Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Apr. 08, 2021 | Jun. 30, 2020 | |
Document Information Line Items | |||
Entity Registrant Name | APPLIED ENERGETICS, INC. | ||
Document Type | 10-K | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 199,375,149 | ||
Entity Public Float | $ 26,605,000 | ||
Amendment Flag | false | ||
Entity Central Index Key | 0000879911 | ||
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, 2020 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity File Number | 001-14015 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Interactive Data Current | Yes |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash and cash equivalents | $ 3,323,290 | $ 88,415 |
Other receivable | 2,880 | 2,880 |
Other assets | 39,352 | 52,686 |
Total current assets | 3,365,522 | 143,981 |
Long-term receivables | 582,377 | |
Property and equipment - net | 19,466 | 36,568 |
Deferred compensation | 1,250,001 | 2,083,334 |
Total Long-term assets | 1,269,467 | 2,702,279 |
TOTAL ASSETS | 4,634,989 | 2,846,260 |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||
Accounts payable | 152,445 | 472,868 |
Accrued officer compensation | 206,000 | |
Notes payable | 1,547,695 | 3,467,890 |
Due to related parties | 50,000 | 50,000 |
Accrued expenses | 938 | 23,587 |
Accrued dividends | 48,079 | 48,079 |
Total current liabilities | 1,799,157 | 4,268,424 |
Long-term liabilities | ||
Long-term notes payable | 1,000,000 | 1,500,000 |
Long-term notes payable CARES Act PPP Loan | 133,462 | |
Total liabilities | 2,932,619 | 5,768,424 |
Commitments and contingencies | ||
Stockholders’ equity (deficit) | ||
Series A convertible preferred stock, $.001 par value, 2,000,000 shares authorized and 13,602 shares issued and outstanding at December 31, 2020 and at December 31, 2019 (Liquidation preference $340,050 and $340,050, respectively) | 14 | 14 |
Common stock, $.001 par value, 500,000,000 shares authorized; 190,529,320 and 206,569,062 shares issued and outstanding at December 31, 2020 and at December 31, 2019, respectively | 190,529 | 206,569 |
Additional paid-in capital | 93,778,591 | 85,907,523 |
Accumulated deficit | (92,266,764) | (89,036,270) |
Total stockholders’ equity (deficit) | 1,702,370 | (2,922,164) |
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ 4,634,989 | $ 2,846,260 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Series A convertible preferred stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Series A convertible preferred stock, authorized | 2,000,000 | 2,000,000 |
Series A convertible preferred stock, issued | 13,602 | 13,602 |
Series A convertible preferred stock, outstanding | 13,602 | 13,602 |
Series A convertible preferred stock, liquidation preference (in Dollars) | $ 340,050 | $ 340,050 |
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 190,529,320 | 206,569,062 |
Common stock, shares outstanding | 190,529,320 | 206,569,062 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Statement [Abstract] | ||
Revenue | $ 175,920 | |
Cost of revenue | (153,630) | |
Gross profit | 22,290 | |
Operating expenses: | ||
General and administrative | 4,698,624 | 4,622,624 |
Selling and marketing | 296,461 | 213,738 |
Research and development | 266,864 | 335,445 |
Total operating expenses | 5,261,949 | 5,171,807 |
Operating loss | (5,239,659) | (5,171,807) |
Other income/(expense) | ||
Other income | 15,832 | 19,046 |
Gain on settlement | 3,206,000 | |
Interest expense | (1,212,667) | (403,578) |
Total other income/(expense) | 2,009,165 | (384,532) |
Loss before provision for income taxes | (3,230,494) | (5,556,339) |
Provision for income taxes | ||
Net loss | (3,230,494) | (5,556,339) |
Preferred stock dividends | (34,005) | (34,005) |
Net loss attributable to common stockholders | $ (3,264,499) | $ (5,590,344) |
Net loss attributable to common stockholders per common share – basic and diluted (in Dollars per share) | $ (0.02) | $ (0.03) |
Weighted average number of common shares outstanding, basic and diluted (in Shares) | 193,505,618 | 204,486,058 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders’ Deficit - USD ($) | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2018 | $ 14 | $ 201,697 | $ 82,637,749 | $ (83,479,932) | $ (640,472) |
Balance (in Shares) at Dec. 31, 2018 | 13,602 | 201,697,396 | |||
Warrants issued with debt | 263,237 | 263,237 | |||
Shares issued for services | $ 25 | 25 | |||
Shares issued for services (in Shares) | 25,000 | ||||
Sale of common stock | $ 4,847 | 849,152 | 853,999 | ||
Sale of common stock (in Shares) | 4,846,666 | ||||
Stock-based compensation expense | 2,157,385 | 2,157,385 | |||
Net loss | (5,556,339) | (5,556,339) | |||
Balance at Dec. 31, 2019 | $ 14 | $ 206,569 | 85,907,523 | (89,036,271) | (2,922,164) |
Balance (in Shares) at Dec. 31, 2019 | 13,602 | 206,569,062 | |||
Sale of common stock | $ 5,480 | 1,638,620 | 1,644,100 | ||
Sale of common stock (in Shares) | 5,480,334 | ||||
Cancellation of common stock | $ (31,000) | 31,000 | |||
Cancellation of common stock (in Shares) | (31,000,000) | ||||
Purchase and cancellation of common stock | $ (5,000) | (1,495,000) | (1,500,000) | ||
Purchase and cancellation of common stock (in Shares) | (5,000,000) | ||||
Stock issuance to pay off convertible notes and accrued interest | $ 18,386 | 5,497,466 | 5,515,852 | ||
Stock issuance to pay off convertible notes and accrued interest (in Shares) | 18,386,174 | ||||
Purchase and cancellation of common stock | $ (5,000) | (295,000) | (300,000) | ||
Purchase and cancellation of common stock (in Shares) | (5,000,000) | ||||
Recognize beneficial conversion feature | 919,000 | 919,000 | |||
Stock-based compensation expense | 1,487,701 | 1,487,701 | |||
Restricted stock agreement-based non-cash compensation | $ 19 | 13,106 | 13,125 | ||
Restricted stock agreement-based non-cash compensation (in Shares) | 18,750 | ||||
Common stock issued on exercise of stock option and warrant | $ 1,075 | 74,175 | 75,250 | ||
Common stock issued on exercise of stock option and warrant (in Shares) | 1,075,000 | ||||
Net loss | (3,230,494) | (3,230,494) | |||
Balance at Dec. 31, 2020 | $ 14 | $ 190,529 | $ 93,778,591 | $ (92,266,764) | $ 1,702,370 |
Balance (in Shares) at Dec. 31, 2020 | 13,602 | 190,529,320 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (3,230,494) | $ (5,556,339) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Noncash stock based compensation expense | 1,500,825 | 2,157,385 |
Shares issued for services | 25 | |
Gain on settlement of accrued compensation | (206,000) | |
Common Stock issued for interest expenses | 229,296 | |
Amortization of beneficial conversion feature | 919,000 | |
Depreciation and amortization | 17,102 | 14,738 |
Amortization of future compensation payable | 833,333 | 203,333 |
Amortization of prepaid assets | 149,856 | |
Changes in assets and liabilities: | ||
Accounts receivable | 9,888 | (9,888) |
Other receivable | 57,432 | |
Inventory | 5,930 | (5,930) |
Prepaids and deposits | (44,275) | 217,113 |
Long term receivables - net | (141,182) | |
Accounts payable | (232,341) | (222,140) |
Accrued interest | (89,755) | 396,578 |
Accrued expenses | (22,649) | (361,266) |
Net cash used in operating activities | (160,284) | (3,250,141) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of equipment | (12,419) | |
Net cash used by investing activities | (12,419) | |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from sale of common stock | 1,644,100 | 853,999 |
Purchase and cancellation of stock | (1,300,000) | |
Repayment of insurance premium loan | (108,064) | |
Repayment on note payable | (1,372,887) | (31,576) |
Proceeds from note payable | 4,324,000 | 2,350,000 |
Proceeds from SBA loan | 132,760 | |
Proceeds from the exercise of stock options and warrants | 75,250 | |
Net cash provided by financing activities | 3,395,159 | 3,172,423 |
Net increase (decrease) in cash and cash equivalents | 3,234,875 | (90,137) |
Cash and cash equivalents, beginning of year | 88,415 | 178,552 |
Cash and cash equivalents, end of year | 3,323,290 | 88,415 |
Supplemental Cash Flow Information | ||
Cash paid for interest | 143,070 | 2,914 |
Cash paid for taxes | ||
Schedule of Non-Cash Information | ||
Insurance financing for prepaid insurance | 108,064 | |
Discount on note payable on purchase of Applied Optical Sciences | 2,500,000 | |
Amortization of discount on note payable | (28,333) | |
Common stock issued for accrued interest | 32,942 | |
Common stock issued for repayment of convertible notes | 5,253,614 | |
Long term investment utilized for cancellation of shares | 500,000 | |
Note payable on purchase of Applied Optical Sciences | (2,500,000) | |
Initial beneficial conversion feature on convertible note | $ 919,000 | $ 114,684 |
Organization of Business, Going
Organization of Business, Going Concern and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
ORGANIZATION OF BUSINESS, GOING CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation The consolidated financial statements include the accounts of Applied Energetics, Inc. and its wholly owned subsidiary North Star Power Engineering, Inc. (“North Star”) (collectively, “company,” “Applied Energetics,” “AERG”, “we,” “our” or “us”). All intercompany balances and transactions have been eliminated. Going Concern The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the year ended December 31, 2020, the company incurred a net loss of approximately $3,230,000, had negative cash flows from operations of approximately $160,000 and may incur additional future losses due to the reduction in Government contract activity. At December 31, 2020, the Company had total current assets of approximately $3,400,000 and total current liabilities of approximately $1,800,000 resulting in working capital of approximately $1,600,000. At December 31, 2020, the Company had cash of $3,323,290. On February 2, 2021 and February 8, 2021, the Company completed the issuance of 7,056,250 total shares of its common stock at a price of $0.32 per share, or $2,258,000 in the aggregate. As of March 31, 2021, the Company had cash of approximately $4,300,000. Based on the Company’s current business plan, it believes its cash balance as of the date of this filing will be sufficient to meet its anticipated cash requirements for the next twelve months. However, there can be no assurance that the current business plan will be achievable. Such conditions raise substantial doubts about the Company’s ability to continue as a going concern for one year from the date the financial statements are issued. The company’s existence is dependent upon management’s ability to develop profitable operations. Management is devoting substantially all of its efforts to developing its business and raising capital and there can be no assurance that the company’s efforts will be successful. No assurance can be given that management’s actions will result in profitable operations or the resolution of its liquidity problems. The accompanying consolidated financial statements do not include any adjustments that might result should the company be unable to continue as a going concern. The ongoing COVID-19 pandemic contributes to this uncertainty. In order to improve the company’s liquidity, the company’s management is actively pursuing additional equity financing through discussions with investment bankers and private investors. There can be no assurance that the company will be successful in its effort to secure additional equity financing. The financial statements do not include any adjustments relating to the recoverability of assets and the amount or classification of liabilities that might be necessary should the company be unable to continue as a going concern. Applied Energetics, Inc. is a corporation organized and existing under the laws of the State of Delaware. Our executive office is located at 2480 West Ruthrauff Road, Suite 140 Q, Tucson, Arizona, 85705, we have office and laboratory space at 4595 S Palo Verde Rd, Suite 517, Tucson, AZ 85714 and our telephone number is (520) 628-7415. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management bases its assumptions on historical experiences and on various other assumptions 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 that are not readily apparent from other sources. In addition, management considers the basis and methodology used in developing and selecting these estimates, the trends in and amounts of these estimates, specific matters affecting the amount of and changes in these estimates, and any other relevant matters related to these estimates, including significant issues concerning accounting principles and financial statement presentation. Such estimates and assumptions could change in the future as more information becomes known which could impact the amounts reported and disclosed herein. Significant estimates include revenue recognition, carrying amounts of long-lived assets, valuation assumptions for share-based payments, evaluation of debt modification accounting, effective borrowing rate determinations, analysis of fair value transferred upon debt extinguishment, valuation and calculation of measurements of income tax assets and liabilities and valuation of debt discount related to beneficial conversion features. Net Loss Attributable to Common Stockholders Basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period before giving effect to stock options, stock warrants, restricted stock units and convertible securities outstanding, which are considered to be dilutive common stock equivalents. Diluted net loss per common share is calculated based on the weighted average number of common and potentially dilutive shares outstanding during the period after giving effect to dilutive common stock equivalents. Contingently issuable shares are included in the computation of basic loss per share when issuance of the shares is no longer contingent. The number of warrants, options, restricted stock units and our Series A Convertible Preferred Stock, which were not included in the computation of earnings per share because the effect was antidilutive, was 35,612,091 and 35,246,757 for the years ended December 31, 2020 and 2019, respectively. Fair Value of Current Assets and Liabilities The carrying amount of accounts payable approximate fair value due to the short maturity of these instruments. Cash and Cash Equivalents Cash equivalents are investments in money market funds or securities with an initial maturity of three months or less. Income Taxes Deferred tax assets and liabilities are recognized currently for the future tax consequences attributable to the temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets if it is more likely than not that such assets will not be realized. Our valuation allowance is currently 100% of our assets. We consider all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed for some portion or all of a net deferred tax asset. Judgment is used in considering the relative impact of negative and positive evidence. In arriving at these judgments, the weight given to the potential effect of negative and positive evidence is commensurate with the extent to which it can be objectively verified. We record a valuation allowance to reduce our deferred tax assets and review the amount of such allowance annually. When we determine certain deferred tax assets are more likely than not to be utilized, we will reduce our valuation allowance accordingly. Revenue Recognition The Company recognizes revenue in accordance with ASC Topic 606 – Revenue from Contracts with Customers (“ASC 606”) to depict the transfer of control to the Company’s customers in an amount reflecting the consideration the Company expects to be entitled. The Company determines revenue recognition through the following steps: i. Identification of the contract, or contracts, with a customer ii. Identification of the performance obligations in the contract iii. Determination of the transaction price iv. Allocation of the transaction price to the performance obligations in the contract v. Recognition of revenue, when, or as, the Company satisfied the performance obligation The Company generated revenue from its customer by preparing a technical report. The Company’s single performance obligation was to deliver the final technical report detailing the findings of the Company’s investigations. The fee for the report was fixed. During the year ending December 31, 2020, the Company recognized $175,920 related to the delivery of the final report. Share-Based Payments Employee stock-based compensation cost is measured at grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period. The fair value of each option grant is estimated at the date of grant using the Black-Scholes-Merton option valuation model. We make the following assumptions relative to this model: (i) the annual dividend yield is zero as we do not pay dividends on common stock, (ii) the weighted-average expected life is based on a midpoint scenario, where the expected life is determined to be half of the time from grant to expiration, regardless of vesting, (iii) the risk free interest rate is based on the U.S. Treasury security rate for the expected life, and (iv) the volatility is based on the level of fluctuations in our historical share price for a period equal to the weighted-average expected life. We estimate forfeitures when recognizing compensation expense and adjust this estimate over the requisite service period should actual forfeitures differ from such estimates. Changes in estimated forfeitures are recognized through a cumulative adjustment, which is recognized in the period of change and which impacts the amount of unamortized compensation expense to be recognized in future periods. Significant Concentrations and Risks We maintain cash balances at a commercial bank and, at times, balances exceed FDIC limits. As of December 31, 2020 approximately $3,073,000 was uninsured. |
New Accounting Standards
New Accounting Standards | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
NEW ACCOUNTING STANDARDS | NOTE 2 – NEW ACCOUNTING STANDARDS The company has reviewed all issued accounting pronouncements and plans to adopt those that are applicable to it. The company does not expect the adoption of any other pronouncements to have an impact on its results of operations or financial position. In December 2019, the FASB issued amended guidance in the form of ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This ASU is intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifying certain aspects of the current guidance to promote consistency among reporting entities. ASU 2019-12 is effective for annual periods beginning after December 15, 2020 and interim periods within those annual periods, with early adoption permitted. An entity that elects early adoption must adopt all the amendments in the same period. Most amendments within this ASU are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company is in the initial stage of evaluating the impact of this new standard however it does not believe the guidance will have a material impact on our financial statements. On August 5, 2020, the FASB issued ASU No. 2020-06 which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. ASU 2020-06 simplifies the guidance in U.S. GAAP on the issuer’s accounting for convertible debt instruments. Such guidance includes multiple disparate sets of classification, measurement, and derecognition requirements whose interactions are complex. ASU 2020-06 is effective for annual periods beginning after December 15, 2021 and interim periods within those annual periods, with early adoption permitted. An entity that elects early adoption must adopt all the amendments in the same period. Most amendments within this ASU are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company is in the initial stage of evaluating the impact of this new standard however it does not believe the guidance will have a material impact on our financial statements. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 3 – NOTES PAYABLE On May 24, 2019, the Company entered into an Asset Purchase Agreement (the “APA”) with Applied Optical Sciences, LLC (“AOS”) to acquire certain assets. As consideration for the APA, the Company entered into a promissory note issued to the shareholders of AOS for $2,500,000. The note is non-interest bearing and shall be repaid in equal installments, the first payment is due on February 10, 2021 and subsequent payments being due May, 24, 2021 and the remainder on the last day of each six-month period thereafter, the final such payment being due on November 24, 2022. The Promissory Note may be prepaid at any time (in whole or in part). Upon inception, the Company recorded a debt discount in the amount of $2,500,000 in relation to the transaction which is being amortized over the life of the loan as compensation expense. As of December 31, 2020 and 2019, the note is not in default. During the year ended December 31, 2019, the company received $2,350,000 from eleven non-affiliated individuals based on 10% Promissory Notes (“Notes”). $1,150,000 of the Notes mature September 1, 2019 and $1,200,000 of the notes mature December 1, 2019. The Notes are accompanied by a Common Stock Purchase Warrant (a “Warrant”) entitling the holder to purchase one share of the company’s common stock, par value $0.001 per share (the “Common Shares”), for each $2.00 of Note principle, at an exercise price of $0.07 per share, for two years from the date of issuance. During the year ended December 31, 2020, the Company cash settled $1,525,490 of principal and interest and exchanged $1,087,699 of principal and interest for convertible notes (the Exchange Notes”). The Exchange Notes are convertible into shares of our common stock at a conversion price of $0.30 per share. The Company evaluated the Exchange Notes for modification accounting in accordance with ASC 470-50 and concluded that the modification qualified for debt extinguishment as the debt is substantially different because a substantive conversion option was added. Company recorded $210,966 as additional paid-in capital in relation to the beneficial conversion feature entered into upon exchange. During the year ended December 31, 2020, the Company converted the principal and interest of $1,108,590 into 3,695,301 shares of common stock. During the period ending December 31, 2020, the Company amortized the $210,966 as interest expense in the consolidated statements of operations upon conversion. As of December 31, 2020, these notes were not outstanding. During the year ended December 31, 2020, the Company received $4,324,000 in bridge funding pursuant to 10% Convertible Promissory Notes. These notes are convertible into shares of our common stock at a conversion price of $0.30 per share, as negotiated with the holders based on the prevailing market price of the common stock leading up to the issuance of the notes. At any time after October 15, 2020 until July 15, 2021, the date of maturity, (i) each investor may elect to convert these notes into shares of our common stock, at a conversion price of $0.30 per share and (ii) the company may elect to prepay, either in cash or in shares of common stock at a price of $0.30 per share, at the option of the holder, the amount of principal and interest then outstanding under each note. In the event we elect to prepay the notes, we will notify the holders, each of whom will then have five business days to notify the company if they prefer to receive such prepayment in cash or stock. These notes are payable in full at maturity. In lieu of repayment of the principal and interest on the notes at maturity, the Company may elect to convert the amounts due into shares of Common Stock at a price of $0.15 per share. In November of 2020, the Company converted the total principal and interest of $4,407,262 into 14,690,873 shares of common stock. The Company recorded a debt discount in the amount of $708,034 in relation to the conversion feature which was fully amortized to interest expense in the consolidated statements of operations during the year ended December 31, 2020. On April 28, 2020, the Company entered into a loan agreement with Alliance Bank of Arizona, N.A. for a loan in the amount of $133,000 pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act enacted on March 27, 2020 (the “CARES Act”). This loan is evidenced by a promissory note dated April 27, 2020 and matures two years from the disbursement date. This loan bears interest at a rate of 1.00% per annum, with the first nine months of interest deferred. Principal and interest are payable monthly commencing nine months after the disbursement date and may be prepaid by the Company at any time prior to maturity with no prepayment penalties. This loan contains customary events of default relating to, among other things, payment defaults or breaches of the terms of the loan. Upon the occurrence of an event of default, the lender may require immediate repayment of all amounts outstanding under the note. The following reconciles notes payable as of December 31, 2020 and December 31, 2019: December 31, December 31, Beginning balance $ 4,967,890 $ - Notes payable 4,456,760 4,880,000 Accrued interest 297,849 119,218 Transfer from prepaid 108,064 54,329 Initial beneficial conversion feature (919,000 ) - Amortize beneficial conversion feature 919,000 - Payments on notes payable (1,480,951 ) (85,657 ) Repayment of interest (152,603 ) - Converted into common stock (5,515,852 ) - Total 2,681,157 4,967,890 Less-Notes payable - current (1,547,695 ) (3,467,890 ) Notes payable - non-current $ 1,133,462 $ 1,500,000 Future principal payments for the Company’s Notes as of December 31, 2020 are as follows: 2021 $ 1,547,695 2022 1,133,462 Thereafter - Total $ 2,681,157 Of the $2,681,000 note payable balance, $1,548,000 are short term of which $1,500,000 are payments on the note to acquire Applied Optical Sciences and $1,133,000 are long term, of which $1,000,000 are payments on the note to acquire Applied Optical Sciences. Of the note to acquire Applied Optical Sciences, the first payment is due on February 10, 2021 and subsequent payments being due May, 24, 2021 and the remainder on the last day of each six-month period thereafter, the final such payment being due on November 24, 2022. |
Deferred Compensation
Deferred Compensation | 12 Months Ended |
Dec. 31, 2020 | |
Compensation Related Costs [Abstract] | |
DEFERRED COMPENSATION | NOTE 4 – DEFERRED COMPENSATION On May 24, 2019, the company entered into the APA with AOS to acquire certain assets. As consideration for the APA, the company entered into a promissory note issued to the shareholders of AOS for $2,500,000. The company also recorded a debt discount, which is reported on the balance sheet as deferred compensation, in the amount of $2,500,000 in relation to the transaction which is being amortized over the life of the loan as compensation expense. The amortization of deferred compensation for the year ended December 31, 2020 was $833,000 and for the year ended December 31, 2019 was $417,000. |
Due to Related Parties
Due to Related Parties | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
DUE TO RELATED PARTIES | NOTE 5 – DUE TO RELATED PARTIES It has come to the board’s attention that on July 31, 2018, our now deceased CEO deposited $50,000 into the company’s account. Although it has been suggested that the funds may have been intended for use toward Mr. Dearmin’s healthcare, the board does not know for certain what the purpose of the funds were or the nature of any intended investment. Accordingly, the board is investigating the appropriate disposition of the funds which will likely be to the estate of Mr. Dearmin. Until such a determination is made, the board does not intend to use these funds for any corporate purpose. For reporting purposes, the company has treated the deposit as a due to related party. |
Stockholders_ Deficit
Stockholders’ Deficit | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS’ DEFICIT | NOTE 6 – STOCKHOLDERS’ DEFICIT Authorized Capital Stock Our authorized capital stock consists of 500,000,000 shares of common stock at a par value of $.001 per share and 2,000,000 shares of preferred stock at a par value of $.001 per share. A certificate of amendment to increase our authorize common stock from 125,000,000 to 500,000,000 shares was filed and accepted and recorded by the Secretary of State of the State of Delaware on March 3, 2016. In January 2020, the company received $603,000 from five non-affiliated individuals based on subscription agreements with the company for which the company issued 2,010,000 shares of its common stock. In January 2020, the company issued 25,000 shares upon exercise of a warrant by a non-affiliated warrant holder at an exercise price of $0.07 per share. In February 2020, the company received $510,000 from a non-affiliated individual based on a subscription agreement with the company for which the company issued 1,700,000 shares of its common stock. In April, 2020, the company received $73,500 from an individual based on warrant and option exercises for which the company issued 1,050,000 shares of its common stock. In April, 2020, the company received $532,000 from individuals based on subscription agreements with the company for which the company issued 1,770,334 shares of its common stock. June 2020, we entered into a Mutual Release and Hold Harmless Agreement with a stockholder resolving claims related to the issuance of 1,000,000 shares of our common stock, par value $0.001 per share, to that stockholder, as directed by prior company CEO George Farley, as compensation for valuation services. The shares have been returned and cancelled recorded at $0.001 par, for $1,000. In June 2020, we issued 18,750 shares of common stock based on a restricted stock agreement with a contractor. The closing price of our common stock on grant date was $0.35 per share. In August 2020, pursuant to a consulting agreement with Stephen W McCahon, the company repurchased 5,000,000 shares of the company’s common stock from Mr. McCahon for $300,000. The shares were removed from outstanding status and were cancelled. Due to a September 24, 2020 settlement with George Farley and AnneMarieCo, the company paid $1,000,000 to Mr. Farley’s attorney. Additionally, the company directed that $500,000 of its deposited bond also be paid to Mr. Farley’s attorney. According to the settlement, 25,000,000 shares of the company’s common shares belonging to Mr. Farley and AnneMarieCo were removed from outstanding status and were cancelled. Due to an October 2, 2020 settlement with Stein Riso Mantel McDonough, LLP, 10,000,000 shares of the company’s common shares belonging to Stein Riso Mantel McDonough, LLP were removed from outstanding status and were cancelled. The cancellation was recorded at $0.001 par or $10,000.00. As a part of the settlement, the company received $3,000,000 which is shown as gain on settlement under the Statement of Operations. During the year ended December 31, 2020, the Company issued 18,386,174 shares of common stock upon the conversion of $5,515,852 of convertible note and accrued interest (see Note 3), In March, 2021, notes containing a principal balance of approximately $45,000 with a maturity date of September 1, 2019 converted into approximately 158,000 shares of common stock. In January 2019, the company received $150,000 from 3 non-affiliated individuals based on subscription agreements with the company for which the company issued 2,500,000 shares of its common stock. During the fourth quarter of 2019, the company received $704,000 from four non-affiliated individuals based on subscription agreements with the company for which the company issued 2,346,666 shares of its common stock. In April 2019, the company granted 75,000 shares under a restricted stock agreement valued at $26,250 of which $8,882 was recognized in 2019 and $13,125 was recognized in 2020. The shares to vest semi-annually over two years with the first installment six months from the agreement; provided, however, if either party terminates the agreement at any time prior to the last date of it ending, then the shares will vest, pro rata, for each month served since the most recent prior semi-annual vesting date. Preferred Stock As of December 31, 2020 and 2019 there were 13,602 and 13,602 shares of Series A Redeemable Convertible Preferred Stock (the “Series A Preferred Stock”) outstanding, respectively. The company has not paid the dividends commencing with the quarterly dividend due August 1, 2013. Dividend arrearages as of December 31, 2020 including previously accrued dividends included in our balance sheet are approximately $255,000. Our Board of Directors suspended the declaration of the dividend, commencing with the dividend payable as of February 1, 2015 since we did not have a surplus (as such term is defined in the Delaware general corporation Law) as of December 31, 2014, until such time as we have a surplus or net profits for a fiscal year. Our Series A Preferred Stock has a liquidation preference of $25.00 per Share. The Series A Preferred Stock bears dividends at the rate of 6.5% of the liquidation preference per share per annum, which accrues from the date of issuance, and is payable quarterly. Dividends may be paid in: (i) cash, (ii) shares of our common stock (valued for such purpose at 95% of the weighted average of the last sales prices of our common stock for each of the trading days in the ten trading day period ending on the third trading day prior to the applicable dividend payment date), provided that the issuance and/or resale of all such shares of our common stock are then covered by an effective registration statement and the company’s common stock is listed on a U.S. national securities exchange or the Nasdaq Stock Market at the time of issuance or (iii) any combination of the foregoing. If the company fails to make a dividend payment within five business days following a dividend payment date, the dividend rate shall immediately and automatically increase by 1% from 6.5% of the liquidation preference per offered share of Series A preferred stock to 7.5% of such liquidation preference. If a payment default shall occur on two consecutive dividend payment dates, the dividend rate shall immediately and automatically increase to 10% of the liquidation preference for as long as such payment default continues and shall immediately and automatically return to the Initial dividend rate at such time as the payment default is no longer continuing. Each share of Series A Preferred Stock is convertible at any time at the option of the holder into a number of shares of common stock equal to the liquidation preference (plus any unpaid dividends for periods prior to the dividend payment date immediately preceding the date of conversion by the holder) divided by the conversion price (initially $12.00 per share, subject to adjustment in the event of a stock dividend or split, reorganization, recapitalization or similar event.) If the closing sale price of the common stock is greater than 140% of the conversion price on 20 out of 30 trading days, the company may redeem the Series A Preferred Stock in whole or in part at any time through October 31, 2010, upon at least 30 days’ notice, at a redemption price, payable in cash, equal to 100% of the liquidation preference of the shares to be redeemed, plus unpaid dividends thereon to, but excluding, the redemption date, subject to certain conditions. In addition, beginning November 1, 2010, the company may redeem the Series A Preferred Stock in whole or in part, upon at least 30 days’ notice, at a redemption price, payable in cash, equal to 100% of the liquidation preference of the Series A Preferred Stock to be redeemed, plus unpaid dividends thereon to, but excluding, the redemption date, under certain conditions. If a change of control occurs, each holder of shares of Series A Convertible Preferred Stock that are outstanding immediately prior to the change of control shall have the right to require the corporation to purchase, out of legally available funds, any outstanding shares of Series A Convertible Preferred Stock at the defined purchase price. The purchase price is defined as: per share of Preferred Stock, 101% of the liquidation preference thereof, plus all unpaid and accumulated dividends, if any, to the date of purchase thereof. The purchase price is payable, at the corporation’s option, (x) in cash, (y) in shares of the common stock at a discount of 5% from the fair market value of Common Stock on the Purchase Date (i.e. valued at a 95% discount of the Common Stock on the Purchase Date), or (z) any combination thereof. If the Corporation pays all or a portion of the Purchase Price in Common Stock, no fractional shares of Common Stock will be issued; instead, the company will round the applicable number of shares of Common Stock up to the nearest whole number of shares; provided that the Corporation may pay the Purchase Price (or a portion thereof), whether in cash or in shares of Common Stock, only if the Corporation has funds legally available for such payment and may pay the Purchase Price (or a portion thereof) in shares of its Common Stock only if (i) the Common Stock is listed on a U.S. national securities exchange or the Nasdaq Stock Market at the time of issuance and (ii) a shelf registration statement covering the issuance by the Corporation and/or resales of the Common Stock issuable as payment of the Purchase Price is effective on the Payment Date unless such shares are eligible for immediate resale in the public market by non-affiliates of the Corporation. Dividends on our Preferred Stock are payable quarterly on the first day of February, May, August and November, in cash or shares of Common Stock, at our discretion. Share-Based Payments Effective November 12, 2018, the Board of Directors of Applied Energetics, Inc. adopted the 2018 Incentive Stock Plan. The plan provides for the allocation and issuance of stock, restricted stock purchase offers and options (both incentive stock options and non-qualified stock options) to officers, directors, employees and consultants of the company. The board reserved a total of 50,000,000 for possible issuance under the plan. We have, from time to time, also granted non-plan options to certain officers, directors, employees and consultants. Total stock-based compensation expense for grants to officers, employees and consultants was approximately $1,501,000 and $2,157,000 for the years ended December 31, 2020 and 2019, respectively, which was charged to general and administrative expense. There was no related income tax benefit recognized because our deferred tax assets are fully offset by a valuation allowance. The following table sets forth information regarding awards under our 2018 Incentive Stock Plan: As of December 31, 2020 Share Options Shares 2018 Incentive Stock Plan 50,000,000 20,150,000 29,850,000 Total 50,000,000 20,150,000 29,850,000 We determine the fair value of option grant share-based awards at their grant date, using a Black-Scholes- Merton Option-Pricing Model applying the assumptions in the following table: For the year ended 2020 2019 Expected life (years) N/A 5.5 - 6.75 Dividend yield N/A 0 % Expected volatility N/A 232 % Risk free interest rates N/A 2.47 % Weighted average fair value of options at grant date N/A $ 0.3400 For the year ended December 31, 2020, no options to purchase stock were granted, no options to purchase stock were forfeited, additionally, 900,000 options to purchase stock were exercised with a weighted average exercise price of $0.07 per share, no options expired; no restricted stock purchase offers were granted, vested or forfeited. At December 31, 2020, options to purchase 32,000,000 shares of common stock were outstanding with a weighted average exercise price of $0.1419 with a weighted average remaining contract term of approximately 5.6 years with an aggregate intrinsic value (amount by which Applied Energetics’ closing stock price on the last trading day of the year exceeds the exercise price of the option) of $6,054,000. At December 31, 2020 options for 24,363,000 shares were exercisable. There was no activity of our restricted stock units and restricted stock grants for the years ended December 31, 2020 and 2019. As of December 31, 2020, there was approximately $913,000 of unrecognized compensation cost related to unvested stock options granted and outstanding, net of estimated forfeitures. The cost is expected to be recognized on a weighted average basis over a period of approximately one year. The fair value of restricted stock and restricted stock units was estimated using the closing price of our common stock on the date of award and fully recognized upon vesting. The following table summarizes the activity of our stock options for the years ended December 31, 2020, and 2019: Shares Weighted Outstanding at December 31, 2018 29,250,000 $ 0.1025 Granted 6,650,000 $ 0.3545 Exercised - $ - Forfeited or expired (3,000,000 ) $ 0.2500 Outstanding at December 31, 2019 32,900,000 $ 0.1400 Granted - $ - Exercised (900,000 ) $ 0.0700 Forfeited or expired - $ - Outstanding at December 31, 2020 32,000,000 $ 0.1419 Exercisable at December 31, 2020 24,362,500 $ 0.1037 As of December 31, 2020 and December 31, 2019 there was no unrecognized stock-based compensation related to unvested restricted stock, net of estimated forfeitures. As of December 31, 2020 and December 31, 2019 there was $892,000 and $1,561,000, respectively, in unrecognized stock-based compensation related to a lockup agreement on 5,000,000 shares of common stock in the acquisition of AOS valued at $0.4014 a share as that was the closing price on the date of the contract and is amortized over 36 months. $669,000 and $446,000 was amortized for the years ended December 31, 2020 and December 31, 2019, respectively We determine the fair value of warrant grant share-based awards at their grant date, using a Black-Scholes- Merton Option-Pricing Model applying the assumptions in the following table: For the year ended 2020 2019 Expected life (years) 1.0 1.0 Dividend yield 0 % 0 % Expected volatility 125.19 % 249%-149 % Risk free interest rates 0.14 % 2.4-1.54 % Weighted average fair value of options at grant date $ .308 $ 0.0632 Warrant Activity Shares Weighted Weighted Outstanding at December 31, 2018 - $ - Warrants Issued 3,675,000 $ 0.0632 Outstanding at December 31, 2019 3,675,000 $ 0.0632 Warrants Issued 50,000 $ 0.0500 Warrants exercised (175,000 ) $ 0.0700 Outstanding and exercisable at December 31, 2020 3,550,000 $ 0.0627 6.17 Warrants Outstanding Warrants Exercisable Weighted Avg. Remaining Shares Contractual Weighted Avg. Shares Weighted Avg. Range of Exercise Prices Outstanding Life in Years Exercise Price Exercisable Exercise Price $0.05 - $0.08 3,550,000 0.0627 $ 6.17 3,550,000 $ 6.17 3,550,000 0.0627 $ 6.17 3,550,000 $ 6.17 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 7 – COMMITMENTS AND CONTINGENCIES Operating Leases In May 2016, we moved and entered into a month-to-month lease agreement to lease office space in Tucson, Arizona. In May 2019, we acquired Applied Optical Sciences and assumed the month-to-month lease for office and laboratory space also in Tucson, Arizona. Rent expense was approximately $49,000 and $30,000 for 2020 and 2019, respectively. In March 2021, we signed a five-year lease for a 13,000 square foot laboratory/office space here in Tucson. The lease term begins May 1, 2021 and ends on April 30, 2026. The base rent is $6.7626 per rentable square foot for year one, and escalates to $9.2009 in year two, $11.4806 in year three, $13.1740 in year four and $14.9306 in year five, plus certain operating expenses and taxes. At December 31, 2020, we had approximately $4,209 in future minimum lease payments due in less than a year. Guarantees We agree to indemnify our officers and directors for certain events or occurrences arising as a result of the officers or directors serving in such capacity. The maximum amount of future payments that we could be required to make under these indemnification agreements is unlimited. However, we maintain a director’s and officer’s liability insurance policy that limits our exposure and enables us to recover a portion of any future amounts paid. As a result, we believe the estimated fair value of these indemnification agreements is minimal because of our insurance coverage and we have not recognized any liabilities for these agreements as of December 31, 2020 and 2019. Litigation As previously reported, on July 3, 2018, we commenced a lawsuit in the Court of Chancery of the State of Delaware against the company’s former director and principal executive officer George Farley (“Farley”) and AnneMarieCo LLC (“AMC”). The parties settled the lawsuit via a written settlement agreement dated September 24, 2020. Under the agreement, 20,000,000 of the 25,000,000 shares originally issued to Farley (20,000,000 of which were transferred to AMC) were invalidated, the remaining 5,000,000 shares being deemed valid under Section 205 of the Delaware General Corporation Law. The agreement calls for the company to repurchase the remaining 5,000,000 shares at a price of $0.30 per share for an aggregate purchase price of $1,500,000. The agreement also provided for the release and return to the company of funds in the amount of $582,377.26, plus interest, securing the bond posted by the company in connection with the preliminary injunction issued in the litigation. The agreement also contains standard mutual general release and confidentiality provisions. Approximately, $206,000 accrued compensation was forgone as per settlement agreement was shown as gain on settlement. In a related matter, on February 8, 2019, the company filed a complaint against Stein Riso Mantel McDonough, LLP (“Stein Riso”), its former counsel, in the United States District Court for the Southern District of New York. The parties settled the lawsuit via a written settlement agreement dated October 2, 2020. Pursuant to the agreement, Stein Riso paid the company three million dollars ($3,000,000) and returned to the company ten million (10,000,000) shares of the company’s common stock, par value $0.001 per share. Stein Riso entered into the Settlement Agreement without any admission of liability. The parties filed a Stipulation of Dismissal with Prejudice as to all claims asserted or which could have been asserted in the lawsuit. The agreement also contains standard mutual general release and confidentiality provisions. On July 3, 2019, Gusrae, Kaplan & Nusbaum and its partner, Ryan Whalen, counsel for defendants, George Farley and AnneMarieCo LLC, in the aforesaid Delaware litigation, filed a claim in the District Court for the Southern District of New York against the company, its directors, officers, attorneys and a consultant. The action alleges libel, securities fraud and related claims. The company believes that this suit lacks merit and intends to dispute these allegations. The company filed a motion to dismiss the complaint on October 24, 2019. On December 13, 2019, Gusrae Kaplan and Mr. Whalen filed an opposition to the Company’s motion. On January 10, 2020, the company filed a reply brief. The United States District Court has not yet ruled on the motion. On June 15, 2020, Grace A.C. Dearmin, as the Administrator of the Estate of Thomas Carr Dearmin, filed a cross-complaint against the company and company directors Jonathan Barcklow and Bradford Adamczyk, alleging causes of action against them for Breach of Contract and Conversion. The causes of action against the company allege that the company’s Board of Directors voted to compensate its former CEO and director, Thomas Dearmin, as reflected in board meeting minutes dated May 11, 2018, and June 25, 2018, but failed to pay compensation owed to Mr. Dearmin. These causes of action further allege that, if incentive milestones of the company’s stock price were reached, Mr. Dearmin’s estate is owed up to 5 million shares of company common stock, or the current monetary value of that stock. On November 17, 2020, the company, Mr. Barcklow and Mr. Adamczyk filed motions to dismiss the cross-complaint against them on substantive and jurisdictional grounds. On February 8, 2021, the court granted the motion to dismiss on personal jurisdiction grounds as to the company, Mr. Barcklow and Mr. Adamczyk. On January 15, 2021, the company filed a complaint in the United States District Court, Southern District of New York, against Gusrae, Kaplan & Nusbaum and Ryan Whalen for malpractice and breach of New York Rules of Professional Conduct by both parties as former counsel to the company. Gusrae, Kaplan & Nusbaum and Ryan Whalen have not yet responded to the complaint. As with any litigation, the company cannot predict the outcome with certainty, but the company expects to provide further updates on the status of the litigation as circumstances warrant. We may, from time to time, be involved in legal proceedings arising from the normal course of business. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 8 – INCOME TAXES An analysis of the difference between the expected federal income tax for the years ended December 31, 2020 and 2019, and the effective income tax rate is as follows:: 2020 2019 Taxes calculated at federal rate $ (634,101 ) 21.0 % $ (1,166,831 ) 21.0 % State income tax, net of federal benefit (90,903 ) 3.0 % (213,340 ) 3.8 % Change in Valuation Allowance 463,091 -15.3 % 1,203,231 -21.7 % Expiration of tax attributes 161,254 -5.3 % 175,036 -3.1 % Prior period adjustment (49,105 ) -1.6 % - 0.0 % Permenant items 149,764 -5.0 % 1,904 0.0 % Provision (benefit) for taxes $ - 0 % $ - 0 % Tax effects of temporary differences at December 31, 2020 and December 31, 2019 are as follows: 2020 2019 Noncurrent deferred tax assets (liabilities): Deferred Tax Assets Accrued compensation $ 1,380,955 $ 740,442 Fixed assets (70,474 ) (9,095 ) Net Operating Loss Carryforwards and Credits 14,378,365 14,494,408 Total Deferred Tax Assets $ 15,561,529 $ 15,225,755 Valuation allowance (15,688,846 ) (15,225,755 ) Net deferred tax / (liabilities) $ - $ - Deferred tax assets and liabilities are computed by applying the federal and state income tax rates in effect to the gross amounts of temporary differences and other tax attributes, such as net operating loss carry-forwards. In assessing if the deferred tax assets will be realized, the Company considers whether it is more likely than not that some or all of these deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which these deductible temporary differences reverse. During the year ended December 31, 2020, the deferred tax assets and the valuation allowance increased by $463,091 mainly as a result of current year tax loss. As of December 31, 2020, we have cumulative federal and Arizona net operating loss carryforwards of approximately $64.5 million and $7.0 million, respectively, which can be used to offset future income subject to taxes. Of the $64.5 million, of Federal net operating loss carryforwards, $58.5 begin to expire in 2020. The remaining balance of $6.0 million is limited in annual usage of 80% of current years taxable income but do not have an expiration. Arizona net operating loss carryforwards begin to expire in 2020. In addition there are federal net operating loss carryforwards is approximately $27.0 million from USHG related to pre-merger losses. We also have pre-merger federal capital loss carryforwards of approximately $520,000. As of December 31, 2020, we had cumulative unused research and development tax credits of approximately $239,000 and $340,000, which can be used to reduce future federal and Arizona income taxes, respectively. As of December 31, 2020, we have cumulative unused federal minimum tax credit carryforwards from USHG of approximately $244,000. The federal minimum tax credit carryforwards are not subject to expiration under current federal tax law. Utilization of our USHG pre-merger net operating loss carryforwards and tax credits is subject to substantial annual limitations due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of the net operating loss carryforwards and tax credit carryforwards before utilization. We have unrecognized tax benefits attributable to losses and minimum tax credit carryforwards that were incurred by USHG prior to the merger in March 2004 as follows: Balance at December 31, 2018 $ 9,635,824 Additions related to prior year tax positions - Additions related to current year tax positions - Reductions related to prior year tax positions and settlements Balance at December 31, 2019 $ 9,635,824 Additions related to prior year tax positions - Additions related to current year tax positions - Reductions related to prior year tax positions and settlements - Balance at December 31, 2020 $ 9,635,824 These benefits are not recognized as a result of uncertainty regarding the utilization of the loss carryforwards and minimum tax credits. If in the future we utilize the attributes and resolve the uncertainty in our favor, the full amount will favorably impact our effective income tax rate. The company considers the U.S. and Arizona to be major tax jurisdictions. As of December 31, 2020, for federal tax purposes the tax years 2015, 2016 and 2017, 2018 and 2019 for Arizona the tax years 2015 through 2020 remain open to examination. The company currently does not expect any material changes to unrecognized tax positions within the next twelve months. We recognize interest and penalties related to unrecognized tax benefits in income tax expense. As of December 31, 2020, and 2019, we had no accrued interest or penalties related to our unrecognized tax benefits. |
Subsequent Event
Subsequent Event | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | NOTE 9 – SUBSEQUENT EVENT During the months of January and February 2021, the Company issued an aggregate of 7,056,250 shares of its common stock, par value $.001 per share, at an issue price of $0.32 per share. In February, 2021, the company made a $500,000 payment on the $2,500,000 note to acquire Applied Optical Sciences. In March 2021, we signed a five-year lease for a 13,000 square foot laboratory/office space here Tucson, Arizona. The lease term begins May 1, 2021 and ends on April 30, 2026. The base rent is $6.7626 per rentable square foot for year one, and escalates to $9.2009 in year two, $11.4806 in year three, $13.1740 in year four and $14.9306 in year five, plus certain operating expenses and taxes. In March, 2021, a note containing a principal balance of approximately $45,000 with a maturity date of September 1, 2019 converted into approximately 158,000 shares of common stock. In the first quarter of 2021, the company issued 500,000 shares in response to three non-affiliated warrant holders exercising warrants at an exercise price of $0.07 a share. In the first quarter of 2021, the company issued 75,000 shares to a non-affiliated holder of a restricted Stock agreement. In the first quarter of 2021, the company issued 1,000,000 shares in response to a non-affiliated option holder exercising options at an exercise price of $0.05 a share. The company’s management has evaluated subsequent events occurring after December 31, 2020, the date of our most recent balance sheet, through the date our financial statements were issued. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The consolidated financial statements include the accounts of Applied Energetics, Inc. and its wholly owned subsidiary North Star Power Engineering, Inc. (“North Star”) (collectively, “company,” “Applied Energetics,” “AERG”, “we,” “our” or “us”). All intercompany balances and transactions have been eliminated. |
Going Concern | Going Concern The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the year ended December 31, 2020, the company incurred a net loss of approximately $3,230,000, had negative cash flows from operations of approximately $160,000 and may incur additional future losses due to the reduction in Government contract activity. At December 31, 2020, the Company had total current assets of approximately $3,400,000 and total current liabilities of approximately $1,800,000 resulting in working capital of approximately $1,600,000. At December 31, 2020, the Company had cash of $3,323,290. On February 2, 2021 and February 8, 2021, the Company completed the issuance of 7,056,250 total shares of its common stock at a price of $0.32 per share, or $2,258,000 in the aggregate. As of March 31, 2021, the Company had cash of approximately $4,300,000. Based on the Company’s current business plan, it believes its cash balance as of the date of this filing will be sufficient to meet its anticipated cash requirements for the next twelve months. However, there can be no assurance that the current business plan will be achievable. Such conditions raise substantial doubts about the Company’s ability to continue as a going concern for one year from the date the financial statements are issued. The company’s existence is dependent upon management’s ability to develop profitable operations. Management is devoting substantially all of its efforts to developing its business and raising capital and there can be no assurance that the company’s efforts will be successful. No assurance can be given that management’s actions will result in profitable operations or the resolution of its liquidity problems. The accompanying consolidated financial statements do not include any adjustments that might result should the company be unable to continue as a going concern. The ongoing COVID-19 pandemic contributes to this uncertainty. In order to improve the company’s liquidity, the company’s management is actively pursuing additional equity financing through discussions with investment bankers and private investors. There can be no assurance that the company will be successful in its effort to secure additional equity financing. The financial statements do not include any adjustments relating to the recoverability of assets and the amount or classification of liabilities that might be necessary should the company be unable to continue as a going concern. Applied Energetics, Inc. is a corporation organized and existing under the laws of the State of Delaware. Our executive office is located at 2480 West Ruthrauff Road, Suite 140 Q, Tucson, Arizona, 85705, we have office and laboratory space at 4595 S Palo Verde Rd, Suite 517, Tucson, AZ 85714 and our telephone number is (520) 628-7415. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management bases its assumptions on historical experiences and on various other assumptions 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 that are not readily apparent from other sources. In addition, management considers the basis and methodology used in developing and selecting these estimates, the trends in and amounts of these estimates, specific matters affecting the amount of and changes in these estimates, and any other relevant matters related to these estimates, including significant issues concerning accounting principles and financial statement presentation. Such estimates and assumptions could change in the future as more information becomes known which could impact the amounts reported and disclosed herein. Significant estimates include revenue recognition, carrying amounts of long-lived assets, valuation assumptions for share-based payments, evaluation of debt modification accounting, effective borrowing rate determinations, analysis of fair value transferred upon debt extinguishment, valuation and calculation of measurements of income tax assets and liabilities and valuation of debt discount related to beneficial conversion features. |
Net Loss Attributable to Common Stockholders | Net Loss Attributable to Common Stockholders Basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period before giving effect to stock options, stock warrants, restricted stock units and convertible securities outstanding, which are considered to be dilutive common stock equivalents. Diluted net loss per common share is calculated based on the weighted average number of common and potentially dilutive shares outstanding during the period after giving effect to dilutive common stock equivalents. Contingently issuable shares are included in the computation of basic loss per share when issuance of the shares is no longer contingent. The number of warrants, options, restricted stock units and our Series A Convertible Preferred Stock, which were not included in the computation of earnings per share because the effect was antidilutive, was 35,612,091 and 35,246,757 for the years ended December 31, 2020 and 2019, respectively. |
Fair Value of Current Assets and Liabilities | Fair Value of Current Assets and Liabilities The carrying amount of accounts payable approximate fair value due to the short maturity of these instruments. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash equivalents are investments in money market funds or securities with an initial maturity of three months or less. |
Income Taxes | Income Taxes Deferred tax assets and liabilities are recognized currently for the future tax consequences attributable to the temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets if it is more likely than not that such assets will not be realized. Our valuation allowance is currently 100% of our assets. We consider all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed for some portion or all of a net deferred tax asset. Judgment is used in considering the relative impact of negative and positive evidence. In arriving at these judgments, the weight given to the potential effect of negative and positive evidence is commensurate with the extent to which it can be objectively verified. We record a valuation allowance to reduce our deferred tax assets and review the amount of such allowance annually. When we determine certain deferred tax assets are more likely than not to be utilized, we will reduce our valuation allowance accordingly. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASC Topic 606 – Revenue from Contracts with Customers (“ASC 606”) to depict the transfer of control to the Company’s customers in an amount reflecting the consideration the Company expects to be entitled. The Company determines revenue recognition through the following steps: i. Identification of the contract, or contracts, with a customer ii. Identification of the performance obligations in the contract iii. Determination of the transaction price iv. Allocation of the transaction price to the performance obligations in the contract v. Recognition of revenue, when, or as, the Company satisfied the performance obligation The Company generated revenue from its customer by preparing a technical report. The Company’s single performance obligation was to deliver the final technical report detailing the findings of the Company’s investigations. The fee for the report was fixed. During the year ending December 31, 2020, the Company recognized $175,920 related to the delivery of the final report. |
Share-Based Payments | Share-Based Payments Employee stock-based compensation cost is measured at grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period. The fair value of each option grant is estimated at the date of grant using the Black-Scholes-Merton option valuation model. We make the following assumptions relative to this model: (i) the annual dividend yield is zero as we do not pay dividends on common stock, (ii) the weighted-average expected life is based on a midpoint scenario, where the expected life is determined to be half of the time from grant to expiration, regardless of vesting, (iii) the risk free interest rate is based on the U.S. Treasury security rate for the expected life, and (iv) the volatility is based on the level of fluctuations in our historical share price for a period equal to the weighted-average expected life. We estimate forfeitures when recognizing compensation expense and adjust this estimate over the requisite service period should actual forfeitures differ from such estimates. Changes in estimated forfeitures are recognized through a cumulative adjustment, which is recognized in the period of change and which impacts the amount of unamortized compensation expense to be recognized in future periods. |
Significant Concentrations and Risks | Significant Concentrations and Risks We maintain cash balances at a commercial bank and, at times, balances exceed FDIC limits. As of December 31, 2020 approximately $3,073,000 was uninsured. |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of reconciles notes payable | December 31, December 31, Beginning balance $ 4,967,890 $ - Notes payable 4,456,760 4,880,000 Accrued interest 297,849 119,218 Transfer from prepaid 108,064 54,329 Initial beneficial conversion feature (919,000 ) - Amortize beneficial conversion feature 919,000 - Payments on notes payable (1,480,951 ) (85,657 ) Repayment of interest (152,603 ) - Converted into common stock (5,515,852 ) - Total 2,681,157 4,967,890 Less-Notes payable - current (1,547,695 ) (3,467,890 ) Notes payable - non-current $ 1,133,462 $ 1,500,000 |
Schedule of future principal payments | 2021 $ 1,547,695 2022 1,133,462 Thereafter - Total $ 2,681,157 |
Stockholders_ Deficit (Tables)
Stockholders’ Deficit (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders’ Deficit (Tables) [Line Items] | |
Schedule of awards under our 2018 Incentive sock plan | As of December 31, 2020 Share Options Shares 2018 Incentive Stock Plan 50,000,000 20,150,000 29,850,000 Total 50,000,000 20,150,000 29,850,000 |
Schedule of fair value of warrant grant share-based awards at their grant date | For the year ended 2020 2019 Expected life (years) N/A 5.5 - 6.75 Dividend yield N/A 0 % Expected volatility N/A 232 % Risk free interest rates N/A 2.47 % Weighted average fair value of options at grant date N/A $ 0.3400 |
Schedule of activity of our stock options | Shares Weighted Outstanding at December 31, 2018 29,250,000 $ 0.1025 Granted 6,650,000 $ 0.3545 Exercised - $ - Forfeited or expired (3,000,000 ) $ 0.2500 Outstanding at December 31, 2019 32,900,000 $ 0.1400 Granted - $ - Exercised (900,000 ) $ 0.0700 Forfeited or expired - $ - Outstanding at December 31, 2020 32,000,000 $ 0.1419 Exercisable at December 31, 2020 24,362,500 $ 0.1037 |
Schedule of unrecognized stock-based compensation related to unvested restricted stock, net of estimated forfeitures | Warrant Activity Shares Weighted Weighted Outstanding at December 31, 2018 - $ - Warrants Issued 3,675,000 $ 0.0632 Outstanding at December 31, 2019 3,675,000 $ 0.0632 Warrants Issued 50,000 $ 0.0500 Warrants exercised (175,000 ) $ 0.0700 Outstanding and exercisable at December 31, 2020 3,550,000 $ 0.0627 6.17 |
Schedule of range exercise prices warrants outstanding and exercisable | Warrants Outstanding Warrants Exercisable Weighted Avg. Remaining Shares Contractual Weighted Avg. Shares Weighted Avg. Range of Exercise Prices Outstanding Life in Years Exercise Price Exercisable Exercise Price $0.05 - $0.08 3,550,000 0.0627 $ 6.17 3,550,000 $ 6.17 3,550,000 0.0627 $ 6.17 3,550,000 $ 6.17 |
Black-Scholes- Merton Option-Pricing Model [Member] | |
Stockholders’ Deficit (Tables) [Line Items] | |
Schedule of fair value of warrant grant share-based awards at their grant date | For the year ended 2020 2019 Expected life (years) 1.0 1.0 Dividend yield 0 % 0 % Expected volatility 125.19 % 249%-149 % Risk free interest rates 0.14 % 2.4-1.54 % Weighted average fair value of options at grant date $ .308 $ 0.0632 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of federal income tax and effective income tax | 2020 2019 Taxes calculated at federal rate $ (634,101 ) 21.0 % $ (1,166,831 ) 21.0 % State income tax, net of federal benefit (90,903 ) 3.0 % (213,340 ) 3.8 % Change in Valuation Allowance 463,091 -15.3 % 1,203,231 -21.7 % Expiration of tax attributes 161,254 -5.3 % 175,036 -3.1 % Prior period adjustment (49,105 ) -1.6 % - 0.0 % Permenant items 149,764 -5.0 % 1,904 0.0 % Provision (benefit) for taxes $ - 0 % $ - 0 % |
Schedue of deferred tax assets | 2020 2019 Noncurrent deferred tax assets (liabilities): Deferred Tax Assets Accrued compensation $ 1,380,955 $ 740,442 Fixed assets (70,474 ) (9,095 ) Net Operating Loss Carryforwards and Credits 14,378,365 14,494,408 Total Deferred Tax Assets $ 15,561,529 $ 15,225,755 Valuation allowance (15,688,846 ) (15,225,755 ) Net deferred tax / (liabilities) $ - $ - |
Schedule of unrecognized tax benefits attributable to losses and minimum tax credit carryforwards | Balance at December 31, 2018 $ 9,635,824 Additions related to prior year tax positions - Additions related to current year tax positions - Reductions related to prior year tax positions and settlements Balance at December 31, 2019 $ 9,635,824 Additions related to prior year tax positions - Additions related to current year tax positions - Reductions related to prior year tax positions and settlements - Balance at December 31, 2020 $ 9,635,824 |
Organization of Business, Goi_2
Organization of Business, Going Concern and Summary of Significant Accounting Policies (Details) - USD ($) | Feb. 02, 2021 | Jan. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2021 | Feb. 08, 2021 |
Organization of Business, Going Concern and Summary of Significant Accounting Policies (Details) [Line Items] | |||||||
Net loss | $ 3,230,000 | ||||||
Negative cash flows from operations | 160,000 | ||||||
Current assets | 3,365,522 | $ 143,981 | |||||
Current liabilities | 1,799,157 | 4,268,424 | |||||
Cash | 3,323,290 | 88,415 | |||||
Shares Issues (in Shares) | 2,010,000 | ||||||
Aggregate shares amount | $ 1,644,100 | $ 853,999 | |||||
Antidilutive options, restricted stock units, and Series A Convertible Preferred Stock shares excluded from of earnings per share (in Shares) | 35,246,757 | 35,612,091 | |||||
Valuation allowance, percentage | 100.00% | ||||||
Fee for the delivery of final report | $ 175,920 | ||||||
Cash uninsured | 3,073,000 | ||||||
Subsequent Event [Member] | |||||||
Organization of Business, Going Concern and Summary of Significant Accounting Policies (Details) [Line Items] | |||||||
Cash | $ 4,300,000 | ||||||
Shares Issues (in Shares) | 7,056,250 | ||||||
Shares issued price per share (in Dollars per share) | $ 0.32 | ||||||
Aggregate shares amount | $ 2,258,000 | ||||||
Government Contract [Member] | |||||||
Organization of Business, Going Concern and Summary of Significant Accounting Policies (Details) [Line Items] | |||||||
Current assets | 3,400,000 | ||||||
Current liabilities | 1,800,000 | ||||||
Working capital | 1,600,000 | ||||||
Cash | $ 3,323,290 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | May 24, 2019 | Nov. 20, 2020 | Apr. 28, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Notes Payable (Details) [Line Items] | ||||||
Issued of stock value | $ 25 | |||||
Debt discount | $ 2,500,000 | |||||
Description of affiliated individuals | the company received $2,350,000 from eleven non-affiliated individuals based on 10% Promissory Notes (“Notes”). $1,150,000 of the Notes mature September 1, 2019 and $1,200,000 of the notes mature December 1, 2019. | |||||
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 | ||||
Note principle value | $ 2 | |||||
Exercise price (in Dollars per share) | $ 0.0627 | $ 0.0632 | ||||
Debt term | 2 years | |||||
Cash settled of principal and interest | $ 1,525,490 | |||||
Convertible note payable | $ 1,087,699 | |||||
Conversion price, per share (in Dollars per share) | $ 0.30 | |||||
Additional paid-in capital | $ 210,966 | |||||
Shares issued (in Shares) | 18,386,174 | |||||
Interest expense | $ 210,966 | |||||
Payment, description | the Company entered into a loan agreement with Alliance Bank of Arizona, N.A. for a loan in the amount of $133,000 pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act enacted on March 27, 2020 (the “CARES Act”). This loan is evidenced by a promissory note dated April 27, 2020 and matures two years from the disbursement date. This loan bears interest at a rate of 1.00% per annum, with the first nine months of interest deferred. Principal and interest are payable monthly commencing nine months after the disbursement date and may be prepaid by the Company at any time prior to maturity with no prepayment penalties. | |||||
Principal balance | 2,681,000 | |||||
Other short term debt | 1,548,000 | |||||
Payments on the note | 1,500,000 | |||||
Long term debt | 1,133,000 | |||||
Debt payment | 1,000,000 | |||||
Promissory Notes [Member] | ||||||
Notes Payable (Details) [Line Items] | ||||||
Debt discount | $ 708,034 | |||||
Remaining principal and interest vakue | $ 4,407,262 | $ 1,108,590 | ||||
Loan agreement, description | the Company received $4,324,000 in bridge funding pursuant to 10% Convertible Promissory Notes. These notes are convertible into shares of our common stock at a conversion price of $0.30 per share, as negotiated with the holders based on the prevailing market price of the common stock leading up to the issuance of the notes. At any time after October 15, 2020 until July 15, 2021, the date of maturity, (i) each investor may elect to convert these notes into shares of our common stock, at a conversion price of $0.30 per share and (ii) the company may elect to prepay, either in cash or in shares of common stock at a price of $0.30 per share, at the option of the holder, the amount of principal and interest then outstanding under each note. In the event we elect to prepay the notes, we will notify the holders, each of whom will then have five business days to notify the company if they prefer to receive such prepayment in cash or stock. These notes are payable in full at maturity. In lieu of repayment of the principal and interest on the notes at maturity, the Company may elect to convert the amounts due into shares of Common Stock at a price of $0.15 per share. | |||||
Applied Optical Sciences [Member] | ||||||
Notes Payable (Details) [Line Items] | ||||||
Issued of stock value | $ 2,500,000 | |||||
Warrant [Member] | ||||||
Notes Payable (Details) [Line Items] | ||||||
Exercise price (in Dollars per share) | $ 0.07 | |||||
Common Stock [Member] | ||||||
Notes Payable (Details) [Line Items] | ||||||
Shares issued (in Shares) | 14,690,873 | 3,695,301 |
Notes Payable (Details) - Sched
Notes Payable (Details) - Schedule of reconciles notes payable - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Schedule of reconciles notes payable [Abstract] | ||
Beginning balance | $ 4,967,890 | |
Notes payable | 4,456,760 | 4,880,000 |
Accrued interest | 297,849 | 119,218 |
Transfer from prepaid | 108,064 | 54,329 |
Initial beneficial conversion feature | (919,000) | |
Amortize beneficial conversion feature | 919,000 | |
Payments on notes payable | (1,480,951) | (85,657) |
Repayment of interest | (152,603) | |
Converted into common stock | (5,515,852) | |
Total | 2,681,157 | 4,967,890 |
Less-Notes payable - current | (1,547,695) | (3,467,890) |
Notes payable - non-current | $ 1,133,462 | $ 1,500,000 |
Notes Payable (Details) - Sch_2
Notes Payable (Details) - Schedule of future principal payments | Dec. 31, 2020USD ($) |
Schedule of future principal payments [Abstract] | |
2021 | $ 1,547,695 |
2022 | 1,133,462 |
Thereafter | |
Total | $ 2,681,157 |
Deferred Compensation (Details)
Deferred Compensation (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
May 24, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Compensation Related Costs [Abstract] | |||
Promissory note issued | $ 2,500,000 | ||
Deferred compensation | $ 2,500,000 | $ 1,250,001 | $ 2,083,334 |
Amortization of deferred compensation | $ 833,000 | $ 417,000 |
Due to Related Parties (Details
Due to Related Parties (Details) | 1 Months Ended |
Jul. 31, 2018USD ($) | |
CEO [Member] | |
Due to Related Parties (Details) [Line Items] | |
Deposited | $ 50,000 |
Stockholders_ Deficit (Details)
Stockholders’ Deficit (Details) | May 31, 2021USD ($)shares | Feb. 02, 2021USD ($)shares | Oct. 02, 2020USD ($)$ / sharesshares | Apr. 08, 2020USD ($)shares | Sep. 24, 2020USD ($)shares | Aug. 31, 2020USD ($)shares | Jun. 30, 2020$ / shares | Jun. 30, 2020$ / sharesshares | Apr. 23, 2020USD ($)shares | Feb. 19, 2020USD ($)shares | Jan. 31, 2020USD ($)$ / sharesshares | Apr. 30, 2019USD ($)shares | Apr. 30, 2019 | Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | Nov. 20, 2020shares | Dec. 31, 2018$ / shares |
Stockholders’ Deficit (Details) [Line Items] | ||||||||||||||||||
Common stock, shares authorized | 500,000,000 | 500,000,000 | 500,000,000 | |||||||||||||||
preferred stock, shares authorized | 2,000,000 | 2,000,000 | 2,000,000 | |||||||||||||||
Common stock value (in Dollars) | $ | $ 1,644,100 | $ 853,999 | ||||||||||||||||
Common stock shares | 2,010,000 | |||||||||||||||||
Strike price per share (in Dollars per Share) | $ / shares | 0.07 | |||||||||||||||||
Agreement Description | we entered into a Mutual Release and Hold Harmless Agreement with a stockholder resolving claims related to the issuance of 1,000,000 shares of our common stock, par value $0.001 per share, to that stockholder, as directed by prior company CEO George Farley, as compensation for valuation services. The shares have been returned and cancelled recorded at $0.001 par, for $1,000. | |||||||||||||||||
Share-based compensation, options granted | 6,650,000 | |||||||||||||||||
Deposited bond (in Dollars) | $ | $ 500,000 | |||||||||||||||||
Settlement of shares | 10,000,000 | 25,000,000 | ||||||||||||||||
Issued shares | 18,386,174 | |||||||||||||||||
Conversion of convertible note (in Dollars) | $ | $ 5,515,852 | |||||||||||||||||
Shares received (in Dollars) | $ | $ 150,000 | |||||||||||||||||
Issue of common stock | 900,000 | |||||||||||||||||
Stockholders equity, description | the company granted 75,000 shares under a restricted stock agreement valued at $26,250 of which $8,882 was recognized in 2019 and $13,125 was recognized in 2020. The shares to vest semi-annually over two years with the first installment six months from the agreement; provided, however, if either party terminates the agreement at any time prior to the last date of it ending, then the shares will vest, pro rata, for each month served since the most recent prior semi-annual vesting date. | If the closing sale price of the common stock is greater than 140% of the conversion price on 20 out of 30 trading days, the company may redeem the Series A Preferred Stock in whole or in part at any time through October 31, 2010, upon at least 30 days’ notice, at a redemption price, payable in cash, equal to 100% of the liquidation preference of the shares to be redeemed, plus unpaid dividends thereon to, but excluding, the redemption date, subject to certain conditions. In addition, beginning November 1, 2010, the company may redeem the Series A Preferred Stock in whole or in part, upon at least 30 days’ notice, at a redemption price, payable in cash, equal to 100% of the liquidation preference of the Series A Preferred Stock to be redeemed, plus unpaid dividends thereon to, but excluding, the redemption date, under certain conditions. | ||||||||||||||||
Series A convertible preferred stock, shares outstanding | 13,602 | 13,602 | 13,602 | |||||||||||||||
Reversal of convertible preferred stock dividend accrual (in Dollars) | $ | $ 255,000 | |||||||||||||||||
Series A convertible preferred stock, liquidation preference (in Dollars per share) | $ / shares | $ 25 | |||||||||||||||||
Series A convertible preferred stock, dividend rate | 6.50% | |||||||||||||||||
Weighted average of the last sales prices | 95.00% | |||||||||||||||||
liquidation preference | 7.50% | |||||||||||||||||
Dividend rate increase | 10.00% | |||||||||||||||||
Preferred stock conversion price per share (in Dollars per share) | $ / shares | $ 12 | |||||||||||||||||
Common stock discount shares description | The purchase price is payable, at the corporation’s option, (x) in cash, (y) in shares of the common stock at a discount of 5% from the fair market value of Common Stock on the Purchase Date (i.e. valued at a 95% discount of the Common Stock on the Purchase Date), or (z) any combination thereof. | |||||||||||||||||
Common stock discount percentage | 0.95 | |||||||||||||||||
Reserved a total possible issuance under the plan | 50,000,000 | |||||||||||||||||
Total stock-based compensation expense for grants (in Dollars) | $ | $ 1,501,000 | $ 2,157,000 | ||||||||||||||||
Options to purchase stock were exercised | 900,000 | |||||||||||||||||
Average exercise price (in Dollars per share) | $ / shares | $ 0.07 | |||||||||||||||||
Share-based compensation, options outstanding, weighted average exercise price (in Dollars per share) | $ / shares | $ 0.1400 | $ 0.1419 | $ 0.1400 | $ 0.1025 | ||||||||||||||
Options exercisable | 24,362,500 | |||||||||||||||||
Issuable in acquisition, description | As of December 31, 2020 and December 31, 2019 there was $892,000 and $1,561,000, respectively, in unrecognized stock-based compensation related to a lockup agreement on 5,000,000 shares of common stock in the acquisition of AOS valued at $0.4014 a share as that was the closing price on the date of the contract and is amortized over 36 months. $669,000 and $446,000 was amortized for the years ended December 31, 2020 and December 31, 2019, respectively | |||||||||||||||||
unrecognized stock based compensation (in Dollars) | $ | $ 892,000 | $ 1,561,000 | ||||||||||||||||
Minimum [Member] | ||||||||||||||||||
Stockholders’ Deficit (Details) [Line Items] | ||||||||||||||||||
Certificate of amendment to increase our authorize common stock | 125,000,000 | |||||||||||||||||
Amount of dividend rate increase if distribution not made within five business days following dividend payment date | 1.00% | |||||||||||||||||
Maximum [Member] | ||||||||||||||||||
Stockholders’ Deficit (Details) [Line Items] | ||||||||||||||||||
Certificate of amendment to increase our authorize common stock | 500,000,000 | |||||||||||||||||
Amount of dividend rate increase if distribution not made within five business days following dividend payment date | 6.50% | |||||||||||||||||
Common stock [Member] | ||||||||||||||||||
Stockholders’ Deficit (Details) [Line Items] | ||||||||||||||||||
Common stock value (in Dollars) | $ | $ 73,500 | $ 510,000 | $ 603,000 | |||||||||||||||
Common stock shares | 1,050,000 | 1,700,000 | ||||||||||||||||
Issue of warrants | 25,000 | |||||||||||||||||
Issued shares | 3,695,301 | 14,690,873 | ||||||||||||||||
Preferred Stock [Member] | ||||||||||||||||||
Stockholders’ Deficit (Details) [Line Items] | ||||||||||||||||||
liquidation preference | 101.00% | |||||||||||||||||
Subsequent Event [Member] | ||||||||||||||||||
Stockholders’ Deficit (Details) [Line Items] | ||||||||||||||||||
Common stock value (in Dollars) | $ | $ 2,258,000 | |||||||||||||||||
Common stock shares | 7,056,250 | |||||||||||||||||
Principal balance (in Dollars) | $ | $ 45,000 | |||||||||||||||||
Conversion of common stock | 158,000 | |||||||||||||||||
Stephen W McCahon [Membe] | ||||||||||||||||||
Stockholders’ Deficit (Details) [Line Items] | ||||||||||||||||||
Share of common stock repurchased | 5,000,000 | |||||||||||||||||
Common stock repurchased (in Dollars) | $ | $ 300,000 | |||||||||||||||||
Mr. Farley’s attorney | ||||||||||||||||||
Stockholders’ Deficit (Details) [Line Items] | ||||||||||||||||||
Advance amount (in Dollars) | $ | $ 1,000,000 | |||||||||||||||||
Stein Riso Mantel McDonough, LLP [Member] | ||||||||||||||||||
Stockholders’ Deficit (Details) [Line Items] | ||||||||||||||||||
Settlement of shares | 3,000,000 | |||||||||||||||||
cancellation of per share (in Dollars per share) | $ / shares | $ 0.001 | |||||||||||||||||
Cancellation recorded Value (in Dollars) | $ | $ 10,000 | |||||||||||||||||
Share-based Payment Arrangement, Option [Member] | ||||||||||||||||||
Stockholders’ Deficit (Details) [Line Items] | ||||||||||||||||||
Share-based compensation, options granted | 32,000,000 | |||||||||||||||||
Share-based compensation, options outstanding, weighted average exercise price (in Dollars per share) | $ / shares | $ 0.1419 | |||||||||||||||||
Share-based compensation, options outstanding, weighted average remaining contractual term | 5 years 219 days | |||||||||||||||||
Options outstanding aggregate intrinsic value (in Dollars) | $ | $ 6,054,000 | |||||||||||||||||
Options exercisable | 24,363,000 | |||||||||||||||||
Unrecognized compensation costs related to unvested equity awards, net of estimated forfeitures (in Dollars) | $ | $ 913,000 | |||||||||||||||||
Common stock [Member] | ||||||||||||||||||
Stockholders’ Deficit (Details) [Line Items] | ||||||||||||||||||
Common stock value (in Dollars) | $ | $ 5,480 | $ 4,847 | ||||||||||||||||
Common stock shares | 5,480,334 | 4,846,666 | ||||||||||||||||
Common stock [Member] | Restricted stock [Member] | ||||||||||||||||||
Stockholders’ Deficit (Details) [Line Items] | ||||||||||||||||||
Share-based compensation, options granted | 18,750 | |||||||||||||||||
Grant date price (in Dollars per share) | $ / shares | $ 0.35 | $ 0.35 | ||||||||||||||||
Subscription Agreements [Member] | ||||||||||||||||||
Stockholders’ Deficit (Details) [Line Items] | ||||||||||||||||||
Common stock value (in Dollars) | $ | $ 532,000 | |||||||||||||||||
Common stock shares | 1,770,334 | |||||||||||||||||
Shares received (in Dollars) | $ | $ 704,000 | |||||||||||||||||
Issue of common stock | 2,500,000 | 2,346,666 |
Stockholders_ Deficit (Detail_2
Stockholders’ Deficit (Details) - Schedule of awards under our 2018 Incentive sock plan | 12 Months Ended |
Dec. 31, 2020shares | |
Restricted Stock [Member] | 2018 Incentive Stock Plan [Member] | |
Stockholders’ Deficit (Details) - Schedule of awards under our 2018 Incentive sock plan [Line Items] | |
Share Grants Approved | 50,000,000 |
Options Outstanding | 20,150,000 |
Shares Available for Award | 29,850,000 |
Stock Compensation Plan [Member] | |
Stockholders’ Deficit (Details) - Schedule of awards under our 2018 Incentive sock plan [Line Items] | |
Share Grants Approved | 50,000,000 |
Options Outstanding | 20,150,000 |
Shares Available for Award | 29,850,000 |
Stockholders_ Deficit (Detail_3
Stockholders’ Deficit (Details) - Schedule of fair value of option grant share-based awards at their grant date, using a black-scholes- merton option-pricing model - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Stockholders’ Deficit (Details) - Schedule of fair value of option grant share-based awards at their grant date, using a black-scholes- merton option-pricing model [Line Items] | ||
Expected life (years) | ||
Dividend yield | 0.00% | |
Expected volatility | 232.00% | |
Risk free interest rates | 2.47% | |
Weighted average fair value of options at grant date (in Dollars per share) | $ 0.3400 | |
Minimum [Member] | ||
Stockholders’ Deficit (Details) - Schedule of fair value of option grant share-based awards at their grant date, using a black-scholes- merton option-pricing model [Line Items] | ||
Expected life (years) | 5 years 6 months | |
Maximum [Member] | ||
Stockholders’ Deficit (Details) - Schedule of fair value of option grant share-based awards at their grant date, using a black-scholes- merton option-pricing model [Line Items] | ||
Expected life (years) | 6 years 9 months |
Stockholders_ Deficit (Detail_4
Stockholders’ Deficit (Details) - Schedule of activity of our stock options - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Schedule of activity of our stock options [Abstract] | ||
Shares, Beginning balance | 32,900,000 | 29,250,000 |
Weighted Average Exercise Price, Beginning balance | $ 0.1400 | $ 0.1025 |
Shares, Granted | 6,650,000 | |
Weighted Average Exercise Price, Granted | $ 0.3545 | |
Shares, Exercisable | 24,362,500 | |
Weighted Average Exercise Price, Exercisable | $ 0.1037 | |
Shares, Exercised | (900,000) | |
Weighted Average Exercise Price, Exercised | $ 0.0700 | |
Shares, Forfeited or expired | (3,000,000) | |
Weighted Average Exercise Price, Forfeited or expired | $ 0.2500 | |
Shares, Ending balance | 32,000,000 | 32,900,000 |
Weighted Average Exercise Price, Ending balance | $ 0.1419 | $ 0.1400 |
Stockholders_ Deficit (Detail_5
Stockholders’ Deficit (Details) - Schedule of fair value of warrant grant share-based awards at their grant date - Black-Scholes- Merton Option-Pricing Model [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Stockholders’ Deficit (Details) - Schedule of fair value of warrant grant share-based awards at their grant date [Line Items] | ||
Expected life (years) | 1 year | 1 year |
Dividend yield | 0.00% | 0.00% |
Expected volatility | 125.19% | |
Risk free interest rates | 0.14% | |
Weighted average fair value of options at grant date (in Dollars per share) | $ 0.308 | $ 0.0632 |
Minimum [Member] | ||
Stockholders’ Deficit (Details) - Schedule of fair value of warrant grant share-based awards at their grant date [Line Items] | ||
Expected volatility | 249.00% | |
Risk free interest rates | 2.40% | |
Maximum [Member] | ||
Stockholders’ Deficit (Details) - Schedule of fair value of warrant grant share-based awards at their grant date [Line Items] | ||
Expected volatility | 149.00% | |
Risk free interest rates | 1.54% |
Stockholders_ Deficit (Detail_6
Stockholders’ Deficit (Details) - Schedule of unrecognized stock-based compensation related to unvested restricted stock, net of estimated forfeitures - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Schedule of unrecognized stock-based compensation related to unvested restricted stock, net of estimated forfeitures [Abstract] | ||
Beginning Balance | 3,675,000 | |
Beginning Balance | $ 0.0632 | |
Warrants Issued | 50,000 | 3,675,000 |
Warrants Issued | $ 0.0500 | $ 0.0632 |
Warrants exercised, Shares | (175,000) | |
Warrants exercised, Weighted Average Exercise Price | $ 0.0700 | |
Ending Balance | 3,550,000 | 3,675,000 |
Ending Balance | $ 0.0627 | $ 0.0632 |
Weighted Average Remaining Contractual Term (years) | 6 years 62 days |
Stockholders_ Deficit (Detail_7
Stockholders’ Deficit (Details) - Schedule of range exercise prices warrants outstanding and exercisable | 12 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Warrants Outstanding, Shares Outstanding (in Shares) | shares | 3,550,000 |
Warrants Outstanding, Weighted Avg. Remaining Contractual Life in Years | 22 days |
Warrants Outstanding, Weighted Avg. Exercise Price | $ 6.17 |
Warrants Exercisable, Shares Exercisable (in Shares) | shares | 3,550,000 |
Warrants Exercisable, Weighted Avg. Exercise Price | $ 6.17 |
$0.05 - $0.08 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Warrants Outstanding, Shares Outstanding (in Shares) | shares | 3,550,000 |
Warrants Outstanding, Weighted Avg. Remaining Contractual Life in Years | 22 days |
Warrants Outstanding, Weighted Avg. Exercise Price | $ 6.17 |
Warrants Exercisable, Shares Exercisable (in Shares) | shares | 3,550,000 |
Warrants Exercisable, Weighted Avg. Exercise Price | $ 6.17 |
$0.05 - $0.08 [Member] | Minimum [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Range of Exercise Prices | 0.05 |
$0.05 - $0.08 [Member] | Maximum [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Range of Exercise Prices | $ 0.08 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2021 | Oct. 31, 2020 | |
Commitments and Contingencies (Details) [Line Items] | ||||
Rent expense | $ 49,000 | $ 30,000 | ||
Future minimum lease payments due in less than a year | $ 4,209 | |||
Description of preliminary injunction | As previously reported, on July 3, 2018, we commenced a lawsuit in the Court of Chancery of the State of Delaware against the company’s former director and principal executive officer George Farley (“Farley”) and AnneMarieCo LLC (“AMC”). The parties settled the lawsuit via a written settlement agreement dated September 24, 2020. Under the agreement, 20,000,000 of the 25,000,000 shares originally issued to Farley (20,000,000 of which were transferred to AMC) were invalidated, the remaining 5,000,000 shares being deemed valid under Section 205 of the Delaware General Corporation Law. The agreement calls for the company to repurchase the remaining 5,000,000 shares at a price of $0.30 per share for an aggregate purchase price of $1,500,000. The agreement also provided for the release and return to the company of funds in the amount of $582,377.26, plus interest, securing the bond posted by the company in connection with the preliminary injunction issued in the litigation. The agreement also contains standard mutual general release and confidentiality provisions. Approximately, $206,000 accrued compensation was forgone as per settlement agreement was shown as gain on settlement. In a related matter, on February 8, 2019, the company filed a complaint against Stein Riso Mantel McDonough, LLP (“Stein Riso”), its former counsel, in the United States District Court for the Southern District of New York. The parties settled the lawsuit via a written settlement agreement dated October 2, 2020. Pursuant to the agreement, Stein Riso paid the company three million dollars ($3,000,000) and returned to the company ten million (10,000,000) shares of the company’s common stock, par value $0.001 per share. Stein Riso entered into the Settlement Agreement without any admission of liability. The parties filed a Stipulation of Dismissal with Prejudice as to all claims asserted or which could have been asserted in the lawsuit. The agreement also contains standard mutual general release and confidentiality provisions. | |||
Common stock value | $ 190,529 | $ 206,569 | ||
Common stock shares issued (in Shares) | 190,529,320 | 206,569,062 | ||
Common stock par value (in Dollars per share) | $ 0.001 | $ 0.001 | ||
Square Food Laboratory [Member] | ||||
Commitments and Contingencies (Details) [Line Items] | ||||
Per rentable square foot for year | $ 14.9306 | $ 13,000 | ||
Per rentable square foot for year | $ 6.7626 | |||
Per rentable square foot for year | 9.2009 | |||
Per rentable square foot for year | 11.4806 | |||
Per rentable square foot for year | $ 13.1740 | |||
Square Food Laboratory [Member] | ||||
Commitments and Contingencies (Details) [Line Items] | ||||
Common stock value | $ 3,000,000 | |||
Common stock shares issued (in Shares) | 10,000,000 | |||
Common stock par value (in Dollars per share) | $ 0.001 |
Income Taxes (Details)
Income Taxes (Details) | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Income Taxes (Details) [Line Items] | |
Change in valuation allowance | $ 463,091 |
Federal operating loss carryforward | 64,500,000 |
Arizona operating loss carryforward | $ 7,000,000 |
Income taxes description | the $64.5 million, of Federal net operating loss carryforwards, $58.5 begin to expire in 2020. The remaining balance of $6.0 million is limited in annual usage of 80% of current years taxable income but do not have an expiration. Arizona net operating loss carryforwards begin to expire in 2020. In addition there are federal net operating loss carryforwards is approximately $27.0 million from USHG related to pre-merger losses. We also have pre-merger federal capital loss carryforwards of approximately $520,000. |
Pre-USHG merger cumulative unused tax credits | $ 244,000 |
Minimum [Member] | |
Income Taxes (Details) [Line Items] | |
Federal research and development tax credits | 239,000 |
Maximum [Member] | |
Income Taxes (Details) [Line Items] | |
Federal research and development tax credits | $ 340,000 |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of federal income tax and effective income tax - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Schedule of federal income tax and effective income tax [Abstract] | ||
Taxes calculated at federal rate | $ (634,101) | $ (1,166,831) |
Taxes calculated at federal rate | 21.00% | 21.00% |
State income tax, net of federal benefit | $ (90,903) | $ (213,340) |
State income tax, net of federal benefit | 3.00% | 3.80% |
Change in Valuation Allowance | $ 463,091 | $ 1,203,231 |
Change in Valuation Allowance | (15.30%) | (21.70%) |
Expiration of tax attributes | $ 161,254 | $ 175,036 |
Expiration of tax attributes | (5.30%) | (3.10%) |
Prior period adjustment | $ (49,105) | |
Prior period adjustment | (1.60%) | 0.00% |
Permenant items | $ 149,764 | $ 1,904 |
Permenant items | (5.00%) | 0.00% |
Provision (benefit) for taxes | ||
Provision (benefit) for taxes | 0.00% | 0.00% |
Income Taxes (Details) - Sche_2
Income Taxes (Details) - Schedue of temporary differences tax assets - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred Tax Assets | ||
Accrued compensation | $ 1,380,955 | $ 740,442 |
Fixed assets | (70,474) | (9,095) |
Net Operating Loss Carryforwards and Credits | 14,378,365 | 14,494,408 |
Total Deferred Tax Assets | 15,561,529 | 15,225,755 |
Valuation allowance | (15,688,846) | (15,225,755) |
Net deferred tax / (liabilities) |
Income Taxes (Details) - Sche_3
Income Taxes (Details) - Schedule of unrecognized tax benefits attributable to losses and minimum tax credit carryforwards - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Schedule of unrecognized tax benefits attributable to losses and minimum tax credit carryforwards [Abstract] | ||
Balance, Beginning | $ 9,635,824 | $ 9,635,824 |
Balance, Ending | 9,635,824 | 9,635,824 |
Additions related to prior year tax positions | ||
Additions related to current year tax positions | ||
Reductions related to prior year tax positions and settlements |
Subsequent Event (Details)
Subsequent Event (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Mar. 31, 2021 | Feb. 28, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Subsequent Event (Details) [Line Items] | |||||
Number of shares issued (in shares) | shares | 158,000 | ||||
Common stock,shares issued | 190,529,320 | 206,569,062 | |||
Acquire applied optical sciences (in Dollars) | $ 500,000 | ||||
Subsequent events, description | In March 2021, we signed a five-year lease for a 13,000 square foot laboratory/office space here Tucson, Arizona. The lease term begins May 1, 2021 and ends on April 30, 2026. The base rent is $6.7626 per rentable square foot for year one, and escalates to $9.2009 in year two, $11.4806 in year three, $13.1740 in year four and $14.9306 in year five, plus certain operating expenses and taxes. | ||||
Strike price per share (in Dollars per share) | $ 0.0627 | $ 0.0632 | |||
Subsequent Event [Member] | |||||
Subsequent Event (Details) [Line Items] | |||||
Number of shares issued (in shares) | shares | 7,056,250 | ||||
Common stock pa value (in Dollars per share) | $ 1 | ||||
Common stock,shares issued | 0.32 | ||||
Strike price per share (in Dollars per share) | $ 0.07 | ||||
Primmisory Notes [member] | |||||
Subsequent Event (Details) [Line Items] | |||||
Acquire applied optical sciences (in Dollars) | $ 2,500,000 | ||||
Primmisory Notes [member] | Subsequent Event [Member] | |||||
Subsequent Event (Details) [Line Items] | |||||
Contract amount (in Dollars) | $ 45,000 | ||||
Non Affiliated Warrant [Member] | Subsequent Event [Member] | |||||
Subsequent Event (Details) [Line Items] | |||||
Number of shares issued (in shares) | shares | 500,000 | ||||
Restricted Stock Agreement | 75,000 | ||||
Non-affiliated Option Holder [Member] | Subsequent Event [Member] | |||||
Subsequent Event (Details) [Line Items] | |||||
Restricted Stock Agreement | 1,000,000 |