Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 31, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Entity Registrant Name | Infinite Group, Inc. | ||
Entity Central Index Key | 0000884650 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Dec. 31, 2022 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2022 | ||
Entity Common Stock Shares Outstanding | 476,608 | ||
Entity Public Float | $ 5,034,000 | ||
Document Annual Report | true | ||
Entity File Number | 0-21816 | ||
Entity Incorporation State Country Code | DE | ||
Entity Tax Identification Number | 52-1490422 | ||
Entity Address Address Line 1 | 175 Sully’s Trail | ||
Entity Address Address Line 2 | Suite 202 | ||
Entity Address City Or Town | Pittsford | ||
Entity Address State Or Province | NY | ||
Entity Address Postal Zip Code | 14534 | ||
City Area Code | 585 | ||
Icfr Auditor Attestation Flag | false | ||
Local Phone Number | 385-0610 | ||
Entity Interactive Data Current | Yes | ||
Auditor Firm Id | 317 | ||
Auditor Location | Rochester, New York | ||
Auditor Name | Freed Maxick |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash | $ 23,187 | $ 99,432 |
Accounts receivable, net of allowances of $36,710 as of December 31, 2022 and $ 9,710 as of December 31, 2021, respectively. | 406,005 | 727,297 |
Prepaid expenses and other current assets | 144,218 | 218,821 |
Total current assets | 573,410 | 1,045,550 |
Right of Use Asset Operating Lease, net | 645,095 | 41,490 |
Property and equipment, net | 19,996 | 41,138 |
Software, net | 417,325 | 417,650 |
Deposits | 10,144 | 6,937 |
Total assets | 1,665,970 | 1,552,765 |
Current liabilities: | ||
Accounts payable | 1,687,579 | 536,863 |
Accrued payroll | 386,289 | 425,839 |
Accrued interest payable | 783,581 | 594,241 |
Accrued retirement | 286,605 | 275,422 |
Deferred revenue | 550,523 | 497,734 |
Accrued expenses other and other current liabilities | 138,639 | 167,310 |
Operating lease liability - Short-term | 76,826 | 42,347 |
Current maturities of long-term obligations | 515,000 | 765,000 |
Current maturities of long-term obligations - related parties | 385,000 | 190,000 |
Notes payable, net | 1,572,857 | 383,824 |
Notes payable - related parties | 229,000 | 229,000 |
Total current liabilities | 6,611,899 | 4,107,580 |
Other | 458,849 | 458,309 |
Related parties | 886,876 | 1,084,765 |
Operating Lease liability - Long-term | 572,560 | 0 |
Total liabilities | 8,530,184 | 5,650,654 |
Stockholders' deficiency: | ||
Common stock, $0.001 par value, 60,000,000 shares authorized; 470,093 and 436,012 shares issued and outstanding as of December 31, 2022 and 2021, respectively. | 470 | 436 |
Additional paid-in capital | 32,164,334 | 31,369,036 |
Accumulated deficit | (39,029,018) | (35,467,361) |
Total stockholders' deficiency | (6,864,214) | (4,097,889) |
Total liabilities and stockholders' deficiency | $ 1,665,970 | $ 1,552,765 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
BALANCE SHEETS | ||
Allowances for accounts receivable | $ 36,710 | $ 9,710 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 470,093 | 436,012 |
Common stock, shares outstanding | 470,093 | 436,012 |
STATEMENTS OF OPERATIONS (Unaud
STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
STATEMENTS OF OPERATIONS (Unaudited) | ||
Revenue | $ 7,003,404 | $ 7,224,242 |
Cost of revenue | 4,262,355 | 4,489,306 |
Gross profit | 2,741,049 | 2,734,936 |
Costs and expenses: | ||
General and administrative | 2,488,937 | 2,159,378 |
Selling | 2,591,623 | 1,983,127 |
Total costs and expenses | 5,080,560 | 4,142,505 |
Operating income (loss) | (2,339,511) | (1,407,569) |
Other income (loss) | (60,973) | (120,505) |
Interest income | 109 | 37 |
Interest expense: | ||
Related parties | (91,944) | (72,455) |
Other | (1,069,338) | (209,331) |
Total interest expense | (1,161,282) | (281,786) |
Total other income (expense) | (1,222,146) | (161,244) |
Net loss | $ (3,561,657) | $ (1,568,813) |
Net loss per share - basic and diluted | $ (7.95) | $ (3.91) |
Weighted average shares outstanding - basic | 447,870 | 401,637 |
Weighted average shares outstanding - diluted | 447,870 | 401,637 |
STATEMENTS OF CHANGES IN STOCKH
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY (Unaudited) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Balance, amount | $ (4,097,889) | $ (3,105,770) |
Issuance of common stock, amount | 158,125 | |
Exercise of stock options, amount | 17,000 | 98,930 |
Stock based compensation, amount | 143,181 | 117,587 |
Warrants issued, amount | 635,151 | 202,052 |
Net loss, amount | (3,561,657) | (1,568,813) |
Cashless exercise of warrants, amount | 0 | |
Split Adjustments, amount | 0 | |
Balance, amount | $ (6,864,214) | $ (4,097,889) |
Common Stock | ||
Balance, shares | 436,012 | 387,492 |
Balance, amount | $ 436 | $ 387 |
Issuance of common stock, shares | 16,668 | |
Issuance of common stock, amount | $ 17 | |
Exercise of stock options, shares | 5,668 | 31,852 |
Exercise of stock options, amount | $ 6 | $ 32 |
Stock based compensation, shares | 0 | 0 |
Stock based compensation, amount | $ 0 | $ 0 |
Warrants issued, shares | 0 | 0 |
Warrants issued, amount | $ 0 | $ 0 |
Net loss, shares | 0 | 0 |
Net loss, amount | $ 0 | $ 0 |
Cashless exercise of warrants, shares | 26,894 | |
Cashless exercise of warrants, amount | $ 27 | |
Split Adjustments, shares | 1,519 | |
Split Adjustments, amount | $ 1 | |
Balance, shares | 470,093 | 436,012 |
Balance, amount | $ 470 | $ 436 |
Additional Paid-In Capital | ||
Balance, amount | 31,369,036 | 30,792,391 |
Issuance of common stock, amount | 158,108 | |
Exercise of stock options, amount | 16,994 | 98,898 |
Stock based compensation, amount | 143,181 | 117,587 |
Warrants issued, amount | 635,151 | 202,052 |
Net loss, amount | 0 | 0 |
Cashless exercise of warrants, amount | (27) | |
Split Adjustments, amount | (1) | |
Balance, amount | 32,164,334 | 31,369,036 |
Accumulated Deficit | ||
Balance, amount | (35,467,361) | (33,898,548) |
Issuance of common stock, amount | 0 | |
Exercise of stock options, amount | 0 | 0 |
Stock based compensation, amount | 0 | 0 |
Warrants issued, amount | 0 | 0 |
Net loss, amount | (3,561,657) | (1,568,813) |
Cashless exercise of warrants, amount | 0 | |
Split Adjustments, amount | 0 | |
Balance, amount | $ (39,029,018) | $ (35,467,361) |
STATEMENTS OF CASH FLOWS (Unaud
STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (3,561,657) | $ (1,568,813) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Stock based compensation | 143,181 | 117,587 |
Depreciation and amortization | 240,923 | 186,379 |
Amortization of debt discount | 637,879 | 51,891 |
Bad debt expense | 27,000 | 9,000 |
Forgiveness of note payable and interest | 0 | (120,505) |
Restructure of short term debt and interest | 60,973 | 0 |
(Increase) decrease in assets: | ||
Accounts receivable | (89,180) | 217,529 |
Prepaid expenses and other assets | 71,396 | (64,213) |
Increase (decrease) in liabilities: | ||
Accounts payable | 1,150,716 | 193,790 |
Deferred revenue | 52,789 | 177,692 |
Accrued expenses | 204,660 | 244,099 |
Accrued retirement | 11,183 | 10,747 |
Net cash used by operating activities | (1,050,137) | (544,817) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (969) | (13,506) |
Capitalization of software development costs | (215,054) | (229,528) |
Net cash used by investing activities | (216,023) | (243,034) |
Cash flows from financing activities: | ||
Proceeds from notes payable | 1,737,552 | 403,200 |
Debt issuance costs | (242,297) | (25,160) |
Proceeds from notes payable - related parties | 0 | 578,000 |
Repayment of notes payable - short-term | (322,340) | 0 |
Proceeds from the exercise of common stock options | 17,000 | 98,930 |
Repayment of long-term obligations | 0 | (200,000) |
Net cash provided by financing activities | 1,189,915 | 854,970 |
Net (decrease) increase in cash | (76,245) | 67,119 |
Cash - beginning of period | 99,432 | 32,313 |
Cash - end of period | 23,187 | 99,432 |
Supplemental Disclosures of Cash Flow Information: | ||
Cash payments for interest | 269,777 | 84,203 |
Non-cash investing and financing activities: | ||
Warrant issued in conjunction with debts | 635,151 | 202,052 |
Settlement of accounts receivable, notes payable, and accrued interest | 322,500 | 0 |
Common stock issued for prepaid consulting agreement | 0 | 58,125 |
Right of use asset operating lease and lease liability | $ 691,010 | $ 0 |
BASIS OF PRESENTATION AND BUSIN
BASIS OF PRESENTATION AND BUSINESS | 12 Months Ended |
Dec. 31, 2022 | |
BASIS OF PRESENTATION AND BUSINESS | |
BASIS OF PRESENTATION & BUSINESS | NOTE 1. - BASIS OF PRESENTATION & BUSINESS The accompanying financial statements consist of the financial statements of Infinite Group, Inc. (the Company). The Company operates in one segment, the field of information technology (IT) consulting services, with all operations based in the United States. The primary consulting services are in the cybersecurity industry. There were no significant sales from customers in foreign countries during 2022 and 2021. All assets are located in the United States. |
MANAGEMENT PLANS
MANAGEMENT PLANS | 12 Months Ended |
Dec. 31, 2022 | |
MANAGEMENT PLANS | |
MANAGEMENT PLANS | NOTE 2. - MANAGEMENT PLANS The Company reported operating loss of $2,339,511 in 2022 and operating loss of $1,407,569 in 2021, net loss of $3,561,657 in 2022 and net loss of $1,568,813 in 2021, and stockholders’ deficiencies of $6,864,214 and $4,097,889 at December 31, 2022 and 2021, respectively. The Company has a working capital deficit of approximately $6.0 million at December 31, 2022. These factors raise initial doubt about the entities ability to continue as a going concern. The Company’s mission is to drive shareholder value by developing and bringing to market automated, cost effective, and innovative cybersecurity technologies. The Company’s strategy is to build its business by designing, developing, and marketing IT security-based products and solutions that fill technology gaps in cybersecurity. The Company’s goal is to increase sales and generate cash flow from operations on a consistent basis. The Company’s business plans require improving the results of its operations in future periods. The Company has renegotiated the terms of some certain obligations, using operational cash flow to pay down balances and extending terms, and provided financing with the issuance of new loans. The Company has applied for and expects approval of its ERTC application, plans to issue stock, restructure certain debt and anticipates significant growth of business. During the first quarter of 2022, the Company filed an S-1 for a public offering of $15 million of common stock and warrants, which was expected to be used for the Pratum acquisition and working capital needs. The public offering did not occur. On June 15, 2022, the acquisition agreement was terminated, and the transaction did not close. The Company believes the capital resources generated by the improving results of its operations as well as cash available under its factoring line of credit and from additional related parties and third-party loans, if needed, provide sources to fund its ongoing operations and to support the internal growth of the Company. The Company may need to extend existing debt agreements in order to provide resources for other purposes. 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. The Company plans to continue to evaluate alternatives which may include continuing to renegotiate the terms of other notes, seeking conversion of the notes to shares of common stock and seeking funds to repay the notes. The Company continues to evaluate repayment of our remaining notes payable based on its cash flow. As a result, there is substantial doubt about the Company’s ability to continue as a going concern within one year of issuance of the financial statements. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounts Receivable Credit is granted to substantially all customers throughout the United States. The Company carries its accounts receivable at invoice amount, less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts, based on a history of past write-offs and collections and current credit conditions. The Company’s policy is to not accrue interest on past due receivables. Management determined that an allowance of $36,710 for doubtful accounts was reasonably stated at December 31, 2022 ($9,710 – 2021). Concentration of Credit Risk - Loan Origination Fees - Sale of Certain Accounts Receivable - These transactions qualify for a sale of assets since (1) the Company has transferred all of its right, title and interest in the selected accounts receivable invoices to the financial institution, (2) the Purchaser may pledge, sell or transfer the selected accounts receivable invoices, and (3) the Company has no effective control over the selected accounts receivable invoices since it is not entitled to or obligated to repurchase or redeem the invoices before their maturity and it does not have the ability to unilaterally cause the Purchaser to return the invoices. Under FASB ASC 860, after a transfer of financial assets, an entity recognizes the financial and servicing assets it controls and the liabilities it has incurred, derecognizes financial assets when control has been surrendered, and derecognizes liabilities when extinguished. 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 of the transaction and less any anticipated future loss in the value of the retained asset. The retained amount is equal to 10% of the total accounts receivable invoice sold to the Purchaser. The fee is charged at prime plus 3.6% (effective rate of 11.1% at December 31, 2022) 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 year ended December 31, 2022, the Company sold approximately $3,972,700 ($3,630,000 - 2021) of its accounts receivable to the Purchaser. As of December 31, 2022, approximately $228,000 ($148,000 - 2021) of these receivables remained outstanding. Additionally, as of December 31, 2022, the Company had $144,000 available under the financing line with the financial institution ($66,000 - 2021). After deducting estimated fees and advances from the Purchaser, the net receivable from the Purchaser amounted to $22,760 at December 31, 2022 ($14,816 - 2021) and is included in accounts receivable in the accompanying balance sheets as of that date. There were no gains or losses on the sale of the accounts receivable because all were collected. The cost associated with the financing line was approximately $52,200 for the year ended December 31, 2022 ($34,200 - 2021). These financing line fees are classified on the statements of operations as interest expense. Property and Equipment - Capitalization of Software for Resale - Accounting for the Impairment or Disposal of Long-Lived Assets - Revenue Recognition - The Company sells licenses of Nodeware and third-party software, principally Webroot. The majority of customers are invoiced monthly at fixed rates for license fees and revenue is recognized over time. The Company’s total revenue recognized from contracts from customers was comprised of two major services in 2022, down from three major sources in 2021. Managed support services and Cybersecurity projects including software, continue to constitute our major revenue sources for 2022, while Other IT consulting services are no longer a major source of revenue. 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 December 31, 2022 or 2021 for contracts with an expected original duration of more than one year. The following table summarizes the revenue recognized by the major services: Years Ended December 31, 2022 2021 Managed support services $ 4,442,236 $ 4,325,067 Cybersecurity projects and software 2,561,168 2,780,175 Other IT consulting services 0 119,000 Total sales $ 7,003,404 $ 7,224,242 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. Cyber security projects and software Cyber security projects and software revenue includes the selling of licenses of Nodeware® and third-party software, principally Webroot™ as well as performing cybersecurity assessments, testing and consulting as a CISO (Chief Information Security Officer). · 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, testing and CISO 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 either 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 Cybersecurity agreements, a 50% to 75% down payment is required before work is initiated. Down payments received are deferred until revenue is recognized. For the year ended December 31, 2022, we recognized revenue of approximately $498,000 that was included in the deferred revenue liability balance at the beginning of the period presented. Deferred revenue that will be realized during the succeeding 12-month period is approximately $540,000. Other IT consulting services Other IT consulting services consists of services such as project management and general IT consulting services. We terminated this service in 2021. · We generated 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. During 2022, sales to one client, including sales under subcontracts for services to several entities, accounted for 63.4% of total sales (59.6% - 2021) and 26.5% of accounts receivable at December 31, 2022 (15.6% - 2021). Stock Options - Income Taxes - The Company periodically reviews tax positions taken to determine if it is more likely than not that the position would be sustained upon examination. The Company did not have any material unrecognized tax benefit at December 31, 2022 or 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2022 and 2021, the Company recognized no interest and penalties. The Company files U.S. federal tax returns and tax returns in various states. The tax years 2018 through 2022 remain open to examination by the taxing jurisdictions to which the Company is subject. Fair Value of Financial Instruments - Level 1 uses observable inputs such as quoted prices in active markets; Level 2 uses inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3 is defined as unobservable inputs in which little or no market data exist and requires the Company to develop its own assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The carrying amounts of cash, accounts receivable and accounts payable and accrued expenses are reasonable estimates of their fair value due to their short maturity. The carrying amount of the Company’s term debt and notes payable approximates fair value because the effective yields on these obligations, which include contractual interest rates, taken together with other features such as concurrent issuance of warrants, are comparable to rates of returns for instruments of similar credit risk. Earnings Per Share - The following table sets forth the computation of basic and diluted loss per share as of December 31, 2022 and 2021: Years Ended December 31, Numerator for basic and diluted net income per share: 2022 2021 Net income (loss) $ (3,561,657 ) $ (1,568,813 ) Basic and diluted net income (loss) per share $ (7.95 ) $ (3.91 ) Weighted average common shares outstanding Basic shares 447,870 401,637 Diluted shares 447,870 401,637 Anti-dilutive shares excluded from net income (loss) per share 415,534 301,651 Certain common shares issuable under stock options and convertible notes payable have been omitted from the diluted net income (loss) per share calculation because their inclusion is considered anti-dilutive because the exercise or conversion prices were greater than the average market price of the common shares or their inclusion would have been anti-dilutive. Reclassifications Use of Estimates - Leases The Company recognizes a liability for their lease obligations and a corresponding right-of-use asset, initially measured at the present value of the lease payments. Subsequent accounting depends on whether the agreement is deemed to be a financing or operating lease. For operating leases, a lessee recognizes its total lease expense as an operating expense over the lease term. Assets and liabilities are presented and disclosed separately, and the liabilities must be classified appropriately as current and noncurrent. Recently Adopted Accounting Guidance Effective January 1, 2021, the Company adopted Accounting Standards Update (“ASU”) 2019-12, “Simplifying the Accounting for Income Taxes (Topic 740)”. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. Adoption of the new standard did not materially impact the Company’s consolidated financial statements. Recent Accounting Guidance Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments”, which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This guidance is effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. The Company is currently assessing the impact that adopting this new accounting standard will have on our consolidated financial statements. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 4. - PROPERTY AND EQUIPMENT Property and equipment consists of: Depreciable December 31, Lives 2022 2021 Software 3 years $ 72,834 $ 72,834 Equipment 3 to 10 years 156,603 155,635 Furniture and fixtures 5 to 7 years 17,735 17,735 247,172 246,204 Accumulated depreciation (227,176 ) (205,066 ) $ 19,996 $ 41,138 Depreciation expense was $22,110 and $20,567 for the years ended December 31, 2022 and 2021, respectively. |
NOTES PAYABLE - CURRENT
NOTES PAYABLE - CURRENT | 12 Months Ended |
Dec. 31, 2022 | |
NOTES PAYABLE - CURRENT | |
NOTES PAYABLE - CURRENT | NOTE 5. - NOTES PAYABLE - CURRENT Notes payable consist of: December 31, 2022 2021 Demand note payable, 10%, secured by software (A) $ 12,500 $ 12,500 Convertible promissory note, 8%, (B) 240,902 448,000 Convertible promissory note, 8%, (C) 370,000 0 Convertible promissory note, 8%, (D) 262,453 0 Convertible promissory note, 8%, (E) 355,000 0 Convertible promissory note, 8%, (F) 566,000 0 Financing arrangement on certain accounts receivable (G) 75,838 0 Convertible notes payable, 6% (H) 150,000 150,000 $ 2,032,693 $ 610,500 Less: Deferred financing costs (C,D,E,F) 112,000 58,300 Debt discounts - warrants (C,D,E,F) 347,836 168,377 $ 1,572,857 $ 383,823 (A) Demand Note payable, 10%, secured by Software (B) Convertible promissory note, 8%, due November 3, 2022 (C) Convertible promissory note, 8%, due February 15, 2023 (D) Convertible promissory note, 8%, due April 12, 2023 (E) Convertible promissory note, 8%, due May 26, 2023 (F) Convertible promissory note, 8%, due November 22, 2023 (G) Financing arrangement on certain accounts receivable (H) Convertible notes payable, 6%, maturity date of December 31, 2016 - Notes payable - related parties consist of: December 31, 2022 2021 Demand notes payable to director, 6%, unsecured $ 130,000 $ 130,000 Demand note payable to employee, 6% unsecured 50,000 50,000 Demand notes payable to officer and director, 6%, unsecured 37,000 37,000 Demand note payable to officer and director, 6%, unsecured 12,000 12,000 $ 229,000 $ 229,000 |
LONG-TERM OBLIGATIONS
LONG-TERM OBLIGATIONS | 12 Months Ended |
Dec. 31, 2022 | |
NOTES PAYABLE - CURRENT | |
LONG-TERM OBLIGATIONS | NOTE 6. - LONG-TERM OBLIGATIONS Notes Payable - Other - December 31, 2022 2021 2016 note payable, 6%, unsecured, due December 31, 2021 (A) $ 0 $ 500,000 2022 note payable, 10%, unsecured, due September 30, 2023 (B) 250,000 0 Note payable, 10%, secured, due January 1, 2018 (C) 265,000 265,000 Convertible term note payable,12%, secured, due January 1, 2024 (D) 175,000 175,000 2020 note payable, 6%, unsecured, due August 24, 2024 (E) 166,473 166,473 Convertible term note payable,7%, secured, due January 1, 2024 (F) 100,000 100,000 Convertible notes payable, 6%, due January 1, 2024 (G) 9,000 9,000 Accrued interest due after 2021(H) 8,376 7,836 973,849 1,223,309 Less: current maturities 515,000 765,000 $ 458,849 $ 458,309 (A) 2016 note payable, 6%, unsecured, due December 31, 2021 - (B) 2022 note payable, 10%, unsecured, due September 30, 2023 - ( ) Convertible term note payable, 12%, secured, due January 1, 2024 - (E) 2020 note payable, 6%, unsecured, due August 24, 2024 ( ) Convertible term note payable, 7%, secured, due January 1, 2024 (G ) Convertible notes payable, 6%, due January 1, 2024 - (H) Accrued interest due after 2021 – Notes Payable - Related Parties Notes payable - related parties consist of: December 31, 2022 2021 Note payable, up to $500,000, 7.5%, due August 31, 2026 (A) $ 499,000 $ 499,000 2020 Note payable, 6%, due January 1, 2024 (B) 328,000 328,000 Convertible notes payable, 6% (C) 146,300 146,300 Convertible note payable, 7%, due June 30, 2023 (D) 25,000 25,000 Note payable, $100,000 line of credit, 6%, unsecured (E) 90,000 90,000 Note payable, $75,000 line of credit, 6%, unsecured (F) 70,000 70,000 Accrued interest due after 2022 (G) 113,576 116,465 $ 1,271,876 $ 1,274,765 Less current maturities 385,000 190,000 $ 886,876 $ 1,084,765 (A) Note payable of up to $500,000, 7.5%, due August 31, 2026 - (B) 2020 Note payable, 6%, due January 1, 2024 - (C ) Convertible notes payable, 6% - st st The Company executed collateral security agreements with the note holders providing for a subordinate security interest in all the Company’s assets. Generally, upon notice, prior to the note maturity date, the Company can prepay all or a portion of the outstanding notes. (D) Convertible note payable, 7%, due June 30, 2023 (E) Note payable, $100,000 line of credit, 6%, unsecured (F) Note payable, $75,000 line of credit, 6%, unsecured (G) Accrued interest due after 2023 Long-Term Obligations As of December 31, 2022, minimum future annual payments of long-term obligations and amortization of deferred financing costs are as follows: Annual Annual Payments Amortization Net Due Prior to 2023 $ 1,111,083 $ 0 $ 1,111,083 2023 2,033,930 459,884 1,574,046 2024 863,453 0 863,453 2025 0 0 0 2026 499,000 0 499,000 Total long-term obligations $ 4,507,466 $ 459,884 $ 4,047,582 |
STOCK AND STOCK OPTION PLANS
STOCK AND STOCK OPTION PLANS | 12 Months Ended |
Dec. 31, 2022 | |
STOCK AND STOCK OPTION PLANS | |
STOCK AND STOCK OPTION PLANS | NOTE 7. - STOCK AND STOCK OPTION PLANS Preferred Stock - 2005 Plan - 2009 Plan - 2019 Plan - 2020 Plan - 2021 Plan – |
STOCK OPTION AGREEMENTS AND TRA
STOCK OPTION AGREEMENTS AND TRANSACTIONS | 12 Months Ended |
Dec. 31, 2022 | |
STOCK AND STOCK OPTION PLANS | |
STOCK OPTION AGREEMENTS AND TRANSACTIONS | NOTE 8. - STOCK OPTION AGREEMENTS AND TRANSACTIONS The Company grants stock options to its key employees and independent service providers as it deems appropriate. Most options expire from five to ten years after the grant date. Option Agreements - On April 6, 2021, the Company granted a stock option to purchase a total of 2,667 common shares at an exercise price of $14.438 per share to a former executive of the Company who consults with the Company. The individual forfeited an option grant of 6,307 common shares from the 2009 Plan. On April 19, 2021, the Company issued 10,000 performance-based stock options at $18.375 per share to an executive of the Company. Certain revenue targets must be made to grant the options in three tranches of 3,333, 3,333, and 3,334 shares each. The unrecognized compensation expense for these options is approximately $135,800 at December 31, 2021, and has been fully recognized as of December 31, 2022. The remaining stock options issued during the year ended December 31, 2021 included in the table below relate to options issued to employees as compensation expense. All stock options issued in 2022 were issued to employees as compensation expense. On July 29, 2022, an executive officer exercised 5,334 options at a price of $3.00 per share. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model based on the following assumptions. Volatility is based on the Company’s historical volatility. The expected life of the options was determined using the simplified method for plain vanilla options as stated in FASB ASC 718 to improve the accuracy of this assumption while simplifying record keeping requirements until more detailed information about the Company’s exercise behavior is available. The risk-free rate for the life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The following assumptions were used for the years ended December 31, 2022 and 2021 2022 2021 Risk free interest rate 1.26% to 3.35% 0.16% to 0.64% Expected dividend yield 0 % 0 % Expected stock price volatility 110% to 130% 100% to 140% Expected life of options 2.75 years 1.25 to 5.25 years The following is a summary of stock option activity, including qualified and non-qualified options for the years ended December 31, 2021 and 2022 Number of Weighted Remaining Aggregate Options Average Contractual Intrinsic Outstanding Exercise Price Term Value Outstanding at December 31, 2020 165,768 $ 3.98 Granted 23,429 $ 15.98 Exercised (31,858 ) $ 2.78 Expired (600 ) $ 7.13 Forfeited (13,312 ) $ 7.20 Outstanding at December 31, 2021 143,427 $ 5.85 2.8 years 289,700 Granted 1,403 $ 9.48 Exercised (5,668 ) $ 3.00 Expired (7,373 ) $ 4.87 Outstanding at December 31, 2022 131,789 $ 6.05 Vested or expected to vest at December 31, 2022 131,789 $ 6.05 2.8 years 289,700 Exercisable at December 31, 2022 131,655 $ 6.04 2.8 years 289,700 At December 31, 2022, there was approximately $1,428 of total unrecognized compensation cost related to outstanding non-vested options. The balance was $135,800 at December 31, 2021. The weighted average fair value of options granted was $9.48 and $15.98 per share for the years ended December 31, 2022 and 2021, respectively. The exercise price for all options granted equaled or exceeded the market value of the Company’s common stock on the date of grant. |
WARRANTS
WARRANTS | 12 Months Ended |
Dec. 31, 2022 | |
WARRANTS | |
WARRANTS | NOTE 9. – WARRANTS On November 3, 2021, as additional consideration for the convertible promissory note financing (Note 5), the Company issued the Mast Hill Fund, L.P. (the “Lender”) a 5-year warrant to purchase 18,667 shares of Company common stock at a fixed price of $12.00 per share, subject to price adjustments for certain actions, including dilutive issuances. The Company has granted the Lender customary “piggy-back” registration rights with respect to the shares issuable upon conversion of the promissory note and exercise of the warrant. No material relationship exists between the Company or its affiliates and Lender, other than in respect of the Loan. The Company evaluated the terms of the warrant under ASC 480 and ASC 815 and determined that they were to be treated as equity instruments. The value of the warrant (calculated using the Black-Scholes option pricing model to determine the estimated fair value of the warrant) of approximately $181,900 will be amortized to interest expense over the life of the Promissory Note and is recorded as a discount to the promissory note (Note 5). During 2022, the Lender initiated a cashless exercise of this warrants for 11,470 shares. On November 3, 2021, J.H. Darbie & Co., Inc., a registered broker-dealer, acted as a finder in connection with the same convertible promissory note and was paid a cash fee of $20,160 and issued a 5-year warrant to purchase 2,135 shares of Company common stock at a fixed price of $14.40 per share, subject to price adjustments for certain actions, including dilutive issuances. The Company has granted the Finder customary “piggy-back” registration rights with respect to the shares issuable upon exercise of the warrant. The Company evaluated the terms of the warrant under ASC 480 and ASC 815 and determined that they were to be treated as equity instruments. The value of the warrant (calculated using the Black-Scholes option pricing model to determine the estimated fair value of the warrant) of approximately $20,200 will be amortized to interest expense over the life of the Promissory Note and is recorded as a discount to the promissory note (Note 5). On February 15, 2022, as additional consideration for the convertible promissory note financing (Note 5), the Company issued the Mast Hill Fund, L.P. (the “Lender”) a 5-year warrant to purchase 12,334 shares of Company common stock at a fixed price of $12.00 per share, subject to price adjustments for certain actions, including dilutive issuances. The Company has granted the Lender customary “piggy-back” registration rights with respect to the shares issuable upon conversion of the promissory note and exercise of the warrant. No material relationship exists between the Company or its affiliates and Lender, other than in respect of the Loan. The Company evaluated the terms of the warrant under ASC 480 and ASC 815 and determined that they were to be treated as equity instruments. The value of the warrant (calculated using the Black-Scholes option pricing model to determine the estimated fair value of the warrant) of approximately $131,600 will be amortized to interest expense over the life of the Promissory Note and is recorded as a discount to the promissory note (Note 5). During 2022, the Lender initiated a cashless exercise of this warrants for 9,362 shares. On February 15, 2022, J.H. Darbie & Co., Inc., a registered broker-dealer, acted as a finder in connection with the same convertible promissory note and was paid a cash fee of $14,650 and issued a 5-year warrant to purchase 1,619 shares of Company common stock at a fixed price of $14.40 per share, subject to price adjustments for certain actions, including dilutive issuances. The Company has granted the Finder customary “piggy-back” registration rights with respect to the shares issuable upon exercise of the warrant. The Company evaluated the terms of the warrant under ASC 480 and ASC 815 and determined that they were to be treated as equity instruments. The value of the warrant (calculated using the Black-Scholes option pricing model to determine the estimated fair value of the warrant) of approximately $16,700 will be amortized to interest expense over the life of the Promissory Note and is recorded as a discount to the promissory note (Note 5). On April 12, 2022, as additional consideration for the convertible promissory note financing (Note 5), the Company issued Talos Victory Fund, LLC (the “Lender”) a 5-year warrant to purchase 9,867 shares of Company common stock at a fixed price of $12.00 per share, subject to price adjustments for certain actions, including dilutive issuances. The Company has granted the Lender customary “piggy-back” registration rights with respect to the shares issuable upon conversion of the promissory note and exercise of the warrant. No material relationship exists between the Company or its affiliates and Lender, other than in respect of the Loan. The Company evaluated the terms of the warrant under ASC 480 and ASC 815 and determined that they were to be treated as equity instruments. The value of the warrant (calculated using the Black-Scholes option pricing model to determine the estimated fair value of the warrant) of approximately $74,000 will be amortized to interest expense over the life of the Promissory Note and is recorded as a discount to the promissory note (Note 5). During 2022, the Lender initiated a cashless exercise of this warrants for 6,062 shares. On April 12, 2022, J.H. Darbie & Co., Inc., a registered broker-dealer, acted as a finder in connection with the same convertible promissory note and was paid a cash fee of $11,320 and issued a 5-year warrant to purchase 1,295 shares of Company common stock at a fixed price of $14.40 per share, subject to price adjustments for certain actions, including dilutive issuances. The Company has granted the Finder customary “piggy-back” registration rights with respect to the shares issuable upon exercise of the warrant. The Company evaluated the terms of the warrant under ASC 480 and ASC 815 and determined that they were to be treated as equity instruments. The value of the warrant (calculated using the Black-Scholes option pricing model to determine the estimated fair value of the warrant) of approximately $9,200 will be amortized to interest expense over the life of the Promissory Note and is recorded as a discount to the promissory note (Note 5). On May 27, 2022, as additional consideration for the convertible promissory note financing (Note 5), the Company issued the Mast Hill Fund, L.P. (the “Lender”) a 5-year warrant to purchase 11,834 shares of Company common stock at a fixed price of $12.00 per share, subject to price adjustments for certain actions, including dilutive issuances. The Company has granted the Lender customary “piggy-back” registration rights with respect to the shares issuable upon conversion of the promissory note and exercise of the warrant. No material relationship exists between the Company or its affiliates and Lender, other than in respect of the Loan. The Company evaluated the terms of the warrant under ASC 480 and ASC 815 and determined that they were to be treated as equity instruments. The value of the warrant (calculated using the Black-Scholes option pricing model to determine the estimated fair value of the warrant) of approximately $113,400 will be amortized to interest expense over the life of the Promissory Note and is recorded as a discount to the promissory note (Note 5). On May 27, 2022, J.H. Darbie & Co., Inc., a registered broker-dealer, acted as a finder in connection with the same convertible promissory note and was paid a cash fee of $15,975 and issued a 5-year warrant to purchase 1,554 shares of Company common stock at a fixed price of $14.40 per share, subject to price adjustments for certain actions, including dilutive issuances. The Company has granted the Finder customary “piggy-back” registration rights with respect to the shares issuable upon exercise of the warrant. The Company evaluated the terms of the warrant under ASC 480 and ASC 815 and determined that they were to be treated as equity instruments. The value of the warrant (calculated using the Black-Scholes option pricing model to determine the estimated fair value of the warrant) of approximately $14,200 will be amortized to interest expense over the life of the Promissory Note and is recorded as a discount to the promissory note (Note 5). On November 23, 2022, as additional consideration for the convertible promissory note financing (Note 5), the Company issued the Mast Hill Fund, L.P. (the “Lender”) a 5-year warrant to purchase 110,000 shares of Company common stock at a fixed price of $3.55 per share, subject to price adjustments for certain actions, including dilutive issuances. The Company has granted the Lender customary “piggy-back” registration rights with respect to the shares issuable upon conversion of the promissory note and exercise of the warrant. No material relationship exists between the Company or its affiliates and Lender, other than in respect of the Loan. The Company evaluated the terms of the warrant under ASC 480 and ASC 815 and determined that they were to be treated as equity instruments. The value of the warrant (calculated using the Black-Scholes option pricing model to determine the estimated fair value of the warrant) of approximately $257,400 will be amortized to interest expense over the life of the Promissory Note and is recorded as a discount to the promissory note (Note 5). On November 23, 2022, J.H. Darbie & Co., Inc., a registered broker-dealer, acted as a finder in connection with the same convertible promissory note and was paid a cash fee of $14,000 and issued a 5-year warrant to purchase 8,371 shares of Company common stock at a fixed price of $4.26 per share, subject to price adjustments for certain actions, including dilutive issuances. The Company has granted the Finder customary “piggy-back” registration rights with respect to the shares issuable upon exercise of the warrant. The Company evaluated the terms of the warrant under ASC 480 and ASC 815 and determined that they were to be treated as equity instruments. The value of the warrant (calculated using the Black-Scholes option pricing model to determine the estimated fair value of the warrant) of approximately $18,600 will be amortized to interest expense over the life of the Promissory Note and is recorded as a discount to the promissory note (Note 5). |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
INCOME TAXES | NOTE 10. – INCOME TAXES The components of income tax expense (benefit) consists of the following: At December 31, 2022, the Company had federal net operating loss carryforwards of approximately $9,300,000 ($8,500,000 - 2021) and various state net operating loss carryforwards of approximately $6,700,000 ($4,900,000 - 2021). Approximately $4,800,000 of these carryforwards can be carried forward indefinitely, while the remaining carryforwards expire from 2023 through 2042. These carryforwards exclude federal net operating loss carryforwards from inactive subsidiaries and net operating loss carryforwards from states that the Company does not presently operate in. Utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. The annual limitation may result in the expiration of the net operating loss carryforwards before utilization. At December 31, 2022, a net deferred tax asset, representing the future benefit attributed primarily to the available net operating loss carryforwards in the amount of approximately $2,538,000 ($2,238,000 - 2021), had been fully offset by a valuation allowance because management believes that the statutory limitations on utilization of the operating losses and concerns over achieving profitable operations diminish the Company’s ability to demonstrate that it is more likely than not that these future benefits will be realized before they expire. The following is a summary of the Company’s temporary differences and carryforwards which give rise to deferred tax assets and liabilities. December 31, Deferred tax assets (liabilities): 2022 2021 Net operating loss carryforwards $ 2,187,000 $ 1,956,000 Operating Lease ROU (158,000 ) (10,000 ) Operating Lease Liability 159,000 10,000 Property and Equipment 47,000 (14,000 ) Reserves and accrued expenses payable 303,000 296,000 Gross deferred tax asset 2,538,000 2,238,000 Deferred tax asset valuation allowance (2,538,000 ) (2,238,000 ) Net deferred tax asset $ 0 $ 0 The differences between the U.S. statutory federal income tax rate and the effective income tax rate in the accompanying statements of operations are as follows: December 31, 2022 2021 Statutory U.S. federal tax rate 21.00 % 21.00 Change in valuation allowance (8.40 ) (20.70 ) Net operating loss carryforward expiration (11.10 ) (5.90 ) State taxes 2.00 3.00 Original Issue Discount (3.30 ) 0.00 Stock-based compensation (0.10 ) 1.10 Forgiveness of PPP Loan 0.00 1.60 Other permanent non-deductible items (0.10 ) (0.10 ) Effective income tax rate 0.00 % 0.00 % |
EMPLOYEE RETIREMENT PLANS
EMPLOYEE RETIREMENT PLANS | 12 Months Ended |
Dec. 31, 2022 | |
EMPLOYEE RETIREMENT PLANS | |
EMPLOYEE RETIREMENT PLANS | NOTE 11. - EMPLOYEE RETIREMENT PLANS Simple IRA Plan - 401(k) Plan - |
LEASE
LEASE | 12 Months Ended |
Dec. 31, 2022 | |
LEASE | |
LEASE | NOTE 12. - LEASE Beginning on June 1, 2022, the Company leases its headquarters facility under an operating lease agreement that expires on May 31, 2029. Rent due is $118,487 annually during the first year of the lease term, and increases by 2.0% annually thereafter. Upon entering the lease agreement, the Company recognized a right-of-use asset of $691,009 and a lease liability of $691,009. Supplemental balance sheet information related to the operating lease was as follows: December 31,2022 Right of use asset – lease, net $ 645,095 Operating lease liability - short-term $ 76,826 Operating lease liability - long-term 572,560 Total operating lease liability $ 649,386 Discount rate - operating lease 7.0 % |
RELATED PARTY ACCRUED INTEREST
RELATED PARTY ACCRUED INTEREST PAYABLE | 12 Months Ended |
Dec. 31, 2022 | |
RELATED PARTY ACCRUED INTEREST PAYABLE | |
RELATED PARTY ACCRUED INTEREST PAYABLE | NOTE 13. - RELATED PARTY ACCRUED INTEREST PAYABLE Accrued Interest Payable - |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 14. - SUBSEQUENT EVENTS Mast Hill Loan #5 - J.H. Darbie & Co., Inc. ( “Finder”), a registered broker-dealer, acted as a finder in connection with the Loan, and was paid a cash fee of $3,100.00 (2.92% of the gross proceeds of the Loan) and issued a 5-year warrant to purchase 3,098 shares of Company common stock at a fixed price of $2.40 per share (120% of the exercise price of the warrant issued in connection with the Loan), subject to price adjustments for certain actions, including dilutive issuances, representing 7% warrant coverage on the gross proceeds of the Loan. The Company has granted the Finder customary “piggy-back” registration rights with respect to the shares issuable upon exercise of the warrant. ERC Claim and Loan On March 29, 2023, Company, as seller, received $1,330,464 as a purchase price (the “Purchase Price”) for the sale of the Company’s rights, title and interest per a Risk Participation of ERC Claim Agreement, dated March 27, 2023 (“Agreement”) by and between the Company and 1861 Acquisition LLC (the “Buyer”). On April 21, 2023, the Company received an additional $82,830 from the Buyer which was held in escrow. The Agreement transferred all of the Company’s rights to receive any and all payments, proceeds or distributions of any kind (without set-off, deduction or withholding of any kind), including interest, from the United States Internal Revenue Service (the “IRS”) in respect of the employee retention credits duly and timely claimed by Seller on account of qualified wages paid by Seller and identified as a “Claim for Refund” under Form 941-X Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund for the third (3rd) and fourth (4th) quarters of 2020, and the first (1st), second (2nd) and third (3rd) quarters of 2021 (the “Tax Refund Claim”) in the aggregate amount of $1,662,698 (“Transferred Interests”). Notwithstanding anything to the contrary contained in the Agreement, (i) the relationship between Company and Buyer under the Agreement with respect to the Transferred Interests is that of seller and purchaser, with the Company having irrevocably transferred to Buyer the right to receive from the Company 100% of the monies or property received by the Company with respect to the Tax Refund Claim in exchange for the Purchase Price, and (ii) the Agreement shall not constitute an assignment or transfer or agreement to assign or transfer all or any part of the Company’s legal title in and to the Tax Refund Claim. Amended and Restated Line of Credit Note - Under the terms of the New Note, the Company has agreed to make a one-time payment of $16,667 for interest accrued on the Original Note for the four-month period covering June 2022 through September 2022. The Company has also agreed to make quarterly interest payments of $6,250, commencing on December 31, 2022, and continuing through and including September 30, 2023. Revised Financing Arrangement Payoff of Related Party Note Extinguishment of Convertible Promissory Note |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Accounts Receivable | Accounts Receivable Credit is granted to substantially all customers throughout the United States. The Company carries its accounts receivable at invoice amount, less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts, based on a history of past write-offs and collections and current credit conditions. The Company’s policy is to not accrue interest on past due receivables. Management determined that an allowance of $36,710 for doubtful accounts was reasonably stated at December 31, 2022 ($9,710 – 2021). |
Concentration of Credit Risk | Concentration of Credit Risk - |
Loan Origination Fees | Loan Origination Fees - |
Sale of Certain Accounts Receivable | Sale of Certain Accounts Receivable - These transactions qualify for a sale of assets since (1) the Company has transferred all of its right, title and interest in the selected accounts receivable invoices to the financial institution, (2) the Purchaser may pledge, sell or transfer the selected accounts receivable invoices, and (3) the Company has no effective control over the selected accounts receivable invoices since it is not entitled to or obligated to repurchase or redeem the invoices before their maturity and it does not have the ability to unilaterally cause the Purchaser to return the invoices. Under FASB ASC 860, after a transfer of financial assets, an entity recognizes the financial and servicing assets it controls and the liabilities it has incurred, derecognizes financial assets when control has been surrendered, and derecognizes liabilities when extinguished. 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 of the transaction and less any anticipated future loss in the value of the retained asset. The retained amount is equal to 10% of the total accounts receivable invoice sold to the Purchaser. The fee is charged at prime plus 3.6% (effective rate of 11.1% at December 31, 2022) 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 year ended December 31, 2022, the Company sold approximately $3,972,700 ($3,630,000 - 2021) of its accounts receivable to the Purchaser. As of December 31, 2022, approximately $228,000 ($148,000 - 2021) of these receivables remained outstanding. Additionally, as of December 31, 2022, the Company had $144,000 available under the financing line with the financial institution ($66,000 - 2021). After deducting estimated fees and advances from the Purchaser, the net receivable from the Purchaser amounted to $22,760 at December 31, 2022 ($14,816 - 2021) and is included in accounts receivable in the accompanying balance sheets as of that date. There were no gains or losses on the sale of the accounts receivable because all were collected. The cost associated with the financing line was approximately $52,200 for the year ended December 31, 2022 ($34,200 - 2021). These financing line fees are classified on the statements of operations as interest expense. |
Property and Equipment | Property and Equipment - |
Capitalization of Software for Resale | Capitalization of Software for Resale - |
Accounting for the Impairment or Disposal of Long-Lived Assets | Accounting for the Impairment or Disposal of Long-Lived Assets - |
Revenue Recognition | Revenue Recognition - The Company sells licenses of Nodeware and third-party software, principally Webroot. The majority of customers are invoiced monthly at fixed rates for license fees and revenue is recognized over time. The Company’s total revenue recognized from contracts from customers was comprised of two major services in 2022, down from three major sources in 2021. Managed support services and Cybersecurity projects including software, continue to constitute our major revenue sources for 2022, while Other IT consulting services are no longer a major source of revenue. 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 December 31, 2022 or 2021 for contracts with an expected original duration of more than one year. The following table summarizes the revenue recognized by the major services: Years Ended December 31, 2022 2021 Managed support services $ 4,442,236 $ 4,325,067 Cybersecurity projects and software 2,561,168 2,780,175 Other IT consulting services 0 119,000 Total sales $ 7,003,404 $ 7,224,242 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. Cyber security projects and software Cyber security projects and software revenue includes the selling of licenses of Nodeware® and third-party software, principally Webroot™ as well as performing cybersecurity assessments, testing and consulting as a CISO (Chief Information Security Officer). · 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, testing and CISO 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 either 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 Cybersecurity agreements, a 50% to 75% down payment is required before work is initiated. Down payments received are deferred until revenue is recognized. For the year ended December 31, 2022, we recognized revenue of approximately $498,000 that was included in the deferred revenue liability balance at the beginning of the period presented. Deferred revenue that will be realized during the succeeding 12-month period is approximately $540,000. Other IT consulting services Other IT consulting services consists of services such as project management and general IT consulting services. We terminated this service in 2021. · We generated 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. During 2022, sales to one client, including sales under subcontracts for services to several entities, accounted for 63.4% of total sales (59.6% - 2021) and 26.5% of accounts receivable at December 31, 2022 (15.6% - 2021). |
Stock Options | Stock Options - |
Income Taxes | Income Taxes - The Company periodically reviews tax positions taken to determine if it is more likely than not that the position would be sustained upon examination. The Company did not have any material unrecognized tax benefit at December 31, 2022 or 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2022 and 2021, the Company recognized no interest and penalties. The Company files U.S. federal tax returns and tax returns in various states. The tax years 2018 through 2022 remain open to examination by the taxing jurisdictions to which the Company is subject. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments - Level 1 uses observable inputs such as quoted prices in active markets; Level 2 uses inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3 is defined as unobservable inputs in which little or no market data exist and requires the Company to develop its own assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The carrying amounts of cash, accounts receivable and accounts payable and accrued expenses are reasonable estimates of their fair value due to their short maturity. The carrying amount of the Company’s term debt and notes payable approximates fair value because the effective yields on these obligations, which include contractual interest rates, taken together with other features such as concurrent issuance of warrants, are comparable to rates of returns for instruments of similar credit risk. |
Earnings Per Share | Earnings Per Share - The following table sets forth the computation of basic and diluted loss per share as of December 31, 2022 and 2021: Years Ended December 31, Numerator for basic and diluted net income per share: 2022 2021 Net income (loss) $ (3,561,657 ) $ (1,568,813 ) Basic and diluted net income (loss) per share $ (7.95 ) $ (3.91 ) Weighted average common shares outstanding Basic shares 447,870 401,637 Diluted shares 447,870 401,637 Anti-dilutive shares excluded from net income (loss) per share 415,534 301,651 Certain common shares issuable under stock options and convertible notes payable have been omitted from the diluted net income (loss) per share calculation because their inclusion is considered anti-dilutive because the exercise or conversion prices were greater than the average market price of the common shares or their inclusion would have been anti-dilutive. |
Reclassifications | Reclassifications |
Use of Estimates | Use of Estimates - |
Leases | Leases The Company recognizes a liability for their lease obligations and a corresponding right-of-use asset, initially measured at the present value of the lease payments. Subsequent accounting depends on whether the agreement is deemed to be a financing or operating lease. For operating leases, a lessee recognizes its total lease expense as an operating expense over the lease term. Assets and liabilities are presented and disclosed separately, and the liabilities must be classified appropriately as current and noncurrent. |
Recently Adopted Accounting Guidance | Recently Adopted Accounting Guidance Effective January 1, 2021, the Company adopted Accounting Standards Update (“ASU”) 2019-12, “Simplifying the Accounting for Income Taxes (Topic 740)”. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. Adoption of the new standard did not materially impact the Company’s consolidated financial statements. |
Recent Accounting Guidance Not Yet Adopted | Recent Accounting Guidance Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments”, which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This guidance is effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. The Company is currently assessing the impact that adopting this new accounting standard will have on our consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of summarizes the revenue recognized | Years Ended December 31, 2022 2021 Managed support services $ 4,442,236 $ 4,325,067 Cybersecurity projects and software 2,561,168 2,780,175 Other IT consulting services 0 119,000 Total sales $ 7,003,404 $ 7,224,242 |
Schedule of computation of basic and diluted loss per share | Years Ended December 31, Numerator for basic and diluted net income per share: 2022 2021 Net income (loss) $ (3,561,657 ) $ (1,568,813 ) Basic and diluted net income (loss) per share $ (7.95 ) $ (3.91 ) Weighted average common shares outstanding Basic shares 447,870 401,637 Diluted shares 447,870 401,637 Anti-dilutive shares excluded from net income (loss) per share 415,534 301,651 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT | |
Schedule of property and equipment | Depreciable December 31, Lives 2022 2021 Software 3 years $ 72,834 $ 72,834 Equipment 3 to 10 years 156,603 155,635 Furniture and fixtures 5 to 7 years 17,735 17,735 247,172 246,204 Accumulated depreciation (227,176 ) (205,066 ) $ 19,996 $ 41,138 |
NOTES PAYABLE - CURRENT (Tables
NOTES PAYABLE - CURRENT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
NOTES PAYABLE - CURRENT | |
Schedule of Note Payable | December 31, 2022 2021 Demand note payable, 10%, secured by software (A) $ 12,500 $ 12,500 Convertible promissory note, 8%, (B) 240,902 448,000 Convertible promissory note, 8%, (C) 370,000 0 Convertible promissory note, 8%, (D) 262,453 0 Convertible promissory note, 8%, (E) 355,000 0 Convertible promissory note, 8%, (F) 566,000 0 Financing arrangement on certain accounts receivable (G) 75,838 0 Convertible notes payable, 6% (H) 150,000 150,000 $ 2,032,693 $ 610,500 Less: Deferred financing costs (C,D,E,F) 112,000 58,300 Debt discounts - warrants (C,D,E,F) 347,836 168,377 $ 1,572,857 $ 383,823 |
Schedule of Notes payable - related parties | December 31, 2022 2021 Demand notes payable to director, 6%, unsecured $ 130,000 $ 130,000 Demand note payable to employee, 6% unsecured 50,000 50,000 Demand notes payable to officer and director, 6%, unsecured 37,000 37,000 Demand note payable to officer and director, 6%, unsecured 12,000 12,000 $ 229,000 $ 229,000 |
LONG-TERM OBLIGATIONS (Tables)
LONG-TERM OBLIGATIONS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
NOTES PAYABLE - CURRENT | |
Schedule of Notes Payable Other | December 31, 2022 2021 2016 note payable, 6%, unsecured, due December 31, 2021 (A) $ 0 $ 500,000 2022 note payable, 10%, unsecured, due September 30, 2023 (B) 250,000 0 Note payable, 10%, secured, due January 1, 2018 (C) 265,000 265,000 Convertible term note payable,12%, secured, due January 1, 2024 (D) 175,000 175,000 2020 note payable, 6%, unsecured, due August 24, 2024 (E) 166,473 166,473 Convertible term note payable,7%, secured, due January 1, 2024 (F) 100,000 100,000 Convertible notes payable, 6%, due January 1, 2024 (G) 9,000 9,000 Accrued interest due after 2021(H) 8,376 7,836 973,849 1,223,309 Less: current maturities 515,000 765,000 $ 458,849 $ 458,309 |
Schedule of Notes payable related parties | December 31, 2022 2021 Note payable, up to $500,000, 7.5%, due August 31, 2026 (A) $ 499,000 $ 499,000 2020 Note payable, 6%, due January 1, 2024 (B) 328,000 328,000 Convertible notes payable, 6% (C) 146,300 146,300 Convertible note payable, 7%, due June 30, 2023 (D) 25,000 25,000 Note payable, $100,000 line of credit, 6%, unsecured (E) 90,000 90,000 Note payable, $75,000 line of credit, 6%, unsecured (F) 70,000 70,000 Accrued interest due after 2022 (G) 113,576 116,465 $ 1,271,876 $ 1,274,765 Less current maturities 385,000 190,000 $ 886,876 $ 1,084,765 |
Schedule of long-term obligations and amortization | Annual Annual Payments Amortization Net Due Prior to 2023 $ 1,111,083 $ 0 $ 1,111,083 2023 2,033,930 459,884 1,574,046 2024 863,453 0 863,453 2025 0 0 0 2026 499,000 0 499,000 Total long-term obligations $ 4,507,466 $ 459,884 $ 4,047,582 |
STOCK OPTION AGREEMENTS AND T_2
STOCK OPTION AGREEMENTS AND TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
STOCK AND STOCK OPTION PLANS | |
Stock option valuation assumptions | 2022 2021 Risk free interest rate 1.26% to 3.35% 0.16% to 0.64% Expected dividend yield 0 % 0 % Expected stock price volatility 110% to 130% 100% to 140% Expected life of options 2.75 years 1.25 to 5.25 years |
Stock option activity | Number of Weighted Remaining Aggregate Options Average Contractual Intrinsic Outstanding Exercise Price Term Value Outstanding at December 31, 2020 165,768 $ 3.98 Granted 23,429 $ 15.98 Exercised (31,858 ) $ 2.78 Expired (600 ) $ 7.13 Forfeited (13,312 ) $ 7.20 Outstanding at December 31, 2021 143,427 $ 5.85 2.8 years 289,700 Granted 1,403 $ 9.48 Exercised (5,668 ) $ 3.00 Expired (7,373 ) $ 4.87 Outstanding at December 31, 2022 131,789 $ 6.05 Vested or expected to vest at December 31, 2022 131,789 $ 6.05 2.8 years 289,700 Exercisable at December 31, 2022 131,655 $ 6.04 2.8 years 289,700 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
Schedule of deferred tax assets and liabilities | December 31, Deferred tax assets (liabilities): 2022 2021 Net operating loss carryforwards $ 2,187,000 $ 1,956,000 Operating Lease ROU (158,000 ) (10,000 ) Operating Lease Liability 159,000 10,000 Property and Equipment 47,000 (14,000 ) Reserves and accrued expenses payable 303,000 296,000 Gross deferred tax asset 2,538,000 2,238,000 Deferred tax asset valuation allowance (2,538,000 ) (2,238,000 ) Net deferred tax asset $ 0 $ 0 |
Schedule of statements of operations | December 31, 2022 2021 Statutory U.S. federal tax rate 21.00 % 21.00 Change in valuation allowance (8.40 ) (20.70 ) Net operating loss carryforward expiration (11.10 ) (5.90 ) State taxes 2.00 3.00 Original Issue Discount (3.30 ) 0.00 Stock-based compensation (0.10 ) 1.10 Forgiveness of PPP Loan 0.00 1.60 Other permanent non-deductible items (0.10 ) (0.10 ) Effective income tax rate 0.00 % 0.00 % |
LEASE (Tables)
LEASE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LEASE | |
Supplemental operating lease information | December 31,2022 Right of use asset – lease, net $ 645,095 Operating lease liability - short-term $ 76,826 Operating lease liability - long-term 572,560 Total operating lease liability $ 649,386 Discount rate - operating lease 7.0 % |
MANAGEMENT PLANS (Details Narra
MANAGEMENT PLANS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
MANAGEMENT PLANS | ||
Net income (loss) | $ (3,561,657) | $ (1,568,813) |
Total stockholders' deficiency | 6,864,214 | 4,097,889 |
Working capital deficit | 6,000,000 | |
Public offering | 15,000,000 | |
Operating loss | $ (2,339,511) | $ (1,407,569) |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Total sales | $ 7,003,404 | $ 7,224,242 |
Managed Support Services Member | ||
Total sales | 4,442,236 | 4,325,067 |
Cybersecurity projects and software Member | ||
Total sales | 2,561,168 | 2,780,175 |
Other IT consulting services Member | ||
Total sales | $ 0 | $ 119,000 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Net income (loss) | $ (3,561,657) | $ (1,568,813) |
Basic shares | 447,870 | 401,637 |
Diluted shares | 447,870 | 401,637 |
Anti-dilutive shares excluded from net loss per share | 415,534 | 301,651 |
Basic and diluted net income (loss) per share | $ (7.95) | $ (3.91) |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Allowances for doubtful accounts | $ 36,710 | $ 9,710 |
Sale of certain accounts receivable description | The retained amount is equal to 10% of the total accounts receivable invoice sold to the Purchaser. The fee is charged at prime plus 3.6% (effective rate of 11.1% at December 31, 2022) against the average daily outstanding balance of funds advanced | |
Accounts Receivable, after Allowance for Credit Loss | $ 2,000,000 | |
Accounts receivable sold | 3,972,700 | 3,630,000 |
Account receivables outstanding | 228,000 | 148,000 |
Accounts receivable available | 144,000 | 66,000 |
Net receivable | 22,760 | 14,816 |
Financing line cost | 52,200 | 34,200 |
Capitalized costs | 894,027 | 678,973 |
Accumulated amortization | 472,702 | 261,323 |
Amortization expense | 215,379 | 166,783 |
Future amortization expenses | 367,708 | |
Future amortization expenses year 2023 | 196,468 | |
Future amortization expenses year 2024 | 114,687 | |
Future amortization expenses year 2025 | 56,553 | |
Development costs | 46,489 | $ 153,600 |
Recognized revenue | 498,000 | |
Customer One Member | ||
Accounts Receivable, after Allowance for Credit Loss | $ 1,500,000 | |
Sales Revenue Net [Member] | Customer A [Member] | ||
Concentration risk | 63.40% | 59.60% |
Accounts Receivable [Member] | Customer A [Member] | ||
Concentration risk | 26.50% | 15.60% |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property, plant and equipment, gross | $ 247,172 | $ 246,204 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | (227,176) | (205,066) |
Property and equipment, net | 19,996 | 41,138 |
Software Development Member | ||
Property, plant and equipment, gross | $ 72,834 | 72,834 |
Depreciable lives | 3 years | |
Property Plant And Equipments Member | ||
Property, plant and equipment, gross | $ 156,603 | 155,635 |
Property Plant And Equipments Member | Minimum Member | ||
Depreciable lives | 3 years | |
Property Plant And Equipments Member | Maximum Member | ||
Depreciable lives | 10 years | |
Furniture And Fixtures Member | ||
Property, plant and equipment, gross | $ 17,735 | $ 17,735 |
Furniture And Fixtures Member | Minimum Member | ||
Depreciable lives | 5 years | |
Furniture And Fixtures Member | Maximum Member | ||
Depreciable lives | 7 years |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
PROPERTY AND EQUIPMENT | ||
Depreciation | $ 22,110 | $ 20,567 |
NOTES PAYABLE - CURRENT (Detail
NOTES PAYABLE - CURRENT (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Demand note payable, 10%, secured by software | $ 12,500 | $ 12,500 |
Convertible promissory note, 8% | 2,032,693 | 610,500 |
Financing arrangement on certain accounts receivable | 75,838 | 0 |
Less: Deferred financing costs | 112,000 | 58,300 |
Debt discounts - warrants | 347,836 | 168,377 |
Notes Payable, Current | 1,572,857 | 383,823 |
Convertible Promissory Note B Member | ||
Convertible promissory note, 8% | 240,902 | 448,000 |
Convertible Promissory Note C Member | ||
Convertible promissory note, 8% | 370,000 | 0 |
Convertible Promissory Note D Member | ||
Convertible promissory note, 8% | 262,453 | 0 |
Convertible Promissory Note E Member | ||
Convertible promissory note, 8% | 355,000 | 0 |
Convertible Promissory Note F Member | ||
Convertible promissory note, 8% | 566,000 | 0 |
Convertible Promissory Note H Member | ||
Convertible promissory note, 8% | $ 150,000 | $ 150,000 |
NOTES PAYABLE - CURRENT (Deta_2
NOTES PAYABLE - CURRENT (Details 1) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Notes payable, related parties | $ 229,000 | $ 229,000 |
Demand Notes Payable To Director Member | ||
Notes payable, related parties | 130,000 | 130,000 |
Demand Notes Payable To Employee Member | ||
Notes payable, related parties | 50,000 | 50,000 |
Demand Notes Payable To Officers And Director Member | ||
Notes payable, related parties | 37,000 | 37,000 |
Demand Note Payable Officer And Director One Member | ||
Notes payable, related parties | $ 12,000 | $ 12,000 |
NOTES PAYABLE CURRENT (Details
NOTES PAYABLE CURRENT (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Conversion Price | $ 7.50 | ||
Convertible Promissory Note T Member | |||
Convertible Promissory Note | $ 139,400 | ||
Loan fee | 11,152 | ||
Total obligation | $ 150,552 | ||
Interest Rate | 25% | ||
Monthly Payments Of Principal And Interest | $ 16,728 | ||
Finder's Fee | 16,728 | ||
Legal Fees | $ 75,838 | ||
Notes Bear Interest | 25% | ||
Convertible Promissory Note B Member | 3 November' 2022 Member | |||
Original Issue Discount | $ 44,800 | ||
Convertible Promissory Note | 448,000 | ||
Total obligation | 140,000 | ||
Original discount on Promissory note | $ 44,800 | ||
Interest Rate | 8% | ||
Monthly Payments Of Principal And Interest | $ 53,760 | ||
Conversion Price | $ 7.50 | ||
Finder's Fee | $ 20,160 | ||
Legal Fees | 5,000 | ||
Obligated Unrelated Third Parties | $ 140,000 | $ 150,000 | |
Notes Bear Interest | 15% | ||
Convertible Promissory Note C Member | 15 Febuary 2023 Member | |||
Original Issue Discount | $ 37,000 | ||
Convertible Promissory Note | 370,000 | ||
Original discount on Promissory note | $ 37,000 | ||
Interest Rate | 8% | ||
Monthly Payments Of Principal And Interest | $ 44,400 | ||
Conversion Price | $ 7.50 | ||
Finder's Fee | $ 14,650 | ||
Legal Fees | 3,000 | ||
Obligated Unrelated Third Parties | 200,000 | ||
Lender waived | $ 30,000 | ||
Notes Bear Interest | 15% | ||
Convertible Promissory Note D Member | April 12, 2023 Member | |||
Original Issue Discount | $ 29,600 | ||
Convertible Promissory Note | 296,000 | ||
Original discount on Promissory note | $ 29,600 | ||
Interest Rate | 8% | ||
Monthly Payments Of Principal And Interest | $ 35,520 | ||
Conversion Price | $ 7.50 | ||
Finder's Fee | $ 11,320 | ||
Legal Fees | 5,000 | ||
Obligated Unrelated Third Parties | $ 200,000 | ||
Notes Bear Interest | 15% | ||
Accrued interest | $ 200,000 | ||
Debt | 98,000 | ||
Convertible Promissory Note D Member | May 23, 2023 Member | |||
Original Issue Discount | 35,500 | ||
Convertible Promissory Note | 355,000 | ||
Original discount on Promissory note | $ 35,500 | ||
Interest Rate | 8% | ||
Monthly Payments Of Principal And Interest | $ 42,600 | ||
Conversion Price | $ 7.50 | ||
Finder's Fee | $ 15,975 | ||
Legal Fees | $ 3,500 | ||
Notes Bear Interest | 15% | ||
Convertible Promissory Note F Member | 22 November' 2023Member | |||
Original Issue Discount | $ 56,600 | ||
Convertible Promissory Note | 566,000 | ||
Original discount on Promissory note | $ 56,600 | ||
Interest Rate | 8% | ||
Monthly Payments Of Principal And Interest | $ 67,920 | ||
Conversion Price | $ 3.55 | ||
Finder's Fee | $ 14,000 | ||
Legal Fees | $ 5,000 | ||
Notes Bear Interest | 15% | ||
Convertible Promissory Note H Member | 31 December 2023 Member | |||
Interest Rate | 6% | ||
Conversion Price | $ 3.75 | ||
Obligated Unrelated Third Parties | $ 150,000 | $ 150,000 | $ 150,000 |
Notes Bear Interest | 5% |
LONGTERM OBLIGATIONS (Details)
LONGTERM OBLIGATIONS (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Total | $ 973,849 | $ 1,223,309 |
Less Current Maturities | 515,000 | 765,000 |
Long-term Debt, Excluding Current Maturities | 458,849 | 458,309 |
Notes Payable - Other 1 | ||
Long-term Debt | 0 | 500,000 |
Notes Payable - Other 2 | ||
Long-term Debt | 250,000 | 0 |
Notes Payable - Other 3 | ||
Long-term Debt | 265,000 | 265,000 |
Notes Payable - Other 4 | ||
Long-term Debt | 175,000 | 175,000 |
Notes Payable - Other 5 | ||
Long-term Debt | 166,473 | 166,473 |
Notes Payable - Other 6 | ||
Long-term Debt | 100,000 | 100,000 |
Notes Payable - Other 7 | ||
Long-term Debt | 9,000 | 9,000 |
Accrued interest due after 2021(H) | ||
Long-term Debt | $ 8,376 | $ 7,836 |
LONGTERM OBLIGATIONS (Details 1
LONGTERM OBLIGATIONS (Details 1) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Notes Payable - Related Parties | $ 1,271,876 | $ 1,274,765 |
Less Current Maturities | 385,000 | 190,000 |
Notes Payable - Related Parties, Excluding Current Maturities | 886,876 | 1,084,765 |
Note Payable - Related Party 3 | ||
Notes Payable - Related Parties | 146,300 | 146,300 |
Note Payable - Related Party 4 | ||
Notes Payable - Related Parties | 25,000 | 25,000 |
Note Payable - Related Party 5 | ||
Notes Payable - Related Parties | 90,000 | 90,000 |
Note Payable - Related Party 6 | ||
Notes Payable - Related Parties | 70,000 | 70,000 |
Accrued interest due after 2022 | ||
Notes Payable - Related Parties | 113,576 | 116,465 |
Note Payable - Related Party 1 | ||
Notes Payable - Related Parties | 499,000 | 499,000 |
Note Payable - Related Party 2 | ||
Notes Payable - Related Parties | $ 328,000 | $ 328,000 |
LONGTERM OBLIGATIONS (Details 2
LONGTERM OBLIGATIONS (Details 2) | Dec. 31, 2022 USD ($) |
Due Prior To 2023 | $ 1,111,083 |
2023 | 1,574,046 |
2024 | 863,453 |
2025 | 0 |
2026 | 499,000 |
Total Long-term Obligations | 4,047,582 |
Total Long-term Obligations | 4,047,582 |
Annual Payments | |
Due Prior To 2023 | 1,111,083 |
2023 | 2,033,930 |
2024 | 863,453 |
2025 | 0 |
2026 | 499,000 |
Total Long-term Obligations | 4,507,466 |
Total Long-term Obligations | 4,507,466 |
Annual Amortization | |
Due Prior To 2023 | 0 |
2023 | 459,884 |
2024 | 0 |
2025 | 0 |
2026 | 0 |
Total Long-term Obligations | 459,884 |
Total Long-term Obligations | $ 459,884 |
LONGTERM OBLIGATIONS (Details N
LONGTERM OBLIGATIONS (Details Narrative) - USD ($) | 12 Months Ended | ||||||||||
May 07, 2019 | Mar. 14, 2016 | Dec. 31, 2022 | Mar. 17, 2023 | Jan. 01, 2023 | Jan. 31, 2022 | Jan. 01, 2022 | Dec. 31, 2021 | Jan. 01, 2021 | Sep. 21, 2017 | Jul. 18, 2017 | |
Aggregate Purchase Price | $ 8,500,000 | ||||||||||
Conversion Price | $ 7.50 | ||||||||||
Convertible Promissory Note B Member | 30 September' 2023 Member | |||||||||||
Principal Due Amount | $ 200,000 | $ 249,000 | |||||||||
Gain On Notes | $ 120,500 | ||||||||||
Principal amount | 250,000 | $ 74,500 | |||||||||
Settled Long-term Debt Agreement | 200,000 | ||||||||||
Aggregate Purchase Price | 300,000 | ||||||||||
Note payable of up to $500,000, 7.5%, due August 31, 2026 [Member] | |||||||||||
Bears Interest Rate | 7.50% | 6% | |||||||||
Principal Due Amount | $ 200,000 | $ 249,000 | |||||||||
Balloon Payment Due | $ 219,000 | ||||||||||
Convertible term note payable, 7%, secured, due January 1, 2024 [Member] | |||||||||||
Bears Interest Rate | 7% | ||||||||||
Note Payable | $ 467,225 | ||||||||||
Common Stock, Share Price | $ 7.50 | ||||||||||
2016 note payable, 6%, unsecured, due December 31, 2021 [Member] | |||||||||||
Obligation Amount | 500,000 | ||||||||||
Balance Amount | 500,000 | $ 500,000 | |||||||||
Lender Fee Payment Share | $ 250,000 | ||||||||||
Common stock | 33,334 | ||||||||||
Lender Fee Payment | $ 37,500 | ||||||||||
Bears Interest Rate | 6% | ||||||||||
Note Payable | $ 467,225 | ||||||||||
Accounts receivable | 383,473 | ||||||||||
Principal Due Amount | 500,000 | ||||||||||
Non-operating loss | 60,973 | ||||||||||
Accrued interest payable | 72,500 | ||||||||||
Deferred Financing Costs | $ 32,775 | ||||||||||
2020 note payable, 6%, unsecured, due August 24, 2024 [Member] | |||||||||||
Lender Fee Payment | $ 166,473 | ||||||||||
Principal Due Amount | $ 550,000 | ||||||||||
Convertible notes payable, 6% [Member] | |||||||||||
Bears Interest Rate | 6% | ||||||||||
Common Stock, Share Price | $ 3.75 | ||||||||||
Note Payable To Former Related Party | $ 146,300 | ||||||||||
Interes Rate Effective | 6% | 8.75% | |||||||||
Note payable, 10%, secured, due January 1, 2018 [Member] | |||||||||||
Bears Interest Rate | 12% | ||||||||||
Aggregate Purchase Price | $ 175,000 | ||||||||||
Conversion Price | $ 18.75 | ||||||||||
Convertible term note payable, 12%, secured, due January 1, 2024 [Member] | |||||||||||
Bears Interest Rate | 12% | ||||||||||
Principal Due Amount | $ 50,000 | $ 175,000 | |||||||||
Conversion Price | $ 18.75 | ||||||||||
Convertible notes payable, 6%, due January 1, 2024 [Member] | |||||||||||
Bears Interest Rate | 6% | ||||||||||
Common Stock, Share Price | $ 3.75 | ||||||||||
Exercisable Per Share | $ 7.50 | ||||||||||
Note Payable To Former Related Party | $ 9,000 | ||||||||||
Issue Borrower | 25,000 | ||||||||||
Interes Rate Effective | 6% | 6% | 6% | ||||||||
Note payable, $75,000 line of credit, 6%, unsecured [Member] | |||||||||||
Bears Interest Rate | 6% | 6% | |||||||||
Common Stock, Shares Purchased | 5,334 | 5,334 | |||||||||
Common Stock, Share Price | $ 3 | $ 3 | |||||||||
Working Capital | $ 75,000 | $ 100,000 | |||||||||
2020 Note payable, 6%, due January 1, 2024 [Member] | |||||||||||
Principal Due Amount | $ 200,000 | ||||||||||
Balloon Payment Due | 128,000 | ||||||||||
Convertible note payable, 7%, due June 30, 2023 [Member] | |||||||||||
Principal Due Amount | 25,000 | ||||||||||
Quarterly interest payments | $ 6,250 | ||||||||||
Common Stock, Share Price | $ 7.50 | $ 7.50 | |||||||||
Issue Borrower | 16,667 | ||||||||||
Interes Rate Effective | 10% | 6% | 6% |
STOCK AND STOCK OPTION PLANS (D
STOCK AND STOCK OPTION PLANS (Details Narrative) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Preferred Stock, Par Or Stated Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 1,000,000 | 1,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
2005 Plan [Member] | ||
Shares Available For Grant | 0 | |
Common Stock, Shares Purchased | 53,334 | |
2009 Plan [Member] | ||
Shares Available For Grant | 0 | |
Common Stock, Shares Purchased | 48,894 | 48,894 |
2019 Plan [Member] | ||
Shares Available For Grant | 0 | |
Common Stock, Shares Purchased | 20,000 | |
2020 Plan [Member] | ||
Shares Available For Grant | 0 | |
Common Stock, Shares Purchased | 20,000 | |
2021 Plan [Member] | ||
Shares Available For Grant | 62,767 | |
Common Stock, Shares Purchased | 60,000 |
STOCK OPTION AGREEMENTS AND T_3
STOCK OPTION AGREEMENTS AND TRANSACTIONS (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Expected dividend yield | 0% | 0% |
Expected life of options | 2 years 9 months | |
Minimum Member | ||
Expected life of options | 1 year 3 months | |
Risk-free interest rate | 1.26% | 0.16% |
Expected stock price volatility | 110% | 100% |
Maximum Member | ||
Expected life of options | 5 years 3 months | |
Risk-free interest rate | 3.35% | 0.64% |
Expected stock price volatility | 130% | 140% |
STOCK OPTION AGREEMENTS AND T_4
STOCK OPTION AGREEMENTS AND TRANSACTIONS (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
STOCK AND STOCK OPTION PLANS | ||
Number of options outstanding, beginning | 143,427 | 165,768 |
Number of options granted | 1,403 | 23,429 |
Number of options expired | (7,373) | (600) |
Number of options exercise | (5,668) | (31,858) |
Number of options forfeited | (13,312) | |
Number of options outstanding, ending | 131,789 | 143,427 |
Number of options vested or expected to vest | 131,789 | |
Number of options exercisable | 131,655 | |
Weighted average exercise price outstanding, beginning | $ 5.85 | $ 3.98 |
Weighted average exercise price granted | 9.48 | 15.98 |
Weighted average exercise price expired | 4.87 | 7.13 |
Weighted average exercise price exercised | 3 | 2.78 |
Weighted average exercise price forfeited | 7.20 | |
Weighted average exercise price outstanding, ending | 6.05 | $ 5.85 |
Weighted average exercise price vested or expected to vest | 6.05 | |
Weighted average exercise price exercisable | $ 6.04 | |
Weighted-average remaining contractual term outstanding | 2 years 9 months 18 days | |
Weighted-average remaining contractual term vested or expected to vest | 2 years 9 months 18 days | |
Weighted-average remaining contractual term exercisable | 2 years 9 months 18 days | |
Aggregate intrinsic value outstanding | $ 289,700 | |
Aggregate intrinsic value vested or expected to vest | 289,700 | |
Aggregate intrinsic value exercisable | $ 289,700 |
STOCK OPTION AGREEMENTS AND T_5
STOCK OPTION AGREEMENTS AND TRANSACTIONS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Apr. 06, 2023 | Apr. 19, 2023 | Jul. 29, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
STOCK AND STOCK OPTION PLANS | ||||||
Weighted Average Fair Value Of Options Granted Per Share | $ 9.48 | $ 15.98 | ||||
Unrecognized compensation cost | $ 135,800 | $ 1,428 | $ 135,800 | |||
Options and granted | 2,667 | 10,000 | 27,354 | 9,354 | ||
Option price | $ 14.438 | $ 18.375 | $ 3 | $ 12.04 | ||
Aggregate shares of common stock authorized under stock option plans and agreements | 6,307 | |||||
Options shares | 5,334 | 3,334 | ||||
Options shares one | 3,333 | |||||
Options shares two | 3,333 |
WARRANTS (Details Narrative)
WARRANTS (Details Narrative) - USD ($) | 1 Months Ended | ||||
Apr. 12, 2022 | Nov. 03, 2021 | Nov. 23, 2022 | May 27, 2022 | Feb. 15, 2022 | |
Mast Hill Fund L P [Member] | |||||
Warrant To Purchase Shares Of Common Stock | 9,867 | 18,667 | 110,000 | 11,834 | 12,334 |
Warrant To Purchase Shares Of Common Stock, Exercise Price Per Share | $ 12 | $ 12 | $ 3.55 | $ 12 | $ 12 |
Warrant To Purchase Shares Of Common Stock Term | 5 | 5 | 5 | 5 | 5 |
Estimated Fair Value Of The Warrant | $ 74,000 | $ 181,900 | $ 257,400 | $ 113,400 | $ 131,600 |
Issuance of stock | 6,062 | 11,470 | 9,362 | ||
Payment Of Fee In Cash | $ 0 | ||||
J.H. Darbie & Co., Inc. [Member] | |||||
Warrant To Purchase Shares Of Common Stock | 1,295 | 2,135 | 8,371 | 1,554 | 1,619 |
Warrant To Purchase Shares Of Common Stock, Exercise Price Per Share | $ 1,295 | $ 14.40 | $ 4.26 | $ 14.40 | $ 14.40 |
Warrant To Purchase Shares Of Common Stock Term | 5 | 5 | 5 | 5 | 5 |
Estimated Fair Value Of The Warrant | $ 9,200 | $ 20,200 | $ 18,600 | $ 14,200 | $ 16,700 |
Payment Of Fee In Cash | $ 11,320 | $ 20,160 | $ 14,000 | $ 15,975 | $ 14,650 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred Tax Assets (liabilities): | ||
Net Operating Loss Carryforwards | $ 2,187,000 | $ 1,956,000 |
Operating Lease Rou | (158,000) | (10,000) |
Operating Lease Liability | 159,000 | 10,000 |
Property And Equipment | (47,000) | (14,000) |
Reserves And Accrued Expenses Payable | 303,000 | 296,000 |
Gross Deferred Tax Asset | 2,538,000 | 2,238,000 |
Deferred Tax Asset Valuation Allowance | (2,538,000) | (2,238,000) |
Net Deferred Tax Asset | $ 0 | $ 0 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
Statutory U.s. Federal Tax Rate | 21% | 21% |
Change In Valuation Allowance | (8.40%) | (20.70%) |
Net Operating Loss Carryforward Expiration | (11.10%) | (5.90%) |
State Income Taxes | 2% | 3% |
Original Issue Discount | (3.30%) | 0% |
Stock-based Compensation | (0.10%) | 1.10% |
Forgiveness Of Ppp Loan | 0% | 1.60% |
Other Permanent Non-deductible Items | (0.10%) | (0.10%) |
Effective Income Tax Rate | 0% | 0% |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative1) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Operating Loss Carryforwards | $ 4,800,000 | |
Deferred Tax Asset Valuation Allowance | 2,538,000 | $ 2,238,000 |
Federal | ||
Operating Loss Carryforwards | 9,300,000 | 8,500,000 |
State | ||
Operating Loss Carryforwards | $ 6,700,000 | $ 4,900,000 |
EMPLOYEE RETIREMENT PLANS (Deta
EMPLOYEE RETIREMENT PLANS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Simple IRA Plan [Member] | ||
Annual Compensation | $ 5,000 | |
Defined Contribution Plan, Accrued Liability | 286,605 | $ 275,422 |
Simple IRA Plan [Member] | Maximum Member | ||
Annual Compensation | 50 | |
401 (k) Plan [Member] | ||
Employee Contribution | 20,500 | |
401 (k) Plan [Member] | Maximum Member | ||
Employee Contribution | $ 6,500 |
LEASE (Details)
LEASE (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
LEASE | ||
Right of use asset - lease, net | $ 645,095 | $ 41,490 |
Operating lease liability - short-term | 76,826 | |
Operating lease liability - long-term | 572,560 | |
Total operating lease liability | $ 649,386 | |
Discount Rate Operating Lease | 7% |
LEASE (Details Narrative)
LEASE (Details Narrative) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
LEASE | |
Leases expires | May 31, 2029 |
Rent expense | $ 118,487 |
Leases rate | 2% |
Right-of-use asset | $ 691,009 |
Lease liability | $ 691,009 |
RELATED PARTY ACCRUED INTERES_2
RELATED PARTY ACCRUED INTEREST PAYABLE (Details Narrative) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
RELATED PARTY ACCRUED INTEREST PAYABLE | ||
Accrued interest payable, related parties, current | $ 185,000 | $ 107,000 |
Additional accrued interest to related parties | $ 114,000 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Apr. 12, 2023 | Feb. 03, 2023 | Mar. 29, 2023 | Mar. 17, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Payment percentage of receipts amount | 30% | |||||
Amended and Restated Line of Credit Note - [Member] | ||||||
Accrued interest | $ 16,667 | |||||
Loan fee | $ 11,152 | |||||
Notes Bear Interest | 15% | 10% | ||||
Principal Due Amount | $ 250,000 | $ 250,000 | ||||
Interest payments | 6,250 | |||||
Mast Hill Loan Member | ||||||
Warrant to purchase | 59,000 | |||||
Conversion price | $ 2 | |||||
Original Issue Discount | $ 11,800 | $ 44,800 | ||||
Notes Bear Interest | 15% | 15% | ||||
Stock fixed price | $ 2 | |||||
Warrant interest | 100% | |||||
Depreciable lives | 5 years | 3 years | ||||
J.H. Darbie & Co., Inc. [Member] | ||||||
Warrant to purchase | 3,098 | |||||
Conversion price | $ 2.40 | |||||
Loan fee | $ 3,100 | |||||
Notes Bear Interest | 7% | 15% | ||||
Warrant interest | 120% | |||||
Depreciable lives | 5 years | 5 years | ||||
Revised Financing Arrangement [Member] | ||||||
Original loan | $ 27,559 | |||||
Total obligation | 150,552 | |||||
financing arrangement | 155,800 | |||||
Payment | 18,696 | |||||
Loan fee | 12,464 | |||||
Convertible Promissory Note | $ 139,400 | |||||
ERC Claim and Loan [Member] | ||||||
Line of Credit | $ 1,662,698 | |||||
Purchase price | 1,330,464 | |||||
Accrued interest | 1,662,698 | |||||
Remaining accrued and unpaid interest | $ 82,830 | |||||
Warrant interest | 100% | |||||
Extinguishment of Convertible Promissory Note [Member] | ||||||
Principal Due Amount | $ 98,000 | $ 250,000 | ||||
Debt | $ 200,000 |