Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 14, 2019 | |
Details | ||
Registrant Name | BLACKRIDGE TECHNOLOGY INTERNATIONAL, INC. | |
Registrant CIK | 0001456212 | |
SEC Form | 10-Q | |
Period End date | Mar. 31, 2019 | |
Fiscal Year End | --12-31 | |
Trading Symbol | brti | |
Tax Identification Number (TIN) | 201282850 | |
Number of common stock shares outstanding | 96,872,725 | |
Filer Category | Non-accelerated Filer | |
Small Business | true | |
Emerging Growth Company | true | |
Ex Transition Period | false | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Entity Incorporation, State Country Name | Nevada | |
Entity Address, Address Line One | 10615 Professional Circle | |
Entity Address, Address Line Two | Suite 201 | |
Entity Address, City or Town | Reno | |
Entity Address, State or Province | NV | |
Entity Address, Postal Zip Code | 89521 | |
City Area Code | (855) | |
Local Phone Number | 807-8776 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Current Assets | ||
Cash | $ 673,880 | $ 4,693,950 |
Accounts receivable | 220,456 | 102,292 |
Inventory | 66,003 | 56,003 |
Prepaid expenses | 154,038 | 122,713 |
Total Current Assets | 1,114,377 | 4,974,958 |
Property and equipment, net | 152,329 | 78,821 |
Intangible assets, net | 9,422,070 | 8,920,360 |
Total Assets | 10,688,776 | 13,974,139 |
Current Liabilities | ||
Accounts payable and accrued expenses | 2,170,911 | 2,089,322 |
Accounts payable and accrued expenses - related party | 12,992 | 9,690 |
Accrued interest | 1,128,077 | 714,187 |
Accrued interest - related party | 182,354 | 177,419 |
Wages payable | 2,147,281 | 1,928,639 |
Deferred revenue | 6,064 | 3,535 |
Short-term notes payable | 45,232 | 45,232 |
Current portion of long term debt | 266,657 | 366,657 |
Convertible notes, short term, net of discounts | 5,495,881 | 3,248,746 |
Convertible notes, long term, net of discounts, current portion | 55,137 | 39,726 |
Convertible notes, short term - related party | 158,172 | 183,172 |
Total current liabilities | 11,668,758 | 8,806,325 |
Total Liabilities | 11,668,758 | 8,806,325 |
Stockholders' deficit: | ||
Preferred Stock | 3,577 | 3,577 |
Common Stock | 96,873 | 96,873 |
Additional paid-in capital | 72,337,483 | 72,114,707 |
Accumulated deficit | (73,417,915) | (67,047,343) |
Total Stockholders' (Deficit) Equity | (979,982) | 5,167,814 |
Total Liabilities and Stockholders' (Deficit) Equity | $ 10,688,776 | $ 13,974,139 |
Consolidated Balance Sheets - P
Consolidated Balance Sheets - Parenthetical - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
Details | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 3,577,370 | 3,577,370 |
Preferred Stock, Shares Outstanding | 3,577,370 | 3,577,370 |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 200,000,000 | 200,000,000 |
Common Stock, Shares, Issued | 96,872,725 | 96,872,725 |
Common Stock, Shares, Outstanding | 96,872,725 | 96,872,725 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Details | ||
Revenues | $ 123,676 | $ 3,188 |
Cost of Goods Sold | 0 | 50 |
Gross Profit | 123,676 | 3,138 |
Operating expenses: | ||
Engineering | 94,711 | 39,814 |
Sales and marketing | 67,003 | 0 |
General and administrative | 3,643,015 | 3,058,623 |
Total operating expenses | 3,804,729 | 3,098,437 |
Loss From Operations | (3,681,053) | (3,095,299) |
Other Income (Expense) | ||
Interest expense | (2,684,584) | (100,982) |
Interest expense - related party | (4,935) | (38,497) |
Total other income (expense) | (2,689,519) | (139,479) |
Net Loss Before Income Taxes | (6,370,572) | (3,234,778) |
Income Tax | 0 | 0 |
Net Loss | $ (6,370,572) | $ (3,234,778) |
Loss From Continuing Operations per Common Share - Basic and Diluted | $ (0.07) | $ (0.04) |
Basic and diluted weighted-average common shares outstanding | 96,872,725 | 78,092,929 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Deficit - USD ($) | Preferred Stock | Common Stock | Additional Paid-in Capital | Retained Earnings | Total |
Stockholders' Equity Attributable to Parent, Beginning Balance at Dec. 31, 2017 | $ 3,640 | $ 77,063 | $ 51,384,027 | $ (49,896,376) | $ 1,568,354 |
Shares, Outstanding, Beginning Balance at Dec. 31, 2017 | 3,639,783 | 77,063,171 | |||
Preferred stock converted to common stock, value | $ (45) | $ 536 | (491) | 0 | 0 |
Preferred stock converted to common stock, shares | (45,173) | 535,565 | |||
Issuance of stock in conjunction with contracts, value | $ 0 | $ 324 | 123,346 | 0 | 123,670 |
Issuance of stock in conjunction with contracts, shares | 324,166 | ||||
Beneficial conversion feature on convertible debt | 0 | $ 0 | 1,046,982 | 0 | 1,046,982 |
Issuance of warrants in conjunction with debt | 0 | 0 | 1,219,524 | 0 | 1,219,524 |
Share-based Compensation | 0 | 0 | 101,413 | 0 | 101,413 |
Net Income (Loss) | 0 | 0 | 0 | (3,234,778) | (3,234,778) |
Stockholders' Equity Attributable to Parent, Ending Balance at Mar. 31, 2018 | 3,595 | $ 77,923 | 53,874,800 | (53,131,154) | 825,164 |
Shares, Outstanding, Ending Balance at Mar. 31, 2018 | 77,922,902 | ||||
Stockholders' Equity Attributable to Parent, Beginning Balance at Dec. 31, 2018 | $ 3,577 | $ 96,873 | 72,114,707 | (67,047,343) | 5,167,814 |
Shares, Outstanding, Beginning Balance at Dec. 31, 2018 | 3,577,370 | 96,872,725 | |||
Issuance of Options in conjunction with contracts | $ 0 | $ 0 | 3,912 | 0 | 3,912 |
Share-based Compensation | 0 | 0 | 218,855 | 0 | 218,855 |
Net Income (Loss) | 0 | 0 | 0 | (6,370,572) | (6,370,572) |
Stockholders' Equity Attributable to Parent, Ending Balance at Mar. 31, 2019 | $ 3,577 | $ 96,873 | $ 72,337,483 | $ (73,417,915) | $ (979,982) |
Shares, Outstanding, Ending Balance at Mar. 31, 2019 | 3,577,370 | 96,872,725 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Net Cash Provided by (Used in) Operating Activities | ||
Net Income (Loss) | $ (6,370,572) | $ (3,234,778) |
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities | ||
Depreciation and amortization | 119,366 | 121,332 |
Amortization of debt discounts | 2,262,546 | 57,951 |
Common stock and warrants issued in conjunction with contracts | 3,921 | 123,670 |
Share-based Compensation | 218,855 | 101,413 |
Changes in operating assets and liabilities: | ||
Increase (Decrease) in Receivables | (118,164) | 101,455 |
Increase (Decrease) in Inventories | (10,000) | (1,172) |
Increase (Decrease) in Prepaid Expense | (31,325) | (34,416) |
Increase (Decrease) in Accounts Payable | 81,589 | 301,518 |
Increase (Decrease) in Accounts Payable, Related Parties | 3,302 | (39,881) |
Increase (Decrease) in Interest Payable, Net | 413,890 | 42,303 |
Increase Decrease in accrued interest - related party | 4,935 | 38,497 |
Increase (Decrease) in Deferred Revenue | 2,529 | (3,187) |
Increase (Decrease) in Accrued Salaries | 218,642 | 283,530 |
Net Cash Used in Operating Activities | (3,200,486) | (2,141,765) |
Net Cash Provided by (Used in) Investing Activities | ||
Purchases of property and equipment | (79,389) | 0 |
Purchases of intangible assets | (615,198) | (554,666) |
Net Cash Provided by (Used in) Investing Activities | (694,584) | (554,666) |
Net Cash Provided by (Used in) Financing Activities | ||
Proceeds from short term notes - related party | 0 | 500,000 |
Proceeds from issuance of short term convertible notes | 0 | 2,100,000 |
Proceeds from advances - related party | 0 | 75,000 |
Repayments of short term debt | (25,000) | 0 |
Repayments on long term debt | (100,000) | (100,000) |
Net Cash Provided by (Used in) Financing Activities | (125,000) | 2,575,000 |
Cash and Cash Equivalents, Period Increase (Decrease) | (4,020,070) | (121,431) |
Cash and Cash Equivalents, at Carrying Value, Beginning Balance | 4,693,950 | 421,869 |
Cash and Cash Equivalents, at Carrying Value, Ending Balance | 673,880 | 300,438 |
Non-Cash Investing and Financing Activities | ||
Wages payable included in capitalized intangible assets | 0 | 23,338 |
Preferred stock converted to common stock | 0 | 536 |
Warrants issued in conjunction with debt agreements | 0 | 1,219,524 |
Beneficial conversion features | 0 | 1,046,982 |
Supplemental Cash Flow Information | ||
Interest Paid, Including Capitalized Interest, Operating and Investing Activities | 8,148 | 728 |
Income Taxes Paid, Net | $ 0 | $ 0 |
Note 1 - Summary of Significant
Note 1 - Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
Notes | |
Note 1 - Summary of Significant Accounting Policies | NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization – On September 6, 2016, the Company entered into an agreement and plan of reorganization with BlackRidge Technology International, Inc., a Delaware corporation, and Grote Merger Co., a Delaware corporation providing for the Company’s acquisition of BlackRidge in exchange for a controlling number of shares of the Company’s preferred and common stock pursuant to the merger of Grote Merger Co. with and into BlackRidge, with BlackRidge continuing as the surviving corporation. The transaction contemplated in the agreement closed on February 22, 2017. On July 2, 2017, the Company filed a Certificate to Accompany Restated Articles or Amended and Restated Articles with the Secretary of State of Nevada to, among other things, change the Company’s name to BlackRidge Technology International, Inc. On October 13, 2017, the Company formed a new business subsidiary called BlackRidge Secure Services, Inc. to work with partners on Secure Supervisory Control and Data Acquisition Systems (“SCADA”) infrastructure and to design and deliver secure systems using BlackRidge Technology products for use by the utilities industry. Principles of Consolidation BlackRidge Technology International, Inc. BlackRidge Technology Holding, Inc. BlackRidge Technology, Inc. BlackRidge Technology Government, Inc. BlackRidge Secure Services, Inc. All intercompany balances have been eliminated in consolidation. Interim Financial Statements Use of Estimates - Concentrations - Significant customers are those which represent more than 10% of the Company’s revenue for each period presented, or the Company’s accounts receivable balance as of each respective balance sheet date. For each significant customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total net accounts receivable are as follows: Revenue Accounts Receivable Three Months Ended March 31, March 31, Customers 2019 2018 2019 2018 Customer A 99 % - % 56 % - % Customer B - % 63 % - % - % Customer C - % 37 % 2 % - % Inventory As of March 31, 2019 As of December 31, 2018 Inventory $ 401,658 $ 391,658 Less: allowance for obsolescence (335,655) (335,655) $ 66,003 $ 56,003 Adoption of ASC Topic 606, “ Revenue from Contracts with Customers ” - FASB ASC 606 The effect of applying ASC 606 did not result in an opening balance adjustment to retained earnings or any other balance sheet accounts because the Company: (1) identified similar performance obligations under ASC 606 as compared with deliverables and separate units of account previously identified; (2) determined the transaction price to be consistent; and (3) concluded that revenue is recorded at the same point in time, upon performance under both ASC 605 and ASC 606. The adoption of ASC 606 did not require significant changes in our internal controls and procedures over financial reporting and disclosures. However, we made enhancements to existing internal controls and procedures to ensure compliance with the new guidance. Revenue Recognition - We may enter into arrangements that consist of multiple performance obligations. Such arrangements may include any combination of our deliverables. To the extent a contract includes multiple promised deliverables, we apply judgment to determine whether promised deliverables are capable of being distinct and are distinct in the context of the contract. If these criteria are not met, the promised deliverables are accounted for as a combined performance obligation. For arrangements with multiple distinct performance obligations, we allocate consideration among the performance obligations based on their relative standalone selling price. Standalone selling price is the price at which we would sell a promised good or service separately to the customer. When not directly observable, we typically estimate standalone selling price by using the expected cost plus a margin approach. We typically establish a standalone selling price range for our deliverables, which is reassessed on a periodic basis or when facts and circumstances change. For performance obligations where control is transferred over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the deliverables to be provided. Revenue related to fixed-price contracts for application development and systems integration services, consulting or other technology services is recognized as the service is performed using the output method, under which the total value of revenue is recognized based on each contract’s deliverable(s) as they are completed and when value is transferred to a customer. Revenue related to fixed-price application maintenance, testing and business process services is recognized based on our right to invoice for services performed for contracts in which the invoicing is representative of the value being delivered, in accordance with the practical expedient in ASC 606-10-55-18. Our revenue consists of product and service revenue. Product revenue primarily consists of sales of our BlackRidge products. Service revenue relates to sales technical support services, and other services. Disaggregation of Revenue – Three Months Ended March 31, 2019 2018 Product $ - $ - Technical support and other 123,676 3,188 Total $ 123,676 $ 3,188 Recently Issued Accounting Standards In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Leases In August 2018, the FASB issued ASU 2018-13 “Fair Value Measurement (Topic 820) Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU eliminates, amends, and adds disclosure requirements for fair value measurements. The new standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Although we are still evaluating the impact of this new standard, we do not believe that the adoption will materially impact our Consolidated Financial Statements and related disclosures. In June 2018, the FASB issued ASU 2018-07 – Compensation – Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting. The amendments in this update expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. Prior to this update, equity-based payments to non-employees were accounted for under Subtopic 505-50 resulting in significant differences between the accounting for share-based payments to non-employees as compared to employees. One of the most significant changes is that non-employee share-based awards (classified as equity awards) may be measured at grant-date fair value and not have to be continually revalued until the service/goods are rendered. The update also indicates that share-based awards related to financing and awards granted to a customer in conjunction with selling goods or services are not included in Topic 718. This standard is effective for interim and annual reporting periods beginning after December 15, 2018 for public entities and December 15, 2019 for all other entities. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. We are currently assessing the implication of our adoption as well as the potential impact that the standard will have on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-04 “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which amends and simplifies the accounting standard for goodwill impairment. The new standard removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount a reporting unit’s carrying value exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. The new standard is effective for annual and any interim impairment tests for periods beginning after December 15, 2019. We are currently assessing the implication of our adoption as well as the potential impact that the standard will have on our consolidated financial statements. |
Note 2 - Going Concern
Note 2 - Going Concern | 3 Months Ended |
Mar. 31, 2019 | |
Notes | |
Note 2 - Going Concern | NOTE 2 –GOING CONCERN The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, during the three months ended and as of March 31, 2019, the Company incurred a net loss of $6,370,572, had a working capital deficit of $10,554,381, and cash used in operations of $3,200,486 . These factors raise substantial doubt about the ability of the Company to continue as a going concern. In this regard, management is proposing to raise any necessary additional funds not provided by operations through investment capital. There is no assurance that the Company will be successful in raising this additional capital or in achieving profitable operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. |
Note 3 - Intangible Assets
Note 3 - Intangible Assets | 3 Months Ended |
Mar. 31, 2019 | |
Notes | |
Note 3 - Intangible Assets | NOTE 3 – INTANGIBLE ASSETS During the three months ended March 31, 2019 and 2018, the Company capitalized $615,198 and $578,004, respectively, towards the development of software, intellectual property, and patent expenses. The Company amortizes these costs over their related useful lives (approximately 7 to 20 years), using a straight-line basis. Fair value is determined through various valuation techniques, including market and income approaches as considered necessary. The Company reviews capitalized assets periodically for impairment any time there is a significant change that could lead to impairment, but not less than annually. The Company recorded amortization of $113,488 and $119,130 related to intangible assets during the three months ended March 31, 2019 and 2018, respectively. Intangible assets consisted of the following at March 31, 2019 and December 31, 2018: As of March 31, 2019 As of December 31, 2018 Estimated Useful Life Patent Costs 550,439 542,846 15 years Software Licenses 58,260 58,260 7 years Software Development Costs 10,815,666 10,208,061 5 years Less: accumulated amortization (2,002,295) (1,888,807) $ 9,422,070 $ 8,920,360 Based upon currently launched products, the Company anticipates amortization expense of approximately $480,000 during each of the next five years. |
Note 4 - Notes Payable
Note 4 - Notes Payable | 3 Months Ended |
Mar. 31, 2019 | |
Notes | |
Note 4 - Notes Payable | NOTE 4 – NOTES PAYABLE Short term notes At March 31, 2019 and December 31, 2018, the Company had outstanding short-term debt totaling $45,232. These notes bear interest at the rates of between 10% and 12% annually and have maturity dates ranging from January 1, 2012 through December 31, 2014. As these notes have exceeded their initial maturity dates, they are subject to the default interest rate of 15% per annum. The following table summarizes the Company’s short-term notes payable for the three months ended March 31, 2019 and the year ended December 31, 2018: March 31, 2019 December 31, 2018 Beginning Balance $ 45,232 $ 50,232 Repayments - (5,000 Ending Balance $ 45,232 $ 45,232 Short term notes – related party On January 31, 2018, the Company’s Chief Technology Officer and significant shareholder invested $500,000 via a one year note bearing interest at 8% annually. In conjunction with this note, the Company issued 5 year detachable warrants to purchase 1,562,500 shares of the Company’s common stock at $0.50 per share. These warrants were valued at $172,542 using the Black-Scholes pricing model and were recorded as a discount to the note. The note carries a default rate of 18% for any principal not paid by the maturity date. On September 30, 2018, the note along with interest of $29,712 was converted into 2,118,849 shares of the Company’s common stock at a rate of $0.25 per share. Additionally, as part of the conversion, additional warrants to purchase 437,500 shares of common stock were issued and all warrants related to this note were repriced to reflect an exercise price of $0.25 per share. The value of these additional warrants and the lowered conversion totaled $58,250 which the Company recorded as a loss on extinguishment of debt. Long term notes On November 2, 2016, the Company entered into settlement agreements with two holders of convertible debt and other payables in which the Company agreed to issue new long-term debt agreements as settlement of amounts due. Pursuant to these agreements, the Company issued two non-interest bearing $600,000 notes payable in 36 equal monthly installments of $16,667 beginning on January 1, 2017 and maturing on December 1, 2019. The following table summarizes the Company’s long-term notes payable for the three months ended March 31, 2019 and the year ended December 31, 2018: March 31, 2019 December 31, 2018 Beginning Balance $ 366,657 $ 766,658 Repayments (100,000) (400,001) Ending Balance $ 266,567 $ 366,657 Short Term Portion of Long Term Debt $ 266,657 $ 366,657 Long Term Debt $ - $ - |
Note 5 - Convertible Notes
Note 5 - Convertible Notes | 3 Months Ended |
Mar. 31, 2019 | |
Notes | |
Note 5 - Convertible Notes | NOTE 5 – CONVERTIBLE NOTES Short term convertible notes On January 31, 2018, the Company issued a $100,000 convertible note bearing interest at 8% per annum. The note matures on January 31, 2019 and is convertible into the Company’s Series B Preferred Stock at a price of $0.32 per share at the holder’s request. The noteholder was also granted detachable 5 year warrants to purchase an aggregate of 312,500 shares of the Company’s common stock at an exercise price of $0.32 per share. The Company has determined the note to contain a beneficial conversion feature. The Company valued the beneficial conversion feature at $88,219 based on the intrinsic per share value of the conversion feature, and the warrants at $46,991 using the Black-Scholes pricing model. The Company has allocated the note proceeds based on relative fair value and has recorded the value of the beneficial conversion feature and warrants as a discount to the debt in the amount of $68,021 and $31,969, respectively. At March 31, 2019, the principal balance was still outstanding and is included on the Company’s consolidated balance sheets. The Company had accrued interest for this note in the amount of $11,019, which is included in accrued interest on the Company’s consolidated balance sheets. The Company is currently in the process of extending this note. On February 23, 2018, the Company issued a $1,000,000 convertible note bearing interest at 9% per annum. The note matures on February 28, 2019 and is convertible, as amended, into the Company’s Series B Preferred Stock at a price of $0.25 per share at the holder’s request. The noteholder was also granted detachable 5 year warrants to purchase an aggregate of 3,125,000 shares of the Company’s common stock at an exercise price of $0.32 per share. The Company has determined the note to contain a beneficial conversion feature. The Company valued the beneficial conversion feature at $417,757 based on the intrinsic per share value of the conversion feature, and the warrants at $540,553 using the Black-Scholes pricing model. The Company has allocated the note proceeds based on relative fair value and has recorded the value of the beneficial conversion feature and warrants as a discount to the debt in the amount of $417,757 and $350,882, respectively. At March 31, 2019, the principal balance was still outstanding and is included on the Company’s consolidated balance sheets. The Company had accrued interest for this note in the amount of $108,575, which is included in accrued interest on the Company’s consolidated balance sheets. The Company is currently in the process of extending this note. On February 27, 2018, the Company issued a $1,000,000 convertible note bearing interest at 9% per annum. The note matures on February 28, 2019 and is convertible, as amended, into the Company’s Series B Preferred Stock at a price of $0.25 per share at the holder’s request. The noteholder was also granted detachable 5 year warrants to purchase an aggregate of 3,125,000 shares of the Company’s common stock at an exercise price of $0.32 per share. The Company has determined the note to contain a beneficial conversion feature. The Company valued the beneficial conversion feature at $444,923 based on the intrinsic per share value of the conversion feature, and the warrants at $541,244 using the Black-Scholes pricing model. The Company has allocated the note proceeds based on relative fair value and has recorded the value of the beneficial conversion feature and warrants as a discount to the debt in the amount of $444,923 and $351,173, respectively. At March 31, 2019, the principal balance was still outstanding and is included on the Company’s consolidated balance sheets. The Company had accrued interest for this note in the amount of $107,589, which is included in accrued interest on the Company’s consolidated balance sheets. The Company is currently in the process of extending this note. On April 18, 2018, the Company issued a $2,000,000 convertible note bearing interest at 9% per annum. The note matures on April 18, 2019 and is convertible, as amended, into the Company’s Series B Preferred Stock at a price of $0.25 per share at the holder’s request. The noteholder was also granted detachable 5 year warrants to purchase an aggregate of 6,250,000 shares of the Company’s common stock at an exercise price of $0.32 per share. The Company has determined the note to contain a beneficial conversion feature. The Company valued the beneficial conversion feature at $1,510,980 based on the intrinsic per share value of the conversion feature, and the warrants at $1,073,331 using the Black-Scholes pricing model. The Company has allocated the note proceeds based on relative fair value and has recorded the value of the beneficial conversion feature and warrants as a discount to the debt in the amount of $1,301,510 and $698,480, respectively. At March 31, 2019, the principal balance was still outstanding and is included on the Company’s consolidated balance sheets net of discounts at $992,886. The Company had accrued interest for this note in the amount of $171,123, which is included in accrued interest on the Company’s consolidated balance sheets. The Company is currently in the process of extending this note. On May 4, 2018, the Company issued an aggregate $1,500,000 in convertible notes bearing interest at 9% per annum. These notes mature on May 31, 2019 and are convertible, as amended, into the Company’s Series B Preferred Stock at a price of $0.25 per share at the holder’s request. The noteholder was also granted detachable 5 year warrants to purchase an aggregate of 4,687,500 shares of the Company’s common stock at an exercise price of $0.25 per share. The Company has determined the note to contain a beneficial conversion feature. The Company valued the beneficial conversion feature at $1,133,680 based on the intrinsic per share value of the conversion feature, and the warrants at $806,050 using the Black-Scholes pricing model. The Company has allocated the note proceeds based on relative fair value and has recorded the value of the beneficial conversion feature and warrants as a discount to the debt in the amount of $975,685 and $524,305, respectively. At March 31, 2019, the principal balances were still outstanding and is included on the Company’s consolidated balance sheets net of discounts at an aggregate $236,391. The Company had accrued interest for these notes in the amount of $122,425, which is included in accrued interest on the Company’s consolidated balance sheets. On May 9, 2018, the Company issued a $1,028,274 convertible note bearing interest at 9% per annum as replacement for a $1,000,000 note plus accrued interest of $28,274 (see long term convertible notes section of this note). The note matures on May 31, 2019 and is convertible, as amended, into the Company’s Series B Preferred Stock at a price of $0.25 per share at the holder’s request. The noteholder was also granted detachable 5 year warrants to purchase an aggregate of 3,213,356 shares of the Company’s common stock at an exercise price of $0.25 per share. The Company has determined the note to contain a beneficial conversion feature. The Company valued the beneficial conversion feature at $835,295 based on the intrinsic per share value of the conversion feature, and the warrants at $538,207 using the Black-Scholes pricing model. The Company has allocated the note proceeds based relative on fair value and has recorded the value of the beneficial conversion feature and warrants as a discount to the debt in the amount of $674,972 and $353,292, respectively. At March 31, 2019, the principal balance was still outstanding and is included on the Company’s consolidated balance sheets net of discounts at $164,930. The Company had accrued interest for this note in the amount of $82,656, which is included in accrued interest on the Company’s consolidated balance sheets. On July 5, 2018, the Company issued an aggregate $2,000,000 in convertible notes bearing interest at 9% per annum. These notes mature on July 5, 2019 and is convertible, as amended, into the Company’s Series B Preferred Stock at a price of $0.25 per share at the holder’s request. The noteholders were also granted detachable 5 year warrants to purchase an aggregate of 8,000,000 shares of the Company’s common stock at an exercise price of $0.25 per share. The Company has determined the notes to contain a beneficial conversion feature. The Company valued the beneficial conversion feature at $1,307,658 based on the intrinsic per share value of the conversion feature, and the warrants at $1,354,741 using the Black-Scholes pricing model. The Company has allocated the note proceeds based on relative fair value and has recorded the value of the beneficial conversion feature and warrants as a discount to the debt in the amount of $1,192,302 and $807,658, respectively. At March 31, 2019, the principal balances were still outstanding and are included on the Company’s consolidated balance sheets net of discounts at an aggregate $98,659. The Company had accrued interest for these notes in the amount of $132,164, which is included in accrued interest on the Company’s consolidated balance sheets. On July 10, 2018, the Company issued a $32,000 convertible note bearing interest at 9% per annum. This note matures on July 31, 2019 and is convertible into the Company’s Series B Preferred Stock at a price of $0.32 per share at the holder’s request. The noteholder was also granted detachable 5 year warrants to purchase an aggregate of 128,000 shares of the Company’s common stock at an exercise price of $0.25 per share. The Company has determined the note to contain a beneficial conversion feature. The Company valued the beneficial conversion feature at $15,005 based on the intrinsic per share value of the conversion feature, and the warrants at $21,711 using the Black-Scholes pricing model. The Company has allocated the note proceeds based on relative fair value and has recorded the value of the beneficial conversion feature and warrants as a discount to the debt in the amount of $15,005 and $12,935, respectively. At March 31, 2019, the principal balance was still outstanding and is included on the Company’s consolidated balance sheets net of discounts at an aggregate $18,045. The Company had accrued interest for these notes in the amount of $2,083, which is included in accrued interest on the Company’s consolidated balance sheets. On July 13, 2018, the Company issued a $200,000 in convertible notes bearing interest at 9% per annum. This note matures on July 31, 2019 and is convertible into the Company’s Series B Preferred Stock at a price of $0.32 per share at the holder’s request. The noteholder was also granted detachable 5 year warrants to purchase an aggregate of 800,000 shares of the Company’s common stock at an exercise price of $0.25 per share. The Company has determined the note to contain a beneficial conversion feature. The Company valued the beneficial conversion feature at $68,266 based on the intrinsic per share value of the conversion feature, and the warrants at $135,474 using the Black-Scholes pricing model. The Company has allocated the note proceeds based on relative fair value and has recorded the value of the beneficial conversion feature and warrants as a discount to the debt in the amount of $68,266 and $80,766, respectively. At March 31, 2019, the principal balance was still outstanding and is included on the Company’s consolidated balance sheets net of discounts at an aggregate $135,377. The Company had accrued interest for these notes in the amount of $12,871, which is included in accrued interest on the Company’s consolidated balance sheets. On September 17, 2018, the Company issued an aggregate $3,000,000 in convertible notes bearing interest at 9% per annum. The notes mature on September 17, 2019 and are convertible into the Company’s Series B Preferred Stock at a price of $0.25 per share at the holder’s request. The noteholders were also granted detachable 7 year warrants to purchase an aggregate of 12,000,000 shares of the Company’s common stock at an exercise price of $0.25 per share. The Company has determined the notes to contain a beneficial conversion feature. The Company valued the beneficial conversion feature at $2,921,170 based on the intrinsic per share value of the conversion feature, and the warrants at $1,617,415 using the Black-Scholes pricing model. The Company has allocated the note proceeds based on relative fair value and has recorded the value of the beneficial conversion feature and warrants as a discount to the debt in the amount of $1,949,132 and $1,050,858, respectively. Additionally, as further inducement to write this this note, the Company agreed to grant all of the investor’s existing notes as well as several other existing noteholders with relationships to the investor the same terms on their existing debt that this debt carries. These new terms were required to write the notes, therefore, the Company has accounted them as a discount on this note, the value of which is included in the beneficial conversion value. At March 31, 2019, the principal balance was still outstanding and is included on the Company’s consolidated balance sheets net of discounts at an aggregate $8,215. The Company had accrued interest for these notes in the amount of $144,247, which is included in accrued interest on the Company’s consolidated balance sheets. On December 4, 2018, the Company issued an aggregate $3,000,000 in convertible notes bearing interest at 9% per annum. The notes mature on December 4, 2019 and are convertible into the Company’s Series B Preferred Stock at a price of $0.25 per share at the holder’s request. The noteholders were also granted detachable 7 year warrants to purchase an aggregate of 12,000,000 shares of the Company’s common stock at an exercise price of $0.25 per share. As additional consideration for this note, the Company issued an aggregate 4,006,250 shares of the Company’s common stock. The Company has determined the notes to contain a beneficial conversion feature. The Company valued the beneficial conversion feature at $2,248,088 based on the intrinsic per share value of the conversion feature, the warrants at $1,589,454 using the Black-Scholes pricing model, and the stock at $1,346,000. The Company has allocated the note proceeds based on relative fair value and has recorded the value of the beneficial conversion feature, warrants, and stock as a discount to the debt in the amount of $1,516,302, $803,369 and $680,319, respectively. At March 31, 2019, the principal balance was still outstanding and is included on the Company’s consolidated balance sheets net of discounts at an aggregate $629. The Company had accrued interest for these notes in the amount of $86,548, which is included in accrued interest on the Company’s consolidated balance sheets. On December 19, 2018, the Company issued an aggregate $3,000,000 in convertible notes bearing interest at 9% per annum. The notes mature on December 19, 2019 and are convertible into the Company’s Series B Preferred Stock at a price of $0.25 per share at the holder’s request. The noteholders were also granted detachable 7 year warrants to purchase an aggregate of 12,000,000 shares of the Company’s common stock at an exercise price of $0.25 per share. The Company has determined the notes to contain a beneficial conversion feature. The Company valued the beneficial conversion feature at $555,512 based on the intrinsic per share value of the conversion feature, and the warrants at $1,581,347 using the Black-Scholes pricing model. The Company has allocated the note proceeds based on relative fair value and has recorded the value of the beneficial conversion feature and warrants as a discount to the debt in the amount of $555,512 and $1,035,512, respectively. At March 31, 2019, the principal balance was still outstanding and is included on the Company’s consolidated balance sheets net of discounts at an aggregate $1,740,779. The Company had accrued interest for these notes in the amount of $75,452, which is included in accrued interest on the Company’s consolidated balance sheets. Short term convertible notes – related party On October 31, 2013, the Company agreed to convert balances owed to the Company’s corporate counsel in the amount of $183,172 into a 42 month convertible note bearing interest at 12% annually and convertible into 203,525 shares of convertible preferred stock at the rate of $0.90 per share. At March 31, 2109, $158,172 of the principal balance was still outstanding, and the Company had accrued interest for this note in the amount of $182,584 which is included in accrued interest – related party on the Company’s consolidated balance sheets. The note carries a default rate of 18% for any principal not paid by the maturity date. On November 30, 2015, John Hayes, the Company’s Chief Technology Officer, Director and significant shareholder invested $101,000 via a one year convertible note bearing interest at 12% annually and convertible into 112,223 shares of Series A convertible preferred stock at the rate of $0.90 per share. On September 1, 2017, $237,000 owed to John Hayes was added to the note. On September 30, 2018, the note along with interest of $89,366 was converted into 1,709,466 shares of the Company’s common stock at a rate of $0.25 per share. Additionally, as further inducement to convert the note, the Company issued the note holder 5 year warrants to purchase 1,352,000 shares of the Company’s common stock. The Company recognized a loss on extinguishment of debt of $384,200 related to the decrease in conversion price and warrants granted. On July 6, 2018, the Company issued a $200,000 convertible note bearing interest at 9% per annum to John Hayes, the Company’s Chief Technology Officer, Director and significant shareholder. This note matures on July 31, 2019 and is convertible into the Company’s Series B Preferred Stock at a price of $0.32 per share at the holder’s request. The noteholder was also granted detachable 5 year warrants to purchase an aggregate of 800,000 shares of the Company’s common stock at an exercise price of $0.25 per share. The Company has determined the note to contain a beneficial conversion feature. The Company valued the beneficial conversion feature at $130,766 based on the intrinsic per share value of the conversion feature, and the warrants at $135,474 using the Black-Scholes pricing model. The Company has allocated the note proceeds based on relative fair value and has recorded the value of the beneficial conversion feature and warrants as a discount to the debt in the amount of $119,224 and $80,766, respectively. On September 30, 2018, the note along with interest of $4,192 was converted into 816,767 shares of the Company’s common stock at a rate of $0.25 per share. The Company recognized a loss on extinguishment of debt of $43,750 related to the decrease in conversion price. On July 10, 2018, the Company issued a $32,000 in convertible notes bearing interest at 9% per annum to J Allen Kosowsky, a Director and related party. This note matures on July 31, 2019 and is convertible into the Company’s Series B Preferred Stock at a price of $0.32 per share at the holder’s request. The Company has determined the note to contain a beneficial conversion feature. The Company valued the beneficial conversion feature at $15,005 based on the intrinsic per share value of the conversion feature, and the warrants at $21,711 using the Black-Scholes pricing model. The Company has allocated the note proceeds based relative on fair value and has recorded the value of the beneficial conversion feature and warrants as a discount to the debt in the amount of $15,005 and $12,935, respectively. On September 30, 2018, the note along with interest of $639 was converted into 130,556 shares of the Company’s common stock at a rate of $0.25 per share. The Company recognized a loss on extinguishment of debt of $8,960 related to the decrease in conversion price. Long term convertible notes On December 21, 2017, the Company issued a $150,000 convertible note bearing interest at 8% per annum. The note matures on December 21, 2019 and is convertible into the Company’s Series B Preferred Stock at a price of $0.32 per share at the holder’s request. The Company has determined the note to contain a beneficial conversion feature valued at $69,935 based on the intrinsic per share value of the conversion feature. This beneficial conversion feature is recorded as a discount to the debt agreement. The noteholder was also granted detachable 5 year warrants to purchase an aggregate of 468,750 shares of the company’s common stock at an exercise price of $0.32 per share. The warrants were valued at $69,935 using the Black-Scholes pricing model and were recorded as a discount to the note. At March 31, 2019 the principal balance was still outstanding and is included on the Company’s consolidated balance sheets net of discounts at $55,137. The Company had accrued interest for this note in the amount of $15,288, which is included in accrued interest on the Company’s consolidated balance sheets. On December 22, 2017, the Company issued a $1,000,000 convertible note bearing interest at 8% per annum. The note matures on December 22, 2019 and is convertible into the Company’s Series B Preferred Stock at a price of $0.32 per share at the holder’s request. The Company has determined the note to contain a beneficial conversion feature valued at $466,230 based on the intrinsic per share value of the conversion feature. This beneficial conversion feature is recorded as a discount to the debt agreement. The noteholder was also granted detachable 5 year warrants to purchase an aggregate of 3,125,000 shares of the company’s common stock at an exercise price of $0.32 per share. The warrants were valued at $466,230 using the Black-Scholes pricing model and were recorded as a discount to the note. On May 9, 2018, this note along with $28,274 was renegotiated into a new short term convertible note and the warrants associated with the original note were cancelled. The newly negotiated note included an additional warrant benefit valued at $95,804 which was recorded as a loss on extinguishment of debt. Long term convertible notes – related party During 2011 to 2014, the Company’s Chief Technology Officer and significant shareholder of the Company loaned a total of $2,673,200 to the Company. On October 1, 2014, all prior notes including accrued interest were combined into a single $3,712,637 convertible note bearing interest at 12% annually and convertible into 4,125,154 shares of Series A preferred stock at the rate of $0.90 per share. On November 9, 2017, the Company converted the note and accrued interest of $1,665,991 into 10,757,254 shares of the Company's common stock at a conversion rate of $0.50 per share. The Company also issued a 5 year warrant to purchase an additional 5,378,627 shares of the Company s common stock at a purchase price of $0.50 per share as further consideration for this conversion. The Company recognized a loss on extinguishment of debt related to this transaction of $913,238. Convertible debt holders are entitled, at their option, to convert all or part of the principal and accrued interest into shares of the Company’s common stock at the conversion prices and terms discussed above. The Company has determined that any embedded conversion options do not possess a beneficial conversion feature, and therefore has not separately accounted for their value. The following table summarizes the Company’s convertible notes payable for the three months ended March 31, 2019 and the year ended December 31, 2018: March 31, 2019 December 31, 2018 Beginning Balance, net of discounts $ 3,471,644 $ 601,576 Proceeds from issuance of convertible notes, net of issuance discounts - 1,903,438 Repayments (25,000) - Restructuring of debt - (112,017) Conversion of notes payable into common stock - (570,000) Amortization of discounts 2,262,546 1,648,647 Ending Balance, net of discounts $ 5,709,190 $ 3,471,644 Convertible notes, short term $ 17,860,274 $ 17,860,274 Convertible notes, short term – related party $ 158,172 $ 183,172 Convertible notes, long term $ 150,000 $ 150,000 Debt discounts $ 12,459,256 $ 14,721,802 The following table summarizes the Company’s short term convertible notes payable as of March 31, 2019: Note(s) Date Maturity Date Interest Principal 1/31/2018* 1/31/2019 8% $ 100,000 2/23/2018* 2/28/2019 9% 1,000,000 2/27/2018* 2/28/2019 9% 1,000,000 4/18/2018 4/18/2019 9% 2,000,000 5/4/2018 5/31/2019 9% 1,500,000 5/9/2018 5/31/2019 9% 1,028,274 7/5/2018 7/5/2019 9% 2,000,000 7/10/2018 7/10/2019 9% 32,000 7/13/2018 7/13/2019 9% 200,000 9/17/2018 9/17/2019 9% 3,000,000 12/4/2018 12/4/2019 9% 3,000,000 12/19/2018 12/19/2019 9% 3,000,000 $ 17,860,274 *Note(s) currently in default. The Company is currently working with noteholder(s) to extend the note(s) |
Note 6 - Commitments and Contin
Note 6 - Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Notes | |
Note 6 - Commitments and Contingencies | NOTE 6 – COMMITMENTS AND CONTINGENCIES Operating Leases The Company leases approximately 7,579 square feet of office space under a 62 month operating lease which expires in April 2023. The amounts reflected in the table below are for the aggregate future minimum lease payments under the non-cancelable facility operating leases. Under lease agreements that contain escalating rent provisions, lease expense is recorded on a straight-line basis over the lease term. The Company also leases office space under a 23 month operating lease which expires during August 2019. The amounts reflected in the table below are for the aggregate future minimum lease payments under the non-cancelable facility operating leases. Under lease agreements that contain escalating rent provisions, lease expense is recorded on a straight-line basis over the lease term. The Company also leases approximately 202 square feet of office space under a 12 month operating lease which originally expired in 2016. The lease was renewed to May 2019, and is renewable at the Company’s option annually at a flat monthly amount of $400. The amounts reflected in the table below are for the aggregate future minimum lease payments under the non-cancelable facility operating leases. Rent expense was $75,122 and $74,737 for the three months ended March 31, 2019 and 2018, respectively. As of March 31, 2019, future minimum lease payments are as follows: Year Ending December 31, 2019 (nine months) $ 184,729 2020 209,559 2021 214,107 2022 218,654 2023 and thereafter 18,569 Total minimum lease payments $ 845,618 On August 1, 2017, the Company entered into a 36 month lease of computer equipment. The lease carries a monthly payment of $2,871 with the option to purchase the equipment at its fair market value at the end of the lease. Restricted Stock Commitments The Company has committed to settling a significant portion of its current accounts payable balances through the future issuance of restricted stock units. While the terms of these agreements have not yet been formalized with employees and outside contractors, they could have a potentially dilutive effect to current shareholders. Contingent Liability On October 15, 2011, the Company entered into an agreement with a consultant by which the consultant’s invoices for the previous four months would be accrued as a liability to be paid out upon (a) the Company’s successful raising of $10,000,000 in capital funding, or (b) the Company reaching total revenues of $10,000,000. The Company had a balance due under this agreement of $37,500 December 31, 2017. In 2018, the Company reached its capital funding threshold under the agreement and reclassified the entire $37,500 liability to a payable. |
Note 7 - Related Party Transact
Note 7 - Related Party Transactions | 3 Months Ended |
Mar. 31, 2019 | |
Notes | |
Note 7 - Related Party Transactions | NOTE 7 - RELATED PARTY TRANSACTIONS During the three months ended March 31, 2019, the Company incurred interest expense on notes to related parties in the aggregate amount of $4,935 (see Note 4 – Short term notes – related party & Note 5 – Convertible Notes). Accounts payable related party At March 31, 2019 and December 31, 2018, the Company had a balance in related party accounts payable of $12,992 and $9,690, respectively, which consisted of the following: March 31, December 31, Party Name: Relationship: Nature of transactions: 2019 2018 John Bluher Chief Financial Officer Expense reimbursement $ 75 $ 4,465 John Hayes Chief Technology Officer Expense reimbursement 12,917 5,225 $ 12,992 $ 9,690 Related Party Notes During the year ended December 31, 2018, the Company issued notes and converted notes to related parties, see Note 5 – Notes Payable, and Note 6 – Convertible Notes for full disclosure. |
Note 9 - Stockholders' Equity
Note 9 - Stockholders' Equity | 3 Months Ended |
Mar. 31, 2019 | |
Notes | |
Note 9 - Stockholders' Equity | NOTE 8 - STOCK HOLDERSÂ’ EQUITY The Company is authorized to issue 200 million shares of common stock, par value $0.001 per share, and 10 million shares of preferred stock, par value $0.001 per share. Each share of the CompanyÂ’s preferred stock was originally convertible into 10 shares of common stock, subject to adjustment, has voting rights equal to its common stock equivalent, 7% cumulative dividend rights, and has liquidation rights that entitle the holder to the receipt of net assets of the Company on a pro-rata basis. The Company had 96,872,725 common shares issued and outstanding and 3,577,370 Series A preferred shares issued and outstanding as of March 31, 2019 and December 31, 2018. The Company did not issue any equity shares or declare any dividends during the three months ended March 31, 2019. |
Note 9 - Share Based Compensati
Note 9 - Share Based Compensation | 3 Months Ended |
Mar. 31, 2019 | |
Notes | |
Note 9 - Share Based Compensation | NOTE 9 – SHARE BASED COMPENSATION During the three months ended March 31, 2019, the Company issued 128,000 5-year options to purchase common stock to employees and directors under the 2017 Stock Incentive Plan. The options were valued at $13,637 using the Black-Scholes pricing model. As of March 31, 2019, the total unrecognized expense for unvested share based compensation is $1,794,439. The 2017 Stock Incentive Plan allows for a maximum 25,000,000 shares to be issued, of which 7,925,574 shares remain available for issuance as of March 31, 2019. The Company recognized stock option expense during the three months ended March 31, 2019 and 2018 of $218,855 and $101,413, respectively. The fair values at the commitment date for the options were based upon the following management assumptions as of March 31, 2019: Commitment Date Expected dividends 0 % Expected term 5 years Risk free rate 2.49 % Volatility 48.46 % The activity of options granted to during the year ended December 31, 2018 and three months ended March 31, 2019 is as follows: Employee and Director Options Outstanding Weighted Average Exercise Price Weighted Average Remaining Life Weighted Average Grant Date Fair Value Balance – December 31, 2017 6,962,560 $ 0.60 4.65 years $ 0.28 Granted 10,390,741 $ 0.33 5 years $ 0.16 Exercised - Expired (57,827) Forfeited (349,048) Ending Balance – December 31, 2018 16,946,426 $ 0.43 4.32 years $ 0.20 Granted 128,000 $ 0.25 5 years $ 0.10 Exercised - Expired - Forfeited - Ending Balance – March 31, 2019 17,074,426 $ 0.43 4.11 years $ 0.20 Exercisable options 7,378,830 $ 0.46 4.11 years $ 0.22 The Company’s outstanding employee options at March 31, 2019 are as follows: Options Outstanding Option Exercisable Exercise Price Range Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price Intrinsic Value $0.25 - $0.60 17,074,426 4.11 $ 0.43 7,378,830 $ 0.46 $ - The weighted average fair value per option issued during the three months ended March 31, 2019 was $0.11. The following table summarizes non-vested option activity during the three months ended March 31, 2019 and the year ended December 31, 2018: Non-Vested Options Weighted Average Grant Date Fair Value Balance – December 31, 2017 5,589,463 $ 0.28 Granted 10,390,741 $ 0.16 Vested (4,911,501) Expired (57,827) Forfeited (349,048) Ending Balance – December 31, 2018 10,661,828 $ 0.19 Granted 128,000 $ 0.11 Vested (1,094,233) Expired - Forfeited - Ending Balance – March 31, 2019 9,695,595 $ 0.19 |
NOTE 10 - WARRANTS
NOTE 10 - WARRANTS | 3 Months Ended |
Mar. 31, 2019 | |
Notes | |
NOTE 10 - WARRANTS | NOTE 10 – WARRANTS During the three months ended March 31, 2109, the Company issued 150,000 five year warrants to purchase common stock at a price of $0.25 per share. The warrants vest ratably over a twelve month period. The Company valued the new warrants at $15,685 using the Black Scholes pricing model, $3,921 of which is included in selling, general and administrative expense on the Company’s statement of profit and loss for the three months ended March 31, 2019. The fair values at the commitment date for the warrants were based upon the following management assumptions as of March 31, 2019: Commitment Date Expected dividends 0 % Expected term 5 years Risk free rate 2.62 % Volatility 48.46 % The activity of warrants granted to during the three months ended March 31, 2019 and the year ended December 31, 2018 is as follows: Warrants Outstanding Weighted Average Exercise Price Weighted Average Remaining Life Weighted Average Grant Date Fair Value Balance – December 31, 2017 43,068,636 $ 0.45 4.69 years $ 0.08 Granted 73,755,856 $ 0.26 6.68 years $ 0.14 Exercised - Expired - Forfeited (7,087,500) Ending Balance – December 31, 2018 109,736,992 $ 0.32 5.46 years $ 0.12 Granted 150,000 $ 0.25 5 years $ 0.10 Exercised - Expired - Forfeited - Ending Balance – March 31, 2019 109,886,992 $ 0.32 5.21 years $ 0.12 Exercisable options 109,771,492 $ 0.32 5.21 years $ 0.12 The Company’s outstanding warrants at March 31, 2019 are as follows: Warrants Outstanding Warrants Exercisable Exercise Price Range Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price Intrinsic Value $0.01 - $0.70 109,886,992 5.21 $ 0.32 109,771,492 $ 0.32 $ 80,841 |
NOTE 12 - EARNINGS (LOSS) PER S
NOTE 12 - EARNINGS (LOSS) PER SHARE | 3 Months Ended |
Mar. 31, 2019 | |
Notes | |
NOTE 12 - EARNINGS (LOSS) PER SHARE | NOTE 11 – EARNINGS (LOSS) PER SHARE Net earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. Since the Company reflected a net loss for the three months ended March 31, 2019 and the year ended December 31, 2018, respectively, the effect of considering any common stock equivalents, if exercisable, would have been anti-dilutive. Therefore, a separate computation of diluted earnings (loss) per share is not presented. The Company has the following common stock equivalents as of March 31, 2019 and December 31, 2018: As of March 31, 2019 As of December 31, 2018 Warrants (exercise price $0.01 - $0.70/share) 109,886,992 109,736,992 Options (exercise price $0.25 - $0.66/share) 20,436,601 20,436,601 130,323,593 130,173,593 |
Note 16 - Subsequent Events
Note 16 - Subsequent Events | 3 Months Ended |
Mar. 31, 2019 | |
Notes | |
Note 16 - Subsequent Events | NOTE 12 - SUBSEQUENT EVENTS We have evaluated all events that occurred after the balance sheet date through the date when our financial statements were issued to determine if they must be reported. Management has determined that there were no additional reportable subsequent events to be disclosed. |
Note 1 - Summary of Significa_2
Note 1 - Summary of Significant Accounting Policies: Principles of Consolidation (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Policies | |
Principles of Consolidation | Principles of Consolidation BlackRidge Technology International, Inc. BlackRidge Technology Holding, Inc. BlackRidge Technology, Inc. BlackRidge Technology Government, Inc. BlackRidge Secure Services, Inc. All intercompany balances have been eliminated in consolidation. |
Note 1 - Summary of Significa_3
Note 1 - Summary of Significant Accounting Policies: Use of Estimates (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Policies | |
Use of Estimates | Use of Estimates - |
Note 1 - Summary of Significa_4
Note 1 - Summary of Significant Accounting Policies: Concentrations (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Policies | |
Concentrations | Concentrations - Significant customers are those which represent more than 10% of the CompanyÂ’s revenue for each period presented, or the CompanyÂ’s accounts receivable balance as of each respective balance sheet date. For each significant customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total net accounts receivable are as follows: Revenue Accounts Receivable Three Months Ended March 31, March 31, Customers 2019 2018 2019 2018 Customer A 99 % - % 56 % - % Customer B - % 63 % - % - % Customer C - % 37 % 2 % - % |
Note 1 - Summary of Significa_5
Note 1 - Summary of Significant Accounting Policies: Revenue Recognition (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Policies | |
Revenue Recognition | Revenue Recognition - We may enter into arrangements that consist of multiple performance obligations. Such arrangements may include any combination of our deliverables. To the extent a contract includes multiple promised deliverables, we apply judgment to determine whether promised deliverables are capable of being distinct and are distinct in the context of the contract. If these criteria are not met, the promised deliverables are accounted for as a combined performance obligation. For arrangements with multiple distinct performance obligations, we allocate consideration among the performance obligations based on their relative standalone selling price. Standalone selling price is the price at which we would sell a promised good or service separately to the customer. When not directly observable, we typically estimate standalone selling price by using the expected cost plus a margin approach. We typically establish a standalone selling price range for our deliverables, which is reassessed on a periodic basis or when facts and circumstances change. For performance obligations where control is transferred over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the deliverables to be provided. Revenue related to fixed-price contracts for application development and systems integration services, consulting or other technology services is recognized as the service is performed using the output method, under which the total value of revenue is recognized based on each contractÂ’s deliverable(s) as they are completed and when value is transferred to a customer. Revenue related to fixed-price application maintenance, testing and business process services is recognized based on our right to invoice for services performed for contracts in which the invoicing is representative of the value being delivered, in accordance with the practical expedient in ASC 606-10-55-18. Our revenue consists of product and service revenue. Product revenue primarily consists of sales of our BlackRidge products. Service revenue relates to sales technical support services, and other services. |
Note 1 - Summary of Significa_6
Note 1 - Summary of Significant Accounting Policies: Disaggregation of Revenue (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Policies | |
Disaggregation of Revenue | Disaggregation of Revenue – Three Months Ended March 31, 2019 2018 Product $ - $ - Technical support and other 123,676 3,188 Total $ 123,676 $ 3,188 |
Note 1 - Summary of Significa_7
Note 1 - Summary of Significant Accounting Policies: Recently Issued Accounting Standards (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Policies | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Leases In August 2018, the FASB issued ASU 2018-13 “Fair Value Measurement (Topic 820) Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU eliminates, amends, and adds disclosure requirements for fair value measurements. The new standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Although we are still evaluating the impact of this new standard, we do not believe that the adoption will materially impact our Consolidated Financial Statements and related disclosures. In June 2018, the FASB issued ASU 2018-07 – Compensation – Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting. The amendments in this update expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. Prior to this update, equity-based payments to non-employees were accounted for under Subtopic 505-50 resulting in significant differences between the accounting for share-based payments to non-employees as compared to employees. One of the most significant changes is that non-employee share-based awards (classified as equity awards) may be measured at grant-date fair value and not have to be continually revalued until the service/goods are rendered. The update also indicates that share-based awards related to financing and awards granted to a customer in conjunction with selling goods or services are not included in Topic 718. This standard is effective for interim and annual reporting periods beginning after December 15, 2018 for public entities and December 15, 2019 for all other entities. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. We are currently assessing the implication of our adoption as well as the potential impact that the standard will have on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-04 “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which amends and simplifies the accounting standard for goodwill impairment. The new standard removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount a reporting unit’s carrying value exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. The new standard is effective for annual and any interim impairment tests for periods beginning after December 15, 2019. We are currently assessing the implication of our adoption as well as the potential impact that the standard will have on our consolidated financial statements. |
Note 1 - Summary of Significa_8
Note 1 - Summary of Significant Accounting Policies: Concentrations: Schedules of Concentration of Risk, by Risk Factor (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Tables/Schedules | |
Schedules of Concentration of Risk, by Risk Factor | Revenue Accounts Receivable Three Months Ended March 31, March 31, Customers 2019 2018 2019 2018 Customer A 99 % - % 56 % - % Customer B - % 63 % - % - % Customer C - % 37 % 2 % - % |
Note 1 - Summary of Significa_9
Note 1 - Summary of Significant Accounting Policies: Schedule of Inventory, Current (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Tables/Schedules | |
Schedule of Inventory, Current | As of March 31, 2019 As of December 31, 2018 Inventory $ 401,658 $ 391,658 Less: allowance for obsolescence (335,655) (335,655) $ 66,003 $ 56,003 |
Note 1 - Summary of Signific_10
Note 1 - Summary of Significant Accounting Policies: Disaggregation of Revenue: Revenue Disaggregated by Major Product and Service Lines (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Tables/Schedules | |
Revenue Disaggregated by Major Product and Service Lines | Three Months Ended March 31, 2019 2018 Product $ - $ - Technical support and other 123,676 3,188 Total $ 123,676 $ 3,188 |
Note 3 - Intangible Assets_ Sch
Note 3 - Intangible Assets: Schedule of Finite-Lived Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Tables/Schedules | |
Schedule of Finite-Lived Intangible Assets | As of March 31, 2019 As of December 31, 2018 Estimated Useful Life Patent Costs 550,439 542,846 15 years Software Licenses 58,260 58,260 7 years Software Development Costs 10,815,666 10,208,061 5 years Less: accumulated amortization (2,002,295) (1,888,807) $ 9,422,070 $ 8,920,360 |
Note 4 - Notes Payable_ Schedul
Note 4 - Notes Payable: Schedule of Short-term Debt (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Tables/Schedules | |
Schedule of Short-term Debt | March 31, 2019 December 31, 2018 Beginning Balance $ 45,232 $ 50,232 Repayments - (5,000 Ending Balance $ 45,232 $ 45,232 |
Note 4 - Notes Payable_ Sched_2
Note 4 - Notes Payable: Schedule of Long-term Debt Instruments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Tables/Schedules | |
Schedule of Long-term Debt Instruments | March 31, 2019 December 31, 2018 Beginning Balance $ 366,657 $ 766,658 Repayments (100,000) (400,001) Ending Balance $ 266,567 $ 366,657 Short Term Portion of Long Term Debt $ 266,657 $ 366,657 Long Term Debt $ - $ - |
Note 5 - Convertible Notes_ Sch
Note 5 - Convertible Notes: Schedule of Convertible Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Tables/Schedules | |
Schedule of Convertible Notes Payable | March 31, 2019 December 31, 2018 Beginning Balance, net of discounts $ 3,471,644 $ 601,576 Proceeds from issuance of convertible notes, net of issuance discounts - 1,903,438 Repayments (25,000) - Restructuring of debt - (112,017) Conversion of notes payable into common stock - (570,000) Amortization of discounts 2,262,546 1,648,647 Ending Balance, net of discounts $ 5,709,190 $ 3,471,644 Convertible notes, short term $ 17,860,274 $ 17,860,274 Convertible notes, short term – related party $ 158,172 $ 183,172 Convertible notes, long term $ 150,000 $ 150,000 Debt discounts $ 12,459,256 $ 14,721,802 The following table summarizes the Company’s short term convertible notes payable as of March 31, 2019: Note(s) Date Maturity Date Interest Principal 1/31/2018* 1/31/2019 8% $ 100,000 2/23/2018* 2/28/2019 9% 1,000,000 2/27/2018* 2/28/2019 9% 1,000,000 4/18/2018 4/18/2019 9% 2,000,000 5/4/2018 5/31/2019 9% 1,500,000 5/9/2018 5/31/2019 9% 1,028,274 7/5/2018 7/5/2019 9% 2,000,000 7/10/2018 7/10/2019 9% 32,000 7/13/2018 7/13/2019 9% 200,000 9/17/2018 9/17/2019 9% 3,000,000 12/4/2018 12/4/2019 9% 3,000,000 12/19/2018 12/19/2019 9% 3,000,000 $ 17,860,274 |
Note 6 - Commitments and Cont_2
Note 6 - Commitments and Contingencies: Schedule of Future Minimum Rental Payments for Operating Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Tables/Schedules | |
Schedule of Future Minimum Rental Payments for Operating Leases | Year Ending December 31, 2019 (nine months) $ 184,729 2020 209,559 2021 214,107 2022 218,654 2023 and thereafter 18,569 Total minimum lease payments $ 845,618 |
Note 7 - Related Party Transa_2
Note 7 - Related Party Transactions: Schedule of Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounts Payable - Related Party | |
Schedule of Related Party Transactions | March 31, December 31, Party Name: Relationship: Nature of transactions: 2019 2018 John Bluher Chief Financial Officer Expense reimbursement $ 75 $ 4,465 John Hayes Chief Technology Officer Expense reimbursement 12,917 5,225 $ 12,992 $ 9,690 |
Note 9 - Share Based Compensa_2
Note 9 - Share Based Compensation: Schedule of Assumptions for Fair Value at the Commitment Date as of Balance Sheet Date (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Tables/Schedules | |
Schedule of Assumptions for Fair Value at the Commitment Date as of Balance Sheet Date | Commitment Date Expected dividends 0 % Expected term 5 years Risk free rate 2.49 % Volatility 48.46 % |
Note 9 - Share Based Compensa_3
Note 9 - Share Based Compensation: Share-based Compensation, Activity (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Tables/Schedules | |
Share-based Compensation, Activity | Employee and Director Options Outstanding Weighted Average Exercise Price Weighted Average Remaining Life Weighted Average Grant Date Fair Value Balance – December 31, 2017 6,962,560 $ 0.60 4.65 years $ 0.28 Granted 10,390,741 $ 0.33 5 years $ 0.16 Exercised - Expired (57,827) Forfeited (349,048) Ending Balance – December 31, 2018 16,946,426 $ 0.43 4.32 years $ 0.20 Granted 128,000 $ 0.25 5 years $ 0.10 Exercised - Expired - Forfeited - Ending Balance – March 31, 2019 17,074,426 $ 0.43 4.11 years $ 0.20 Exercisable options 7,378,830 $ 0.46 4.11 years $ 0.22 The Company’s outstanding employee options at March 31, 2019 are as follows: Options Outstanding Option Exercisable Exercise Price Range Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price Intrinsic Value $0.25 - $0.60 17,074,426 4.11 $ 0.43 7,378,830 $ 0.46 $ - |
Note 9 - Share Based Compensa_4
Note 9 - Share Based Compensation: Share-based Compensation, Performance Shares Award Nonvested Activity (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Tables/Schedules | |
Share-based Compensation, Performance Shares Award Nonvested Activity | Non-Vested Options Weighted Average Grant Date Fair Value Balance – December 31, 2017 5,589,463 $ 0.28 Granted 10,390,741 $ 0.16 Vested (4,911,501) Expired (57,827) Forfeited (349,048) Ending Balance – December 31, 2018 10,661,828 $ 0.19 Granted 128,000 $ 0.11 Vested (1,094,233) Expired - Forfeited - Ending Balance – March 31, 2019 9,695,595 $ 0.19 |
NOTE 10 - WARRANTS_ Schedule of
NOTE 10 - WARRANTS: Schedule of Assumptions for Fair Value at the Commitment Date as of Balance Sheet Date (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Schedule of Assumptions for Fair Value at the Commitment Date as of Balance Sheet Date | Commitment Date Expected dividends 0 % Expected term 5 years Risk free rate 2.49 % Volatility 48.46 % |
Warrant | |
Schedule of Assumptions for Fair Value at the Commitment Date as of Balance Sheet Date | Commitment Date Expected dividends 0 % Expected term 5 years Risk free rate 2.62 % Volatility 48.46 % |
NOTE 10 - WARRANTS_ Schedule _2
NOTE 10 - WARRANTS: Schedule of Stockholders' Equity Note, Warrants or Rights (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Tables/Schedules | |
Schedule of Stockholders' Equity Note, Warrants or Rights | Warrants Outstanding Weighted Average Exercise Price Weighted Average Remaining Life Weighted Average Grant Date Fair Value Balance – December 31, 2017 43,068,636 $ 0.45 4.69 years $ 0.08 Granted 73,755,856 $ 0.26 6.68 years $ 0.14 Exercised - Expired - Forfeited (7,087,500) Ending Balance – December 31, 2018 109,736,992 $ 0.32 5.46 years $ 0.12 Granted 150,000 $ 0.25 5 years $ 0.10 Exercised - Expired - Forfeited - Ending Balance – March 31, 2019 109,886,992 $ 0.32 5.21 years $ 0.12 Exercisable options 109,771,492 $ 0.32 5.21 years $ 0.12 The Company’s outstanding warrants at March 31, 2019 are as follows: Warrants Outstanding Warrants Exercisable Exercise Price Range Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price Intrinsic Value $0.01 - $0.70 109,886,992 5.21 $ 0.32 109,771,492 $ 0.32 $ 80,841 |
NOTE 12 - EARNINGS (LOSS) PER_2
NOTE 12 - EARNINGS (LOSS) PER SHARE: Schedule of Common Stock Equivalents (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Tables/Schedules | |
Schedule of Common Stock Equivalents | As of March 31, 2019 As of December 31, 2018 Warrants (exercise price $0.01 - $0.70/share) 109,886,992 109,736,992 Options (exercise price $0.25 - $0.66/share) 20,436,601 20,436,601 130,323,593 130,173,593 |
Note 1 - Summary of Signific_11
Note 1 - Summary of Significant Accounting Policies: Concentrations (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Details | ||
Cash, FDIC Insured Amount | $ 4,110,236 | $ 70,173 |
Note 1 - Summary of Signific_12
Note 1 - Summary of Significant Accounting Policies: Concentrations: Schedules of Concentration of Risk, by Risk Factor (Details) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Accounts Receivable | ||
Concentration Risk, Percentage | 2.00% | |
Customer A | Revenue | ||
Concentration Risk, Percentage | 99.00% | 0.00% |
Customer A | Accounts Receivable | ||
Concentration Risk, Percentage | 56.00% | |
Customer B | Revenue | ||
Concentration Risk, Percentage | 0.00% | 63.00% |
Customer B | Accounts Receivable | ||
Concentration Risk, Percentage | 0.00% | |
Customer C | Revenue | ||
Concentration Risk, Percentage | 0.00% | 37.00% |
Note 1 - Summary of Signific_13
Note 1 - Summary of Significant Accounting Policies: Schedule of Inventory, Current (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Details | ||
Inventory, Gross | $ 401,658 | $ 391,658 |
Allowance for obsolescence | (335,655) | (335,655) |
Inventory | $ 66,003 | $ 56,003 |
Note 1 - Summary of Signific_14
Note 1 - Summary of Significant Accounting Policies: Disaggregation of Revenue: Revenue Disaggregated by Major Product and Service Lines (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues | $ 123,676 | $ 3,188 |
Product | ||
Revenues | 0 | 0 |
Technical support and other | ||
Revenues | $ 123,676 | $ 3,188 |
Note 2 - Going Concern (Details
Note 2 - Going Concern (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Details | ||
Net Income (Loss) | $ 6,370,572 | $ 3,234,778 |
Working Capital Deficit | 10,554,381 | |
Net Cash Used in Operating Activities | $ 3,200,486 | $ 2,141,765 |
Note 3 - Intangible Assets (Det
Note 3 - Intangible Assets (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Capitalized Intangible Assets | $ 615,198 | $ 578,004 |
Depreciation and amortization | 119,366 | 121,332 |
Intangible Assets | ||
Depreciation and amortization | $ 113,488 | $ 119,130 |
Note 3 - Intangible Assets_ S_2
Note 3 - Intangible Assets: Schedule of Finite-Lived Intangible Assets (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Intangible assets, net | $ 9,422,070 | $ 8,920,360 |
Finite-Lived Intangible Assets, Accumulated Amortization | $ (2,002,295) | (1,888,807) |
Patents | ||
Property, Plant and Equipment, Useful Life | 15 years | |
Intangible assets, net | $ 550,439 | 542,846 |
Software Licenses | ||
Property, Plant and Equipment, Useful Life | 7 years | |
Intangible assets, net | $ 58,260 | 58,260 |
Software Development | ||
Property, Plant and Equipment, Useful Life | 5 years | |
Intangible assets, net | $ 10,815,666 | $ 10,208,061 |
Note 4 - Notes Payable_ Sched_3
Note 4 - Notes Payable: Schedule of Short-term Debt (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Short-term notes payable | $ 45,232 | $ 45,232 | $ 50,232 | |
Short Term Notes Payable | ||||
Repayments | $ 0 | $ (5,000) |
Note 4 - Notes Payable_ Sched_4
Note 4 - Notes Payable: Schedule of Long-term Debt Instruments (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Long-term Debt | $ 266,567 | $ 366,657 | $ 766,658 | |
Current portion of long term debt | 266,657 | 366,657 | ||
Notes Payable, Noncurrent | 0 | $ 0 | ||
Long Term Notes Payable | ||||
Repayments | $ (100,000) | $ (400,001) |
Note 5 - Convertible Notes_ S_2
Note 5 - Convertible Notes: Schedule of Convertible Notes Payable (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Convertible Debt | $ 5,709,190 | $ 3,471,644 | $ 601,576 |
Proceeds from Issuance of Convertible Preferred Stock | 0 | 1,903,438 | |
Repayments of Convertible Debt | (25,000) | 0 | |
Restructuring of Debt | 0 | (112,017) | |
Conversion of notes payable into common stock | 0 | (570,000) | |
Amortization of discounts | 2,262,546 | 1,648,647 | |
Convertible notes, short term | 17,860,274 | 17,860,274 | |
Convertible notes, short term - related party | 158,172 | 183,172 | |
Convertible notes, long term | 150,000 | 150,000 | |
Debt discounts | 12,459,256 | $ 14,721,802 | |
Short Term Convertible Debt Note 1/31/2018 | |||
Convertible notes, short term | 100,000 | ||
Short Term Convertible Debt Note 2/23/18 | |||
Convertible notes, short term | 1,000,000 | ||
Short Term Convertible Debt Note 2/27/18 | |||
Convertible notes, short term | 1,000,000 | ||
Short Term Convertible Debt Note 4/18/18 | |||
Convertible notes, short term | 2,000,000 | ||
Short Term Convertible Debt Note 5/4/18 | |||
Convertible notes, short term | 1,500,000 | ||
Short Term Convertible Debt Note 5/9/18 | |||
Convertible notes, short term | 1,028,274 | ||
Short Term Convertible Debt Note 7/5/18 | |||
Convertible notes, short term | 2,000,000 | ||
Short Term Convertible Debt Note 7/10/18 | |||
Convertible notes, short term | 32,000 | ||
Short Term Convertible Debt Note 7/13/18 | |||
Convertible notes, short term | 200,000 | ||
Short Term Convertible Debt Note 9/17/18 | |||
Convertible notes, short term | 3,000,000 | ||
Short Term Convertible Debt Note 12/4/18 | |||
Convertible notes, short term | 3,000,000 | ||
Short Term Convertible Debt Note 12/19/18 | |||
Convertible notes, short term | $ 3,000,000 |
Note 6 - Commitments and Cont_3
Note 6 - Commitments and Contingencies (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Details | ||
Operating Leases, Rent Expense | $ 75,122 | $ 74,737 |
Payments to Acquire Equipment on Lease | $ 2,871 |
Note 6 - Commitments and Cont_4
Note 6 - Commitments and Contingencies: Schedule of Future Minimum Rental Payments for Operating Leases (Details) | Mar. 31, 2019USD ($) |
Details | |
Operating Leases, Future Minimum Payments, Remainder of Fiscal Year | $ 184,729 |
Operating Leases, Future Minimum Payments, Due in Two Years | 209,559 |
Operating Leases, Future Minimum Payments, Due in Three Years | 214,107 |
Operating Leases, Future Minimum Payments, Due in Four Years | 218,654 |
Operating Leases, Future Minimum Payments, Due Thereafter | 18,569 |
Operating Leases, Future Minimum Payments Due | $ 845,618 |
Note 7 - Related Party Transa_3
Note 7 - Related Party Transactions (Details) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Details | |
Change in Accrued Interest - Related Party | $ 4,935 |
Note 7 - Related Party Transa_4
Note 7 - Related Party Transactions: Schedule of Related Party Transactions (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Accounts Payable, Related Parties, Current | $ 12,992 | $ 9,690 |
John Bluher | ||
Accounts Payable, Related Parties, Current | 75 | 4,465 |
John Hayes | ||
Accounts Payable, Related Parties, Current | $ 12,917 | $ 5,225 |
Note 9 - Stockholders' Equity (
Note 9 - Stockholders' Equity (Details) - shares | Mar. 31, 2019 | Dec. 31, 2018 |
Details | ||
Common Stock, Shares, Outstanding | 96,872,725 | 96,872,725 |
Common Stock, Shares, Issued | 96,872,725 | 96,872,725 |
Preferred Stock, Shares Outstanding | 3,577,370 | 3,577,370 |
Preferred Stock, Shares Issued | 3,577,370 | 3,577,370 |
Note 9 - Share Based Compensa_5
Note 9 - Share Based Compensation (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Details | ||
Stock Granted, Value, Share-based Compensation, Net of Forfeitures | $ 13,637 | |
Unrecognized Expense for Unvested Share-based Compensation | 1,794,439 | |
Share-based Compensation | $ 218,855 | $ 101,413 |
Note 9 - Share Based Compensa_6
Note 9 - Share Based Compensation: Schedule of Assumptions for Fair Value at the Commitment Date as of Balance Sheet Date (Details) | 3 Months Ended |
Mar. 31, 2019 | |
Details | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 5 years |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 2.49% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 48.46% |
Note 9 - Share Based Compensa_7
Note 9 - Share Based Compensation: Share-based Compensation, Activity (Details) - USD ($) | Dec. 31, 2017 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 6,962,560 | 17,074,426 | 16,946,426 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $ 0.60 | $ 0.43 | $ 0.43 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Remaining Contractual Term | 4 years 7 months 24 days | 4 years 1 month 10 days | 4 years 3 months 25 days | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Weighted Average Grant Date Fair Value | $ 0.28 | $ 0.20 | $ 0.20 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 128,000 | 10,390,741 | ||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 0.25 | $ 0.33 | ||
Share-based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range, Options Granted In Period, Weighted Average Remaining Contractual Term | 5 years | 5 years | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 0.10 | $ 0.16 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period | 0 | (57,827) | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period | 0 | (349,048) | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 7,378,830 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ 0.46 | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Exercisable Options, Weighted Average Remaining Contractual Term | 4 years 1 month 10 days | |||
Weighted Average Grant Date Fair Value - Exercisable Options | $ 0.22 | |||
Employee | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 17,074,426 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $ 0.43 | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Remaining Contractual Term | 4 years 1 month 10 days | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 7,378,830 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ 0.46 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value | $ 0 |
Note 9 - Share Based Compensa_8
Note 9 - Share Based Compensation: Share-based Compensation, Performance Shares Award Nonvested Activity (Details) - $ / shares | 3 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Details | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares | 9,695,595 | 10,661,828 | 5,589,463 | |
Share-based Compensation Arrangement by Share-based Payment Award, Option, Nonvested, Weighted Average Exercise Price | $ 0.19 | $ 0.19 | $ 0.28 | |
Share-Based Compensation Arrangement By Share-Based Payment Award Options, Grants In Period, Nonvested | 128,000 | 10,390,741 | ||
Share-based Compensation Arrangement By Share-based Payment Award, Options Nonvested, Weighted Average Grant Date Fair Value, Grants In Period | $ 0.11 | $ 0.16 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares | (1,094,233) | (4,911,501) | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period | 0 | (57,827) | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited, Number of Shares | 0 | (349,048) |
NOTE 10 - WARRANTS_ Schedule _3
NOTE 10 - WARRANTS: Schedule of Assumptions for Fair Value at the Commitment Date as of Balance Sheet Date (Details) | 3 Months Ended |
Mar. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 5 years |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 2.49% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 48.46% |
Warrant | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 5 years |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 2.62% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 48.46% |
NOTE 10 - WARRANTS_ Schedule _4
NOTE 10 - WARRANTS: Schedule of Stockholders' Equity Note, Warrants or Rights (Details) - USD ($) | Dec. 31, 2017 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 6,962,560 | 17,074,426 | 6,962,560 | 16,946,426 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $ 0.60 | $ 0.43 | $ 0.60 | $ 0.43 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Remaining Contractual Term | 4 years 7 months 24 days | 4 years 1 month 10 days | 4 years 3 months 25 days | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Weighted Average Grant Date Fair Value | $ 0.28 | $ 0.20 | $ 0.20 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 128,000 | 10,390,741 | |||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 0.25 | $ 0.33 | |||
Share-based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range, Options Granted In Period, Weighted Average Remaining Contractual Term | 5 years | 5 years | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 0.10 | $ 0.16 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period | 0 | (349,048) | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 7,378,830 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ 0.46 | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Exercisable Options, Weighted Average Remaining Contractual Term | 4 years 1 month 10 days | ||||
Weighted Average Grant Date Fair Value - Exercisable Options | $ 0.22 | ||||
Warrant | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 43,068,636 | 109,886,992 | 43,068,636 | 109,736,992 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $ 0.45 | $ 0.32 | $ 0.45 | $ 0.32 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Remaining Contractual Term | 5 years 2 months 16 days | 5 years 5 months 16 days | 4 years 8 months 8 days | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Weighted Average Grant Date Fair Value | $ 0.12 | $ 0.12 | $ 0.08 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 150,000 | 73,755,856 | |||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 0.25 | $ 0.26 | |||
Share-based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range, Options Granted In Period, Weighted Average Remaining Contractual Term | 5 years | 6 years 8 months 5 days | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 0.10 | $ 0.14 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value | $ 0 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period | 0 | (7,087,500) | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 109,771,492 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ 0.32 | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Exercisable Options, Weighted Average Remaining Contractual Term | 5 years 2 months 16 days | ||||
Weighted Average Grant Date Fair Value - Exercisable Options | $ 0.12 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value | $ 80,841 |
NOTE 12 - EARNINGS (LOSS) PER_3
NOTE 12 - EARNINGS (LOSS) PER SHARE: Schedule of Common Stock Equivalents (Details) - shares | Mar. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 17,074,426 | 16,946,426 | 6,962,560 |
Warrant | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 109,886,992 | 109,736,992 | 43,068,636 |
Options | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 20,436,601 | 20,436,601 | |
Total | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 130,323,593 | 130,173,593 |