Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 01, 2019 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | INFINITE GROUP INC | |
Entity Central Index Key | 0000884650 | |
Document Type | 10-Q/A | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | true | |
Amendment Description | For the purpose of filing XBRL. | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Is Entity's Reporting Status Current? | No | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 29,061,883 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 |
BALANCE SHEETS (Unaudited)
BALANCE SHEETS (Unaudited) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Current Assets | ||
Cash | $ 32,167 | $ 29,716 |
Accounts receivable, net of allowances of $19,369 and $22,000 | 589,395 | 286,187 |
Prepaid expenses and other current assets | 74,956 | 2,906 |
Total current assets | 696,518 | 318,809 |
Right of Use Asset - Lease, net | 213,426 | 0 |
Property and equipment, net | 6,968 | 8,627 |
Deposits | 6,937 | 6,667 |
Total assets | 923,849 | 334,103 |
Current Liabilities | ||
Accounts payable | 295,847 | 367,536 |
Accrued payroll | 359,520 | 218,328 |
Accrued interest payable | 905,906 | 839,189 |
Accrued retirement | 251,829 | 244,423 |
Accrued expenses - other | 232,407 | 87,581 |
Operating lease liability - short-term | 72,957 | 0 |
Current maturities of long-term obligations | 950,000 | 686,000 |
Current maturities of long-term obligations - related parties | 538,775 | 34,350 |
Notes payable | 332,500 | 332,500 |
Notes payable - related parties | 62,000 | 102,000 |
Total current liabilities | 4,001,741 | 2,911,907 |
Long-term obligations: | ||
Notes payable - other | 485,251 | 744,335 |
Notes payable - related parties | 369,000 | 677,955 |
Operating lease liability - long-term | 141,801 | 0 |
Total liabilities | 4,997,793 | 4,334,197 |
Stockholders' deficiency: | ||
Common stock, $.001 par value, 60,000,000 shares authorized; 29,061,883 shares issued and outstanding | 29,061 | 29,061 |
Additional paid-in capital | 30,613,412 | 30,593,366 |
Accumulated deficit | (34,716,417) | (34,622,521) |
Total stockholders' deficiency | (4,073,944) | (4,000,094) |
Total liabilities and stockholders' deficiency | $ 923,849 | $ 334,103 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowances for accounts receivable | $ 19,369 | $ 22,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 29,061,883 | 29,061,883 |
Common stock, shares outstanding | 29,061,883 | 29,061,883 |
STATEMENTS OF OPERATIONS (Unaud
STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Sales | $ 1,819,699 | $ 1,570,342 | $ 5,286,141 | $ 4,666,562 |
Cost of sales | 1,197,315 | 1,005,542 | 3,386,526 | 3,063,893 |
Gross profit | 622,384 | 564,800 | 1,899,615 | 1,602,669 |
Costs and expenses: | ||||
General and administrative | 335,528 | 261,401 | 959,535 | 848,735 |
Selling | 311,647 | 223,367 | 822,307 | 677,677 |
Total costs and expenses | 647,175 | 484,768 | 1,781,842 | 1,526,412 |
Operating (loss) income | (24,791) | 80,032 | 117,773 | 76,257 |
Interest expense: | ||||
Related parties | (20,890) | (16,454) | (69,659) | (45,428) |
Other | (47,390) | (47,578) | (142,010) | (144,829) |
Total interest expense | (68,280) | (64,032) | (211,669) | (190,257) |
Net (loss) income | $ (93,071) | $ 16,000 | $ (93,896) | $ (114,000) |
Net loss per share - basic and diluted | $ .00 | $ 0 | $ .00 | $ .00 |
Weighted average shares outstanding - basic and diluted | 29,061,883 | 29,061,883 | 29,061,883 | 29,061,883 |
STATEMENTS OF CHANGES IN STOCKH
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY) - USD ($) | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2017 | 29,061,883 | |||
Beginning balance, amount at Dec. 31, 2017 | $ 29,061 | $ 30,591,896 | $ (34,659,521) | $ (4,038,564) |
Net income (loss) | (87,000) | (87,000) | ||
Ending balance, shares at Mar. 31, 2018 | 29,061,883 | |||
Ending balance, amount at Mar. 31, 2018 | $ 29,061 | 30,591,896 | (34,746,521) | (4,125,564) |
Beginning balance, shares at Dec. 31, 2017 | 29,061,883 | |||
Beginning balance, amount at Dec. 31, 2017 | $ 29,061 | 30,591,896 | (34,659,521) | (4,038,564) |
Net income (loss) | (114,000) | |||
Ending balance, shares at Sep. 30, 2018 | 29,061,883 | |||
Ending balance, amount at Sep. 30, 2018 | $ 29,061 | 30,591,896 | (34,773,521) | (4,152,564) |
Beginning balance, shares at Mar. 31, 2018 | 29,061,883 | |||
Beginning balance, amount at Mar. 31, 2018 | $ 29,061 | 30,591,896 | (34,746,521) | (4,125,564) |
Net income (loss) | (43,000) | (43,000) | ||
Ending balance, shares at Jun. 30, 2018 | 29,061,883 | |||
Ending balance, amount at Jun. 30, 2018 | $ 29,061 | 30,591,896 | (34,789,521) | (4,168,564) |
Net income (loss) | 16,000 | 16,000 | ||
Ending balance, shares at Sep. 30, 2018 | 29,061,883 | |||
Ending balance, amount at Sep. 30, 2018 | $ 29,061 | 30,591,896 | (34,773,521) | (4,152,564) |
Beginning balance, shares at Dec. 31, 2018 | 29,061,883 | |||
Beginning balance, amount at Dec. 31, 2018 | $ 29,061 | 30,593,366 | (34,622,521) | (4,000,094) |
Stock based compensation | 260 | 260 | ||
Net income (loss) | 35,036 | 35,036 | ||
Ending balance, shares at Mar. 31, 2019 | 29,061,883 | |||
Ending balance, amount at Mar. 31, 2019 | $ 29,061 | 30,593,626 | (34,587,485) | (3,964,798) |
Beginning balance, shares at Dec. 31, 2018 | 29,061,883 | |||
Beginning balance, amount at Dec. 31, 2018 | $ 29,061 | 30,593,366 | (34,622,521) | (4,000,094) |
Net income (loss) | (93,896) | |||
Ending balance, shares at Sep. 30, 2019 | 29,061,883 | |||
Ending balance, amount at Sep. 30, 2019 | $ 29,061 | 30,613,412 | (34,716,417) | (4,073,944) |
Beginning balance, shares at Mar. 31, 2019 | 29,061,883 | |||
Beginning balance, amount at Mar. 31, 2019 | $ 29,061 | 30,593,626 | (34,587,485) | (3,964,798) |
Stock based compensation | 14,250 | 14,250 | ||
Net income (loss) | (35,861) | (35,861) | ||
Ending balance, shares at Jun. 30, 2019 | 29,061,883 | |||
Ending balance, amount at Jun. 30, 2019 | $ 29,061 | 30,607,876 | (34,623,346) | (3,986,409) |
Stock based compensation | 5,536 | 5,536 | ||
Net income (loss) | (93,071) | (93,071) | ||
Ending balance, shares at Sep. 30, 2019 | 29,061,883 | |||
Ending balance, amount at Sep. 30, 2019 | $ 29,061 | $ 30,613,412 | $ (34,716,417) | $ (4,073,944) |
STATEMENTS OF CASH FLOWS (Unaud
STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (93,896) | $ (114,000) |
Adjustments to reconcile net loss to net cash used by operating activities: | ||
Stock based compensation | 20,046 | 0 |
Depreciation and amortization | 15,372 | 19,315 |
Bad debt recovery | 0 | (4,000) |
(Increase) decrease in assets: | ||
Accounts receivable | (303,208) | 208,050 |
Prepaid expenses and other assets | (72,320) | (6,124) |
Increase (decrease) in liabilities: | ||
Accounts payable | (71,689) | (512,377) |
Accrued expenses | 352,735 | 243,268 |
Accrued retirement | 7,406 | 7,117 |
Net cash used by operating activities | (145,554) | (158,751) |
Cash flows from investing activities: | ||
Purchase of property, plant and equipment | (1,945) | 0 |
Net cash used by investing activities | (1,945) | 0 |
Cash flows from financing activities: | ||
Proceeds from issuance of notes payable - related party | 200,000 | 90,000 |
Repayments of notes payable - related party | (50,050) | (1,340) |
Net cash provided by financing activities | 149,950 | 88,660 |
Net increase (decrease) in cash | 2,451 | (70,091) |
Cash - beginning of period | 29,716 | 73,734 |
Cash - end of period | 32,167 | 3,643 |
Supplemental Disclosures of Cash Flow Information: | ||
Cash payments for interest | $ 120,506 | $ 79,354 |
1. Basis of Presentation
1. Basis of Presentation | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying unaudited financial statements of Infinite Group, Inc. (“Infinite Group, Inc.” or the “Company”) included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (U.S.) ("GAAP") for interim financial information and with instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. The December 31, 2018 balance sheet has been derived from the audited financial statements at that date but does not include all disclosures required by GAAP. The accompanying unaudited financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the U.S. Securities and Exchange Commission (SEC). Results of operations for the nine months ended September 30, 2019 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2019. |
2. Management Plans - Capital R
2. Management Plans - Capital Resources | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Management Plans - Capital Resources | The Company reported net losses of $93,896 and $114,000 for the nine months ended September 30, 2019 and 2018, respectively, and stockholders’ deficiencies of $4,073,944 and $4,000,094 at September 30, 2019 and December 31, 2018, respectively. Current maturities of long-term obligations were approximately $1,490,000 and $720,000 at September 30, 2019 and December 31, 2018, respectively. We have a working capital deficiency of approximately $3,305,000 and $2,593,000 at September 30, 2019 and December 31, 2018, respectively. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern and this substantial doubt has not been alleviated. The Company's goal is to increase sales and generate cash flow from operations on a consistent basis. The Company uses a formal financial review and budgeting process as a tool for improvement that has aided expense reduction and internal performance. The Company’s business plans require improving the results of its operations in future periods. The Company believes the capital resources available under its factoring line of credit, cash from additional related party and third-party loans and cash generated by improving the results of its operations provide sources to fund its ongoing operations and to support the internal growth of the Company. Although the Company has no assurances, the Company believes that related parties, who have previously provided working capital, and third parties will continue to provide working capital loans on similar terms, as in the past, as may be necessary to fund its on-going operations for at least the next 12 months. If the Company experiences significant growth in its sales, the Company believes that this may require it to increase its financing line, finance additional accounts receivable, or obtain additional working capital from other sources to support its sales growth. |
3. Summary of Significant Accou
3. Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | There are several accounting policies that the Company believes are significant to the presentation of its financial statements. These policies require management to make complex or subjective judgments about matters that are inherently uncertain. Note 3 to the Company’s audited financial statements for the year ended December 31, 2018 presents a summary of significant accounting policies as included in the Company's Annual Report on Form 10-K as filed with the SEC. Reclassifications Fair Value of Financial Instruments Revenue - The Company’s total revenue recognized from contracts from customers was comprised of three major services: Managed support services, Cybersecurity Projects and software and Other IT consulting services. The categories depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. There were no material unsatisfied performance obligations at September 30, 2019 or 2018 for contracts with an expected original duration of more than one year. The following table summarizes the revenue recognized by the major services: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Managed support services $ 1,275,273 $ 1,224,138 $ 3,769,274 $ 3,657,509 Cybersecurity projects and software 406,926 295,138 1,089,778 865,449 Other IT consulting services 137,500 51,066 427,089 143,604 Total sales $ 1,819,699 $ 1,570,342 $ 5,286,141 $ 4,666,562 Managed support services Managed support services consist of revenue primarily from our subcontracts for services to its end clients, principally a major establishment of the U.S. Government for which we manage one of the nation’s largest physical and virtual Microsoft Windows environments. ● We generate revenue primarily from these subcontracts through fixed price service and support agreements. Revenues are earned and billed weekly and are generally paid within 45 days. The revenues are recognized at time of service. Cybersecurity projects and software Cybersecurity projects and software revenue includes the selling of licenses of Nodeware™ and third-party software, principally Webroot™ as well as performing cybersecurity assessments and testing. ● Nodeware™ and Webroot™ software offerings consist of fees generated from the use of the respective software by our customers. Revenue is recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Substantially all customers are billed in the month of the service and is cancellable upon notice per the respective agreements. Substantially all payments are electronically billed, and the billed amounts are paid to the Company instantaneously via an online payment platform. If payments are made in advance, revenues related to the term associated with our software licenses is recognized ratably over the contractual period. ● Some of our customers have the option to purchase additional subscription and support services at a stated price. These options generally do not provide a material right as they are priced at our standalone selling price. ● Cybersecurity assessments and testing services are considered distinct performance obligations when sold stand alone or with other products. These contracts generally have terms of one year or less. For substantially all these contracts, revenue is recognized when the specific performance obligation is satisfied. If the contract has multiple performance obligations, the revenue is recognized when the performance obligations are satisfied. Depending on the nature of the service, the amounts recognized are based on an allocation of the transaction price to each performance obligation based on a relative standalone selling price of the products sold. ● In substantially all agreements, a 50% to 75% down payment is required before work is initiated. Down payments received are deferred until revenue is recognized. Upon completion of performance obligation of service, payment terms are 30 days. Other IT consulting services Other IT consulting services consists of services such as project management and general IT consulting services. ● We generate revenue via fixed price service agreements. These are based on periodic billings of a fixed dollar amount for recurring services of a similar nature performed according to the contractual arrangements with clients. The revenues are recognized at time of service. Based on historical experience, the Company believes that collection is reasonably assured. During the nine months ended September 30, 2019, sales to one client, including sales under subcontracts for services to several entities, accounted for 63.1% of total sales (71.4% - 2018) and 32.6% of accounts receivable at September 30, 2019 (10.5% - December 31, 2018). Leases - December 31, 2018 Effect of Change January 1, 2019 September 30, 2019 Right of use asset – lease, net 0 265,825 265,825 213,426 Operating lease liability – short-term 0 68,848 68,848 72,957 Operating lease liability – long-term 0 196,977 196,977 141,801 |
4. Sale of Certain Accounts Rec
4. Sale of Certain Accounts Receivable | 9 Months Ended |
Sep. 30, 2019 | |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | |
Sale of Certain Accounts Receivable | The Company has available a financing line with a financial institution (the Purchaser), which enables the Company to sell accounts receivable to the Purchaser with full recourse against the Company. Pursuant to the provisions of FASB ASC 860, the Company reflects the transactions as a sale of assets and establishes an accounts receivable from the Purchaser for the retained amount less the costs and fees of the transaction and less any anticipated future loss in the value of the retained asset. The retained amount is 10% of the total accounts receivable invoice sold to the Purchaser. The fee is charged at prime plus 3.6% (effective rate of 8.60% at September 30, 2019) against the average daily outstanding balance of funds advanced. The estimated future loss reserve for each receivable included in the estimated value of the retained asset is based on the payment history of the accounts receivable customer and is included in the allowance for doubtful accounts, if any. As collateral, the Company granted the Purchaser a first priority interest in accounts receivable and a blanket lien, which may be junior to other creditors, on all other assets. The financing line provides the Company the ability to finance up to $2,000,000 of selected accounts receivable invoices, which includes a sublimit for one of the Company’s customers of $1,500,000. During the nine months ended September 30, 2019, the Company sold approximately $3,398,000 ($3,890,000 - September 30, 2018) of its accounts receivable to the Purchaser. As of September 30, 2019, approximately $306,400 ($363,000 - December 31, 2018) of these receivables remained outstanding. Additionally, as of September 30, 2019, the Company had approximately $188,000 available under the financing line with the financial institution ($0 - December 31, 2018). After deducting estimated fees, allowance for bad debts and advances from the Purchaser, the net receivable from the Purchaser amounted to approximately $31,000, at September 30, 2019 ($36,000 - December 31, 2018), and is included in accounts receivable in the accompanying balance sheets. There were no gains or losses on the sale of the accounts receivable because all were collected. The cost associated with the financing line totaled $38,382 for the nine months ended September 30, 2019 ($40,007 - September 30, 2018). These financing line fees are classified on the statements of operations as interest expense. |
5. Earnings Per Share
5. Earnings Per Share | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Basic earnings per share is based on the weighted average number of common shares outstanding during the periods presented. Diluted earnings per share is based on the weighted average number of common shares outstanding, as well as dilutive potential common shares which, in the Company’s case, comprise shares issuable under convertible notes payable and stock options. The treasury stock method is used to calculate dilutive shares, which reduces the gross number of dilutive shares by the number of shares purchasable from the proceeds of the options and warrants assumed to be exercised. In a loss period, the calculation for basic and diluted earnings per share is considered to be the same, as the impact of potential common shares is anti-dilutive. The following table sets forth the computation of basic and diluted loss per share for the nine months ended: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Numerator for basic and diluted net loss per share: Net (loss) income $ (93,071 ) $ 16,000 $ (93,896 ) $ (114,000 ) Denominator for basic and diluted net loss per share: Weighted average common shares outstanding 29,061,883 29,061,883 29,061,883 29,061,883 Basic and diluted net loss/ earnings per share $ .00 $ .00 $ .00 $ .00 Anti-dilutive shares excluded from net loss/earnings per share calculation 31,288,912 28,530,252 31,288,912 28,530,252 Certain common shares issuable under stock options and convertible notes payable have been omitted from the diluted net loss per share calculation because their inclusion is considered anti-dilutive because the exercise prices were greater than the average market price of the common shares or their inclusion would have been anti-dilutive. |
6. Notes Payable - Related Part
6. Notes Payable - Related Parties | 9 Months Ended |
Sep. 30, 2019 | |
Notes Payable [Abstract] | |
Notes Payable - Related Parties | On May 7, 2019, the Company entered into a note payable agreement for up to $500,000 with a related party. The note has an interest rate of 7.5% and is due on August 31, 2026. The Company borrowed $200,000 which remains outstanding. As consideration for providing this financing, the Company granted a stock option to purchase a total of 2,500,000 common shares at an exercise price of $.02 and recorded interest expense of $14,250 using the Black-Scholes option pricing model to determine the estimated fair value of the option. |
7. Stock Option Plans and Agree
7. Stock Option Plans and Agreements | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock Option Plans and Agreements | The Company has approved stock options plans and agreements covering up to an aggregate of 11,255,000 shares of common stock. Such options may be designated at the time of grant as either incentive stock options or nonqualified stock options. Stock based compensation consists of charges for stock option awards to employees, directors and consultants. On August 20, 2019, the Company’s board of directors approved the 2019 stock option plan, which grants options to purchase up to an aggregate of 1,500,000 common shares. As of September 30, 2019, 1,371,500 options to purchase shares remain unissued under the 2019 plan. Options issued to date are nonqualified since the Company has decided not to seek stockholder approval of the 2019 Plan. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. Options for 2,973,500 shares were granted for the nine months ended September 30, 2019. No options were granted for the nine months ended September 30, 2018. The following assumptions were used for the nine months ended September 30, 2019. Risk-free interest rate 1.38% - 2.55 % Expected dividend yield 0 % Expected stock price volatility 100 % Expected life of options 2.75 - 3.90 years The Company recorded expense for options issued to employees of $5,796 and related-party loan financing consideration of $14,250 for the nine months ended September 30, 2019 and $0 for the nine months ended September 30, 2018. At September 30, 2019, there was $0 of total unrecognized compensation cost related to non-vested options. No options vested during the nine months ended September 30, 2019. A summary of all stock option activity for the nine months ended September 30, 2019 follows: Number of Options Outstanding Weighted Average Exercise Price Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2018 7,920,000 $ .09 Granted 2,973,500 .02 Forfeited (938,000 ) .23 Expired (75,000 ) .17 Outstanding at September 30, 2019 9,880,500 $ .05 4.1 years $ 206,400 At September 30, 2019 - vested or expected to vest 9,880,500 $ .05 4.1 years $ 206,400 Exercisable 9,755,500 $ .05 4.1 years $ 202,300 |
8. Related Party Accounts Recei
8. Related Party Accounts Receivable and Accrued Interest Payable | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Accounts Receivable and Accrued Interest Payable | Accrued Interest Payable - Included in accrued interest payable is accrued interest payable to related parties of $150,360 at September 30, 2019 ($148,703 - December 31, 2018). |
3. Summary of Significant Acc_2
3. Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Reclassifications | Reclassifications |
Fair Value of Financial Instruments | Fair Value of Financial Instruments |
Revenue | Revenue - The Company’s total revenue recognized from contracts from customers was comprised of three major services: Managed support services, Cybersecurity Projects and software and Other IT consulting services. The categories depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. There were no material unsatisfied performance obligations at September 30, 2019 or 2018 for contracts with an expected original duration of more than one year. The following table summarizes the revenue recognized by the major services: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Managed support services $ 1,275,273 $ 1,224,138 $ 3,769,274 $ 3,657,509 Cybersecurity projects and software 406,926 295,138 1,089,778 865,449 Other IT consulting services 137,500 51,066 427,089 143,604 Total sales $ 1,819,699 $ 1,570,342 $ 5,286,141 $ 4,666,562 Managed support services Managed support services consist of revenue primarily from our subcontracts for services to its end clients, principally a major establishment of the U.S. Government for which we manage one of the nation’s largest physical and virtual Microsoft Windows environments. ● We generate revenue primarily from these subcontracts through fixed price service and support agreements. Revenues are earned and billed weekly and are generally paid within 45 days. The revenues are recognized at time of service. Cybersecurity projects and software Cybersecurity projects and software revenue includes the selling of licenses of Nodeware™ and third-party software, principally Webroot™ as well as performing cybersecurity assessments and testing. ● Nodeware™ and Webroot™ software offerings consist of fees generated from the use of the respective software by our customers. Revenue is recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Substantially all customers are billed in the month of the service and is cancellable upon notice per the respective agreements. Substantially all payments are electronically billed, and the billed amounts are paid to the Company instantaneously via an online payment platform. If payments are made in advance, revenues related to the term associated with our software licenses is recognized ratably over the contractual period. ● Some of our customers have the option to purchase additional subscription and support services at a stated price. These options generally do not provide a material right as they are priced at our standalone selling price. ● Cybersecurity assessments and testing services are considered distinct performance obligations when sold stand alone or with other products. These contracts generally have terms of one year or less. For substantially all these contracts, revenue is recognized when the specific performance obligation is satisfied. If the contract has multiple performance obligations, the revenue is recognized when the performance obligations are satisfied. Depending on the nature of the service, the amounts recognized are based on an allocation of the transaction price to each performance obligation based on a relative standalone selling price of the products sold. ● In substantially all agreements, a 50% to 75% down payment is required before work is initiated. Down payments received are deferred until revenue is recognized. Upon completion of performance obligation of service, payment terms are 30 days. Other IT consulting services Other IT consulting services consists of services such as project management and general IT consulting services. ● We generate revenue via fixed price service agreements. These are based on periodic billings of a fixed dollar amount for recurring services of a similar nature performed according to the contractual arrangements with clients. The revenues are recognized at time of service. Based on historical experience, the Company believes that collection is reasonably assured. During the nine months ended September 30, 2019, sales to one client, including sales under subcontracts for services to several entities, accounted for 63.1% of total sales (71.4% - 2018) and 32.6% of accounts receivable at September 30, 2019 (10.5% - December 31, 2018). |
Leases | Leases - December 31, 2018 Effect of Change January 1, 2019 September 30, 2019 Right of use asset – lease, net 0 265,825 265,825 213,426 Operating lease liability – short-term 0 68,848 68,848 72,957 Operating lease liability – long-term 0 196,977 196,977 141,801 |
3. Summary of Significant Acc_3
3. Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Disaggregation of revenue | Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Managed support services $ 1,275,273 $ 1,224,138 $ 3,769,274 $ 3,657,509 Cybersecurity projects and software 406,926 295,138 1,089,778 865,449 Other IT consulting services 137,500 51,066 427,089 143,604 Total sales $ 1,819,699 $ 1,570,342 $ 5,286,141 $ 4,666,562 |
Leases | December 31, 2018 Effect of Change January 1, 2019 September 30, 2019 Right of use asset – lease, net 0 265,825 265,825 213,426 Operating lease liability – short-term 0 68,848 68,848 72,957 Operating lease liability – long-term 0 196,977 196,977 141,801 |
5. Earnings Per Share (Tables)
5. Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share, basic and diluted | Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Numerator for basic and diluted net loss per share: Net (loss) income $ (93,071 ) $ 16,000 $ (93,896 ) $ (114,000 ) Denominator for basic and diluted net loss per share: Weighted average common shares outstanding 29,061,883 29,061,883 29,061,883 29,061,883 Basic and diluted net loss/ earnings per share $ .00 $ .00 $ .00 $ .00 Anti-dilutive shares excluded from net loss/earnings per share calculation 31,288,912 28,530,252 31,288,912 28,530,252 |
7. Stock Option Plans and Agr_2
7. Stock Option Plans and Agreements (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of share-based payment award, stock options, valuation assumptions | Risk-free interest rate 1.38% - 2.55 % Expected dividend yield 0 % Expected stock price volatility 100 % Expected life of options 2.75 - 3.90 years |
Schedule of share-based compensation, stock options, activity | Number of Options Outstanding Weighted Average Exercise Price Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2018 7,920,000 $ .09 Granted 2,973,500 .02 Forfeited (938,000 ) .23 Expired (75,000 ) .17 Outstanding at September 30, 2019 9,880,500 $ .05 4.1 years $ 206,400 At September 30, 2019 - vested or expected to vest 9,880,500 $ .05 4.1 years $ 206,400 Exercisable 9,755,500 $ .05 4.1 years $ 202,300 |
2. Management Plans - Capital_2
2. Management Plans - Capital Resources (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||
Net income (loss) | $ (93,071) | $ (35,861) | $ 35,036 | $ 16,000 | $ (43,000) | $ (87,000) | $ (93,896) | $ (114,000) | ||
Stockholders' deficiency | $ (4,073,944) | $ (3,986,409) | $ (3,964,798) | $ (4,152,564) | $ (4,168,564) | $ (4,125,564) | $ (4,073,944) | $ (4,152,564) | $ (4,000,094) | $ (4,038,564) |
3. Summary of Significant Acc_4
3. Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Total sales | $ 1,819,699 | $ 1,570,342 | $ 5,286,141 | $ 4,666,562 |
Managed Support Services | ||||
Total sales | 1,275,273 | 1,224,138 | 3,769,274 | 3,657,509 |
Cybersecurity Projects and Software | ||||
Total sales | 406,926 | 295,138 | 1,089,778 | 865,449 |
Other IT Consulting Services | ||||
Total sales | $ 137,500 | $ 51,066 | $ 427,089 | $ 143,604 |
3. Summary of Significant Acc_5
3. Summary of Significant Accounting Policies (Details 1) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Right of use asset - lease, net | $ 213,426 | $ 0 |
Operating lease liability - short-term | 72,957 | 0 |
Operating lease liability - long-term | $ 141,801 | 0 |
Restatement Adjustment | ||
Right of use asset - lease, net | 265,825 | |
Operating lease liability - short-term | 68,848 | |
Operating lease liability - long-term | 196,977 | |
As Restated | ||
Right of use asset - lease, net | 265,825 | |
Operating lease liability - short-term | 68,848 | |
Operating lease liability - long-term | $ 196,977 |
5. Earnings Per Share (Details)
5. Earnings Per Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings Per Share [Abstract] | ||||||||
Net loss | $ (93,071) | $ (35,861) | $ 35,036 | $ 16,000 | $ (43,000) | $ (87,000) | $ (93,896) | $ (114,000) |
Weighted average common shares outstanding | 29,061,883 | 29,061,883 | 29,061,883 | 29,061,883 | ||||
Basic and diluted net loss per share | $ .00 | $ 0 | $ .00 | $ .00 | ||||
Anti-dilutive shares excluded from net loss per share calculation | 31,288,912 | 28,530,252 | 31,288,912 | 28,530,252 |
7. Stock Option Plans and Agr_3
7. Stock Option Plans and Agreements (Details) | 9 Months Ended |
Sep. 30, 2019 | |
Expected dividend yield | 0.00% |
Expected stock price volatility | 100.00% |
Minimum | |
Risk-free interest rate | 1.38% |
Expected life of options | 2 years 9 months |
Maximum | |
Risk-free interest rate | 2.55% |
Expected life of options | 3 years 10 months 24 days |
7. Stock Option Plans and Agr_4
7. Stock Option Plans and Agreements (Details 1) | 9 Months Ended |
Sep. 30, 2019USD ($)$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Number of options outstanding, beginning | shares | 7,920,000 |
Number of options granted | shares | 2,973,500 |
Number of options forfeited | shares | (938,000) |
Number of options expired | shares | (75,000) |
Number of options outstanding, ending | shares | 9,880,500 |
Number of options vested or expected to vest | shares | 9,880,500 |
Number of options exercisable | shares | 9,755,500 |
Weighted average exercise price outstanding, beginning | $ / shares | $ .09 |
Weighted average exercise price granted | $ / shares | .02 |
Weighted average exercise price forfeited | $ / shares | .23 |
Weighted average exercise price expired | $ / shares | .17 |
Weighted average exercise price outstanding, ending | $ / shares | .05 |
Weighted average exercise price vested or expected to vest | $ / shares | .05 |
Weighted average exercise price exercisable | $ / shares | $ .05 |
Weighted-average remaining contractual term outstanding | 4 years 1 month 6 days |
Weighted-average remaining contractual term vested or expected to vest | 4 years 1 month 6 days |
Weighted-average remaining contractual term exercisable | 4 years 1 month 6 days |
Aggregate intrinsic value outstanding | $ | $ 206,400 |
Aggregate intrinsic value vested or expected to vest | $ | 206,400 |
Aggregate intrinsic value exercisable | $ | $ 202,300 |
8. Related Party Accounts Rec_2
8. Related Party Accounts Receivable and Accrued Interest Payable (Details Narrative) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Related Party Transactions [Abstract] | ||
Accrued interest payable, related parties, current | $ 150,360 | $ 148,703 |