Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 23, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2021 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2021 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 000-26361 | |
Entity Registrant Name | GLOBAL DIGITAL SOLUTIONS, INC. | |
Entity Central Index Key | 0001011662 | |
Entity Tax Identification Number | 22-3392051 | |
Entity Incorporation, State or Country Code | NJ | |
Entity Address, Address Line One | 777 South Flagler Drive | |
Entity Address, Address Line Two | Suite 800 West Tower | |
Entity Address, City or Town | West Palm Beach | |
Entity Address, State or Province | FL | |
Entity Address, Postal Zip Code | 33401 | |
City Area Code | (561) | |
Local Phone Number | 515-6163 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 698,637,958 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Current Assets | ||
Cash | $ 145,330 | $ 264 |
Prepaid Expenses | 135,000 | |
Total current assets | 280,330 | 264 |
Other Assets | ||
Prepaid expenses - related party | 520,000 | 520,000 |
Due from related entity | 70,710 | |
Equipment, net of accumulated depreciation of $7,617 at June 30, 2021 and $5,078 at December 31, 2020 | 43,165 | 45,704 |
Software Development Cost | 64,547 | 64,547 |
Total assets | 908,042 | 701,225 |
Current Liabilities | ||
Accounts payable | 356,042 | 486,593 |
Accrued expenses | 957,765 | 1,343,880 |
Due to officer | 253,291 | |
Financed insurance policy | 11,330 | 11,187 |
Derivative liability | 915,000 | 9,367,159 |
Warrant liability | 1,477,000 | |
Convertible notes payable, net of discount of $1,613,429 and $218,484 respectively | 2,868,812 | 1,429,450 |
Notes Payable | 4,613,162 | 4,512,000 |
Total current liabilities | 11,199,111 | 17,403,560 |
Long term liabilities | ||
Notes payable | 103,125 | |
Total Liabilities | 11,199,111 | 17,506,685 |
Stockholders deficit | ||
Preferred stock, $0.001 par value, 35,000,000 shares authorized, 1,000,000 issued and outstanding at June 30, 2021 and December 31, 2020, respectively | 1,000 | 1,000 |
Common stock, $0.001 par value, 2,000,000,000 shares authorized 701,862,757, and 668,338,264 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively | 701,863 | 668,338 |
Additional paid-in capital | 35,866,342 | 34,086,086 |
Shares payable | 180,000 | |
Accumulated deficit | (47,040,274) | (51,560,884) |
Total stockholders deficit | (10,291,069) | (16,805,460) |
Total liabilities and stockholders deficit | $ 908,042 | $ 701,225 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Accumulated depreciation | $ 7,617 | $ 5,078 |
Convertible notes, unamortized discount | $ 1,613,429 | $ 218,484 |
Preferred Stock, Par Value | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 35,000,000 | 35,000,000 |
Preferred Stock, Shares Issued | 1,000,000 | 1,000,000 |
Preferred Stock, Shares Outstanding | 1,000,000 | 1,000,000 |
Common Stock, Par Value | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 2,000,000,000 | 2,000,000,000 |
Common Stock, Shares, Issued | 701,862,757 | 668,338,264 |
Common Stock, Shares, Outstanding | 701,862,757 | 668,338,264 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Statement [Abstract] | ||||
Revenue | ||||
Operating expenses | ||||
Selling, general and administrative expenses | 1,165,194 | 288,169 | 1,590,618 | 535,377 |
Operating loss before other (income) expense | (1,165,194) | (288,169) | (1,590,618) | (535,377) |
Other (income) expense | ||||
Change in fair value of derivative liability | (2,345,836) | 1,582,617 | (7,779,988) | 3,240,320 |
Change in fair value of warrant liability | (943,000) | (849,000) | ||
Amortization of debt discount | 941,112 | 262,976 | 1,097,337 | 429,042 |
Interest expense | 383,571 | 1,655,584 | 1,432,423 | 1,881,366 |
Other income | (12,000) | |||
Total other (income) expense | (1,964,153) | 3,501,177 | (6,111,228) | 5,550,728 |
Income/(loss) from operations before provision for income taxes | 798,959 | (3,789,346) | 4,520,610 | (6,086,105) |
Provision for income taxes | ||||
Net income/(loss) | $ 798,959 | $ (3,789,346) | $ 4,520,610 | $ (6,086,105) |
Income (loss) per common share - basic | $ 0 | $ 0 | $ 0.01 | $ (0.01) |
Income (loss) per common share - diluted | $ 0 | $ 0 | $ 0 | $ (0.01) |
Weighted average common shares: | ||||
Basic | 693,982,757 | 632,690,409 | 683,592,355 | 628,559,792 |
Diluted | 559,459,905 | 632,690,409 | 958,495,183 | 628,559,792 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (EQUITY) - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Shares Payable | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2019 | $ 1,000 | $ 643,122 | $ 32,152,715 | $ (38,954,344) | $ (6,157,507) | |
Beginning balance, Shares at Dec. 31, 2019 | 1,000,000 | 643,121,923 | ||||
Common stock shares issued for services | $ 282 | 4,792 | 5,074 | |||
Common stock issued for services to consultants, Shares | 281,955 | |||||
Shares of common stock issued for conversion of debt | $ 2,000 | 6,800 | 8,800 | |||
Shares Issued for conversion of debt, in shares | 2,000,000 | |||||
Reclass of derivative liability upon settlement of convertible notes payable | 86,700 | 86,700 | ||||
Net loss | (2,296,759) | (2,296,759) | ||||
Ending balance, value at Mar. 31, 2020 | $ 1,000 | $ 645,404 | 32,251,007 | (41,251,103) | (8,353,692) | |
Ending balance, Shares at Mar. 31, 2020 | 1,000,000 | 645,403,878 | ||||
Beginning balance, value at Dec. 31, 2019 | $ 1,000 | $ 643,122 | 32,152,715 | (38,954,344) | (6,157,507) | |
Beginning balance, Shares at Dec. 31, 2019 | 1,000,000 | 643,121,923 | ||||
Common stock shares issued for services | 20,199 | |||||
Shares of common stock issued for conversion of debt | 30,250 | |||||
Net loss | (6,086,105) | |||||
Ending balance, value at Jun. 30, 2020 | $ 1,000 | $ 657,788 | 33,329,969 | (45,040,449) | (11,051,692) | |
Ending balance, Shares at Jun. 30, 2020 | 1,000,000 | 657,788,267 | ||||
Beginning balance, value at Mar. 31, 2020 | $ 1,000 | $ 645,404 | 32,251,007 | (41,251,103) | (8,353,692) | |
Beginning balance, Shares at Mar. 31, 2020 | 1,000,000 | 645,403,878 | ||||
Shares of common stock issued for conversion of debt | $ 5,588 | 15,862 | 21,450 | |||
Shares Issued for conversion of debt, in shares | 5,588,333 | |||||
Reclass of derivative liability upon settlement of convertible notes payable | 994,771 | 994,771 | ||||
Shares issued for exercise of warrants | $ 6,000 | 54,000 | 60,000 | |||
Cashless exercise of warrants, in shares | 6,000,000 | |||||
Net loss | (3,789,346) | (3,789,346) | ||||
Ending balance, value at Jun. 30, 2020 | $ 1,000 | $ 657,788 | 33,329,969 | (45,040,449) | (11,051,692) | |
Ending balance, Shares at Jun. 30, 2020 | 1,000,000 | 657,788,267 | ||||
Convertible note forbearance agreement | $ 796 | 14,329 | 15,125 | |||
Convertible note forbearance agreement, shares | 796,056 | |||||
Beginning balance, value at Dec. 31, 2020 | $ 1,000 | $ 668,338 | 34,086,086 | (51,560,884) | (16,805,460) | |
Beginning balance, Shares at Dec. 31, 2020 | 1,000,000 | 668,338,264 | ||||
Common stock shares issued for services | $ 5,000 | 279,500 | 284,500 | |||
Common stock issued for services to consultants, Shares | 5,000,000 | |||||
Shares of common stock issued for conversion of debt | $ 5,368 | 48,317 | 53,686 | |||
Shares Issued for conversion of debt, in shares | 5,368,493 | |||||
Shares of common stock issued in relation to convertible debt | $ 5,850 | 232,375 | 238,225 | |||
Shares of common stock issued in relation to convertible debt, Shares | 5,850,000 | |||||
Reclass of derivative liability upon settlement of convertible notes payable | 654,170 | 654,170 | ||||
Shares issued for exercise of warrants | $ 1,400 | (1,400) | ||||
Cashless exercise of warrants, in shares | 1,400,000 | |||||
Net loss | 3,721,651 | 3,721,651 | ||||
Ending balance, value at Mar. 31, 2021 | $ 1,000 | $ 685,957 | 35,299,048 | (47,839,233) | (11,853,228) | |
Ending balance, Shares at Mar. 31, 2021 | 1,000,000 | 685,956,757 | ||||
Beginning balance, value at Dec. 31, 2020 | $ 1,000 | $ 668,338 | 34,086,086 | (51,560,884) | (16,805,460) | |
Beginning balance, Shares at Dec. 31, 2020 | 1,000,000 | 668,338,264 | ||||
Common stock shares issued for services | 464,500 | |||||
Shares of common stock issued for conversion of debt | ||||||
Net loss | 4,520,610 | |||||
Ending balance, value at Jun. 30, 2021 | $ 1,000 | $ 701,863 | 35,866,342 | 180,000 | (47,040,274) | (10,291,069) |
Ending balance, Shares at Jun. 30, 2021 | 1,000,000 | 701,862,757 | ||||
Beginning balance, value at Mar. 31, 2021 | $ 1,000 | $ 685,957 | 35,299,048 | (47,839,233) | (11,853,228) | |
Beginning balance, Shares at Mar. 31, 2021 | 1,000,000 | 685,956,757 | ||||
Common stock shares issued for services | 180,000 | 180,000 | ||||
Shares of common stock issued for conversion of debt | $ 8,000 | 107,200 | 115,200 | |||
Shares Issued for conversion of debt, in shares | 8,000,000 | |||||
Shares of common stock issued in relation to convertible debt | $ 4,000 | 180,000 | 184,000 | |||
Shares of common stock issued in relation to convertible debt, Shares | 4,000,000 | |||||
Reclass of derivative liability upon settlement of convertible notes payable | 284,000 | 284,000 | ||||
Shares issued for exercise of warrants | $ 3,906 | (3,906) | ||||
Cashless exercise of warrants, in shares | 3,906,000 | |||||
Net loss | 798,959 | 798,959 | ||||
Ending balance, value at Jun. 30, 2021 | $ 1,000 | $ 701,863 | $ 35,866,342 | $ 180,000 | $ (47,040,274) | $ (10,291,069) |
Ending balance, Shares at Jun. 30, 2021 | 1,000,000 | 701,862,757 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Operating Activities | ||
Net income/( loss) | $ 4,520,610 | $ (6,086,105) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Shares issued for services | 464,500 | 20,199 |
Change in fair value of derivative liability | (7,779,988) | 3,240,320 |
Change in fair value of warrant liability | (849,000) | |
Amortization of debt discount | 1,097,337 | 429,042 |
Consulting fees added to note payable principal | 123,037 | |
Interest expense from derivative liability | 87,999 | 1,547,192 |
Interest expense from warrant liability | 819,000 | |
Interest expense for extension fees added to principal | 180,270 | |
Operating expenses setled through debt proceeds | 13,800 | |
Depreciation | 2,539 | |
Changes in operating assets and liabilities: | ||
Accounts payable | (130,551) | 8,236 |
Accrued expenses | (178,136) | 138,254 |
Due from related entity | 70,710 | |
Due to Officer | 20,390 | |
Net cash used in operating activities | (1,706,673) | (668,672) |
Investing Activities | ||
Software Development Cost | (127,888) | |
Net cash used in investing activities | (127,888) | |
Financing Activities | ||
Proceeds from notes payable | 103,125 | |
Payments on notes payable | (125,000) | |
Repayments of convertible notes | (355,000) | (410,750) |
Repayments to advances from related party | (53,000) | |
Repayments to advances from officer | (595,241) | |
Proceeds from convertible notes | 2,979,980 | 634,500 |
Proceeds from issuance of common stock | 60,000 | |
Net cash provided by financing activities | 1,851,739 | 386,875 |
Net decrease in cash and cash equivalents | 145,066 | (409,685) |
Cash and cash equivalents at beginning of period | 264 | 493,402 |
Cash and cash equivalents at end of period | 145,330 | 83,717 |
Supplementary disclosure of cash flow information | ||
Interest | (44,782) | |
Taxes | ||
Supplementary disclosure of non-cash investing and financing activities | ||
Accrued expenses settled through convertible notes payable | 120,000 | |
Debt discount from derivative on convertible notes payable | 178,000 | 758,500 |
Debt discount for issuance of shares of common stock with convertible note | 204,000 | |
Debt discount for issuance of warrants with convertible note | 507,000 | |
Reclass of derivative liability to equity upon repayment/conversions | 654,170 | 1,081,471 |
Shares of common stock issued by conversion | 53,686 | 8,800 |
Cashless exercise of warrants | 1,400 | |
Shares of common stock issued in relation to debt | 34,226 | |
Convertible debt settled through issuance of common shares | $ 30,250 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 6 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | NOTE 1 – DESCRIPTION OF BUSINESS The Company was incorporated in New Jersey as Creative Beauty Supply, Inc. (Creative) in August 1995. In March 2004, Creative acquired Global Digital Solutions, Inc., a Delaware corporation (Global). The merger was treated as a recapitalization of Global, and Creative changed its name to Global Digital Solutions, Inc. (the Company, we), Global provided structured cabling design, installation and maintenance for leading information technology companies, federal, state and local government, major businesses, educational institutions, and telecommunication companies. On May 1, 2012, the Company made the decision to wind down their operations in the telecommunications area and to refocus efforts in the area of cyber arms technology and complementary security and technology solutions. From August 2012 through November 2013, the Company was actively involved in managing Airtronic USA, Inc., and effective as of June 16, 2014 they acquired North American Custom Specialty Vehicles (NACSV). In July 2014, the Company announced the formation of GDSI International (f/k/a Global Digital Solutions, LLC) to spearhead their efforts overseas. The Company had limited operations from the NACSV subsidiary from December 31, 2015 until May 13, 2016. During the interim, the Company was pursuing acquisition opportunities and responding to the litigation with the Securities and Exchange Commission. Subsequent to May 13, 2016, the Company has been seeking acquisitions and additional financing. In March of 2019, the Company acquired HarmAlarm (HA). HA was formed in 2002 as a private Texas company to pursue Infrared commercial applications in the aviation services area. HA is developing an updated version of the system known as Pilot Assisted Landing Systems (PALS). The precision and robustness of PALS is expected to generate a host of new applications mainly through landing trajectory optimization which provides additional safety margin against weather related hazardous conditions, like wind shear, wake turbulence, icing, as well as low ceilings and fog. Going Concern The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has sustained losses and experienced negative cash flows from operations since inception, and for the six months ended June 30, 2021, while it had net income of approximately $4,521,000, which was mostly the result of the change in fair value of the derivative liability, the Company used net cash of approximately $2,100,000 to fund operating activities at June 30, 2021, had an accumulated deficit of approximately $47,040,000, and a working capital deficit of approximately $ 10,919,000 The Company needs to raise additional funds immediately and continue to raise funds until they begin to generate sufficient cash from operations and may not be able to obtain the necessary financing on acceptable terms, or at all. The Company will continue to require substantial funds to continue development of its core business. Managements plans in order to meet the operating cash flow requirements include financing activities such as private placements of common stock, and issuances of debt and convertible debt instruments, and the establishment of strategic relationships which management expects will lead to the generation of additional revenue or acquisition opportunities. While Management believes that the Company will be successful in obtaining the necessary financing to fund operations, there are no assurances that such additional funding will be achieved or that they will succeed in future operations. Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to successfully execute the plans to pursue acquisitions and raise the funds necessary to complete such acquisitions. The outcome of these matters cannot be predicted at this time. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited financial information as of and for the three and six months ended June 30, 2021 and 2020 has been prepared in accordance with accounting principles generally accepted in the U.S. for interim financial information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments, unless otherwise indicated) considered necessary for a fair presentation of our financial position at such date and the operating results and cash flows for such periods. Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission, or the SEC. These unaudited financial statements and related notes should be read in conjunction with our Annual Report on Form 10-K that includes the audited financial statements for the year ended December 31, 2020 as filed with the SEC on April 19, 2021. The condensed consolidated balance sheet at December 31, 2020 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles in the U.S. for complete financial statements. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries, NACSV, GDSI Florida, LLC, Global Digital Solutions, LLC and Aviation Services f/k/a HarmAlarm. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity-based transactions and disclosure of contingent liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the financial statements. Significant estimates include the derivative liability valuation, deferred tax asset and valuation allowance, and assumptions used in Black-Scholes-Merton, or BSM, or other valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate. Income Taxes Income taxes are accounted for based upon an asset and liability approach. Accordingly, deferred tax assets and liabilities arise from the difference between the tax basis of an asset or liability and its reported amount in the financial statements. Deferred tax amounts are determined using the tax rates expected to be in effect when the taxes will be paid or refunds received, as provided under currently enacted tax law. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense or benefit is the tax payable or refundable, respectively, for the period plus or minus the change in deferred tax assets and liabilities during the period. Accounting guidance requires the recognition of a financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company believes its income tax filing positions and deductions will be sustained upon examination and accordingly, no reserves, or related accruals for interest and penalties have been recorded at June 30, 2021, and December 31, 2020. The Company recognizes interest and penalties on unrecognized tax benefits as well as interest received from favorable tax settlements within income tax expense. Cash and Cash Equivalents We consider all highly liquid investments with original maturities of three months or less to be cash equivalents. We maintain our cash in high-quality financial institutions. The balances, at times, may exceed federally insured limits. As of June 30, 2021, and December 31, 2020, the Companys cash balance did not exceed FDIC coverage. As of June 30, 2021 and December 31, 2020, the Company did not have any cash equivalents. Fair Value of Financial Instruments The carrying value of cash, accounts payable and accrued expenses approximate their fair values based on the short-term maturity of these instruments. The carrying amounts of debt were also estimated to approximate fair value. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement). This fair value measurement framework applies at both initial and subsequent measurement. The three levels of the fair value hierarchy defined by ASC 820 are as follows: ● Level 1 – Quoted prices in active markets for identical assets or liabilities ● Level 2 – Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly ● Level 3 – Significant unobservable inputs that cannot be corroborated by market data. Derivative Financial Instruments We account for conversion options embedded in convertible notes payable in accordance with the Financial Accounting Standards Board (FASB) Accounting Standard Codification (ASC) 815, Derivatives and Hedging Embedded Derivatives Derivative Liabilities Derivatives and Hedging – Contracts in Entitys own Equity Change in fair value of derivative liability Earnings (Loss) Per Share (EPS) Basic EPS is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding. Diluted EPS includes the effect from potential issuance of common stock, such as stock issuable pursuant to the exercise of stock options and warrants and the assumed conversion of convertible notes. The following table summarizes the securities that were included in the diluted per share calculation: Securities excluded from the diluted per share calculation Six Months Ended June 30, 2021 2020 Convertible notes and accrued interest 65,352,167 62,555,959 Preferred Stock 261,169,294 214,560,000 Stock options 13,650,002 13,650,002 Warrants 48,446,875 1,500,000 Potentially dilutive securities 388,618,338 292,265,961 Stock Based Compensation In accordance with ASC 718, Compensation – Stock Compensation the Company measures the cost of employee services received in exchange for share-based compensation measured at the grant date fair value of the award. The Companys accounting policy for equity instruments issued to advisors, consultants and vendors in exchange for goods and services follows the provisions of FASB ASC 505-50 . Convertible Instruments The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with accounting standards for Accounting for Derivative Instruments and Hedging Activities. Accounting standards generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. accounting standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as The Meaning of Conventional Convertible Debt Instrument. The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with professional standards when Accounting for Convertible Securities with Beneficial Conversion Features, as those professional standards pertain to Certain Convertible Instruments. Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Original issue discounts (OID) under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. ASC 815-40 provides that, among other things, generally, if an event is not within the entitys control could or require net cash settlement, then the contract shall be classified as an asset or a liability. Convertible Securities Based upon ASC 815-15, we have adopted a sequencing approach regarding the application of ASC 815-40 to convertible securities. We will evaluate our contracts based upon the earliest issuance date. In the event partial reclassification of contracts subject to ASC 815-40-25 is necessary, due to our inability to demonstrate we have sufficient shares authorized and unissued, shares will be allocated on the basis of issuance date, with the earliest issuance date receiving first allocation of shares. If a reclassification of an instrument were required, it would result in the instrument issued latest being reclassified first. Recent Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entitys Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entitys Own Equity (ASU 2020-06), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuers own stock and classified in stockholders equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. For SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. The Company is currently evaluating the impact that ASU 2020-06 may have on its consolidated financial statements and related disclosures. Management is evaluating other new accounting pronouncements but doesnt expect them to have material impact on our financial position or results of operations. Managements Evaluation of Subsequent Events The Company evaluates events that have occurred after the balance sheet date of June 30, 2021, through the date which the financial statements were issued. Based upon the review, other than described in Note 10 – Subsequent Events, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 6 Months Ended |
Jun. 30, 2021 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | NOTE 3 – ACCRUED EXPENSES As of June 30, 2021, and December 31, 2020, accrued expenses consist of the following amounts: Schedule of Accrued Expenses June 30, 2021 December 31, 2020 Accrued compensation to executive officers and employee $ 86,834 $ 142,315 Accrued professional fees and settlements 26,990 259,119 Accrued interest 843,941 942,446 Total $ 957,765 $ 1,343,880 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | NOTE 4 – FAIR VALUE MEASUREMENTS We had no Level 1 or Level 2 assets and liabilities at June 30, 2021, and December 31, 2020. The Derivative liabilities are Level 3 fair value measurements. The following is a summary of activity of Level 3 liabilities June 30, 2021 December 31, 2020 Derivative liability: Balance at beginning of period $ 9,367,159 $ 1,158,008 Additions 266,000 2,802,754 Settlements (938,171 ) (1,743,734 ) Change in fair value (7,779,988 ) 7,132,131 Balance at end of year $ 915,000 $ 9,367,159 June 30, 2021 December 31, 2020 Warrant liability: Balance at beginning of period $ — $ — Additions 2,326,000 — Change in fair value (849,000 ) — Balance at end of year $ 1,477,000 $ — Embedded Derivative Liabilities of Convertible Notes At June 30, 2021, the fair value of the bifurcated embedded derivative liabilities of convertible notes was estimated using a bi-nomial option model with the following inputs: the price of the Companys common stock of $0.03; a risk-free interest rate of 0.05% 143.35% 0 .08% 2.5 103.71% |
NOTE PAYABLE
NOTE PAYABLE | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
NOTE PAYABLE | NOTE 5 – NOTE PAYABLE During August 2017, Dragon Acquisitions, a related entity owned by William Delgado, and an individual lender entered into a promissory note agreement for $20,000 as well as $2,000 in interest to accrue through maturity on August 31, 2018 for a total of $22,000 due on August 31, 2018. The lender has extended the maturity date to December 31, 2021. Dragon Acquisitions assumed payment of a payable of the Company and the Company took on the note. The Company defaulted on the note at maturity in August 2018. The $20,000 note remained outstanding at June 30, 2021 and December 31, 2020 through the date of this report. On December 22, 2017, the Company entered into a financing agreement with Parabellum, an accredited investor, for $1.2 million, which was then amended in 2020 and increased to $2,550,000. Under the terms of the agreement, the Company is to receive milestone payments based on the progress of the Companys lawsuit (see Note 6) for damages against Grupo Rontan Metalurgica, S.A (the Lawsuit). Such milestone payments consist of (i) an initial purchase price payment of $300,000, which the Company received on December 22, 2017, (ii) $150,000 within 30 days of the Lawsuit surviving a motion to dismiss on the primary claims, (iii) $100,000 within 30 days of the close of all discovery in the Lawsuit and (iv) $650,000 within 30 days of the Lawsuit surviving a motion for summary judgment and challenges on the primary claims. As part of the agreement, the Company shall pay the investor an investment return of 100% of the litigation proceeds to recoup all money invested, plus 27.5% of the total litigation proceeds received by the Company. The loan and the accrued interest has been personally guaranteed by William Delgado, the CEO. As of June 30, 2021 and December 31, 2020, and through the date of this report, the $2,550,000 note remains outstanding. On December 23, 2017 (the Effective Date) the Company entered into a $485,000, 7% interest rate, demand promissory note with Vox Business Trust, LLC (Vox). The note was in settlement of the amounts accrued under a consulting agreement (see Note 6), consisting of $200,000 owed for retainer payments through December 2017, as well as $285,000 owed to Vox when the Resolution Progress Funding was met on December 22, 2017. As part of the agreement, Vox may not demand payment prior to the date of the Resolution Funding Date. The Company shall make mandatory prepayment in the following amounts and at the following times – ● $1,000 on the Effective Date. ● $50,000 on the date on which the judge presiding over the lawsuit issues a ruling or decision in which the lawsuit survives a motion to dismiss. ● $50,000 on the date on which discovery closes with respect to the lawsuit. ● $100,000 on the date on which the judge presiding over the lawsuit issues a ruling or decision in which the lawsuit survives a motion for summary judgement on the claims. Under the terms of the Vox note consulting agreement (see Note 6), any unpaid consulting fees subsequent to December 2017 causes a default on the note with unpaid consulting fees to be added to the principal of the note. During the three and six-month period ended June 30, 2021, consulting fees totaling $30,000 and $60,000 were added to the note principal and are included in the note balance of $866,500, as of June 30, 2021, and $806,500 as of December 31, 2020. Through the date of this report, monthly consulting fees have not been repaid and continue to be added to the principal balance of the note. The note remains in default. However, Vox has voluntarily refrained from making demand prior to the resolution funding date. On December 26, 2017 (the Effective Date), the Company entered into a $485,000, 7% interest rate, demand promissory note with RLT Consulting, Inc. (RLT), a related party. The note was in settlement of the amounts accrued under a consulting agreement (see Note 6), consisting of $200,000 owed for retainer payments through December 2017, as well as $285,000 owed to RLT when resolution progress funding was met on December 22, 2017. As part of the agreement, RLT may not demand payment prior to the date of the resolution funding date. The Company also agreed to grant 5,000,000 shares within 90 days of the resolution progress funding date and 10,000,000 shares within 90 days of the resolution funding date. The 5,000,000 shares were issued on March 13, 2018. The Company shall make mandatory prepayment in the following amounts and at the following times – ● $1,000 on the Effective Date. ● $50,000 on the date on which the judge presiding over the lawsuit issues a ruling or decision in which the lawsuit survives a motion to dismiss. ● $50,000 on the date on which discovery closes with respect to the lawsuit. ● $100,000 on the date on which the judge presiding over the lawsuit issues a ruling or decision in which the lawsuit survives a motion for summary judgement on the claims. Under the terms of the RLT note consulting agreement (see Note 6), any unpaid consulting fees subsequent to December 2017 causes a default on the note with unpaid consulting fees to be added to the principal of the note. During the three and six-month period ended June 30, 2021, consulting fees totaling $30,000 and $60,000, respectively, were added to the note principal and are included in the note balance of $859,500 as of June 30, 2021 and $799,500 as of December 31, 2020. Through the date of this report, monthly consulting fees have not been repaid and continue to be added to the principal balance of the note. The note remains in default. However, RLT has voluntarily refrained from making demand prior to the resolution funding date. RLT was granted a first priority security interest in the litigation proceeds and is pari passu to Parabellum and Vox. To that end, they share in the litigation in a priority position to proceed to repay the note. During April 2018, the Company entered into a two-month $36,000 note payable with $31,000 in proceeds paid directly to a third-party vendor for expenses. The note did not bear interest and included a $5,000 original issue discount. During June 2018, the Company defaulted on the note. The lender has extended the maturity date to December 31, 2021. The Company paid $25,000 in April 2021. As of June 30, 2021 and December 31, 2020, $11,000 and $31,000 of the note remained outstanding, respectively. During May 2018, the Company entered into an Investment Return Purchase Agreement with an accredited investor (the Purchaser) for proceeds of $200,000 (the Investment Agreement). Under the terms of the Investment Agreement, the Company agreed to pay the Purchaser the $200,000 proceeds plus a 10% return, or $20,000 (the Investment Return) within three (3) months from the date of the Investment Agreement. Such Investment Return shall be paid earlier if the Company secures funding totaling $500,000 within 90 days from the date of the Investment Agreement. The lender has extended the maturity date to December 31, 2021. In addition, the Company agreed to issue to the Purchaser 2,000,000 warrants to purchase common stock of the Company at an exercise price of $0.01 per share, exercisable for a period of three (3) years. As of June 30, 2021 and December 31, 2020, and through the date of this report, the $200,000 principal and $20,000 Investment Return remained outstanding. During June 2018, the Company entered in to a one-year $300,000 non-convertible note with an accredited investor with $150,000 original issue discount (OID) for net proceeds of $150,000. As part of the note agreement, the Company also agreed to issue the investor 5,000,000 warrants at an exercise price of $0.01, exercisable for a period of three (3) years. The Company defaulted on the note at maturity in June 2019. The note contains a default interest rate of 10% plus a 5% penalty of the outstanding balance of the note. The note holder has voluntarily refrained from making demand for repayment under the default provisions of the note, which would require the Company to pay the holder 130% of the outstanding principal and interest accrued at the default rate. The remaining principal and accrued interest of the note was paid in full on March 10, 2021. The June 2018 note bears a personal guarantee by William Delgado, the Chief Executive Officer of the Company. As further security for the note, Mr. Delgado has also pledged the 1,000,000 Convertible Preferred Shares of the Company that he owns, as well as 5,000,000 common shares of another public company in which Mr. Delgado is a director and Chief Financial Officer. On May 12, 2020, the Company obtained a Paycheck Protection Program (PPP) loan in the amount of $103,125 pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act). Interest on the loan is at the rate of 1% per year, and all loan payments are deferred until December 12, 2020, at which time the balance is payable in $5,805 monthly installments through May 12, 2022, if not forgiven in accordance with the CARES Act and the terms of the promissory note executed by the Company in connection with the loan. The promissory note contains events of default and other provisions customary for a loan of this type. As required, the Company used the PPP loan proceeds for payroll, healthcare benefits, and utilities. The program provided that the use of PPP Loan amount shall be limited to certain qualifying expenses and may be partially or wholly forgiven in accordance with the requirements set forth in the CARES Act. Convertible Notes Payable On June 7, 2021, the Company and Geneva Roth Remark Holdings, Inc., entered into a security purchase agreement (SPA) for an 8% promissory note in the aggregate principal of $251,625, with a maturity date of June 7, 2022. The note included an original issuance discount (OID) of $22,875, for a purchase price of $228,750. The interest was applied as a one-time interest charge upon the issuance date, in the amount of $20,130, recognized in accrued interest. The month payments will include the outstanding principal and accrued interest, in 10 monthly payments of $27,175, with the first payment on July 30, 2021. Upon an event of default, as set forth in the agreement, the holder shall have the right to convert the outstanding balance of the note into shares of common stock of the Company, with a conversion rate based on 75% of the lowest trading price of the common stock for the 5 trading days prior to the conversion date. In addition, upon default, the interest increases to 22%, and any outstanding principal and accrued interest shall be increased by 150%. The Company is required at have authorized and reserved four times the number of shares that is actually issuable upon full conversion of the note, which was initially 29,494,505 shares. While the note is still outstanding the Company shall not, without written consent of the holder, issue any variable convertible instruments with a convertible price that varies with the market price of the Companys common stock, nor shall the Company without the holders written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business. In connection with the note, the Company issued 2,096,875 warrants, exercisable each at $0.03, with a 3-year term. The warrants and the OID resulted in a debt discount of $105,875, which will be amortized using the effective interest method over the life of the note. The warrants were evaluated to be classified as a liability, as based on the various convertible notes outstanding with variable conversion rates it cannot be determined if there are sufficient authorized shares available during the contract period. The Company estimated the fair value of the warrant using the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Companys common stock of $0.03 at issuance date, a risk-free interest rate of 0.79% and expected volatility of the Companys common stock of 143,5%, resulting in a fair value of $83,000. On March 25, 2021, the Company and GS Capital Partners LLC entered into a security purchase agreement for a Prime rate plus 8% Convertible Note in the aggregate principal of $2,285,714. The note shall be paid in one or more tranches. The maturity for each tranche shall be twelve-month period from advance date. The holder has the right at any time to convert all or any part of the outstanding principal into shares of common stock of the Company. The conversion price shall be a fixed conversion price of $0.06, which upon a default event, shall be equal to the lesser of (i) the fixed conversion price; (ii) or 70% of the lowest intraday price during the 21 days preceding the conversion request. The note principal and the accrued interest has been personally guaranteed by William Delgado, the Companys CEO. On April 1, 2021, the Company received the first tranche of $1,000,000. Upon the receipt of the first tranche, the Company issued 20,000,000 warrants, exercisable at $0.10, with a 10-year term and contain full-ratchet anti-dilution protection provisions, with a fair value of $917,000. The Company also issued 4,000,000 shares of common stock as commitment shares to the noteholder, with a fair value of $184,000. On May 24, 2021, the Company received the second tranche from GS Capital Partners LLC, for $796,000, less an OID of $99,500. As of June 30, 2021, the principal balance of the two tranches totaling $1,938,750 is outstanding. On January 15, 2021, the Company and Power Up Lending Group entered into a securities purchase agreement for a 10% convertible note in the aggregate principal of $88,500 due on January 15, 2022. The conversion price is equal to the variable conversion price which is defined as 61% of the market price for the lowest two trading dates during a fifteen-day trading period ending on the latest complete trading date prior to the conversion date. The conversion feature meets the definition of a derivative and therefore requires bifurcation and will be accounted for as a derivative liability on the date the note becomes convertible. As June 30, 2021, and through the date of this report, the principal balance totaling $85,000 is outstanding. On July 13, 2021, the CEO, William J. Delgado, paid off the note, plus accrued interest and redemption fees, for a total payment of $130,010 On February 25, 2021, the Company and Leonite Capital LLC entered into a securities purchase agreement for a prime rate plus 8% convertible note in the aggregate principal of $2,285,714. The note shall be paid in one or more tranches. The maturity for each tranche shall be twelve-month period from advance date. The holder has the right at any time to convert all or any part of the outstanding principal into shares of common stock of the Company. The conversion price shall be a fixed conversion price of $0.06, which upon a default event, shall be equal to the lesser of (i) the fixed conversion price; (ii) or 70% of the lowest intraday price during the 21 days preceding the conversion request. The note principal and the accrued interest has been personally guaranteed by William Delgado, the Companys CEO. On March 1, 2021, the Company received the first tranche of $1,000,000. In connection with the first tranche, the Company issued 10,000,000 warrants, exercisable at $0.10, with a 10-year term and contain full-ratchet anti-dilution protection provisions, with a fair value of $507,000. The Company also issued 4,000,000 shares of common stock as commitment shares to the noteholder, with a fair value of $204,000. The warrants and the commitment shares resulted in a debt discount of $1,000,000, which will be amortized using the effective interest method over the life of the convertible note, and the excess of $101,000 recognized as interest expense at issuance. The warrants were evaluated to be classified as a liability, as based on the various convertible notes outstanding with variable conversion rates it cannot be determined if there are sufficient authorized shares available during the contract period. As June 30, 2021, and through the date of this report, the principal balance totaling $1,142,875 is outstanding. On April 7, 2020, the Company and Auctus Fund, LLC entered into a securities purchase agreement for a 12% convertible promissory in the aggregate principal of $197,000 due on February 7, 2021. The noteholder agreed to an extension of the maturity date to May 31, 2021 for a settlement amount of $344,548, including interest. The note is convertible into shares of the Companys common stock. The conversion price shall equal the lessor of (i) Current Market Price, or (ii) Variable Market price as defined as Market Price less a 50% discount price. The conversion feature meets the definition of a derivative and therefore requires bifurcation and was accounted for as a derivative liability on the date the note became convertible. As of June 30, 2021, and through the date of this report, the principal and interest balance totaling $344,548 is outstanding. On May 20, 2020, the Company and GS Capital Partners, LLC entered into a 10% convertible note in the aggregate principal of $165,000 due on February 20, 2021. The note can be converted into shares of common stock of the Company at any time after the issue date, at a price of $0.01 per share. During the first three months ended June 30, 2021, the noteholder converted $50,000 of principal plus accrued interest into 5,368,493 shares of common stock. The remaining principal and accrued interest of the note was paid in full on March 10, 2021. On June 29, 2020, the Company and Power Up Lending Group entered into a securities purchase agreement for a 10% Convertible Promissory Note in the aggregate principal of $53,000 due on June 29, 2021. The note can be converted (180) days following the date of the note. The conversion price is equal to the Variable Conversion price which is defined as 61% of the Market Price for the lowest two trading dates during a fifteen-day trading period ending on the latest complete trading date prior to the Conversion date. The conversion feature meets the definition of a derivative and therefore requires bifurcation and was accounted for as a derivative liability on the date the note became convertible. On January 15, 2021 the Company, paid off the convertible note payable. On August 5, 2020, the Company and Adar Alef, LLC entered into a security agreement for an 8% convertible note in the aggregate principal of $150,000 due August 5, 2021. The note is convertible into shares of the Companys common stock at any time after the 9 th On August 17, 2020, the Company and Harbor Gates Capital, LLC entered into a securities agreement for a 10% Convertible Note in the aggregate principal of $165,000 due August 17, 2021. The note carries original issue discount or $15,000. The note can be converted (180) days following the issuance date of the note. The conversion price is equal to the Variable Conversion price which is defined as 60% of the Market Price for the lowest two trading dates during a fifteen-day trading period ending on the latest complete trading date prior to the Conversion date. The conversion feature meets the definition of a derivative and therefore requires bifurcation and was accounted for as a derivative liability on the date the note became convertible. The note and accrued interest totaling $272,250.00 was paid by the Company on May 28, 2021. On August 25, 2020, the Company and Power Up Lending Group entered into a securities purchase agreement for a 10% Convertible Note in the aggregate principal of $103,000 due on August 25, 2021. The note can be converted (180) days following the date of the note. The conversion price is equal to the Variable Conversion price which is defined as 61% of the Market Price for the lowest two trading dates during a fifteen-day trading period ending on the latest complete trading date prior to the Conversion date. The conversion feature meets the definition of a derivative and therefore requires bifurcation and was accounted for as a derivative liability on the date the note became convertible. On February 25, 2021, the Company estimated the fair value of the conversion feature derivative embedded in the debenture at issuance at $151,000, based on weighted probabilities of assumptions. The key valuation assumptions used consist, in part, of the price of the Companys common stock of $0.06 at issuance date; a risk-free interest rate of 0.06% and expected volatility of the Companys common stock, of 162.43%, and the various estimated reset exercise prices weighted by probability. This plus the fair value of the warrants resulted in the calculated fair value of the debt discount being greater than the face amount of the debt, and the excess amount of $48,000 was immediately expensed as interest expense. On February 24, 2021 the convertible note and accrued interest, with a redemption fee for a total of $151,311, was paid off by the CEO of the Company. On October 6, 2020, the Company and Power Up Lending Group entered into a securities purchase agreement for a 10% Convertible Note in the aggregate principal of $75,000 due on August 25, 2021. The note can be converted (180) days following the date of the note. The conversion price is equal to the Variable Conversion price which is defined as 61% of the Market Price for the lowest two trading dates during a fifteen-day trading period ending on the latest complete trading date prior to the Conversion date. The conversion feature meets the definition of a derivative and therefore requires bifurcation and was accounted for as a derivative liability on the date the note became convertible. On March 6, 2021, the Company estimated the fair value of the conversion feature derivative embedded in the debenture at issuance at $81,198, based on weighted probabilities of assumptions. The key valuation assumptions used consist, in part, of the price of the Companys common stock of $0.04 at issuance date; a risk-free interest rate of 0.07% and expected volatility of the Companys common stock, of 171.53%, and the various estimated reset exercise prices weighted by probability. This resulted in the calculated fair value of the debt discount being greater than the face amount of the debt, and the excess amount of $6,198 was immediately expensed as interest expense. On April 9, 2021, the convertible note and accrued interest, with a redemption fee, for a total of $110,120, was paid off by the Company. On May 10, 2019, the Company and GHS Investments LLC entered into a securities agreement for a 10% Convertible Note in the aggregate principal of $335,000 due on February 10, 2020. The note carries original issue discount or $35,000. The note is convertible into shares of common stock of the Company. The Conversion Price shall mean 60% multiplied by the Market Price (as defined herein), representing a discount rate of 40%. Market Price means the lowest Traded Price for the Common Stock during the twenty (20) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. The Company is required to maintain a common share reserve of not less than three times the number of shares that is actually issuable upon full conversion of the note. The purchaser will also receive warrants to purchase 5,000,000 shares of GDSI common stock at $.01/share. Warrants will have a three-year term to exercise. The Convertible Note is personally guaranteed by William Delgado, CEO. The conversion feature meets the definition of a derivative and therefore requires bifurcation and was accounted for as a derivative liability on the date the note became convertible. As of June 30, 2021, and December 31, 2020, the principal balance totaling $789,012 and $714,012, respectively, including approximately an additional $304,000 and an additional $25,000 per month going forward that is added to principal for an open-ended extension of the due date of the note, is outstanding. In relation to the extension, the Company is required to issue 1,000,000 warrants each month, and pay $25,000 per month. As of June 30, 2021 the Company has issued 18,000,000 warrants, with a fair value of $819,000 at issuance, with are classified in warrant liability. During January 2015, the Company entered into a one-year $78,750 convertible note payable with LG Capital Funding (LG). The note bears interest at 8% per annum and is convertible at any time at the option of LG into shares of our common stock at a conversion price equal to a 40% discount of the lowest closing bid price for 20 prior trading days including the notice of conversion date. The embedded derivative liability associated with the conversion option of the note was bifurcated from the note and recorded at its fair value on the date of issuance and at each reporting date. The note requires the Company to reserve four times the potential number of shares of common stock issuable upon conversion, or 54,926,552 shares and 157,874,360 shares at June 30, 2021, and December 31, 2020, respectively. The Company defaulted on the note in January 2016. Additionally, as a result of declines in the fair value of the Companys common stock, from time to time the Company did not have sufficient authorized shares to maintain this required four times share reserve. Accordingly, the note holder had the right to accelerate the repayment of the note and unpaid interest. In addition, LG has the right to require that additional shares and/or monies be paid in connection with the defaults. During December 2017, in settlement of default, the Company and LG entered into a Convertible Note Redemption Agreement under which the Company was to repay $68,110, $39,921 in unpaid principal outstanding at December 31, 2017, and $28,189 in accrued interest, in five payments through April 2018. Through April 2018, the Company repaid $6,500 of principal under the Convertible Note Redemption Agreement. The Company defaulted on the Convertible Note Redemption Agreement in April 2018 and the $28,189 in accrued interest was converted to principal. As of June 30, 2021, and December 31, 2020, and through the date of this report, the principal balance totaling $48,610 is outstanding and remains in default. During January 2015, the Company entered into a two-year convertible note payable for up to $250,000 with JMJ Financial (JMJ), of which $110,000 was funded between January and April 2015. The note was issued with an original issue discount of 10% of amounts funded, had a one-time 12% interest charge as it was not repaid within 90 days of the funding date, and is convertible at any time at the option of JMJ into shares of our common stock at the lesser of $0.075 per share or 60% of the average of the trading price in the 25 trading days prior to conversion. The embedded derivative liability associated with the conversion option of the note was bifurcated from the note and recorded at its fair value on the date of issuance and at each reporting date. The note requires the Company to reserve 26,650,000 shares of common stock. JMJ had the option to finance additional amounts up to the balance of the $250,000 during the term of the note. The Company defaulted on the note during January 2017. During December 2017, in settlement of default, the Company and JMJ entered into a Repayment Agreement under which the Company was to repay $84,514, $69,070 in unpaid principal outstanding at December 31, 2017, and $15,444 in accrued interest, in four payments through May 2018. Through May 2018, the Company repaid $25,000 of principal under the Repayment Agreement. The Company defaulted on the Repayment Agreement in May 2018 and the $15,444 in accrued interest was converted to principal. As of June 30, 2021, and December 31, 2020, and through the date of this report, the principal balance totaling $59,514 is outstanding and remains in default. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 6 – COMMITMENTS AND CONTINGENCIES Consulting agreements The Company entered into two consulting agreements (see Note 5) in May 2016, for services to be provided in connection towards the resolution of the Rontan lawsuit (below). The consulting agreements includes a monthly retainer payment of $10,000 to each consultant. The agreement also includes consideration of 5,000,000 shares of restricted common stock of the Company, plus a 5% cash consideration of the Resolution Progress Funding, (defined as upon the retention of legal counsel and receipt of funding for the litigation), as of the Resolution Progress Funding date and 10,000,000 shares of restricted common stock of the Company and a 5% cash consideration of the Resolution Funding amount (defined as a settlement or judgement in favor of the Company by Rotan), at the Resolution Funding date. The Resolution Progress funding was met on December 22, 2017. On March 1, 2019, the Company entered into a consulting agreement with the former owner of HarmAlarm. The agreement commenced on March 1, 2019 and shall continue for a period of thirty-six (36) months. The agreement may only be terminated by either incapacitation or death of consultant or for cause with ten (10) days written notice. During the term of the agreement consultant will be paid at a rate of $5,000 per month. On March 1, 2019, the Company entered into a consulting agreement with a former key employee of HarmAlarm. The agreement commenced on March 1, 2019 and shall continue for a period of thirty-six (36) months. The agreement may only be terminated by either incapacitation or death of consultant or for cause with ten (10) days written notice. During the term of the agreement consultant will be paid an hourly rate of $50.00 per hour. Share Purchase and Sale Agreement for Acquisition of Grupo Rontan Electro Metalurgica, S.A. Effective October 13, 2015, the Company (as Purchaser) entered into the SPSA dated October 8, 2015 with Joao Alberto Bolzan and Jose Carlos Bolzan, both Brazilian residents (collectively, the Sellers) and Grupo Rontan Electro Metalurgica, S.A., a limited liability company duly organized and existing under the laws of Federative Republic of Brazil (Rontan) (collectively, the Parties), pursuant to which the Sellers agreed to sell 100% of the issued and outstanding shares of Rontan to the Purchaser on the closing date. The purchase price shall consist of a cash amount, a stock amount and an earn-out amount as follows: (i) Brazilian Real (R) $100 million (approximately US$26 million) to be paid by the Purchaser in equal monthly installments over a period of forty eight (48) months following the closing date; (ii) an aggregate of R$100 million (approximately US$26 million) in shares of the Purchasers common stock, valued at US$1.00 per share; and (iii) an earn-out payable within ten business days following receipt by the Purchaser of Rontans audited financial statements for the 12-months ended December 31, 2017, 2018 and 2019. The earn-out shall be equal to the product of (i) Rontans earnings before interest, taxes, depreciation and amortization (EBITDA) for the last 12 months, and (ii) twenty percent and is contingent upon Rontans EBITDA results for any earn-out period being at least 125% of Rontans EBITDA for the 12-months ended December 31, 2015. It is the intention of the parties that the stock amount will be used by Rontan to repay institutional debt outstanding as of the closing date. Under the terms of a Finders Fees Agreement dated April 14, 2014, we have agreed to pay RLT Consulting Inc., a related party, a fee of 2% (two percent) of the Transaction Value, as defined in the agreement, of Rontan upon closing. The fee is payable one-half in cash and one-half in shares of our common stock. Specific conditions to closing consist of: a) Purchasers receipt of written limited assurance of an unqualified opinion with respect to Rontans audited financial statements for the years ended December 31 2013 and 2014 (the Opinion); b) The commitment of sufficient investment by General American Capital Partners LLC (the Institutional Investor), in the Purchaser following receipt of the Opinion; c) The accuracy of each Parties representations and warranties contained in the SPSA; d) The continued operation of Rontans business in the ordinary course; e) The maintenance of all of Rontans bank credit lines in the maximum amount of R$200 million (approximately US$52 million) under the same terms and conditions originally agreed with any such financial institutions, and the maintenance of all other types of funding arrangements. As of the date of the SPSA, Rontans financial institution debt consists of not more than R$200 million (approximately US$52 million), trade debt of not more than R$50 million (approximately US$13 million) and other fiscal contingencies of not more that R$95 million (approximately US$24.7 million); f) Rontan shall enter into employment or consulting service agreements with key employees and advisors identified by the Purchaser, including Rontans Chief Executive Officer; and g) The Sellers continued guarantee of Rontans bank debt for a period of 90 days following issuance of the Opinion, among other items. The Institutional Investor has committed to invest sufficient capital to facilitate the transaction, subject to receipt of the Opinion, as well as the ability to acquire 100% of the outstanding stock of Rontan at a price of $200 million BR, and the Company can acquire 100% of all real estate held by Rontan. Subject to satisfaction or waiver of the conditions precedent provided for in the SPSA, the closing date of the transaction shall take place within 10 business days from the date of issuance of the Opinion. Rontan is engaged in the manufacture and distribution of specialty vehicles and acoustic/visual signaling equipment for the industrial and automotive markets. Subsequent to December 31, 2015, on April 1, 2016, we believed that we had satisfied or otherwise waived the conditions to closing (as disclosed under the SPSA, the closing was subject to specific conditions to closing, which were waivable by us,) and advised the Sellers of our intention to close the SPSA and demanded delivery of the Rontan Securities. The Sellers, however, notified us that they intend to terminate the SPSA. We believe that the Sellers had no right to terminate the SPSA and that notice of termination by the Sellers was not permitted under the terms of the SPSA. On January 31, 2018, we announced that we initiated a lawsuit for damages against Grupo Rontan Metalurgica, S. A, (Rontan) and that companys controlling shareholders, Joao Alberto Bolzan and Jose Carlos Bolzan. The action has been filed in the United States District Court for the Southern District of Florida. The complaint alleges that Rontan is wholly-owned by Joao Bolzan and Jose Bolzan. In the complaint, we further allege that Rontan and its shareholders improperly terminated a Share Purchase and Sale Agreement (the SPA) by which we were to acquire whole ownership of Rontan. On February 5, 2018, United States District Court Southern District of Florida filed a Pretrial Scheduling Order and Order Referring Case to Mediation dated February 5, 2018 for the Companys lawsuit against Grupo Rontan Electro Metalurgica, S.A., et al. The Case No. is 18-80106-Civ-Middlebrooks/Brannon. The court has issued a schedule outlining various documents and responses that are to be delivered by the parties as part of the discovery plan. On April 25, 2018, the Note of Filing Proposed Summons was completed by the Company. On April 26, 2018, a summons was issued to Grupo Rontan Electro Metalurgica, S.A. Also, on May 15, 2018, the Company filed a motion for Issuance of Letters Rogatory. On or about January 31, 2019, Defendants filed a Motion to Dismiss for Failure to State a Claim for failure to fulfill conditions precedent in the consummation of the contract in question. Defendants filed a Motion to Dismiss challenging jurisdiction, venue, and forum nonconvenes forum nonconvenes On February 3, 2020, the U.S District Court awarded the Company Specific Performance (Acquisition of the Plant in Tauti, Brazil) and incidental damages of approximately $192,000,000. On August 16, 2021, the court awarded the Company an additional $2,086,233 in legal fees and costs. The defendants have filed an intent to appeal the awards, but as of this date have not submitted any filings or briefs. |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 6 Months Ended |
Jun. 30, 2021 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | NOTE 7 – STOCKHOLDERS EQUITY Stock Incentive Plans 2014 Global Digital Solutions Equity Incentive Plan On May 9, 2014, our shareholders approved the 2014 Global Digital Solutions Equity Incentive Plan (Plan) and reserved 20,000,000 shares of our common stock for issuance pursuant to awards thereunder, including options, stock appreciation right, restricted stock, restricted stock units, performance awards, dividend equivalents, or other stock-based awards. The Plan is intended as an incentive, to retain in the employ of the Company, our directors, officers, employees, consultants and advisors, and to attract new officers, employees, directors, consultants and advisors whose services are considered valuable, to encourage the sense of proprietorship and to stimulate the active interest of such persons in the development and financial success of the Company and its subsidiaries. In accordance with the ACS 718, Compensation – Stock Compensation Awards Issued Under Stock Incentive Plans As of June 30, 2021, and December 31, 2020, we have outstanding 13,650,002 0.006 0.64 4.6 years During the three and six-month period ended June 30, 2021, and the year ended December 31, 2020 , Restricted Stock Units On October 10, 2014, we granted an employee 1 million RSUs convertible into 1 million shares of the Companys common stock, with a grant date fair market value of $100,000. The grant was made under our 2014 Equity Incentive Plan. 333,333 RSUs will vest in respect of each calendar year (commencing January 1 and ending December 31) of the Company from 2015 through 2017 if the Company has achieved at least 90% of the total revenue and EBITDA midpoint targets set forth in the agreement. If less than 90% of the target is achieved in respect of any such fiscal year, then the number of RSUs vesting for that fiscal year shall be 333,333 times the applicable percentage set forth in the agreement; provided that, The aggregate intrinsic value of the restricted stock grant was $0 as of June 30, 2021, and December 31, 2020. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 8 – INCOME TAXES The Company provides for a valuation allowance when it is more likely than not that they will not realize a portion of the deferred tax assets. The Company has established a valuation allowance against their net deferred tax asset due to the uncertainty that enough taxable income will be generated in those taxing jurisdictions to utilize the assets. Therefore, they have not reflected any benefit of such deferred tax assets in the accompanying financial statements. The Company has reviewed all income tax positions taken or that are expected to be taken for all open years and determined that their income tax positions are appropriately stated and supported for all open years. The Company is subject to U.S. federal income tax examinations by tax authorities for years after 2011 due to unexpired net operating loss carryforwards originating in and subsequent to that year. The Company may be subject to income tax examinations for the various taxing authorities which vary by jurisdiction. The Companys policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the consolidated statements of operations. As of June 30, 2021. The Company files income tax returns in the U.S. federal jurisdiction and the various states in which they operate. The former members of NACSV are required to file separate federal and state tax returns for NACSV for the periods prior to our acquisition of NACSV. The Company files consolidated tax returns for subsequent periods. The Company has not filed their U.S. federal and certain state tax returns since 2014 and currently do not have any examinations ongoing. Tax returns for the years 2012 onwards are subject to federal, state or local examinations. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 9 – RELATED PARTY TRANSACTIONS Due to Officer The Due to Officer is due on demand, does not bear or accrue interest and is unsecured. On February 24, 2021, the CEO, William J. Delgado, paid off a convertible note, plus accrued interest and redemption fees (see Note 5), for a total payment of $151,211. On May 12, 2021, he paid off a convertible note plus accrued interest and redemption fees, for a total payment of $238,850 (see Note 5). The balance owing to the Officer in the amount of $ 522,572 253,291 During the three months ended June 30, 2021, the Company paid its CEO bonus compensation of approximately $820,000 for the execution of personal guarantees to Parabellum Inc, Leonite Capital LLC, GS Capital LLC, and GHS Capital, LLC in the approximate aggregate amount of $6,500,000, which is recognized in selling, general and administrative expenses in the accompanying condensed consolidated statement of operations. Due from Related Party During the year ended December 31, 2020, the Company advanced Eco-Growth Strategies, Inc., a related entity, $70,710 to cover administrative costs. During the six month period ended June 30, 2021, Eco-Growth Strategies, Inc repaid the advance from December 31, 2020 and the additional $270,000 that the Company advanced. Accrued Compensation As of June 30, 2021, and December 31, 2020, we had $0 and $64,481 payable to William J. Delgado and $82,834 and $77,834 payable to Jerome Gomolski, respectively. Accrued compensation is included in Accrued expenses. Schedule of Accured Compensation William Jerome Total Delgado Gomolski Balance December 31, 2020 $ 142,315 $ 64,481 $ 77,834 Six months ended June 30, 2021 Salary 964,158 940,158 24,000 Promissory notes paid by William Delgado 390,261 390,261 Payments (1,409,900 ) (1,394,000 ) (15,000 ) Balance June 30, 2021 $ 86,834 $ — $ 86,834 RLT Consulting As of June 30, 2021, and December 31, 2020, the Company had a note payable to RLT Consulting and a consulting agreement see (see Note 5). RLT Consulting is owned by Ross Trevino, a Vice President of the Company. Accounts Payable June 30, December 31, 2021 2020 RLT Consulting $ 21,591 $ 21,591 Jerry Gomolski 25,000 25,000 Charter 804CS 20,099 20,099 Gary Gray 12,000 12,000 Compensation owed to related parties $ 78,690 $ 78,690 During August 2017, Dragon Acquisitions, an entity owned by William Delgado, a related party, and an individual lender entered into a Promissory Note agreement for $20,000 as well as $2,000 in interest to accrue through maturity on August 31, 2018 for a total of $22,000 due on August 31, 2018. Dragon Acquisition assumed payment of a payable of the Company and the Company took on the note. The Company defaulted on the note at maturity in August 2018. The lender has extended the maturity date to December 31, 2021. The $22,000 note remained outstanding as of June 30, 2021 and December 31,2020 and through the date of this report. The June 2018 note bears a personal guarantee by William Delgado, the Chief Executive Officer of the Company. As further security for the note, Mr. Delgado has also pledged the 1,000,000 Convertible Preferred Shares of the Company that he owns, as well as 5,000,000 common shares of NaturalShrimp Incorporated, another public company in which Mr. Delgado is a director and Chief Financial Officer. Prepaid Expense - Related Party Prepaid expense represents the cost of an airplane purchased by the Company and transferred to Valley Air Express, a related entity, in exchange for flight hours. The prepaid expense of $ 520,000 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 10 – SUBSEQUENT EVENTS On July 13, 2021, the CEO, William J. Delgado 130,010 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited financial information as of and for the three and six months ended June 30, 2021 and 2020 has been prepared in accordance with accounting principles generally accepted in the U.S. for interim financial information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments, unless otherwise indicated) considered necessary for a fair presentation of our financial position at such date and the operating results and cash flows for such periods. Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission, or the SEC. These unaudited financial statements and related notes should be read in conjunction with our Annual Report on Form 10-K that includes the audited financial statements for the year ended December 31, 2020 as filed with the SEC on April 19, 2021. The condensed consolidated balance sheet at December 31, 2020 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles in the U.S. for complete financial statements. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries, NACSV, GDSI Florida, LLC, Global Digital Solutions, LLC and Aviation Services f/k/a HarmAlarm. All intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity-based transactions and disclosure of contingent liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the financial statements. Significant estimates include the derivative liability valuation, deferred tax asset and valuation allowance, and assumptions used in Black-Scholes-Merton, or BSM, or other valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate. |
Income Taxes | Income Taxes Income taxes are accounted for based upon an asset and liability approach. Accordingly, deferred tax assets and liabilities arise from the difference between the tax basis of an asset or liability and its reported amount in the financial statements. Deferred tax amounts are determined using the tax rates expected to be in effect when the taxes will be paid or refunds received, as provided under currently enacted tax law. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense or benefit is the tax payable or refundable, respectively, for the period plus or minus the change in deferred tax assets and liabilities during the period. Accounting guidance requires the recognition of a financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company believes its income tax filing positions and deductions will be sustained upon examination and accordingly, no reserves, or related accruals for interest and penalties have been recorded at June 30, 2021, and December 31, 2020. The Company recognizes interest and penalties on unrecognized tax benefits as well as interest received from favorable tax settlements within income tax expense. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid investments with original maturities of three months or less to be cash equivalents. We maintain our cash in high-quality financial institutions. The balances, at times, may exceed federally insured limits. As of June 30, 2021, and December 31, 2020, the Companys cash balance did not exceed FDIC coverage. As of June 30, 2021 and December 31, 2020, the Company did not have any cash equivalents. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying value of cash, accounts payable and accrued expenses approximate their fair values based on the short-term maturity of these instruments. The carrying amounts of debt were also estimated to approximate fair value. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement). This fair value measurement framework applies at both initial and subsequent measurement. The three levels of the fair value hierarchy defined by ASC 820 are as follows: ● Level 1 – Quoted prices in active markets for identical assets or liabilities ● Level 2 – Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly ● Level 3 – Significant unobservable inputs that cannot be corroborated by market data. |
Derivative Financial Instruments | Derivative Financial Instruments We account for conversion options embedded in convertible notes payable in accordance with the Financial Accounting Standards Board (FASB) Accounting Standard Codification (ASC) 815, Derivatives and Hedging Embedded Derivatives Derivative Liabilities Derivatives and Hedging – Contracts in Entitys own Equity Change in fair value of derivative liability |
Earnings (Loss) Per Share (“EPS”) | Earnings (Loss) Per Share (EPS) Basic EPS is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding. Diluted EPS includes the effect from potential issuance of common stock, such as stock issuable pursuant to the exercise of stock options and warrants and the assumed conversion of convertible notes. The following table summarizes the securities that were included in the diluted per share calculation: Securities excluded from the diluted per share calculation Six Months Ended June 30, 2021 2020 Convertible notes and accrued interest 65,352,167 62,555,959 Preferred Stock 261,169,294 214,560,000 Stock options 13,650,002 13,650,002 Warrants 48,446,875 1,500,000 Potentially dilutive securities 388,618,338 292,265,961 |
Stock Based Compensation | Stock Based Compensation In accordance with ASC 718, Compensation – Stock Compensation the Company measures the cost of employee services received in exchange for share-based compensation measured at the grant date fair value of the award. The Companys accounting policy for equity instruments issued to advisors, consultants and vendors in exchange for goods and services follows the provisions of FASB ASC 505-50 . |
Convertible Instruments | Convertible Instruments The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with accounting standards for Accounting for Derivative Instruments and Hedging Activities. Accounting standards generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. accounting standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as The Meaning of Conventional Convertible Debt Instrument. The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with professional standards when Accounting for Convertible Securities with Beneficial Conversion Features, as those professional standards pertain to Certain Convertible Instruments. Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Original issue discounts (OID) under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. ASC 815-40 provides that, among other things, generally, if an event is not within the entitys control could or require net cash settlement, then the contract shall be classified as an asset or a liability. |
Convertible Securities | Convertible Securities Based upon ASC 815-15, we have adopted a sequencing approach regarding the application of ASC 815-40 to convertible securities. We will evaluate our contracts based upon the earliest issuance date. In the event partial reclassification of contracts subject to ASC 815-40-25 is necessary, due to our inability to demonstrate we have sufficient shares authorized and unissued, shares will be allocated on the basis of issuance date, with the earliest issuance date receiving first allocation of shares. If a reclassification of an instrument were required, it would result in the instrument issued latest being reclassified first. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entitys Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entitys Own Equity (ASU 2020-06), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuers own stock and classified in stockholders equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. For SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. The Company is currently evaluating the impact that ASU 2020-06 may have on its consolidated financial statements and related disclosures. Management is evaluating other new accounting pronouncements but doesnt expect them to have material impact on our financial position or results of operations. |
Management’s Evaluation of Subsequent Events | Managements Evaluation of Subsequent Events The Company evaluates events that have occurred after the balance sheet date of June 30, 2021, through the date which the financial statements were issued. Based upon the review, other than described in Note 10 – Subsequent Events, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Securities excluded from the diluted per share calculation | The following table summarizes the securities that were included in the diluted per share calculation: Securities excluded from the diluted per share calculation |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Six Months Ended June 30, 2021 2020 Convertible notes and accrued interest 65,352,167 62,555,959 Preferred Stock 261,169,294 214,560,000 Stock options 13,650,002 13,650,002 Warrants 48,446,875 1,500,000 Potentially dilutive securities 388,618,338 292,265,961 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | As of June 30, 2021, and December 31, 2020, accrued expenses consist of the following amounts: Schedule of Accrued Expenses |
ACCRUED EXPENSES | June 30, 2021 December 31, 2020 Accrued compensation to executive officers and employee $ 86,834 $ 142,315 Accrued professional fees and settlements 26,990 259,119 Accrued interest 843,941 942,446 Total $ 957,765 $ 1,343,880 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
summary of activity of Level 3 liabilities | The following is a summary of activity of Level 3 liabilities June 30, 2021 December 31, 2020 Derivative liability: Balance at beginning of period $ 9,367,159 $ 1,158,008 Additions 266,000 2,802,754 Settlements (938,171 ) (1,743,734 ) Change in fair value (7,779,988 ) 7,132,131 Balance at end of year $ 915,000 $ 9,367,159 June 30, 2021 December 31, 2020 Warrant liability: Balance at beginning of period $ — $ — Additions 2,326,000 — Change in fair value (849,000 ) — Balance at end of year $ 1,477,000 $ — |
[custom:DisclosureFairValueMeasurementsDetailsAbstract] | June 30, 2021 December 31, 2020 Derivative liability: Balance at beginning of period $ 9,367,159 $ 1,158,008 Additions 266,000 2,802,754 Settlements (938,171 ) (1,743,734 ) Change in fair value (7,779,988 ) 7,132,131 Balance at end of year $ 915,000 $ 9,367,159 June 30, 2021 December 31, 2020 Warrant liability: Balance at beginning of period $ — $ — Additions 2,326,000 — Change in fair value (849,000 ) — Balance at end of year $ 1,477,000 $ — |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
Schedule of Accured Compensation | Schedule of Accured Compensation |
RELATED PARTY TRANSACTIONS | William Jerome Total Delgado Gomolski Balance December 31, 2020 $ 142,315 $ 64,481 $ 77,834 Six months ended June 30, 2021 Salary 964,158 940,158 24,000 Promissory notes paid by William Delgado 390,261 390,261 Payments (1,409,900 ) (1,394,000 ) (15,000 ) Balance June 30, 2021 $ 86,834 $ — $ 86,834 |
Accounts Payable | Accounts Payable |
RELATED PARTY TRANSACTIONS (Details 2) | June 30, December 31, 2021 2020 RLT Consulting $ 21,591 $ 21,591 Jerry Gomolski 25,000 25,000 Charter 804CS 20,099 20,099 Gary Gray 12,000 12,000 Compensation owed to related parties $ 78,690 $ 78,690 |
DESCRIPTION OF BUSINESS (Detail
DESCRIPTION OF BUSINESS (Details Narrative) | Jun. 30, 2021USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Working Capital Deficit | $ 10,919,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - shares | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive securities | 388,618,338 | 292,265,961 |
Convertible Notes Payable [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive securities | 65,352,167 | 62,555,959 |
Preferred Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive securities | 261,169,294 | 214,560,000 |
Equity Option [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive securities | 13,650,002 | 13,650,002 |
Warrant [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive securities | 48,446,875 | 1,500,000 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Accrued compensation to executive officers and employee | $ 86,834 | $ 142,315 |
Accrued professional fees and settlements | 26,990 | 259,119 |
Accrued interest | 843,941 | 942,446 |
Total | $ 957,765 | $ 1,343,880 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | |||||
Balance at beginning of period | $ 9,367,159 | ||||
Change in fair value | $ (2,345,836) | $ 1,582,617 | (7,779,988) | $ 3,240,320 | |
Balance at end of year | 915,000 | 915,000 | $ 9,367,159 | ||
Derivative [Member] | Fair Value, Inputs, Level 3 [Member] | |||||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | |||||
Balance at beginning of period | 9,367,159 | 1,158,008 | 1,158,008 | ||
Additions | 266,000 | 2,802,754 | |||
Settlements | (938,171) | (1,743,734) | |||
Change in fair value | (7,779,988) | 7,132,131 | |||
Balance at end of year | 915,000 | 915,000 | 9,367,159 | ||
Warrant [Member] | Fair Value, Inputs, Level 3 [Member] | |||||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | |||||
Balance at beginning of period | |||||
Additions | 2,326,000 | ||||
Change in fair value | (849,000) | ||||
Balance at end of year | $ 1,477,000 | $ 1,477,000 |
FAIR VALUE MEASUREMENTS (Deta_2
FAIR VALUE MEASUREMENTS (Details Narrative) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 0.05% | 0.08% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 143.35% | 103.71% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 2 months 15 days |
STOCKHOLDERS_ EQUITY (Details N
STOCKHOLDERS’ EQUITY (Details Narrative) - $ / shares | 6 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | |
Equity [Abstract] | ||
Stock Options Outstanding | 13,650,002 | 13,650,002 |
Exercise Price, Minimum Value | $ 0.006 | |
Exercise Price, Maximum Value | $ 0.64 | |
Average Remaining Term | 4 years 7 months 6 days |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Related Party Transaction [Line Items] | |
Balance December 31, 2020 | $ 142,315 |
Six months ended June 30, 2021 Salary | 964,158 |
Promissory notes paid by William Delgado | 390,261 |
Payments | (1,409,900) |
Balance June 30, 2021 | 86,834 |
William Delgado [Member] | |
Related Party Transaction [Line Items] | |
Balance December 31, 2020 | 64,481 |
Six months ended June 30, 2021 Salary | 940,158 |
Promissory notes paid by William Delgado | 390,261 |
Payments | (1,394,000) |
Balance June 30, 2021 | |
Jerome Gomolski [Member] | |
Related Party Transaction [Line Items] | |
Balance December 31, 2020 | 77,834 |
Six months ended June 30, 2021 Salary | 24,000 |
Payments | (15,000) |
Balance June 30, 2021 | $ 86,834 |
RELATED PARTY TRANSACTIONS (D_2
RELATED PARTY TRANSACTIONS (Details 2) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Related Party Transaction [Line Items] | ||
Compensation owed to related parties | $ 78,690 | $ 78,690 |
RLT Consulting | ||
Related Party Transaction [Line Items] | ||
Compensation owed to related parties | 21,591 | 21,591 |
Jerry Gomolski | ||
Related Party Transaction [Line Items] | ||
Compensation owed to related parties | 25,000 | 25,000 |
Charter 804CS | ||
Related Party Transaction [Line Items] | ||
Compensation owed to related parties | 20,099 | 20,099 |
Gary Gray | ||
Related Party Transaction [Line Items] | ||
Compensation owed to related parties | $ 12,000 | $ 12,000 |
RELATED PARTY TRANSACTIONS (D_3
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |||
Related Party Transaction, Expenses from Transactions with Related Party | $ 522,572 | ||
Employee-related Liabilities, Current | $ 253,291 | ||
Prepaid Expesnes - Related Party | $ 520,000 | $ 520,000 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | Jul. 13, 2021 | Jun. 30, 2021 | Jun. 30, 2020 |
Subsequent Event [Line Items] | |||
Amount Due to Office | $ 20,390 | ||
Subsequent Event [Member] | William J. Delgado | |||
Subsequent Event [Line Items] | |||
Amount Due to Office | $ 130,010 |