Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 16, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | StrikeForce Technologies Inc. | |
Entity Central Index Key | 0001285543 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Jun. 30, 2020 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 | |
Entity Common Stock Shares Outstanding | 15,887,721 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash | $ 122,068 | $ 74,648 |
Accounts receivable, net | 20,151 | 19,686 |
Prepaid expenses | 5,558 | 4,557 |
Total current assets | 147,777 | 98,891 |
Property and equipment, net | 2,791 | 5,448 |
Operating lease right-of-use asset | 181,755 | 205,970 |
Other assets | 15,348 | 16,376 |
Total Assets | 347,671 | 326,685 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 1,254,955 | 1,115,995 |
Convertible notes payable (net of discount of $341,321 and $422,705, respectively; including $1,481,100 and $1,438,100 in default, respectively) | 1,739,419 | 1,860,395 |
Convertible notes payable - related parties | 298,000 | 355,500 |
Notes payable (including $2,142,538 and $2,113,824 in default, respectively) | 2,365,684 | 2,237,484 |
Notes payable - related parties | 752,513 | 742,513 |
Accrued interest (including $1,378,260 and $1,396,296 due to related parties, respectively) | 4,962,132 | 4,842,215 |
Contingent payment obligation | 1,500,000 | 1,500,000 |
Debt settlement obligation | 288,000 | 0 |
Financing obligation | 1,263,200 | 1,263,200 |
Operating lease liability, current portion | 48,724 | 46,952 |
Derivative liabilities | 984,000 | 1,516,435 |
Total current liabilities | 15,453,627 | 15,480,689 |
Notes payable, long term portion | 398,212 | 147,890 |
Operating lease liability, long term portion | 137,275 | 162,289 |
Total Liabilities | 15,992,114 | 15,790,868 |
Commitments and Contingencies | 0 | 0 |
Stockholders' Deficit | ||
Preferred stock series not designated par value $0.10: 10,000,000 shares authorized; none issued or outstanding | 0 | 0 |
Common stock par value $0.0001: 14,000,000,000 shares authorized; 9,363,610 and 5,905,388 shares issued and outstanding, respectively | 936 | 591 |
Additional paid-in capital | 30,563,874 | 28,674,569 |
Accumulated deficit | (46,401,808) | (44,352,595) |
Total StrikeForce Technologies, Inc. stockholders' deficit | (14,846,331) | (14,686,768) |
Noncontrolling interest in consolidated subsidiary | (798,112) | (777,415) |
Total Stockholders' Deficit | (15,644,443) | (15,464,183) |
Total Liabilities and Stockholders' Deficit | 34,761 | 326,685 |
Series A Preferred Stock [Member] | ||
Stockholders' Deficit | ||
Preferred stock series not designated par value $0.10: 10,000,000 shares authorized; none issued or outstanding | 987,000 | 987,000 |
Series B Preferred Stock [Member] | ||
Stockholders' Deficit | ||
Preferred stock series not designated par value $0.10: 10,000,000 shares authorized; none issued or outstanding | $ 3,667 | $ 3,667 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Current Liabilities | ||
Convertible notes payable, net of discount | $ 341,321 | $ 422,705 |
Convertible notes payable, default | 1,481,100 | 1,438,100 |
Notes payable, default | 2,142,538 | 2,113,824 |
Accrued interest due to related parties | $ 1,378,260 | $ 1,396,296 |
Stockholders' Deficit | ||
Preferred Stock, share par value | $ 0.10 | $ 0.10 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, shares par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 14,000,000,000 | 14,000,000,000 |
Common stock, shares issued | 9,363,610 | 5,905,388 |
Common stock, shares outstanding | 9,363,610 | 5,905,388 |
Preferred Stock Series A [Member] | ||
Stockholders' Deficit | ||
Preferred stock, shares authorized | 100 | 100 |
Preferred stock, shares issued | 3 | 3 |
Preferred stock, shares outstanding | 3 | 3 |
Preferred Stock Series B [Member] | ||
Stockholders' Deficit | ||
Preferred Stock, share par value | $ 0.10 | $ 0.10 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 36,667 | 36,667 |
Preferred stock, shares outstanding | 36,667 | 36,667 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||||
Revenue | $ 50,884 | $ 307,739 | $ 110,844 | $ 439,426 |
Operating expenses: | ||||
Cost of revenue | 6,511 | 2,210 | 9,015 | 6,081 |
Compensation | 166,569 | 197,393 | 331,218 | 370,912 |
Professional fees | 193,596 | 115,487 | 336,110 | 286,040 |
Selling, general and administrative expenses | 178,956 | 65,661 | 379,655 | 169,031 |
Research and development | 123,750 | 123,750 | 247,500 | 250,212 |
Total operating expenses | 669,382 | 504,501 | 1,303,498 | 1,082,276 |
Loss from operations | (618,498) | (196,762) | (1,192,654) | (642,850) |
Other income (expense): | ||||
Interest expense (including $65,237 and $63,156 to related parties, respectively) | (161,679) | (121,213) | (333,498) | (246,242) |
Debt discount amortization | (188,112) | (295,699) | (407,962) | (595,165) |
Private placement costs | 0 | (145,511) | (103,500) | (342,558) |
Change in fair value of derivative liabilities | 13,000 | (521,334) | 212,435 | (681,710) |
Loss on extinguishment of debt | (252,524) | 64,268 | (287,376) | (22,301) |
Other income | 42,645 | 33,266 | 42,645 | 33,266 |
Other income (expense), net | (546,670) | (986,223) | (877,256) | (1,854,710) |
Net loss | (1,165,168) | (1,182,985) | (2,069,910) | (2,497,560) |
Net loss attributable to noncontrolling interest | 12,093 | 66,589 | 20,697 | 178,378 |
Net loss attributable to StrikeForce Technologies, Inc. | $ (1,153,075) | $ (1,116,396) | $ (2,049,213) | $ (2,319,182) |
Net loss per common share | ||||
-Basic and diluted | $ (0.15) | $ (0.22) | $ (0.29) | $ (0.47) |
Weighted average common shares outstanding | ||||
-Basic and diluted | 7,811,894 | 4,986,303 | 7,058,500 | 4,893,377 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (Unaudited) - USD ($) | Total | Series A, Preferred Stock | Series B, Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Noncontrolling Interest |
Balance, shares at Dec. 31, 2018 | 3 | 36,667 | 4,747,499 | ||||
Balance, amount at Dec. 31, 2018 | $ (13,802,504) | $ 987,000 | $ 3,667 | $ 475 | $ 26,586,704 | $ (40,824,610) | $ (555,740) |
Fair value of common stock issued for services, shares | 30 | ||||||
Fair value of common stock issued for services, amount | 96 | $ 0 | $ 0 | $ 1 | 95 | 0 | 0 |
Fair value of vested options | 1,912 | $ 0 | $ 0 | $ 0 | 1,912 | 0 | 0 |
Warrants issued with convertible notes | 0 | ||||||
Common stock issued upon conversion of notes and interest, shares | 384,836 | ||||||
Common stock issued upon conversion of notes and interest, amount | 1,025,259 | $ 0 | $ 0 | $ 38 | 1,025,221 | 0 | 0 |
Net loss | (2,497,560) | 0 | 0 | 0 | 0 | (2,319,182) | (178,378) |
Fair value of warrants issued with convertible notes | 0 | $ 0 | $ 0 | $ 0 | 0 | 0 | 0 |
Balance, shares at Jun. 30, 2019 | 3 | 36,667 | 5,132,365 | ||||
Balance, amount at Jun. 30, 2019 | (15,272,797) | $ 987,000 | $ 3,667 | $ 514 | 27,613,932 | (43,143,792) | (734,118) |
Balance, shares at Mar. 31, 2019 | 3 | 36,667 | 4,894,399 | ||||
Balance, amount at Mar. 31, 2019 | (14,536,293) | $ 987,000 | $ 3,667 | $ 489 | 27,167,476 | (42,027,396) | (667,259) |
Fair value of common stock issued for services, shares | 15 | ||||||
Fair value of common stock issued for services, amount | 27 | $ 0 | $ 0 | $ 1 | 26 | 0 | 0 |
Fair value of vested options | 961 | $ 0 | $ 0 | $ 0 | 961 | 0 | 0 |
Common stock issued upon conversion of notes and interest, shares | 237,951 | ||||||
Common stock issued upon conversion of notes and interest, amount | 445,493 | $ 0 | $ 0 | $ 24 | 445,469 | 0 | 0 |
Net loss | (1,182,985) | $ 0 | $ 0 | $ 0 | 0 | (1,116,396) | (66,589) |
Balance, shares at Jun. 30, 2019 | 3 | 36,667 | 5,132,365 | ||||
Balance, amount at Jun. 30, 2019 | (15,272,797) | $ 987,000 | $ 3,667 | $ 514 | 27,613,932 | (43,143,792) | (734,118) |
Balance, shares at Dec. 31, 2019 | 3 | 36,667 | 5,905,388 | ||||
Balance, amount at Dec. 31, 2019 | (15,464,183) | $ 987,000 | $ 3,667 | $ 591 | 28,674,569 | (44,352,595) | (777,415) |
Fair value of common stock issued for services, shares | 98,880 | ||||||
Fair value of common stock issued for services, amount | 20,022 | $ 0 | $ 0 | $ 10 | 20,012 | 0 | 0 |
Fair value of vested options | 216,426 | 0 | 0 | 0 | 216,426 | 0 | 0 |
Warrants issued with convertible notes | 37,500 | $ 0 | $ 0 | $ 0 | 37,500 | 0 | 0 |
Common stock issued upon conversion of notes and interest, shares | 2,914,883 | ||||||
Common stock issued upon conversion of notes and interest, amount | 1,517,702 | $ 0 | $ 0 | $ 291 | 1,517,411 | 0 | 0 |
Net loss | (2,069,910) | $ 0 | $ 0 | $ 0 | 0 | (2,049,213) | (20,697) |
Common stock issued upon conversion of debt settlement, shares | 444,459 | ||||||
Common stock issued upon conversion of debt settlement, amount | 98,000 | $ 0 | $ 0 | $ 44 | 97,956 | 0 | 0 |
Balance, shares at Jun. 30, 2020 | 3 | 36,667 | 9,363,610 | ||||
Balance, amount at Jun. 30, 2020 | (15,644,443) | $ 987,000 | $ 3,667 | $ 936 | 30,563,874 | (46,401,808) | (798,112) |
Balance, shares at Mar. 31, 2020 | 3 | 36,667 | 6,751,909 | ||||
Balance, amount at Mar. 31, 2020 | (15,285,198) | $ 987,000 | $ 3,667 | $ 677 | 29,758,210 | (45,248,733) | (786,019) |
Fair value of common stock issued for services, shares | 98,865 | ||||||
Fair value of common stock issued for services, amount | 20,008 | $ 0 | $ 0 | $ 9 | 19,999 | 0 | 0 |
Fair value of vested options | 102,054 | 0 | 0 | 0 | 102,054 | 0 | 0 |
Warrants issued with convertible notes | 0 | $ 0 | $ 0 | $ 0 | 0 | 0 | 0 |
Common stock issued upon conversion of notes and interest, shares | 2,068,377 | ||||||
Common stock issued upon conversion of notes and interest, amount | 585,861 | $ 0 | $ 0 | $ 206 | 585,655 | 0 | 0 |
Net loss | (1,165,168) | $ 0 | $ 0 | $ 0 | 0 | (1,153,075) | (12,093) |
Common stock issued upon conversion of debt settlement, shares | 444,459 | ||||||
Common stock issued upon conversion of debt settlement, amount | 98,000 | $ 0 | $ 0 | $ 44 | 97,956 | 0 | 0 |
Balance, shares at Jun. 30, 2020 | 3 | 36,667 | 9,363,610 | ||||
Balance, amount at Jun. 30, 2020 | $ (15,644,443) | $ 987,000 | $ 3,667 | $ 936 | $ 30,563,874 | $ (46,401,808) | $ (798,112) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities | ||
Net loss | $ (2,069,910) | $ (2,497,560) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 3,685 | 3,698 |
Amortization of discount on notes payable | 407,962 | 595,165 |
Amortization of right-of-use asset | $ 24,215 | $ 14,627 |
Fair value of common stock issued for services | 20,022 | 96 |
Fair value of vested options | $ 216,426 | $ 1,912 |
Change in fair value of derivative liabilities | (212,435) | 681,710 |
Private placement costs | 103,500 | 342,558 |
Fair value of shares issued for interest expenses | 26,000 | 0 |
Loss on extinguishment of debt | 287,376 | 22,301 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (465) | (52,391) |
Prepaid expenses | (1,001) | 3,884 |
Accounts payable and accrued expenses | 163,585 | (30,522) |
Accrued interest | 264,180 | 245,993 |
Operating lease liabilities | (23,242) | (13,261) |
Net cash used in operating activities | (790,102) | (681,790) |
Cash flows from financing activities: | ||
Proceeds from convertible note payable | 471,000 | 578,000 |
Proceeds from notes payable | 543,161 | 0 |
Proceeds from notes payable-related parties | 10,000 | 0 |
Repayment of convertible notes payable | (43,000) | 0 |
Repayment of notes payable | (143,639) | (5,000) |
Proceeds from finance obligation | 0 | 112,500 |
Net cash provided by financing activities | 837,522 | 685,500 |
Net increase in cash | 47,420 | 3,710 |
Cash at beginning of the year | 74,648 | 86,160 |
Cash at end of the year | 122,068 | 89,870 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 50,918 | 0 |
Income tax paid | 0 | 0 |
Supplemental disclosure of non-cash investing and financing transactions | ||
Fair value of derivative upon issuance of convertible debt recorded as debt discount | 471,000 | 578,000 |
Right-of-use assets obtained in exchange for operating lease obligations | 0 | 214,272 |
Common stock issued for conversion of notes and accrued interest | 1,517,702 | 1,025,259 |
Convertible note, accrued interest, and accounts payable assumed by debt settlement obligation | 197,738 | 0 |
Common stock issued for payment of debt settlement obligation | 98,000 | 0 |
Convertible note and accrued interest exchanged for common stock, net of discount | 684,011 | 0 |
Notes payable and accrued interest exchanged for financing obligation | 0 | 315,200 |
Warrants issued with convertible notes | $ 37,500 | $ 0 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Organization and Summary of Significant Accounting Policies | |
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 operations are based in Edison, New Jersey. Basis of Presentation - Unaudited Interim Financial Information The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods have been included. The results of operations for the six months ended June 30, 2020 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2020. These financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2019 and notes thereto contained in the Annual Report on Form 10-K of the Company as filed with the SEC on May 1, 2020. The consolidated financial statements include the accounts of the Company and its controlled subsidiary, BlockSafe Technologies, Inc. (“BST”). BST is owned 49% by the Company and 31% by three executive officers of the Company, which combined represents an 80% controlling interest in BST. Accordingly, BST is consolidated by the Company. Intercompany balances and transactions have been eliminated in consolidation. At June 30, 2020, noncontrolling interests represents 51% of BST that the Company does not directly own. Reverse Stock Split Effective June 25, 2020, the Company completed a 1:500 reverse stock split of the Company’s issued and outstanding shares of common stock and all fractional shares will be rounded up. All share and per share amounts in the accompanying financial statements have been adjusted retroactively to reflect the reverse stock split as if it had occurred at the beginning of the earliest period presented. COVID-19 In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, has adversely affected workforces, customers, economies, and financial markets globally. It has also disrupted the normal operations of many businesses. This outbreak could decrease spending, adversely affect demand for the Company’s products, and harm the Company’s business and results of operations. In the quarter ended June 30, 2020, the Company believes the COVID-19 pandemic did impact its operating results as sales to customers in the second quarter were down 17% from the first quarter of the year. However, the Company has not observed any impairments of its assets or a significant change in the fair value of its assets due to the COVID-19 pandemic. At this time, it is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or results of operations, financial condition, or liquidity. As of June 30, 2020, the Company has been following the recommendations of local health authorities to minimize exposure risk for its team members for the past several weeks, including the temporary closure of its corporate office and having team members work remotely. Most customers and vendors have transitioned to electronic submission of invoices and payments. 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 six months ended June 30, 2020, the Company incurred a net loss of $2,069,910 and used cash in operating activities of $790,102 and at June 30, 2020, the Company had a stockholders' deficit of $15,644,443. Also, at June 30, 2020, the Company is in default on notes payable and convertible notes payable in the aggregate amount of $3,623,638. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that these financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2019 financial statements, raised substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. At June 30, 2020, the Company had cash on hand in the amount of $122,068. Subsequent to June 30, 2020, the Company issued three unsecured convertible promissory notes for proceeds of $159,500. Management estimates that the current funds on hand will be sufficient to continue operations through the next six months. The Company’s ability to continue as a going concern is dependent upon its ability to continue to implement its business plan 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 stockholders, in the case of equity financing. Use of 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 financing obligations, assumptions used in valuing stock instruments issued for services, assumptions used in valuing derivative liabilities, the valuation allowance for deferred tax assets, and the accrual of potential liabilities. Actual results could differ from those estimates. Revenue Recognition The Company follows the guidance of Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers The Company’s revenue consists of revenue from sales and support of our software products. Revenue primarily consists of sales of software licenses of our ProtectID®, GuardedID® and MobileTrust® products. The Company usually recognizes subscription revenue over a one-month period based on a typical monthly renewal cycle in accordance with its customer agreement terms. For service contracts, the Company’s performance obligations are satisfied, and the related revenue is recognized, as services are rendered. The Company offers no discounts, rebates, rights of return, or other allowances to clients which would result in the establishment of reserves against service revenue. Additionally, to date, the Company has not incurred incremental costs in obtaining customer contracts. Cost of revenue includes direct costs and fees related to the sale of our products. The following tables present our revenue disaggregated by major product and service lines: Three months ended June 30, June 30, 2019 Software $ 49,093 $ 264,577 Service 1,791 43,162 Total revenue $ 50,884 $ 307,739 Six months ended June 30, June 30, 2019 Software $ 107,567 $ 390,791 Service 3,277 48,635 Total revenue $ 110,844 $ 439,426 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. The Company believes the carrying amounts reported in the balance sheet for accounts receivable, accounts payable, accrued expenses, convertible notes, and notes payables approximate fair values because of the short-term nature of these financial instruments. As of June 30, 2020 and December 31, 2019, the Company’s balance sheet includes Level 2 liabilities comprised of the fair value of embedded derivative liabilities of $984,000 and $1,516,435, respectively (see Note 9). 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 Company evaluates embedded conversion features within its convertible debt to determine whether the embedded conversion features should be bifurcated from the host instrument and accounted for as a derivative. The fair value of the embedded derivatives are determined using Monte Carlo simulation method at inception and on subsequent valuation dates. 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. Stock-Based Compensation The Company periodically issues stock options, warrants, and shares of common stock as share-based compensation to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for such grants issued and vesting based on FASB ASC 718, Compensation – Stock Compensation The fair value of the Company’s stock options and warrants 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 restricted stock, 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. Loss per Share Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding, plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Diluted loss per share excludes all potential common shares if their effect is anti-dilutive. The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive: Six months ended June 30, 2020 June 30, 2019 Options to purchase common stock 633,000 519,000 Warrants to purchase common stock 150,575 - Convertible notes 8,031,979 355,709 Convertible Series B Preferred stock 387,984 33,651 Total 9,203,538 908,360 Concentrations For the six months ended June 30, 2020, sales to two customers comprised 71% and 14% of revenues, respectively. For the six months ended June 30, 2019, sales to three customers comprised 64%, 19% and 11% of revenues, respectively. At June 30, 2020, two customers comprised 49% and 32% of accounts receivable, respectively. The Company maintains the majority of its cash balances with one financial institution, in the form of demand deposits. At June 30, 2020, the Company did not have cash deposits that exceeded the federally insured limit of $250,000 per account. The Company believes that no significant concentration of credit risk exists with respect to its cash balances because of its assessment of the creditworthiness and financial viability of the financial institution. Reclassification In presenting the Company’s consolidated statements of operations for the three and six months ended June 30, 2019, the Company presented the loss on extinguishment of debt of ($271,356) and ($700,993), respectively, and a gain on extinguishment of related derivatives of $335,624 and $678,692, respectively, as two separate amounts. In presenting the Company’s consolidated statements of operations for the three and six months ended June 30, 2020, the Company has reclassified the two amounts into $64,268 and ($22,301), respectively, of gain/(loss) on extinguishment of debt in the accompanying consolidated statements of operations for the three and six months ended June 30, 2019. This reclassification has no effect on the results of operations, stockholders’ deficit, and cash flows previously reported. Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. 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. |
Convertible Notes Payable
Convertible Notes Payable | 6 Months Ended |
Jun. 30, 2020 | |
Convertible Notes Payable | |
Note 2- Convertible Notes Payable | Convertible notes payable consisted of the following: June 30, 2020 December 31, 2019 Secured (a) DART/Citco Global, in default $ 542,588 $ 542,588 Unsecured (b) Convertible notes with fixed conversion prices, in default 895,512 895,512 (c) Convertible notes with adjustable conversion prices ($43,000 in default at June 30, 2020) 642,640 845,000 Total convertible notes principal outstanding 2,080,740 2,283,100 Debt discount (341,321 ) (422,705 ) Convertible notes, net of discount $ 1,739,419 $ 1,860,395 (a) At December 31, 2019 and June 30, 2020, convertible notes payables due to DART/Citco Global totaled $542,588. The notes are secured by all of the Company’s assets, were due in 2010, and are currently in default. Beginning in 2009, the note holder agreed to the forbearance of any interest on the notes payable to DART/Citco Global. The DART/Citco Global note payables are convertible into less than one share of the Company’s common stock based on a fixed conversion price adjusted for applicable reverse stock splits. (b) At December 31, 2019 and June 30, 2020, convertible notes payable with fixed conversion prices totaled $895,512. The notes are unsecured, bear interest at 8% to 18% per annum, were due on various dates from March 2008 to March 2015, and are currently in default. The aggregate notes are convertible into less than one share of the Company’s common stock based on fixed conversion prices adjusted for applicable reverse stock splits. At December 31, 2019, the balance of the accrued interest on the fixed convertible notes was $1,154,095. During the six months ended June 30, 2020, interest of $37,463 was accrued. At June 30, 2020, the balance of accrued interest on the fixed convertible notes was $1,191,558. (c) At December 31, 2019, there were $845,000 of convertible notes with adjustable conversion prices outstanding. During the six months ended June 30, 2020, convertible notes for $471,000 were issued, a convertible note for $43,000 was repaid, and convertible notes for $630,360 were converted into shares of the Company’s common stock (see discussions below). At June 30, 2020, the balance of the convertible notes with adjustable conversion prices was $642,640. During the six months ended June 30, 2020, the Company issued six convertible notes payable with adjustable conversion prices to four lenders for aggregate proceeds of $471,000, bearing interest at 8% to 10% per annum, unsecured, and maturing between October 2020 and March 2021. At the option of the holder, the notes are convertible into shares of common stock of the Company at a price per share discount of 58% to 62% of the market price of the Company’s common stock, as defined, for 15 to 25 days preceding a conversion notice. As a result, the Company determined that the conversion options of the convertible notes were not considered indexed to the Company’s own stock and characterized the fair value of the conversion features as derivative liabilities upon issuance. The Company determined that upon issuance of the convertible notes during the six months ended June 30, 2020, the initial fair value of the embedded conversion feature totaled $535,000 (see Note 9), of which $431,500 was recorded as debt discount to be amortized over the term of the related notes, and the remainder of $103,500 was recorded as private placement costs. In addition, one of the convertible notes issued during the six months ended June 30, 2020, was issued with warrants to purchase 50,000 shares of the Company’s common stock (see Note 11). The Company determined the relative fair value of the warrants was $37,500, which was recorded as debt discount to be amortized over the term of the related note. During the six months ended June 30, 2020, lenders elected to convert eleven notes totaling $630,360 plus interest of $53,650 (total of $684,010) into 2,914,883 shares of the Company’s common stock at conversion prices ranging from $0.06 to $0.95 per share. On the dates of conversion, the closing price of the Company’s common stock ranged from $0.15 to $1.65 per share for a total fair value of shares of $1,517,702. The Company followed the general extinguishment model to record the settlement of the debt. The liabilities for the debt and conversion feature totaled $1,392,589, and was made up of debt and accrued interest of $684,010, the related unamortized debt discount of ($144,422), and the derivative liability related to the conversion option of the debt, after final valuation, of $853,000. The shares issued were measured at their fair value of $1,517,702, and the difference of $125,114 was recorded as loss on extinguishment of debt. At December 31, 2019, the balance of unamortized discount on convertible notes with adjustable conversion features was $422,705. During the six months ended June 30, 2020, debt discount of $471,000 was recorded, debt discount amortization of $407,962 was recorded, and $144,422 of debt discount was removed related to debt that was converted. At June 30, 2020, the balance of the unamortized discount was $341,321. |
Convertible Notes Payable Relat
Convertible Notes Payable Related Parties | 6 Months Ended |
Jun. 30, 2020 | |
Convertible Notes Payable Related Parties | |
Note 3- Convertible notes payable Related party | At December 31, 2019, convertible notes payable - related parties totaled $355,500. During the six months ended June 30, 2020, two notes aggregating $57,500 held by the Company’s VP of Technology were extinguished as part of a debt settlement obligation transaction (see Note 8). At June 30, 2020, the balance of convertible notes payable-related parties totaled $298,000. The notes are made up of ten convertible note payables, are unsecured, and have extended due dates of December 31, 2020. Six notes totaling $268,000 are due to the Company’s Chief Executive Officer, at a compounded interest rate of 8% per annum; and four notes totaling $30,000 are due to the spouse of the Company’s Chief Technology Officer at a compounded interest rate of 8% per annum. The aggregate notes are convertible into less than one share of the Company’s common stock at fixed conversion prices adjusted for applicable reverse stock splits. At December 31, 2019, accrued interest due for the convertible notes – related parties was $636,272. During the six months ended June 30, 2020, interest of $37,274 was accrued, and accrued interest of $82,212 due to the Company’s VP of Technology was extinguished as part of a debt settlement obligation transaction (see Note 8). At June 30, 2020, accrued interest due for the convertible notes – related parties was $591,334. |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2020 | |
Notes Payable | |
Note 4 - Notes Payable | Notes payable consisted of the following: June 30, 2020 December 31, 2019 Unsecured notes (a) Notes payable-in default $ 1,638,824 $ 1,638,824 (b) 475,000 475,500 (c) 313,212 - (d) 150,000 - Secured notes payable (e) 186,860 271,550 Total notes payable principal outstanding 2,763,896 2,385,374 Less current portion of notes payable (2,365,684 ) (2,237,484 ) Long term notes payable $ 398,212 $ 147,890 (a) At December 31, 2019 and June 30, 2020, notes payable totaled $1,638,824. The notes bear interest at 8% to 14% per annum, are unsecured, and were due on various dates from December 2011 to July 2017 and are currently in default. At December 31, 2019, the balance of the accrued interest on the notes payable was $2,183,352. During the six months ended June 30, 2020, $83,798 of interest was accrued. At June 30, 2020, accrued interest on the promissory notes payable was $2,267,151. (b) At December 31, 2019 and June 30, 2020, the Company’s consolidated subsidiary BST (see Note 1) had $475,500 of outstanding promissory notes. The notes bear interest at 8% per annum, are unsecured, matured through September 2019, and are currently in default. In conjunction with these notes, the Company recorded a related financing obligation (See Note 6). At December 31, 2019, the balance of the accrued interest on the notes payable-BST was $70,545. During the six months ended June 30, 2020, $18,948 of interest was accrued. At June 30, 2020, accrued interest on the notes payable-BST was $89,493. (c) On April 7, 2020, the Company was granted a loan (the “PPP loan”) from Chase Bank in the aggregate amount of $313,212, pursuant to the Paycheck Protection Program (the “PPP”) under the CARES Act. The PPP loan agreement is dated April 7, 2020, matures on April 7, 2022, bears interest at a rate of 1% per annum, with the first six months of interest deferred, is payable monthly commencing on October 2020, and is unsecured and guaranteed by the U.S. Small Business Administration (“SBA”). The loan term may be extended to April 7, 2025, if mutually agreed to by the Company and lender. The Company applied ASC 470, Debt, (d) On May 15, 2020, the Company received a $150,000 loan (the “EID Loan”) from the SBA under the SBA’s Economic Injury Disaster Loan program. The EID Loan has a thirty-year term and bears interest at a rate of 3.75% per annum. Monthly principal and interest payments of $0.7 per month are deferred for twelve months and commence in May 2021. The EID Loan may be prepaid at any time prior to maturity with no prepayment penalties. The proceeds from the EID Loan must be used for working capital. The EID Loan contains customary events of default and other provisions customary for a loan of this type. The Company was in compliance with the terms of the EID loan as of June 30, 2020. (e) At December 31, 2019, secured notes payable totaled $271,550. During the six months ended June 30, 2020, the Company issued two notes payable aggregating $158,408, of which $79,949 was received through June 30, 2020. In addition, during the six months ended June 30, 2020, the Company made principal payments of $146,639 on the secured notes payable, and one secured note aggregating $21,000 was extinguished as part of a debt settlement obligation transaction (see Note 8). At June 30, 2020, the outstanding balance of the secured note payables was $186,860. The notes bear interest at 8% to 148% per annum, each agreement is secured by substantially all of the assets of the Company, and the notes mature through April 2021. During the six months ended June 30, 2020, $64,247 of interest was accrued, $40,850 of interest was paid on the secured note payables and $8,400 was extinguished as part of a debt settlement obligation transaction (see Note 8). Two notes for $28,714 were due in April 2020 and were not repaid in full when due. The Company and the note holders are in negotiations to extend the due dates of the loans. |
Notes Payable - Related Parties
Notes Payable - Related Parties | 6 Months Ended |
Jun. 30, 2020 | |
Notes Payable - Related Parties | |
Note 5- Notes payable- Related parties | At December 31, 2019, the balance of notes payable-related parties totaled $742,513. During the six months ended June 30, 2020, the Company issued one note payable for $10,000 to its Chief Executive Officer. At June 30, 2020, the balance of notes payable-related parties totaled $752,513. The notes are made up of nineteen notes payable due to the Company’s Chief Executive Officer, are non-interesting bearing or bear interest at rates ranging from 8% per annum to 10% per annum, are unsecured, and are due on December 31, 2020. At December 31, 2019, accrued interest due for the notes was $760,024. During the six months ended June 30, 2020, interest of $27,963 was accrued. At June 30, 2020, accrued interest due for the notes was $787,987. |
Financing Obligation
Financing Obligation | 6 Months Ended |
Jun. 30, 2020 | |
Financing Obligation | |
Note 6 - Financing Obligation | At December 31, 2019 and June 30, 2020, the Company’s consolidated subsidiary, BST, had recorded a financing obligation of $1,263,000 to be paid in tokens, as defined. At June 30, 2020 and through the date of filing, BST has not developed or issued any tokens and there is no assurance as to whether, or at what amount, or on what terms, tokens will be available to be issued, if ever. At June 30, 2020, as the tokens do not exist, and any amounts received for tokens are not considered equity or revenue, management determined that 100% of the obligation of $1,263,200 is a liability to be settled by BST, through the issuance of tokens, or through other means if tokens are never issued. |
Contingent Payment Obligation
Contingent Payment Obligation | 6 Months Ended |
Jun. 30, 2020 | |
Contingent Payment Obligation | |
Note 7 - Contingent Payment Obligation | On September 6, 2017, the Company entered into a litigation funding agreement with Therium Inc. (subsequently Therium Luxembourg) 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 12). 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. At December 31, 2019 and June 30, 2020, the Company has reflected the $1,500,000 received from the Funders as a contingent payment obligation to be paid only if claim proceeds are recovered. |
Debt Settlement Obligations
Debt Settlement Obligations | 6 Months Ended |
Jun. 30, 2020 | |
Convertible Notes Payable | |
Note 8 - Debt Settlement Obligation | On May 13, 2020, the Company entered into a settlement agreement with Continuation Capital, Inc (“Continuation”). Continuation agreed to pay $197,738 owed to Company creditors, including $139,712 of convertible debt and accrued interest due to a related party (see Note 3), $29,400 of secured notes payable and accrued interest (see Note 4) and $28,626 of accounts payable. In exchange, the Company agreed to issue shares of its common stock to Continuation as consideration for the extinguishment of the debt, accrued interest, and accounts payables. The shares to be issued will be determined at a discount based on 45% of the lowest closing price of the Company common stock for the 30 trading days prior to the date of any issuance for payment. The Company determined that the settlement agreement with Continuation was a contract to settle debt with a variable number of shares based on a fixed monetary amount known at inception, and in accordance with ASC 480-10, the obligation was measured at fair value. The Company determined the fair value of the settlement obligation was $360,000 and recorded this as a liability. During the six months ended June 30, 2020, the Company issued 444,459 shares of its common stock to Continuation for the payment of $72,000 of the settlement obligation. At June 30, 2020, the balance of the debt settlement obligation liability was $288,000. When the Company initially recorded the obligation, the difference between the $360,000 fair value and $197,738 of debt and accounts payables assumed by Continuation was recorded as a loss on extinguishment of debt of $162,262 The fair value of the 444,459 shares issued for payment of $72,000 of the settlement obligation was determined to be $98,000 based on the closing price of the shares on the date issued, and the difference of $26,000 was recorded as interest expense. As part of the transaction, the Company also issued 90,909 shares of common stock to Continuation as a fee. The fair value of the shares issued for fees was determined to be $18,182 and is included in general and administrative expenses. |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Financial Instruments | |
Note 9 - Derivative Financial Instruments | At June 30, 2020, the Company had convertible promissory notes outstanding that are convertible into shares of common stock of the Company at the option of the holders at price per share discounts ranging from 20% to 62% of the Company’s common stock market price, as defined in the note agreements. As the ultimate determination of shares to be issued upon conversion of these notes could exceed the current number of available authorized shares, the Company determined that the conversion features of the convertible notes were not considered indexed to the Company’s own stock and characterized the fair value of the conversion features as derivative liabilities. Accordingly, the conversion features of the notes were separated from the host contracts (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, 2019, the balance of the derivative liabilities was $1,516,435. During the six months ended June 30, 2020, the Company recorded additions of $535,000 related to the conversion features of notes issued during the period (see Note 3), and a decrease in fair value of derivatives of $212,435. In addition, the Company recorded a decrease in derivative liability of $855,000 related to derivative liabilities that were extinguished when the related convertible note payable was converted into shares of common stock (see Notes 3 and 11). At June 30, 2020, the balance of the derivative liabilities was $984,000. At June 30, 2020, the fair value of the Company’s embedded derivatives were estimated using the Monte Carlo simulation model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the conversion features, and future dividends. The fair value of the embedded derivative was determined using the following assumptions: June 30, 2020 January 2020 to June 2020 (dates of inception) December 31, 2019 Conversion feature: Risk-free interest rate 0.16 % 0.11%-0.17 % 1.59 % Expected volatility 166 % 152%-166 % 145%-155 % Expected life (in years) 1 year 1 year 0.25 to 1 year Expected dividend yield - - - Fair Value: Conversion feature $ 984,000 $ 535,000 $ 1,516,435 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 Company’s 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. The following table sets forth a summary of the changes in the estimated fair value of our embedded derivative during the six months ended June 30, 2020 and 2019: Six months ended June 30, 2020 Six months ended June 30, 2019 Fair value at beginning of period $ 1,516,435 $ 1,313,904 Recognition of derivative liabilities upon initial valuation 535,000 920,558 Extinguishment of derivative liabilities (855,000 ) (678,692 ) Net change in the fair value of derivative liabilities (212,435 ) 681,710 Fair value at end of period $ 984,000 $ 2,237,480 |
Operating Lease
Operating Lease | 6 Months Ended |
Jun. 30, 2020 | |
Operating Lease | |
Note 10 - Operating Lease | In January 2019, the Company entered into a noncancelable operating lease for its headquarters office requiring payments of $4,409 per month, payments increasing 3% each year, and ending on January 31, 2024. At June 30, 2020, the remaining lease term was 3.58 years. The Company does not have any other leases. Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The operating lease ROU asset includes any lease payments made and excludes lease incentives. The components of lease expense and supplemental cash flow information related to leases for the period are as follows: Six months ended June 30, 2020 Six months ended June 30, 2019 Lease Cost Operating lease cost (included in general and administration in the Company’s unaudited condensed statement of operations) $ 28,092 $ 27,727 Other Information Cash paid for amounts included in the measurement of lease liabilities for the six months ended June 30, 2020 $ 27,118 $ 26,457 Weighted average remaining lease term – operating leases (in years) 3.6 4.6 Average discount rate – operating leases 10.0 % 10.0 % The supplemental balance sheet information related to leases for the period is as follows: At June 30, 2020 Operating leases Long-term right-of-use assets $ 181,755 Short-term operating lease liabilities $ 48,724 Long-term operating lease liabilities 137,275 Total operating lease liabilities $ 185,999 Maturities of the Company’s lease liabilities are as follows: Year Ending Operating Leases 2020 (remaining 6 months) $ 27,251 2021 56,000 2022 57,680 2023 59,410 2024 4,963 Total lease payments 205,304 Less: Imputed interest/present value discount (19,305 ) Present value of lease liabilities $ 185,999 Lease expenses were $28,092 and $27,727 during the six months ended June 30, 2020 and 2019, respectively. |
Stockholders' Deficit
Stockholders' Deficit | 6 Months Ended |
Jun. 30, 2020 | |
Stockholders' Deficit | |
Note 11 - Stockholders' Deficit | Common Stock During the six months ended June 30, 2020, the Company issued an aggregate of 3,458,678 shares of its common stock as follows: · The Company issued 98,880 shares of its common stock for services, valued at $20,022. · Convertible note holders converted $630,360 of principal and $54,650 of accrued interest into 2,914,883 shares of common stock at conversion prices ranging from $0.06 to $0.95 per share, with a total fair value of $1,517,702 (see Note 2). · A funder converted a settlement liability of $72,000 into 444,459 shares of common stock at conversion prices ranging from $0.0825 to $0.11 per share, with a total fair value of $98,000 (see Note 8). Warrants In January 2020, in connection with the issuance of one convertible note that aggregated $75,000 (See Note 2), the Company issued warrants to purchase 50,000 shares of the Company’s common stock. The warrants were exercisable immediately, at an exercise price of $0.75 per share, and expire in 5 years. The warrants are classified within stockholders’ deficit, and the proceeds were allocated between the convertible note and warrants based on their relative fair value. The relative fair value of the warrants was determined to be $37,500 and was recorded as debt discount and additional paid-in-capital. The table below summarizes the Company’s warrant activities for the six months ended June 30, 2020: Number of Warrant Shares Exercise Price Range Per Share Weighted Average Exercise Price Balance, January 1, 2020 100,575 $ 0.75-2.90 $ 1.1185 Granted 50,000 0.75 0.75 Canceled/Expired - - - Exercised - - - Balance outstanding, June 30, 2020 150,575 $ 0.75-2.90 $ 0.996 Balance exercisable, June 30, 2020 150,575 $ 0.75-2.90 $ 0.996 At June 30, 2020, the intrinsic value of the warrants was $175,575. The following table summarizes information concerning outstanding and exercisable warrants as of June 30, 2020: Warrants Outstanding and Exercisable Range of Exercise Prices Number Outstanding Average Remaining Contractual Life (in years) Weighted Average Exercise Price $ 0.75 133,333 5.00 $ 0.75 $ 2.90 17,242 5.00 $ 2.90 $ 0.75 - $2.90 150,575 5.00 $ 0.996 |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2020 | |
Stock-Based Compensation | |
Note 12 - Stock-Based Compensation | At June 30, 2020, the Company had options exercisable into 633,000 shares of the Company’s common stock, with remaining estimated lives of approximately eight years. The options had been issued in 2017 and 2019 with a total fair value of approximately $475,000. The options have exercise prices generally ranging from $2.05 to $3.10 per share, and the fair value of the options is amortized over vesting terms which ranged from three to six months. For the six months ended June 30, 2020 and 2019, the Company recognized compensation costs of $216,426 and $1,912, respectively, related to the fair value of vested options. At June 30, 2020, there was no unamortized fair value of options to be recognized as compensation in future periods. The table below summarizes the Company’s stock option activities for the period January 1, 2020 to June 30, 2020: Number of Options Shares Exercise Price Range Per Share Weighted Average Exercise Price Balance, January 1, 2020 633,000 $ 2.05-3.125 $ 2.93 Granted - - - Exercised - - - Expired - - - Balance outstanding, June 30, 2020 633,000 $ 2.05-3.125 $ 2.93 Balance exercisable, June 30, 2020 633,000 $ 2.05-3.125 $ 2.93 At June 30, 2020, the intrinsic value of outstanding options was zero. The following table summarizes information concerning the Company’s stock options as of June 30, 2020: 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 $ 2.85 126,000 10.00 $ 2.85 126,000 10.00 $ 2.85 $ 2.05 115,000 10.00 $ 2.05 115,000 10.00 $ 2.05 $ 3.125 392,000 10.00 $ 3.125 392,000 10.00 $ 3.125 $ 0.0041 - 975,000,000 633,000 10.00 $ 2.93 633,000 10.00 $ 2.93 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies | |
Note 13 - Commitments and Contingencies | Legal Proceedings On June 20, 2016, we 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. 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 our second Patent No. 8,484,698. In October 2019, the litigation against the remaining two parties was dismissed. Management is currently considering its options regarding the remaining two parties. On March 14, 2017, we 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. Management is currently considering its options regarding the litigation. 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. 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 believe is without merit and will defend vigorously). This litigation is ongoing. On December 1, 2017, The United States District Court for the Central District of California issued an opinion in the StrikeForce Technologies, Inc. v. SecureAuth Corp StrikeForce Technologies, Inc. v. SecureAuth Corp (19-103). 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 had the option to buy the Company’s GuardedID® patent for $10,000,000 that expires on September 30, 2021. If the purchase price is not paid by September 30, 2021, it will increase to $11,000,000 and be due September 30, 2022. The Company anticipates, but cannot guarantee, Cyber Safety will complete the purchase by September 30, 2021. 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 six months ended June 30, 2020 and 2019, the Company recorded revenue of $0 and $280,000, respectively, from Cyber Safety. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events | |
Note 14 - Subsequent Events | Subsequent to June 30, 2020, the Company issued three unsecured convertible promissory notes aggregating $159,500, bearing interest at 8% per annum, and maturing in twelve months through July 2021. At the option of the holder, the notes are convertible into shares of common stock of the Company at a price per share discount of 61% to 70% of the market price of the Company’s common stock, as defined, for 15 to 20 days preceding a conversion notice. In July 2020, in connection with the issuance of one convertible note that aggregated $25,000, the Company issued warrants to purchase 588,235 shares of the Company’s common stock. The warrants were exercisable immediately, at an exercise price of $0.085 per share, and expire in 5 years. Subsequent to June 30, 2020, convertible notes aggregating $132,901 of principal and $7,618 of accrued interest were converted into 3,841,085 shares of common stock at conversion prices ranging from $0.0214 to $0.061938 per share. Subsequent to June 30, 2020, the Company issued 2,680,000 shares of common stock with a fair value of approximately $250,000 to pay off approximately $137,000 of the debt settlement obligation. |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Organization and Summary of Significant Accounting Policies | |
Basis of presentation and principles of consolidation | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods have been included. The results of operations for the six months ended June 30, 2020 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2020. These financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2019 and notes thereto contained in the Annual Report on Form 10-K of the Company as filed with the SEC on May 1, 2020. The consolidated financial statements include the accounts of the Company and its controlled subsidiary, BlockSafe Technologies, Inc. (“BST”). BST is owned 49% by the Company and 31% by three executive officers of the Company, which combined represents an 80% controlling interest in BST. Accordingly, BST is consolidated by the Company. Intercompany balances and transactions have been eliminated in consolidation. At June 30, 2020, noncontrolling interests represents 51% of BST that the Company does not directly own. |
Reverse Stock Split | Effective June 25, 2020, the Company completed a 1:500 reverse stock split of the Company’s issued and outstanding shares of common stock and all fractional shares will be rounded up. All share and per share amounts in the accompanying financial statements have been adjusted retroactively to reflect the reverse stock split as if it had occurred at the beginning of the earliest period presented. |
COVID-19 | In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, has adversely affected workforces, customers, economies, and financial markets globally. It has also disrupted the normal operations of many businesses. This outbreak could decrease spending, adversely affect demand for the Company’s products, and harm the Company’s business and results of operations. In the quarter ended June 30, 2020, the Company believes the COVID-19 pandemic did impact its operating results as sales to customers in the second quarter were down 17% from the first quarter of the year. However, the Company has not observed any impairments of its assets or a significant change in the fair value of its assets due to the COVID-19 pandemic. At this time, it is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or results of operations, financial condition, or liquidity. As of June 30, 2020, the Company has been following the recommendations of local health authorities to minimize exposure risk for its team members for the past several weeks, including the temporary closure of its corporate office and having team members work remotely. Most customers and vendors have transitioned to electronic submission of invoices and payments. |
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 six months ended June 30, 2020, the Company incurred a net loss of $2,069,910 and used cash in operating activities of $790,102 and at June 30, 2020, the Company had a stockholders' deficit of $15,644,443. Also, at June 30, 2020, the Company is in default on notes payable and convertible notes payable in the aggregate amount of $3,623,638. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that these financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2019 financial statements, raised substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. At June 30, 2020, the Company had cash on hand in the amount of $122,068. Subsequent to June 30, 2020, the Company issued three unsecured convertible promissory notes for proceeds of $159,500. Management estimates that the current funds on hand will be sufficient to continue operations through the next six months. The Company’s ability to continue as a going concern is dependent upon its ability to continue to implement its business plan 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 stockholders, in the case of equity financing. |
Use of 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 financing obligations, assumptions used in valuing stock instruments issued for services, assumptions used in valuing derivative liabilities, the valuation allowance for deferred tax assets, and the accrual of potential liabilities. Actual results could differ from those estimates. |
Revenue Recognition | The Company follows the guidance of Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers The Company’s revenue consists of revenue from sales and support of our software products. Revenue primarily consists of sales of software licenses of our ProtectID®, GuardedID® and MobileTrust® products. The Company usually recognizes subscription revenue over a one-month period based on a typical monthly renewal cycle in accordance with its customer agreement terms. For service contracts, the Company’s performance obligations are satisfied, and the related revenue is recognized, as services are rendered. The Company offers no discounts, rebates, rights of return, or other allowances to clients which would result in the establishment of reserves against service revenue. Additionally, to date, the Company has not incurred incremental costs in obtaining customer contracts. Cost of revenue includes direct costs and fees related to the sale of our products. The following tables present our revenue disaggregated by major product and service lines: Three months ended June 30, June 30, 2019 Software $ 49,093 $ 264,577 Service 1,791 43,162 Total revenue $ 50,884 $ 307,739 Six months ended June 30, June 30, 2019 Software $ 107,567 $ 390,791 Service 3,277 48,635 Total revenue $ 110,844 $ 439,426 |
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. The Company believes the carrying amounts reported in the balance sheet for accounts receivable, accounts payable, accrued expenses, convertible notes, and notes payables approximate fair values because of the short-term nature of these financial instruments. As of June 30, 2020 and December 31, 2019, the Company’s balance sheet includes Level 2 liabilities comprised of the fair value of embedded derivative liabilities of $984,000 and $1,516,435, respectively (see Note 9). |
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 Company evaluates embedded conversion features within its convertible debt to determine whether the embedded conversion features should be bifurcated from the host instrument and accounted for as a derivative. The fair value of the embedded derivatives are determined using Monte Carlo simulation method at inception and on subsequent valuation dates. 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. |
Stock-Based Compensation | The Company periodically issues stock options, warrants, and shares of common stock as share-based compensation to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for such grants issued and vesting based on FASB ASC 718, Compensation – Stock Compensation The fair value of the Company’s stock options and warrants 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 restricted stock, 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. |
Loss per Share | Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding, plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Diluted loss per share excludes all potential common shares if their effect is anti-dilutive. The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive: Six months ended June 30, 2020 June 30, 2019 Options to purchase common stock 633,000 519,000 Warrants to purchase common stock 150,575 - Convertible notes 8,031,979 355,709 Convertible Series B Preferred stock 387,984 33,651 Total 9,203,538 908,360 |
Concentrations | For the six months ended June 30, 2020, sales to two customers comprised 71% and 14% of revenues, respectively. For the six months ended June 30, 2019, sales to three customers comprised 64%, 19% and 11% of revenues, respectively. At June 30, 2020, two customers comprised 49% and 32% of accounts receivable, respectively. The Company maintains the majority of its cash balances with one financial institution, in the form of demand deposits. At June 30, 2020, the Company did not have cash deposits that exceeded the federally insured limit of $250,000 per account. The Company believes that no significant concentration of credit risk exists with respect to its cash balances because of its assessment of the creditworthiness and financial viability of the financial institution. |
Reclassification | In presenting the Company’s consolidated statements of operations for the three and six months ended June 30, 2019, the Company presented the loss on extinguishment of debt of ($271,356) and ($700,993), respectively, and a gain on extinguishment of related derivatives of $335,624 and $678,692, respectively, as two separate amounts. In presenting the Company’s consolidated statements of operations for the three and six months ended June 30, 2020, the Company has reclassified the two amounts into $64,268 and ($22,301), respectively, of gain/(loss) on extinguishment of debt in the accompanying consolidated statements of operations for the three and six months ended June 30, 2019. This reclassification has no effect on the results of operations, stockholders’ deficit, and cash flows previously reported. |
Recent Accounting Pronouncements | In June 2016, the FASB issued ASU No. 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. 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 S_3
Organization and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Organization and Summary of Significant Accounting Policies | |
Schedule of Revenue Recognition | Three months ended June 30, June 30, 2019 Software $ 49,093 $ 264,577 Service 1,791 43,162 Total revenue $ 50,884 $ 307,739 Six months ended June 30, June 30, 2019 Software $ 107,567 $ 390,791 Service 3,277 48,635 Total revenue $ 110,844 $ 439,426 |
Schedule of earning per share | Six months ended June 30, 2020 June 30, 2019 Options to purchase common stock 633,000 519,000 Warrants to purchase common stock 150,575 - Convertible notes 8,031,979 355,709 Convertible Series B Preferred stock 387,984 33,651 Total 9,203,538 908,360 |
Convertible Notes Payable (Tabl
Convertible Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Convertible Notes Payable (Tables) | |
Schedule of convertible notes payable | June 30, 2020 December 31, 2019 Secured (a) DART/Citco Global, in default $ 542,588 $ 542,588 Unsecured (b) Convertible notes with fixed conversion prices, in default 895,512 895,512 (c) Convertible notes with adjustable conversion prices ($43,000 in default at June 30, 2020) 642,640 845,000 Total convertible notes principal outstanding 2,080,740 2,283,100 Debt discount (341,321 ) (422,705 ) Convertible notes, net of discount $ 1,739,419 $ 1,860,395 |
Notes Payable (Tables)
Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Notes Payable | |
Schedule of notes payable | June 30, 2020 December 31, 2019 Unsecured notes (a) Notes payable-in default $ 1,638,824 $ 1,638,824 (b) 475,000 475,500 (c) 313,212 - (d) 150,000 - Secured notes payable (e) 186,860 271,550 Total notes payable principal outstanding 2,763,896 2,385,374 Less current portion of notes payable (2,365,684 ) (2,237,484 ) Long term notes payable $ 398,212 $ 147,890 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Financial Instruments | |
Schedule of derivative liability | June 30, 2020 January 2020 to June 2020 (dates of inception) December 31, 2019 Conversion feature: Risk-free interest rate 0.16 % 0.11%-0.17 % 1.59 % Expected volatility 166 % 152%-166 % 145%-155 % Expected life (in years) 1 year 1 year 0.25 to 1 year Expected dividend yield - - - Fair Value: Conversion feature $ 984,000 $ 535,000 $ 1,516,435 |
Summary of changes in derivative liabilities | Six months ended June 30, 2020 Six months ended June 30, 2019 Fair value at beginning of period $ 1,516,435 $ 1,313,904 Recognition of derivative liabilities upon initial valuation 535,000 920,558 Extinguishment of derivative liabilities (855,000 ) (678,692 ) Net change in the fair value of derivative liabilities (212,435 ) 681,710 Fair value at end of period $ 984,000 $ 2,237,480 |
Operating Lease (Tables)
Operating Lease (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Operating Lease | |
Schedule of lease expense and supplemental cash flow information | Six months ended June 30, 2020 Six months ended June 30, 2019 Lease Cost Operating lease cost (included in general and administration in the Company’s unaudited condensed statement of operations) $ 28,092 $ 27,727 Other Information Cash paid for amounts included in the measurement of lease liabilities for the six months ended June 30, 2020 $ 27,118 $ 26,457 Weighted average remaining lease term – operating leases (in years) 3.6 4.6 Average discount rate – operating leases 10.0 % 10.0 % |
Schedule of supplemental balance sheet information | At June 30, 2020 Operating leases Long-term right-of-use assets $ 181,755 Short-term operating lease liabilities $ 48,724 Long-term operating lease liabilities 137,275 Total operating lease liabilities $ 185,999 |
Schedule of maturities | Year Ending Operating Leases 2020 (remaining 6 months) $ 27,251 2021 56,000 2022 57,680 2023 59,410 2024 4,963 Total lease payments 205,304 Less: Imputed interest/present value discount (19,305 ) Present value of lease liabilities $ 185,999 |
Stockholders Deficit (Tables)
Stockholders Deficit (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Stockholders' Deficit | |
Schedule of stock warrants activity | Number of Warrant Shares Exercise Price Range Per Share Weighted Average Exercise Price Balance, January 1, 2020 100,575 $ 0.75-2.90 $ 1.1185 Granted 50,000 0.75 0.75 Canceled/Expired - - - Exercised - - - Balance outstanding, June 30, 2020 150,575 $ 0.75-2.90 $ 0.996 Balance exercisable, June 30, 2020 150,575 $ 0.75-2.90 $ 0.996 |
Schedule of warrants outstanding and exercisable | Warrants Outstanding and Exercisable Range of Exercise Prices Number Outstanding Average Remaining Contractual Life (in years) Weighted Average Exercise Price $ 0.75 133,333 5.00 $ 0.75 $ 2.90 17,242 5.00 $ 2.90 $ 0.75 - $2.90 150,575 5.00 $ 0.996 |
StockBased Compensation (Tables
StockBased Compensation (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
StockBased Compensation (Tables) | |
Schedule of stock options plan | Number of Options Shares Exercise Price Range Per Share Weighted Average Exercise Price Balance, January 1, 2020 633,000 $ 2.05-3.125 $ 2.93 Granted - - - Exercised - - - Expired - - - Balance outstanding, June 30, 2020 633,000 $ 2.05-3.125 $ 2.93 Balance exercisable, June 30, 2020 633,000 $ 2.05-3.125 $ 2.93 |
Schedule 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 $ 2.85 126,001 10.00 $ 2.85 126,001 10.00 $ 2.85 $ 2.05 115,000 10.00 $ 2.05 66,612 10.00 $ 2.05 $ 3.125 392,000 10.00 $ 3.125 392,000 10.00 $ 3.125 $ 0.0041 - 975,000,000 633,001 10.00 $ 2.93 584,613 10.00 $ 2.93 |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Organization and Summary of Significant Accounting Policies | ||||
Software | $ 49,093 | $ 264,577 | $ 107,567 | $ 390,791 |
Service | 1,791 | 43,162 | 3,277 | 48,635 |
Total revenue | $ 50,884 | $ 307,739 | $ 110,844 | $ 439,426 |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies (Details 1) - shares | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Organization and Summary of Significant Accounting Policies | ||
Options to purchase common stock | 633,001 | 519,000 |
Warrants to purchase common stock | 150,575 | |
Convertible notes | 8,031,979 | 355,709 |
Convertible Series B Preferred stock | 387,984 | 33,651 |
Total | 9,203,538 | 908,360 |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | |
Loss on extinguishment of debt | $ 64,268 | $ (271,356) | $ (22,301) | $ (700,993) | ||||
Net loss | (1,165,168) | (1,182,985) | (2,069,910) | (2,497,560) | ||||
Net cash used in operating activities | (790,102) | (681,790) | ||||||
Cash | 122,068 | 89,870 | 122,068 | 89,870 | $ 74,648 | $ 86,160 | ||
Total Stockholders' Deficit | (15,644,443) | (15,272,797) | (15,644,443) | (15,272,797) | $ (15,285,198) | (15,464,183) | $ (14,536,293) | $ (13,802,504) |
Derivative liabilities | 984,000 | 984,000 | $ 1,516,435 | |||||
Notes payable aggregate amount | 3,623,638 | 3,623,638 | ||||||
FDIC insured limit | $ 250,000 | $ 250,000 | ||||||
Noncontrolling interests percentage | 51.00% | 51.00% | ||||||
Extinguishment of related derivatives | $ 335,624 | $ 678,692 | ||||||
BST [Member] | ||||||||
Ownership interest held by three executive officers | 31.00% | 31.00% | ||||||
Ownership interest held by company | 49.00% | 49.00% | ||||||
Ownership interest held by company and officers | 80.00% | 80.00% | ||||||
One customer [Member] | ||||||||
Percentage of sales revenues | 71.00% | 64.00% | ||||||
Percentage of accounts receivable | 49.00% | |||||||
Two customer [Member] | ||||||||
Percentage of sales revenues | 14.00% | 19.00% | ||||||
Percentage of accounts receivable | 32.00% | |||||||
Three customer [Member] | ||||||||
Percentage of sales revenues | 11.00% | |||||||
Subsequent Event [Member] | ||||||||
Proceeds from unsecured convertible promissory notes | $ 159,500 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 | ||
Secured | ||||
(a) DART/Citco Global, in default | $ 542,588 | [1] | $ 542,588 | [2] |
Unsecured | ||||
(b) Convertible notes with fixed conversion features, in default | 895,512 | [3] | 895,512 | [4] |
(c) Convertible notes with adjustable conversion prices ($43,000 in default at June 30, 2020) | 642,640 | [5] | 845,000 | [6] |
Total convertible notes principal outstanding | 2,080,740 | 2,283,100 | ||
Debt discount | (341,321) | (422,705) | ||
Convertible notes, net of discount | $ 1,739,419 | $ 1,860,395 | ||
[1] | At December 31, 2019 and June 30, 2020, convertible notes payables due to DART/Citco Global totaled $542,588. The notes are secured by all of the Company's assets, were due in 2010, and are currently in default. Beginning in 2009, the note holder agreed to the forbearance of any interest on the notes payable to DART/Citco Global. The DART/Citco Global note payables are convertible into less than one share of the Company's common stock based on a fixed conversion price adjusted for applicable reverse stock splits. | |||
[2] | At December 31, 2019 and June 30, 2020, convertible notes payables due to DART/Citco Global totaled $542,588. The notes are secured by all of the Company's assets, were due in 2010, and are currently in default. Beginning in 2009, the note holder agreed to the forbearance of any interest on the notes payable to DART/Citco Global. The DART/Citco Global note payables are convertible into less than one share of the Company's common stock based on a fixed conversion price adjusted for applicable reverse stock splits. | |||
[3] | At December 31, 2019 and June 30, 2020, convertible notes payable with fixed conversion prices totaled $895,512. The notes are unsecured, bear interest at 8% to 18% per annum, were due on various dates from March 2008 to March 2015, and are currently in default. The aggregate notes are convertible into less than one share of the Company's common stock based on fixed conversion prices adjusted for applicable reverse stock splits. At December 31, 2019, the balance of the accrued interest on the fixed convertible notes was $1,154,095. During the six months ended June 30, 2020, interest of $37,463 was accrued. At June 30, 2020, the balance of accrued interest on the fixed convertible notes was $1,191,558. | |||
[4] | At December 31, 2019 and June 30, 2020, convertible notes payable with fixed conversion prices totaled $895,512. The notes are unsecured, bear interest at 8% to 18% per annum, were due on various dates from March 2008 to March 2015, and are currently in default. The aggregate notes are convertible into less than one share of the Company's common stock based on fixed conversion prices adjusted for applicable reverse stock splits. At December 31, 2019, the balance of the accrued interest on the fixed convertible notes was $1,154,095. During the six months ended June 30, 2020, interest of $37,463 was accrued. At June 30, 2020, the balance of accrued interest on the fixed convertible notes was $1,191,558. | |||
[5] | At December 31, 2019, there were $845,000 of convertible notes with adjustable conversion prices outstanding. During the six months ended June 30, 2020, convertible notes for $471,000 were issued, a convertible note for $43,000 was repaid, and convertible notes for $630,360 were converted into shares of the Company's common stock (see discussions below). At June 30, 2020, the balance of the convertible notes with adjustable conversion prices was $642,640. | |||
[6] | At December 31, 2019, there were $845,000 of convertible notes with adjustable conversion prices outstanding. During the six months ended June 30, 2020, convertible notes for $471,000 were issued, a convertible note for $43,000 was repaid, and convertible notes for $630,360 were converted into shares of the Company's common stock (see discussions below). At June 30, 2020, the balance of the convertible notes with adjustable conversion prices was $642,640. |
Convertible Notes Payable (De_2
Convertible Notes Payable (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Unamortized debt discount | $ 341,321 | $ 341,321 | $ 422,705 | ||
Debt discount amortization | (188,112) | $ (295,699) | (407,962) | $ (595,165) | |
Removed debt discount | 144,422 | ||||
Debt instrument converet amount, principal | 535,000 | ||||
Proceeds from convertible notes payable | 43,000 | 0 | |||
Private placement costs | $ 0 | $ (145,511) | (103,500) | $ (342,558) | |
Fair value of the warrants | 175,575 | ||||
Six Convertible Notes Payable [Member] | |||||
Debt discount amortization | 431,500 | ||||
Proceeds from convertible notes payable | $ 471,000 | ||||
Maturity date description | maturing between October 2020 and March 2021 | ||||
Initial fair value of the embedded conversion feature | $ 535,000 | ||||
Private placement costs | $ 103,500 | ||||
Warrants issued to purchase common shares | 50,000 | ||||
Fair value of the warrants | $ 37,500 | ||||
Minimum [Member] | |||||
Conversion price | $ 0.06 | $ 0.06 | |||
Closing price | $ 0.15 | $ 0.15 | |||
Minimum [Member] | Six Convertible Notes Payable [Member] | |||||
Interest rate | 8.00% | 8.00% | |||
Conversion discount rate | 58.00% | ||||
Maximum [Member] | |||||
Conversion price | $ 0.95 | $ 0.95 | |||
Closing price | $ 1.65 | $ 1.65 | |||
Maximum [Member] | Six Convertible Notes Payable [Member] | |||||
Interest rate | 10.00% | 10.00% | |||
Conversion discount rate | 62.00% | ||||
lender [Member] | |||||
Debt instrument converet amount, principal | $ 630,360 | ||||
Debt instrument converet amount, interest | 53,650 | ||||
Debt instrument converet amount, total | $ 684,010 | ||||
Debt instrument converet amount, shares issued | 2,914,883 | ||||
Fair value of shares | $ 1,517,702 | ||||
Unamortized debt discount | (144,422) | ||||
Debt and accrued interest | 684,010 | ||||
Debt and conversion feature liability | $ 1,392,589 | 1,392,589 | |||
Derivative liability related to conversion of common stock | 853,000 | ||||
Loss on extinguishment of debt | $ 125,114 |
Convertible Notes Payable Rel_2
Convertible Notes Payable Related Parties (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Convertible notes payable related party | $ 298,000 | $ 355,500 | ||
Accrued interest | 591,334 | $ 636,272 | ||
Interest expense | 18,595 | |||
Extinguished of debt | $ 335,624 | $ 678,692 | ||
Company's VP of Technology [Member] | ||||
Accrued interest | 82,212 | |||
Extinguished of debt | 57,500 | |||
Spouse of Company's Chief Technology Officer [Member] | Four Notes [Member] | ||||
Convertible notes | $ 30,000 | |||
Interest rate, description | Compounded interest rate of 8% per annum | |||
Chief Executive Officer [Member] | Six Notes [Member] | ||||
Interest rate, description | Compounded interest rate of 8% per annum | |||
Covertible notes | $ 268,000 | |||
Convertible Notes Payable [Member] | ||||
Accrued interest | $ 37,274 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 | ||
Unsecured notes payable-in default | ||||
(a) Notes payable-in default | $ 1,638,824 | [1] | $ 1,638,824 | [2] |
(b) Notes payable issued by BST-in default | 475,000 | [3] | 475,500 | [4] |
(c) Note payable-PPP loan | 313,212 | [5] | 0 | [6] |
(d) Note payable-EID loan | 150,000 | [7] | 0 | [8] |
Secured notes payable | ||||
(e) Notes payable ($28,714 in default at June 30, 2020) | 186,860 | [9] | 271,550 | [10] |
Total notes payable principal outstanding | 2,763,896 | 2,385,374 | ||
Less current portion of notes payable | (2,365,684) | (2,237,484) | ||
Long term notes payable | $ 398,212 | $ 147,890 | ||
[1] | (a) At December 31, 2019 and June 30, 2020, notes payable totaled $1,638,824. The notes bear interest at 8% to 14% per annum, are unsecured, and were due on various dates from December 2011 to July 2017 and are currently in default. At December 31, 2019, the balance of the accrued interest on the notes payable was $2,183,352. During the six months ended June 30, 2020, $83,798 of interest was accrued. At June 30, 2020, accrued interest on the promissory notes payable was $2,267,151. | |||
[2] | (a) At December 31, 2019 and June 30, 2020, notes payable totaled $1,638,824. The notes bear interest at 8% to 14% per annum, are unsecured, and were due on various dates from December 2011 to July 2017 and are currently in default. At December 31, 2019, the balance of the accrued interest on the notes payable was $2,183,352. During the six months ended June 30, 2020, $83,798 of interest was accrued. At June 30, 2020, accrued interest on the promissory notes payable was $2,267,151. | |||
[3] | (b) At December 31, 2019 and June 30, 2020, the Company's consolidated subsidiary BST (see Note 1) had $475,500 of outstanding promissory notes. The notes bear interest at 8% per annum, are unsecured, matured through September 2019, and are currently in default. In conjunction with these notes, the Company recorded a related financing obligation (See Note 6). At December 31, 2019, the balance of the accrued interest on the notes payable-BST was $70,545. During the six months ended June 30, 2020, $18,948 of interest was accrued. At June 30, 2020, accrued interest on the notes payable-BST was $89,493. | |||
[4] | (b) At December 31, 2019 and June 30, 2020, the Company's consolidated subsidiary BST (see Note 1) had $475,500 of outstanding promissory notes. The notes bear interest at 8% per annum, are unsecured, matured through September 2019, and are currently in default. In conjunction with these notes, the Company recorded a related financing obligation (See Note 6). At December 31, 2019, the balance of the accrued interest on the notes payable-BST was $70,545. During the six months ended June 30, 2020, $18,948 of interest was accrued. At June 30, 2020, accrued interest on the notes payable-BST was $89,493. | |||
[5] | (c) On April 7, 2020, the Company was granted a loan (the "PPP loan") from Chase Bank in the aggregate amount of $313,212, pursuant to the Paycheck Protection Program (the "PPP") under the CARES Act. The PPP loan agreement is dated April 7, 2020, matures on April 7, 2022, bears interest at a rate of 1% per annum, with the first six months of interest deferred, is payable monthly commencing on October 2020, and is unsecured and guaranteed by the U.S. Small Business Administration ("SBA"). The loan term may be extended to April 7, 2025, if mutually agreed to by the Company and lender. The Company applied ASC 470, Debt, to account for the PPP loan. The PPP loan may be prepaid at any time prior to maturity with no prepayment penalties. Funds from the PPP loan may only be used for qualifying expenses as described in the CARES Act, including qualifying payroll costs, qualifying group health care benefits, qualifying rent and debt obligations, and qualifying utilities. The Company intends to use the entire loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for qualifying expenses. The Company intends to apply for forgiveness of the PPP loan with respect to these qualifying expenses, however, the Company cannot assure that such forgiveness of any portion of the PPP loan will occur. As for the potential loan forgiveness, once the PPP loan is, in part or wholly, forgiven and a legal release is received, the liability would be reduced by the amount forgiven and a gain on extinguishment would be recorded. The terms of the PPP loan provide for customary events of default including, among other things, payment defaults, breach of representations and warranties, and insolvency events. The Company was in compliance with the terms of the PPP loan as of June 30, 2020. | |||
[6] | (c) On April 7, 2020, the Company was granted a loan (the "PPP loan") from Chase Bank in the aggregate amount of $313,212, pursuant to the Paycheck Protection Program (the "PPP") under the CARES Act. The PPP loan agreement is dated April 7, 2020, matures on April 7, 2022, bears interest at a rate of 1% per annum, with the first six months of interest deferred, is payable monthly commencing on October 2020, and is unsecured and guaranteed by the U.S. Small Business Administration ("SBA"). The loan term may be extended to April 7, 2025, if mutually agreed to by the Company and lender. The Company applied ASC 470, Debt, to account for the PPP loan. The PPP loan may be prepaid at any time prior to maturity with no prepayment penalties. Funds from the PPP loan may only be used for qualifying expenses as described in the CARES Act, including qualifying payroll costs, qualifying group health care benefits, qualifying rent and debt obligations, and qualifying utilities. The Company intends to use the entire loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for qualifying expenses. The Company intends to apply for forgiveness of the PPP loan with respect to these qualifying expenses, however, the Company cannot assure that such forgiveness of any portion of the PPP loan will occur. As for the potential loan forgiveness, once the PPP loan is, in part or wholly, forgiven and a legal release is received, the liability would be reduced by the amount forgiven and a gain on extinguishment would be recorded. The terms of the PPP loan provide for customary events of default including, among other things, payment defaults, breach of representations and warranties, and insolvency events. The Company was in compliance with the terms of the PPP loan as of June 30, 2020. | |||
[7] | (d) On May 15, 2020, the Company received a $150,000 loan (the "EID Loan") from the SBA under the SBA's Economic Injury Disaster Loan program. The EID Loan has a thirty-year term and bears interest at a rate of 3.75% per annum. Monthly principal and interest payments of $0.7 per month are deferred for twelve months and commence in May 2021. The EID Loan may be prepaid at any time prior to maturity with no prepayment penalties. The proceeds from the EID Loan must be used for working capital. The EID Loan contains customary events of default and other provisions customary for a loan of this type. The Company was in compliance with the terms of the EID loan as of June 30, 2020. | |||
[8] | (b) On May 15, 2020, the Company received a $150,000 loan (the "EID Loan") from the SBA under the SBA's Economic Injury Disaster Loan program. The EID Loan has a thirty-year term and bears interest at a rate of 3.75% per annum. Monthly principal and interest payments of $0.7 per month are deferred for twelve months and commence in May 2021. The EID Loan may be prepaid at any time prior to maturity with no prepayment penalties. The proceeds from the EID Loan must be used for working capital. The EID Loan contains customary events of default and other provisions customary for a loan of this type. The Company was in compliance with the terms of the EID loan as of June 30, 2020. | |||
[9] | (e) At December 31, 2019, secured notes payable totaled $271,550. During the six months ended June 30, 2020, the Company issued two notes payable aggregating $158,408, of which $79,949 was received through June 30, 2020. In addition, during the six months ended June 30, 2020, the Company made principal payments of $146,639 on the secured notes payable, and one secured note aggregating $21,000 was extinguished as part of a debt settlement obligation transaction (see Note 8). At June 30, 2020, the outstanding balance of the secured note payables was $186,860. The notes bear interest at 8% to 148% per annum, each agreement is secured by substantially all of the assets of the Company, and the notes mature through April 2021. During the six months ended June 30, 2020, $64,247 of interest was accrued, $40,850 of interest was paid on the secured note payables and $8,400 was extinguished as part of a debt settlement obligation transaction (see Note 8). Two notes for $28,714 were due in April 2020 and were not repaid in full when due. The Company and the note holders are in negotiations to extend the due dates of the loans. | |||
[10] | (e) At December 31, 2019, secured notes payable totaled $271,550. During the six months ended June 30, 2020, the Company issued two notes payable aggregating $158,408, of which $79,949 was received through June 30, 2020. In addition, during the six months ended June 30, 2020, the Company made principal payments of $146,639 on the secured notes payable, and one secured note aggregating $21,000 was extinguished as part of a debt settlement obligation transaction (see Note 8). At June 30, 2020, the outstanding balance of the secured note payables was $186,860. The notes bear interest at 8% to 148% per annum, each agreement is secured by substantially all of the assets of the Company, and the notes mature through April 2021. During the six months ended June 30, 2020, $64,247 of interest was accrued, $40,850 of interest was paid on the secured note payables and $8,400 was extinguished as part of a debt settlement obligation transaction (see Note 8). Two notes for $28,714 were due in April 2020 and were not repaid in full when due. The Company and the note holders are in negotiations to extend the due dates of the loans. |
Notes Payable - Related Parti_2
Notes Payable - Related Parties (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Accrued interest | $ 27,963 | |
19 unsecured notes payable related parties [Member] | Maximum [Member] | ||
Interest rate | 10.00% | |
19 unsecured notes payable related parties [Member] | Minimum [Member] | ||
Interest rate | 8.00% | |
18 unsecured notes payable related parties [Member] | Chief Executive Officer [Member] | ||
Extended due date | Dec. 31, 2020 | |
Notes payable | $ 752,513 | $ 742,513 |
Accrued interest | 787,987 | $ 760,024 |
Notes payable issued to related party | $ 10,000 |
Financing Obligation (Details N
Financing Obligation (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Financing obligation | $ 1,263,200 | $ 1,263,200 |
Litigation funding agreement [Member] | Therium Inc. and VGL Capital, LLC [Member] | ||
Financing obligation description | At March 31, 2020, as the tokens do not exist, and any amounts received for tokens are not considered equity or revenue, management determined that 100% of the obligation of $1,263,200 is a liability to be settled by BlockSafe, through the issuance of tokens, or through other means if tokens are never issued. | |
Promissory note - various parties [Member] | Related Party [Member] | ||
Financing obligation | $ 1,263,000 |
Contingent Payment Obligation (
Contingent Payment Obligation (Details Narrative) - USD ($) | Sep. 06, 2017 | Jun. 30, 2020 | Dec. 31, 2019 |
Funds received from Funders | $ 1,500,000 | $ 1,500,000 | |
Litigation funding agreement [Member] | Therium Inc. and VGL Capital, LLC [Member] | |||
Funds received from Funders | $ 1,500,000 | ||
Gross proceeds | $ 1,500,000 | ||
Contingent obligation, description | 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 $7,500,000, and 2.5% of any claim proceeds thereafter. The Funders shall be paid only in the event that the Company achieves recoveries of claim proceeds. |
Debt Settlement Obligation (Det
Debt Settlement Obligation (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Convertible note, accrued interest, and accounts payable assumed by debt settlement obligation | $ 197,738 | $ 0 | |||
Settlement obligation | $ 288,000 | 288,000 | $ 0 | ||
loss on extinguishment of debt | (252,524) | $ 64,268 | (287,376) | $ (22,301) | |
May 13, 2020 [Member] | Continuation Capital, Inc [Member] | |||||
Convertible note, accrued interest, and accounts payable assumed by debt settlement obligation | $ 197,738 | ||||
Shars issuable price description | The shares to be issued will be determined at a discount based on 45% of the lowest closing price of the Company common stock for the 30 trading days prior to the date of any issuance for payment. | ||||
Fair value of the settlement obligation | $ 360,000 | ||||
Common stock shares issued during the period for settelement | 444,459 | ||||
Proceeds from issuance of common stock | $ 72,000 | ||||
Settlement obligation | $ 288,000 | 288,000 | |||
loss on extinguishment of debt | 162,262 | ||||
Fair value of shares issued | 98,000 | ||||
Fair value of shares issued for interest expense | $ 26,000 | ||||
Common stock shares issued for fee | 90,909 | ||||
Common stock shares issued fee, value | $ 18,182 | ||||
May 13, 2020 [Member] | Continuation Capital, Inc [Member] | Convertible Debt [Member] | |||||
Convertible note, accrued interest, and accounts payable assumed by debt settlement obligation | 139,712 | ||||
May 13, 2020 [Member] | Continuation Capital, Inc [Member] | Secured notes payable [Member] | |||||
Convertible note, accrued interest, and accounts payable assumed by debt settlement obligation | 29,400 | ||||
Accounts Payable [Member] | May 13, 2020 [Member] | Continuation Capital, Inc [Member] | |||||
Convertible note, accrued interest, and accounts payable assumed by debt settlement obligation | $ 28,626 |
Derivative Financial Instrume_3
Derivative Financial Instruments (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Conversion feature: | ||
Risk-free interest rate | 0.16% | 1.59% |
Expected life (in years) | 1 year | |
Expected volatility | 166.00% | |
Fair Value: | ||
Conversion feature | $ 984,000 | $ 1,516,435 |
Conversion Feature [Member] | Minimum [Member] | ||
Conversion feature: | ||
Expected life (in years) | 2 months 30 days | |
Expected volatility | 145.00% | |
Conversion Feature [Member] | Maximum [Member] | ||
Conversion feature: | ||
Expected life (in years) | 1 year | |
Expected volatility | 155.00% | |
Dates of Inception [Member] | ||
Conversion feature: | ||
Expected life (in years) | 1 year | |
Fair Value: | ||
Conversion feature | $ 535,000 | |
Dates of Inception [Member] | Minimum [Member] | ||
Conversion feature: | ||
Risk-free interest rate | 0.11% | |
Expected volatility | 152.00% | |
Dates of Inception [Member] | Maximum [Member] | ||
Conversion feature: | ||
Risk-free interest rate | 0.17% | |
Expected volatility | 166.00% |
Derivative Financial Instrume_4
Derivative Financial Instruments (Details 1) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Debt Settlement Obligation (Details Narrative) | ||
Fair value at beginning of period | $ 1,516,435 | $ 1,313,904 |
Recognition of derivative liabilities upon initial valuation | 535,000 | 920,558 |
Extinguishment of derivative liabilities | (855,000) | (678,692) |
Net change in the fair value of derivative liabilities | (212,435) | 681,710 |
Fair value at end of period | $ 984,000 | $ 2,237,480 |
Derivative Financial Instrume_5
Derivative Financial Instruments (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Debt Settlement Obligation (Details Narrative) | ||
Common stock price per share discounts ranging description | The Company had convertible promissory notes outstanding that are convertible into shares of common stock of the Company at the option of the holders at price per share discounts ranging from 20% to 62% of the Company’s common stock market price, as defined in the note agreements. | |
Change in fair value of derivative liabilities | $ 199,435 | |
Derivative liabilities | 984,000 | $ 1,516,435 |
Conversion features | 535,000 | |
Fair value of derivatives | $ 212,435 |
Operating Lease (Details)
Operating Lease (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Lease Cost | ||
Operating lease cost (included in general and administration in the Company's unaudited condensed statement of operations) | $ 28,092 | $ 27,727 |
Other Information | ||
Cash paid for amounts included in the measurement of lease liabilities for the six months ended June 30, 2020 | $ 27,118 | $ 26,457 |
Weighted average remaining lease term - operating leases (in years) | 3 years 7 months 6 days | 4 years 7 months 6 days |
Average discount rate - operating leases | 10.00% | 10.00% |
Operating Lease (Details 1)
Operating Lease (Details 1) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Operating leases | ||
Long-term right-of-use assets | $ 181,755 | $ 205,970 |
Short-term operating lease liabilities | 48,724 | |
Long-term operating lease liabilities | 137,275 | |
Total operating lease liabilities | $ 185,999 |
Operating Lease (Details 2)
Operating Lease (Details 2) | Jun. 30, 2020USD ($) |
Operating Lease (Details) | |
2020 (remaining 6 months) | $ 27,251 |
2021 | 56,000 |
2022 | 57,680 |
2023 | 59,410 |
2024 | 4,963 |
Total lease payments | 205,304 |
Less: Imputed interest/present value discount | (19,305) |
Present value of lease liabilities | $ 185,999 |
Operating Lease (Details Narrat
Operating Lease (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Operating Lease (Details) | ||
Operating lease payments, monthly | $ 4,409 | |
Operating lease term | 3 years 6 months 29 days | |
Lease expenses | $ 28,092 | $ 27,727 |
Operating lease description | Payments increasing 3% each year, and ending on January 31, 2024. |
Stockholders' Deficit (Details)
Stockholders' Deficit (Details) | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Number of Warrant Shares | |
Number of warrants Beginning balance | shares | 100,575 |
Number of warrants Granted | shares | 50,000 |
Number of warrants Canceled/Expired | shares | 0 |
Number of warrants Exercised | shares | 0 |
Number of warrants Outstsnding Ending | shares | 150,575 |
Number of warrants exercisable Ending | shares | 150,575 |
Exercise Price Range Per Share | |
Exercise Price Range Per Share Granted | $ 0.75 |
Exercise Price Range Per Share Canceled/Expired | 0 |
Exercise Price Range Per Share Exercised | 0 |
Weighted Average Exercise Price | |
Weighted Average Exercise Price Beginning Balance | 1.1185 |
Weighted Average Exercise Price Granted | 0.75 |
Weighted Average Exercise Price Canceled/Expired | 0 |
Weighted Average Exercise Price Exercised | 0 |
Weighted Average Exercise Price Outstanding Ending Balacce | 0.996 |
Weighted Average Exercise Price Exercisable Ending Balacce | 0.996 |
Minimum [Member] | |
Weighted Average Exercise Price | |
Exercise Price Range Per Share Outstanding Ending | 0.75 |
Exercise Price Range Per Share Exercisable Ending balance | 0.75 |
Exercise Price Range Per Share Beginning balance | 0.75 |
Maximum [Member] | |
Weighted Average Exercise Price | |
Exercise Price Range Per Share Outstanding Ending | 2.90 |
Exercise Price Range Per Share Exercisable Ending balance | 2.90 |
Exercise Price Range Per Share Beginning balance | $ 2.90 |
Stockholders' Deficit (Details
Stockholders' Deficit (Details 1) | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Warrant [Member] | |
Warrants Outstanding and Exercisable | |
Range of Exercise Prices | $ 0.75 |
Number Outstanding | shares | 133,333 |
Average Remaining Contractual Life (in years) | 5 years |
Weighted Average Exercise Price | $ 0.75 |
Warrant One [Member] | |
Warrants Outstanding and Exercisable | |
Range of Exercise Prices | $ 2.90 |
Number Outstanding | shares | 17,242 |
Average Remaining Contractual Life (in years) | 5 years |
Weighted Average Exercise Price | $ 2.90 |
Warrant Two [Member] | |
Warrants Outstanding and Exercisable | |
Number Outstanding | shares | 150,575 |
Average Remaining Contractual Life (in years) | 5 years |
Weighted Average Exercise Price | $ 0.996 |
Warrant Two [Member] | Minimum [Member] | |
Warrants Outstanding and Exercisable | |
Range of Exercise Prices | 0.75 |
Warrant Two [Member] | Maximum [Member] | |
Warrants Outstanding and Exercisable | |
Range of Exercise Prices | $ 2.90 |
Stockholders' Deficit (Detail_2
Stockholders' Deficit (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Fair value of common stock issued for services, Value | $ 20,022 | |||
Fair value of common stock issued for services, Shares | 98,880 | |||
Intrinsic value of warrants | $ 175,575 | |||
Warrants issued with convertible notes | $ 0 | 37,500 | $ 0 | |
Debt conversion converted/convertible amount, principal | $ 535,000 | |||
Common Stock, shares issued | 9,363,610 | 9,363,610 | 5,905,388 | |
Convertible Notes Payable [Member] | ||||
Fair value of common stock issued for services, Value | $ 1,517,702 | |||
Debt conversion converted/convertible amount, principal | 630,360 | |||
Debt conversion converted amount, accrued interest | $ 54,650 | |||
Common Stock, shares issued | 3,458,678 | 3,458,678 | ||
Debt conversion converted instrument shares issued | 2,914,883 | |||
Convertible Notes Payable One [Member] | ||||
Fair value of convertible note issued | $ 75,000 | |||
Warrants issued to buy back common shares | 50,000 | |||
Exercise price | $ 0.75 | $ 0.75 | ||
Maturity date | 5 years | |||
Warrants issued with convertible notes | $ 37,500 | |||
Minimum [Member] | ||||
Conversion price | 0.06 | $ 0.06 | ||
Minimum [Member] | Convertible Promissory Note [Member] | ||||
Conversion price | 0.06 | 0.06 | ||
Maximum [Member] | ||||
Conversion price | 0.95 | 0.95 | ||
Maximum [Member] | Convertible Promissory Note [Member] | ||||
Conversion price | 0.95 | $ 0.95 | ||
Funder [Member] | ||||
Common stock shares issued for settlement liability | 444,459 | |||
Settlement liability converted amount | $ 72,000 | |||
Fair value of shares issued | $ 98,000 | |||
Funder [Member] | Minimum [Member] | ||||
Conversion price | 0.0825 | $ 0.0825 | ||
Funder [Member] | Maximum [Member] | ||||
Conversion price | $ 0.11 | $ 0.11 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Exercise Price Range Per Share granted | $ 0.75 |
Weighted Average Exercise Price beginning balance | 1.1185 |
Weighted Average Exercise Price granted | 0.75 |
Weighted Average Exercise Price exercised | 0 |
Minimum [Member] | |
Exercise Price Range Per Share beginning balance | 0.75 |
Maximum [Member] | |
Exercise Price Range Per Share beginning balance | $ 2.90 |
Stock Options [Member] | |
Number of Options Shares beginning balance | shares | 633,000 |
Number of Options Shares granted | shares | 0 |
Number of Options Shares exercised | shares | 0 |
Number of Options Shares expired | shares | 0 |
Number of Options Shares ending balance | shares | 633,000 |
Number of Options Shares ending exercisable | shares | 633,000 |
Exercise Price Range Per Share granted | $ 0 |
Exercise Price Range Per Share expired | 0 |
Weighted Average Exercise Price beginning balance | 2.93 |
Weighted Average Exercise Price granted | 0 |
Weighted Average Exercise Price exercised | 0 |
Weighted Average Exercise Price expired | 0 |
Weighted Average Exercise Price ending balance | 2.93 |
Weighted Average Exercise Price ending exercisable | 2.93 |
Stock Options [Member] | Minimum [Member] | |
Exercise Price Range Per Share beginning balance | 2.05 |
Exercise Price Range Per Share ending balance | 2.05 |
Exercise Price Range Per Share ending exercisable balance | 2.05 |
Stock Options [Member] | Maximum [Member] | |
Exercise Price Range Per Share beginning balance | 3.125 |
Exercise Price Range Per Share ending balance | 3.125 |
Exercise Price Range Per Share ending exercisable balance | $ 3.125 |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details 1) | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Number of warrants outstanding | shares | 633,000 |
Weighted average remaining contractual life (years) | 10 years |
Weighted average exercise price | $ 2.93 |
Number of warrants exercisable | shares | 633,000 |
Weighted average remaining contractual life (years) | 10 years |
Weighted average exercise price | $ 2.93 |
Stock Options [Member] | |
Weighted average remaining contractual life (years) | 8 years |
Stock Options [Member] | Exercise Prices One [Member] | |
Number of warrants outstanding | shares | 126,000 |
Weighted average remaining contractual life (years) | 10 years |
Weighted average exercise price | $ 2.85 |
Number of warrants exercisable | shares | 126,000 |
Weighted average remaining contractual life (years) | 10 years |
Weighted average exercise price | $ 2.85 |
Stock Options [Member] | Exercise Prices Two [Member] | |
Number of warrants outstanding | shares | 115,000 |
Weighted average remaining contractual life (years) | 10 years |
Weighted average exercise price | $ 2.05 |
Number of warrants exercisable | shares | 115,000 |
Weighted average remaining contractual life (years) | 10 years |
Weighted average exercise price | $ 2.05 |
Stock Options [Member] | Exercise Prices Three [Member] | |
Number of warrants outstanding | shares | 392,000 |
Weighted average remaining contractual life (years) | 10 years |
Weighted average exercise price | $ 3.125 |
Number of warrants exercisable | shares | 392,000 |
Weighted average remaining contractual life (years) | 10 years |
Weighted average exercise price | $ 3.125 |
Stock Options [Member] | Minimum [Member] | |
Weighted average exercise price | 0.0041 |
Stock Options [Member] | Maximum [Member] | |
Weighted average exercise price | $ 975,000,000 |
Stock-Based Compensation (Det_3
Stock-Based Compensation (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Share based compensation | $ 102,054 | $ 961 | $ 216,426 | $ 1,912 |
Options outstanding, estimated life | 10 years | |||
Stock Options [Member] | ||||
Share based compensation | $ 216,426 | $ 1,912 | ||
Options outstanding, estimated life | 8 years | |||
Options exercisable | 633,000 | |||
Unamortized compensation costs | $ 102,000 | |||
Total fair value | $ 475,000 | |||
Maximum [Member] | ||||
Exercise Price Range | $ 3.10 | |||
Minimum [Member] | ||||
Exercise Price Range | $ 2.05 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Aug. 24, 2015 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue | $ 50,884 | $ 307,739 | $ 110,844 | $ 439,426 | |
Cyber Safety, Inc [Member] | |||||
Patent expiry year | Sept. 30, 2021 | Sept. 30, 2022 | |||
Option to buy patent price | $ 10,000,000 | $ 11,000,000 | |||
Revenue | $ 0 | $ 280,000 | |||
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% |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended |
Jul. 31, 2020 | Jun. 30, 2020 | |
Debt conversion converted/convertible amount, principal | $ 535,000 | |
Maximum [Member] | ||
Conversion price | $ 0.95 | |
Maximum [Member] | Convertible Note [Member] | ||
Conversion price | 0.95 | |
Minimum [Member] | ||
Conversion price | 0.06 | |
Minimum [Member] | Convertible Note [Member] | ||
Conversion price | $ 0.06 | |
Subsequent Event [Member] | ||
Unsecured convertible promissory notes | $ 159,500 | |
Common stock shares issued for debt settlement obligation | 2,680,000 | |
Common stock shares issued for debt settlement obligation, amount | $ 250,000 | |
Debt settlement obligation amount | $ 137,000 | |
Interest rate | 8.00% | |
Maturity date description | maturing in twelve months through July 2021 | |
Convertible note | $ 25,000 | |
Wasrrants issued to purchase common shares | 588,235 | |
Warrant exercise price | $ 0.085 | |
Warrants term | 5 years | |
Subsequent Event [Member] | Convertible Note [Member] | ||
Debt conversion converted/convertible amount, principal | $ 132,901 | |
Debt conversion converted/covertible amount, accrued interest | $ 7,618 | |
Debt conversion converted instrument, shares issued | 3,841,085 | |
Subsequent Event [Member] | Maximum [Member] | ||
Conversion price discount rate | 70.00% | |
Subsequent Event [Member] | Maximum [Member] | Convertible Note [Member] | ||
Conversion price | $ 0.061938 | |
Subsequent Event [Member] | Minimum [Member] | ||
Conversion price discount rate | 61.00% | |
Subsequent Event [Member] | Minimum [Member] | Convertible Note [Member] | ||
Conversion price | $ 0.0214 |