Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 13, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Entity Registrant Name | KULR Technology Group, Inc. | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 83,293,214 | |
Entity Central Index Key | 0001662684 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash | $ 2,809,656 | $ 108,857 |
Accounts receivable | 70,083 | 30,101 |
Subscription receivable | 40,000 | 0 |
Inventory | 48,161 | 27,091 |
Prepaid expenses and other current assets | 140,468 | 43,201 |
Total Current Assets | 3,108,368 | 209,250 |
Property and equipment, net | 63,030 | 27,516 |
Total Assets | 3,171,398 | 236,766 |
Current Liabilities: | ||
Accounts payable | 91,198 | 344,660 |
Accounts payable - related party | 3,454 | 4,253 |
Accrued expenses and other current liabilities | 389,689 | 659,399 |
Accrued expenses and other current liabilities - related party | 0 | 10,419 |
Accrued issuable equity, current portion | 83,530 | 0 |
Notes payable, net of debt discount of $312,687 and $0 at September 30, 2020 and December 31, 2019, respectively | 2,837,313 | 0 |
Loans payable, current portion | 71,145 | 0 |
Line of credit | 0 | |
Deferred revenue | 36,600 | 15,000 |
Total Current Liabilities | 3,512,929 | 1,033,731 |
Accrued issuable equity, non-current portion | 100,000 | 0 |
Loans payable, non-current portion | 84,081 | 0 |
Total Liabilities | 3,697,010 | 1,033,731 |
Commitments and contingencies (Note 12) | ||
Stockholders' Deficiency: | ||
Common stock, $0.0001 par value, 500,000,000 shares authorized; 83,036,226 and 81,071,831 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively | 8,304 | 8,107 |
Shares to be issued, common stock; 31,250 and 0 shares at September 30, 2020 and December 31, 2020, respectively | 40,000 | 0 |
Additional paid-in capital | 9,813,892 | 7,591,239 |
Accumulated deficit | (10,387,809) | (8,396,312) |
Total Stockholders' Deficiency | (525,612) | (796,965) |
Total Liabilities and Stockholders' Deficiency | 3,171,398 | 236,766 |
Series A Preferred Stock [Member] | ||
Stockholders' Deficiency: | ||
Preferred stock | 0 | 0 |
Series B Convertible Preferred Stock | ||
Stockholders' Deficiency: | ||
Preferred stock | 1 | 1 |
Total Stockholders' Deficiency | 1 | 1 |
Series C Preferred Stock [Member] | ||
Stockholders' Deficiency: | ||
Preferred stock | $ 0 | $ 0 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Debt discount, Current | $ 312,687 | $ 0 |
Preferred Stock, Par Value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 20,000,000 | 20,000,000 |
Common Stock, Par Value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 500,000,000 | 500,000,000 |
Common Stock, Shares Issued | 83,036,226 | 81,071,831 |
Common Stock, Shares Outstanding | 83,036,226 | 81,071,831 |
Shares to be issued, common stock (in shares) | 31,250 | 0 |
Series A Preferred Stock [Member] | ||
Preferred Stock, Shares Authorized | 1,000,000 | 1,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Series B Convertible Preferred Stock | ||
Preferred Stock, Shares Authorized | 31,000 | 31,000 |
Preferred Stock, Shares Issued | 13,972 | 14,487 |
Preferred Stock, Shares Outstanding | 13,972 | 14,487 |
Preferred Stock Shares Liquidated Preference | $ 13,972 | $ 14,487 |
Series C Preferred Stock [Member] | ||
Preferred Stock, Shares Authorized | 400 | 400 |
Preferred Stock, Shares Issued | 18.90 | 24.01 |
Preferred Stock, Shares Outstanding | 18.90 | 24.01 |
Preferred Stock Shares Liquidated Preference | $ 189,000 | $ 240,100 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Revenue | $ 136,849 | $ 526,722 | $ 415,477 | $ 777,984 |
Cost of revenue | 60,967 | 109,051 | 128,306 | 199,118 |
Gross Profit | 75,882 | 417,671 | 287,171 | 578,866 |
Operating Expenses: | ||||
Research and development | 51,820 | 137,970 | 221,524 | 365,709 |
Selling, general, and administrative | 834,582 | 546,982 | 1,728,974 | 1,666,735 |
Total Operating Expenses | 886,402 | 684,952 | 1,950,498 | 2,032,444 |
Loss From Operations | (810,520) | (267,281) | (1,663,327) | (1,453,578) |
Other Expenses: | ||||
Interest expense, net | (1,284) | (503) | (5,004) | (1,315) |
Other income | 0 | 250 | 0 | 250 |
Amortization of debt discount | (210,402) | 0 | (307,313) | 0 |
Change in fair value of accrued issuable equity | 9,947 | 0 | (15,853) | 0 |
Total Other Expenses | (201,739) | (253) | (328,170) | (1,065) |
Net Loss | $ (1,012,259) | $ (267,534) | $ (1,991,497) | $ (1,454,643) |
Net Loss Per Share - Basic and Diluted (In dollars per share) | $ (0.01) | $ 0 | $ (0.02) | $ (0.02) |
Weighted Average Number of Common Shares Outstanding - Basic and Diluted (In Shares) | 82,466,734 | 80,380,640 | 82,042,241 | 79,803,396 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Balance | $ (983,391) | $ (1,273,431) | $ (796,965) | $ (370,293) | $ (499,770) | $ (125,137) | $ (796,965) | $ (125,137) |
Common stock issued for the commitment fee pursuant to the SEDA agreement | 1,395,000 | 679,437 | 63,259 | |||||
Common stock to be issued pursuant to the SEDA agreement | 40,000 | |||||||
Common stock issued for cash | 743,300 | 155,000 | ||||||
Common stock issued upon conversion of Convertible Preferred Stock | 0 | |||||||
Series C Convertible Preferred Stock and warrants issued for cash, net of issuance costs | 139,000 | |||||||
Forgiveness of accrued expenses by related party | 35,000 | |||||||
Net loss | (1,012,259) | (428,985) | (550,253) | (267,534) | (621,416) | (565,693) | (1,991,497) | (1,454,643) |
Balance | (525,612) | (983,391) | (1,273,431) | (275,729) | (370,293) | (499,770) | (525,612) | (275,729) |
Common Stock | ||||||||
Stock-based compensation | 25,000 | 30,000 | 117,160 | 16,500 | ||||
Stock options | ||||||||
Stock-based compensation | 10,038 | 9,588 | 10,528 | 9,475 | 7,593 | 19,560 | ||
Warrants | ||||||||
Stock-based compensation | 61,463 | |||||||
Common Stock | ||||||||
Balance | $ 8,176 | $ 8,117 | $ 8,107 | $ 8,009 | $ 7,897 | $ 7,871 | $ 8,107 | $ 7,871 |
Balance (shares) | 81,759,242 | 81,167,678 | 81,071,831 | 80,092,315 | 78,966,105 | 78,706,256 | 81,071,831 | 78,706,256 |
Stock-based compensation | $ 0 | |||||||
Common stock issued for the commitment fee pursuant to the SEDA agreement | $ 116 | $ 56 | $ 10 | |||||
Common stock issued for the commitment fee pursuant to the SEDA agreement (in shares) | 1,159,449 | 561,564 | 95,847 | |||||
Common stock to be issued pursuant to the SEDA agreement | $ 0 | |||||||
Common stock issued for cash | $ 112 | $ 23 | ||||||
Common stock issued for cash (in shares) | 1,126,210 | 234,849 | ||||||
Common stock issued upon conversion of Convertible Preferred Stock | $ 82 | |||||||
Common stock issued upon conversion of Convertible Preferred Stock (in shares) | 818,550 | |||||||
Series C Convertible Preferred Stock and warrants issued for cash, net of issuance costs | $ 0 | |||||||
Series C Convertible Preferred Stock and warrants issued for cash, net of issuance costs (In shares) | 0 | |||||||
Forgiveness of accrued expenses by related party | $ 0 | |||||||
Net loss | 0 | $ 0 | $ 0 | 0 | $ 0 | $ 0 | ||
Balance | $ 8,304 | $ 8,176 | $ 8,117 | $ 8,107 | $ 8,009 | $ 7,897 | $ 8,304 | $ 8,107 |
Balance (shares) | 83,036,226 | 81,759,242 | 81,167,678 | 81,071,831 | 80,092,315 | 78,966,105 | 83,036,226 | 81,071,831 |
Common Stock | Common Stock | ||||||||
Stock-based compensation | $ 3 | $ 3 | $ 16 | $ 3 | ||||
Stock-based compensation (in shares) | 35,000 | 30,000 | 160,966 | 25,000 | ||||
Common Stock | Stock options | ||||||||
Stock-based compensation | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | ||
Stock-based compensation (in shares) | 0 | 0 | 0 | |||||
Shares to be Issued | ||||||||
Balance | $ 0 | $ 0 | $ 0 | $ 0 | ||||
Common stock issued for the commitment fee pursuant to the SEDA agreement | 0 | 0 | 0 | |||||
Common stock to be issued pursuant to the SEDA agreement | 40,000 | |||||||
Net loss | 0 | 0 | 0 | |||||
Balance | 40,000 | 0 | 0 | 40,000 | ||||
Shares to be Issued | Common Stock | ||||||||
Stock-based compensation | 0 | 0 | ||||||
Shares to be Issued | Stock options | ||||||||
Stock-based compensation | 0 | 0 | 0 | |||||
Additional Paid-in Capital | ||||||||
Balance | 8,383,982 | 7,665,016 | 7,591,239 | 7,225,363 | 6,474,582 | 6,283,548 | 7,591,239 | $ 6,283,548 |
Common stock issued for the commitment fee pursuant to the SEDA agreement | 1,394,884 | 679,381 | 63,249 | |||||
Common stock to be issued pursuant to the SEDA agreement | 0 | |||||||
Common stock issued for cash | 743,188 | 154,977 | ||||||
Common stock issued upon conversion of Convertible Preferred Stock | (80) | |||||||
Series C Convertible Preferred Stock and warrants issued for cash, net of issuance costs | 139,000 | |||||||
Forgiveness of accrued expenses by related party | 35,000 | |||||||
Net loss | 0 | 0 | 0 | 0 | 0 | 0 | ||
Balance | 9,813,892 | 8,383,982 | 7,665,016 | 7,587,365 | 7,225,363 | 6,474,582 | 9,813,892 | 7,587,365 |
Additional Paid-in Capital | Common Stock | ||||||||
Stock-based compensation | 24,997 | 29,997 | 117,144 | 16,497 | ||||
Additional Paid-in Capital | Stock options | ||||||||
Stock-based compensation | 10,038 | 9,588 | 10,528 | 9,475 | 7,593 | 19,560 | ||
Additional Paid-in Capital | Warrants | ||||||||
Stock-based compensation | 61,463 | |||||||
Accumulated Deficit | ||||||||
Balance | (9,375,550) | (8,946,565) | (8,396,312) | (7,603,668) | (6,982,252) | (6,416,559) | (8,396,312) | (6,416,559) |
Stock-based compensation | 0 | |||||||
Common stock issued for the commitment fee pursuant to the SEDA agreement | 0 | 0 | 0 | |||||
Common stock to be issued pursuant to the SEDA agreement | 0 | |||||||
Common stock issued for cash | 0 | 0 | ||||||
Common stock issued upon conversion of Convertible Preferred Stock | 0 | |||||||
Series C Convertible Preferred Stock and warrants issued for cash, net of issuance costs | 0 | |||||||
Forgiveness of accrued expenses by related party | 0 | |||||||
Net loss | (1,012,259) | (428,985) | (550,253) | (267,534) | (621,416) | (565,693) | ||
Balance | (10,387,809) | (9,375,550) | (8,946,565) | (7,871,202) | (7,603,668) | (6,982,252) | (10,387,809) | (7,871,202) |
Accumulated Deficit | Common Stock | ||||||||
Stock-based compensation | 0 | 0 | 0 | 0 | ||||
Accumulated Deficit | Stock options | ||||||||
Stock-based compensation | 0 | 0 | 0 | 0 | 0 | 0 | ||
Series B Convertible Preferred Stock | ||||||||
Balance | $ 1 | $ 1 | $ 1 | $ 3 | $ 3 | $ 3 | $ 1 | $ 3 |
Balance (shares) | 14,487 | 14,487 | 14,487 | 30,858 | 30,858 | 30,858 | 14,487 | 30,858 |
Stock-based compensation | $ 0 | |||||||
Common stock issued for cash | $ 0 | $ 0 | ||||||
Common stock issued for cash (in shares) | 0 | 0 | ||||||
Common stock issued upon conversion of Convertible Preferred Stock | $ 0 | $ (2) | ||||||
Common stock issued upon conversion of Convertible Preferred Stock (in shares) | (515) | (16,371) | (515) | |||||
Series C Convertible Preferred Stock and warrants issued for cash, net of issuance costs | $ 0 | |||||||
Series C Convertible Preferred Stock and warrants issued for cash, net of issuance costs (In shares) | 0 | |||||||
Forgiveness of accrued expenses by related party | $ 0 | |||||||
Net loss | 0 | $ 0 | $ 0 | |||||
Balance | $ 1 | $ 1 | $ 1 | $ 1 | $ 3 | $ 3 | $ 1 | $ 1 |
Balance (shares) | 13,972 | 14,487 | 14,487 | 14,487 | 30,858 | 30,858 | 13,972 | 14,487 |
Series B Convertible Preferred Stock | Common Stock | ||||||||
Stock-based compensation | $ 0 | $ 0 | ||||||
Stock-based compensation (in shares) | 0 | 0 | ||||||
Common stock issued upon conversion of Convertible Preferred Stock (in shares) | 25,758 | 25,758 | ||||||
Series B Convertible Preferred Stock | Stock options | ||||||||
Stock-based compensation | $ 0 | $ 0 | $ 0 | |||||
Stock-based compensation (in shares) | 0 | |||||||
Series B Convertible Preferred Stock | Common Stock | ||||||||
Common stock issued upon conversion of Convertible Preferred Stock | $ 3 | |||||||
Common stock issued upon conversion of Convertible Preferred Stock (in shares) | 25,758 | |||||||
Series B Convertible Preferred Stock | Shares to be Issued | ||||||||
Common stock issued upon conversion of Convertible Preferred Stock | $ 0 | |||||||
Series B Convertible Preferred Stock | Additional Paid-in Capital | ||||||||
Common stock issued upon conversion of Convertible Preferred Stock | (3) | |||||||
Series B Convertible Preferred Stock | Accumulated Deficit | ||||||||
Common stock issued upon conversion of Convertible Preferred Stock | $ 0 | |||||||
Series C Convertible Preferred Stock | ||||||||
Balance (shares) | 24.01 | 24.01 | 24.01 | 24.01 | ||||
Common stock issued upon conversion of Convertible Preferred Stock | $ 0 | |||||||
Common stock issued upon conversion of Convertible Preferred Stock (in shares) | (5.11) | (5.11) | ||||||
Series C Convertible Preferred Stock and warrants issued for cash, net of issuance costs | 20.68 | |||||||
Balance | $ 20.68 | $ 20.68 | ||||||
Balance (shares) | 18.90 | 24.01 | 24.01 | 18.90 | ||||
Series C Convertible Preferred Stock | Common Stock | ||||||||
Common stock issued upon conversion of Convertible Preferred Stock | $ 6 | |||||||
Common stock issued upon conversion of Convertible Preferred Stock (in shares) | 56,777 | 56,777 | ||||||
Series C Convertible Preferred Stock | Shares to be Issued | ||||||||
Common stock issued upon conversion of Convertible Preferred Stock | $ 0 | |||||||
Series C Convertible Preferred Stock | Additional Paid-in Capital | ||||||||
Common stock issued upon conversion of Convertible Preferred Stock | (6) | |||||||
Series C Convertible Preferred Stock | Accumulated Deficit | ||||||||
Common stock issued upon conversion of Convertible Preferred Stock | $ 0 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY (Parenthetical) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020 | Sep. 30, 2019 | |
Gross cash proceeds from common stock | $ 186,000 | |
Amortized of deferred offering cost | $ 78,258 | |
Payments of Stock Issuance Costs | 15,000 | |
Common stock issued for repayment of note payable | 0 | |
Common Stock | ||
Payments of Stock Issuance Costs | $ 47,000 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash Flows From Operating Activities: | ||
Net loss | $ (1,991,497) | $ (1,454,643) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization of debt discount | 307,313 | 0 |
Depreciation expense | 10,573 | 9,444 |
Bad debt expense | 933 | 0 |
Write-down of inventory | 0 | 90 |
Change in fair value of accrued issuable equity | 15,853 | 0 |
Stock-based compensation | 252,831 | 231,751 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (40,915) | (283,482) |
Inventory | (21,070) | (34,141) |
Prepaid expenses and other current assets | (97,267) | (18,131) |
Accounts payable | (253,461) | 214,754 |
Accounts payable - related party | (799) | 0 |
Accrued expenses and other current liabilities | (269,710) | 158,223 |
Accrued expenses and other current liabilities - related party | 10,419 | 30,000 |
Deferred revenue | 21,600 | 0 |
Total Adjustments | (84,538) | 248,508 |
Net Cash Used In Operating Activities | (2,076,035) | (1,206,135) |
Cash Flows From Investing Activities: | ||
Purchase of property and equipment | (46,087) | 0 |
Net Cash Used In Investing Activities | (46,087) | 0 |
Cash Flows from Financing Activities: | ||
Proceeds from note payable | 3,710,000 | 0 |
Repayments of note payable | (159,000) | 0 |
Payment of debt issuance costs | (330,000) | 0 |
Proceeds from Paycheck Protection Program loan | 155,226 | 0 |
Proceeds from sale of Series C Convertible Preferred Stock and warrants | 0 | 169,000 |
Proceeds from sale of common stock | 1,461,695 | 898,300 |
Payment of offering costs | (15,000) | (15,000) |
Net Cash Provided By Financing Activities | 4,822,921 | 1,052,300 |
Net Increase (Decrease) In Cash | 2,700,799 | (153,835) |
Cash - Beginning of Period | 108,857 | 229,896 |
Cash - End of Period | 2,809,656 | 76,061 |
Cash paid during the period for: | ||
Cash paid during the period for interest | 3,890 | 446 |
Non-cash investing and financing activities: | ||
Accrual of offering costs | 15,000 | |
Common stock issued for repayment of note payable | 691,000 | 0 |
Deferred offering costs reclassified to equity | 13,042 | 0 |
Forgiveness of accrued expenses by related party | 35,000 | |
Original issuance discount on note payable | 290,000 | 0 |
Subscriptions receivable for shares to be issued | 40,000 | 0 |
Value of common stock issued as a commitment fee for the SEDA agreement | 63,259 | 0 |
Series B Convertible Preferred Stock | ||
Non-cash investing and financing activities: | ||
Common stock issued upon conversion | 3 | 82 |
Series C Convertible Preferred Stock | ||
Non-cash investing and financing activities: | ||
Common stock issued upon conversion | $ 6 | $ 0 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Gross cash proceeds from common stock | $ 757,695 |
Common Stock | |
Gross cash proceeds from common stock | 2,152,695 |
Proceeds from issuance withheld by investors | $ 691,000 |
BUSINESS ORGANIZATION AND NATUR
BUSINESS ORGANIZATION AND NATURE OF OPERATIONS | 9 Months Ended |
Sep. 30, 2020 | |
BUSINESS ORGANIZATION AND NATURE OF OPERATIONS | |
BUSINESS ORGANIZATION AND NATURE OF OPERATIONS | NOTE 1 BUSINESS ORGANIZATION AND NATURE OF OPERATIONS Organization and Operations KULR Technology Group, Inc., through its wholly-owned subsidiary, KULR Technology Corporation (collectively referred to as “KULR” or the “Company”), develops and commercializes high-performance thermal management technologies for electronics, batteries, and other components across a range of applications. Currently, the Company is focused on targeting both, high performance aerospace and Department of Defense ("DOD") applications, such as satellite communications, directed energy system and hypersonic vehicle, and applying them to mass market commercial applications, such as lithium-ion battery energy storage, electrical vehicle, 5G communications, cloud computer infrastructure, consumer and industrial devices. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10‑Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of September 30, 2020 and for the three and nine months ended September 30, 2020 and 2019. The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the operating results for the full year ending December 31, 2020 or any other period. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and related disclosures as of December 31, 2019 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”) on Form 10-K on May 14, 2020. |
GOING CONCERN AND MANAGEMENT'S
GOING CONCERN AND MANAGEMENT'S PLANS | 9 Months Ended |
Sep. 30, 2020 | |
GOING CONCERN AND MANAGEMENT'S PLANS | |
GOING CONCERN AND MANAGEMENT'S PLANS | NOTE 2 GOING CONCERN AND MANAGEMENT’S PLANS The Company has not yet achieved profitability and expects to continue to incur cash outflows from operations. As of September 30, 2020, the Company had cash of $2,809,656 and a working capital deficit of $404,561. For the nine months ended September 30, 2020 and 2019, the Company incurred net losses of $1,991,497 and $1,454,643, respectively, and used cash in operations of $2,076,035 and $1,206,135, respectively. It is expected that research and development and general and administrative expenses will continue to increase and, as a result, the Company will eventually need to generate significant revenues to achieve profitability. Further, as of September 30, 2020, the Company has debt principal outstanding on notes payable in the amount of $3,150,000 which mature between May 31 and July 20, 2021 and $155,226 of principal outstanding pursuant to the PPP loan agreement that matures in April 2022. In January 2020, an outbreak of a new strain of coronavirus, COVID-19, was identified in Wuhan, China. Through the first quarter of 2020, the disease became widespread around the world, and on March 11, 2020, the World Health Organization declared a pandemic. Our business is dependent on developing new markets and new products to be used on a global basis, thus restrictions on travel could lead to reduced demand for our products and interruptions to supply chains. Also, the local regulations such as “Shelter in Place” will affect our ability to maintain regular R&D and manufacturing schedules as well as the capability to meet customer demands in a timely manner. Given the uncertainty around the extent and timing of the potential future spread or mitigation of the Coronavirus and around the imposition or relaxation of protective measures, we cannot reasonably estimate the impact to our future results of operations, cash flows, or financial condition. Effective February 27, 2020, the Company entered into a twenty-four month Standby Equity Distribution Agreement (“SEDA”) with an Investor, pursuant to which the Company may, at its discretion, sell up to an aggregate of $8,000,000 (subject to the Investor’s approval for amounts over $100,000) of shares of the Company’s common stock at a price equal to 80% of the lowest daily volume weighted average price for the five days immediately following the date the Company delivers notice requiring the Investor to purchase the shares under the SEDA. For each advance, the Company shall have delivered all shares relating to all prior advances, and, unless waived by the Investor, at least 5 trading days shall have elapsed from the immediately preceding advance date (see Note 11 – Stockholders’ Deficiency). Additionally, the Company applied for, and in April 2020, received, a loan of $155,226 under the government Small Business Administration (“SBA”) sponsored Payroll Protection Program (“PPP”) to support continuing employment during the COVID-19 pandemic. As of September 30, 2020, the Company had approximately $5,847,300 available in connection with the SEDA, subject to certain conditions, in order to fund its ongoing operations; however, there can be no assurance that the Company will be able to continue to sell common shares pursuant to the SEDA at an acceptable price, or without causing undue dilution to existing investors. Further, there is also no assurance that the Company will be able to continue to obtain additional funds on commercially acceptable terms, if at all. If the Company is unable to obtain adequate funds on reasonable terms, it may be required to significantly curtail or discontinue operations or obtain funds by entering into financing agreements on unattractive terms. The Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. The aforementioned conditions indicate that there is substantial doubt about the Company’s ability to continue as a going concern within one year after the financial statement issuance date. The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The unaudited condensed consolidated financial statements do not include any adjustment that might become necessary should the Company be unable to continue as a going concern. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Since the date of the Annual Report on Form 10-K for the year ended December 31, 2019, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note. Concentrations of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and accounts receivable. A significant portion of the Company’s cash is held at one major financial institution. The Company has not experienced any losses in such accounts. Cash held in US bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each institution. There was an uninsured balance of $2,559,656 as of September 30, 2020 and no uninsured cash balances as of December 31, 2019. Customer and Revenue Concentrations The Company had certain customers whose revenue individually represented 10% or more of the Company's total revenue, or whose accounts receivable balances individually represented 10% or more of the Company's total accounts receivable, as follows: Revenues Accounts Receivable For the Three Months Ended For the Nine Months Ended September 30, September 30, As of As of 2020 2019 2020 2019 September 30, 2020 December 31, 2019 Customer A * 67 % * 46 % * * Customer B * 14 % * 10 % 23 % * Customer C * * * * * 33 % Customer D * * * * * 17 % Customer E * * * * * 20 % Customer F * * * * * 19 % Customer G 35 % * 44 % * * * Customer H * * * 15 % * * Customer I 26 % * * * 56 % * Customer J * * 12 % * * * Customer K 12 % * * * 10 % * All other customers 27 % % 44 % 29 % 11 % 11 % Total 100 % 100 % 100 % 100 % 100 % 100 % * There is no assurance the Company will continue to receive significant revenues from any of these customers. Any reduction or delay in operating activity from any of the Company’s significant customers, or a delay or default in payment by any significant customer, or termination of agreements with significant customers, could materially harm the Company’s business and prospects. As a result of the Company’s significant customer concentrations, its gross profit and results from operations could fluctuate significantly due to changes in political, environmental, or economic conditions, or the loss of, reduction of business from, or less favorable terms with any of the Company’s significant customers. Vendor Concentrations As of September 30, 2020 and December 31, 2019, certain vendors represented 10% or more of the Company's total accounts payable, as follows: Accounts Payable As of As of September 30, 2020 December 31, 2019 Vendor A * 15 % Vendor B * 16 % Vendor C * 17 % Vendor D * 12 % Vendor E 47 % * Vendor F 10 % * All other vendors 43 % 40 % 100 % 100 % * Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The following five steps are applied to achieve that core principle: · Step 1 : Identify the contract with the customer; · Step 2 : Identify the performance obligations in the contract; · Step 3 : Determine the transaction price; · Step 4 : Allocate the transaction price to the performance obligations in the contract; and · Step 5 : Recognize revenue when the company satisfies a performance obligation. The Company recognizes revenue primarily from the following different types of contracts: · Product sales – Revenue is recognized at the point in time the customer obtains control of the goods and the Company satisfies its performance obligation, which is generally at the time it ships the product to the customer. · Contract services – Revenue is recognized at the point in time that the Company satisfies its performance obligation under the contract, which is generally at the time the services are fulfilled and/or accepted by the customer. The following table summarizes the revenue recognized in the unaudited condensed consolidated statements of operations: For the Three Months Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Product sales $ 136,849 $ 464,772 $ 235,979 $ 686,522 Contract services — 61,950 179,498 91,462 Total revenue $ 136,849 $ 526,722 $ 415,477 $ 777,984 As of September 30, 2020, and December 31, 2019, the Company had $36,600 and $15,000, respectively, of deferred revenue, from contracts with customers. The contract liabilities represent payments received from customers for which the Company had not yet satisfied its performance obligation under the contract, or the customers have not officially accepted the goods or services provided under the contract. During the nine months ended September 30, 2020, the Company recognized $15,000 of revenues that were included in deferred revenue as of December 31, 2019. Sequencing Policy Under ASC 815-40-35 (“ASC 815”), the Company has adopted a sequencing policy, whereby, in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares as a result of certain securities with a potentially indeterminable number of shares, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares. Pursuant to ASC 815, issuances of securities as compensation in a share-based payment arrangement are not subject to the sequencing policy. Net Loss Per Common Share Basic net loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding, plus the impact of common shares, if dilutive, resulting from the exercise of outstanding stock options and warrants and the conversion of convertible instruments. The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: As of September 30, 2020 2019 Series B Convertible Preferred Stock 698,600 724,350 Series C Convertible Preferred Stock 189,000 206,800 Options 395,000 400,000 Warrants 210,025 201,700 Total 1,492,625 1,532,850 Reclassifications Certain prior period balances have been reclassified in order to conform to the current period presentation. These reclassifications have no effect on previously reported results of operations or loss per share. |
PREPAID EXPENSES
PREPAID EXPENSES | 9 Months Ended |
Sep. 30, 2020 | |
PREPAID EXPENSES | |
PREPAID EXPENSES | NOTE 4 PREPAID EXPENSES As of September 30, 2020, and December 31, 2019, prepaid expenses consisted of the following: September 30, December 31, 2020 2019 Marketing $ 61,298 $ — Other 29,767 12,232 Professional 26,201 4,134 Filing 14,474 9,858 Security deposit 8,728 16,977 Total prepaid expenses $ 140,468 $ 43,201 |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 9 Months Ended |
Sep. 30, 2020 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | NOTE 5 ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES As of September 30, 2020 and December 31, 2019, accrued expenses and other current liabilities consisted of the following: September 30, December 31, 2020 2019 Payroll and vacation $ 321,519 $ 525,917 Legal and professional fees 51,250 60,000 Other 16,920 73,482 Total accrued expenses and other current liabilities $ 389,689 $ 659,399 See Note 10 – Related Party Transactions for additional information on accrued expenses – related party. |
ACCRUED ISSUABLE EQUITY
ACCRUED ISSUABLE EQUITY | 9 Months Ended |
Sep. 30, 2020 | |
ACCRUED ISSUABLE EQUITY. | |
ACCRUED ISSUABLE EQUITY | NOTE 6 ACCRUED ISSUABLE EQUITY As of September 30, 2020, accrued issuable equity consists of the following: September 30, 2020 Accrued issuable equity for services, current portion $ 83,530 Accrued issuable equity for services, non-current portion 100,000 $ 183,530 Accrued Issuable Equity for Services During the three and nine months ended September 30, 2020, the Company agreed to issue an aggregate of 113,453 and 136,786 shares of common stock to certain consultants in exchange for services valued at $147,977 and $164,577, respectively. The shares have not been issued as of September 30, 2020. The fair value of the accrued but unissued shares as of September 30, 2020 was $183,530. During the three and nine months ended September 30, 2020 the Company recorded $9,947 and ($15,853), respectively, of gains (losses) related to the change in fair value of accrued issuable equity (see Note 11 - Stockholders' Deficiency, Stock-Based Compensation ). |
LINE OF CREDIT
LINE OF CREDIT | 9 Months Ended |
Sep. 30, 2020 | |
LINE OF CREDIT | |
LINE OF CREDIT | NOTE 7 LINE OF CREDIT On February 18, 2020, the Company entered into a financing agreement (the “Line of Credit”) wherein it may borrow up to $10,000. The repayment terms (interest rate, repayment amount and number of consecutive weekly periodic installments) are determined at the time the Company borrows proceeds under the Line of Credit. On February 19, 2020, the Company borrowed and received gross proceeds of $10,000 under the Line of Credit for its working capital needs, which is being repaid weekly for the next 26 weeks at a weekly interest rate of 1.7%. As of September 30, 2020, the outstanding aggregate principal amount on the Line of Credit was $0 During the three and nine months ended September 30, 2020, the Company recorded interest expense of $114 and $2,292, respectively, related to the Line of Credit. There was no accrued interest related to the Line of Credit as of September 30, 2020. The outstanding balance of the line of credit was paid off in July 2020. |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2020 | |
NOTES PAYABLE. | |
NOTES PAYABLE | NOTE 8 NOTES PAYABLE On February 27, 2020, the Company entered into a note purchase agreement with the YAII PN, Ltd., a Cayman Island exempt limited partnership (the “Investor”), pursuant to which the Investor purchased a full recourse promissory note (the “Note”) in the original principal amount of $1,500,000 (“Principal Amount”) for cash proceeds of $1,410,000. The Note included an original issue discount of $90,000, which represents the difference between the principal and proceeds received. The original issue discount, along with the $130,000 advisory fee were recorded as a debt discount which is being amortized over the term of the Note using the effective interest rate method. The Note bears no coupon interest (original issue discount only) and will become immediately due and payable on May 31, 2021 or upon acceleration, redemption or otherwise upon the occurrence of an event of default, as set forth in the Note and which includes the early termination of a standby equity distribution agreement with the Investor (see Note 11 – Stockholders’ Deficiency, Standby Equity Distribution Agreement ). The Company is required to repay the Principal Amount in monthly installments as set forth in the agreement. The Company may, at its discretion, prepay any installment amount or the principal amount, subject to a payment premium equal to the 10% of the amount being prepaid. During the three and nine months ended September 30, 2020, the Company repaid principal on the Note of $250,000 and $475,000, respectively (of which $250,000 and $391,000, respectively, was repaid from proceeds from the SEDA). As of September 30, 2020, the outstanding aggregate principal balance of the Note was $1,025,000. During the three and nine months ended September 30, 2020, the Company recognized amortization of debt discount of $53,709 and $150,620, respectively, related to the Note. Please see Note 13 - Subsequent Events for additional information regarding further repayments of the Note. New Note Purchase Agreement and Promissory Note The Company also entered into a Note Purchase Agreement, dated July 20, 2020, with the Investor, pursuant to which the Investor purchased a full recourse promissory note (the "July 2020 Note") in the original principal amount of $2,500,000 ("July 2020 Principal Amount") for cash proceeds of $2,300,000. The July 2020 Note included an original issue discount of $200,000, which represents the difference between the principal and proceeds received. The original issue discount, along with the $200,000 advisory fee were recorded as a debt discount, which is being amortized over the term of the July 2020 Note using the effective interest rate method. The July 2020 Note bears no interest (original issuance discount only) and will become immediately due and payable on July 20, 2021 or upon acceleration, redemption or otherwise upon the occurrence of an event of default, as set forth in the July 2020 Note. The Company will repay the July 2020 Principal Amount in monthly installments as set forth in the July 2020 Note. The Company may, at its discretion, prepay any installment amount or the principal amount, subject to a payment premium equal to the 10% of the amount being prepaid. Further, pursuant to the terms of the July 2020 Note, the Company may decrease any installment payment by up to 50%, of which the decreased amount is added to the final installment due on the maturity date. The Company elected to decrease the monthly installment payments due during May and August 2020 by an aggregate of $225,000. The decrease of $225,000 will be added to the final monthly installment on July 20, 2021. During the three and nine months ended September 30, 2020, the Company repaid principal on the July 2020 Note of $375,000 (of which $300,000 was repaid from proceeds from the SEDA). As of September 30, 2020, the outstanding aggregate principal balance of the July 2020 Note was $2,125,000. During the three and nine months ended September 30, 2020, the Company recognized amortization of debt discount of $156,693 related to the July 2020 Note. See Note 13 - Subsequent Events for additional information regarding further repayments of the Note. |
LOAN PAYABLE
LOAN PAYABLE | 9 Months Ended |
Sep. 30, 2020 | |
LOAN PAYABLE | |
LOAN PAYABLE | NOTE 9 LOAN PAYABLE On April 27, 2020, the Company received $155,226 of cash proceeds pursuant to an unsecured loan (the "PPP" Loan) provided in connection with the Paycheck Protection Program ("PPP") under the Coronavirus Aid, Relief, and Economic Security Act and applicable regulations ("CARES Act"). Under the terms of the CARES Act, as amended by the Paycheck Protection Program Flexibility Act of 2020, the Company is eligible to apply for and receive forgiveness for all or a portion of the PPP Loan. Such forgiveness will be determined, subject to limitations, based on the use of the loan proceeds for certain permissible purposes as set forth in the PPP, including, but not limited to, payroll costs (as defined under the PPP) and mortgage interest, rent or utility costs (collectively, "Qualifying Expenses") incurred during the 24 weeks subsequent to funding, and on the maintenance of employee and compensation levels, as defined, following the funding of the PPP Loan. The Company intends to use the proceeds of the PPP Loan for Qualifying Expenses. However, no assurance is provided that KULR will be able to obtain forgiveness of the PPP Loan in whole or in part. Any amounts not forgiven incur interest at 1.0% per annum and monthly repayments of principal and interest are deferred until the Small Business Administration decides on forgiveness. While the Company's PPP Loan currently has a two-year maturity, the amended law will permit the Company to request a five-year maturity, subject to the approval of the counterparty. During the three and nine months ended September 30, 2020, the Company recognized interest expense of $387 and $659 respectively in connection with the PPP Loan. As of September 30, 2020, and December 31, 2019, the Company's accrued interest related to the PPP Loan was $659 and $0, respectively. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2020 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 10 RELATED PARTY TRANSACTIONS Accounts Payable – Related Party Accounts payable – related party consists of a liability of $3,454 and $4,253 as of September 30, 2020 and December 31, 2019, respectively, to Energy Science Laboratories, Inc. (“ESLI”), a company controlled by the Company’s Chief Technology Officer (“CTO”), in connection with consulting services provided to the Company associated with the development of the Company’s carbon fiber velvet ("CFV") thermal management solutions in prior periods. During the three and nine months ended September 30, 2020, the Company paid $168 and $799, respectively, of certain bills on behalf of ESLI, which reduced the liability owed to ESLI. Accrued Expenses and Other Current Liabilities – Related Party Accrued expenses and other current liabilities – related party consist of a liability of $0 and $10,419 as of September 30, 2020 and December 31, 2019, respectively, to Energy Science Laboratories, Inc. (“ESLI”), a company controlled by the Company’s Chief Technology Officer (“CTO”), in connection with consulting services provided by ESLI to the Company associated with the development of the Company’s CFV thermal management solutions. |
STOCKHOLDERS' DEFICIENCY
STOCKHOLDERS' DEFICIENCY | 9 Months Ended |
Sep. 30, 2020 | |
STOCKHOLDERS' DEFICIENCY | |
STOCKHOLDERS' DEFICIENCY | NOTE 11 STOCKHOLDERS’ DEFICIENCY Standby Equity Distribution Agreement On February 27, 2020, KULR Technology Group, Inc. entered into a SEDA with the Investor, pursuant to which the Company may, at its discretion, sell to the Investor up to $8,000,000 of shares of the Company’s common stock (the “Offering”), par value $0.0001 per share (the “Common Stock”). For each share of Common Stock purchased under the SEDA (the “Shares”), the Investor will pay the Company 80% of the lowest daily volume weighted average price of the Common Stock on the OTC Markets OTCQB or other principal market on which the Common Stock is traded for the five days immediately following the date the Company delivers notice requiring the Investor to purchase the Shares under the SEDA. The Investor’s obligation to purchase the Shares under the SEDA is subject to certain conditions, including the Company maintaining the effectiveness of a registration statement for the securities sold under the SEDA, and is subject to the Investor’s approval for amounts over $100,000. In addition, the Company may not request advances if the Shares to be issued would result in the Investor owning more than 4.99% of the Company’s outstanding Common Stock, with any such request being automatically modified to reduce the advance amount. The Company shall not be able to request advances under the SEDA if the Registration Statement is not effective or if any issuances of Common Stock pursuant to any Advances would violate any rules. The commitment period under the SEDA commenced on February 27, 2020 (the “Effective Date”) and expires on the earliest to occur of (i) first day of the month following the twenty-four months after the Effective Date, (ii) the date on which the Investor has purchased an aggregate amount of $8,000,000 of Shares under the SEDA, or (iii) the date the SEDA is earlier terminated. The SEDA contains customary representations, warranties and agreements of the Company and the Investor, indemnification rights and other obligations of the parties. The Company has the right to terminate the SEDA at any time upon prior written notice, at no cost to the Company, provided that (i) there are no outstanding advances which have yet to be issued and (ii) the Company has paid all amounts owed to the Investor, including amounts borrowed under the Note (see Note 8 - Notes Payable). The Investor has covenanted not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of the Company’s shares of Common Stock. The Company paid cash of $15,000 and issued 95,847 shares of Common Stock to the Investor as consideration for entering into the SEDA. The shares of common stock issued to the Investor had an issuance date fair value of $63,259. The aggregate consideration of $78,259 was recorded as deferred offering costs and additional paid in capital on the condensed consolidated balance sheet. During the three and nine months ended September 30, 2020 , the Company recorded $0 and $78,259, respectively, of expense related to the amortization of deferred offering costs. During the three and nine months ended September 30, 2020 the Company issued an aggregate of 1,159,449 and 1,721,013 shares of common stock, at prices between $0.73 - $1.62 and $0.72 - $1.65 per share, for aggregate proceeds of $1,395,000 and $2,152,696, respectively, in connection with notices submitted to the Investor under the SEDA, of which $550,000 and $691,000 of the proceeds, respectively, were applied directly against the Notes ( see Note 8 - Notes Payable). See Note 11 - Stockholders’ Deficiency - Shares To Be Issued for additional information. See Note 13 - Subsequent Events for additional information regarding the sale of SEDA shares subsequent to September 30, 2020. Series B Convertible Preferred Stock During the three and nine months ended September 30, 2020, a holder of 515 shares of Series B Convertible Preferred Stock elected to convert their shares into 25,758 shares of restricted common stock. Series C Convertible Preferred Stock During the three and nine months ended September 30, 2020, certain holders of 5.11 shares of Series C Convertible Preferred stock elected to convert their shares into an aggregate of 56,777 shares of restricted common stock. Stock-Based Compensation Common Stock During the three and nine months ended September 30, 2020, the Company issued an aggregate of 35,000 and 65,000 shares of immediately vested common stock with a grant date value of $25,000 and $55,000, respectively, for legal and consulting services provided. During the three and nine months ended September 30, 2019, the Company issued 160,966 and 185,966 shares of immediately vested common stock with a grant date value of $117,160 and $133,660, respectively, for legal and consulting services provided. Stock Options On January 1, 2020, the Company granted five-year options to purchase a total of 10,000 shares of common stock at an exercise price of $0.66 per share to an employee pursuant to the 2018 Plan. One-fourth of the options will vest on the first-year anniversary of the grant date and the remaining options vest monthly over three years. The options had an aggregate grant date value of $3,609 which is recognized over the vesting period. The Company estimated the fair value of the options using the Black-Scholes Option Pricing Model with the following assumptions: (a) stock price of $0.66 per share; (b) volatility of 93%; (c) expected term of 2.5 years; (d) risk-free interest rate of 1.58%; and (e) a dividend rate of 0.0%. Stock-Based Compensation Expense During the three and nine months ended September 30, 2020, the Company recognized stock-based compensation expense of $158,014 and $252,831, respectively, related to restricted common stock and stock options, of which $7,424 and $22,961, respectively, was charged to research and development expense and $150,590 and $229,870, respectively, was charged to general and administrative expense. As of September 30, 2020, there was $66,290 of unrecognized stock-based compensation expense that will be recognized over the weighted average remaining vesting period of 1.77 years. During the three and nine months ended September 30, 2019, the Company recognized stock-based compensation expense of $138,640 and $231,751 (which includes the issuance of 185,966 shares common stock for $133,660 of services provided as described above), respectively, related to restricted common stock, stock options and warrants, which are included within general and administrative expenses on the condensed consolidated statements of operations. The following table presents information related to stock-based compensation for the three and nine months ended September 30, 2020 and 2019: For the Three Months Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Common stock (issued) $ — $ 75,710 $ 55,000 $ 121,181 Stock options 10,038 9,475 30,155 36,628 Warrants — 40,976 — 61,463 Accrued issuable equity (common stock) 147,976 12,479 167,676 12,479 Total $ 158,014 $ 138,640 $ 252,831 $ 231,751 Shares To Be Issued On September 28, 2020 the Company delivered a notice requiring the Investor to purchase 31,250 of shares under the SEDA, at $1.28 price per share, which was equal to 80% of the lowest daily volume weighted average price at which the shares are traded for the five days immediately following the date the Company delivered such notice. The shares were subsequently settled on October 1, 2020 for $40,000 of gross proceeds (see Note 13 - Subsequent Events). Consulting Agreement On September 30, 2020, the Company entered into a 2-year consulting agreement with a contractor to provide services as an Advisory Board Member related to government and defense acquisitions in exchange for 60,000 shares of restricted common stock. Pursuant to the consulting agreement, the shares are subject to the Company's claw back, based upon the achievement of certain performance obligations. As of September 30, 2020, the required performance obligations have not been identified, and the restricted common shares were issued on or about November 9, 2020. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2020 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | NOTE 12 COMMITMENTS AND CONTINGENCIES Operating Lease On June 15, 2020, the Company entered into an agreement to extend the term of its original office space lease from September 30, 2020 to December 31, 2020. Monthly rental payments under the renewed lease total $5,107, which are comprised of $4,552 of base rent plus $555 of association fees. For the three and nine months ended September 30, 2020, operating lease expense was $15,616 and $56,414, respectively. For the three and nine months ended September 30, 2019, operating lease expense was $41,281 and $121,769, respectively. The Company evaluated their operating lease and determined that the short-term exemption available under ASC 842 applies since the lease term is less than 12 months and the lease does not include a purchase option whose exercise is reasonably certain. Since the short-term exemption applies, lease payments are recognized as expense and no right of use asset or lease liability is recorded. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2020 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 13 SUBSEQUENT EVENTS Standby Equity Distribution Agreement and Repayments of the Notes Payable Subsequent to September 30, 2020, the Company received cash of $40,000 in satisfaction of subscriptions receivable as of September 30, 2020 and the Company issued 31,250 shares of common stock pursuant to the SEDA (see Note 6 – Accrued Issuable Equity, Accrued Issuable Equity for Subscriptions Receivable and Note 10 - Stockholders' Deficiency). Subsequent to September 30, 2020, the Company issued an aggregate of 89,285 shares of additional common stock at a price of $1.12 per share pursuant to new advance notices submitted to the Investor under the SEDA . The entire proceeds of $100,000 were withheld by YAII to pay down a portion of the Notes (see Note 11 - Stockholders' Deficiency, Standby Equity Distribution Agreement and Note 8 - Notes Payable). Subsequent to September 30, 2020, the Company made cash payments totaling $250,000 to pay down a portion of the Notes. Subsequent to September 30, 2020, the Company issued 76,453 shares of restricted common stock in satisfaction of $100,000 of accrued issuable pursuant to a services agreement. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and accounts receivable. A significant portion of the Company’s cash is held at one major financial institution. The Company has not experienced any losses in such accounts. Cash held in US bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each institution. There was an uninsured balance of $2,559,656 as of September 30, 2020 and no uninsured cash balances as of December 31, 2019. Customer and Revenue Concentrations The Company had certain customers whose revenue individually represented 10% or more of the Company's total revenue, or whose accounts receivable balances individually represented 10% or more of the Company's total accounts receivable, as follows: Revenues Accounts Receivable For the Three Months Ended For the Nine Months Ended September 30, September 30, As of As of 2020 2019 2020 2019 September 30, 2020 December 31, 2019 Customer A * 67 % * 46 % * * Customer B * 14 % * 10 % 23 % * Customer C * * * * * 33 % Customer D * * * * * 17 % Customer E * * * * * 20 % Customer F * * * * * 19 % Customer G 35 % * 44 % * * * Customer H * * * 15 % * * Customer I 26 % * * * 56 % * Customer J * * 12 % * * * Customer K 12 % * * * 10 % * All other customers 27 % % 44 % 29 % 11 % 11 % Total 100 % 100 % 100 % 100 % 100 % 100 % * There is no assurance the Company will continue to receive significant revenues from any of these customers. Any reduction or delay in operating activity from any of the Company’s significant customers, or a delay or default in payment by any significant customer, or termination of agreements with significant customers, could materially harm the Company’s business and prospects. As a result of the Company’s significant customer concentrations, its gross profit and results from operations could fluctuate significantly due to changes in political, environmental, or economic conditions, or the loss of, reduction of business from, or less favorable terms with any of the Company’s significant customers. Vendor Concentrations As of September 30, 2020 and December 31, 2019, certain vendors represented 10% or more of the Company's total accounts payable, as follows: Accounts Payable As of As of September 30, 2020 December 31, 2019 Vendor A * 15 % Vendor B * 16 % Vendor C * 17 % Vendor D * 12 % Vendor E 47 % * Vendor F 10 % * All other vendors 43 % 40 % 100 % 100 % * |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The following five steps are applied to achieve that core principle: · Step 1 : Identify the contract with the customer; · Step 2 : Identify the performance obligations in the contract; · Step 3 : Determine the transaction price; · Step 4 : Allocate the transaction price to the performance obligations in the contract; and · Step 5 : Recognize revenue when the company satisfies a performance obligation. The Company recognizes revenue primarily from the following different types of contracts: · Product sales – Revenue is recognized at the point in time the customer obtains control of the goods and the Company satisfies its performance obligation, which is generally at the time it ships the product to the customer. · Contract services – Revenue is recognized at the point in time that the Company satisfies its performance obligation under the contract, which is generally at the time the services are fulfilled and/or accepted by the customer. The following table summarizes the revenue recognized in the unaudited condensed consolidated statements of operations: For the Three Months Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Product sales $ 136,849 $ 464,772 $ 235,979 $ 686,522 Contract services — 61,950 179,498 91,462 Total revenue $ 136,849 $ 526,722 $ 415,477 $ 777,984 As of September 30, 2020, and December 31, 2019, the Company had $36,600 and $15,000, respectively, of deferred revenue, from contracts with customers. The contract liabilities represent payments received from customers for which the Company had not yet satisfied its performance obligation under the contract, or the customers have not officially accepted the goods or services provided under the contract. During the nine months ended September 30, 2020, the Company recognized $15,000 of revenues that were included in deferred revenue as of December 31, 2019. |
Sequencing Policy | Sequencing Policy Under ASC 815-40-35 (“ASC 815”), the Company has adopted a sequencing policy, whereby, in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares as a result of certain securities with a potentially indeterminable number of shares, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares. Pursuant to ASC 815, issuances of securities as compensation in a share-based payment arrangement are not subject to the sequencing policy. |
Net Loss Per Common Share | Net Loss Per Common Share Basic net loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding, plus the impact of common shares, if dilutive, resulting from the exercise of outstanding stock options and warrants and the conversion of convertible instruments. The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: As of September 30, 2020 2019 Series B Convertible Preferred Stock 698,600 724,350 Series C Convertible Preferred Stock 189,000 206,800 Options 395,000 400,000 Warrants 210,025 201,700 Total 1,492,625 1,532,850 |
Reclassifications | Reclassifications Certain prior period balances have been reclassified in order to conform to the current period presentation. These reclassifications have no effect on previously reported results of operations or loss per share. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of concentrations of credit risk | Revenues Accounts Receivable For the Three Months Ended For the Nine Months Ended September 30, September 30, As of As of 2020 2019 2020 2019 September 30, 2020 December 31, 2019 Customer A * 67 % * 46 % * * Customer B * 14 % * 10 % 23 % * Customer C * * * * * 33 % Customer D * * * * * 17 % Customer E * * * * * 20 % Customer F * * * * * 19 % Customer G 35 % * 44 % * * * Customer H * * * 15 % * * Customer I 26 % * * * 56 % * Customer J * * 12 % * * * Customer K 12 % * * * 10 % * All other customers 27 % % 44 % 29 % 11 % 11 % Total 100 % 100 % 100 % 100 % 100 % 100 % * Accounts Payable As of As of September 30, 2020 December 31, 2019 Vendor A * 15 % Vendor B * 16 % Vendor C * 17 % Vendor D * 12 % Vendor E 47 % * Vendor F 10 % * All other vendors 43 % 40 % 100 % 100 % * |
Schedule of revenue recognized | For the Three Months Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Product sales $ 136,849 $ 464,772 $ 235,979 $ 686,522 Contract services — 61,950 179,498 91,462 Total revenue $ 136,849 $ 526,722 $ 415,477 $ 777,984 |
Schedule of weighted average dilutive common shares because their inclusion would have been anti-dilutive | As of September 30, 2020 2019 Series B Convertible Preferred Stock 698,600 724,350 Series C Convertible Preferred Stock 189,000 206,800 Options 395,000 400,000 Warrants 210,025 201,700 Total 1,492,625 1,532,850 |
PREPAID EXPENSES (Tables)
PREPAID EXPENSES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
PREPAID EXPENSES | |
Schedule of prepaid expenses | September 30, December 31, 2020 2019 Marketing $ 61,298 $ — Other 29,767 12,232 Professional 26,201 4,134 Filing 14,474 9,858 Security deposit 8,728 16,977 Total prepaid expenses $ 140,468 $ 43,201 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of accrued expenses and other current liabilities | September 30, December 31, 2020 2019 Payroll and vacation $ 321,519 $ 525,917 Legal and professional fees 51,250 60,000 Other 16,920 73,482 Total accrued expenses and other current liabilities $ 389,689 $ 659,399 |
ACCRUED ISSUABLE EQUITY (Tables
ACCRUED ISSUABLE EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
ACCRUED ISSUABLE EQUITY. | |
Schedule of accrued issuable equity | September 30, 2020 Accrued issuable equity for services, current portion $ 83,530 Accrued issuable equity for services, non-current portion 100,000 $ 183,530 |
STOCKHOLDERS' DEFICIENCY (Table
STOCKHOLDERS' DEFICIENCY (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
STOCKHOLDERS' DEFICIENCY | |
Schedule of Information relating to stock based compensation | For the Three Months Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Common stock (issued) $ — $ 75,710 $ 55,000 $ 121,181 Stock options 10,038 9,475 30,155 36,628 Warrants — 40,976 — 61,463 Accrued issuable equity (common stock) 147,976 12,479 167,676 12,479 Total $ 158,014 $ 138,640 $ 252,831 $ 231,751 |
GOING CONCERN AND MANAGEMENT'_2
GOING CONCERN AND MANAGEMENT'S PLANS (Details) - USD ($) | Feb. 27, 2020 | Apr. 30, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Feb. 18, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Cash | $ 2,809,656 | $ 76,061 | $ 2,809,656 | $ 76,061 | $ 108,857 | $ 229,896 | |||||||
Working capital deficit | 404,561 | 404,561 | |||||||||||
Net loss | (1,012,259) | $ (428,985) | $ (550,253) | $ (267,534) | $ (621,416) | $ (565,693) | (1,991,497) | (1,454,643) | |||||
Cash used in operations | (2,076,035) | $ (1,206,135) | |||||||||||
Maximum borrowing capacity under Line of credit | $ 10,000 | ||||||||||||
Paycheck Protection Program Loan | |||||||||||||
Debt principal amount | 155,226 | $ 155,226 | |||||||||||
Maturity Date | Apr. 1, 2022 | ||||||||||||
Loan proceeds received | $ 155,226 | ||||||||||||
Standby Equity Distribution Agreement | |||||||||||||
Commitment period | 24 months | ||||||||||||
Value of shares authorized to be issued under the SEDA agreement | $ 8,000,000 | ||||||||||||
Investor's obligation to purchase, per advance amount | $ 100,000 | ||||||||||||
Lowest daily volume weighted average price of the Common Stock to be paid (as a percent) | 80.00% | ||||||||||||
Maximum borrowing capacity under Line of credit | 5,847,300 | $ 5,847,300 | |||||||||||
Total Loans Excluding Paycheck Protection Program Loans [Member] | |||||||||||||
Debt principal amount | $ 3,150,000 | $ 3,150,000 | |||||||||||
Total Loans Excluding Paycheck Protection Program Loans [Member] | Maximum | |||||||||||||
Maturity Date | Jul. 20, 2021 | ||||||||||||
Total Loans Excluding Paycheck Protection Program Loans [Member] | Minimum | |||||||||||||
Maturity Date | May 31, 2021 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Customer concentrations (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Revenues [Member] | |||||
Concentration Risk, Percentage | 100.00% | 100.00% | 100.00% | 100.00% | |
Accounts Receivable [Member] | |||||
Concentration Risk, Percentage | 100.00% | 100.00% | |||
Accounts Payable [Member] | |||||
Concentration Risk, Percentage | 100.00% | 100.00% | |||
Customer A [Member] | Revenues [Member] | |||||
Concentration Risk, Percentage | 67.00% | 46.00% | |||
Customer B [Member] | Revenues [Member] | |||||
Concentration Risk, Percentage | 14.00% | 10.00% | |||
Customer B [Member] | Accounts Receivable [Member] | |||||
Concentration Risk, Percentage | 23.00% | ||||
Customer C [Member] | Accounts Receivable [Member] | |||||
Concentration Risk, Percentage | 33.00% | ||||
Customer D [Member] | Accounts Receivable [Member] | |||||
Concentration Risk, Percentage | 17.00% | ||||
Customer E [Member] | Accounts Receivable [Member] | |||||
Concentration Risk, Percentage | 20.00% | ||||
Customer F [Member] | Accounts Receivable [Member] | |||||
Concentration Risk, Percentage | 19.00% | ||||
Customer G [Member] | Revenues [Member] | |||||
Concentration Risk, Percentage | 35.00% | 44.00% | |||
Customer H [Member] | Revenues [Member] | |||||
Concentration Risk, Percentage | 15.00% | ||||
Customer I [Member] | Revenues [Member] | |||||
Concentration Risk, Percentage | 26.00% | ||||
Customer I [Member] | Accounts Receivable [Member] | |||||
Concentration Risk, Percentage | 56.00% | ||||
Customer J [Member] | Revenues [Member] | |||||
Concentration Risk, Percentage | 12.00% | ||||
Customer K [Member] | Revenues [Member] | |||||
Concentration Risk, Percentage | 12.00% | ||||
Customer K [Member] | Accounts Receivable [Member] | |||||
Concentration Risk, Percentage | 10.00% | ||||
All other customers [Member] | Revenues [Member] | |||||
Concentration Risk, Percentage | 27.00% | 19.00% | 44.00% | 29.00% | |
All other customers [Member] | Accounts Receivable [Member] | |||||
Concentration Risk, Percentage | 11.00% | 11.00% | |||
Vendor A [Member] | Accounts Payable [Member] | |||||
Concentration Risk, Percentage | 15.00% | ||||
Vendor B [Member] | Accounts Payable [Member] | |||||
Concentration Risk, Percentage | 16.00% | ||||
Vendor C [Member] | Accounts Payable [Member] | |||||
Concentration Risk, Percentage | 17.00% | ||||
Vendor D [Member] | Accounts Payable [Member] | |||||
Concentration Risk, Percentage | 12.00% | ||||
Vendor E [Member] | Accounts Payable [Member] | |||||
Concentration Risk, Percentage | 47.00% | ||||
Vendor F [Member] | Accounts Payable [Member] | |||||
Concentration Risk, Percentage | 10.00% | ||||
All other vendors [Member] | Accounts Payable [Member] | |||||
Concentration Risk, Percentage | 43.00% | 40.00% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- consolidated statements of operations: (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 136,849 | $ 526,722 | $ 415,477 | $ 777,984 |
Product sales [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 136,849 | 464,772 | 235,979 | 686,522 |
Contract services [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 61,950 | $ 179,498 | $ 91,462 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - weighted average dilutive common shares (Details) - shares | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,492,625 | 1,532,850 |
Series B Convertible Preferred Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 698,600 | 724,350 |
Series C Convertible Preferred Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 189,000 | 206,800 |
options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 395,000 | 400,000 |
Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 210,025 | 201,700 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Cash, FDIC Insured Amount | $ 250,000 | |
Uninsured cash | 2,559,656 | $ 0 |
Deferred revenue | 36,600 | 15,000 |
Revenue Recognized | $ 15,000 | $ 15,000 |
PREPAID EXPENSES (Details)
PREPAID EXPENSES (Details) - Business development services [Member] - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Marketing | $ 61,298 | |
Other | 29,767 | $ 12,232 |
Professional | 26,201 | 4,134 |
Filing | 14,474 | 9,858 |
Security deposit | 8,728 | 16,977 |
Total prepaid expenses | $ 140,468 | $ 43,201 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||
Payroll and vacation | $ 321,519 | $ 525,917 |
Legal and professional fees | 51,250 | 60,000 |
Other | 16,920 | 73,482 |
Total accrued expenses and other current liabilities | $ 389,689 | $ 659,399 |
ACCRUED ISSUABLE EQUITY (Detail
ACCRUED ISSUABLE EQUITY (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
ACCRUED ISSUABLE EQUITY. | ||
Accrued issuable equity for services, current portion | $ 83,530 | $ 0 |
Accrued issuable equity for services, non-current portion | 100,000 | $ 0 |
Accrued issuable equity for services, Total | $ 183,530 |
ACCRUED ISSUABLE EQUITY - Addit
ACCRUED ISSUABLE EQUITY - Additional information (Details) - USD ($) | Oct. 01, 2020 | Feb. 27, 2020 | Sep. 30, 2020 | Sep. 30, 2020 | Sep. 28, 2020 |
Shares to be issued for services (in shares) | 113,453 | 136,786 | |||
Value of services | $ 147,977 | $ 164,577 | |||
Fair value of unissued equity | 183,530 | 183,530 | |||
Gains (losses) related to the change in fair value | $ 9,947 | $ (15,853) | |||
Standby Equity Distribution Agreement | |||||
Accrued issuable equity for subscriptions receivable | $ 11 | ||||
Common Stock Issued as a Commitment Fee for the Seda Agreement, Shares | 95,847 | ||||
Standby Equity Distribution Agreement | Subsequent Event | |||||
Accrued issuable equity for subscriptions receivable | $ 40,000 | ||||
Common Stock Issued as a Commitment Fee for the Seda Agreement, Shares | 31,250 |
LINE OF CREDIT (Details)
LINE OF CREDIT (Details) - USD ($) | Feb. 19, 2020 | Sep. 30, 2020 | Sep. 30, 2020 | Feb. 18, 2020 |
LINE OF CREDIT | ||||
Maximum borrowing capacity | $ 10,000 | |||
Gross proceeds under line of credit | $ 10,000 | |||
Loan maturity term | 182 days | |||
Interest rate | 1.70% | |||
Outstanding line of credit | $ 0 | $ 0 | ||
Interest expense | $ 114 | 2,292 | ||
Accrued interest | $ 0 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | Jul. 20, 2020 | Feb. 27, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Debt Instrument [Line Items] | ||||||
Proceeds from notes payable | $ 3,710,000 | $ 0 | ||||
Original issuance discount on note payable | 290,000 | 0 | ||||
Amortization of debt discount | $ 210,402 | $ 0 | $ 307,313 | $ 0 | ||
Note payable | ||||||
Debt Instrument [Line Items] | ||||||
Aggregate principal amount | $ 1,500,000 | |||||
Proceeds from notes payable | 1,410,000 | |||||
Advisory fees paid to financial advisor | 130,000 | |||||
Original issuance discount on note payable | $ 90,000 | |||||
Prepayment premium (as a percentage) | 10.00% | 10.00% | ||||
Repayments of note payable | $ 250,000 | $ 475,000 | ||||
Outstanding aggregate principal balance | 1,025,000 | 1,025,000 | ||||
Amortization of debt discount | 53,709 | 150,620 | ||||
Note payable | Standby Equity Distribution Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Repaid from proceeds of notes payable | 250,000 | 391,000 | ||||
Promissory Note | Note Purchase Agreement | Investor | ||||||
Debt Instrument [Line Items] | ||||||
Aggregate principal amount | $ 2,500,000 | |||||
Proceeds from notes payable | 2,300,000 | |||||
Advisory fees paid to financial advisor | 200,000 | |||||
Original issuance discount on note payable | $ 200,000 | |||||
Debt Instrument, Premium Price, Percentage | 10.00% | |||||
Percentage of Decrease in the Monthly installment Premium | 50.00% | |||||
Decrease in the Monthly installment Premium | 225,000 | |||||
Repayments of note payable | 375,000 | 375,000 | ||||
Outstanding aggregate principal balance | 2,125,000 | 2,125,000 | ||||
Amortization of debt discount | 156,693 | 156,693 | ||||
Promissory Note | Standby Equity Distribution Agreement | Investor | ||||||
Debt Instrument [Line Items] | ||||||
Repaid from proceeds of notes payable | $ 300,000 | $ 300,000 |
LOAN PAYABLE (Details)
LOAN PAYABLE (Details) - USD ($) | Apr. 27, 2020 | Feb. 19, 2020 | Sep. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | |||||
Loan maturity term | 182 days | ||||
Payment Protection Loans | |||||
Debt Instrument [Line Items] | |||||
Cash proceeds from unsecured loan | $ 155,226 | ||||
Interest rate (as a percentage) | 1.00% | ||||
Loan maturity term | 2 years | ||||
Extended maturity term | 5 years | ||||
Interest expense of loan | $ 387 | $ 659 | |||
Accrued interest related to the loan | $ 659 | $ 659 | $ 0 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | |||
Accounts payable - related party | $ 3,454 | $ 3,454 | $ 4,253 |
Payments to related party | 168 | 799 | |
Accrued expenses and other current liabilities - related party | 0 | 0 | 10,419 |
Chief Technology Officer CTO [Member] | |||
Related Party Transaction [Line Items] | |||
Accounts payable - related party | $ 3,454 | $ 3,454 | $ 4,253 |
STOCKHOLDERS' DEFICIENCY - Stan
STOCKHOLDERS' DEFICIENCY - Standby Equity Distribution Agreement (Details) - USD ($) | Feb. 27, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 28, 2020 | Dec. 31, 2019 |
Par value per share (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||
Common stock issued for cash | $ 743,300 | $ 155,000 | ||||||||
Standby Equity Distribution Agreement | ||||||||||
Value of shares authorized to be issued under the SEDA agreement | $ 8,000,000 | |||||||||
Par value per share (in dollars per share) | $ 0.0001 | |||||||||
Lowest daily volume weighted average price of the Common Stock to be paid (as a percent) | 80.00% | |||||||||
Threshold number of trading days for investor payments | 5 days | |||||||||
Investor's obligation to purchase, per advance amount | $ 100,000 | |||||||||
Threshold maximum investor's ownership percentage | 4.99% | |||||||||
Commitment period | 24 months | |||||||||
Cash paid | $ 15,000 | |||||||||
Number of shares issued as a commitment fee for the SEDA agreement | 95,847 | |||||||||
Fair value of shares | $ 63,259 | |||||||||
Deferred offering costs | $ 78,259 | |||||||||
Amortization expense | $ 0 | $ 78,259 | ||||||||
Proceeds from notes payable | $ 550,000 | $ 691,000 | ||||||||
Common stock issued for cash, net of issuance costs (in shares) | 1,159,449 | 1,721,013 | ||||||||
Common stock issued for cash | $ 1,395,000 | $ 2,152,696 | ||||||||
Accrued issuable equity for subscriptions receivable | $ 11 | |||||||||
Series B Convertible Preferred Stock | ||||||||||
Common stock issued for cash, net of issuance costs (in shares) | 0 | 0 | ||||||||
Common stock issued for cash | $ 0 | $ 0 | ||||||||
Stock Issued During Period, Shares, Conversion of Convertible Securities | (515) | (16,371) | (515) | |||||||
Series C Convertible Preferred Stock | ||||||||||
Stock Issued During Period, Shares, Conversion of Convertible Securities | (5.11) | (5.11) | ||||||||
Maximum | Standby Equity Distribution Agreement | ||||||||||
Common Stock, Par Value | $ 1.62 | $ 1.65 | ||||||||
Minimum | Standby Equity Distribution Agreement | ||||||||||
Common Stock, Par Value | $ 0.73 | $ 0.72 | ||||||||
Common Stock | ||||||||||
Number of shares issued as a commitment fee for the SEDA agreement | 1,159,449 | 561,564 | 95,847 | |||||||
Common stock issued for cash, net of issuance costs (in shares) | 1,126,210 | 234,849 | ||||||||
Common stock issued for cash | $ 112 | $ 23 | ||||||||
Stock Issued During Period, Shares, Conversion of Convertible Securities | 818,550 | |||||||||
Common Stock | Series B Convertible Preferred Stock | ||||||||||
Stock Issued During Period, Shares, Conversion of Convertible Securities | 25,758 | |||||||||
Common Stock | Series C Convertible Preferred Stock | ||||||||||
Stock Issued During Period, Shares, Conversion of Convertible Securities | 56,777 | 56,777 |
STOCKHOLDERS' DEFICIENCY - Stoc
STOCKHOLDERS' DEFICIENCY - Stock-Based Compensation (Details) - USD ($) | Jan. 01, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
STOCKHOLDERS' DEFICIENCY | |||||
Shares of common stock issued related to consulting services provided | 35,000 | 160,966 | 65,000 | 185,966 | |
Grant date value of common stock issued related to consulting services provided | $ 25,000 | $ 117,160 | $ 55,000 | $ 133,660 | |
Options Outstanding, Number of Options | 10,000 | ||||
Options Outstanding, Exercise Price | $ 0.66 | ||||
Share based Compensation Arrangement By Share based Payment Award Options Non vested Weighted Average Aggregate Grant Date Fair Value | $ 3,609 | ||||
Expected volatility (as a percent) | 93.00% | ||||
Expected term | 2 years 6 months | ||||
Risk free interest rate (as a percent) | 1.58% | ||||
Expected dividends (as a percent) | 0.00% |
STOCKHOLDERS' DEFICIENCY - St_2
STOCKHOLDERS' DEFICIENCY - Stock-Based Compensation Expense (Details) - USD ($) | Oct. 01, 2020 | Sep. 28, 2020 | Feb. 27, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||||||
Stock-based compensation expense | $ 158,014 | $ 138,640 | $ 252,831 | $ 231,751 | |||||
Stock Issued During Period, Shares, Issued for Services | 35,000 | 160,966 | 65,000 | 185,966 | |||||
Unrecognized stock-based compensation expense | $ 66,290 | $ 133,660 | $ 66,290 | $ 133,660 | |||||
Weighted average remaining vesting period | 1 year 9 months 7 days | ||||||||
Consulting Agreement, Term | 2 years | ||||||||
Shares to be issued under Consulting Agreement | 60,000 | ||||||||
Gross proceeds | $ 1,461,695 | 898,300 | |||||||
Standby Equity Distribution Agreement | |||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||||||
Number of shares issued as a commitment fee for the SEDA agreement | 95,847 | ||||||||
Standby Equity Distribution Agreement | Subsequent Event | |||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||||||
Number of shares issued as a commitment fee for the SEDA agreement | 31,250 | ||||||||
Gross proceeds | $ 100,000 | ||||||||
Selling, general and administrative expenses | |||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||||||
Stock-based compensation expense | 150,590 | 229,870 | |||||||
Research and development expenses | |||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||||||
Stock-based compensation expense | $ 7,424 | 22,961 | |||||||
Common Stock | |||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||||||
Stock-based compensation expense | 75,710 | 55,000 | 121,181 | ||||||
Number of shares issued as a commitment fee for the SEDA agreement | 1,159,449 | 561,564 | 95,847 | ||||||
Stock options | |||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||||||
Stock-based compensation expense | $ 10,038 | 9,475 | 30,155 | 36,628 | |||||
Accrued issuable equity (common stock) | |||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||||||
Stock-based compensation expense | $ 147,976 | 12,479 | $ 167,676 | 12,479 | |||||
Warrants | |||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||||||
Stock-based compensation expense | $ 40,976 | $ 61,463 | |||||||
Shares to be Issued | Standby Equity Distribution Agreement | |||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||||||
Number of shares issued for the SEDA agreement | 31,250 | ||||||||
Price per share | $ 1.28 | ||||||||
Shares to be Issued | Standby Equity Distribution Agreement | Subsequent Event | |||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||||||
Gross proceeds | $ 40,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 15, 2020 | |
COMMITMENTS AND CONTINGENCIES. | |||||
Monthly rental payments | $ 5,107 | ||||
Base rent | 4,552 | ||||
Association fees | $ 555 | ||||
Operating Lease, Expense | $ 15,616 | $ 41,281 | $ 56,414 | $ 121,769 | |
Right of use assets | 0 | 0 | |||
Lease liabilities | $ 0 | $ 0 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | Oct. 01, 2020 | Feb. 27, 2020 | Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 28, 2020 | Dec. 31, 2019 |
Subsequent Event [Line Items] | |||||||
Par value per share (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Proceeds from sale of common stock | $ 1,461,695 | $ 898,300 | |||||
Repayments of Notes Payable | 159,000 | $ 0 | |||||
Accrued Issuable Equity for Services | $ 183,530 | $ 183,530 | |||||
Standby Equity Distribution Agreement | |||||||
Subsequent Event [Line Items] | |||||||
Accrued issuable equity for subscriptions receivable | $ 11 | ||||||
Common Stock Issued as a Commitment Fee for the Seda Agreement, Shares | 95,847 | ||||||
Common stock issued for cash, net of issuance costs (in shares) | 1,159,449 | 1,721,013 | |||||
Par value per share (in dollars per share) | $ 0.0001 | ||||||
Subsequent Event | Standby Equity Distribution Agreement | |||||||
Subsequent Event [Line Items] | |||||||
Accrued issuable equity for subscriptions receivable | $ 40,000 | ||||||
Common Stock Issued as a Commitment Fee for the Seda Agreement, Shares | 31,250 | ||||||
Common stock issued for cash, net of issuance costs (in shares) | 89,285 | ||||||
Par value per share (in dollars per share) | $ 1.12 | ||||||
Proceeds from sale of common stock | $ 100,000 | ||||||
Repayments of Notes Payable | 250,000 | ||||||
Issued shares of restricted common stock | 76,453 | ||||||
Accrued Issuable Equity for Services | $ 100,000 |