Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | May 27, 2020 | Jun. 30, 2019 | |
Document And Entity Information | |||
Entity Registrant Name | FISION Corp | ||
Entity Central Index Key | 0001487931 | ||
Document Type | 10-K/A | ||
Amendment Flag | true | ||
Amendment Description | Fision Corporation (the "Company," "we," "us," "our" or "Fision") is filing this Amendment No. 1 on Form 10-K/A (this "Amendment") to amend its Annual Report on Form 10-K for the year ended December 31, 2019, originally filed with the U.S. Securities and Exchange Commission (the "Commission") on May 27, 2020 (the "Original 10-K"). The purpose of this Amendment is to add this additional disclosure of the Company's reliance on the March 4, 2020 order issued by the Commission under Section 36 (Release No. 34-88318), as modified on March 25, 2020 (Release No. 34-88465) of the Securities Exchange Act of 1934 ("Exchange Act") granting exemptions from specified provisions of the Exchange Act and certain rules thereunder (the "Order"), as a result of the novel coronavirus ("COVID-19") pandemic, to file the Company's Original 10-K when originally due on March 30, 2020. | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Dec. 31, 2019 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 | ||
Entity Common Stock Shares Outstanding | 270,660,252 | ||
Entity Public Float | $ 2,900,000 | ||
Entity Interactive Data Current | Yes |
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current Assets: | ||
Cash | $ 14,510 | $ 121,900 |
Accounts receivable, net | 9,906 | 19,498 |
Notes receivable, net of allowance for doubtful accounts | 811,234 | |
Prepaid expenses | 533,064 | 31,955 |
Total Current Assets | 557,480 | 984,587 |
Property and equipment, net | 2,916 | 6,598 |
Other Assets: | ||
Goodwill | 13,800 | 13,800 |
Intellectual property/software code, net of accumulated amortization | 42,813 | 52,598 |
Deposits | 25,599 | 8,053 |
Total Assets | 642,608 | 1,065,637 |
Current Liabilities: | ||
Accounts payable, accrued expenses and other current liabilities | 2,155,065 | 856,096 |
Customer advances | 62,500 | 181,469 |
Derivative liability | 4,156,621 | 1,480,978 |
Note payable and accrued interest - related party (CMS) | 228,692 | 284,377 |
Convertible notes payable, net of debt discount of $0 and $1,050,602 respectively | 1,028,845 | 590,636 |
Total Current Liabilities | 7,631,723 | 3,393,556 |
Long-Term Liabilities: | ||
Long-term convertible notes payable, net of debt discount of $853,261 and $541,275 respectively | 700,845 | 607,725 |
Total Long-Term Liabilities | 700,845 | 607,725 |
Total Liabilities | 8,332,567 | 4,001,281 |
Contingencies and Commitments (Note 12) | ||
Stockholders' Deficit: | ||
Preferred Stock, $0.0001 Par value, 20,000,000 shares authorized, no shares issued and outstanding | ||
Common Stock, $0.0001 Par value, 500,000,000 shares authorized 135,685,981 and 67,454,276 shares issued and outstanding, respectively | 13,569 | 6,745 |
Additional paid in capital | 24,108,264 | 19,572,322 |
Accumulated deficit | (31,811,792) | (22,514,711) |
Total Stockholders' Deficit | (7,689,959) | (2,935,644) |
Total Liabilities and Stockholders' Deficit | $ 642,608 | $ 1,065,637 |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parenthetical) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current Liabilities | ||
Notes payable, net of debt discount | $ 0 | $ 1,050,602 |
Long-Term Liabilities | ||
Long-Term convertible notes payable, net of debt discount | $ 853,261 | $ 541,275 |
Stockholders' Deficit | ||
Preferred stock, shares par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, shares par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 135,685,981 | 67,454,276 |
Common stock, shares outstanding | 135,685,981 | 67,454,276 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||
REVENUE | $ 562,763 | $ 505,030 |
COST OF SALES | 78,333 | 81,265 |
GROSS MARGIN | 484,430 | 423,765 |
OPERATING EXPENSES | ||
Sales and Marketing | 564,228 | 725,018 |
Development and Support | 290,035 | 691,201 |
General and Administrative | 3,015,621 | 1,723,543 |
TOTAL OPERATING EXPENSES | 3,869,884 | 3,139,762 |
OPERATING LOSS | (3,385,454) | (2,715,997) |
OTHER INCOME / (EXPENSES) | ||
Interest | (1,565,491) | (1,744,557) |
Amortization expense/amortization of debt discount | (1,844,329) | (1,241,843) |
OID, excess derivative expense and other expenses | (757,474) | (139,150) |
Goodwill impairment expense | (66,000) | |
Change in fair value of derivatives | (2,024,961) | 1,358,601 |
Loss on extinguishment of debt / settlement of debt | (209,989) | 549,166 |
Bad debt expense | (857,242) | |
Other income | 135,354 | 6,934 |
TOTAL OTHER INCOME (EXPENSES) | (5,911,627) | (1,276,849) |
NET LOSS | $ (9,297,081) | $ (3,992,846) |
Net loss per common share - basic and diluted | $ (0.08) | $ (0.07) |
Weighted average common shares outstanding: | ||
Basic and diluted | 109,789,986 | 54,219,812 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated (Deficit) [Member] |
Balance, shares at Dec. 31, 2017 | 45,935,369 | |||
Balance, amount at Dec. 31, 2017 | $ (2,695,010) | $ 4,594 | $ 15,822,261 | $ (18,521,865) |
Common stock issued for cash, shares | 7,000,000 | |||
Common stock issued for cash, amount | 1,400,000 | $ 700 | 1,399,300 | |
Stock issued for services, shares | 4,154,960 | |||
Stock issued for services, amount | 461,070 | $ 416 | 460,654 | |
Warrants/Options granted for services | 1,249,665 | 1,249,665 | ||
Conversion of notes payable and accrued interest/expenses, shares | 9,079,383 | |||
Conversion of notes payable and accrued interest/expenses, amount | 641,477 | $ 908 | 640,569 | |
Stock issued from exercise of warrants, shares | 1,284,564 | |||
Stock issued from exercise of warrants, amount | $ 128 | (128) | ||
Net loss | $ (3,992,846) | $ (3,992,846) | ||
Balance, shares at Dec. 31, 2018 | 67,454,276 | |||
Balance, amount at Dec. 31, 2018 | $ (2,935,644) | $ 6,745 | $ 19,572,322 | $ (22,514,711) |
Common stock issued for cash, shares | 1,750,000 | |||
Common stock issued for cash, amount | 350,000 | $ 175 | 349,825 | |
Stock issued for services, shares | 37,154,044 | |||
Stock issued for services, amount | 2,114,900 | $ 3,715 | 2,111,185 | |
Warrants/Options granted for services | 879,760 | 879,760 | ||
Conversion of notes payable and accrued interest/expenses, shares | 29,327,661 | |||
Conversion of notes payable and accrued interest/expenses, amount | 1,198,106 | $ 2,934 | 1,195,172 | |
Net loss | $ (9,297,081) | $ (9,297,081) | ||
Balance, shares at Dec. 31, 2019 | 135,685,981 | |||
Balance, amount at Dec. 31, 2019 | $ (7,689,959) | $ 13,569 | $ 24,108,264 | $ (31,811,792) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net Loss | $ (9,297,081) | $ (3,992,846) |
Adjustments to reconcile Net Loss to net cash used in operating activities: | ||
Common stock issued for services | 1,589,532 | 461,070 |
Amortization of prepaid expenses | 170,197 | |
Depreciation and amortization | 13,468 | 24,830 |
Stock warrants/stock options issued for services | 879,760 | 1,249,665 |
Change in fair value of derivative liabilities | 2,024,961 | (1,358,601) |
Excess derivative expense | 757,474 | 259,385 |
Loss on extinguishment of debt/Gain on settlement of debt | 209,989 | (549,166) |
Extinguishment of derivative liability due to convertible note conversions | (1,212,505) | |
Impairment and other charges | 66,000 | |
Bad debt expense | 857,242 | |
Amortization of debt discount | 1,844,329 | 1,220,134 |
Interest income on notes receivable | (46,008) | (6,934) |
(Increase) decrease in: | ||
Accounts receivables | 9,592 | 20,267 |
Deposits | (17,546) | |
Customer contracts - unrecognized revenue | 11,924 | |
Work In Process | 8,400 | |
Prepaid expenses | 24,259 | (1,060) |
Increase (decrease) in: | ||
Accounts payable, accrued expenses and other current liabilities | 1,389,742 | (269,656) |
Change in customer advances | (118,969) | 78,224 |
Net Cash Used in Operating Activities | (1,091,761) | (2,437,972) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (5,000) | |
Issuance of notes receivables | (804,300) | |
Net Cash Used In Investing Activities | (809,300) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repayments on note payable | (343,000) | (983,013) |
Proceeds from note payable | 964,000 | 2,959,500 |
Proceeds from related party notes | 61,500 | 26,125 |
Repayments for related party notes line of credit | (48,129) | (44,213) |
Proceeds from issuance of common stock | 350,000 | 1,400,000 |
Net Cash Provided by Financing Activities | 984,371 | 3,358,399 |
Net (Decrease) Increase in Cash | (107,390) | 111,127 |
Cash at Beginning of Year | 121,900 | 10,773 |
Cash at End of Year | 14,510 | 121,900 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid during year: Interest | 118,920 | |
Noncash operating and financing activities: | ||
Derivatives recorded as debt discount | 1,041,106 | |
Conversion of debt and accrued interest to common stock | 1,198,106 | 641,477 |
Prepaid stock issuance | 525,368 | |
Acquisiion of Volerro | $ 31,800 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2019 | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | |
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | FISION Corporation (formerly DE Acquisition, Inc.), a Delaware corporation (the “Company”) was incorporated on February 24, 2010 and was inactive until 2015 when it merged with Fision Holdings, Inc., a Minnesota corporation, an operating software development business based in Minneapolis, Minnesota. As a result of this merger, Fision Holdings, Inc. became a wholly-owned subsidiary of the Company. Fision Holdings, Inc. was incorporated in Minnesota in 2010, and has developed and successfully commercialized a proprietary cloud-based software platform which automates and integrates digital marketing assets and marketing communications in order to “bridge the gap” between the marketing and sales functions of any enterprise. The Company generates its revenues primarily from software licensing contracts typically having terms of one to three years and requiring monthly subscription fees based on the customer’s number of users and locations where used. The Company’s business model provides it with a high percentage of recurring revenues. The terms “Fision,” “we,” “us,” and “our,” refer to FISION Corporation, a Delaware corporation and its wholly-owned operating subsidiary Fision Holdings, Inc., a Minnesota corporation. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Use of estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ materially from those estimates and assumptions. Such estimates include management’s assessments of the carrying value of certain assets, useful lives of assets, derivative securities, fair value of financial instruments, and related depreciation and amortization methods applied. Concentration of Credit Risk Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and accounts receivable. As of December 31, 2019, we may have had cash deposits that exceeded Federal Deposit Insurance Corporation (“FDIC”) insurance limits of $250,000. As of December 31, 2019 there was no cash in excess of federally insured limits. We maintain cash balances at high quality financial institutions to mitigate this risk. We perform ongoing credit evaluations of our customers and generally do not require collateral from them to do business with us. Cash equivalents We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. At December 31, 2019, the Company had no cash equivalents. Fair value of financial instruments The Company adopted the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820 (the “Fair Value Topic”) which defines fair value, establishes a framework for measuring fair value under Generally Accepted Accounting Principles (GAAP), and expands disclosures about fair value measurements. The Fair Value Topic defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. It also establishes a fair value hierarchy, which prioritizes the valuation inputs into six broad levels. The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities: A) Market approach—Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Prices may be indicated by pricing guides, sale transactions, market trades, or other sources; B) Cost approach—Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost); and C) Income approach—Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about the future amounts (includes present value techniques, and option-pricing models). Net present value is an income approach where a stream of expected cash flows is discounted at an appropriate market interest rate. Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. An active market for an asset or liability is a market in which transactions for the asset or liability occur with significant frequency and volume to provide pricing information on an ongoing basis. Level 2: Observable inputs other than Level 1 inputs. Example of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. Level 3: Unobservable inputs based on the Company’s assessment of the assumptions that are market participants would use in pricing the asset or liability. The carrying amount of the Company’s financial assets and liabilities, such as cash, accounts receivable, accounts payable, accrued expenses, and notes payable approximate their fair value because of the short maturity of those instruments. The following table represents our assets and liabilities by level measured at fair value on a recurring basis at December 31, 2019. Level 1 Level 2 Level 3 Derivative Liability $ - $ - $ 4,156,621 The following assets and liabilities are measured on the consolidated balance sheets at fair value on a recurring basis utilizing significant unobservable inputs or Level 3 assumptions in their valuation. The following table provides a reconciliation of the beginning and ending balances of the liabilities. Fair Value Change in Fair Value January 1, fair December 31, 2018 Additions Value Conversions 2018 Derivative Liability $ 1,243,788 $ 3,501,616 $ (1,358,601 ) $ (1,905,825 ) $ 1,480,978 Fair Value Change in Fair Value January 1, fair December 31, 2019 Additions Value Extinguishment 2019 Derivative Liability $ 1,480,978 $ 1,863,187 $ 2,024,961 $ (1,212,505 ) $ 4,156,621 All gains and losses on assets and liabilities measured at fair value on a recurring basis and classified as Level 3 within the fair value hierarchy are recognized in other interest and expense in the accompanying financial statements. The derivative liability relating to the beneficial conversion feature of our convertible notes payable was $4,156,621 at December 31, 2019 and was computed using the following variables: Exercise price $ .135--$.174 Expected volatility 182 % Expected term Due on demand to 36 months Risk free interest rate 0.91 – 2.51 % Expected dividends - Derivative Instruments We account for derivative instruments in accordance with Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”) If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable related to the products and services sold are recorded at the time revenue is recognized and are presented on the balance sheet net of allowance for doubtful accounts. The ultimate collection of the receivable may not be known for several months after services have been provided and billed. We have established an allowance for doubtful accounts based upon factors pertaining to the credit risk of specific customers, analyses of current and historical cash collections, and the aging of receivables. Delinquent accounts are written-off when the likelihood for collection is remote and/or when we believe collection efforts have been fully exhausted and we do not intend to devote any additional efforts in an attempt to collect the receivable. We adjust our allowance for doubtful accounts balance on a quarterly basis. Property and Equipment Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method over the assets estimated useful life of five (5) years for equipment, furniture and fixtures. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations. Consolidated Statements of Cash Flows Correction During the first quarter of 2020, the Company identified that activities related to certain notes receivables had been reported as cash flows from operating activities that should have been presented as investing activities. The Company corrected the previously presented cash flows for these notes receivables and in doing so, the statements of cash flows for 2018 was adjusted to decrease net cash flows used by operating activities by $804,300, with corresponding increases in net cash flows used by investing activities. The Company has evaluated the effect of the incorrect presentation, both qualitatively and quantitatively, and concluded that it did not have a material impact on, nor require amendment of, any previously filed annual or quarterly consolidated financial statements. Impairment of long-lived assets We follow paragraph 360-10-05-4 of the FASB Accounting Standards Codification for long-lived assets. Our long-lived assets are required to be reviewed for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. We assess the recoverability of our long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. Revenue recognition In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 606, Revenue From Contracts With Customers, originally effective for public business entities with annual reporting periods beginning after December 15, 2016. On August 12, 2015, the FASB issued an Accounting Standards Update (“ASU”), Revenue From Contracts With Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASC 606 for one year. ASC 606 provides accounting guidance related to revenue from contracts with customers. For public business entities, ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. This new revenue recognition standard (new guidance) has a five-step process: a) Determine whether a contract exists; b) Identify the performance obligations; c) Determine the transaction price; d) Allocate the transaction price; and e) Recognize revenue when (or as) performance obligations are satisfied. The Company has already implemented the five-step process in determining revenue recognition from contracts with customers, in accordance with ASC 606. Revenue is recognized in the period the services are provided over the contract period, normally one (1) to three (3) years. We invoice one-time startup and implementation costs, such as consolidating and uploading digital assets of the customer, upon completion of those services as one performance obligation and recorded as revenue when completed. Monthly services, such as internet access to software as a service (SaaS), hosting and weekly backups are invoiced monthly as another performance obligation and recorded as revenue over time. Company Recognizes Contract Liability for Its Performance Obligation Upon receipt of a prepayment from a customer, the Company recognizes a contract liability in the amount of the prepayment for its performance obligation to transfer goods and services in the future. When the Company transfers those goods and services and, therefore, satisfies its performance obligation to the customer, the Company will then recognize the revenue. Income taxes We follow Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance to the extent our management concludes it is more likely than not that the assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty in income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. We had no material adjustments to our assets and/or liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25. Stock-Based Compensation In December 2004, the FASB issued FASB Accounting Standards Codification No. 718, Compensation – Stock Compensation In June 2018, the FASB issued Accounting Standards Update No. 2018-07, Compensation - Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting Equity - Equity-Based Payments to Non-employees Revenue from Contracts with Customers Fair Value The closing price of our common stock on the date of grant is used as the fair value for the issuances of restricted stock. The fair value of stock options or warrants granted is estimated as of the grant date using the Black-Scholes option pricing model. The following range of assumptions in the Black- Scholes option pricing model was used to determine fair value at the years ended below: Year ended December 31, 2019 2018 Weighted-average volatility 182 % 93.6 % Expected term (in years) 2.4 3.2 Risk-free interest rate 1.62 % 2.56 % Expected volatilities used for award valuation in 2019 and 2018 are based on the Company’s historical prices. The risk-free interest rate for periods equal to the expected term of an award is based on a blended historical rate using Federal Reserve rates for U.S. Treasury securities. Net income (loss) per share We compute basic and diluted earnings per share amounts pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic earnings per share is computed by dividing net income (loss) available to common shareholders, by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share is computed by dividing net income (loss) available to common shareholders by the diluted weighted average number of shares of common stock during the period. The diluted weighted average number of common shares outstanding is the basic weighted number of shares adjusted as of the first day of the year for any potentially diluted debt or equity. For the years ended December 31, 2019 and 2018, there were 388,876,859 and 20,956,569 respectively, potentially dilutive securities not included in the calculation of weighted-average common shares outstanding since they would be anti-dilutive. Research and Development We expense all our research and development operations and activities as they occur. During the fiscal year ended December 31, 2019 we incurred total expenses of $290,035 for research and development. In comparison, during the fiscal year ended December 31, 2018 we incurred total expenses of $691,201 for research and development. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached, which for our software products, is generally shortly before the products are released to manufacturing. Once technological feasibility is reached, such costs are capitalized and amortized to cost of revenue over the estimated lives of the products Advertising Costs We expense marketing and advertising costs as incurred. Marketing and advertising expenses for the years ended December 31, 2019 and 2018 were $17,331 and $20,444 respectively. The costs are included in the sales and marketing expenses on the consolidated statement of operations. Recently Issued Accounting Pronouncements We regularly monitor our compliance with applicable financial reporting standards and review new pronouncements and drafts thereof that are relevant to us. As a result of new standards, changes to existing standards and changes in their interpretation, we might be required to change our accounting policies, particularly concerning revenue recognition, the capitalized incremental costs to obtain a customer contract and lease accounting, to alter our operational policies and to implement new or enhance existing systems so that they reflect new or amended financial reporting standards, or to restate our published financial statements. Such changes may have an adverse effect on our business, financial position, and operating results, or cause an adverse deviation from our revenue and operating profit target, which may negatively impact our financial results. In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company has adopted ASU 2016-02. As of December 31, 2019, the Company had no leases, as the office lease expired. The Company pays for a virtual office space on a month-to-month basis. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. |
GOING CONCERN
GOING CONCERN | 12 Months Ended |
Dec. 31, 2019 | |
GOING CONCERN | |
NOTE 3 - GOING CONCERN | These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Our ability to continue as a going concern is contingent upon our ability to achieve and maintain profitable operations, and our ability to raise additional capital as required. At December 31, 2019 we had a working capital deficiency of $7,074,243 and an accumulated deficit of $31,811,792 and a net loss of $9,297,081 and net cash used in operating activities of $1,091,761. These conditions raise substantial doubt about our ability to continue as a going concern within one year after issuance date of the financial statements. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty. Our ability to continue as a going concern depends on our ability to raise additional significant funds. The Company is attempting to raise such funds through private placements of its equity or debt (including convertible debt) securities, but there can be no assurance any such future funds will become available to us. Unless we can raise additional significant working capital, our business plan most likely will not succeed. |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2019 | |
ACCOUNTS RECEIVABLE | |
NOTE 4 - ACCOUNTS RECEIVABLE | Our accounts receivable at December 31, 2019 and 2018 consisted of the following: December 31, 2019 December 31, 2018 Accounts receivable $ 9,906 $ 19,498 Less: Allowance for doubtful accounts -0- -0- $ 9,906 $ 19,498 |
NOTES RECEIVABLE
NOTES RECEIVABLE | 12 Months Ended |
Dec. 31, 2019 | |
NOTES RECEIVABLE | |
NOTE 5 - NOTES RECEIVABLE | Our notes receivable at December 31, 2019 and 2018 consisted of the following: December 31, 2019 December 31, 2018 Notes receivable $ 804,300 $ 804,300 Accrued interest 52,942 6,934 Total 857,242 811,234 Less allowance for doubtful accounts (857,242 ) - Notes receivable, net $ - $ 811,234 While the failed Continuity Logic merger was pending, the Company made various bridge loans to Continuity for working capital purposes, of which a total balance of $857,242 is still outstanding as of December 31, 2019 and in default. These loans matured on August 31, 2019, bear interest at 6% per annum, and a portion of the Notes for these loans are secured by a first-priority perfected security interest on the accounts receivable of Continuity Logic, pursuant to a Security Agreement dated November 27, 2018. On February 4, 2019, the merger with Continuity Logic LLC was terminated. The termination of the merger does not change or affect the continuing obligation of Continuity Logic to satisfy the future payment of these loans to the Company. Further, during August 2019, the Company commenced a complaint against Continuity Logic LLC regarding the unpaid balance of the Notes Receivable. Accordingly, the Company created an allowance for doubtful accounts of $857,242 against the loans. Continuity Logic, LLC is not a related party to the Company. Further court action is ongoing, while the Company pursues aggressive collection activities, including our law firm contacting Continuity Logic LLC customers requesting all payments to be sent directly to the law firm, on our behalf. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT | |
NOTE 6 - PROPERTY AND EQUIPMENT | Property and equipment, stated at cost, less accumulated depreciation, consist of the following at December 31, 2019 and 2018: December 31, 2019 December 31, 2018 Equipment $ 15,720 $ 27,118 Furniture & Fixtures 471 11,641 Less: Accumulated Depreciation (13,275 ) (32,161 ) Net Property and Equipment $ 2,916 $ 6,598 |
OTHER BALANCE SHEET ACCOUNTS -
OTHER BALANCE SHEET ACCOUNTS - PREPAID EXPENSES | 12 Months Ended |
Dec. 31, 2019 | |
OTHER BALANCE SHEET ACCOUNTS - PREPAID EXPENSES | |
NOTE 7 - OTHER BALANCE SHEET ACCOUNTS - PREPAID EXPENSES | Prepaid expenses consisted of the following: December 31, 2019 2018 Prepaid Expenses: Rent Deposit - 17,340 Sales Commissions and Severance Advances 7,696 1,060 Unvested Stock Grants 525,368 13,555 Total Prepaid Expenses $ 533,064 $ 31,955 Certain prior year amounts have been reclassified to conform to the current year presentation. Specifically, rent deposit was classified in 2018 in prepaid expenses. In 2019, rent deposit is classified in Other Assets. |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2019 | |
NOTES PAYABLE | |
NOTE 8 - NOTES PAYABLE | At December 31, 2019, we were indebted under various convertible and non-convertible Notes Payable net of debt discount of $853,261 for a total amount of $1,958,382, including related parties notes of $228,692 and non-convertible Notes Payable of $932,586 and excluding $446,404 accrued interest. As of December 31, 2019, all short term notes are in default. At December 31, 2018 the Company was indebted under various Notes Payable net of debt discount of $1,591,877 for a total amount of $1,482,738, excluding related parties notes of $284,377 and $287,548 accrued interest. Derivative Instruments The Company accounts for derivative instruments in accordance with Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”), If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change. Convertible Notes During March-June 2019, we issued a total of $650,000 in convertible notes sold to five accredited individual investors who purchased these notes from our 2019 private placement bearing interest at 6% per annum and maturing three years from their purchase with the noteholders having the right to convert these notes into our common stock at a conversion price equal to the lower of $.20 per share or the Volume Weighted Average Price (VWAP) of our common shares for the ten days prior to conversion, also including three-year warrants to purchase a number of shares equal to the principal amount of the note divided by the conversion price. The exercise price is equal to the conversion price. The Company recorded a derivative liability on the conversion feature in the note and associated warrant liability to the warrants issuable under the agreement. We valued the warrants at $501,996, under our Black-Scholes model, to be recorded as a derivative liability for warrants, whereby the associated debt discount will be amortized on a straight-line basis over the term of the warrants, including a cashless exercise provision as defined under the terms of the Note, and also received registration rights related to any future conversion(s) of this Note to equity. In April 2019, we issued a $50,000 convertible note to an accredited investor, in addition to an additional $141,106 convertible notes for the conversion of existing short term notes to long term convertible notes to two affiliate accredited investors, bearing interest at 6% per annum during the three-year term of the note, and being convertible into our common shares at a conversion price equal to the lower of $.20 per share or the Volume Weighted Average Price (VWAP) of our common shares for the ten days prior to conversion, also including three-year warrants to purchase a number of shares equal to the principal amount of the note divided by the conversion price. The exercise Black-Scholes model, to be recorded as a derivative liability for warrants, whereby the associated debt discount will be amortized on a straight-line basis over the term of the warrants, including a cashless exercise provision as defined under the terms of the Note, and also received registration rights related to any future conversion(s) of this Note to equity. During May 2019, we issued a $250,000 convertible note to an accredited investor, in addition to a $250,000 convertible note for the conversion of an existing short term note to a long term convertible note to an affiliate accredited investor, bearing interest at 6% per annum during the three-year term of the note, and being convertible into our common shares at a conversion price equal to the lower of $.20 per share or the Volume Weighted Average Price (VWAP) of our common shares for the ten days prior to conversion, also including three-year warrants to purchase a number of shares equal to the principal amount of the note divided by the conversion price. The exercise price is equal to the conversion price. The Company recorded a derivative liability on the conversion feature in the note and associated warrant liability to the warrants issuable under the agreement. We valued the warrants at $463,174, under our Black-Scholes model, to be recorded as a derivative liability for warrants, whereby the associated debt discount will be amortized on a straight-line basis over the term of the warrants, including a cashless exercise provision as defined under the terms of the Note, and also received registration rights related to any future conversion(s) of this Note to equity. In accordance with ASC 470 – Debt, the Company accounted for this as a debt extinguishment since the terms of the debt changed significantly by adding a conversion feature. Accordingly, the Company recorded a loss on debt extinguishment of $189,847 for the May 2019 note and the April 2019 note to affiliate noteholders for these conversions. ASC 470-50-40-10 (EITF Issue 96-19) establishes the criteria for debt extinguishment and modification. If the debt is substantially different, then the debt is extinguished, and a gain or loss is calculated and recorded. Substantially different is defined by the following three tests: 1. Ten percent or more difference in cash flows – The present value of the cash flow under the terms of the new debt instrument is at least 10% different from the present value of the remaining cash flows under the terms of the original instrument. 2. Embedded conversion option difference is 10% or more – The change in the fair value of the embedded conversion option (calculated as the difference between the fair value of the embedded conversion option immediately before and after the modification or exchange) is at least 10% of the carrying amount of the original debt instrument immediately prior to the modification or exchange; or 3. There is the addition or elimination of a substantive conversion option – A modification or an exchange of debt instruments that adds a substantive conversion option or eliminates a conversion option that was substantive at the date of the modification or exchange. During September 2019, we issued a total of $78,000 in convertible notes sold to three accredited individual investors who purchased these notes from our 2019 private placement bearing interest at 6% per annum and maturing three years from their purchase with the noteholders having the right to convert these notes into our common stock at a conversion price equal to the lower of $.20 per share or the Volume Weighted Average Price (VWAP) of our common shares for the ten days prior to conversion. The Company recorded a derivative liability on the conversion feature in the notes, utilizing a Black Scholes pricing model, utilizing volatility for the period, closing stock price, conversion price, and the discount rate of a U.S. bond equivalent yield as of December 31, 2019. The convertible note holders also received registration rights related to any future conversion(s) of these Notes to equity. As of December 31, 2019, the Company had $700,845 outstanding in long term convertible notes, which is net of debt discount of $853,261. The accrued interest on these long-term notes is included in accounts payable and accrued expenses on the balance sheet. The Company recorded a gain of $1,212,505 related to the extinguishment of derivative liabilities on notes that were settled and converted during 2019. |
CONSULTING CONTRACT WITH CAPITA
CONSULTING CONTRACT WITH CAPITAL MARKET SOLUTIONS LLC | 12 Months Ended |
Dec. 31, 2019 | |
CONSULTING CONTRACT WITH CAPITAL MARKET SOLUTIONS LLC | |
NOTE 9 - CONSULTING CONTRACT WITH CAPITAL MARKET SOLUTIONS LLC | In April 2019, we entered into a consulting contract with Capital Market Solutions LLC, a Delaware limited liability company (“CMS”), an affiliate, providing that for a term of one year, CMS will provide us with management, operational, and financial services in consideration for our payments to CMS of $50,000 monthly along with issuance to CMS of 30 million shares of our common stock which we valued at $1,797,000 based on the closing stock price on the date of the transaction, which was recorded as a pre-paid expense and amortized over one year. This consulting contract also provided for a five-year warrant providing CMS the right to purchase an additional 30 million shares of our common stock exercisable at $.20 per share, which we valued at $1,297,570 utilizing a Black Scholes pricing model, with the warrant expense also amortized as consulting expense on a straight-line basis over the term of the consulting agreement of one year. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2019 | |
STOCKHOLDERS' EQUITY | |
NOTE 10 - STOCKHOLDERS' EQUITY | The Company is authorized to issue 500,000,000 shares of common stock and 20,000,000 shares of preferred stock, both having $.0001 par value per share. At December 31, 2019 there were 135,685,981 outstanding shares of common stock and no outstanding shares of preferred stock. Common Shares Issued in 2018 In January--February 2018 we issued a total of 800,000 unregistered common shares valued at $134,000 to two consultants for investor relations and shareholder communications services. During January- March 2018 we issued a total of 2,012,957 unregistered common shares to three holders of Convertible Notes who converted their Notes to $130,433 of common stock, which conversion prices were based on specific provisions contained in their Convertible Notes. In March 2018 we granted 250,000 unvested shares of our common stock, valued at $50,000, to John Bode in consideration for his agreement to serve for a year as an independent director on our Board of Directors, of which 62,500 shares vest quarterly on May 31, 2018, August 31, 2018, November 30, 2018 and February 28, 2019 provided he continues to serve as a director. All these shares are now vested. In April 2018 we issued 660,000 unregistered common shares, valued at $92,844, to a holder of a Convertible Note who converted $47,248 of the Note into common stock with the conversion price based on specific provisions in the Note. During April-May 2018 we issued a total of 779,960 unregistered common shares valued at $109,770 to three consultants for investor relations and shareholder communications services. During April-June 2018 we issued a total of 3,861,843 unregistered common shares to three holders of Convertible Notes who converted their Notes to $256,086 of common stock, which conversion prices were based on specific provisions contained in these Notes. During June 2018, we issued 500,000 shares of restricted common stock, valued at $80,000 to our former Chief Technology Officer. During July-August, 2018, we issued 650,000 shares of restricted common stock valued at $102,500 to two consultants and a Noteholder for investor relations and shareholder communications services. During July-September 2018, we issued a total of 3,014,491 unregistered shares of our common stock valued at $209,388 for debt conversions from four noteholders, which conversion prices were based on specific provisions contained in their convertible Notes During September 2018, we issued 93,333 shares of unregistered common stock valued at $14,000 to an accredited investor for exercise of a warrant with a cashless exercise provision. During September 2018 we issued 200,000 shares of unregistered common stock valued at $31,800 to Volerro Corporation as bonus shares pursuant to terms of the 2017 acquisition agreement. In October 2018 we issued a total of 400,000 unregistered common shares valued at $62,000 to two consultants for investor relations and shareholder communications services. In October 2018 we issued 439,092 common shares to a noteholder to convert debt in the amount of $26,894 based on specific provisions contained in the note. In October 2018 we issued 141,231 common shares incident to exercise of a warrant held by a broker-dealer that raised funds for the Company in 2017 and 2018. From October-December 2018 and incident to our recent private placement offering of $2,000,000, we issued a total of 7,700,000 common shares to accredited private investors for proceeds of $1,400,000, which included purchased shares at $.20 per share and additional advisory shares based on 10% of the purchased shares. Stock Option Grants in 2018 In 2018 we granted a four-year stock option to our Chief Revenue Officer to purchase 500,000 common shares, vesting quarterly, at an exercise price of $.20 per share. In 2018 we also issued employee stock options for an aggregate purchase of 740,000 common shares, ratably vesting annually over their four-year terms, and with options for 650,000 shares exercisable at $.20 per share and options for 90,000 shares exercisable at $.25 per share. Warrant Grants in 2018 During the three-month period ended March 31, 2018, we granted warrants to purchase a total of 450,000 shares of our common stock, valued at $84,875 using Black-Scholes, as follows: (i) warrants for 100,000 shares granted to a Noteholder incident to the purchase of a $100,000 Convertible Note, fully vested, and exercisable at $.30 per share anytime during a five-year term; (ii) warrants for 150,000 shares granted to a Noteholder incident to purchase of a $150,000 Convertible Note, fully vested, and exercisable at $.01 per share anytime during a three-year term; and (iii) warrants for 200,000 shares granted incident to the purchase of $100,000 of convertible debt in our private placement, fully vested, and exercisable at $.01 per share anytime during a three-year term, and which included warrants for 100,000 shares issued to the Noteholders and warrants for 100,000 shares issued to the placement agent. During the three-month period ended June 30, 2018, we granted warrants to purchase a total of 686,000 shares of our common stock, valued at $82,407 using Black-Scholes, as follows: (i) warrants for 100,000 shares granted to a Noteholder incident to the purchase of a $75,000 Convertible Note, fully vested, and exercisable at $.135 per share anytime during a two-year term; (ii) warrants for 480,000 shares granted to a Noteholder incident to purchase of a $176,000 Convertible Note, fully vested, and exercisable at $.20 per share anytime during a three-year term; and (iii) warrants for 106,000 shares granted incident to the purchase of $53,000 of convertible debt in our private placement, fully vested, and exercisable at $.01 per share anytime during a three-year term, including warrants for 53,000 shares issued to the Noteholders and warrants for 53,000 shares issued to the placement agent During the three-month period ended September 30, 2018, we granted warrants to purchase a total of 540,000 shares of our common stock, valued at $33,656 using Black-Scholes , as follows: (i) warrants for 100,000 shares granted to two Noteholders incident to their purchase of $100,000 Convertible Notes, fully vested, and exercisable at $.01 per share anytime during a two-year term; (ii) warrants for 50,000 shares granted to two consultants, vesting ratably over a two-year term, and exercisable at $.25 per share anytime during their two-year term; and (iii) warrants for 390,000 shares granted to Noteholders incident to their purchase of $390,000 Convertible Notes, fully vested, and exercisable at $.01 per share anytime during a two-year term. During the three-month period ended December 31, 2018, related to our recent private placement, we granted three-year warrants to the private placement investors to purchase an aggregate of 10,000,000 shares of our common stock, exercisable at $.20 per share, adjusted to a discounted true-up price, with a floor of $0.10 per share, related to the trading price of our Common Stock during a 90-day period after effectiveness of a registration statement. Accounting Standards Codification (ASC) specifies prior to the Accounting Standards Update (ASU) 2017-11, it specifies the true-up price terms makes this warrant a derivative. However, post ASU 2017-11, this clause is scoped out of the analysis and is not a derivative. ASU 2017-11 is officially effective for calendar year end companies on 1/1/19, however issuers can early adopt. The Company has taken the position to early adopt, which would eliminate Section 7(b) from making these warrants a derivative. Shares Issued for Service in 2019 In February 2019 we issued 300,000 common shares valued at $26,730 for advisory services to be provided to us during February-April 2019. In February 2019 we also issued 62,500 common shares to our independent director, John Bode for his service as a director in the fourth quarter of his first year of service, and we also granted him $12,500 worth of our common stock vesting at the end of each quarter of his second year as a director, in consideration for his agreement to serve as a director for the year commencing March 1, 2019. In March 2019, we recognized an option and warrant expense of $148,199 for certain employee stock options previously granted to our employees. In April 2019 we entered into a one-year consulting contract in consideration for our payment to the consultant of $50,000 monthly, 30 million shares of our common stock, and a five-year warrant to acquire an additional 30 million shares for $.20 per share. See foregoing Note 9. In May 2019 we issued 245,098 restricted common shares valued at $12,500 to our independent director for three months service on our Board of Directors. In August 2019 we issued 490,196 restricted common shares valued at $12,500 to our independent director for three months service on our Board of Directors. In November 2019, we issued 781,250 restricted common shares valued at $12,500 to our independent director for three months service on our Board of Directors. Shares Issued for Cash in 2019 During January-March 2019 we received proceeds of $350,000 from certain accredited investors who made payments of their second tranche under our recent private placement, for which we issued to them a total of 1,750,000 purchased common shares and 175,000 advisory common shares, pursuant to the terms of a Securities Purchase Agreement as an Advisory Fee based on ten percent of the shares purchased in this private placement. Shares Issued for Conversion of Debt in 2019 During February-March 2019 we issued an aggregate of 8,622,087 common shares and two-year warrants to purchase an aggregate of 3,182,834 common shares (exercisable at $.20 per share and valued at $63,502 under Black-Scholes pricing) to noteholders who converted their outstanding notes in the amount of $742,391, with the conversion prices and warrant terms based on specific terms contained in the notes. In March 2019, we also issued three-year warrants to purchase an aggregate of 1,750,000 common shares exercisable at $.20 per share (with a Black-Scholes model value of $59,121 and recorded as a debt discount), in connection with a convertible debt offering of $350,000 to five accredited investors and bearing interest at 6% per annum during the five-year term of these notes, and also being convertible into our common stock at a conversion price equal to the lower of $.20 per share or the Volume Weighted Average Price (VWAP) of our common shares during the ten days prior to conversion. In April-May 2019, we issued an aggregate of 3,284,284 shares of our common stock to two noteholders who converted total outstanding Notes in the amount of $51,500, with the conversion price based on specific terms contained in the Notes. In addition, we issued an aggregate of 5,000,000 common shares valued at $222,000 for advisory services to be provided to us during one year advisory agreements. In June 2019, three noteholders converted $176,000 of outstanding Notes owed to them into an aggregate of 1,760,000 common shares, with the conversion prices based on specific terms contained in these Notes. In July 2019, we issued 100,000 restricted common shares valued at $3,900 to an individual accredited investor in consideration for making a loan to us in the amount of $75,000, having an interest rate of 6% per annum, and maturing on January 18, 2020. In August 2019 an accredited Noteholder converted $80,162 of outstanding Notes into an aggregate of 2,676,771 common shares, with the conversion price based on specific terms contained in the Notes; and in September 2019 another accredited Noteholder converted $19,000 of outstanding Notes into an aggregate of 2,533,333 common shares, with the conversion price based on specific terms contained in the Notes. In October 2019, two Noteholders who are accredited investors converted a total of $28,000 of outstanding Notes into an aggregate of 1,370,000 common shares, with the conversion prices based on specific terms in the Notes. In November 2019 an accredited Noteholder converted $60,869 of outstanding Notes into an aggregate of 4,753,476 common shares, with the conversion price based on specific terms in the Notes. In December 2019, accredited debt holders converted debt, whereby we issued 2,382,402 common shares for debt of $11,912, another 3,877,237 common shares for debt of $19,386, and an additional $40,000 notes into 3,067,915 common shares, with the conversion price based on specific terms of the Notes. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2019 | |
RELATED PARTY TRANSACTIONS | |
NOTE 11 - RELATED PARTY TRANSACTIONS | In February 2019, we entered into a one-year Independent Director Agreement with our director John Bode, providing quarterly compensation to him of $12,500 in value of our restricted common stock which vests quarterly, in consideration for his serving on our Board of Directors during the one-year term of the Agreement. Mr. Bode received a total of 1,579,044 restricted common shares for his services as a director in 2019. In April 2019, we entered into a consulting contract with affiliate Capital Market Solutions, LLC (CMS) providing that for a term of one year. CMS will provide us with management, operational, accounting and financial services in consideration for our payments to CMS of $50,000 monthly along with issuance to CMS of 30 million shares of our common stock which we valued at $1,797,000 and a warrant to purchase an additional 30 million common shares. (See Note 9). In May 2019, our largest and also a principal shareholder, CMS entered into a Long Term Convertible Note with us in the principal amount of $250,000 for the conversion of existing short term notes, maturing in three years, bearing interest at 6% per annum payable each six months of its term, and being convertible into our common stock at the lesser of $.20 per share or the Volume Weighted Average Price (VWAP) per share during the 10-day period prior to conversion. The Convertible Note also includes three-year warrants to purchase a number of shares equal to the principal amount of the note divided by the conversion price. The exercise price is equal to the conversion price. The Company recorded a derivative liability on the conversion feature in the note and associated warrant liability to the warrants issuable under the agreement. We valued the warrants at $463,174, under our Black Scholes model, to be recorded as a derivative liability for warrants, whereby the associated debt discount will be amortized on a straight-line basis over the term of the warrants, including a cashless exercise provision as defined under the terms of the Note, and also received registration rights related to any future conversion(s) of this Note to equity. In accordance with ASC 470 – Debt, the Company accounted for this as a debt extinguishment since the terms of the debt changed significantly by adding a conversion feature. Accordingly, the Company recorded a loss on debt extinguishment of $189,847. CMS also has additional short term nonconvertible notes for a total of $147,942 which are in default as of June 30, 2019. |
COMMITMENTS CONTINGENCIES
COMMITMENTS CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
COMMITMENTS CONTINGENCIES | |
NOTE 12 - COMMITMENTS & CONTINGENCIES | Management has concluded that the COVID-19 outbreak in 2020 may have a significant impact on business in general, but the potential impact on the Company is not currently measurable. Due to the level of risk this virus may have on the global economy, it is at least reasonably possible that it could have an impact on the operations of the Company in the near term that could materially impact the Company’s financials. Management has not been able to measure the potential financial impact on the Company but will review commercial and federal financing options should the need arise. In March 2020, the outbreak of COVID-19 (coronavirus) caused by a novel strain of the coronavirus was recognized as a pandemic by the World Health Organization, and the outbreak has become increasingly widespread in the United States, including in each of the areas in which the Company operates. While to date the Company has not been required to stop operating, management is evaluating its use of its office space, virtual meetings and the like. The Company continues to monitor the impact of the COVID-19 (coronavirus) outbreak closely. The extent to which the COVID-19 (coronavirus) outbreak will impact our operations, ability to obtain financing or future financial results is uncertain. The Company is also in litigation with our former office landlord, Butler Properties, for four months unpaid rent. Management has properly recorded these accrued amounts in the financial statements. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
NOTE 13 - INCOME TAXES | At December 31, 2019 and 2018, we had available Federal and state net operating loss carryforwards to reduce future taxable income. The amounts available were approximately $19,591,225 and $13,486,741 for Federal and state purposes, respectively. The Federal carryforward for the Net Operating Loss (NOL) for 2010-2017 expires in 2038, while the Federal carryforward NOL for 2018 and 2019 has no expiration date, and the state carryforward expires in 2023. Given our history of net operating losses, our management has determined that it is more likely than not that we will not be able to realize the tax benefit of the carryforwards. Accordingly, we have not recognized a deferred tax asset for this benefit. Effective January 1, 2007, we adopted FASB guidelines that address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this guidance, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. This guidance also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At the date of adoption, and as of December 31, 2019 and 2018, we did not have a liability for unrecognized tax benefits, and no adjustment was required at adoption. Our policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of December 31, 2019 and 2018, we have not accrued interest or penalties related to uncertain tax positions. Additionally, tax years 2017 through 2019 remain open to examination by the major taxing jurisdictions to which we are subject. Upon any attainment of taxable income by us, our management will assess the likelihood of realizing the tax benefit associated with the use of the carryforwards and will recognize a deferred tax asset at that time. The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes are as follows: 2019 2018 Income tax at federal Statutory rate 21.0 % 21.0 % Effects of permanent differences (3.4 )% (4.0 )% Effect of temporary differences 3.5 % 4.0 % Effects of state taxes (net of federal taxes) 0 % 0 % Change in valuation allowance (21.1 )% (21.0 )% 0.0 % 0.0 % Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. As of December 31, 2019 and 2018, a deferred income tax asset, includes a reserve for the notes receivable of $857,242, and a cumulative estimated net tax operating loss of $19,591,225 and $13,486,741 respectively, that is available to offset future taxable income, if any, in future periods, subject to expiration and other limitations imposed by the Internal Revenue Service. Management has considered our operating losses incurred to date and believes that a full valuation allowance against the deferred tax assets is required as of December 31, 2019 and 2018. Utilization of our net operating losses may be subject to substantial limitations if the Company experiences a 50% change in ownership, as provided by the Internal Revenue Code and similar state provisions. |
WARRANTS
WARRANTS | 12 Months Ended |
Dec. 31, 2019 | |
WARRANTS | |
NOTE 14 - WARRANTS | We have the following outstanding warrants to purchase our common stock at December 31, 2018 and 2019: Number of Shares Weighted Average Exercise Price Weighted Average (Remaining Term) Aggregate Intrinsic Value Balance December 31, 2017 6,217,819 $ 0.28 $ 0.28 $ 0.29 Granted 11,626,000 0.19 Forfeited or cancelled (102,250 ) 0.26 Balance December 31, 2018 17,741,569 $ 0.22 $ 0.22 $ 0.23 Granted 54,302,767 0.14 Forfeited or cancelled (1,681,287 ) 0.27 Balance December 31, 2019 70,363,049 $ 0.13 $ 0.13 $ 0.14 |
CONCENTRATIONS
CONCENTRATIONS | 12 Months Ended |
Dec. 31, 2019 | |
CONCENTRATIONS | |
NOTE 15 - CONCENTRATIONS | For the year ended December 31, 2019 two customers each accounted for more than 10% of our revenues, and for the year ended December 31, 2018 three customers each accounted for more than 10% of our revenues. Combined, these customers represented less than 50% of our revenues during each of 2019 and 2018. A significant reduction for any reason in the use of our software solutions by one or more of our major customers could harm our business materially. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2019 | |
SUBSEQUENT EVENTS | |
NOTE 16 - SUBSEQUENT EVENTS | During January-May, 2020, the following subsequent events occurred: New debt instruments In April 2020, we entered into a long-term loan with the U. S. Small Business Administration for a Payroll Protection Program (PPP) loan program, administered by Richfield/Bloomington Credit Union for $177,200 with an annual interest rate of one percent (1%), with a term of twenty-four (24) months, whereby a portion of the loan proceeds will be used for certain labor costs, office rent costs and utilities, which this portion may be subject to a loan forgiveness, pursuant to the terms of the SBA/PPP program. Stock issued for services i) We issued 2,083,333 restricted common shares to Independent Director John B. Bode in February 2020 for the fourth vesting period of his second year of board service, pursuant to an Independent Director agreement. Stock issued for conversion of debt ii) In January - April 2020, we issued an aggregate of 37,062,761 shares of our common stock to four noteholders who converted total outstanding Notes in the amount of $210,000, with the conversion price based on specific terms contained in the Notes. These noteholders purchased a portion of these Notes from Capital Market Solutions, LLC, an Affiliate of the Company, in December 2019 in private transactions, prior to any debt conversions. iii) In January 2020, we issued 4,933,333 shares of our common stock to a debt holder who converted outstanding debt in the amount of $37,000, and we issued an additional 6,933,333 shares of our common stock to a noteholder who converted a portion of a Note in the amount of $52,000. iv) In January 2020, we issued 4,401,591 shares of our common stock to an affiliate noteholder who converted a Note in the amount of $33,452, with the conversion price based on specific terms contained in the Note. v) In February 2020, two accredited Noteholders converted $26,472 of outstanding Notes into an aggregate of 9,662,622 common shares, with the conversion price based on specific terms contained in the Notes. vi) In January - March 2020, we issued an aggregate of 14,195,619 shares of our common stock to four noteholders who converted total outstanding Notes in the amount of $107,675.63, with the conversion price based on specific terms contained in the Notes. These convertible notes were originally executed February 2018. vii) In March 2020, we issued 6,062,863 shares of our common stock to a noteholder who converted a portion of an outstanding Note in the amount of $42,500, with the conversion price based on specific terms contained in the Note. viii) In January - April 2020, we issued an aggregate of 14,929,577 shares of our common stock to three noteholders who converted total outstanding Notes in the amount of $129,000, with the conversion price based on specific terms contained in the Notes. These convertible notes were originally executed March 2019. ix) In March 2020, we issued 6,965,743 shares of our common stock to a noteholder who converted a portion of an outstanding Note in the amount of $23,000, with the conversion price based on specific terms contained in the Note. x) In March 2020, we issued 9,625,000 shares of our common stock to twelve accredited investors in True-Up and Penalty shares, based on terms of a private equity offering, who invested $1,750,000 from November 2018 through January 2019 in a private offering by the Company. xi) In March 2020, an accredited Noteholder converted $5,048 of outstanding Notes into an aggregate of 4,589,091 common shares, with the conversion price based on specific terms contained in the Notes. xii) In April 2020, we issued 3,653,846 shares of our common stock to a noteholder who converted a portion of an outstanding Note in the amount of $9,500, with the conversion price based on specific terms contained in the Note. xiii) In April 2020, an accredited Noteholder converted $10,042 of outstanding Notes into an aggregate of 7,172,857 common shares, with the conversion price based on specific terms contained in the Notes. xiv) In April 2020, an accredited Noteholder converted $10,000 of outstanding Notes into an aggregate of 2,702,702 common shares, with the conversion price based on specific terms contained in the Notes. This noteholder purchased a portion of a June 2019 Note from Ignition Capital, LLC in April 2020 in a private transaction. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Use of Estimates | The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ materially from those estimates and assumptions. Such estimates include management’s assessments of the carrying value of certain assets, useful lives of assets, derivative securities, fair value of financial instruments, and related depreciation and amortization methods applied. |
Concentration of Credit Risk | Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and accounts receivable. As of December 31, 2019, we may have had cash deposits that exceeded Federal Deposit Insurance Corporation (“FDIC”) insurance limits of $250,000. As of December 31, 2019 there was no cash in excess of federally insured limits. We maintain cash balances at high quality financial institutions to mitigate this risk. We perform ongoing credit evaluations of our customers and generally do not require collateral from them to do business with us. |
Cash equivalents | We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. At December 31, 2019, the Company had no cash equivalents. |
Fair value of financial instrument | The Company adopted the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820 (the “Fair Value Topic”) which defines fair value, establishes a framework for measuring fair value under Generally Accepted Accounting Principles (GAAP), and expands disclosures about fair value measurements. The Fair Value Topic defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. It also establishes a fair value hierarchy, which prioritizes the valuation inputs into six broad levels. The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities: A) Market approach—Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Prices may be indicated by pricing guides, sale transactions, market trades, or other sources; B) Cost approach—Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost); and C) Income approach—Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about the future amounts (includes present value techniques, and option-pricing models). Net present value is an income approach where a stream of expected cash flows is discounted at an appropriate market interest rate. Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. An active market for an asset or liability is a market in which transactions for the asset or liability occur with significant frequency and volume to provide pricing information on an ongoing basis. Level 2: Observable inputs other than Level 1 inputs. Example of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. Level 3: Unobservable inputs based on the Company’s assessment of the assumptions that are market participants would use in pricing the asset or liability. The carrying amount of the Company’s financial assets and liabilities, such as cash, accounts receivable, accounts payable, accrued expenses, and notes payable approximate their fair value because of the short maturity of those instruments. The following table represents our assets and liabilities by level measured at fair value on a recurring basis at December 31, 2019. Level 1 Level 2 Level 3 Derivative Liability $ - $ - $ 4,156,621 The following assets and liabilities are measured on the consolidated balance sheets at fair value on a recurring basis utilizing significant unobservable inputs or Level 3 assumptions in their valuation. The following table provides a reconciliation of the beginning and ending balances of the liabilities. Fair Value Change in Fair Value January 1, fair December 31, 2018 Additions Value Conversions 2018 Derivative Liability $ 1,243,788 $ 3,501,616 $ (1,358,601 ) $ (1,905,825 ) $ 1,480,978 Fair Value Change in Fair Value January 1, fair December 31, 2019 Additions Value Extinguishment 2019 Derivative Liability $ 1,480,978 $ 1,863,187 $ 2,024,961 $ (1,212,505 ) $ 4,156,621 All gains and losses on assets and liabilities measured at fair value on a recurring basis and classified as Level 3 within the fair value hierarchy are recognized in other interest and expense in the accompanying financial statements. The derivative liability relating to the beneficial conversion feature of our convertible notes payable was $4,156,621 at December 31, 2019 and was computed using the following variables: Exercise price $ .135--$.174 Expected volatility 182 % Expected term Due on demand to 36 months Risk free interest rate 0.91 – 2.51 % Expected dividends - |
Derivative instrument | We account for derivative instruments in accordance with Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”) If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts receivable related to the products and services sold are recorded at the time revenue is recognized and are presented on the balance sheet net of allowance for doubtful accounts. The ultimate collection of the receivable may not be known for several months after services have been provided and billed. We have established an allowance for doubtful accounts based upon factors pertaining to the credit risk of specific customers, analyses of current and historical cash collections, and the aging of receivables. Delinquent accounts are written-off when the likelihood for collection is remote and/or when we believe collection efforts have been fully exhausted and we do not intend to devote any additional efforts in an attempt to collect the receivable. We adjust our allowance for doubtful accounts balance on a quarterly basis. |
Property and Equipment | Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method over the assets estimated useful life of five (5) years for equipment, furniture and fixtures. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations. |
Consolidated Statements of Cash Flows Correction | During the first quarter of 2020, the Company identified that activities related to certain notes receivables had been reported as cash flows from operating activities that should have been presented as investing activities. The Company corrected the previously presented cash flows for these notes receivables and in doing so, the statements of cash flows for 2018 was adjusted to decrease net cash flows used by operating activities by $804,300, with corresponding increases in net cash flows used by investing activities. The Company has evaluated the effect of the incorrect presentation, both qualitatively and quantitatively, and concluded that it did not have a material impact on, nor require amendment of, any previously filed annual or quarterly consolidated financial statements. |
Impairment of long-lived assets | We follow paragraph 360-10-05-4 of the FASB Accounting Standards Codification for long-lived assets. Our long-lived assets are required to be reviewed for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. We assess the recoverability of our long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. |
Revenue recognition | In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 606, Revenue From Contracts With Customers, originally effective for public business entities with annual reporting periods beginning after December 15, 2016. On August 12, 2015, the FASB issued an Accounting Standards Update (“ASU”), Revenue From Contracts With Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASC 606 for one year. ASC 606 provides accounting guidance related to revenue from contracts with customers. For public business entities, ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. This new revenue recognition standard (new guidance) has a five-step process: a) Determine whether a contract exists; b) Identify the performance obligations; c) Determine the transaction price; d) Allocate the transaction price; and e) Recognize revenue when (or as) performance obligations are satisfied. The Company has already implemented the five-step process in determining revenue recognition from contracts with customers, in accordance with ASC 606. Revenue is recognized in the period the services are provided over the contract period, normally one (1) to three (3) years. We invoice one-time startup and implementation costs, such as consolidating and uploading digital assets of the customer, upon completion of those services as one performance obligation and recorded as revenue when completed. Monthly services, such as internet access to software as a service (SaaS), hosting and weekly backups are invoiced monthly as another performance obligation and recorded as revenue over time. Company Recognizes Contract Liability for Its Performance Obligation Upon receipt of a prepayment from a customer, the Company recognizes a contract liability in the amount of the prepayment for its performance obligation to transfer goods and services in the future. When the Company transfers those goods and services and, therefore, satisfies its performance obligation to the customer, the Company will then recognize the revenue. |
Income taxes | We follow Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance to the extent our management concludes it is more likely than not that the assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty in income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. We had no material adjustments to our assets and/or liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25. |
Stock-Based Compensation | In December 2004, the FASB issued FASB Accounting Standards Codification No. 718, Compensation – Stock Compensation In June 2018, the FASB issued Accounting Standards Update No. 2018-07, Compensation - Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting Equity - Equity-Based Payments to Non-employees Revenue from Contracts with Customers Fair Value The closing price of our common stock on the date of grant is used as the fair value for the issuances of restricted stock. The fair value of stock options or warrants granted is estimated as of the grant date using the Black-Scholes option pricing model. The following range of assumptions in the Black- Scholes option pricing model was used to determine fair value at the years ended below: Year ended December 31, 2019 2018 Weighted-average volatility 182 % 93.6 % Expected term (in years) 2.4 3.2 Risk-free interest rate 1.62 % 2.56 % Expected volatilities used for award valuation in 2019 and 2018 are based on the Company’s historical prices. The risk-free interest rate for periods equal to the expected term of an award is based on a blended historical rate using Federal Reserve rates for U.S. Treasury securities. |
Net income (loss) per share | We compute basic and diluted earnings per share amounts pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic earnings per share is computed by dividing net income (loss) available to common shareholders, by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share is computed by dividing net income (loss) available to common shareholders by the diluted weighted average number of shares of common stock during the period. The diluted weighted average number of common shares outstanding is the basic weighted number of shares adjusted as of the first day of the year for any potentially diluted debt or equity. For the years ended December 31, 2019 and 2018, there were 388,876,859 and 20,956,569 respectively, potentially dilutive securities not included in the calculation of weighted-average common shares outstanding since they would be anti-dilutive. |
Research and Development | We expense all our research and development operations and activities as they occur. During the fiscal year ended December 31, 2019 we incurred total expenses of $290,035 for research and development. In comparison, during the fiscal year ended December 31, 2018 we incurred total expenses of $691,201 for research and development. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached, which for our software products, is generally shortly before the products are released to manufacturing. Once technological feasibility is reached, such costs are capitalized and amortized to cost of revenue over the estimated lives of the products |
Advertising cost | We expense marketing and advertising costs as incurred. Marketing and advertising expenses for the years ended December 31, 2019 and 2018 were $17,331 and $20,444 respectively. The costs are included in the sales and marketing expenses on the consolidated statement of operations. |
Recently Issued Accounting Pronouncements | We regularly monitor our compliance with applicable financial reporting standards and review new pronouncements and drafts thereof that are relevant to us. As a result of new standards, changes to existing standards and changes in their interpretation, we might be required to change our accounting policies, particularly concerning revenue recognition, the capitalized incremental costs to obtain a customer contract and lease accounting, to alter our operational policies and to implement new or enhance existing systems so that they reflect new or amended financial reporting standards, or to restate our published financial statements. Such changes may have an adverse effect on our business, financial position, and operating results, or cause an adverse deviation from our revenue and operating profit target, which may negatively impact our financial results. In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company has adopted ASU 2016-02. As of December 31, 2019, the Company had no leases, as the office lease expired. The Company pays for a virtual office space on a month-to-month basis. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Fair value, assets measured on recurring basis | Level 1 Level 2 Level 3 Derivative Liability $ - $ - $ 4,156,621 |
Fair value on recurring basis significant unobservable | The following assets and liabilities are measured on the consolidated balance sheets at fair value on a recurring basis utilizing significant unobservable inputs or Level 3 assumptions in their valuation. The following table provides a reconciliation of the beginning and ending balances of the liabilities. Fair Value Change in Fair Value January 1, fair December 31, 2018 Additions Value Conversions 2018 Derivative Liability $ 1,243,788 $ 3,501,616 $ (1,358,601 ) $ (1,905,825 ) $ 1,480,978 Fair Value Change in Fair Value January 1, fair December 31, 2019 Additions Value Extinguishment 2019 Derivative Liability $ 1,480,978 $ 1,863,187 $ 2,024,961 $ (1,212,505 ) $ 4,156,621 |
Schdule of fair value measurement of liabilities | Exercise price $ .135--$.174 Expected volatility 182 % Expected term Due on demand to 36 months Risk free interest rate 0.91 – 2.51 % Expected dividends - |
Schedule of assumptions used | Year ended December 31, 2019 2018 Weighted-average volatility 182 % 93.6 % Expected term (in years) 2.4 3.2 Risk-free interest rate 1.62 % 2.56 % |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
ACCOUNTS RECEIVABLE (Tables) | |
Schedule of accounts receivable | December 31, 2019 December 31, 2018 Accounts receivable $ 9,906 $ 19,498 Less: Allowance for doubtful accounts -0- -0- $ 9,906 $ 19,498 |
NOTES RECEIVABLE (Tables)
NOTES RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
NOTES RECEIVABLE (Tables) | |
Schedule of notes receivable | December 31, 2019 December 31, 2018 Notes receivable $ 804,300 $ 804,300 Accrued interest 52,942 6,934 Total 857,242 811,234 Less allowance for doubtful accounts (857,242 ) - Notes receivable, net $ - $ 811,234 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT (Tables) | |
Schedule of property, plant and equipment | December 31, 2019 December 31, 2018 Equipment $ 15,720 $ 27,118 Furniture & Fixtures 471 11,641 Less: Accumulated Depreciation (13,275 ) (32,161 ) Net Property and Equipment $ 2,916 $ 6,598 |
OTHER BALANCE SHEET ACCOUNTS _2
OTHER BALANCE SHEET ACCOUNTS - PREPAID EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
OTHER BALANCE SHEET ACCOUNTS - PREPAID EXPENSES | |
Schedule of prepaid expenses | December 31, 2019 2018 Prepaid Expenses: Rent Deposit - 17,340 Sales Commissions and Severance Advances 7,696 1,060 Unvested Stock Grants 525,368 13,555 Total Prepaid Expenses $ 533,064 $ 31,955 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES (Tables) | |
Schedule of effective income tax rate reconciliation | 2019 2018 Income tax at federal Statutory rate 21.0 % 21.0 % Effects of permanent differences (3.4 )% (4.0 )% Effect of temporary differences 3.5 % 4.0 % Effects of state taxes (net of federal taxes) 0 % 0 % Change in valuation allowance (21.1 )% (21.0 )% 0.0 % 0.0 % |
WARRANT (Tables)
WARRANT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
WARRANTS | |
Schedule of warrants | Number of Shares Weighted Average Exercise Price Weighted Average (Remaining Term) Aggregate Intrinsic Value Balance December 31, 2017 6,217,819 $ 0.28 $ 0.28 $ 0.29 Granted 11,626,000 0.19 Forfeited or cancelled (102,250 ) 0.26 Balance December 31, 2018 17,741,569 $ 0.22 $ 0.22 $ 0.23 Granted 54,302,767 0.14 Forfeited or cancelled (1,681,287 ) 0.27 Balance December 31, 2019 70,363,049 $ 0.13 $ 0.13 $ 0.14 |
ORGANIZATION AND DESCRIPTION _2
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative) | 12 Months Ended |
Dec. 31, 2019 | |
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative) | |
Entity incorporation, state country name | Delaware |
Entity incorporation, date of incorporation | Feb. 24, 2010 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | Dec. 31, 2019USD ($) |
Derivative Liability | $ 4,156,621 |
Level 1 [Member] | |
Derivative Liability | |
Level 2 [Member] | |
Derivative Liability | |
Level 3 [Member] | |
Derivative Liability | $ 4,156,621 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Derivative Liability, beginning | $ 1,480,978 | $ 1,243,788 |
Addition | 1,863,187 | 3,501,616 |
Change in fair value | 2,024,961 | (1,358,601) |
Conversions | (1,212,505) | (1,905,825) |
Derivative Liability, ending | $ 4,156,621 | $ 1,480,978 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) | 12 Months Ended |
Dec. 31, 2019$ / shares | |
Expected volatility | 182.00% |
Expected term | 36 months |
Expected dividends | 0.00% |
Minimum [Member] | |
Risk free interest rate | 0.91% |
Exersice price | $ .135 |
Maximum [Member] | |
Exersice price | $ .174 |
Risk free interest rate | 2.51% |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Weighted-average volatility | 182.00% | 93.60% |
Expected term (in years) | 2 years 4 months 24 days | 3 years 2 months 12 days |
Risk-free interest rate | 1.62% | 2.56% |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Derivative liability | $ 4,156,621 | |
Anti-dilutive securities excluded from calculation | 388,876,859 | 20,956,569 |
Adjusted net cash flows used by operating activities | $ 804,300 | |
Property and equipment estimated useful life | 5 years | |
Research and development expenses | $ 290,035 | 691,201 |
Marketing and advertising expense | 17,331 | $ 20,444 |
FDIC insured limit | $ 250,000 | |
Operating lease, payment period | Monthly | |
Income tax description | The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. |
GOING CONCERN (Details Narrativ
GOING CONCERN (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
GOING CONCERN | ||
Accumulated deficit | $ (31,811,792) | $ (22,514,711) |
Working capital deficiency | (7,074,243) | |
Net Loss | (9,297,081) | (3,992,846) |
Net cash used in operating activities | $ (1,091,761) | $ (2,437,972) |
ACCOUNTS RECEIVABLE (Details)
ACCOUNTS RECEIVABLE (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
OTHER BALANCE SHEET ACCOUNTS - PREPAID EXPENSES | ||
Accounts receivable | $ 9,906 | $ 19,498 |
Less: Allowance for doubtful accounts | 0 | 0 |
Accounts receivable, net | $ 9,906 | $ 19,498 |
NOTES RECEIVABLE (Details)
NOTES RECEIVABLE (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
INCOME TAXES (Tables) | ||
Note receivable | $ 804,300 | $ 804,300 |
Accrued interest | 52,942 | 6,934 |
Total | 857,242 | 811,234 |
Less allowance for doubtful accounts | (857,242) | |
Note receivables, net | $ 811,234 |
NOTES RECEIVABLE (Details Narra
NOTES RECEIVABLE (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Allowances for doubtful accounts | $ 857,242 | |
Continuity logic [Member] | Bridge Loan [Member] | ||
Note receivable | $ 857,242 | |
Interest rate | 6.00% | |
Debt default | $ 857,242 | |
Maturity date | Aug. 31, 2019 | |
Continuity logic [Member] | Bridge Loan [Member] | During August, 2019 [Member] | ||
Allowances for doubtful accounts | $ 857,242 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Less: Accumulated Depreciation | $ (13,275) | $ (32,161) |
Net Property and Equipment | 2,916 | 6,598 |
Furniture and Fixtures [Member] | ||
Net Property and Equipment | 471 | 11,641 |
Equipment [Member] | ||
Net Property and Equipment | $ 15,720 | $ 27,118 |
OTHER BALANCE SHEET ACCOUNTS _3
OTHER BALANCE SHEET ACCOUNTS - PREPAID EXPENSES (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Prepaid Expenses: | ||
Rent deposit | $ 17,340 | |
Sales Commissions and Severance Advances | 7,696 | 1,060 |
Unvested Stock Grants | 525,368 | 13,555 |
Total Prepaid Expenses | $ 533,064 | $ 31,955 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||
May 31, 2019 | Apr. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Gain on extinguishment of derivative liabilities/settlement of debt | $ 1,212,505 | |||
Long term convertible notes | 700,845 | |||
Long term convertible notes, net | 853,261 | |||
Conversion of short term debt to long term debt | 700,845 | $ 607,725 | ||
Loss on debt extinguishment | (209,989) | 549,166 | ||
Convertible Notes [Member] | Accredited Investors [Member] | ||||
Interest rate | 6.00% | 6.00% | ||
Debt conversion description | The notes are convertible into our common shares at a conversion price equal to the lower of $.20 per share or the Volume Weighted Average Price (VWAP) of our common shares for the ten days prior to conversion, also including three-year warrants to purchase a number of shares equal to the principal amount of the note divided by the conversion price | The notes are convertible into our common shares at a conversion price equal to the lower of $.20 per share or the Volume Weighted Average Price (VWAP) of our common shares for the ten days prior to conversion, also including three-year warrants to purchase a number of shares equal to the principal amount of the note divided by the conversion price | ||
Debt instrument, face amount | $ 250,000 | $ 50,000 | ||
Maturity date, description | Three years | Three years | ||
Conversion of short term debt to long term debt | $ 250,000 | $ 141,106 | ||
Loss on debt extinguishment | $ 189,847 | 189,847 | ||
Fair value of issuable warrants | 463,174 | |||
Convertible and non-convertible Notes Payable [Member] | ||||
Notes payable | 1,958,382 | 1,482,738 | ||
Debt discount | 853,261 | 1,591,877 | ||
Accrued interest | 446,404 | 287,548 | ||
Related party notes [Member] | ||||
Notes payable | 228,692 | $ 284,377 | ||
Non-Convertible Notes Payable [Member] | ||||
Notes payable | $ 932,586 | |||
During September, 2019 [Member] | 2019 private placement [Member] | Convertible Notes [Member] | Three Accredited Investors [Member] | ||||
Interest rate | 6.00% | |||
Debt conversion description | The noteholders having the right to convert these notes into our common stock at a conversion price equal to the lower of $.20 per share or the Volume Weighted Average Price (VWAP) of our common shares for the ten days prior to conversion | |||
Debt instrument, face amount | $ 78,000 | |||
Maturity date, description | Maturing three years from their purchase | |||
During March-June 2019 [Member] | 2019 private placement [Member] | Convertible Notes [Member] | Five Accredited Investors [Member] | ||||
Interest rate | 6.00% | |||
Debt conversion description | The noteholders having the right to convert these notes into our common stock at a conversion price equal to the lower of $.20 per share or the Volume Weighted Average Price (VWAP) of our common shares for the ten days prior to conversion, also including three-year warrants to purchase a number of shares equal to the principal amount of the note divided by the conversion price | |||
Debt instrument, face amount | $ 650,000 | |||
Maturity date, description | Maturing three years from their purchase | |||
Fair value of issuable warrants | 501,996 |
CONSULTING CONTRACT WITH CAPI_2
CONSULTING CONTRACT WITH CAPITAL MARKET SOLUTIONS LLC (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |
Apr. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Common stock shares issued for services, amount | $ 2,114,900 | $ 461,070 | |
Additional warrant issued under plan for purchase of stock, shares | 879,760 | 1,249,665 | |
Fair value of issued warrants | $ 879,760 | $ 1,249,665 | |
Consulting contract [Member] | |||
Common stock shares issued for services, shares | 30,000,000 | ||
Consulting contract [Member] | Capital Market Solutions, LLC [Member] | |||
Consideration for services provided | $ 50,000 | ||
Common stock shares issued for services, shares | 30,000,000 | ||
Period of consideration | Monthly | ||
Common stock shares issued for services, amount | $ 1,797,000 | ||
Services cost amortization period | 1 year | ||
Additional warrant issued under plan for purchase of stock, shares | $ 30,000,000 | ||
Exercisable price | $ .20 | ||
Warrant term | 5 years | ||
Fair value of issued warrants | $ 1,297,570 |
STOCKHOLDERS EQUITY (Details Na
STOCKHOLDERS EQUITY (Details Narrative) - USD ($) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||||||||||||||||
Dec. 31, 2019 | Nov. 30, 2019 | Oct. 31, 2019 | Sep. 30, 2019 | Aug. 31, 2019 | Jul. 31, 2019 | Jun. 30, 2019 | May 31, 2019 | Apr. 30, 2019 | Mar. 31, 2019 | Feb. 28, 2019 | Oct. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Apr. 30, 2018 | Mar. 31, 2018 | May 31, 2019 | Mar. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Aug. 31, 2018 | May 31, 2018 | |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 | 20,000,000 | |||||||||||||||||||||||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||||||||||||||||||
Preferred stock, shares outstanding | |||||||||||||||||||||||||||
Common stock, shares authorized | 500,000,000 | 500,000,000 | 500,000,000 | 500,000,000 | |||||||||||||||||||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||||||||||||||||||
Common stock, shares outstanding | 135,685,981 | 67,454,276 | 135,685,981 | 67,454,276 | |||||||||||||||||||||||
Class of warrant or right, outstanding | 540,000 | 686,000 | 450,000 | 540,000 | 686,000 | 450,000 | |||||||||||||||||||||
Warrants granted, value | $ 33,656 | $ 82,407 | $ 84,875 | $ 33,656 | $ 82,407 | $ 84,875 | |||||||||||||||||||||
Option and warrant expenses | $ 148,199 | ||||||||||||||||||||||||||
Common shares issued | $ 2,114,900 | $ 461,070 | |||||||||||||||||||||||||
Debt discount | $ (1,844,329) | $ (1,241,843) | |||||||||||||||||||||||||
Employee Stock Option [Member] | |||||||||||||||||||||||||||
Warrant contractual term | 4 years | ||||||||||||||||||||||||||
Warrant exercisable | 650,000 | ||||||||||||||||||||||||||
Warrant exercise price | $ .20 | ||||||||||||||||||||||||||
Employee stock options issued | 740,000 | ||||||||||||||||||||||||||
Options Held [Member] | |||||||||||||||||||||||||||
Warrant exercise price | $ .25 | $ .25 | |||||||||||||||||||||||||
Warrant exercisable | 90,000 | 90,000 | |||||||||||||||||||||||||
Noteholder [Member] | |||||||||||||||||||||||||||
Warrant exercise price | $ 0.135 | $ 0.135 | |||||||||||||||||||||||||
Warrant contractual term | 2 years | ||||||||||||||||||||||||||
Warrants granted | 100,000 | 100,000 | |||||||||||||||||||||||||
Convertible note, amount | $ 75,000 | $ 75,000 | |||||||||||||||||||||||||
One year consulting contract [Member] | |||||||||||||||||||||||||||
Shares issued for service renderred, shares | 30,000,000 | ||||||||||||||||||||||||||
Warrant contractual term | 5 years | ||||||||||||||||||||||||||
Shares reserved for future issuance against warrants, shares | 30,000,000 | ||||||||||||||||||||||||||
Consulting fee, monthly | $ 50,000 | ||||||||||||||||||||||||||
Price per share | $ .20 | ||||||||||||||||||||||||||
Convertible Notes [Member] | Three year warrants [Member] | |||||||||||||||||||||||||||
Shares issued upon debt conversion | 1,750,000 | ||||||||||||||||||||||||||
Convertible notes | $ 350,000 | $ 350,000 | $ 350,000 | ||||||||||||||||||||||||
Rate of interest, loan | 6.00% | ||||||||||||||||||||||||||
Warrant exercise price | $ 0.20 | $ 0.20 | $ 0.20 | ||||||||||||||||||||||||
Debt discount | $ 59,121 | ||||||||||||||||||||||||||
Warrant contractual term | 3 years | ||||||||||||||||||||||||||
Convertible Debt [Member] | |||||||||||||||||||||||||||
Restricted shares issued for service renderred, amount | $ 92,844 | ||||||||||||||||||||||||||
Restricted shares issued for service renderred, shares | 660,000 | ||||||||||||||||||||||||||
Unregistered common stock to convert debt, value | $ 47,248 | ||||||||||||||||||||||||||
Three Noteholders [Member] | |||||||||||||||||||||||||||
Shares issued upon debt conversion | 1,760,000 | ||||||||||||||||||||||||||
Convertible notes | $ 176,000 | ||||||||||||||||||||||||||
Investor [Member] | |||||||||||||||||||||||||||
Warrant exercise price | $ 0.20 | $ 0.30 | $ 0.20 | $ 0.30 | |||||||||||||||||||||||
Warrant contractual term | 3 years | 5 years | |||||||||||||||||||||||||
Warrants granted | 480,000 | 100,000 | 480,000 | 100,000 | |||||||||||||||||||||||
Convertible note, amount | $ 176,000 | $ 100,000 | $ 176,000 | $ 100,000 | |||||||||||||||||||||||
Former Chief Technology Officer [Member] | |||||||||||||||||||||||||||
Restricted shares issued for service renderred, amount | $ 80,000 | ||||||||||||||||||||||||||
Restricted shares issued for service renderred, shares | 500,000 | ||||||||||||||||||||||||||
Two Consultants [Member] | |||||||||||||||||||||||||||
Warrant contractual term | 2 years | ||||||||||||||||||||||||||
Warrants granted | 50,000 | 50,000 | |||||||||||||||||||||||||
Weighted average strike price | $ .25 | ||||||||||||||||||||||||||
Broker-dealer [Member] | |||||||||||||||||||||||||||
Restricted shares issued for service renderred, shares | 141,231 | ||||||||||||||||||||||||||
Investor One [Member] | |||||||||||||||||||||||||||
Warrant exercise price | $ 0.01 | $ 0.01 | |||||||||||||||||||||||||
Warrant contractual term | 3 years | ||||||||||||||||||||||||||
Warrants granted | 150,000 | 150,000 | |||||||||||||||||||||||||
Convertible note, amount | $ 150,000 | $ 150,000 | |||||||||||||||||||||||||
Two Noteholder [Member] | |||||||||||||||||||||||||||
Warrant exercise price | $ 0.01 | $ 0.01 | |||||||||||||||||||||||||
Warrant contractual term | 2 years | ||||||||||||||||||||||||||
Warrants granted | 100,000 | 100,000 | |||||||||||||||||||||||||
Convertible note, amount | $ 100,000 | $ 100,000 | |||||||||||||||||||||||||
Noteholder [Member] | Convertible Notes [Member] | |||||||||||||||||||||||||||
Warrant exercise price | $ 0.01 | $ 0.01 | |||||||||||||||||||||||||
Warrant contractual term | 2 years | ||||||||||||||||||||||||||
Warrants granted | 390,000 | 390,000 | |||||||||||||||||||||||||
Convertible note, amount | $ 390,000 | $ 390,000 | |||||||||||||||||||||||||
During February-March 2019 [Member] | Convertible Notes [Member] | Two year warrants [Member] | |||||||||||||||||||||||||||
Shares issued upon debt conversion | 8,622,087 | ||||||||||||||||||||||||||
Convertible notes | $ 742,391 | $ 742,391 | $ 742,391 | ||||||||||||||||||||||||
Warrant exercise price | $ 0.20 | $ 0.20 | $ 0.20 | ||||||||||||||||||||||||
Warrant contractual term | 2 years | ||||||||||||||||||||||||||
Shares reserved for future issuance against warrants, shares | 3,182,834 | ||||||||||||||||||||||||||
Shares reserved for future issuance against warrants, amount | $ 63,502 | ||||||||||||||||||||||||||
During February-April 2019 [Member] | Advisory Service [Member] | |||||||||||||||||||||||||||
Common shares issued | $ 26,730 | ||||||||||||||||||||||||||
Shares issued for service renderred, shares | 300,000 | ||||||||||||||||||||||||||
January-March 2018 [Member] | Convertible Debt [Member] | |||||||||||||||||||||||||||
Restricted shares issued for service renderred, shares | 2,012,957 | ||||||||||||||||||||||||||
Unregistered common stock to convert debt, value | $ 130,433 | ||||||||||||||||||||||||||
April-June 2018 [Member] | Three Holders [Member] | Convertible Debt [Member] | |||||||||||||||||||||||||||
Restricted shares issued for service renderred, shares | 3,861,843 | ||||||||||||||||||||||||||
Unregistered common stock to convert debt, value | $ 256,086 | ||||||||||||||||||||||||||
July-September 2018 [Member] | Four Note Holders [Member] | Convertible Debt [Member] | |||||||||||||||||||||||||||
Restricted shares issued for service renderred, shares | 3,014,491 | ||||||||||||||||||||||||||
Unregistered common stock to convert debt, value | $ 209,388 | ||||||||||||||||||||||||||
Private Placement [Member] | |||||||||||||||||||||||||||
Class of warrant or right, outstanding | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | |||||||||||||||||||||||
Warrant exercise price | $ .20 | $ .20 | $ .20 | $ .20 | |||||||||||||||||||||||
Discounted true-up price description | Discounted true-up price, with a floor of $0.10 per share, related to the trading price of our Common Stock during a 90-day period after effectiveness of a registration statement | ||||||||||||||||||||||||||
Private Placement [Member] | Investor Two [Member] | |||||||||||||||||||||||||||
Warrant exercise price | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | |||||||||||||||||||||||
Warrant contractual term | 3 years | 3 years | |||||||||||||||||||||||||
Warrants granted | 106,000 | 200,000 | 106,000 | 200,000 | |||||||||||||||||||||||
Convertible note, amount | $ 53,000 | $ 100,000 | $ 53,000 | $ 100,000 | |||||||||||||||||||||||
Warrants issued to note holders | 53,000 | 100,000 | 53,000 | 100,000 | |||||||||||||||||||||||
Warrants issued to placement agent | 53,000 | 100,000 | 53,000 | 100,000 | |||||||||||||||||||||||
Shareholder communications services [Member] | Convertible Debt [Member] | |||||||||||||||||||||||||||
Restricted shares issued for service renderred, amount | $ 26,894 | ||||||||||||||||||||||||||
Restricted shares issued for service renderred, shares | 439,092 | ||||||||||||||||||||||||||
Shareholder communications services [Member] | Volerro Corporation [Member] | |||||||||||||||||||||||||||
Restricted shares issued for service renderred, amount | $ 31,800 | ||||||||||||||||||||||||||
Restricted shares issued for service renderred, shares | 200,000 | ||||||||||||||||||||||||||
Shareholder communications services [Member] | Two Consultants [Member] | |||||||||||||||||||||||||||
Restricted shares issued for service renderred, amount | $ 62,000 | ||||||||||||||||||||||||||
Restricted shares issued for service renderred, shares | 400,000 | ||||||||||||||||||||||||||
Shareholder communications services [Member] | In January--February 2018 [Member] | |||||||||||||||||||||||||||
Restricted shares issued for service renderred, amount | $ 134,000 | ||||||||||||||||||||||||||
Restricted shares issued for service renderred, shares | 800,000 | ||||||||||||||||||||||||||
Shareholder communications services [Member] | April-May 2018 [Member] | Three Consultants [Member] | |||||||||||||||||||||||||||
Restricted shares issued for service renderred, amount | $ 109,770 | ||||||||||||||||||||||||||
Restricted shares issued for service renderred, shares | 779,960 | ||||||||||||||||||||||||||
Shareholder communications services [Member] | July-August 2018 [Member] | Two Consultants [Member] | |||||||||||||||||||||||||||
Restricted shares issued for service renderred, amount | $ 102,500 | ||||||||||||||||||||||||||
Restricted shares issued for service renderred, shares | 650,000 | ||||||||||||||||||||||||||
Accredited Investor [Member] | |||||||||||||||||||||||||||
Proceeds from private placement | $ 350,000 | ||||||||||||||||||||||||||
Common stock, shares issued | 1,750,000 | ||||||||||||||||||||||||||
Accredited Investor [Member] | Private Placement [Member] | October-December 2018 [Member] | |||||||||||||||||||||||||||
Private placement offering | $ 2,000,000 | ||||||||||||||||||||||||||
Private placement offering description | Purchased shares at $.20 per share and additional advisory shares based on 10% of the purchased shares | ||||||||||||||||||||||||||
Proceeds from private investors | $ 1,400,000 | ||||||||||||||||||||||||||
Common shares issued | $ 7,700,000 | ||||||||||||||||||||||||||
Accredited Investor [Member] | Shareholder communications services [Member] | |||||||||||||||||||||||||||
Restricted shares issued for service renderred, amount | $ 14,000 | ||||||||||||||||||||||||||
Restricted shares issued for service renderred, shares | 93,333 | ||||||||||||||||||||||||||
Individual Accredited Investor [Member] | |||||||||||||||||||||||||||
Restricted shares issued for service renderred, amount | $ 3,900 | ||||||||||||||||||||||||||
Restricted shares issued for service renderred, shares | 100,000 | ||||||||||||||||||||||||||
Proceeds from issuance of loan | $ 75,000 | ||||||||||||||||||||||||||
Rate of interest, loan | 6.00% | ||||||||||||||||||||||||||
Maturity date, loan | Jan. 18, 2020 | ||||||||||||||||||||||||||
Accredited Investor [Member] | Security Purchase Agreement [Member] | Advisory Fee [Member] | |||||||||||||||||||||||||||
Shares issued for service renderred, shares | 175,000 | ||||||||||||||||||||||||||
Chief Revenue Officer [Member] | |||||||||||||||||||||||||||
Warrant exercise price | $ 0.20 | $ 0.20 | |||||||||||||||||||||||||
Stock options granted | 500,000 | ||||||||||||||||||||||||||
John Bode [Member] | |||||||||||||||||||||||||||
Common shares issued | $ 12,500 | ||||||||||||||||||||||||||
Shares issued for service renderred, shares | 62,500 | ||||||||||||||||||||||||||
Unvested shares of common stock | 250,000 | ||||||||||||||||||||||||||
Unvested shares of common stock, amount | $ 50,000 | ||||||||||||||||||||||||||
Board of Directors [Member] | |||||||||||||||||||||||||||
Common stock shares vested quarterly | 62,500 | 62,500 | 62,500 | ||||||||||||||||||||||||
Two Accredited Noteholder [Member] | |||||||||||||||||||||||||||
Shares issued upon debt conversion | 1,370,000 | ||||||||||||||||||||||||||
Debt conversion, converted instrument, amount | $ 28,000 | ||||||||||||||||||||||||||
Accredited Noteholder [Member] | |||||||||||||||||||||||||||
Shares issued upon debt conversion | 2,382,402 | 4,753,476 | 2,533,333 | ||||||||||||||||||||||||
Debt conversion, converted instrument, amount | $ 11,912 | $ 60,869 | $ 19,000 | ||||||||||||||||||||||||
Convertible notes | $ 80,162 | ||||||||||||||||||||||||||
Common stock reserved for future issuance, shares | 2,676,771 | ||||||||||||||||||||||||||
Description of additional debt conversion | Another 3,877,237 common shares for debt of $19,386, and an additional $40,000 notes into 3,067,915 common shares, with the conversion price based on specific terms of the Notes | ||||||||||||||||||||||||||
Two Noteholders [Member] | During April-May 2019 [Member] | |||||||||||||||||||||||||||
Shares issued upon debt conversion | 3,284,284 | ||||||||||||||||||||||||||
Convertible notes | $ 51,500 | $ 51,500 | |||||||||||||||||||||||||
Common shares issued | $ 222,000 | ||||||||||||||||||||||||||
Shares issued for service renderred, shares | 5,000,000 | ||||||||||||||||||||||||||
Independent Director [Member] | |||||||||||||||||||||||||||
Restricted shares issued for service renderred, amount | $ 12,500 | $ 12,500 | $ 12,500 | ||||||||||||||||||||||||
Restricted shares issued for service renderred, shares | 781,250 | 490,196 | 245,098 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||||
May 31, 2019 | Apr. 30, 2019 | Feb. 28, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2019 | Jun. 30, 2019 | |
Loss on extinguishment of debt | $ (209,989) | $ 549,166 | |||||
Derivative liability, notes and warrants | $ 4,156,621 | $ 1,480,978 | |||||
Restricted Stock [Member] | Director [Member] | |||||||
Stock issued upon service rendered, amount | $ 12,500 | ||||||
Stock issued upon service rendered, shares | 1,579,044 | ||||||
Capital MarketSolutions Llc [Member] | |||||||
Common stock shares issued for services, amount | $ 1,797,000 | ||||||
Common stock shares issued for services, share | 30,000,000 | ||||||
Consulting fee, monthly | $ 50,000 | ||||||
Warrants to purchase additional common shares | 30,000,000 | ||||||
Long Term Convertible Note [Member] | Capital MarketSolutions Llc [Member] | |||||||
Conversion price description | The note, and being convertible into our common stock at the lesser of $.20 per share or the Volume Weighted Average Price (VWAP) per share during the 10-day period prior to conversion | ||||||
Loss on extinguishment of debt | $ (189,847) | ||||||
Derivative liability, notes and warrants | $ 463,174 | ||||||
Interest rate | 6.00% | ||||||
Proceeds from convertible debt | $ 250,000 | ||||||
Term of warrants | 3 years | ||||||
Short term non convertible notes, in default | $ 147,942 |
COMMITMENTS AND CONTIGENCIES (D
COMMITMENTS AND CONTIGENCIES (Details Narrative) | 12 Months Ended |
Dec. 31, 2019 | |
WARRANTS | |
Description of litigation | The Company is also in litigation with our former office landlord, Butler Properties, for four months unpaid rent. Management has properly recorded these accrued amounts in the financial statements |
INCOME TAXES (Details)
INCOME TAXES (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
GOING CONCERN | ||
Income tax at federal Statutory rate | 21.00% | 21.00% |
Effects of permanent differences | (3.40%) | (4.00%) |
Effect of temporary differences | 3.50% | 4.00% |
Effect of state taxes (net of federal taxes) | 0.00% | 0.00% |
Change in valuation allowance | (21.10%) | (21.00%) |
Total | 0.00% | 0.00% |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CONSULTING CONTRACT WITH CAPITAL MARKET SOLUTIONS LLC (Details Narrative) | ||
Net operating loss carryforwards | $ 19,591,225 | $ 13,486,741 |
Description of operating loss carryforward expiry year | The Federal carryforward for the Net Operating Loss (NOL) for 2010-2017 expires in 2038, while the Federal carryforward NOL for 2018 and 2019 has no expiration date, and the state carryforward expires in 2023 | |
Notes receivable reserve | $ 857,242 | |
Ownership change in subsidiary | 50.00% | |
Cumulative estimated net tax operating loss | $ 19,591,225 | $ 13,486,741 |
WARRANTS (Details)
WARRANTS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Number of shares | ||
Number of shares outstanding, Beginning Balance | $ 17,741,569 | $ 6,217,819 |
Granted | 54,302,767 | 11,626,000 |
Forfeited or cancelled | (1,681,287) | (102,250) |
Number of shares outstanding, Ending Balance | 70,363,049 | 17,741,569 |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price, Beginning Balance | $ 0.22 | $ 0.28 |
Weighted Average Exercise Price, Granted | 0.14 | 0.19 |
Weighted Average Exercise Price, Forfeited or cancelled | 0.27 | 0.26 |
Weighted Average Exercise Price, Ending Balance | $ 0.13 | $ 0.22 |
Weighted Average (Remaining Term) | ||
Weighted Average (Remaining Term), Beginning Balance | 2 months 19 days | 3 months 11 days |
Weighted Average (Remaining Term), Granted | ||
Weighted Average (Remaining Term), Forfeited or cancelled | ||
Weighted Average (Remaining Term), Ending Balance | 1 month 17 days | 2 months 19 days |
Aggregate Intrinsic Value | ||
Aggregate Intrinsic Value, Beginning Balance | $ 0.23 | $ 0.29 |
Aggregate Intrinsic Value, Granted | ||
Aggregate Intrinsic Value, Forfeited or cancelled | ||
Aggregate Intrinsic Value, Ending Balance | $ 0.14 | $ 0.23 |
CONCENTRATIONS (Details Narrati
CONCENTRATIONS (Details Narrative) | 12 Months Ended |
Dec. 31, 2019 | |
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative) | |
Description of concentrations | Two customers each accounted for more than 10% of our revenues, and for the year ended December 31, 2018 three customers each accounted for more than 10% of our revenues. Combined, these customers represented less than 50% of our revenues during each of 2019 and 2018 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 4 Months Ended | ||||||||||||
Apr. 30, 2020 | Apr. 30, 2020 | Mar. 31, 2020 | Mar. 31, 2020 | Feb. 29, 2020 | Jan. 31, 2020 | Dec. 31, 2019 | Nov. 30, 2019 | Oct. 31, 2019 | Sep. 30, 2019 | Aug. 31, 2019 | Jun. 30, 2019 | Mar. 31, 2020 | Jan. 31, 2019 | Apr. 30, 2020 | |
Three Noteholders [Member] | |||||||||||||||
Shares issued upon conversion of debt | 1,760,000 | ||||||||||||||
Subsequent Event [Member] | Second Transaction [Member] | |||||||||||||||
Shares issued upon conversion of debt | 6,933,333 | ||||||||||||||
Debt conversion, converted instrument, amount | $ 52,000 | ||||||||||||||
Subsequent Event [Member] | First Transaction [Member] | |||||||||||||||
Shares issued upon conversion of debt | 4,933,333 | ||||||||||||||
Debt conversion, converted instrument, amount | $ 37,000 | ||||||||||||||
Subsequent Event [Member] | Twelve accredited investor [Member] | |||||||||||||||
Proceeds from affiliates | $ 1,750,000 | ||||||||||||||
Subsequent Event [Member] | Three Noteholders [Member] | |||||||||||||||
Shares issued upon conversion of debt | 14,929,577 | ||||||||||||||
Debt conversion, converted instrument, amount | $ 129,000 | ||||||||||||||
Subsequent Event [Member] | Payroll Protection Program [Member] | U. S. Small Business Administration [Member] | |||||||||||||||
Long term loan | $ 177,200 | $ 177,200 | $ 177,200 | ||||||||||||
Rate of interest | 1.00% | 1.00% | 1.00% | ||||||||||||
Term of loan | 2 years | ||||||||||||||
Accredited Noteholder [Member] | |||||||||||||||
Shares issued upon conversion of debt | 2,382,402 | 4,753,476 | 2,533,333 | ||||||||||||
Debt conversion, converted instrument, amount | $ 11,912 | $ 60,869 | $ 19,000 | ||||||||||||
Accredited Noteholder [Member] | Subsequent Event [Member] | |||||||||||||||
Shares issued upon conversion of debt | 2,702,702 | 7,172,857 | 4,589,091 | ||||||||||||
Debt conversion, converted instrument, amount | $ 10,000 | $ 10,042 | $ 5,048 | ||||||||||||
John B. Bode [Member] | Subsequent Event [Member] | Independent Director Agreement [Member] | |||||||||||||||
Restricted shares issued | 2,083,333 | ||||||||||||||
One Noteholder [Member] | Subsequent Event [Member] | |||||||||||||||
Shares issued upon conversion of debt | 3,653,846 | 6,062,863 | 6,965,743 | ||||||||||||
Debt conversion, converted instrument, amount | $ 9,500 | $ 42,500 | $ 23,000 | ||||||||||||
Two Accredited Noteholder [Member] | |||||||||||||||
Shares issued upon conversion of debt | 1,370,000 | ||||||||||||||
Debt conversion, converted instrument, amount | $ 28,000 | ||||||||||||||
Two Accredited Noteholder [Member] | Subsequent Event [Member] | |||||||||||||||
Shares issued upon conversion of debt | 9,662,622 | ||||||||||||||
Debt conversion, converted instrument, amount | $ 26,472 | ||||||||||||||
Affiliate Noteholder [Member] | Subsequent Event [Member] | |||||||||||||||
Shares issued upon conversion of debt | 4,401,591 | ||||||||||||||
Debt conversion, converted instrument, amount | $ 33,452 | ||||||||||||||
Four Noteholders [Member] | Subsequent Event [Member] | |||||||||||||||
Shares issued upon conversion of debt | 14,195,619 | 37,062,761 | |||||||||||||
Debt conversion, converted instrument, amount | $ 107,676 | $ 210,000 |