Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Jun. 03, 2020 | Jun. 30, 2019 | |
Document Information Line Items | |||
Entity Registrant Name | SCWorx Corp. | ||
Document Type | 10-K | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 9,385,582 | ||
Entity Public Float | $ 32,900,000 | ||
Amendment Flag | false | ||
Entity Central Index Key | 0001674227 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Well-known Seasoned Issuer | No | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Shell Company | false | ||
Entity Ex Transition Period | false | ||
Entity File Number | 001-37899 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Interactive Data Current | Yes |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash | $ 487,953 | $ 76,459 |
Accounts receivable –net of allowance of $344,412 and $0, respectively | 799,246 | 520,692 |
Prepaid and other assets | 11,160 | |
Convertible notes receivable, at fair value | 837,317 | |
Interest receivable | 121,350 | |
Investment in warrants, at fair value | 67,000 | |
Total current assets | 1,298,359 | 1,622,818 |
Fixed assets | 105,199 | |
Goodwill | 8,366,467 | |
Intangible assets | 205,219 | |
Other assets | 17,561 | 1,409,284 |
Total assets | 9,992,805 | 3,032,102 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 2,010,556 | 855,759 |
Contract liabilities | 1,056,637 | 816,714 |
Total current liabilities | 3,067,193 | 1,672,473 |
Long-term liabilities: | ||
Notes payable - related party | 1,591,491 | |
Total long-term liabilities | 1,591,491 | |
Total liabilities | 3,067,193 | 3,263,964 |
Commitments and contingencies | ||
Stockholders’ equity/(deficit): | ||
Series A Convertible Preferred stock, $0.001 par value; 900,000 shares authorized; 578,567 and 0 shares issued and outstanding, respectively | 579 | |
Common stock, $0.001 par value; 45,000,000 shares authorized; 7,390,261 and 5,838,149 shares issued and outstanding, respectively | 7,391 | 5,838 |
Additional paid-in capital | 19,712,115 | 1,244,273 |
Accumulated deficit | (12,794,473) | (1,481,973) |
Total stockholders’ equity/(deficit) | 6,925,612 | (231,862) |
Total liabilities and stockholders’ equity/(deficit) | $ 9,992,805 | $ 3,032,102 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Accounts receivable net of allowance (in Dollars) | $ 344,412 | $ 0 |
Common stock par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 45,000,000 | 45,000,000 |
Common stock, shares issued | 7,390,261 | 5,838,149 |
Common stock, shares outstanding | 7,390,261 | 5,838,149 |
Series A Preferred Stock | ||
Preferred stock par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 900,000 | 900,000 |
Preferred stock, shares issued | 578,567 | 0 |
Preferred stock, shares outstanding | 578,567 | 0 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement [Abstract] | ||
Revenue | $ 5,548,119 | $ 3,421,937 |
Operating expenses: | ||
Cost of revenues | 4,382,083 | 2,914,321 |
General and administrative | 13,063,526 | 658,795 |
Total operating expenses | 17,445,609 | 3,573,116 |
Loss from operations | (11,897,491) | (151,179) |
Other income (expenses): | ||
Interest expense | (23,720) | (220,091) |
Interest income | 37,773 | 169,611 |
Gain (Loss) on fair value of convertible notes receivable | 372,282 | (112,944) |
Gain (Loss) on fair value of warrant asset | 55,000 | (66,000) |
Other expense | (7,990) | |
Gain on exchange of debt for common stock | 151,646 | |
Total other income (expense) | 584,991 | (229,424) |
Net loss before income taxes | (11,312,500) | (380,603) |
Provision for income taxes | ||
Net loss | $ (11,312,500) | $ (380,603) |
Net loss per share, basic and diluted (in Dollars per share) | $ (1.81) | $ (0.09) |
Weighted average common shares outstanding, basic and diluted (in Shares) | 6,263,846 | 4,476,013 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity/(Deficit) - USD ($) | Members’ Deficit | Preferred Stock | Common stock | Additional paid-in capital | Accumulated deficit | Total |
Balances at Dec. 31, 2017 | $ (1,101,259) | $ (1,101,434) | $ (1,101,434) | |||
Balances (in Shares) at Dec. 31, 2017 | 17,500 | |||||
Conversion from LLC to Corporation | $ 1,101,259 | $ 4,476 | 65 | 4,541 | ||
Conversion from LLC to Corporation (in Shares) | (17,500) | 4,476,013 | ||||
Cancelled shares due to issuance of common stock | $ (4,367) | (1) | (4,368) | |||
Cancelled shares due to issuance of common stock (in Shares) | (4,366,954) | |||||
Shares issued to vendor | $ 2 | 2 | ||||
Shares issued to vendor (in Shares) | 2,090 | |||||
Issuance of common stock | $ 5,727 | 1,244,273 | 1,250,000 | |||
Issuance of common stock (in Shares) | 5,727,000 | |||||
Net loss | (380,603) | (380,603) | ||||
Balances at Dec. 31, 2018 | $ 5,838 | 1,244,273 | (1,481,973) | (231,862) | ||
Balances (in Shares) at Dec. 31, 2018 | 5,838,149 | |||||
Surrender of common stock in settlement of due from stockholder balance | $ (575) | (1,608,258) | (1,608,833) | |||
Surrender of common stock in settlement of due from stockholder balance (in Shares) | (574,991) | |||||
Series A Convertible Preferred Stock issuance (Alliance MMA) | $ 629 | 5,980,501 | 5,981,130 | |||
Series A Convertible Preferred Stock issuance (Alliance MMA) (in Shares) | 629,138 | |||||
Issuance of common stock | $ 1,283 | 5,883,078 | 5,884,361 | |||
Issuance of common stock (in Shares) | 1,283,124 | |||||
Conversion of notes payable - related party into Series A Convertible Preferred Stock | $ 190 | 1,899,810 | 1,900,000 | |||
Conversion of notes payable - related party into Series A Convertible Preferred Stock (in Shares) | 190,000 | |||||
Exercise of warrants | $ 11 | 67,537 | 67,548 | |||
Exercise of warrants (in Shares) | 11,075 | |||||
Settlement of disputed contractual claim | $ 20 | 117,982 | 118,002 | |||
Settlement of disputed contractual claim (in Shares) | 19,801 | |||||
Issuance of warrants in settlement of lease dispute | 66,275 | 66,275 | ||||
Shares issued in cashless exercise of warrants | $ 4 | (4) | ||||
Shares issued in cashless exercise of warrants (in Shares) | 3,732 | |||||
Stock-based compensation related to founder’s transfers of common stock to contractors | $ 5,322,930 | $ 5,322,930 | ||||
Stock-based compensation related to employee, director and contractor equity awards (in Shares) | 78 | 2,159,247 | 2,159,325 | |||
Stock-based compensation related to employee, director and contractor equity awards (in Shares) | 78,290 | |||||
Stock and warrant dividend | $ (1,705,722) | $ (1,705,722) | ||||
Conversion of Series A Convertible Preferred Stock into common stock | $ (240) | $ 634 | (394) | |||
Conversion of Series A Convertible Preferred Stock into common stock (in Shares) | (240,571) | 633,082 | ||||
Issuance of common stock in settlement of Series A Convertible Preferred Stock contractual fee | $ 73 | 209,885 | 209,958 | |||
Issuance of common stock in settlement of Series A Convertible Preferred Stock contractual fee (in Shares) | 73,156 | |||||
Common stock issued in settlement of litigation | $ 25 | 74,975 | 75,000 | |||
Common stock issued in settlement of litigation (in Shares) | 24,843 | |||||
Net loss | (11,312,500) | (11,312,500) | ||||
Balances at Dec. 31, 2019 | $ 579 | $ 7,391 | $ 19,712,115 | $ (12,794,473) | $ 6,925,612 | |
Balances (in Shares) at Dec. 31, 2019 | 578,567 | 7,390,261 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Cash Flows [Abstract] | ||
Net loss | $ (11,312,500) | $ (380,603) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 6,453 | |
Amortization of intangibles | 34,781 | |
Reserve for bad debt | 344,412 | |
Gain (loss) on change in fair value of warrant assets | (55,000) | 66,000 |
Gain (loss) on change in fair value of convertible notes receivable | (372,282) | 112,944 |
Settlement of disputed contractual claim | 118,002 | |
Issuance of warrants in settlement of lease dispute | 66,275 | |
Stock based compensation - employee grants | 7,482,254 | |
Non cash interest income | (37,773) | |
Non cash interest expense | 23,720 | |
Other income | 7,990 | |
Common stock issued in settlement of litigation | 75,000 | |
Issuance of common stock in settlement of Series A Convertible Preferred Stock contractual fee | 209,958 | |
Gain on exchange of debt for common stock | (151,646) | |
Amortization of note discount | (48,261) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (622,966) | (173,200) |
Prepaid expenses | (11,160) | |
Other assets | (17,561) | |
Accounts payable and accrued liabilities | (719,170) | 311,865 |
Contract liabilities | 239,923 | (129,825) |
Net cash used in operating activities of continuing operations | (4,691,290) | (241,080) |
Cash flows from investing activities: | ||
Cash acquired in reverse acquisition | 5,441,437 | |
Investment in AMMA warrant | (19,000) | |
Advances to shareholder | (199,549) | (547,116) |
Purchase of convertible notes receivable - Alliance MMA | (196,000) | |
Purchase of fixed assets | (111,652) | |
(Increase) in interest receivable | (121,350) | |
Loan to AMMA | (1,035,000) | |
Net cash provided by (used in) investing activities | 4,915,236 | (1,703,466) |
Cash flows from financing activities: | ||
Proceeds from notes payable - related party | 120,000 | |
Proceeds from exercise of warrants | 67,548 | |
Proceeds from sale of common shares | 1,250,000 | |
Proceeds from additional borrowings from related party | 755,846 | |
Net cash provided by financing activities | 187,548 | 2,005,846 |
Net increase in cash | 411,494 | 61,300 |
Cash, beginning of period | 76,459 | 15,159 |
Cash, end of period | 487,953 | 76,459 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | ||
Cash paid for income taxes | ||
Non-cash investing and financing activities: | ||
Settlement of disputed contractual claim with issuance of common stock | 118,002 | |
Issuance of warrant in settlement of vendor liability | 66,275 | |
Cashless exercise of warrant | 4 | |
Surrender of common stock in settlement of due from shareholder balance | 1,608,833 | |
Stock and warrant dividend | 1,705,722 | |
Warrants issued to company | 19,000 | |
Conversion of notes payable-related party and interest into Series A Convertible Preferred Stock | 1,900,000 | |
Issuance of common shares for preferred stock penalty | 209,958 | |
Interest receivable converted to common stock | 145,000 | |
Conversion of notes payable related party into common stock | 151,646 | |
Issuance of preferred and common stock in connection with acquisition of Alliance MMA, net of cash | 6,424,054 | |
Measurement period goodwill adjustment | 99,815 | |
Conversion of Series A Convertible Preferred Stock into common shares | 2,092,445 | |
Common stock issued in settlement of litigation | 75,000 | |
Right-of-use operating lease assets obtained in exchange for operating lease liabilities | $ 133,000 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | Note 1. Description of Business Nature of Business SCWorx, LLC (n/k/a SCW FL Corp.) (“SCW LLC”) was a privately held limited liability company which was organized in Florida on November 17, 2016. On December 31, 2017, SCW LLC acquired Primrose Solutions, LLC (“Primrose”), a Delaware limited liability company, which became its wholly-owned subsidiary and focused on developing functionality for the software now used and sold by SCWorx Corp. (the “Company” or “SCWorx”). The majority interest holders of Primrose were interest holders of SCW LLC and based upon Staff Accounting Bulletin Topic 5G, the technology acquired has been accounted for at predecessor cost of $0. To facilitate the planned acquisition by Alliance MMA, Inc., a Delaware corporation (“Alliance”), on June 27, 2018, SCW LLC merged with and into a newly-formed entity, SCWorx Acquisition Corp., a Delaware corporation (“SCW Acquisition”), with SCW Acquisition being the surviving entity. Subsequently, on August 17, 2018, SCW Acquisition changed its name to SCWorx Corp. On November 30, 2018, the Company and certain of its stockholders agreed to cancel 6,510 shares of common stock. In June 2018, the Company began to collect subscriptions for common stock. From June to November 2018, the Company collected $1,250,000 in subscriptions and issued 3,125 shares of common stock to new third-party investors. In addition, on February 1, 2019, (i) SCWorx Corp. (f/k/a SCWorx Acquisition Corp.) changed its name to SCW FL Corp. (to allow Alliance to change its name to SCWorx Corp.) and (ii) Alliance acquired SCWorx Corp. (n/k/a SCW FL Corp.) in a stock-for-stock exchange transaction and changed Alliance’s name to SCWorx Corp., which is the Company’s current name, with SCW FL Corp. becoming the Company’s subsidiary. Business Combination and Related Transactions In June 2018, SCWorx Acquisition Corp. entered into a Securities Purchase Agreement (“SPA”) with Alliance, as amended on December 18, 2018, under which SCWorx Acquisition Corp. agreed to purchase up to $1,250,000 in principal amount of Alliance’s convertible notes and warrants to purchase up to 1,128,356 [59,387 shares reflective of one for nineteen stock split] [bracketed amounts disclosed represent post- reverse split adjusted shares or per share amounts] shares of Alliance common stock. The initial $750,000 tranche of the notes was convertible into shares of Alliance common stock at an initial conversion price of $0.3725 [$7.0775 post-split] and the related 503,356 [26,492 post-split] warrants have an exercise price of $0.3725 [$7.0775 post-split]. The conversion price on the $750,000 convertible note was reduced to $0.215 [$4.085 post-split] per share in January 2019. The remaining $500,000 tranche of the notes was convertible into shares of Alliance common stock at a conversion price of $0.20 [$3.80 post-split] and the related 625,000 [32,895 post-split] warrants had an exercise price of $0.30 [$5.70 post-split]. All of these notes (an aggregate of $1,250,000 in principal amount) converted automatically into Alliance common stock upon the closing of the Company’s acquisition on February 1, 2019 and were distributed to certain of the Company’s common stockholders. Pursuant to the SPA, between June 29, 2018 and October 16, 2018, Alliance sold SCWorx Acquisition Corp. convertible notes in the aggregate principal amount of $750,000 and warrants to purchase 503,356 [26,492 post-split] shares of Alliance common stock, for an aggregate purchase price of $750,000. Each of the notes bore interest at 10% annually and had a one year term. The warrants had an exercise price of $0.3725, [$7.0775 post-split] a term of five years and were vested upon grant. As noted above, these notes automatically converted into Alliance common stock upon the closing of the Company’s acquisition on February 1, 2019. On August 20, 2018, the Company and its stockholders entered into a Stock Exchange Agreement with Alliance, as amended on December 18, 2018 (“SEA”). Under the SEA, the Company’s shareholders agreed to sell all of the issued and outstanding common stock of the Company, in exchange for which Alliance agreed to issue at the closing 100,000,000 shares of Alliance common stock to the Company’s stockholders. Pursuant to the SPA, between November 16, 2018 and December 31, 2018, the Company purchased additional Alliance convertible notes in the aggregate principal amount of $275,000 and warrants to purchase 356,250 [18,750 post-split] shares of Alliance common stock, for an aggregate purchase price of $275,000. Each of the Notes bore interest at 10% annually and matured one year from the issue date. These warrants had an exercise price of $0.30 [$5.70 post-split], a term of five years and were vested upon grant. This brought the total amount funded by the Company to $1,035,000 as of December 31, 2018. In January 2019, SCWorx purchased $215,000 of additional Alliance convertible notes under the aggregate $1,250,000 SPA. These notes automatically converted into Alliance common stock upon the closing of the Company’s acquisition on February 1, 2019 and were purchased under the aggregate $1,250,000 terms of the SPA. In anticipation of the acquisition of the Company, Alliance filed an original listing application with the Nasdaq Capital Market to list the common stock of the combined company. On February 1, 2019, Nasdaq approved the listing of Alliance’s common stock (on a combined basis with SCWorx), with the result being that the newly combined company’s common stock is now newly listed on the Nasdaq Capital Market. On February 1, 2019, SCWorx Corp. changed its name to SCW FL Corp. to allow Alliance to change its name to SCWorx Corp. Alliance completed the acquisition of SCWorx Corp. (n/k/a SCW FL Corp.), at which point Alliance changed its name to SCWorx Corp., changed its ticker symbol to “WORX”, and effected a one-for-nineteen reverse stock split of its common stock, which combined the 100,000,000 Alliance shares of common stock issued to the Company’s shareholders into 5,263,158 shares of common stock of the newly combined company (refer to Note 3, Summary of Significant Accounting Policies, for additional detail). From a legal perspective, Alliance acquired SCW FL Corp., and as a result, historical equity awards including stock options and warrants are carried forward at their historical basis. From an accounting perspective, Alliance was acquired by SCW FL Corp. in a reverse merger and as a result, the Company has completed preliminary purchase accounting for the transaction. Operations of the Business SCWorx is a leading provider of data content and services related to the repair, normalization and interoperability of information for healthcare providers and big data analytics for the healthcare industry. SCWorx has developed and markets health information technology solutions and associated services that improve healthcare processes and information flow within hospitals. SCWorx’s software platform enables healthcare providers to simplify, repair, and organize its data (“data normalization”), allows the data to be utilized across multiple internal software applications (“interoperability”) and provides the basis for sophisticated data analytics (“big data”). SCWorx’s solutions are designed to improve the flow of information quickly and accurately between the existing supply chain, electronic medical records, clinical systems, and patient billing functions. The software is designed to achieve multiple operational benefits such as supply chain cost reductions, decreased accounts receivables aging, accelerated and more accurate billing, contract optimization, increased supply chain management and cost visibility, synchronous Charge Description Master (“CDM”) and control of vendor rebates and contract administration fees. SCWorx empowers healthcare providers to maintain comprehensive access and visibility to an advanced business intelligence that enables better decision-making and reductions in product costs and utilization, ultimately leading to accelerated and accurate patient billing. SCWorx’s software modules perform separate functions as follows: ● virtualized Item Master File repair, expansion and automation; ● CDM management; ● contract management; ● request for proposal automation; ● rebate management; ● big data analytics modeling; and ● data integration and warehousing. SCWorx continues to provide transformational data-driven solutions to some of the finest, most well-respected healthcare providers in the United States. Clients are geographically dispersed throughout the country. The Company’s focus is to assist healthcare providers with issues they have pertaining to data interoperability. SCWorx provides these solutions through a combination of direct sales and relationships with strategic partners. SCWorx’s software solutions are delivered to clients within a fixed term period, typically a three-to-five-year contracted term, where such software is hosted in SCWorx data centers (Amazon Web Service’s “AWS” or RackSpace) and accessed by the client through a secure connection in a software as a service (“SaaS”) delivery method. SCWorx currently sells its solutions and services in the United States to hospitals and health systems through its direct sales force and its distribution and reseller partnerships. Direct-Worx — In March 2020, in response to the COVID-19 pandemic, SCWorx established a wholly-owned subsidiary, Direct-Worx, LLC, which will utilize the SCWorx database to identify trends within the purchasing supply chain and use this information to source and provide critical, difficult-to-find items for the healthcare industry. Items may become difficult to source due to unexpected disruptions within the supply chain, such as the COVID-19 pandemic. Through the date of filing the Company has not sold any PPE and as of December 31, 2019 did not have any inventory. These products currently include: Test Kits — the Company has identified multiple potential sources for Rapid Test Kits for COVID-19. PPE — Personal Protective Equipment (PPE) includes items include masks, gloves, gowns, shields, etc. This is a new business for us, and there is no assurance that we will be able to complete any sales of these products or that any such sales will be sufficient to offset the negative effects of the COVID-19 pandemic on our business. The sale of PPE and rapid test kits for COVID-19 represent a new business for the Company and is subject to the myriad risks associated with any new venture. The Company has yet to complete the sale of any COVID-19 rapid test kits. Through the date of filing we have not generated any material revenue from the sale of PPE. SCWorx, as part of the acquisition of Alliance MMA, operates an online event ticketing platform focused on serving regional MMA (“mixed martial arts”) promotions. |
Liquidity and Going Concern
Liquidity and Going Concern | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Substantial Doubt about Going Concern [Text Block] | Note 2. Liquidity and Going Concern Liquidity and Going Concern The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), which contemplates continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustment that might become necessary should the Company be unable to continue as a going concern. The Company has suffered recurring losses from operations and incurred a net loss of $11,312,500 for the year ended December 31, 2019 and $380,603 for the year ended December 31, 2018. The accumulated deficit as of December 31, 2019 was $12,794,473 The Company has not yet achieved profitability and expects to continue to incur cash outflows from operations. It is expected that its operating expenses will continue to increase and, as a result, the Company will eventually need to generate significant increases in product revenues to achieve profitability. These 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. As of the filing date of this Report, management believes that there may not be sufficient capital resources from operations and existing financing arrangements in order to meet operating expenses and working capital requirements for the next twelve months. Accordingly, we are evaluating various alternatives, including reducing operating expenses, securing additional financing through debt or equity securities to fund future business activities and other strategic alternatives. There can be no assurance that the Company will be able to generate the level of operating revenues in its business plan, or if additional sources of financing will be available on acceptable terms, if at all. If no additional sources of financing are available, our future operating prospects may be adversely affected. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | Note 3. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance to U.S. GAAP and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The accompanying consolidated financial statements include the accounts of SCWorx and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. Reverse Stock Split On February 1, 2019, the Company effected a 1-for-19 reverse stock split with respect to the outstanding shares of its common stock. The reverse stock split was deemed effective on February 4, 2019. The reverse stock split did not affect the total number of shares of common stock that the Company is authorized to issue, which is 45,000,000 shares. The reverse stock split also did not affect the total number of shares of Series A preferred stock that the Company is authorized to issue, which is 900,000 shares. Share and per share data have been adjusted for all periods presented to reflect the reverse stock split unless otherwise noted. Reclassifications A reclassification has been made to the consolidated balance sheet and consolidated statement of changes in stockholders’ equity/(deficit) to break out the total Series A Convertible Preferred Stock par value of $819 and additional paid in capital of $7,980,126. Previously, for the quarter ended March 31, 2019, the entire balance was disclosed as Series A Convertible Preferred Stock. This change in classification does not affect the previously reported total stockholders’ equity balance. In addition, the authorized common stock has been restated to reflect the correct amount of 45,000,000 authorized shares of common stock. In addition, certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on reported results of operations or cash flows. Cash Cash is maintained with various financial institutions. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. There were no amounts in excess of the FDIC insured limit for both the years ended December 31, 2019 and 2018, respectively. Fair Value of Financial Instruments Management applies fair value accounting for significant financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis. Management defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, management considers the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. Concentration of Credit and Other Risks Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, accounts receivable, due from shareholder, convertible notes receivable and warrants. The Company believes that any concentration of credit risk in its accounts receivable is substantially mitigated by the Company’s evaluation process, relatively short collection terms and the high level of credit worthiness of its customers. The Company performs ongoing internal credit evaluations of its customers’ financial condition, obtains deposits and limits the amount of credit extended when deemed necessary but generally requires no collateral. The Company believes that any concentration of credit risk in its due from shareholder and convertible notes receivable was substantially mitigated by the shareholder’s material interest in the Company, ability to sell off portions of the interest, if necessary, and the closing of the acquisition of SCWorx by Alliance and conversion of the notes payable - related party into shares of Series A Convertible Preferred Stock and the settlement of the due from stockholder balance with the surrender of 1,401 SCWorx shares of common stock in January 2019. For the year ended December 31, 2019, the Company had two customers representing 19% and 10% of aggregate revenues. For the year ended December 31, 2018, the Company had three customers representing 20%, 16% and 12% of aggregate revenues. At December 31, 2019, the Company had four customers representing 17%, 14%, 10% and 10% of aggregate accounts receivable. At December 31, 2018, the Company had three customers representing 39%, 21% and 13% of aggregate accounts receivable. Allowance for Doubtful Accounts The Company continually monitors customer payments and maintains a reserve for estimated losses resulting from its customers’ inability to make required payments. In determining the reserve, the Company evaluates the collectability of its accounts receivable based upon a variety of factors. In cases where the Company becomes aware of circumstances that may impair a specific customer’s ability to meet its financial obligations, the Company records a specific allowance against amounts due. For all other customers, the Company recognizes allowances for doubtful accounts based on its historical write-off experience in conjunction with the length of time the receivables are past due, customer creditworthiness, geographic risk and the current business environment. Actual future losses from uncollectible accounts may differ from the Company’s estimates. The Company recorded an allowance for doubtful accounts as of December 31, 2019 and 2018 of $344,412 and $0, respectively. Leases The Company determines if an arrangement is a lease at inception. The current portion of lease obligations are included in accounts payable and accrued liabilities on the consolidated balance sheets. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s lease terms may include options to extend or terminate the lease, which are included in the lease ROU asset when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease components only, none with non-lease components, which are generally accounted for separately (refer to Note 8, Leases, for additional detail). Business Combinations The Company includes the results of operations of a business it acquires in its consolidated results as of the date of acquisition. The Company allocates the fair value of the purchase consideration of its acquisition to the tangible assets, liabilities and intangible assets acquired, based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. The primary items that generate goodwill include the value of the synergies between the acquired businesses and the Company. Intangible assets are amortized over their estimated useful lives. The fair value of contingent consideration (earn out) associated with acquisitions is remeasured each reporting period and adjusted accordingly. Acquisition and integration related costs are recognized separately from the business combination and are expensed as incurred. For additional information regarding the Company’s acquisitions, refer to Note 5, Business Combinations. Goodwill and Purchased Identified Intangible Assets Goodwill Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible and identified intangible assets acquired under a business combination. Goodwill also includes acquired assembled workforce, which does not qualify as an identifiable intangible asset. The Company reviews impairment of goodwill annually in the third quarter, or more frequently if events or circumstances indicate that the goodwill might be impaired. The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. If, after assessing the totality of events or circumstances, the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the quantitative goodwill impairment test is unnecessary. Identified intangible assets Identified finite-lived intangible assets consist of ticketing software and promoter relationships resulting from the February 1, 2019 business combination. The Company’s identified intangible assets are amortized on a straight-line basis over their estimated useful lives, ranging from 5 to 7 years. The Company makes judgments about the recoverability of finite-lived intangible assets whenever facts and circumstances indicate that the useful life is shorter than originally estimated or that the carrying amount of assets may not be recoverable. If such facts and circumstances exist, the Company assesses recoverability by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets. If the useful life is shorter than originally estimated, the Company would accelerate the rate of amortization and amortize the remaining carrying value over the new shorter useful life. For further discussion of goodwill and identified intangible assets, refer to Note 5, Business Combinations. Property and Equipment Property and equipment are recorded at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the related assets’ estimated useful lives. Equipment, furniture and fixtures are being amortized over a period of three years. Expenditures that materially increase asset life are capitalized, while ordinary maintenance and repairs are expensed as incurred. Depreciation expense for the years ended December 31, 2019 and 2018 was $6,453 and $0, respectively. Revenue Recognition The Company recognizes revenue in accordance with Topic 606 to depict the transfer of promised goods or services in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of Topic 606 the Company performs the following steps: ● Step 1: Identify the contract(s) with a 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 ● Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation The Company follows the accounting revenue guidance under Topic 606 to determine whether contracts contain more than one performance obligation. Performance obligations are the unit of accounting for revenue recognition and generally represent the distinct goods or services that are promised to the customer. The Company has identified the following performance obligations in its contracts with customers: 1) Data Normalization: which includes data preparation, product and vendor mapping, product categorization, data enrichment and other data related services, 2) Software-as-a-service (“SaaS”): which is generated from clients’ access of and usage of the Company’s hosted software solutions on a subscription basis for a specified contract term, which is usually annually. In SaaS arrangements, the client cannot take possession of the software during the term of the contract and generally has the right to access and use the software and receive any software upgrades published during the subscription period, 3) Maintenance: which includes ongoing data cleansing and normalization, content enrichment, and optimization, and 4) Professional Services: mainly related to specific customer projects to manage and/or analyze data and review for cost reduction opportunities. A contract will typically include Data Normalization, SaaS and Maintenance, which are distinct performance obligations and are accounted for separately. The transaction price is allocated to each separate performance obligation on a relative stand-alone selling price basis. Significant judgement is required to determine the stand-alone selling price for each distinct performance obligation and is typically estimated based on observable transactions when these services are sold on a stand-alone basis. At contract inception, an assessment of the goods and services promised in the contracts with customers is performed and a performance obligation is identified for each distinct promise to transfer to the customer a good or service (or bundle of goods or services). To identify the performance obligations, the Company considers all the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. Revenue is recognized when the performance obligation has been met. The Company considers control to have transferred upon delivery because the Company has a present right to payment at that time, the Company has transferred use of the good or service, and the customer is able to direct the use of, and obtain substantially all the remaining benefits from, the good or service. The Company’s SaaS and Maintenance contracts typically have termination for convenience without penalty clauses and accordingly, are generally accounted for as month-to-month agreements. If it is determined that the Company has not satisfied a performance obligation, revenue recognition will be deferred until the performance obligation is deemed to be satisfied. Revenue recognition for the Company’s performance obligations are as follows: Data Normalization and Professional Services The Company’s Data Normalization and Professional Services are typically fixed fee. When these services are not combined with SaaS or Maintenance revenues as a single unit of accounting, these revenues are recognized as the services are rendered and when contractual milestones are achieved and accepted by the customer. SaaS and Maintenance SaaS and Maintenance revenues are recognized ratably over the contract terms beginning on the commencement date of each contract, which is the date on which the Company’s service is made available to customers. The Company does have some contracts that have payment terms that differ from the timing of revenue recognition, which requires the Company to assess whether the transaction price for those contracts include a significant financing component. The Company has elected the practical expedient that permits an entity to not adjust for the effects of a significant financing component if it expects that at the contract inception, the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. The Company does not maintain contracts in which the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service exceeds the one-year threshold. In periods prior to the adoption of ASC 606, the Company recognized revenues when persuasive evidence of an arrangement existed, delivery had occurred, the sales price was fixed or determinable, and the collectability of the resulting receivable was reasonably assured. The adoption of Topic 606 did not result in a cumulative effect adjustment to the Company’s opening retained earnings since there was no significant impact upon adoption of Topic 606. There was also no material impact to revenues, or any other financial statement line items for the year ended December 31, 2018 as a result of applying ASC 606. The Company has one revenue stream, from the SaaS business, and believes it has presented all varying factors that affect the nature, timing and uncertainty of revenues and cash flows. As of December 31, 2019, the Company had $1,056,637 of remaining performance obligations recorded as contract liabilities. The Company expects to recognize sales relating to these existing performance obligations of $1,056,637 during the remainder of 2020. There were no revenues that were recognized from performance obligations that were partially satisfied prior to January 1, 2018. Costs to Fulfill a Contract Costs to fulfill a contract typically include costs related to satisfying performance obligations as well as general and administrative costs that are not explicitly chargeable to customer contracts. These expenses are recognized and expensed when incurred in accordance with ASC 340-40. Cost of Revenue Cost of revenues primarily represent data center hosting costs, consulting services and maintenance of the Company’s large data array that were incurred in delivering professional services and maintenance of the Company’s large data array during the periods presented. Contract Balances Contract assets arise when the revenue associated prior to the Company’s unconditional right to receive a payment under a contract with a customer ( i.e Contract liabilities arise when customers remit contractual cash payments in advance of the Company satisfying its performance obligations under the contract and are derecognized when the revenue associated with the contract is recognized when the performance obligation is satisfied. Contract liabilities were $1,056,637 and $816,714 as of December 31, 2019 and 2018, respectively, and $946,539 as of January 1, 2018. Revenue recognized in 2018 included the $946,539 of contract liabilities outstanding as of January 1, 2018 and revenues in 2019 included $816,714 of contract liabilities outstanding as of December 31, 2018. Income Taxes The Company converted to a corporation from a limited liability company during 2018. The Company uses the asset and liability method of accounting for income taxes in accordance with Accounting Standard Codification (“ASC”) Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2019, the Company has evaluated available evidence and concluded that the Company may not realize all the benefits of its deferred tax assets; therefore, a valuation allowance has been established for its deferred tax assets. ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has no material uncertain tax positions for any of the reporting periods presented. On December 22, 2017, the Tax Cuts and Jobs Act of 2017, (the “Tax Act”) was enacted. The Tax Act significantly revised the U.S. corporate income tax regime by, including but not limited to, lowering the U.S. corporate income tax rate from 34% to 21% effective January 1, 2018, implementing a territorial tax system, imposing a one-time transition tax on previously untaxed accumulated earnings and profits of foreign subsidiaries, and creating new taxes on foreign sourced earnings. The Company completed the accounting for tax effects of the Tax Act under ASC 740. There were no impacts to the years ended December 31, 2019 and 2018. Stock-Based Compensation The Company accounts for stock-based compensation expense in accordance with the authoritative guidance on share-based payments. Under the provisions of the guidance, stock-based compensation expense is measured at the grant date based on the fair value of the option or warrant using a Black-Scholes option pricing model and is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period. The authoritative guidance also requires that the Company measures and recognizes stock-based compensation expense upon modification of the term of stock award. The stock-based compensation expense for such modification is accounted for as a repurchase of the original award and the issuance of a new award. Calculating stock-based compensation expense requires the input of highly subjective assumptions, including the expected term of the stock-based awards, stock price volatility, and the pre-vesting option forfeiture rate. The Company estimates the expected life of options granted based on historical exercise patterns, which are believed to be representative of future behavior. The Company estimates the volatility of the Company’s common stock on the date of grant based on historical volatility. The assumptions used in calculating the fair value of stock-based awards represent the Company’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, its stock-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. The Company estimates the forfeiture rate based on historical experience of its stock-based awards that are granted, exercised and cancelled. If the actual forfeiture rate is materially different from the estimate, stock-based compensation expense could be significantly different from what was recorded in the current period. The Company also grants performance based restricted stock awards to employees and consultants. These awards will vest if certain employee\consultant-specific or company-designated performance targets are achieved. If minimum performance thresholds are achieved, each award will convert into a designated number of the Company’s common stock. If minimum performance thresholds are not achieved, then no shares will be issued. Based upon the expected levels of achievement, stock-based compensation is recognized on a straight-line basis over the requisite service period. The expected levels of achievement are reassessed over the requisite service periods and, to the extent that the expected levels of achievement change, stock-based compensation is adjusted in the period of change and recorded on the statements of operations and the remaining unrecognized stock-based compensation is recorded over the remaining requisite service period. Refer to Note 10, Stockholders’ Equity, for additional detail. Loss Per Share The Company computes earnings (loss) per share in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted earnings (loss) per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing the loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of December 31, 2019 and 2018, the Company had 1,650,511 and 371,848, respectively, common stock equivalents outstanding. Indemnification The Company provides indemnification of varying scope to certain customers against claims of intellectual property infringement made by third parties arising from the use of the Company’s software. In accordance with authoritative guidance for accounting for guarantees, the Company evaluates estimated losses for such indemnification. The Company considers such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. To date, no such claims have been filed against the Company and no liability has been recorded in its financial statements. As permitted under Delaware law, the Company has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. In addition, the Company has directors’ and officers’ liability insurance coverage that is intended to reduce its financial exposure and may enable it to recover any payments above the applicable policy retention, should they occur. Contingencies The Company records a liability when the Company believes that it is both probable that a loss has been incurred and the amount can be reasonably estimated. If the Company determines that a loss is reasonably possible, and the loss or range of loss can be estimated, the Company discloses the possible loss in the notes to the consolidated financial statements. The Company reviews the developments in its contingencies that could affect the amount of the provisions that has been previously recorded, and the matters and related possible losses disclosed. The Company adjusts provisions and changes to its disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Significant judgment is required to determine both the probability and the estimated amount. Legal costs associated with loss contingencies are accrued based upon legal expenses incurred by the end of the reporting period. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. The Company regularly evaluates estimates and assumptions related to the allowance for doubtful accounts, the estimated useful lives and recoverability of long-lived assets, equity component of convertible debt, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Actual results could differ materially from those estimates. Recently Issued Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 requires a lessee to record a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, on the balance sheet for all leases with terms longer than 12 months, as well as the disclosure of key information about leasing arrangements. Disclosures are required to provide the amount, timing and uncertainty of cash flows arising from leases. A modified retrospective transition approach is provided for lessees of 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. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842) Targeted Improvements (“ASU 2018-11”). ASU 2018-11 allows all entities adopting ASU 2016-02 to choose an additional (and optional) transition method of adoption, under which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. ASU 2018-11 also allows lessors to not separate non-lease components from the associated lease component if certain conditions are met. The Company adopted the provisions of ASU 2016-02 and ASU 2018-11 in the quarter beginning January 1, 2019. The adoption resulted in the recognition of additional disclosures and a right of use asset of approximately $53,000 included as a component of prepaid expenses and other assets and a lease liability of approximately $53,000, which is included as a component of accounts payable and accrued liabilities. In October 2018, the FASB issued ASU No. 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities (“ASU 2018-17”). ASU 2018-17 provides that indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. ASU 2018-17 is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. The Company adopted this new standard in the first quarter of fiscal 2020 and the adoption of the standard did not have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disc |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | Note 4. Related Party Transactions Due from Shareholder/Member The Company’s founder and then majority stockholder, Marc Schessel, had provided cash advances on an unsecured and non-interest-bearing basis, during the first few years of operation. Beginning in 2016, the founder began receiving distributions from the Company. The amounts owed to, and due from, the shareholder have been netted in the accompanying consolidated balance sheets. In January 2019, this shareholder surrendered 1,401 common shares to the Company as settlement of the balance due. As of December 31, 2019 and 2018, the net balance due from the founder was $0 and $1,409,284, respectively. The balance did not carry a maturity date and there were no repayment terms. Due to Shareholder In October 2016, the Company entered into an unsecured loan agreement with a minority shareholder for up to $1,000,000 of borrowings for operating expenses. In November 2016 and January 2018, the Company entered into additional note agreements with the minority shareholder to provide up to an additional $2,000,000 of aggregate borrowings for which the Company had guaranteed payment from its subsidiary if the Company was unable to repay the note. The interest rate for the notes was 10% per annum and the notes had a maturity date in January 2021. One of the notes bore interest at 10% for the first 90 days and was then adjusted to 18% per annum. As previously disclosed, on August 20, 2018, the Company entered into a SEA with Alliance MMA, as amended on December 18, 2018, in connection therewith this minority shareholder agreed to accept shares of Series A Convertible Preferred Stock having a face value equal to the total amount owed to him of approximately $2.1 million in full satisfaction of such indebtedness (including principal and accrued interest). As of December 31, 2019 and 2018, the notes payable - related party totaled $0 and $1,591,491 respectively. On September 30, 2019, the note holder agreed to accept 17,000 shares of the Company’s common stock in 2020 as full settlement of the remaining $192,000 of principal. The Company incurred interest expense of $23,720 and $218,991 for the years ended December 31, 2019 and 2018, respectively, which was accrued and converted to Series A Preferred Stock in 2019. In addition, this shareholder also provided office space to the Company at no cost through January 2019. |
Business Combinations
Business Combinations | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Business Combination Disclosure [Text Block] | Note 5. Business Combinations Purchase accounting On February 1, 2019, the Company’s shareholders exchanged all of its outstanding shares in exchange for 5,263,158 shares of Alliance common stock. Due to the Company’s shareholders acquiring a controlling interest in Alliance after acquisition, the transaction was treated as a reverse merger for accounting purposes, with SCWorx being the reporting company. In accordance with purchase accounting rules under ASC 805, the purchase consideration was $11,765,491. The acquisition was accounted for under the acquisition method of accounting. The assets acquired, liabilities assumed and purchase allocation, which is based on valuations of management, is as follows: Fair Value Cash $ 5,441,437 Goodwill 8,366,467 Identifiable intangible assets: Ticketing software 64,000 Promoter relationships 176,000 Total identifiable intangible assets 240,000 Account payable (2,282,413 ) Aggregate purchase price $ 11,765,491 Identified intangible assets consist of the following: December 31, 2019 Intangible assets Useful life Gross assets Accumulated Net Ticketing software 5 years $ 64,000 $ (11,733 ) $ 52,267 Promoter relationships 7 years 176,000 (23,048 ) 152,952 Total intangible assets $ 240,000 $ (34,781 ) $ 205,219 Amortization expense for the years ended December 31, 2019 and 2018, was $34,781 and $0, respectively. As of December 31, 2019, the estimated future amortization expense on an annual basis of amortizable intangible assets is as follows: The estimated future amortization expense for the next five years and thereafter is as follows: Year ending December 31, 2020 $ 37,943 2021 37,943 2022 37,943 2023 37,943 2024 26,209 Thereafter 27,238 Total $ 205,219 Goodwill The changes to the carrying value of goodwill from January 1, 2019 through December 31, 2019 are reflected below: Fair Value December 31, 2018 $ - Preliminary goodwill related to the acquisition of Alliance MMA 8,466,282 Measurement period adjustment (99,815 ) December 31, 2019 $ 8,366,467 During the measurement period the Company adjusted the original goodwill amount by $99,815. |
Convertible Notes Receivable
Convertible Notes Receivable | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | Note 6. Convertible Notes Receivable On June 28, 2018, SCWorx Acquisition Corp. entered into a SPA with Alliance MMA, under which SCW LLC agreed to buy up to $1,000,000 in principal amount of convertible notes and warrants to purchase up to 35,323 shares of common stock. The notes were originally convertible into shares of common stock at a conversion price of $7.0775 and bore interest at 10% annually. The warrants were originally exercisable for shares of common stock at an exercise price of $7.0775. Under the SPA, SCWorx Acquisition Corp. agreed to fund (i) $500,000 at the initial closing, (ii) a second tranche of $250,000 upon the signing of a business combination agreement with the Company and (iii) a third tranche of $250,000 upon mutual agreement of Alliance MMA and SCWorx. On December 18, 2018, SCWorx agreed to increase the total amount of principal from $1,000,000 to $1,250,000 and to reduce the conversion price of the final $500,000 installment of the aggregate $1,250,000 note purchase to $3.80 per share. The warrant exercise price for the related warrants to purchase 32,895 shares was reduced to $5.70 per share. Pursuant to the SPA, during 2018, SCWorx purchased convertible notes from Alliance MMA in the principal amount of $1,035,000 and warrants to purchase an aggregate of 45,242 shares of common stock, for an aggregate purchase price of $1,035,000. The note for $750,000 bears interest at 10% annually and matured on July 31, 2019. This note was amended in January 2019 to reduce the conversion price to $4.09 per share. The related warrant to acquire 26,492 shares of common stock has an exercise price of $7.0775, a term of five years and was vested upon grant. The note for $275,000 has a conversion price of $3.80, bore interest at 10% annually and matured on June 22, 2019. The warrant to acquire 18,750 shares of common stock has an exercise price of $5.70, a term of five years and was vested upon grant. During the first quarter of 2019, SCWorx purchased additional convertible notes from Alliance MMA in the principal amount of $215,000 and warrants to purchase an aggregate of 14,145 shares of common stock, for an aggregate purchase price of $215,000. The note for $215,000 had a conversion price of $3.80, bore interest at 10% annually and matured on June 22, 2019. The warrant to acquire 14,145 shares of common stock had an exercise price of $5.70, a term of five years and was vested upon grant. The Alliance acquisition closed on February 1, 2019 and the principal, commitment costs and accrued interest related to the purchased Alliance convertible notes automatically converted into 362,280 shares of Alliance common stock. In January 2019, the SCWorx board of directors declared a dividend of the 362,280 when-converted shares of Alliance common stock, and related warrants, to the SCWorx shareholders, two of whom waived their rights to the dividend, resulting in the shares being distributed to shareholders who participated in the November 2018 stock offering by SCWorx Corp. of $1,250,000. As of December 31, 2018, the Company held a convertible note receivable from Alliance MMA with a balance of $837,317. The Company also received warrants from the transaction which were valued at $67,000. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures [Text Block] | Note 7. Fair Value of Financial Instruments FASB ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (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. ASC 820-10 also establishes a framework for measuring the fair value of assets and liabilities according to a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that are derived from assumptions based on management’s estimate of assumptions that market participants would use in pricing the asset or liability based on the best information available under the circumstances. The hierarchy is broken down into the following three levels, based on the reliability of inputs: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date. Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs for assets or liabilities that are derived from assumptions based on management’s estimate of assumptions that market participants would use in pricing the assets or liabilities. Fair value is determined on a recurring basis based on appraisals by qualified licensed appraisers and is adjusted for management’s estimates of costs to sell and holding period discounts. The following table presents information as of December 31, 2018 about significant unobservable inputs (Level 3) used in the valuation of assets measured at fair value on a recurring basis: Financial Instrument Fair Value Valuation technique Significant Unobservable inputs Convertible notes receivable $ 837,317 Monte Carlo Simulation Probability of conversion and interest rates on comparable financial instruments Investment in warrants $ 67,000 Black-Scholes Option Pricing Model Common Stock volatility and discount The fair value of the convertible notes receivable (and related discount) at the date of issuance was determined using the Monte Carlo simulation, probability of conversion and comparable interest rates. The assumptions used to measure the fair value of the convertible notes receivable as of original issuance date and, as of December 31, 2018 were as follows: Issuance date December 31, 2018 Risk-free interest rate 2.41% - 2.47 % 2.41 % Probability of conversion into equity 50% - 90 % 90 % Expected volatility 91.95 % 91.95 % Term .09 - .59 years .09 year The Company has recorded a warrant asset in relation to the contingent call option upon the occurrence of a “fundamental transaction”, as defined in the SEA. The fair value of the warrant asset (and related discount) at the date of issuance was determined using the Black-Scholes option pricing model, which was deemed not to be materially different than the fair value as would have been determined using an open simulation model such as the Monte Carlo. The Black-Scholes model uses a combination of observable inputs (Level 2) and unobservable inputs (Level 3) in calculating fair value. The assumptions used to measure the fair value of the warrants as of original issuance date and as of December 31, 2018 were as follows: Issuance dates December 31, Risk-free interest rate 2.47 % 2.41 % Expected dividend yield 0 % 0 % Expected volatility 91.95 % 91.95 % Term 5 years 5 years Fair value of common stock $ 0.3275 $ 0.16 The balances and levels of the assets measured at fair value on a non-recurring basis at December 31, 2018 are presented in the following table: Quoted prices in Significant other Significant Financial assets: Convertible notes receivable $ - $ - $ 837,317 Investment in warrants $ - $ - $ 67,000 Total $ - $ - $ 904,317 In relation to the acquisition, the Company no longer held these investments at December 31, 2019. A gain was recorded for $427,282 related to an increase in fair value and is included in other income. A summary of the changes in the Company’s convertible notes receivable at fair value using significant unobservable inputs (Level 3) as of and for the year ended December 31, 2019 is as follows: Year ended Convertible notes receivable, December 31, 2018 $ 837,317 Notes issued (face value $215,000), at fair value 196,000 Increase in fair value 372,282 Conversion of notes into common stock (1,405,599 ) Investment in notes receivable, December 31, 2019 $ - A summary of the changes in the Company’s investment in warrants measured at fair value using significant unobservable inputs (Level 3) as of and for the year ended December 31, 2019 is as follows: Year ended Investment in warrants, December 31, 2018 $ 67,000 Warrants issued to the Company 19,000 Increase in fair value 55,000 Conversion of warrants into common stock (141,000 ) Investment in warrants, December 31, 2019 $ - The values of the investment in warrants at issuance and as of December 31, 2019 were $152,000 and $0, respectively, with a gain from the change in fair value of $55,000 for the year ended December 31, 2019 and is a component of other income in the accompanying consolidated statement of operations. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Disclosure Text Block [Abstract] | |
Lessee, Operating Leases [Text Block] | Note 8. Leases Operating Leases The Company leases office facilities under operating leases. The Company’s principal executive office in New York City is under a month to month arrangement. The Company’s also had a lease which was set to expire in March 2020 and was renewed through May 2021. Leases with a probable term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. As a practical expedient, the Company elected, for all office and facility leases, not to separate non-lease components ( e.g., e.g., The Company adopted FASB Accounting Standards Codification, Topic 842, Leases (“ASC 842”) electing the practical expedient that allows the Company not to restate its comparative periods prior to the adoption of the standard on January 1, 2019. As such, the disclosures required under ASC 842 are not presented for periods before the date of adoption. For the comparative periods prior to adoption, the Company presented the disclosures which were required under ASC 840. The Company elected the optional transition method and adopted the new guidance on January 1, 2019 on a modified retrospective basis with no restatement of prior period amounts. As allowed under the new accounting standard, the Company elected to apply practical expedients to carry forward the original lease determinations, lease classifications and accounting of initial direct costs for all asset classes at the time of adoption. The Company also elected not to separate lease components from non-lease components and to exclude short-term leases from its condensed consolidated balance sheet. The Company’s adoption of the new standard as of January 1, 2019 resulted in the recognition of right-of-use assets of approximately $53,000 and liabilities of approximately $53,000. There was no impact to the accumulated deficit upon adoption of Topic 842. The Company has operating leases for corporate, business and technician offices. Leases with a probable term of 12 months or less, including month-to-month agreements, are not recorded on the consolidated balance sheet, unless the arrangement includes an option to purchase the underlying asset, or an option to renew the arrangement, that the Company is reasonably certain to exercise (short-term leases). The Company’s leases have remaining lease terms of one to 15 months, none of which include options to extend the leases without a new arrangement. As of December 31, 2019, assets recorded under operating leases were $11,065, which is included as a component of prepaid expenses and other assets. Operating lease right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The discount rate used to determine the commencement date present value of lease payment is our incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received. For the year ended December 31, 2019, the components of lease expense were as follows: Year ended Operating lease cost $ 39,184 Total lease cost $ 39,184 Other information related to leases was as follows: As of Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows for operating leases $ 39,184 Weighted Average Remaining Lease term (months) – operating leases 3 Weighted Average Discount Rate – operating leases 10 % The maturity analysis of the Company’s annual undiscounted cash flows of operating lease liabilities as of December 31, 2019 are as follows: Operating Lease Year Ending December 31, 2020 $ 11,365 Total minimum lease payments 11,365 Lease amount representing interest (300 ) Total lease liabilities $ 11,065 There were no commitments for non-cancelable operating leases as of December 31, 2018 and as of December 31, 2019 there were non-cancellable lease liabilities of $11,365. As of December 31, 2019, the Company has no additional operating leases, other than that noted above, and no financing leases. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | Note 9. Commitments and Contingencies In the normal course of business, the Company is subject to various contingencies. The Company records a contingency in the consolidated financial statements when it is probable that a liability will be incurred and the amount of the loss is reasonably estimable, or otherwise disclosed, in accordance with ASC Topic 450, Contingencies (“ASC Topic 450”). Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. In the event the Company determines that a loss is not probable, but is reasonably possible, and it becomes possible to develop what the Company believes to be a reasonable range of possible loss, then the Company will include disclosures related to such matter as appropriate and in compliance with ASC Topic 450. To the extent there is a reasonable possibility that the losses could exceed the amounts already accrued, the Company will, when applicable, adjust the accrual in the period in which the determination is made, disclose an estimate of the additional loss or range of loss, indicate that the estimate is immaterial with respect to its financial statements as a whole or, if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity Note Disclosure [Text Block] | Note 10. Stockholders’ Equity Common Stock The Company has 45,000,000 common shares authorized with a par value of $0.001 per share. On July 17, 2019, we issued 65,789 shares of our common stock to a holder of our shares of Series A Convertible Preferred Stock upon the conversion of 25,000 of such shares of Series A Convertible Preferred Stock. On September 9, 2019, we issued 200,000 shares of our common stock to a holder of our shares of Series A Convertible Preferred Stock upon the conversion of 76,000 of such shares of Series A Convertible Preferred Stock. On September 16, 2019, we issued 43,081 shares of our common stock to a holder of our shares of Series A Convertible Preferred Stock upon the conversion of 16,371 of such shares of Series A Convertible Preferred Stock. On September 16, 2019, we issued 108,422 shares of our common stock to a holder of our shares of Series A Convertible Preferred Stock upon the conversion of 41,200 of such shares of Series A Convertible Preferred Stock. On September 25, 2019, we issued 73,156 shares of our common stock to the holders of Series A Convertible Preferred Stock in settlement of fees owed to such holders pursuant to the terms of such of the Series A Convertible Preferred Stock. The shares had a fair value of $250,000. On September 30, 2019, we issued 24,843 shares of our common stock to a former employee in settlement of litigation. The shares of common stock had a fair value of $75,000. On November 11, 2019 we issued 200,000 shares of our common stock to the holders of Series A Convertible Preferred Stock in settlement of fees owed to such holders pursuant to the terms of such of the Series A Convertible Preferred Stock. The shares had a fair value of $584,000. On November 20, 2019, we issued 25,000 shares of our common stock to a former employee in per the terms of a settlement agreement. The shares of common stock had a fair value of $73,250. On December 5, 2019, we issued 50,000 shares of our common stock to a director as compensation. The shares of common stock had a fair value of $135,000. On December 11, 2019 we issued 6,579 shares of our common stock to the holders of Series A Convertible Preferred Stock in settlement of fees owed to such holders pursuant to the terms of such of the Series A Convertible Preferred Stock. The shares had a fair value of $21,053. On December 23, 2019 we issued 9,211 shares of our common stock to the holders of Series A Convertible Preferred Stock in settlement of fees owed to such holders pursuant to the terms of such of the Series A Convertible Preferred Stock. The shares had a fair value of $26,343. Series A Preferred Stock On December 19, 2018, the Company authorized Series A Preferred Shares consisting of 900,000 authorized shares, with a par value of $0.001. Transfer of Common Stock to Consultants On or about February 1, 2019, the Company’s founder and CEO as well as another shareholder transferred an aggregate of approximately 1,379,000 and 144,000 shares of common stock, respectively to certain consultants of the Company, of which approximately 983,000 and 144,000 shares of common stock, respectively were sold to consultants in exchange for promissory notes. The Company accounted for these share transfers as stock-based compensation expense based upon the Black-Scholes model as if these were stock option grants made by the Company. The Company used the following inputs in the Black-Scholes option pricing model, expected life of 5 years, risk-free interest rate of 2.51%, volatility 92% and dividend yield of 0%. As a result, the Company recognized approximately $3.6 million of stock-based compensation expense during the first quarter of 2019 related to these share transfers. Additionally, approximately 396,000 shares of common stock were transferred by the founder and CEO to contractors for no consideration. The Company accounted for these share transfers as stock-based compensation based upon the underlying common stock price of $4.37 as of the date of transfer. The Company recognized approximately $1.7 million of stock-based compensation expense related to these transfers during the first quarter of 2019. Stock Incentive Plan In connection with Alliance’s acquisition of SCW FL Corp., the Company adopted Alliance’s Second Amended and Restated 2016 Equity Incentive Plan (“2016 Plan”). The 2016 Plan allows the Company to grant shares of the Company’s common stock to the Company’s directors, officers, employees and consultants. On January 30, 2019, the Alliance shareholders approved the amendment of the 2016 Plan to increase the number of shares of common stock available for issuance thereunder to 3,000,000 shares of common stock. On February 13, 2019, the Board of Directors of the Company granted an aggregate of 425,000 restricted stock units (“RSUs”) under the 2016 Plan, of which an aggregate of 325,000 shares were granted to management and vest quarterly over the next three years, and of which 100,000 were issued to a consultant and vest quarterly over one year. U hese RSUs The Company also granted an additional 525,000 RSUs which are subject to performance vesting, of which an aggregate of 225,000 shares were issued to management and 300,000 were issued to a consultant. The 225,000 shares issued to management were cancelled in April 2020, when the person’s employment with the Company terminated. On December 5, 2019, the Company issued 50,000 RSU’s to a member of the board of directors. The RSU’s vested immediately and had a fair value of $135,000. Additionally, on December 10, 2019, the board of directors awarded stock options under the 2016 Plan to each of the three remaining independent directors to 50,000 shares of the Company’s common stock. The stock options have a term of five years, an exercise price of $2.64 per share, vest immediately on the grant date of December 10, 2019 and had a grant date fair value of $388,746. The Company determined the fair value of the stock options using the Black-Scholes model with the following inputs: expected life 10 years, risk-free interest rate 1.0%, dividend yield 0% and expected volatility 100%. On June 28, 2019, the Company terminated the aforementioned consultant and reversed the stock-based compensation expense recognized during the first quarter 2019 totaling $162,250 as the consultant had not vested in any of the RSU’s. On October 26, 2019, the employment of the Employee who received the 250,000 RSU’s on February 13, 2019, terminated and the remaining stock based compensation for the employee was cancelled as the employee had not vested in the shares. The number of shares of the Company’s common stock that are issuable pursuant to warrant and stock option grants with time-based vesting as of and for the year ended December 31, 2019 are: Warrant Grants Stock Option Grants Restricted Stock Units Number of Weighted- Number of Weighted- Number of Weighted- Balance at December 31, 2018 236,825 $ 26.00 135,023 $ 7.70 0 $ - Granted 1,112,220 5.67 203,572 3.65 730,303 - Exercised (11,075 ) 5.51 - - - - Cancelled/Forfeited (26,054 ) 5.51 - - (100,000 ) - Balance at December 31, 2019 1,311,916 $ 9.35 338,595 $ 5.96 630,303 $ - Exercisable at December 31, 2019 1,311,916 $ 9.35 226,095 $ 6.57 630,303 $ - As of December 31, 2019 and 2018, the total unrecognized expense for unvested stock options and restricted stock awards, net of actual forfeitures, was approximately $3.2 million and $0, respectively, to be recognized over a three-year period for restricted stock awards and one year for option grants from the date of grant. Stock-based compensation expense for the years ended December 31, 2019 and 2018 was as follows: Year Ended December 31, 2019 2018 Stock-based compensation expense $ 7,482,254 $ - Stock-based compensation expense categorized by the equity components for the years ended December 31, 2019 and 2018 is as follows: Year Ended December 31, 2019 2018 Stock option awards $ 584,280 $ - Common stock 1,575,044 - Transfer of common stock by founders to contractors 5,322,930 - Total $ 7,482,254 $ - Stock compensation is included in general and administrative expenses on the consolidated statements of operations |
Net Loss Per Share
Net Loss Per Share | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share [Text Block] | Note 11. Net Loss Per Share Basic net loss per share is computed by dividing net loss for the period by the weighted average shares of common stock outstanding during each period. Diluted net loss per share is computed by dividing net loss for the period by the weighted average shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. The Company uses the treasury stock method to determine whether there is a dilutive effect of outstanding option grants. The following securities were excluded from the computation of diluted net loss per share for the periods presented because including them would have been anti-dilutive: As of December 31, 2019 2018 Stock options 338,595 135,023 Warrants 1,311,916 236,825 Total common stock equivalents 1,650,511 371,848 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | Note 12. Income Taxes By virtue of a merger of the limited liability company into a corporation, the Company became a corporation during 2018. The significant items comprising the Company’s net deferred taxes as of December 31, 2019 and 2018 are as follows: As of December 31, 2019 2018 Net operating loss $ 6,408,788 $ 12,739 Stock options 747,277 - Unrealized losses - 40,573 Other 18,716 16,227 Deferred revenue 4,247 4,251 Allowance for doubtful accounts 78,009 - Valuation allowance (7,088,189 ) (73,790 ) Total deferred tax asset 168,848 - Basis difference fixed assets (25,587 ) - Basis difference intangible assets (46,482 ) - Other liabilities (96,779 ) - Total deferred tax liability (168,848 ) - Net deferred tax asset (liability) $ - $ - The components of the provision for (benefit from) income taxes consist of the following: As of December 31, 2019 2018 Current tax: Federal - - State - - Total - - Deferred tax: Federal $ (1,575,843 ) $ - State (123,778 ) - Less: change in valuation allowance 1,699,621 - - - Total $ - $ - The provision for (benefit from) income taxes varies from the amount computed by applying the statutory rate for reasons summarized below: As of December 31, 2019 As of December 31, 2018 Net loss before tax per financial statements $ (11,312,500 ) $ (380,603 ) Statutory rate (2,375,625 ) 21.00 % (79,927 ) 21.00 % State tax rate (186,642 ) 1.65 % - 0.00 % Conversion to C Corporation - 0.00 % 11,154 -2.963 % Permanent items 862,623 -7.63 % (281 ) 0.07 % Rate change 23 0.00 % - 0.00 % Change in valuation allowance 1,699,621 -15.02 % 69,054 -18.14 % $ - 0.00 % $ - 0.00 % As of December 31, 2019 and 2018, the Company had federal net operating loss carryforwards of approximately $28.3 million and $56,416, respectively, available to offset future taxable income. As of December 31, 2019 and 2018, the Company had state loss carry-forwards of approximately $10.8 million and $11,352, respectively. Future utilization of net operating losses may be limited due to potential ownership changes under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). The federal net operating loss carryforwards can be carried forward indefinitely and state loss carryforwards begin to expire in 2039. The valuation allowance as of December 31, 2019 and 2018 was $7,088,189 and $73,790, respectively. The net change in valuation allowance for the years ended December 31, 2019 and 2018 was an increase of $7,014,399 and $73,790, respectively. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on consideration of these items, management has determined that enough uncertainty exists relative to the realization of the deferred income tax asset balances to warrant the application of a full valuation allowance as of December 31, 2019 and 2018. The Company had no unrecognized tax benefits during 2019 or 2018. By statute, all tax years are open to examination by the major taxing jurisdictions to which the Company is subject. |
Legal Proceedings
Legal Proceedings | 12 Months Ended |
Dec. 31, 2019 | |
Disclosure Text Block Supplement [Abstract] | |
Legal Matters and Contingencies [Text Block] | Note 13. Legal Proceedings In conducting our business, we may become involved in legal proceedings. We will accrue a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal fees and other directly related costs expected to be incurred. On April 29, 2020, a securities class action case was filed in the United States District Court for the Southern District of New York against the Company and its CEO. The action is captioned Daniel Yannes, individually and on behalf of all others similarly situated, Plaintiff vs. SCWorx Corp. and Marc S. Schessel, Defendants. On May 27, 2020, a second securities class was filed in the United States District Court for the Southern District of New York against the Company and its CEO. The action is captioned Caitlin Leeburn, individually and on behalf of all others similarly situated, Plaintiff v. SCWorx Corp. and Marc S. Schessel, Defendants. Both lawsuits allege that the Company and its CEO mislead investors in connection with the Company’s April 13, 2020 press release with respect to the sale of COVID-19 rapid test kits. The plaintiffs in these actions are seeking unspecified monetary damages. The Company intends to vigorously defend against these proceedings. In connection with these actions, the Company may be obligated to indemnify its CEO and any of its officers or directors who incur any liability or expense incurred as a result of serving at our company’s request in such capacity. In addition, following the April 13, 2020 press release and related disclosures (related to COVID-19 rapid test kits), the Securities and Exchange Commission made an inquiry regarding the disclosures the Company made in relation to the transaction involving COVID-19 test kits. On April 22, 2020, the Securities and Exchange Commission ordered that trading in the securities of the Company be suspended because of “questions and concerns regarding the adequacy and accuracy of publicly available information in the marketplace” (the “SEC Trading Halt”). The SEC Trading Halt expired May 5, 2020, at 11:59 PM EDT. The Company is fully cooperating with the SEC’s investigation and is providing documents and other requested information. In April 2020, the Company received related inquiries from The Nasdaq Stock Market and the Financial Industry Regulatory Authority (FINRA). The Company has been fully cooperating with these agencies and providing information and documents, as requested. On May 5, 2020, the Nasdaq Stock Market informed the Company that it has initiated a “T12 trading halt,” which means the halt will remain in place until the Company has fully satisfied Nasdaq's request for additional information. The Company continues to fully cooperate with Nasdaq and respond to Nasdaq’s information requests as they are issued. The T12 trading halt remains in effect as of the filing of this Form 10-K. Also in April 2020, the Company was contacted by the U.S. Attorney’s Office for the District of New Jersey, which is seeking information and documents from the Company’s officers and directors relating primarily to the April 13, 2020 press release concerning COVID-19 rapid test kits. The Company is fully cooperating with the U.S. Attorney’s Office in its investigation. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Note 14. Subsequent Events Formation of Direct-Worx LLC subsidiary On Issuance of Shares Pursuant to Conversion of Series A Preferred Stock During January 2020, three Series A Preferred stockholders converted 55,000 shares of Series A Preferred Stock into 144,738 shares of common stock. During February 2020, two Series A Preferred stockholders converted 12,500 shares of Series A Preferred Stock into 32,895 shares of common stock. During April 2020, fifteen Series A Preferred stockholders converted 396,695 shares of Series A Preferred Stock into 1,043,935 shares of common stock. During May 2020, three Series A Preferred stockholders converted 19,500 shares of Series A Preferred Stock into 51,316 shares of common stock. Issuance of Shares Pursuant to Cashless Exercises of Common Stock Warrants During April 2020, thirteen holders of common stock warrants exercised 520,925 warrants using a cashless exercise into 352,488 shares of common stock. During May 2020, four holders of common stock warrants exercised 56,982 warrants using a cashless exercise into 26,034 shares of common stock. Issuance of Shares Pursuant to Exercises of Common Stock Warrants On April 14, 2020, a holder of common stock warrants exercised 7,000 warrants for a cash payment of $38,570. Issuance of Shares Pursuant to Cashless Exercises of Stock Options During April 2020, five holders of common stock options exercised 108,978 options using a cashless exercise into 26,361 shares of common stock. Issuance of Shares Pursuant to Settlement of Accounts Payable On April 16, 2020, the Company issued 100,000 shares of common stock in full settlement of $640,517 of accounts payable. On May 12, 2020, the Company issued 104,567 shares of common stock in full settlement of $93,150 of accounts payable. Issuance of Shares Pursuant to Stock Compensation On March 12, 2020, the Company issued 16,667 shares of common stock to an employee pursuant to a vesting schedule. On April 15, 2020, the Company issued 3,913 shares of common stock to a consultant of the company as stock compensation. On April 16, 2020, the Company issued 5,264 shares of common stock to a consultant of the company as stock compensation. On April 21, 2020, the Company issued 30,303 shares of common stock to an employee pursuant to a vesting schedule. Issuance of Shares Pursuant to a Settlement On January 8, 2020, the Company issued 50,000 shares of common stock to a former employee per the terms of a separation settlement. Issuance of Restricted Stock Units On March 17, 2020, the Company granted 80,000 restricted stock units to each of the members of the Board of Directors, for a total of 320,000 restricted stock units. Such units vest fully on September 17, 2020. On April 7, 2020, the Company granted 1,569,000 restricted stock units to 36 individuals for services rendered. Such shares vest in between six months and two years from the date of grant. On April 7, 2020, the Company granted 329,000 restricted stock units to its Chief Executive Officer. Such shares vest 50% upon the Company filing its 2019 Form 10-K and 50% upon the Company filing its 2020 Form 10-K. On May 15, 2020, the Company granted 20,000 restricted stock units to three of the four members of the Board of Directors. The fourth member, in connection with his appointment to the board on May 15, 2020, was granted 100,000 restricted stock units. The total amount of 160,000 restricted stock units granted by the Company vest fully on September 17, 2020. Securities Class Action and Investigations On April 29, 2020, a securities class action case was filed in the United States District Court for the Southern District of New York against the Company and its CEO. The action is captioned Daniel Yannes, individually and on behalf of all others similarly situated, Plaintiff vs. SCWorx Corp. and Marc S. Schessel, Defendants. On May 27, 2020, a second securities class was filed in the United States District Court for the Southern District of New York against the Company and its CEO. The action is captioned Caitlin Leeburn, individually and on behalf of all others similarly situated, Plaintiff v. SCWorx Corp. and Marc S. Schessel, Defendants. Both lawsuits allege that the Company and its CEO mislead investors in connection with the Company’s April 13, 2020 press release with respect to the sale of COVID-19 rapid test kits. The plaintiffs in these actions are seeking unspecified monetary damages. The Company intends to vigorously defend against these proceedings. In connection with these actions, the Company may be obligated to indemnify its CEO and any of its officers or directors who incur any liability or expense incurred as a result of serving at our company’s request in such capacity. In addition, following the April 13, 2020 press release and related disclosures (related to COVID-19 rapid test kits), the Securities and Exchange Commission made an inquiry regarding the disclosures the Company made in relation to the transaction involving COVID-19 test kits. On April 22, 2020, the Securities and Exchange Commission ordered that trading in the securities of the Company be suspended because of “questions and concerns regarding the adequacy and accuracy of publicly available information in the marketplace” (the “SEC Trading Halt”). The SEC Trading Halt expired May 5, 2020, at 11:59 PM EDT. The Company is fully cooperating with the SEC’s investigation and is providing documents and other requested information. In April 2020, the Company received related inquiries from The Nasdaq Stock Market and the Financial Industry Regulatory Authority (FINRA). The Company has been fully cooperating with these agencies and providing information and documents, as requested. On May 5, 2020, the Nasdaq Stock Market informed the Company that it has initiated a “T12 trading halt,” which means the halt will remain in place until the Company has fully satisfied Nasdaq's request for additional information. The Company continues to fully cooperate with Nasdaq and respond to Nasdaq’s information requests as they are issued. The T12 trading halt remains in effect as of the filing of this Form 10-K. Also in April 2020, the Company was contacted by the U.S. Attorney’s Office for the District of New Jersey, which is seeking information and documents from the Company’s officers and directors relating primarily to the April 13, 2020 press release concerning COVID-19 rapid test kits. The Company is fully cooperating with the U.S. Attorney’s Office in its investigation. Equity Offering During May 2020 the Company received $515,000 in connection with an equity financing. This transaction is subject to execution of definitive documents. COVID-19 The Company’s operations and business have experienced disruption due to the unprecedented conditions surrounding the COVID-19 pandemic spreading throughout the United States and the world. The New York and New Jersey area, where the Company is headquartered, is currently at one of the epicenters of the coronavirus outbreak in the United States. The Company has been following the recommendations of local health authorities to minimize exposure risk for its team members since the outbreak. In addition, the Company’s customers (hospitals) have also experienced extraordinary disruptions to their businesses and supply chains, while experiencing unprecedented demand for health care services related to COVID-19. As a result of these extraordinary disruptions to our customers’ business, the Company’s customers are currently focused on meeting the nation’s health care needs in response to the COVID-19 pandemic. As a result, there is a significant risk that the Company’s customers will not be able to focus any resources on expanding the utilization of the Company’s services, which could adversely impact the Company’s future growth prospects, at least until the adverse effects of the pandemic subside. In addition, the financial impact of COVID-19 on the Company’s hospital customers could cause the hospital to delay payments due to us for services, which could negatively impact the Company’s cash flows. Receipt of CARES funding On May 5, 2020, we received $293,972 in financing from the U.S. government’s Payroll Protection Program (“PPP”). We entered into a loan agreement with Bank of America. This loan agreement was pursuant to the CARES Act. The CARES Act was established in order to enable small businesses to pay employees during the economic slowdown caused by COVID-19 by providing forgivable loans to qualifying businesses for up to 2.5 times their average monthly payroll costs. The amount borrowed under the CARES Act is eligible to be forgiven provided that (a) the Company uses the PPP Funds during the eight week period after receipt thereof, and (b) the PPP Funds are only used to cover payroll costs (including benefits), rent, mortgage interest, and utility costs. The amount of loan forgiveness will be reduced if, among other reasons, the Company does not maintain staffing or payroll levels. Principal and interest payments on any unforgiven portion of the PPP Funds (the “PPP Loan”) will be deferred for six months and will accrue interest at a fixed annual rate of 1.0% and carry a two year maturity date. There is no prepayment penalty on the CARES Act Loan. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance to U.S. GAAP and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The accompanying consolidated financial statements include the accounts of SCWorx and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. |
Reverse Stock Split | Reverse Stock Split On February 1, 2019, the Company effected a 1-for-19 reverse stock split with respect to the outstanding shares of its common stock. The reverse stock split was deemed effective on February 4, 2019. The reverse stock split did not affect the total number of shares of common stock that the Company is authorized to issue, which is 45,000,000 shares. The reverse stock split also did not affect the total number of shares of Series A preferred stock that the Company is authorized to issue, which is 900,000 shares. Share and per share data have been adjusted for all periods presented to reflect the reverse stock split unless otherwise noted. |
Reclassifications | Reclassifications A reclassification has been made to the consolidated balance sheet and consolidated statement of changes in stockholders’ equity/(deficit) to break out the total Series A Convertible Preferred Stock par value of $819 and additional paid in capital of $7,980,126. Previously, for the quarter ended March 31, 2019, the entire balance was disclosed as Series A Convertible Preferred Stock. This change in classification does not affect the previously reported total stockholders’ equity balance. In addition, the authorized common stock has been restated to reflect the correct amount of 45,000,000 authorized shares of common stock. In addition, certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on reported results of operations or cash flows. |
Cash | Cash Cash is maintained with various financial institutions. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. There were no amounts in excess of the FDIC insured limit for both the years ended December 31, 2019 and 2018, respectively. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Management applies fair value accounting for significant financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis. Management defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, management considers the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. |
Concentration of Credit and Other Risks | Concentration of Credit and Other Risks Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, accounts receivable, due from shareholder, convertible notes receivable and warrants. The Company believes that any concentration of credit risk in its accounts receivable is substantially mitigated by the Company’s evaluation process, relatively short collection terms and the high level of credit worthiness of its customers. The Company performs ongoing internal credit evaluations of its customers’ financial condition, obtains deposits and limits the amount of credit extended when deemed necessary but generally requires no collateral. The Company believes that any concentration of credit risk in its due from shareholder and convertible notes receivable was substantially mitigated by the shareholder’s material interest in the Company, ability to sell off portions of the interest, if necessary, and the closing of the acquisition of SCWorx by Alliance and conversion of the notes payable - related party into shares of Series A Convertible Preferred Stock and the settlement of the due from stockholder balance with the surrender of 1,401 SCWorx shares of common stock in January 2019. For the year ended December 31, 2019, the Company had two customers representing 19% and 10% of aggregate revenues. For the year ended December 31, 2018, the Company had three customers representing 20%, 16% and 12% of aggregate revenues. At December 31, 2019, the Company had four customers representing 17%, 14%, 10% and 10% of aggregate accounts receivable. At December 31, 2018, the Company had three customers representing 39%, 21% and 13% of aggregate accounts receivable. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company continually monitors customer payments and maintains a reserve for estimated losses resulting from its customers’ inability to make required payments. In determining the reserve, the Company evaluates the collectability of its accounts receivable based upon a variety of factors. In cases where the Company becomes aware of circumstances that may impair a specific customer’s ability to meet its financial obligations, the Company records a specific allowance against amounts due. For all other customers, the Company recognizes allowances for doubtful accounts based on its historical write-off experience in conjunction with the length of time the receivables are past due, customer creditworthiness, geographic risk and the current business environment. Actual future losses from uncollectible accounts may differ from the Company’s estimates. The Company recorded an allowance for doubtful accounts as of December 31, 2019 and 2018 of $344,412 and $0, respectively. |
Leases | Leases The Company determines if an arrangement is a lease at inception. The current portion of lease obligations are included in accounts payable and accrued liabilities on the consolidated balance sheets. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s lease terms may include options to extend or terminate the lease, which are included in the lease ROU asset when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease components only, none with non-lease components, which are generally accounted for separately (refer to Note 8, Leases, for additional detail). |
Business Combinations | Business Combinations The Company includes the results of operations of a business it acquires in its consolidated results as of the date of acquisition. The Company allocates the fair value of the purchase consideration of its acquisition to the tangible assets, liabilities and intangible assets acquired, based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. The primary items that generate goodwill include the value of the synergies between the acquired businesses and the Company. Intangible assets are amortized over their estimated useful lives. The fair value of contingent consideration (earn out) associated with acquisitions is remeasured each reporting period and adjusted accordingly. Acquisition and integration related costs are recognized separately from the business combination and are expensed as incurred. For additional information regarding the Company’s acquisitions, refer to Note 5, Business Combinations. |
Goodwill and Purchased Identified Intangible Assets | Goodwill and Purchased Identified Intangible Assets Goodwill Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible and identified intangible assets acquired under a business combination. Goodwill also includes acquired assembled workforce, which does not qualify as an identifiable intangible asset. The Company reviews impairment of goodwill annually in the third quarter, or more frequently if events or circumstances indicate that the goodwill might be impaired. The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. If, after assessing the totality of events or circumstances, the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the quantitative goodwill impairment test is unnecessary. Identified intangible assets Identified finite-lived intangible assets consist of ticketing software and promoter relationships resulting from the February 1, 2019 business combination. The Company’s identified intangible assets are amortized on a straight-line basis over their estimated useful lives, ranging from 5 to 7 years. The Company makes judgments about the recoverability of finite-lived intangible assets whenever facts and circumstances indicate that the useful life is shorter than originally estimated or that the carrying amount of assets may not be recoverable. If such facts and circumstances exist, the Company assesses recoverability by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets. If the useful life is shorter than originally estimated, the Company would accelerate the rate of amortization and amortize the remaining carrying value over the new shorter useful life. For further discussion of goodwill and identified intangible assets, refer to Note 5, Business Combinations. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the related assets’ estimated useful lives. Equipment, furniture and fixtures are being amortized over a period of three years. Expenditures that materially increase asset life are capitalized, while ordinary maintenance and repairs are expensed as incurred. Depreciation expense for the years ended December 31, 2019 and 2018 was $6,453 and $0, respectively. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with Topic 606 to depict the transfer of promised goods or services in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of Topic 606 the Company performs the following steps: ● Step 1: Identify the contract(s) with a 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 ● Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation The Company follows the accounting revenue guidance under Topic 606 to determine whether contracts contain more than one performance obligation. Performance obligations are the unit of accounting for revenue recognition and generally represent the distinct goods or services that are promised to the customer. The Company has identified the following performance obligations in its contracts with customers: 1) Data Normalization: which includes data preparation, product and vendor mapping, product categorization, data enrichment and other data related services, 2) Software-as-a-service (“SaaS”): which is generated from clients’ access of and usage of the Company’s hosted software solutions on a subscription basis for a specified contract term, which is usually annually. In SaaS arrangements, the client cannot take possession of the software during the term of the contract and generally has the right to access and use the software and receive any software upgrades published during the subscription period, 3) Maintenance: which includes ongoing data cleansing and normalization, content enrichment, and optimization, and 4) Professional Services: mainly related to specific customer projects to manage and/or analyze data and review for cost reduction opportunities. A contract will typically include Data Normalization, SaaS and Maintenance, which are distinct performance obligations and are accounted for separately. The transaction price is allocated to each separate performance obligation on a relative stand-alone selling price basis. Significant judgement is required to determine the stand-alone selling price for each distinct performance obligation and is typically estimated based on observable transactions when these services are sold on a stand-alone basis. At contract inception, an assessment of the goods and services promised in the contracts with customers is performed and a performance obligation is identified for each distinct promise to transfer to the customer a good or service (or bundle of goods or services). To identify the performance obligations, the Company considers all the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. Revenue is recognized when the performance obligation has been met. The Company considers control to have transferred upon delivery because the Company has a present right to payment at that time, the Company has transferred use of the good or service, and the customer is able to direct the use of, and obtain substantially all the remaining benefits from, the good or service. The Company’s SaaS and Maintenance contracts typically have termination for convenience without penalty clauses and accordingly, are generally accounted for as month-to-month agreements. If it is determined that the Company has not satisfied a performance obligation, revenue recognition will be deferred until the performance obligation is deemed to be satisfied. Revenue recognition for the Company’s performance obligations are as follows: Data Normalization and Professional Services The Company’s Data Normalization and Professional Services are typically fixed fee. When these services are not combined with SaaS or Maintenance revenues as a single unit of accounting, these revenues are recognized as the services are rendered and when contractual milestones are achieved and accepted by the customer. SaaS and Maintenance SaaS and Maintenance revenues are recognized ratably over the contract terms beginning on the commencement date of each contract, which is the date on which the Company’s service is made available to customers. The Company does have some contracts that have payment terms that differ from the timing of revenue recognition, which requires the Company to assess whether the transaction price for those contracts include a significant financing component. The Company has elected the practical expedient that permits an entity to not adjust for the effects of a significant financing component if it expects that at the contract inception, the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. The Company does not maintain contracts in which the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service exceeds the one-year threshold. In periods prior to the adoption of ASC 606, the Company recognized revenues when persuasive evidence of an arrangement existed, delivery had occurred, the sales price was fixed or determinable, and the collectability of the resulting receivable was reasonably assured. The adoption of Topic 606 did not result in a cumulative effect adjustment to the Company’s opening retained earnings since there was no significant impact upon adoption of Topic 606. There was also no material impact to revenues, or any other financial statement line items for the year ended December 31, 2018 as a result of applying ASC 606. The Company has one revenue stream, from the SaaS business, and believes it has presented all varying factors that affect the nature, timing and uncertainty of revenues and cash flows. As of December 31, 2019, the Company had $1,056,637 of remaining performance obligations recorded as contract liabilities. The Company expects to recognize sales relating to these existing performance obligations of $1,056,637 during the remainder of 2020. There were no revenues that were recognized from performance obligations that were partially satisfied prior to January 1, 2018. Costs to Fulfill a Contract Costs to fulfill a contract typically include costs related to satisfying performance obligations as well as general and administrative costs that are not explicitly chargeable to customer contracts. These expenses are recognized and expensed when incurred in accordance with ASC 340-40. |
Cost of Revenue | Cost of Revenue Cost of revenues primarily represent data center hosting costs, consulting services and maintenance of the Company’s large data array that were incurred in delivering professional services and maintenance of the Company’s large data array during the periods presented. |
Contract Balances | Contract Balances Contract assets arise when the revenue associated prior to the Company’s unconditional right to receive a payment under a contract with a customer ( i.e Contract liabilities arise when customers remit contractual cash payments in advance of the Company satisfying its performance obligations under the contract and are derecognized when the revenue associated with the contract is recognized when the performance obligation is satisfied. Contract liabilities were $1,056,637 and $816,714 as of December 31, 2019 and 2018, respectively, and $946,539 as of January 1, 2018. Revenue recognized in 2018 included the $946,539 of contract liabilities outstanding as of January 1, 2018 and revenues in 2019 included $816,714 of contract liabilities outstanding as of December 31, 2018. |
Income Taxes | Income Taxes The Company converted to a corporation from a limited liability company during 2018. The Company uses the asset and liability method of accounting for income taxes in accordance with Accounting Standard Codification (“ASC”) Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2019, the Company has evaluated available evidence and concluded that the Company may not realize all the benefits of its deferred tax assets; therefore, a valuation allowance has been established for its deferred tax assets. ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has no material uncertain tax positions for any of the reporting periods presented. On December 22, 2017, the Tax Cuts and Jobs Act of 2017, (the “Tax Act”) was enacted. The Tax Act significantly revised the U.S. corporate income tax regime by, including but not limited to, lowering the U.S. corporate income tax rate from 34% to 21% effective January 1, 2018, implementing a territorial tax system, imposing a one-time transition tax on previously untaxed accumulated earnings and profits of foreign subsidiaries, and creating new taxes on foreign sourced earnings. The Company completed the accounting for tax effects of the Tax Act under ASC 740. There were no impacts to the years ended December 31, 2019 and 2018. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation expense in accordance with the authoritative guidance on share-based payments. Under the provisions of the guidance, stock-based compensation expense is measured at the grant date based on the fair value of the option or warrant using a Black-Scholes option pricing model and is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period. The authoritative guidance also requires that the Company measures and recognizes stock-based compensation expense upon modification of the term of stock award. The stock-based compensation expense for such modification is accounted for as a repurchase of the original award and the issuance of a new award. Calculating stock-based compensation expense requires the input of highly subjective assumptions, including the expected term of the stock-based awards, stock price volatility, and the pre-vesting option forfeiture rate. The Company estimates the expected life of options granted based on historical exercise patterns, which are believed to be representative of future behavior. The Company estimates the volatility of the Company’s common stock on the date of grant based on historical volatility. The assumptions used in calculating the fair value of stock-based awards represent the Company’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, its stock-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. The Company estimates the forfeiture rate based on historical experience of its stock-based awards that are granted, exercised and cancelled. If the actual forfeiture rate is materially different from the estimate, stock-based compensation expense could be significantly different from what was recorded in the current period. The Company also grants performance based restricted stock awards to employees and consultants. These awards will vest if certain employee\consultant-specific or company-designated performance targets are achieved. If minimum performance thresholds are achieved, each award will convert into a designated number of the Company’s common stock. If minimum performance thresholds are not achieved, then no shares will be issued. Based upon the expected levels of achievement, stock-based compensation is recognized on a straight-line basis over the requisite service period. The expected levels of achievement are reassessed over the requisite service periods and, to the extent that the expected levels of achievement change, stock-based compensation is adjusted in the period of change and recorded on the statements of operations and the remaining unrecognized stock-based compensation is recorded over the remaining requisite service period. Refer to Note 10, Stockholders’ Equity, for additional detail. |
Loss Per Share | Loss Per Share The Company computes earnings (loss) per share in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted earnings (loss) per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing the loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of December 31, 2019 and 2018, the Company had 1,650,511 and 371,848, respectively, common stock equivalents outstanding. |
Indemnification | Indemnification The Company provides indemnification of varying scope to certain customers against claims of intellectual property infringement made by third parties arising from the use of the Company’s software. In accordance with authoritative guidance for accounting for guarantees, the Company evaluates estimated losses for such indemnification. The Company considers such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. To date, no such claims have been filed against the Company and no liability has been recorded in its financial statements. As permitted under Delaware law, the Company has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. In addition, the Company has directors’ and officers’ liability insurance coverage that is intended to reduce its financial exposure and may enable it to recover any payments above the applicable policy retention, should they occur. |
Contingencies | Contingencies The Company records a liability when the Company believes that it is both probable that a loss has been incurred and the amount can be reasonably estimated. If the Company determines that a loss is reasonably possible, and the loss or range of loss can be estimated, the Company discloses the possible loss in the notes to the consolidated financial statements. The Company reviews the developments in its contingencies that could affect the amount of the provisions that has been previously recorded, and the matters and related possible losses disclosed. The Company adjusts provisions and changes to its disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Significant judgment is required to determine both the probability and the estimated amount. Legal costs associated with loss contingencies are accrued based upon legal expenses incurred by the end of the reporting period. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. The Company regularly evaluates estimates and assumptions related to the allowance for doubtful accounts, the estimated useful lives and recoverability of long-lived assets, equity component of convertible debt, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Actual results could differ materially from those estimates. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 requires a lessee to record a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, on the balance sheet for all leases with terms longer than 12 months, as well as the disclosure of key information about leasing arrangements. Disclosures are required to provide the amount, timing and uncertainty of cash flows arising from leases. A modified retrospective transition approach is provided for lessees of 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. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842) Targeted Improvements (“ASU 2018-11”). ASU 2018-11 allows all entities adopting ASU 2016-02 to choose an additional (and optional) transition method of adoption, under which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. ASU 2018-11 also allows lessors to not separate non-lease components from the associated lease component if certain conditions are met. The Company adopted the provisions of ASU 2016-02 and ASU 2018-11 in the quarter beginning January 1, 2019. The adoption resulted in the recognition of additional disclosures and a right of use asset of approximately $53,000 included as a component of prepaid expenses and other assets and a lease liability of approximately $53,000, which is included as a component of accounts payable and accrued liabilities. In October 2018, the FASB issued ASU No. 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities (“ASU 2018-17”). ASU 2018-17 provides that indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. ASU 2018-17 is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. The Company adopted this new standard in the first quarter of fiscal 2020 and the adoption of the standard did not have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective in the first quarter of fiscal 2020, and earlier adoption is permitted. The Company adopted this new standard in the first quarter of fiscal 2020 and the adoption of the standard did not have a material impact on its consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which eliminates step two from the goodwill impairment test. Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. The Company adopted this new standard in the first quarter of fiscal 2020 and the adoption of the standard did not have a material impact on its consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, Stock-based Compensation: Improvements to Nonemployee Share-based Payment Accounting, which amends the existing accounting standards for share-based payments to nonemployees. This ASU aligns much of the guidance on measuring and classifying nonemployee awards with that of awards to employees. Under the new guidance, the measurement of nonemployee equity awards is fixed on the grant date. The effective date for the standard is for interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted, but no earlier than the Company’s adoption date of Topic 606. The new guidance is required to be applied retrospectively with the cumulative effect recognized at the date of initial application. The Company adopted this new standard in the first quarter of fiscal 2019 and the adoption of the standard did not have a material impact on its consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13 (“ASU 2016-13”) “Financial Instruments - Credit Losses” (“ASC 326”): Measurement of Credit Losses on Financial Instruments” which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in earlier recognition of credit losses. In November 2019, the FASB issued ASU 2019-10 “Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)” (“ASC 2019-10”), which defers the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, for public entities which meet the definition of a smaller reporting company. The Company will adopt ASU 2016-13 effective January 1, 2023. Management is currently evaluating the effect of the adoption of ASU 2016-13 on the consolidated financial statements. The effect will largely depend on the composition and credit quality of our investment portfolio and the economic conditions at the time of adoption. |
Business Combinations (Tables)
Business Combinations (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Schedule of assets acquired, liabilities assumed and preliminary purchase allocation [Table Text Block] | Fair Value Cash $ 5,441,437 Goodwill 8,366,467 Identifiable intangible assets: Ticketing software 64,000 Promoter relationships 176,000 Total identifiable intangible assets 240,000 Account payable (2,282,413 ) Aggregate purchase price $ 11,765,491 |
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block] | December 31, 2019 Intangible assets Useful life Gross assets Accumulated Net Ticketing software 5 years $ 64,000 $ (11,733 ) $ 52,267 Promoter relationships 7 years 176,000 (23,048 ) 152,952 Total intangible assets $ 240,000 $ (34,781 ) $ 205,219 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | Year ending December 31, 2020 $ 37,943 2021 37,943 2022 37,943 2023 37,943 2024 26,209 Thereafter 27,238 Total $ 205,219 |
Schedule of Goodwill [Table Text Block] | Fair Value December 31, 2018 $ - Preliminary goodwill related to the acquisition of Alliance MMA 8,466,282 Measurement period adjustment (99,815 ) December 31, 2019 $ 8,366,467 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | Financial Instrument Fair Value Valuation technique Significant Unobservable inputs Convertible notes receivable $ 837,317 Monte Carlo Simulation Probability of conversion and interest rates on comparable financial instruments Investment in warrants $ 67,000 Black-Scholes Option Pricing Model Common Stock volatility and discount |
Fair Value Option, Disclosures [Table Text Block] | Issuance date December 31, 2018 Risk-free interest rate 2.41% - 2.47 % 2.41 % Probability of conversion into equity 50% - 90 % 90 % Expected volatility 91.95 % 91.95 % Term .09 - .59 years .09 year |
Fair Value Measurement Inputs and Valuation Techniques [Table Text Block] | Issuance dates December 31, Risk-free interest rate 2.47 % 2.41 % Expected dividend yield 0 % 0 % Expected volatility 91.95 % 91.95 % Term 5 years 5 years Fair value of common stock $ 0.3275 $ 0.16 |
Fair Value Measurements, Nonrecurring [Table Text Block] | Quoted prices in Significant other Significant Financial assets: Convertible notes receivable $ - $ - $ 837,317 Investment in warrants $ - $ - $ 67,000 Total $ - $ - $ 904,317 |
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] | Year ended Convertible notes receivable, December 31, 2018 $ 837,317 Notes issued (face value $215,000), at fair value 196,000 Increase in fair value 372,282 Conversion of notes into common stock (1,405,599 ) Investment in notes receivable, December 31, 2019 $ - |
Summary of the changes in the Company's investment in warrants [Table Text Block] | Year ended Investment in warrants, December 31, 2018 $ 67,000 Warrants issued to the Company 19,000 Increase in fair value 55,000 Conversion of warrants into common stock (141,000 ) Investment in warrants, December 31, 2019 $ - |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Disclosure Text Block [Abstract] | |
Lease, Cost [Table Text Block] | Year ended Operating lease cost $ 39,184 Total lease cost $ 39,184 |
Schedule of other information related to leases [Table Text Block] | As of Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows for operating leases $ 39,184 Weighted Average Remaining Lease term (months) – operating leases 3 Weighted Average Discount Rate – operating leases 10 % |
Lessee, Operating Lease, Liability, Maturity [Table Text Block] | Operating Lease Year Ending December 31, 2020 $ 11,365 Total minimum lease payments 11,365 Lease amount representing interest (300 ) Total lease liabilities $ 11,065 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity (Tables) [Line Items] | |
Share-based Payment Arrangement, Option, Activity [Table Text Block] | Warrant Grants Stock Option Grants Restricted Stock Units Number of Weighted- Number of Weighted- Number of Weighted- Balance at December 31, 2018 236,825 $ 26.00 135,023 $ 7.70 0 $ - Granted 1,112,220 5.67 203,572 3.65 730,303 - Exercised (11,075 ) 5.51 - - - - Cancelled/Forfeited (26,054 ) 5.51 - - (100,000 ) - Balance at December 31, 2019 1,311,916 $ 9.35 338,595 $ 5.96 630,303 $ - Exercisable at December 31, 2019 1,311,916 $ 9.35 226,095 $ 6.57 630,303 $ - |
Schedule of stock-based compensation expense [Table Text Block] | Year Ended December 31, 2019 2018 Stock option awards $ 584,280 $ - Common stock 1,575,044 - Transfer of common stock by founders to contractors 5,322,930 - Total $ 7,482,254 $ - |
Stock Options [Member] | |
Stockholders' Equity (Tables) [Line Items] | |
Share-based Payment Arrangement, Option, Activity [Table Text Block] | Year Ended December 31, 2019 2018 Stock-based compensation expense $ 7,482,254 $ - |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] | As of December 31, 2019 2018 Stock options 338,595 135,023 Warrants 1,311,916 236,825 Total common stock equivalents 1,650,511 371,848 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | As of December 31, 2019 2018 Net operating loss $ 6,408,788 $ 12,739 Stock options 747,277 - Unrealized losses - 40,573 Other 18,716 16,227 Deferred revenue 4,247 4,251 Allowance for doubtful accounts 78,009 - Valuation allowance (7,088,189 ) (73,790 ) Total deferred tax asset 168,848 - Basis difference fixed assets (25,587 ) - Basis difference intangible assets (46,482 ) - Other liabilities (96,779 ) - Total deferred tax liability (168,848 ) - Net deferred tax asset (liability) $ - $ - |
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] | As of December 31, 2019 2018 Current tax: Federal - - State - - Total - - Deferred tax: Federal $ (1,575,843 ) $ - State (123,778 ) - Less: change in valuation allowance 1,699,621 - - - Total $ - $ - |
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | As of December 31, 2019 As of December 31, 2018 Net loss before tax per financial statements $ (11,312,500 ) $ (380,603 ) Statutory rate (2,375,625 ) 21.00 % (79,927 ) 21.00 % State tax rate (186,642 ) 1.65 % - 0.00 % Conversion to C Corporation - 0.00 % 11,154 -2.963 % Permanent items 862,623 -7.63 % (281 ) 0.07 % Rate change 23 0.00 % - 0.00 % Change in valuation allowance 1,699,621 -15.02 % 69,054 -18.14 % $ - 0.00 % $ - 0.00 % |
Description of Business (Detail
Description of Business (Details) - USD ($) | Jul. 31, 2019 | Jun. 22, 2019 | Oct. 16, 2018 | Dec. 31, 2018 | Nov. 30, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2019 | Aug. 20, 2019 | Mar. 31, 2019 | Feb. 02, 2019 | Feb. 01, 2019 | Jan. 31, 2019 | Dec. 18, 2018 | Jun. 28, 2018 | Dec. 31, 2017 |
Description of Business (Details) [Line Items] | ||||||||||||||||
Acquired technology predecessor cost | $ 0 | |||||||||||||||
Proceeds from subscription of shares | $ 1,250,000 | |||||||||||||||
Principal amount | $ 1,250,000 | $ 1,250,000 | $ 1,250,000 | |||||||||||||
Warrant to purchase (in Shares) | 356,250 | 356,250 | 32,895 | 35,323 | ||||||||||||
Exercise price (in Dollars per share) | $ 0.30 | $ 0.30 | ||||||||||||||
Proceeds from issuance of warrants | $ 750,000 | |||||||||||||||
Conversion of common stock value | $ 0.10 | $ 0.10 | $ 1,250,000 | |||||||||||||
Notes Payable Related Party Interest Rate | 10.00% | |||||||||||||||
Total fund amount | $ 837,317 | $ 837,317 | $ 1,000,000 | |||||||||||||
Additional convertible debt | $ 192,000 | $ 215,000 | ||||||||||||||
Combined shares issues (in Shares) | 5,838,149 | 7,390,261 | 5,838,149 | 5,263,158 | ||||||||||||
Tranche [Member] | ||||||||||||||||
Description of Business (Details) [Line Items] | ||||||||||||||||
Conversion of common stock value | $ 750,000 | $ 750,000 | ||||||||||||||
SC Worx [Member] | ||||||||||||||||
Description of Business (Details) [Line Items] | ||||||||||||||||
Common stock cancel shares (in Shares) | 6,510 | |||||||||||||||
Proceeds from subscription of shares | $ 1,250,000 | |||||||||||||||
Number of shares issued (in Shares) | 3,125 | |||||||||||||||
Securities Purchase Agreement [Member] | ||||||||||||||||
Description of Business (Details) [Line Items] | ||||||||||||||||
Warrant to purchase (in Shares) | 503,356 | 26,492 | ||||||||||||||
Exercise price (in Dollars per share) | $ 0.30 | $ 7.0775 | $ 0.30 | |||||||||||||
Securities Purchase Agreement [Member] | Tranche [Member] | ||||||||||||||||
Description of Business (Details) [Line Items] | ||||||||||||||||
Warrant to purchase (in Shares) | 503,356 | 503,356 | ||||||||||||||
Exercise price (in Dollars per share) | $ 0.3725 | $ 0.3725 | ||||||||||||||
Securities Purchase Agreement [Member] | Tranche one [Member] | ||||||||||||||||
Description of Business (Details) [Line Items] | ||||||||||||||||
Warrant to purchase (in Shares) | 625,000 | 625,000 | ||||||||||||||
Convertible Notes Payable [Member] | ||||||||||||||||
Description of Business (Details) [Line Items] | ||||||||||||||||
Proceeds from issuance of warrants | $ 275,000 | |||||||||||||||
Warrant [Member] | ||||||||||||||||
Description of Business (Details) [Line Items] | ||||||||||||||||
Exercise price (in Dollars per share) | $ 0.3725 | |||||||||||||||
Post Split Common Stock [Member] | ||||||||||||||||
Description of Business (Details) [Line Items] | ||||||||||||||||
Exercise price (in Dollars per share) | $ 5.70 | $ 5.70 | ||||||||||||||
Proceeds from Issuance of Preferred Stock and Preference Stock | $ 275,000 | |||||||||||||||
Post Split Common Stock [Member] | Securities Purchase Agreement [Member] | ||||||||||||||||
Description of Business (Details) [Line Items] | ||||||||||||||||
Exercise price (in Dollars per share) | $ 5.70 | $ 5.70 | ||||||||||||||
Post Split Common Stock [Member] | Securities Purchase Agreement [Member] | Tranche [Member] | ||||||||||||||||
Description of Business (Details) [Line Items] | ||||||||||||||||
Warrant to purchase (in Shares) | 26,492 | 26,492 | ||||||||||||||
Exercise price (in Dollars per share) | $ 7.0775 | $ 7.0775 | ||||||||||||||
Post Split Common Stock [Member] | Securities Purchase Agreement [Member] | Tranche one [Member] | ||||||||||||||||
Description of Business (Details) [Line Items] | ||||||||||||||||
Warrant to purchase (in Shares) | 32,895 | 32,895 | ||||||||||||||
ScworxCorp [Member] | ||||||||||||||||
Description of Business (Details) [Line Items] | ||||||||||||||||
Principal amount | $ 1,035,000 | $ 215,000 | ||||||||||||||
Warrant to purchase (in Shares) | 1,128,356 | 45,242 | 1,128,356 | 14,145 | ||||||||||||
Exercise price (in Dollars per share) | $ 3.80 | $ 5.70 | ||||||||||||||
Proceeds from issuance of warrants | $ 275,000 | $ 750,000 | ||||||||||||||
Convertible price per share (in Dollars per share) | $ 0.215 | |||||||||||||||
Notes Payable Related Party Interest Rate | 10.00% | |||||||||||||||
Total fund amount | $ 750,000 | $ 1,035,000 | $ 1,035,000 | $ 1,035,000 | ||||||||||||
ScworxCorp [Member] | Warrant [Member] | Securities Purchase Agreement [Member] | ||||||||||||||||
Description of Business (Details) [Line Items] | ||||||||||||||||
Warrant to purchase (in Shares) | 59,387 | 59,387 | ||||||||||||||
ScworxCorp [Member] | Post Split Common Stock [Member] | ||||||||||||||||
Description of Business (Details) [Line Items] | ||||||||||||||||
Convertible price per share (in Dollars per share) | $ 4.085 | |||||||||||||||
Alliance [Member] | ||||||||||||||||
Description of Business (Details) [Line Items] | ||||||||||||||||
Conversion of common stock value | $ 100,000,000 | |||||||||||||||
Combined shares issues (in Shares) | 100,000,000 | |||||||||||||||
Alliance [Member] | Tranche [Member] | ||||||||||||||||
Description of Business (Details) [Line Items] | ||||||||||||||||
Conversion of common stock value | $ 750,000 | $ 750,000 | ||||||||||||||
Exercise price (in Dollars per share) | $ 0.3725 | $ 0.3725 | ||||||||||||||
Alliance [Member] | Tranche one [Member] | ||||||||||||||||
Description of Business (Details) [Line Items] | ||||||||||||||||
Conversion of common stock value | $ 500,000 | $ 500,000 | ||||||||||||||
Exercise price (in Dollars per share) | $ 0.20 | $ 0.20 | ||||||||||||||
Alliance [Member] | Post Split Common Stock [Member] | ||||||||||||||||
Description of Business (Details) [Line Items] | ||||||||||||||||
Warrant to purchase (in Shares) | 18,750 | 18,750 | ||||||||||||||
Exercise price (in Dollars per share) | $ 7.0775 | |||||||||||||||
Alliance [Member] | Post Split Common Stock [Member] | Tranche [Member] | ||||||||||||||||
Description of Business (Details) [Line Items] | ||||||||||||||||
Exercise price (in Dollars per share) | $ 7.0775 | $ 7.0775 | ||||||||||||||
Alliance [Member] | Post Split Common Stock [Member] | Tranche one [Member] | ||||||||||||||||
Description of Business (Details) [Line Items] | ||||||||||||||||
Exercise price (in Dollars per share) | $ 3.80 | $ 3.80 | ||||||||||||||
SC Worx [Member] | Post Split Common Stock [Member] | ||||||||||||||||
Description of Business (Details) [Line Items] | ||||||||||||||||
Warrant to purchase (in Shares) | 26,492 |
Liquidity and Going Concern (De
Liquidity and Going Concern (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Net income loss | $ (11,312,500) | $ (380,603) |
Accumulated deficit | $ (12,794,473) | $ (1,481,973) |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2019 | Dec. 31, 2018 | Feb. 01, 2019 | Dec. 19, 2018 | Jan. 31, 2018 | |
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Common stock shares authorized (in Shares) | 45,000,000 | 45,000,000 | 45,000,000 | ||
FDIC insured amount | $ 250,000 | $ 250,000 | |||
Due from stockholder shares of common stock (in Shares) | 1,401 | ||||
Allowance for doubtful accounts | $ 344,412 | 0 | |||
Depreciation | 6,453 | 0 | |||
Contract with Customer, Liability, Current | 1,056,637 | 816,714 | |||
Related Parties Amount in Cost of Sales | 1,056,637 | ||||
Contract liabilities | $ 1,056,637 | 816,714 | $ 946,539 | ||
Contract liabilities outstanding | $ 816,714 | ||||
Common stock equivalents outstanding shares (in Shares) | 1,650,511 | 371,848 | |||
Finance lease, Right of use asset | $ 53,000 | ||||
Lease liability | $ 53,000 | ||||
Restatement Adjustment [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Common stock shares authorized (in Shares) | 45,000,000 | ||||
Minimum [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Finite-Lived intangible asset, useful life | 5 years | ||||
U.S. corporate income tax rate | 21.00% | ||||
Maximum [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Finite-Lived intangible asset, useful life | 7 years | ||||
U.S. corporate income tax rate | 34.00% | ||||
Additional Paid-in Capital [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Adjustments to additional paid in capital | $ 7,980,126 | ||||
Customer One [Member] | Revenue Benchmark [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Concentration risk, percentage | 19.00% | 20.00% | |||
Customer One [Member] | Accounts Receivable [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Concentration risk, percentage | 17.00% | 39.00% | |||
Customer Two [Member] | Revenue Benchmark [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Concentration risk, percentage | 10.00% | 16.00% | |||
Customer Two [Member] | Accounts Receivable [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Concentration risk, percentage | 14.00% | 21.00% | |||
Customer Three [Member] | Revenue Benchmark [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Concentration risk, percentage | 12.00% | ||||
Customer Three [Member] | Accounts Receivable [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Concentration risk, percentage | 10.00% | 13.00% | |||
Customer Four [Member] | Accounts Receivable [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Concentration risk, percentage | 10.00% | ||||
Series A Preferred Stock [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Preferred stock, shares authorized (in Shares) | 900,000 | 900,000 | 900,000 | ||
Common stock, value outstanding | $ 819 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Oct. 16, 2016 | Sep. 30, 2019 | Oct. 31, 2016 | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 31, 2019 | Aug. 20, 2018 |
Related Party Transactions (Details) [Line Items] | |||||||
Due Settlement For shareholders | $ 1,401 | ||||||
Due from Affiliates | $ 0 | $ 1,409,284 | |||||
Unsecured Debt | $ 1,000,000 | ||||||
Secured Debt | $ 2,000,000 | ||||||
Interest rate, related party | 10.00% | ||||||
Debt Instrument, Interest Rate Terms | One of the notes bore interest at 10% for the first 90 days and was then adjusted to 18% per annum. | ||||||
Notes payable related party | 1,591,491 | ||||||
Debt Conversion, Converted Instrument, Shares Issued (in Shares) | 17,000 | ||||||
Remaining principal amount | $ 192,000 | $ 215,000 | |||||
Interest Expense, Related Party | $ 23,720 | $ 218,991 | |||||
Alliance [Member] | Convertible Preferred Stock [Member] | |||||||
Related Party Transactions (Details) [Line Items] | |||||||
Aggregate Indebtedness | $ 2,100,000 |
Business Combinations (Details)
Business Combinations (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Feb. 01, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Business Combinations (Details) [Line Items] | |||
Purchase consideration, description | In accordance with purchase accounting rules under ASC 805, the purchase consideration was $11,765,491. | ||
Amortization expense | $ 34,781 | ||
Adjusted goodwill | $ 99,815 | ||
Alliance MMA [Member] | |||
Business Combinations (Details) [Line Items] | |||
Number of common stock shares (in Shares) | 5,263,158 |
Business Combinations (Detail_2
Business Combinations (Details) - Schedule of assets acquired, liabilities assumed and preliminary purchase allocation - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Business Combinations (Details) - Schedule of assets acquired, liabilities assumed and preliminary purchase allocation [Line Items] | ||
Cash | $ 5,441,437 | |
Goodwill | 8,366,467 | |
Identifiable intangible assets: | ||
Total identifiable intangible assets | 240,000 | |
Account payable | (2,282,413) | |
Aggregate purchase price | 11,765,491 | |
Ticketing Software [Member] | ||
Identifiable intangible assets: | ||
Total identifiable intangible assets | 64,000 | |
Promoter Relationships [Member] | ||
Identifiable intangible assets: | ||
Total identifiable intangible assets | $ 176,000 |
Business Combinations (Detail_3
Business Combinations (Details) - Schedule of identified intangible assets | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Gross Assets | $ 240,000 |
Accumulated Amortization | (34,781) |
Total | $ 205,219 |
Ticketing Software [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, Useful Life | 5 years |
Gross Assets | $ 64,000 |
Accumulated Amortization | (11,733) |
Total | $ 52,267 |
Promoter Relationships [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, Useful Life | 7 years |
Gross Assets | $ 176,000 |
Accumulated Amortization | (23,048) |
Total | $ 152,952 |
Business Combinations (Detail_4
Business Combinations (Details) - Schedule of estimated future amortization expense on an annual basis of amortizable intangible assets | Dec. 31, 2019USD ($) |
Schedule of estimated future amortization expense on an annual basis of amortizable intangible assets [Abstract] | |
2020 | $ 37,943 |
2021 | 37,943 |
2022 | 37,943 |
2023 | 37,943 |
2024 | 26,209 |
Thereafter | 27,238 |
Total | $ 205,219 |
Business Combinations (Detail_5
Business Combinations (Details) - Schedule of changes to the carrying value of goodwill | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Schedule of changes to the carrying value of goodwill [Abstract] | |
Balance | |
Preliminary goodwill related to the acquisition of Alliance MMA | 8,466,282 |
Measurement period adjustment | (99,815) |
Balance | $ 8,366,467 |
Convertible Notes Receivable (D
Convertible Notes Receivable (Details) - USD ($) | Jul. 31, 2019 | Jun. 22, 2019 | Feb. 01, 2019 | Jan. 31, 2019 | Dec. 18, 2018 | Jun. 28, 2018 | Oct. 16, 2018 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2019 | Feb. 02, 2019 |
Convertible Notes Receivable (Details) [Line Items] | ||||||||||||
Principal amount | $ 1,000,000 | $ 837,317 | $ 837,317 | |||||||||
Warrants to purchase shares (in Shares) | 32,895 | 35,323 | 356,250 | 356,250 | ||||||||
Common stock conversion price (in Dollars per share) | $ 4.09 | $ 7.0775 | ||||||||||
Annual interest | 10.00% | |||||||||||
Aggregate principal amount | $ 1,250,000 | $ 1,250,000 | $ 1,250,000 | |||||||||
Convertible notes payable installment value | 500,000 | |||||||||||
Annual interest | 10.00% | |||||||||||
Common stock exercise price per share (in Dollars per share) | $ 0.30 | $ 0.30 | ||||||||||
Conversion amount | $ 750,000 | |||||||||||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in Shares) | 362,280 | |||||||||||
Dividends Payable, description | In January 2019, the SCWorx board of directors declared a dividend of the 362,280 when-converted shares of Alliance common stock, and related warrants, to the SCWorx shareholders, two of whom waived their rights to the dividend, resulting in the shares being distributed to shareholders who participated in the November 2018 stock offering by SCWorx Corp. | |||||||||||
Warrant Two [Member] | ||||||||||||
Convertible Notes Receivable (Details) [Line Items] | ||||||||||||
Warrants to purchase shares (in Shares) | 18,750 | 18,750 | ||||||||||
Common stock exercise price per share (in Dollars per share) | $ 5.70 | $ 5.70 | ||||||||||
Minimum [Member] | ||||||||||||
Convertible Notes Receivable (Details) [Line Items] | ||||||||||||
Aggregate principal amount | $ 1,000,000 | |||||||||||
Purchase price per share (in Dollars per share) | $ 3.80 | |||||||||||
Maximum [Member] | ||||||||||||
Convertible Notes Receivable (Details) [Line Items] | ||||||||||||
Aggregate principal amount | $ 1,250,000 | |||||||||||
Purchase price per share (in Dollars per share) | $ 5.70 | |||||||||||
Securities Purchase Agreement [Member] | ||||||||||||
Convertible Notes Receivable (Details) [Line Items] | ||||||||||||
Warrants to purchase shares (in Shares) | 503,356 | 26,492 | ||||||||||
Agreement description | agreed to fund (i) $500,000 at the initial closing, (ii) a second tranche of $250,000 upon the signing of a business combination agreement with the Company and (iii) a third tranche of $250,000 upon mutual agreement of Alliance MMA and SCWorx. | |||||||||||
Common stock exercise price per share (in Dollars per share) | $ 0.30 | $ 7.0775 | $ 0.30 | |||||||||
ScworxCorp [Member] | ||||||||||||
Convertible Notes Receivable (Details) [Line Items] | ||||||||||||
Principal amount | $ 750,000 | $ 1,035,000 | $ 1,035,000 | $ 1,035,000 | ||||||||
Warrants to purchase shares (in Shares) | 1,128,356 | 45,242 | 1,128,356 | 14,145 | ||||||||
Annual interest | 10.00% | |||||||||||
Common stock exercise price | $ 7.0775 | |||||||||||
Aggregate principal amount | $ 1,035,000 | $ 215,000 | ||||||||||
Annual interest | 10.00% | |||||||||||
Common stock exercise price per share (in Dollars per share) | $ 3.80 | $ 5.70 | ||||||||||
Conversion amount | $ 275,000 | $ 750,000 | ||||||||||
Alliance MMA [Member] | ||||||||||||
Convertible Notes Receivable (Details) [Line Items] | ||||||||||||
Conversion amount | $ 67,000 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Fair Value of Financial Instruments (Details) [Line Items] | |
Gain related to increase in fair value | $ 427,282 |
Gain from the change in fair value | 55,000 |
Warrant [Member] | Maximum [Member] | |
Fair Value of Financial Instruments (Details) [Line Items] | |
Investment in warrants at issuance | 152,000 |
Warrant [Member] | Minimum [Member] | |
Fair Value of Financial Instruments (Details) [Line Items] | |
Investment in warrants at issuance | $ 0 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments (Details) - Schedule of significant unobservable inputs | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Notes Receivable [Member] | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Fair value | $ 837,317 |
Valuation technique | Monte Carlo Simulation |
Significant unobservable inputs | Probability of conversion and interest rates on comparable financial instruments |
Warrant [Member] | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Fair value | $ 67,000 |
Valuation technique | Black-Scholes Option Pricing Model |
Significant unobservable inputs | Common Stock volatility and discount |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments (Details) - Schedule of fair value of the convertible notes receivable as of original issuance date | Feb. 13, 2019 | Feb. 01, 2019 | Dec. 31, 2018 |
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Risk-free interest rate | 0.25% | 2.51% | 2.41% |
Probability of conversion into equity | 90.00% | ||
Expected volatility | 90.00% | 92.00% | 91.95% |
Term | .09 year | ||
Convertible Notes Payable [Member] | Issuance Date Member | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Expected volatility | 91.95% | ||
Convertible Notes Payable [Member] | Minimum [Member] | Issuance Date Member | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Risk-free interest rate | 2.41% | ||
Probability of conversion into equity | 50.00% | ||
Term | 09 | ||
Convertible Notes Payable [Member] | Maximum [Member] | Issuance Date Member | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Risk-free interest rate | 2.47% | ||
Probability of conversion into equity | 90.00% | ||
Term | 59 |
Fair Value of Financial Instr_6
Fair Value of Financial Instruments (Details) - Schedule of fair value of the warrants as of original issuance date - Warrant [Member] | 12 Months Ended |
Dec. 31, 2018$ / shares | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Risk-free interest rate | 2.41% |
Expected dividend yield | 0.00% |
Expected volatility | 91.95% |
Term | 5 years |
Fair value of common stock (in Dollars per share) | $ 0.16 |
Issuance Date Member | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Risk-free interest rate | 2.47% |
Expected dividend yield | 0.00% |
Expected volatility | 91.95% |
Term | 5 years |
Fair value of common stock (in Dollars per share) | $ 0.3275 |
Fair Value of Financial Instr_7
Fair Value of Financial Instruments (Details) - Schedule of balances and levels of the assets measured at fair value | Dec. 31, 2018USD ($) |
Fair Value, Inputs, Level 1 [Member] | |
Financial assets: | |
Convertible notes receivable | |
Investment in warrants | |
Total | |
Fair Value, Inputs, Level 2 [Member] | |
Financial assets: | |
Convertible notes receivable | |
Investment in warrants | |
Total | |
Fair Value, Inputs, Level 3 [Member] | |
Financial assets: | |
Convertible notes receivable | 837,317 |
Investment in warrants | 67,000 |
Total | $ 904,317 |
Fair Value of Financial Instr_8
Fair Value of Financial Instruments (Details) - Summary of the changes in the Company's convertible notes receivable | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Summary of the changes in the Company's convertible notes receivable [Abstract] | |
Convertible notes receivable, December 31, 2018 | $ 837,317 |
Notes issued (face value $215,000), at fair value | 196,000 |
Increase in fair value | 372,282 |
Conversion of notes into common stock | (1,405,599) |
Investment in notes receivable, December 31, 2019 |
Fair Value of Financial Instr_9
Fair Value of Financial Instruments (Details) - Summary of the changes in the Company's convertible notes receivable (Parentheticals) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Summary of the changes in the Company's convertible notes receivable [Abstract] | |
Face value of fair value | $ 215,000 |
Fair Value of Financial Inst_10
Fair Value of Financial Instruments (Details) - Summary of the changes in the Company's investment in warrants | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Summary of the changes in the Company's investment in warrants [Abstract] | |
Investment in warrants | $ 67,000 |
Warrants issued to the Company | 19,000 |
Increase in fair value | 55,000 |
Conversion of warrants into common stock | (141,000) |
Investment in warrants |
Leases (Details)
Leases (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Jan. 01, 2019 | |
Leases (Details) [Line Items] | ||
Operating lease term, description | The Company’s also had a lease which was set to expire in March 2020 and was renewed through May 2021. | |
Recognition of right-of-use assets | $ 53,000 | |
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | $ 53,000 | |
Non-cancelable lease liabilities | $ 11,365 | |
Minimum [Member] | ||
Leases (Details) [Line Items] | ||
Operating lease remaining lease term | 1 year | |
Maximum [Member] | ||
Leases (Details) [Line Items] | ||
Operating lease remaining lease term | 15 years | |
Prepaid Expenses and Other Current Assets [Member] | ||
Leases (Details) [Line Items] | ||
Operating Lease, Liability | $ 11,065 |
Leases (Details) - Schedule of
Leases (Details) - Schedule of components of lease expense | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Schedule of components of lease expense [Abstract] | |
Operating lease cost | $ 39,184 |
Total lease cost | $ 39,184 |
Leases (Details) - Schedule o_2
Leases (Details) - Schedule of other information related to leases | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Cash paid for amounts included in the measurement of operating lease liabilities: | |
Operating cash flows for operating leases | $ 39,184 |
Weighted Average Remaining Lease term (months) – operating leases | 3 months |
Weighted Average Discount Rate – operating leases | 10.00% |
Leases (Details) - Schedule o_3
Leases (Details) - Schedule of cash flows of operating lease liabilities - Prepaid Expenses and Other Current Assets [Member] | Dec. 31, 2019USD ($) |
Leases (Details) - Schedule of cash flows of operating lease liabilities [Line Items] | |
2020 | $ 11,365 |
Total minimum lease payments | 11,365 |
Lease amount representing interest | (300) |
Total lease liabilities | $ 11,065 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | Dec. 23, 2019 | Dec. 11, 2019 | Dec. 05, 2019 | Dec. 05, 2019 | Nov. 20, 2019 | Nov. 11, 2019 | Sep. 30, 2019 | Sep. 25, 2019 | Sep. 16, 2019 | Sep. 09, 2019 | Jul. 17, 2019 | Feb. 13, 2019 | Feb. 01, 2019 | Jan. 30, 2019 | Apr. 30, 2020 | Jun. 28, 2019 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Oct. 26, 2019 | Dec. 19, 2018 |
Stockholders' Equity (Details) [Line Items] | |||||||||||||||||||||
Common stock authorized shares | 45,000,000 | 45,000,000 | 45,000,000 | ||||||||||||||||||
Common stock per share (in Dollars per share) | $ 0.001 | $ 0.001 | |||||||||||||||||||
Convertible shares value (in Dollars) | $ 2,092,445 | ||||||||||||||||||||
Common Stock, Conversion Basis | On or about February 1, 2019, the Company’s founder and CEO as well as another shareholder transferred an aggregate of approximately 1,379,000 and 144,000 shares of common stock, respectively to certain consultants of the Company, of which approximately 983,000 and 144,000 shares of common stock, respectively were sold to consultants in exchange for promissory notes. | ||||||||||||||||||||
Expected life | 10 years | 5 years | |||||||||||||||||||
Risk-free interest rate | 0.25% | 2.51% | 2.41% | ||||||||||||||||||
Volatility | 90.00% | 92.00% | 91.95% | ||||||||||||||||||
Dividend yield | 0.00% | 0.00% | |||||||||||||||||||
Stock-based compensation expense (in Dollars) | $ 162,250 | ||||||||||||||||||||
Common stock transferred | 396,000 | ||||||||||||||||||||
Shares Issued, Price Per Share (in Dollars per share) | $ 4.37 | ||||||||||||||||||||
Stock-based compensation expense (in Dollars) | $ 7,482,254 | ||||||||||||||||||||
Granted shares | 425,000 | ||||||||||||||||||||
Stockholders’ Equity description | Additionally, on December 10, 2019, the board of directors awarded stock options under the 2016 Plan to each of the three remaining independent directors to 50,000 shares of the Company’s common stock. The stock options have a term of five years, an exercise price of $2.64 per share, vest immediately on the grant date of December 10, 2019 and had a grant date fair value of $388,746. The Company determined the fair value of the stock options using the Black-Scholes model with the following inputs: expected life 10 years, risk-free interest rate 1.0%, dividend yield 0% and expected volatility 100%. | ||||||||||||||||||||
Unrecognized expense (in Dollars) | $ 3,200,000 | $ 0 | |||||||||||||||||||
Share-based Payment Arrangement, Tranche One [Member] | |||||||||||||||||||||
Stockholders' Equity (Details) [Line Items] | |||||||||||||||||||||
Granted shares | 525,000 | ||||||||||||||||||||
2016 Stock Option Plan [Member] | |||||||||||||||||||||
Stockholders' Equity (Details) [Line Items] | |||||||||||||||||||||
Common stock issuance | 3,000,000 | ||||||||||||||||||||
2016 Equity Incentive Plan [Member | |||||||||||||||||||||
Stockholders' Equity (Details) [Line Items] | |||||||||||||||||||||
Fair value (in Dollars) | $ 2,700,000 | ||||||||||||||||||||
Aggregate shares | 53,572 | ||||||||||||||||||||
Exercise price (in Dollars per share) | $ 6.49 | ||||||||||||||||||||
Fair value (in Dollars) | $ 431,000 | ||||||||||||||||||||
RSU’s [Member] | |||||||||||||||||||||
Stockholders' Equity (Details) [Line Items] | |||||||||||||||||||||
Convertible shares value (in Dollars) | $ 135,000 | ||||||||||||||||||||
Common stock issuance | 50,000 | ||||||||||||||||||||
Shares received by employees | 250,000 | ||||||||||||||||||||
Consultants [Member] | |||||||||||||||||||||
Stockholders' Equity (Details) [Line Items] | |||||||||||||||||||||
Stock-based compensation expense (in Dollars) | $ 1,700,000 | ||||||||||||||||||||
Subsequent Event [Member] | Employee [Member] | |||||||||||||||||||||
Stockholders' Equity (Details) [Line Items] | |||||||||||||||||||||
Shares cancelled | 225,000 | ||||||||||||||||||||
Series A Convertible Preferred Stock [Member] | |||||||||||||||||||||
Stockholders' Equity (Details) [Line Items] | |||||||||||||||||||||
Shares issued | 9,211 | 6,579 | 200,000 | 73,156 | 43,081 | 200,000 | 65,789 | ||||||||||||||
Conversion of shares | 16,371 | 76,000 | 25,000 | ||||||||||||||||||
Convertible shares value (in Dollars) | $ 26,343 | $ 21,053 | $ 584,000 | $ 250,000 | |||||||||||||||||
Series A Convertible Preferred Stock One [Member] | |||||||||||||||||||||
Stockholders' Equity (Details) [Line Items] | |||||||||||||||||||||
Shares issued | 108,422 | ||||||||||||||||||||
Conversion of shares | 41,200 | ||||||||||||||||||||
Series A Preferred Stock [Member] | |||||||||||||||||||||
Stockholders' Equity (Details) [Line Items] | |||||||||||||||||||||
Preferred stock authorized | 900,000 | 900,000 | 900,000 | ||||||||||||||||||
Preferred stock par value (in Dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||||||||||||
Former Employee [Member] | |||||||||||||||||||||
Stockholders' Equity (Details) [Line Items] | |||||||||||||||||||||
Shares issued | 25,000 | 24,843 | |||||||||||||||||||
Convertible shares value (in Dollars) | $ 73,250 | $ 75,000 | |||||||||||||||||||
Director [Member] | |||||||||||||||||||||
Stockholders' Equity (Details) [Line Items] | |||||||||||||||||||||
Shares issued | 50,000 | ||||||||||||||||||||
Convertible shares value (in Dollars) | $ 135,000 | ||||||||||||||||||||
Chief Executive Officer [Member] | |||||||||||||||||||||
Stockholders' Equity (Details) [Line Items] | |||||||||||||||||||||
Stock-based compensation expense (in Dollars) | $ 3,600,000 | ||||||||||||||||||||
Management [Member] | |||||||||||||||||||||
Stockholders' Equity (Details) [Line Items] | |||||||||||||||||||||
Granted shares | 325,000 | ||||||||||||||||||||
Management [Member] | Share-based Payment Arrangement, Tranche One [Member] | |||||||||||||||||||||
Stockholders' Equity (Details) [Line Items] | |||||||||||||||||||||
Granted shares | 225,000 | ||||||||||||||||||||
Consultants [Member] | |||||||||||||||||||||
Stockholders' Equity (Details) [Line Items] | |||||||||||||||||||||
Granted shares | 100,000 | ||||||||||||||||||||
Consultants [Member] | Share-based Payment Arrangement, Tranche One [Member] | |||||||||||||||||||||
Stockholders' Equity (Details) [Line Items] | |||||||||||||||||||||
Granted shares | 300,000 | ||||||||||||||||||||
Employee [Member] | 2016 Equity Incentive Plan [Member | |||||||||||||||||||||
Stockholders' Equity (Details) [Line Items] | |||||||||||||||||||||
Aggregate shares | 25,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Schedule of warrant and stock option grants | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Warrant Grants [Member] | |
Stockholders' Equity (Details) - Schedule of warrant and stock option grants [Line Items] | |
Balance | 236,825 |
Balance | $ / shares | $ 26 |
Number of shares subject to warrants, Granted | 1,112,220 |
Weighted- average exercise price per share, Granted | $ / shares | $ 5.67 |
Number of shares subject to options, Granted | 1,112,220 |
Number of shares subject to warrants, Exercised | (11,075) |
Weighted- average exercise price per share,Exercised | $ / shares | $ 5.51 |
Number of shares subject to options, Exercised | 11,075 |
Weighted- average exercise price per share, Exercised | $ / shares | $ 5.51 |
Number of shares subject to warrants, Cancelled/Forfeited | (26,054) |
Weighted- average exercise price per share,Cancelled/Forfeited | $ / shares | $ 5.51 |
Number of shares subject to options, Cancelled/Forfeited | 26,054 |
Weighted- average exercise price per share, Cancelled/Forfeited | $ / shares | $ 5.51 |
Balance | 1,311,916 |
Balance | $ / shares | $ 9.35 |
Number of shares subject to warrants, Exercisable | 1,311,916 |
Weighted- average exercise price per share, Exercisable | $ / shares | $ 9.35 |
Number of shares subject to options, Exercisable | 1,311,916 |
Stock Option Grants [Member] | |
Stockholders' Equity (Details) - Schedule of warrant and stock option grants [Line Items] | |
Balance | 135,023 |
Balance | $ / shares | $ 7.70 |
Number of shares subject to warrants, Granted | 203,572 |
Weighted- average exercise price per share, Granted | $ / shares | $ 3.65 |
Number of shares subject to options, Granted | 203,572 |
Number of shares subject to warrants, Exercised | |
Weighted- average exercise price per share,Exercised | $ / shares | |
Number of shares subject to options, Exercised | |
Weighted- average exercise price per share, Exercised | $ / shares | |
Number of shares subject to warrants, Cancelled/Forfeited | |
Weighted- average exercise price per share,Cancelled/Forfeited | $ / shares | |
Number of shares subject to options, Cancelled/Forfeited | |
Weighted- average exercise price per share, Cancelled/Forfeited | $ / shares | |
Balance | 338,595 |
Balance | $ / shares | $ 5.96 |
Number of shares subject to warrants, Exercisable | 226,095 |
Weighted- average exercise price per share, Exercisable | $ / shares | $ 6.57 |
Number of shares subject to options, Exercisable | 226,095 |
Restricted Stock Units (RSUs) [Member] | |
Stockholders' Equity (Details) - Schedule of warrant and stock option grants [Line Items] | |
Balance | $ / shares | |
Balance | 0 |
Weighted- average exercise price per share, Granted | $ / shares | |
Number of shares subject to restricted stock units, Granted | 730,303 |
Weighted- average exercise price per share,Exercised | $ / shares | |
Weighted- average exercise price per share, Exercised | $ / shares | |
Number of shares subject to restricted stock units, Exercised | |
Weighted- average exercise price per share,Cancelled/Forfeited | $ / shares | |
Weighted- average exercise price per share, Cancelled/Forfeited | $ / shares | |
Number of shares subject to restricted stock units, Cancelled/Forfeited | (100,000) |
Balance | $ / shares | |
Balance | 630,303 |
Weighted- average exercise price per share, Exercisable | $ / shares | |
Number of shares subject to restricted stock units, Exercisable | 630,303 |
Stockholders' Equity (Details_2
Stockholders' Equity (Details) - Schedule of stock-based compensation expense - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule of stock-based compensation expense [Abstract] | ||
Stock-based compensation expense | $ 7,482,254 |
Stockholders' Equity (Details_3
Stockholders' Equity (Details) - Schedule of stock-based compensation expense categorized of equity components - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule of stock-based compensation expense categorized of equity components [Abstract] | ||
Stock option awards | $ 584,280 | |
Common stock | 1,575,044 | |
Transfer of common stock by founders to contractors | 5,322,930 | |
Total | $ 7,482,254 |
Net Loss Per Share (Details) -
Net Loss Per Share (Details) - Schedule of securities excluded from the computation of diluted net loss per share - shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total common stock equivalents | 1,650,511 | 371,848 |
Stock Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total common stock equivalents | 338,595 | 135,023 |
Warrant [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total common stock equivalents | 1,311,916 | 236,825 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Taxes (Details) [Line Items] | ||
Operating Loss Carryforwards | $ 28,300,000 | $ 56,416 |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount | 7,088,189 | 73,790 |
Increase (Decrease) Valuation Allowance | 7,014,399 | 73,790 |
State and Local Jurisdiction [Member] | ||
Income Taxes (Details) [Line Items] | ||
Operating Loss Carryforwards | $ 10,800,000 | $ 11,352 |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of net deferred taxes - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Schedule of net deferred taxes [Abstract] | ||
Net operating loss | $ 6,408,788 | $ 12,739 |
Stock options | 747,277 | |
Unrealized losses | 40,573 | |
Other | 18,716 | 16,227 |
Deferred revenue | 4,247 | 4,251 |
Allowance for doubtful accounts | 78,009 | |
Valuation allowance | (7,088,189) | (73,790) |
Total deferred tax asset | 168,848 | |
Basis difference fixed assets | (25,587) | |
Basis difference intangible assets | (46,482) | |
Other Liabilities | (96,779) | |
Total deferred tax liability | (168,848) | |
Net deferred tax asset (liability) |
Income Taxes (Details) - Sche_2
Income Taxes (Details) - Schedule of provision for (benefit from) income taxes - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule of provision for (benefit from) income taxes [Abstract] | ||
Federal | ||
State | ||
Total | ||
Federal | (1,575,843) | |
State | (123,778) | |
Less: change in valuation allowance | 1,699,621 | $ 69,054 |
Deferred tax Total | ||
Total |
Income Taxes (Details) - Sche_3
Income Taxes (Details) - Schedule of provision for (benefit from) income taxes statutory rate - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule of provision for (benefit from) income taxes statutory rate [Abstract] | ||
Net loss per financial statements | $ (11,312,500) | $ (380,603) |
Statutory rate | $ (2,375,625) | $ (79,927) |
Statutory rate, Percentage | 21.00% | 21.00% |
State tax rate | $ (186,642) | |
State tax rate, Percentage | 1.65% | 0.00% |
Conversion to C Corporation | $ 11,154 | |
Conversion to C Corporation, Percentage | 0.00% | (2.963%) |
Permanent items | $ 862,623 | $ (281) |
Permanent items, Percentage | (7.63%) | 0.07% |
Rate change | $ 23 | |
Rate change, Percentage | 0.00% | 0.00% |
Change in valuation allowance | $ 1,699,621 | $ 69,054 |
Change in valuation allowance, Percentage | (15.02%) | (18.14%) |
Total (benefit) from income taxes | ||
Total (benefit) from income taxes, Percentage | 0.00% | 0.00% |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] - USD ($) | Jun. 21, 2020 | May 15, 2020 | May 15, 2020 | May 12, 2020 | Apr. 14, 2020 | Apr. 07, 2020 | Mar. 12, 2020 | Jan. 08, 2020 | May 31, 2020 | Apr. 30, 2020 | Apr. 16, 2020 | Apr. 15, 2020 | Mar. 17, 2020 | Feb. 29, 2020 | Jan. 31, 2020 | May 05, 2020 |
Subsequent Events (Details) [Line Items] | ||||||||||||||||
Issuance of shares pursuant to settlement of accounts payable | 104,567 | 100,000 | ||||||||||||||
Issuance of value pursuant to settlement of accounts payable (in Dollars) | $ 93,150 | $ 640,517 | ||||||||||||||
Issuance of shares pursuant to a settlement | 50,000 | |||||||||||||||
Shares granted in restricted stock units | 160,000 | 80,000 | ||||||||||||||
CARES fund amount (in Dollars) | $ 293,972 | |||||||||||||||
Restricted Stock Units (RSUs) [Member] | ||||||||||||||||
Subsequent Events (Details) [Line Items] | ||||||||||||||||
Restricted stock units,shares | 20,000 | |||||||||||||||
2016 Equity Incentive Plan [Member | ||||||||||||||||
Subsequent Events (Details) [Line Items] | ||||||||||||||||
Shares issued (in Dollars) | $ 100,000 | |||||||||||||||
Three Series A Preferred stockholder [Member] | ||||||||||||||||
Subsequent Events (Details) [Line Items] | ||||||||||||||||
Converted shares of Series A preferred stock | 19,500 | 55,000 | ||||||||||||||
Conversion of Series A Convertible Preferred Stock into common stock | 51,316 | 144,738 | ||||||||||||||
Two Series A Preferred stockholder [Member] | ||||||||||||||||
Subsequent Events (Details) [Line Items] | ||||||||||||||||
Converted shares of Series A preferred stock | 12,500 | |||||||||||||||
Conversion of Series A Convertible Preferred Stock into common stock | 32,895 | |||||||||||||||
Fifteen Series A Preferred stockholders [Member] | ||||||||||||||||
Subsequent Events (Details) [Line Items] | ||||||||||||||||
Converted shares of Series A preferred stock | 396,695 | |||||||||||||||
Conversion of Series A Convertible Preferred Stock into common stock | 1,043,935 | |||||||||||||||
Thirteen holders [Member] | ||||||||||||||||
Subsequent Events (Details) [Line Items] | ||||||||||||||||
Common stock warrants exercised | 520,925 | |||||||||||||||
Warrants using a cashless exercise into shares of common stock | 352,488 | |||||||||||||||
Four holders [Member] | ||||||||||||||||
Subsequent Events (Details) [Line Items] | ||||||||||||||||
Common stock warrants exercised | 56,982 | |||||||||||||||
Warrants using a cashless exercise into shares of common stock | 26,034 | |||||||||||||||
Holder [Member] | ||||||||||||||||
Subsequent Events (Details) [Line Items] | ||||||||||||||||
Common stock warrants exercised | 7,000 | |||||||||||||||
Cash payments (in Dollars) | $ 38,570 | |||||||||||||||
Five holders [Member] | ||||||||||||||||
Subsequent Events (Details) [Line Items] | ||||||||||||||||
Common stock options exercised | 108,978 | |||||||||||||||
Options using a cashless exercise into shares of common stock | 26,361 | |||||||||||||||
Employee [Member] | ||||||||||||||||
Subsequent Events (Details) [Line Items] | ||||||||||||||||
Issuance of shares pursuant to stock compensation | 30,303 | 16,667 | ||||||||||||||
Consultant [Member] | ||||||||||||||||
Subsequent Events (Details) [Line Items] | ||||||||||||||||
Issuance of shares pursuant to stock compensation | 5,264 | 3,913 | ||||||||||||||
Board of Directors [Member] | ||||||||||||||||
Subsequent Events (Details) [Line Items] | ||||||||||||||||
Shares granted in restricted stock units | 320,000 | |||||||||||||||
27 individuals [Member] | ||||||||||||||||
Subsequent Events (Details) [Line Items] | ||||||||||||||||
Shares granted in restricted stock units | 1,569,000 | |||||||||||||||
Chief Executive Officer [Member] | ||||||||||||||||
Subsequent Events (Details) [Line Items] | ||||||||||||||||
Shares granted in restricted stock units | 329,000 |