Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 05, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | Data443 Risk Mitigation, Inc. | |
Entity Central Index Key | 0001068689 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 303,248,465 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash | $ 548,793 | $ 18,673 |
Accounts receivable | 33,612 | 63,556 |
Inventory | 8,301 | 8,301 |
Prepaid expense and other current assets | 323 | 807 |
Total current assets | 591,029 | 91,337 |
Property and equipment, net | 232,329 | 100,127 |
Operating lease right-of-use assets, net | 282,699 | 395,388 |
Intellectual property, net of accumulated amortization | 2,264,062 | 3,141,938 |
Deposits | 31,440 | 20,944 |
Total Assets | 3,401,559 | 3,749,734 |
Current Liabilities | ||
Accounts payable | 217,364 | 379,325 |
Payroll liabilities | 131,729 | 28,870 |
Deferred revenue | 1,153,677 | 728,749 |
Interest payable | 119,039 | 59,979 |
Notes payable | 425,517 | 165,120 |
Convertible notes payable, net of unamortized discount | 2,891,253 | 3,212,786 |
Derivative liability | 9,275,204 | 2,601,277 |
Due to a related party | 1,083,866 | 1,103,314 |
License fee payable | 1,094,691 | 1,094,691 |
Operating lease liability | 79,856 | 86,372 |
Finance lease liability | 85,316 | 34,425 |
Total Current Liabilities | 16,557,512 | 9,494,908 |
Notes payable - non-current | 489,000 | |
Deferred revenues - non-current | 58,741 | 224,797 |
Operating lease liability - non-current | 289,045 | 373,000 |
Finance lease liability - non-current | 129,742 | 53,480 |
Total Liabilities | 17,524,040 | 10,146,185 |
Commitments and Contingencies | ||
Stockholders' Deficit | ||
Preferred stock: 337,500 authorized; $0.001 par value 1,334 shares issued and outstanding | 1 | 1 |
Common stock: 250,000,000 authorized; $0.001 par value 160,108,545 and 9,692,065 shares issued and outstanding, respectively | 160,108 | 9,692 |
Additional paid in capital | 20,082,520 | 15,204,771 |
Accumulated deficit | (34,365,110) | (21,610,915) |
Total Stockholders' Deficit | (14,122,481) | (6,396,451) |
Total Liabilities and Stockholders' Deficit | $ 3,401,559 | $ 3,749,734 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2020 | Mar. 05, 2020 | Dec. 31, 2019 | Oct. 14, 2019 |
Statement of Financial Position [Abstract] | ||||
Preferred stock, shares authorized | 337,500 | |||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||
Preferred stock, shares issued | 1,334 | |||
Preferred stock, shares outstanding | 1,334 | |||
Common stock, shares authorized | 250,000,000 | 250,000,000 | ||
Common stock, par value | $ 0.001 | |||
Common stock, shares issued | 9,692,065 | |||
Common stock, shares outstanding | 160,108,545 | 9,692,065 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenue | $ 465,935 | $ 358,612 | $ 943,812 | $ 501,403 |
Cost of revenue | 19,097 | 19,195 | 53,386 | 39,746 |
Gross profit | 446,838 | 339,417 | 890,426 | 461,657 |
Operating expenses | ||||
General and administrative | 1,666,196 | 1,196,576 | 3,091,430 | 1,872,075 |
Sales and marketing | 27,393 | 155,907 | 148,211 | 381,594 |
Research and development | 4,205 | |||
Total operating expenses | 1,693,589 | 1,352,483 | 3,239,641 | 2,257,874 |
Net loss from operations | (1,246,751) | (1,013,066) | (2,349,215) | (1,796,217) |
Other income (expense) | ||||
Interest expense | (553,765) | (363,928) | (1,072,165) | (663,827) |
Gain on contingent liability | 150,000 | 450,000 | ||
Loss on settlement on debt | (54,000) | |||
Change in fair value of derivative liability | (772,664) | 2,420,622 | (9,278,815) | 9,233,775 |
Total other income (expense) | (1,326,429) | 2,206,694 | (10,404,980) | 9,019,948 |
Income (loss) before income taxes | (2,573,180) | 1,193,628 | (12,754,195) | 7,223,731 |
Provision for income taxes | ||||
Net income (loss) | $ (2,573,180) | $ 1,193,628 | $ (12,754,195) | $ 7,223,731 |
Basic income (loss) per Common Share | $ (0.04) | $ 0.13 | $ (0.32) | $ 0.87 |
Basic weighted average number of common shares outstanding | 65,203,957 | 9,168,114 | 39,873,339 | 8,343,879 |
Diluted income (loss) per Common Share | $ (0.04) | $ 0.12 | $ (0.32) | $ 0.81 |
Diluted weighted average number of common shares outstanding | 65,203,957 | 9,827,784 | 39,873,339 | 8,972,919 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit (Unaudited) - USD ($) | Convertible Preferred Series A [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2018 | $ 1 | $ 6,816 | $ 8,689,353 | $ (21,003,544) | $ (12,307,374) |
Balance, shares at Dec. 31, 2018 | 1,334 | 6,816,281 | |||
Settlement of stock subscriptions | $ 336 | (336) | |||
Settlement of stock subscriptions, shares | 336,020 | ||||
Stock subscriptions | 225,000 | 225,000 | |||
Warrants on stock subscriptions | 83,334 | 83,334 | |||
Common issued to settle debt | $ 2,000 | 3,203,000 | 3,205,000 | ||
Common issued to settle debt, shares | 1,999,997 | ||||
Stock-based compensation | 363,409 | 363,409 | |||
Stock-based compensation, shares | |||||
Common stock issued for conversion of debt | $ 558 | 499,442 | 500,000 | ||
Common stock issued for conversion of debt, shares | 557,942 | ||||
Net income loss | 7,223,731 | 7,223,731 | |||
Balance at Jun. 30, 2019 | $ 1 | $ 9,710 | 13,063,202 | (13,779,813) | (706,900) |
Balance, shares at Jun. 30, 2019 | 1,334 | 9,710,240 | |||
Balance at Mar. 31, 2019 | $ 1 | $ 8,377 | 10,760,255 | (14,973,441) | (4,204,808) |
Balance, shares at Mar. 31, 2019 | 1,334 | 8,376,908 | |||
Stock subscriptions | 225,000 | 225,000 | |||
Warrants on stock subscriptions | 250,878 | 250,878 | |||
Common issued to settle debt | $ 1,333 | 1,508,667 | 1,510,000 | ||
Common issued to settle debt, shares | 1,333,332 | ||||
Stock-based compensation | 318,402 | 318,402 | |||
Stock-based compensation, shares | |||||
Net income loss | 1,193,628 | 1,193,628 | |||
Balance at Jun. 30, 2019 | $ 1 | $ 9,710 | 13,063,202 | (13,779,813) | (706,900) |
Balance, shares at Jun. 30, 2019 | 1,334 | 9,710,240 | |||
Balance at Dec. 31, 2019 | $ 1 | $ 9,692 | 15,204,771 | (21,610,915) | (6,396,451) |
Balance, shares at Dec. 31, 2019 | 1,334 | 9,692,065 | |||
Settlement of stock subscriptions | $ 1,496 | 1,496 | |||
Settlement of stock subscriptions, shares | 1,496,516 | ||||
Stock-based compensation | $ 12,435 | 686,571 | 699,006 | ||
Stock-based compensation, shares | 12,435,000 | ||||
Common stock issued for conversion of debt | $ 134,019 | 4,195,140 | 4,329,159 | ||
Common stock issued for conversion of debt, shares | 134,019,210 | ||||
Stock issued for purchase of asset | $ 2,466 | (2,466) | |||
Stock issued for purchase of asset, shares | 2,465,754 | ||||
Net income loss | (12,754,195) | (12,754,195) | |||
Balance at Jun. 30, 2020 | $ 1 | $ 160,108 | 20,082,520 | (34,365,110) | (14,122,481) |
Balance, shares at Jun. 30, 2020 | 1,334 | 160,108,545 | |||
Balance at Mar. 31, 2020 | $ 1 | $ 19,482 | 16,725,143 | (31,791,930) | (15,047,304) |
Balance, shares at Mar. 31, 2020 | 1,334 | 19,482,091 | |||
Settlement of stock subscriptions | $ 1,496 | (1,496) | |||
Settlement of stock subscriptions, shares | 1,496,516 | ||||
Stock-based compensation | $ 11,935 | 481,419 | 493,354 | ||
Stock-based compensation, shares | 11,935,000 | ||||
Common stock issued for conversion of debt | $ 127,195 | 2,877,454 | 3,004,649 | ||
Common stock issued for conversion of debt, shares | 127,194,938 | ||||
Net income loss | (2,573,180) | (2,573,180) | |||
Balance at Jun. 30, 2020 | $ 1 | $ 160,108 | $ 20,082,520 | $ (34,365,110) | $ (14,122,481) |
Balance, shares at Jun. 30, 2020 | 1,334 | 160,108,545 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
Net income (loss) | $ (2,573,180) | $ 1,193,628 | $ (12,754,195) | $ 7,223,731 | |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||
Change in fair value of derivative liability | 772,664 | (2,420,622) | 9,278,815 | (9,233,775) | |
Gain on contingent liability | (150,000) | (450,000) | |||
Loss on settlement of debt | 54,000 | ||||
Stock-based compensation expense | 699,006 | 363,409 | |||
Depreciation and amortization | 909,851 | 592,309 | |||
Amortization of debt discount | 816,949 | 677,021 | |||
Bad debt | 50,800 | ||||
Changes in operating assets and liabilities: | |||||
Accounts receivable | (20,856) | (494,740) | |||
Inventory | (8,301) | ||||
Prepaid expenses and other assets | 484 | (16,597) | |||
Accounts payable | (161,961) | 208,964 | |||
Deferred revenue | 258,872 | 397,867 | |||
Payroll liability | 102,859 | 17,368 | |||
Accrued interest | 171,639 | (19,408) | |||
Due to related parties | 20,769 | ||||
Operating lease payments | 22,218 | 55,742 | |||
Deposit paid | (10,496) | (18,456) | |||
Net Cash used in Operating Activities | (582,015) | (684,097) | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Acquisition of intellectual property | (265,000) | ||||
Purchase of property and equipment | (5,081) | (4,629) | |||
Net Cash used in Investing Activities | (5,081) | (269,629) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Proceeds from issuance of convertible notes payable | 652,250 | 725,000 | |||
Proceeds from issuance of stock and member distributions | 600,000 | ||||
Capital lease payments | (31,943) | (5,452) | |||
Proceeds from issuance of notes payable | 1,077,843 | ||||
Repayment of notes payable | (426,486) | (450,000) | |||
Proceeds from related parties | 132,656 | ||||
Repayment to related parties | (287,104) | ||||
Net Cash provided by Financing Activities | 1,117,216 | 869,548 | |||
Net change in cash | 530,120 | (84,178) | |||
Cash, beginning of period | 18,673 | 324,935 | $ 324,935 | ||
Cash, end of period | $ 548,793 | $ 240,757 | 548,793 | 240,757 | $ 18,673 |
Supplemental cash flow information | |||||
Cash paid for interest | 43,453 | 2,213 | |||
Cash paid for taxes | |||||
Non-cash Investing and Financing transactions: | |||||
Settlement of stock subscriptions | 1,496 | ||||
Settlement of accrued interest through issuance of convertible notes payable | 75,000 | ||||
Settlement of convertible notes payable through issuance of common stock | 1,153,596 | ||||
Resolution of derivative liability upon conversion of debt | 3,175,563 | ||||
Equipment paid by capital lease | 159,096 | ||||
Derivative liability recognized as debt discount | $ 570,675 |
Business Description
Business Description | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Business Description | NOTE 1: BUSINESS DESCRIPTION Data443 Risk Mitigation, Inc. (the “Company”) was incorporated as a Nevada corporation on May 4, 1998. On October 15, 2019, the Company changed its name from LandStar, Inc. to Data443 Risk Mitigation, Inc. within the state of Nevada. The Company is an industry leader in All Things Data Security |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying unaudited consolidated financial statements as of June 30, 2020 include the accounts of the Company and its wholly-owned subsidiary, Data 443 Risk Mitigation, Inc., a North Carolina operating company, and the operations of Myriad Software Productions, LLC through September 2018 when it was liquidated. Prior to the acquisition of Data 443 Risk Mitigation, Inc. in North Carolina and the assets of Myriad Software Productions, LLC in 2018, these two entities were controlled by our sole director and officer, Jason Remillard. On November 17, 2017, Mr. Remillard acquired control of Data443 Risk Mitigation, Inc. through his purchase of all the outstanding Series A preferred shares of the Company, and as a result, these two entities became common controlled entities that require consolidation of results with the reporting company, Data443 Risk Mitigation, Inc., from the time common control occurred. All intercompany accounts and activities have been eliminated. These consolidated financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). Interim Financial Statements These unaudited consolidated financial statements have been prepared in accordance U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2019 and notes thereto and other pertinent information contained in our Form 10-K the Company has filed with the Securities and Exchange Commission (the “SEC”) on April 17, 2020. The results of operations for the six months ended June 30, 2020, are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2020. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition The Company derives revenue primarily from contracts for subscription to access our SaaS platforms and, to a much lesser degree, ancillary services provided in connection with subscription services. The Company’s contracts include the performance obligations that require us to provide access to the platforms, usually on an annual subscription. The Company’s contracts are for subscriptions to DataExpress ® TM ® TM Revenue related to contracts with customers is evaluated utilizing the following steps: (i) Identify the contract, or contracts, with a customer; (ii) Identify the performance obligations in the contract; (iii) Determine the transaction price; (iv) Allocate the transaction price to the performance obligations in the contract; (v) Recognize revenue when the Company satisfies a performance obligation. Deferred Revenue Deferred revenue mostly consists of service subscriptions received from users in advance of revenue recognition. The deferred revenue balance for the period ended June 30, 2020 was driven by cash payments from customers in advance of satisfying our performance obligations, offset by revenue recognized that was included in the deferred revenue balance at the beginning of the period. Convertible Financial Instruments The Company bifurcates conversion options from their host instruments and accounts for them as free-standing derivative financial instruments if certain criteria are met. The 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 remeasured 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. An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable U.S. GAAP. When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, discounts are recorded for the intrinsic value of conversion options embedded in the instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the instrument. Common stock purchase warrants and derivative financial instruments - Beneficial Conversion Feature Stock-Based Compensation Employees Nonemployees The Company recorded $699,006 in stock-based compensation expense for the six months ended June 30, 2020, compared to $363,409 in stock-based compensation expense for the six months ended June 30, 2019. Fair Value Measurements The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows: ● Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; ● Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and ● Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. The Company’s financial instruments, including cash, accounts receivable, accounts payable, note payable, due to related parties and accrued liabilities, are carried at historical cost. At June 30, 2020 and December 31, 2019, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. Management determined that liabilities created by beneficial conversion features associated with the issuance of certain convertible notes payable (see Note 5), meet the criteria of derivatives and are required to be measured at fair value. The fair value of these derivative liabilities was determined based on management’s estimate of the expected future cash flows required to settle the liabilities. This valuation technique involves management’s estimates and judgment based on unobservable inputs and is classified in level 3. Basic and Diluted Net Income (Loss) Per Share of Common Stock Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method and as if converted method. Dilutive potential common shares include outstanding stock options, warrant and convertible notes. For the six months ended June 30, 2020, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive. June 30, 2020 (Shares) Stock options 996,693 Warrants 275,189,822 Convertible notes 558,016,399 Total 834,202,914 COVID-19 A novel strain of coronavirus (COVID-19) was first identified in December 2019, and subsequently declared a global pandemic by the World Health Organization on March 11, 2020. As a result of the outbreak, many companies have experienced disruptions in their operations and in markets served. The Company has instituted some and may take additional temporary precautionary measures intended to help ensure the well-being of its employees and minimize business disruption. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there were no material adverse impacts on the Company’s results of operations and financial position at March 31, 2020. The full extent of the future impacts of COVID-19 on the Company’s operations is uncertain. A prolonged outbreak could have a material adverse impact on financial results and business operations of the Company, including the timing and ability of the Company to collect accounts receivable and the ability of the Company to continue to provide high quality services to its clients. The Company is not 10 may CARES Act The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted on March 27, 2020. There are several different provisions of the CARES Act that impact income taxes for corporations. While the Company continues to evaluate the tax implications, it believes these provisions will not have a material impact to the financial statements. Additionally, the Company has applied for, and has received, funds under the Paycheck Protection Program (the “PPP Loan”) after the period covered in these financial statements in the amount of $339,000. The receipt of these funds, and the forgiveness of the loan attendant to these funds, is dependent on the Company having initially qualified for the loan and qualifying for the forgiveness of such loan based on its future adherence to the forgiveness criteria. The PPP Loan has a two-year term and bears interest at a rate of 1.0% per annum. Monthly principal and interest payments are deferred for six months after the date of disbursement. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. The promissory note executed by the Company in connection with the PPP Loan contains events of default and other provisions customary for a loan of this type. The PPP Loan is being used to retain the Company’s employees and allow them to be able to continue to provide essential services for the customers of the Company. Proceeds of the PPP Loan may also be used for other purposes permitted under applicable terms of the PPP. The Company also received a $150,000 loan (the “EID Loan”) from the U.S. Small Business Administration (the “SBA”) under the SBA’s Economic Injury Disaster Loan program. The Company received the loan proceeds on or around May 27, 2020. The EID Loan has a thirty year term and bears interest at a rate of 3.75% per annum. Monthly principal and interest payments are deferred for twelve months after the date of disbursement. The EID Loan may be prepaid at any time prior to maturity with no prepayment penalties, and is otherwise repaid at the rate of $731 per month. The proceeds from the EID Loan must be used for working capital. The Loan Authorization and Agreement and the Note executed by the Company in connection with the EID Loan contains events of default and other provisions customary for a loan of this type. Recent Accounting Pronouncements Not Yet Adopted In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. This guidance will be effective for entities for the fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 on a prospective basis, with early adoption permitted. We will adopt the new standard effective January 1, 2021 and do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. |
Liquidity and Going Concern
Liquidity and Going Concern | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Liquidity and Going Concern | NOTE 3: LIQUIDITY AND GOING CONCERN The accompanying consolidated financial statements have been prepared (i) in accordance with accounting principles generally accepted in the United States, and (ii) assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. After a period of no income, the Company has recently generated increasing income. However, the Company is subject to the risks and uncertainties associated with a business with growing revenue, as well as limitations on its operating capital resources. These matters, among others, raise substantial doubt about the ability of the Company to continue as a going concern. These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. In light of these matters, the Company’s ability to continue as a going concern is dependent upon the Company’s ability to raise capital and generate revenue and profits in the future. During 2018, the Company made two product acquisitions, ClassiDocs™, and ARALOC TM TM We continue to monitor the effects COVID-19 could have on our operations and liquidity including our ability to collect account receivable timely from our customers due to the economic impacts COVID-19 could have on the general economy. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Intellectual Property
Intellectual Property | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intellectual Property | NOTE 4: INTELLECTUAL PROPERTY The following table summarizes the components of the Company’s intellectual property as of the dates presented: June 30, December 31, 2020 2019 Intellectual property: Word press GDPR rights $ 46,800 $ 46,800 ARALOC™ 1,850,000 1,850,000 ArcMail™ License 1,445,000 1,445,000 DataExpress ® 1,388,051 1,388,051 4,729,851 4,729,851 Accumulated amortization (2,465,789 ) (1,587,913 ) Intellectual property, net of accumulated amortization $ 2,264,062 $ 3,141,938 The Company recognized amortization expense of approximately $877,876 and $586,389, for the six months ended June 30, 2020, and 2019, respectively. Based on the carrying value of definite-lived intangible assets as of June 30, 2020, we estimate our amortization expense for the next five years will be as follows: Amortization Year Ended December 31, Expense 2020 (excluding the six months ended June 30, 2020) $ 476,490 2021 792,422 2022 686,816 2023 308,334 Thereafter - 2,264,062 |
Leases
Leases | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Leases | NOTE 5: LEASES Operating lease We have a non-cancelable operating lease for our office facility that expire in 2024. The operating lease has renewal options and rent escalation clauses. On July 1, 2020, the Company renegotiated the office lease to obtain rent expense relief for the months of April 2020 – December 2020. We recognized total lease expense of approximately $52,217 and $55,742 for the six months ended June 30, 2020 and 2019, respectively, primarily related to operating lease costs paid to lessors from operating cash flows. As of June 30, 2020 and December 31, 2019, the Company recorded a security deposit of $10,000. We entered into our operating lease in January 2019. Future minimum lease payments under operating leases that have initial non-cancelable lease terms in excess of one year at June 30, 2020 were as follows: Total Year Ended December 31, 2020 (excluding the six months ended June 30, 2020) $ 45,000 2021 123,600 2022 127,300 2023 131,150 Thereafter - 427,050 Less: Imputed interest (58,149 ) Operating lease liabilities 368,901 Operating lease liability - current 79,856 Operating lease liability - non-current $ 289,045 The following summarizes other supplemental information about the Company’s operating lease as of June 30, 2020: Weighted average discount rate 8 % Weighted average remaining lease term (years) 3.54 Finance lease The Company leases computer and hardware under non-cancellable capital lease arrangements. The term of those capital leases is 3 years and annual interest rate is 12%. At June 30, 2020 and December 31, 2019, capital lease obligations included in current liabilities were $85,316 and $34,425, respectively, and capital lease obligations included in long-term liabilities were $129,742 and $53,480, respectively. As of June 30, 2020 and December 31, 2019, the Company recorded a security deposit of $10,944. At June 30, 2020, future minimum lease payments under the capital lease obligations, are as follows: Total 2020 (excluding the six months ended June 30, 2020) $ 53,266 2021 106,532 2022 78,379 2023 10,496 Thereafter - 248,673 Less: Imputed interest (33,615 ) Finance lease liabilities 215,058 Finance lease liability 85,316 Finance lease liability - non-current $ 129,742 |
Convertible Notes Payable
Convertible Notes Payable | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Convertible Notes Payable | NOTE 6: CONVERTIBLE NOTES PAYABLE Convertible notes payable consists of the following: June 30, December 31, 2020 2019 Convertible Notes - originated in September 2018 $ 993,656 $ 1,700,000 Convertible Notes - originated in October 2018 294,150 444,150 Convertible Notes - originated in October 2018 608,850 608,850 Convertible Notes - originated in April 2019 444,450 600,000 Convertible Notes - originated in June 2019 - 63,000 Convertible Notes - originated in November 2019 - 38,000 Convertible Notes - originated in December 2019 - 38,000 Convertible Notes - originated in January 2020 200,000 - Convertible Notes - originated in March 2020 136,250 - Convertible Notes - originated in March 2020 78,750 - Convertible Notes - originated in March 2020 28,877 - Convertible Notes - originated in March 2020 125,000 - Convertible Notes - originated in June 2020 84,500 - Convertible Notes - originated in June 2020 43,000 - Convertible Notes - originated in June 2020 43,000 - 3,080,483 3,492,000 Less debt discount and debt issuance cost (189,230 ) (279,214 ) 2,891,253 3,212,786 Less current portion of convertible notes payable 2,891,253 3,212,786 Long-term convertible notes payable $ - $ - During the six months ended June 30, 2020 and 2019, the Company recognized interest expense of $169,760 and $361,714, and amortization of debt discount, included in interest expense of $718,909 and $549,521, respectively. Replacement of note During the six months ended June 30, 2020, the Company assigned a portion of note with outstanding principal amounts of $150,000 to a lender. Our CEO paid $135,000 to repay a principal amount of $81,000 on behalf of the company. As a result, the Company recorded due to related party of $135,000 and loss on settlement of debt of $54,000. Conversion During the six months ended June 30, 2020, the Company converted notes with principal amounts and accrued interest of $1,153,596 into 134,019,210 shares of common stock. The corresponding derivative liability at the date of conversion of $3,175,563 was credited to additional paid in capital. Convertible notes payable consists of the following: Promissory Notes - Issued in fiscal year 2018 On December 31, 2019, the Company entered into an Amendment and Forbearance Agreement with note holders. Under this agreement, note holders agreed to forbear from enforcing its rights under the note with regard to certain possible events of default, and further agreed to amend the note as follows: ● Terms ranging from 4 months to 15 months. ● Annual interest rates: 12%. ● Convertible at the option of the holders at earlier of (i) January 12, 2020 or April 15, 2020 or (ii) any event of default under the note. ● The conversion price shall be equal to 60% of the lesser of the lowest trading price of the Company’s common stock for (i) the 20 days immediately preceding December 31, 2019 or (ii) the 20 days immediately preceding the date of conversion. As a result of an amendment and forbearance agreement, the Company recognized the settlement of original debt and recorded loss on settlement of debt of $1,206,329 during the year ended December 31, 2019. Promissory Notes - Issued in fiscal year 2019 During the year ended December 31, 2019, the Company issued a total of $739,000 of notes with the following terms: ● Terms: 12 months. ● Annual interest rates of 10% - 12%. ● Convertible at the option of the holders at 4 months or 180 days after issuance date. ● Conversion prices are typically based on the discounted (39% to 50% discount) average closing prices or lowest trading prices of the Company’s shares during various periods prior to conversion. ● Certain note allows the principal amount will increase by $15,000 and the discount rate of conversion price will decrease by 10% if the conversion price is less than $$0.005. The note includes original issue discounts and financing costs totaling to $63,000 and the Company received cash of $676,000. Convertible notes issued in fiscal year 2018 are currently in default. Promissory Notes - Issued in fiscal year 2020 During the six months ended June 30, 2020, the Company issued a total of $710,500 of notes with the following terms: ● Terms ranging from 9 months to 12 months. ● Annual interest rates of 10% - 12%. ● Convertible at the option of the holders at issuance date or 6 months after issuance date. ● Conversion prices are typically based on the discounted (25% to 50% discount) average closing prices or lowest trading prices of the Company’s shares during various periods prior to conversion. Certain note has a fixed conversion price of $0.5 for a first 5 months Certain note allows the principal amount will increase by $15,000 and the discount rate of conversion price will decrease by 18% if the conversion price is less than $$0.01. The Company determined that the conversion features, in the convertible notes, met the definition of a liability in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and therefore bifurcated the embedded conversion options once the notes becomes convertible and accounted for it as a derivative liability. The fair value of the conversion feature was recorded as a debt discount and amortized to interest expense over the term of the note. The Company valued the conversion feature using the Binomial pricing model. The fair value of the derivative liability for all the notes that became convertible, including the notes issued in prior years, during the six months ended June 30, 2020 amounted to $8,682,832, and $570,675 of the value assigned to the derivative liability was recognized as a debt discount to the notes while the balance of $8,112,157 was recognized as a “day 1” derivative loss. |
Derivative Liabilities
Derivative Liabilities | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liabilities | NOTE 7: DERIVATIVE LIABILITIES The Company analyzed the conversion option for derivative accounting consideration under ASC 815, Derivatives and Hedging, and hedging, and determined that the instrument should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item. The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Binomial pricing model to calculate the fair value as of June 30, 2020. The Binomial model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note and warrant is estimated using the Binomial valuation model. For the period ended June 30, 2020 and the year ended December 31, 2019, the estimated fair values of the liabilities measured on a recurring basis are as follows: Six Months Ended Year Ended June 30, December 31, 2020 2019 Expected term 0.02 - 5.00 years 0.25 - 5.00 years Expected average volatility 187%- 464 % 160%- 305 % Expected dividend yield - - Risk-free interest rate 0.01% - 1.57 % 1.55% - 2.50 % The following table summarizes the changes in the derivative liabilities during the period ended June 30, 2020: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Derivative liability as of December 31, 2019 $ 2,601,277 Addition of new derivatives recognized as debt discounts 570,675 Addition of new derivatives recognized as day-one loss 8,112,157 Addition of new derivatives recognized upon issuance of warrant - Derivative liabilities settled upon conversion of convertible note (3,175,563 ) Reclassification from APIC to derivative due to tainted instruments - Change in derivative liabilities recognized as loss on derivative 1,166,658 Derivative liability as of June 30, 2020 $ 9,275,204 The aggregate gain (loss) on derivatives during the six months ended June 30, 2020 and 2019 was ($9,278,815) and $9,233,775, respectively. |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2020 | |
Notes Payable [Abstract] | |
Notes Payable | NOTE 8: NOTES PAYABLE Notes payable consists of the following: June 30, December 31, 2020 2019 Maturity Interest Rate Promissory note - originated in October 2019 $ 25,060 $ 25,060 Due on demand 10.0 % Promissory note - originated in October 2019 25,060 25,060 Due on demand 10.0 % Promissory note - originated in November 2019 - 115,000 Due on August 19, 2020 10.0 % Promissory note - originated in April 2020 10,000 - Due on demand No interest Promissory note - originated in April 2020 339,000 - 2 years 1.0 % Promissory note - originated in May 2020 150,000 - 30 years 1.0 % Promissory note - originated in June 2020 544,114 - $3,942.86 daily payment 16.0 % 1,093,234 165,120 Less debt discount and debt issuance cost (178,717 ) - 914,517 165,120 Less current portion of promissory notes payable (425,517 ) (165,120 ) Long-term promissory notes payable $ 489,000 $ - During the six months ended June 30, 2020 and 2019, the Company recognized interest expense of $18,878 and $361,714, and amortization of debt discount, included in interest expense of $98,040 and $549,521, respectively. |
Capital Stock and Reverse Stock
Capital Stock and Reverse Stock Split | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Capital Stock and Reverse Stock Split | NOTE 9: CAPITAL STOCK AND REVERSE STOCK SPLIT Changes in Authorized Shares On October 14, 2019, the Company filed an amendment to its Articles of Incorporation to effect a 1-for-750 reverse stock split of its issued and outstanding shares of common and preferred shares, each with $0.001 par value. All per share amounts and number of shares, in the consolidated financial statements and related notes have been retroactively adjusted to reflect the reverse stock split. On March 5, 2020, the Company amended its Articles of Incorporation to increase the number of shares of authorized common stock to 250,000,000. Preferred Stock As of June 30, 2020, the Company is authorized to issue 337,500 shares of preferred stock with a par value of $0.001, of which 337,500 shares have been designated as Series A. As of June 30, 2020 and December 31, 2019, 1,334 shares of Series A were issued and outstanding, and each share of Series A was (i) convertible into 1,000 shares of common stock, and (ii) entitled to vote 15,000 shares of common stock on all matters submitted to a vote by shareholders voting common stock. All issued and outstanding shares of Series A Preferred Stock are held by Mr. Jason Remillard, (“Mr. Remillard”) sole director of the Company. Common Stock The Company is authorized to issue 250,000,000 shares of common stock with a par value of $0.001. All shares have equal voting rights, are non-assessable, and have one vote per share. The total number of shares of Company common stock issued and outstanding as of June 30, 2020 and December 31, 2019, respectively, was 160,108,545 and 9,692,065 shares, respectively. During the six months ended June 30, 2020, the Company issued common stock as follows, ● 134,019,210 shares issued for conversion of debt ● 2,465,754 shares issued for the settlement of stock payable of acquisition DataExpress TM ● 1,496,516 shares issued for the settlement of stock subscription ● 11,935,000 shares issued pursuance to S-8, of which 6,000,000 shares were issued to our CEO. ● 500,000 shares issued for compensation to our former CFO Warrants The Company identified conversion features embedded within warrants issued during the period ended June 30, 2020. The Company has determined that the conversion feature of the Warrants represents an embedded derivative since the conversion price includes a reset provision which could cause adjustments upon conversion. During the six months ended June 30, 2020, 250,000 warrants were granted, for a period of five years from issuance, at price of $0.50 per share. As a result of the reset features, the warrants increased by 273,066,138 for the period ended June 30, 2020, and the total warrants exercisable into 275,189,822 shares of common stock at a weighted average exercise price of $0.0038 per share as of June 30, 2020. The reset feature of warrants was effective at the time that a separate convertible instrument with lower exercise price was issued. We accounted for the issuance of the Warrants as a derivative. A summary of activity during the period ended June 30, 2020 follows: Warrants Outstanding Weighted Average Shares Exercise Price Outstanding, December 31, 2019 1,873,684 $ 0.4914 Granted 250,000 0.5000 Reset feature 273,066,138 0.0038 Exercised - - Forfeited/canceled - - Outstanding, June 30, 2020 275,189,822 $ 0.0038 The following table summarizes information relating to outstanding and exercisable warrants as of June 30, 2020: Warrants Outstanding Warrants Exercisable Weighted Average Remaining Number of Shares Contractual life (in years) Weighted Average Exercise Price Number of Shares Weighted Average Exercise Price 39,792,020 3.45 $ 0.0038 39,792,020 $ 0.0038 166,684,352 3.61 $ 0.0038 166,684,352 $ 0.0038 35,818,713 4.03 $ 0.0038 35,818,713 $ 0.0038 32,894,737 4.72 $ 0.0038 32,894,737 $ 0.0038 275,189,822 3.77 $ 0.0038 242,295,085 $ 0.0038 |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | NOTE 10: STOCK-BASED COMPENSATION Stock Options During the six months ended June 30, 2020, the Company granted options for the purchase of the Company’s common stock to certain employees, consultants and advisors as consideration for services rendered. The terms of the stock option grants are determined by the Company’s Board of Directors. The Company’s stock options generally vest upon the one-year anniversary date of the grant and have a maximum term of ten years. The following summarizes the stock option activity for the six months ended June 30, 2020: Weighted-Average Options Outstanding Exercise Price Balance as of December 31, 2019 377,227 $ 1.86 Grants 701,434 0.12 Exercised (6 ) 3,750.00 Cancelled (81,962 ) 1.53 Balance as of June 30, 2020 996,693 $ 0.64 The weighted average grant date fair value of stock options granted during the six months ended June 30, 2020 was $0.0976. The total fair value of stock options that granted during the six ended June 30, 2020 was approximately $68,429. The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option pricing model with the following weighted average assumptions for stock options granted during the six months ended June 30, 2020: Expected term (years) 5.2 Expected stock price volatility 510.07 % Weighted-average risk-free interest rate 0.41 % Expected dividend $ 0.00 Volatility is a measure of the amount by which a financial variable such as share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company estimates expected volatility giving primary consideration to the historical volatility of its common stock. The risk-free interest rate is based on the published yield available on U.S. Treasury issues with an equivalent term remaining equal to the expected life of the stock option. The expected lives of the stock options represent the estimated period of time until exercise or forfeiture and are based on the simplified method of using the mid-point between the vesting term and the original contractual term. The following summarizes certain information about stock options vested and expected to vest as of June 30, 2020: Weighted-Average Number of Remaining Contractual Life Weighted- Average Options (In Years) Exercise Price Outstanding 996,693 9.10 $ 0.64 Exercisable 792,602 8.99 0.71 Expected to vest 204,091 9.55 $ 0.38 As of June 30, 2020 and December 31, 2019, there was $28,972 and $18,229, respectively, of total unrecognized compensation cost related to non-vested stock-based compensation arrangements which is expected to be recognized within the next year. Restricted Stock Awards During the six months ended June 30, 2020, the Company issued restricted stock awards for shares of common stock which have been reserved for the holders of the awards. Restricted stock awards were issued to certain consultants and advisors as consideration for services rendered. The terms of the restricted stock units are determined by the Company’s Board of Directors. The Company’s restricted stock shares generally vest over a period of one year and have a maximum term of ten years. The following summarizes the restricted stock activity for the six months ended June 30, 2020: Weighted-Average Shares Fair Value Balance as of December 31, 2019 524,337 0.97 Shares of restricted stock granted 12,230,000 0.0002 Exercised - - Cancelled (72,145 ) 0.60 Balance as of June 30, 2020 12,682,192 0.04 June 30, December 31, Number of Restricted Stock Awards 2020 2019 Vested 12,435,525 57,243 Non-vested 246,667 467,094 As of June 30, 2020 and December 31, 2019, there was $24,831 and $147,743, respectively, of total unrecognized compensation cost related to non-vested stock-based compensation, which is expected to be recognized over the next year. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 11: RELATED PARTY TRANSACTIONS Jason Remillard is our Chief Executive Officer and sole director. Through his ownership of Series A Preferred Shares, Mr. Remillard has voting control over all matters to be submitted to a vote of our shareholders. In January 2018 the Company acquired substantially all of the assets of Myriad Software Productions, LLC, which is owned 100% by Mr. Remillard. Those assets were comprised of the software program known as ClassiDocs, and all intellectual property and goodwill associated therewith. This acquisition changed the Company’s status to no longer being a “shell” under applicable securities rules. In consideration for the acquisition, the Company agreed to a purchase price of $1,500,000 comprised of: (i) $50,000 paid at closing; (ii) $250,000 in the form of our promissory note; and (iii) $1,200,000 in shares of our common stock, valued as of the closing, which equated to 1,600,000 shares of our common stock. The shares have not yet been issued and are not included as part of the issued and outstanding shares of the Company. However, these shares have been recorded as additional paid in capital within our consolidated financial statements for the period ending June 30, 2020. On September 16, 2019, the Company entered into an Asset Purchase Agreement with DMBGroup, LLC, as discussed in Note 2. Amounts owed to DMBGroup, LLC including the note payable of $940,000 and member loans of $97,689 were recorded as amounts due to a related party. During the six months ended June 30, 2020, the Company repaid note payable of $166,646 including interest expense of $15,442. As of June 30, 2020 and December 31, 2019, the company had recorded a liability to DMBGroup totaling $677,357 and $828,561, respectively. During the six months ended June 30, 2020, our CEO paid operating expenses of $132,655 on behalf of the Company and the Company repaid $135,900 to our CEO. During the six months ended June 30, 2020, our CEO repaid $135,000 to purchase convertible note of $81,000 and a prepayment penalty of $54,000. As a result, the Company recorded $54,000 as loss on settlement of debt. As of June 30, 2020 and December 31, 2019, the Company had due to related party of $1,083,866 and $1,103,314 |
Net Income Per Common Share
Net Income Per Common Share | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net Income Per Common Share | NOTE 12: NET INCOME PER COMMON SHARE Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the periods. Diluted net income per common share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the periods. Common equivalent shares consist of stock options, unvested restricted shares, and outstanding warrants that are computed using the treasury stock method. Antidilutive stock awards consist of stock options that would have been antidilutive in the application of the treasury stock method. Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Numerator: Net Income (Loss) $ (2,573,180 ) $ 1,193,628 $ (12,754,195 ) $ 7,223,731 Denominator: Weighted average common shares outstanding 65,203,957 9,168,114 39,873,339 8,343,879 Effect of dilutive shares - 659,062 - 629,039 Diluted 65,203,957 9,827,176 39,873,339 8,972,919 Net income per common share: Basic $ (0.04 ) $ 0.13 $ (0.32 ) $ 0.87 Diluted $ (0.04 ) $ 0.12 $ (0.32 ) $ 0.81 For the three and six months ended June 30, 2020, the convertible instruments are anti-dilutive and therefore, have been excluded from earnings (loss) per share. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 13: SUBSEQUENT EVENTS Subsequent to June 30, 2020, the following transactions occurred: On July 01, the Company converted $29,032.38 of a promissory note into 7,640,100 shares of its common stock. The issuance was exempt under Section 4(a)(2) of the Securities Act. Effective July 01, the Company entered into an agreement with Blue Citi under which Blue Citi agreed to forbear from enforcing its rights under the Consolidated Note with regard certain possible events of default under the Consolidated Note, and the Company and Blue Citi further agreed to amend the Consolidated Note as follows: (i) maturity date will be March 31, 2021; (ii) Blue Citi’s right to match a lower conversion rate will now only apply to convertible notes issued after July 01, 2020; and, (iii) no further interest shall accrue on the Consolidated Note so long as there is no event of default. Effective July 01, the Company entered into an agreement with Smea2z LLC (“Smea2z”) under which Smea2z agreed to forbear from enforcing its rights with regard certain possible events of default under that certain 8% Convertible Redeemable Note in the original principal amount of Two Hundred Twenty Thousand Dollars ($220,000) on 23 October 2018, with a maturity date of 23 July 2019 (the “ SME Note Effective July 01, the Company entered into an agreement with Blue Citi under which Blue Citi agreed to forbear from enforcing its rights with regard certain possible events of default under that certain 8% Convertible Redeemable Note in the original principal amount of One Hundred Ten Thousand Dollars ($110,000) on 16 October 2018, with a maturity date of 16 July 2019 (the “ AFT Note Effective July 01, the Company entered into an agreement with Blue Citi under which Blue Citi agreed to forbear from enforcing its rights under the Credit Line Note with regard certain possible events of default under the Credit Line Note, and the Company and Blue Citi further agreed to amend the Credit Line Note as follows: (i) maturity date will be June 30, 2021; (ii) Blue Citi no longer has a right to match a lower conversion rate; (iii) the conversion rate will be set at 40%; (iv) conversions can start at the earlier of (a) the maturity date or, (b) both the AFT Note and Smea2z Note are paid in full; and, (v) as additional consideration, the Company issued the Penalty Note to Blue, as discussed below. Effective July 01, the Company issued to Blue Citi a Convertible Promissory Note (the “Penalty Note”) in the aggregate principal amount of $25,000 as additional consideration for amendment and forbearance of the Credit Line Note. The Penalty Note (i) accrues interest at a rate of 10% per annum; (ii) can be converted starting on April 01, 2021, at a discount of 40% to the lowest trading price during the twenty consecutive trading days immediately preceding the date of conversion; (iii) Blue Citi has no right to match a lower conversion rate; and, (iv) is due and payable July 01, 2021. The conversion price is subject to adjustment for stock splits, reverse stock splits, stock dividends, and other similar transactions and terms. The Penalty Note was issued in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder, and in reliance on similar exemptions under applicable state laws. On July 01, the Company issued a Convertible Promissory Note (the “July Blue Citi Note”) in the aggregate principal amount of $150,000, and received gross proceeds of $140,000 from the lender, Blue Citi. The proceeds will be used for general corporate purposes. The July Blue Citi Note (i) accrues interest at a rate of 10% per annum, (ii) can be converted starting on April 01, 2020, at a discount of 40% to the lowest trading price during the twenty consecutive trading days immediately preceding the date of conversion; (iii) Blue Citi has no right to match a lower conversion rate; and, (iv) is due and payable July 01, 2021. The conversion price is subject to adjustment for stock splits, reverse stock splits, stock dividends, and other similar transactions and terms. The July 23 Geneva Note was issued in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder, and in reliance on similar exemptions under applicable state laws. On July 06, the Company converted $28,500 of a promissory note into 7,500,000 shares of its common stock. The issuance was exempt under Section 4(a)(2) of the Securities Act. On July 10, the Company converted $33,230.62 of a promissory note into 8,744,900 shares of its common stock. The issuance was exempt under Section 4(a)(2) of the Securities Act. On July 10, the Company converted $20,000 of a promissory note into 4,210,526 shares of its common stock. The issuance was exempt under Section 4(a)(2) of the Securities Act. On July 16, the Company converted $33,060 of a promissory note into 8,700,000 shares of its common stock. The issuance was exempt under Section 4(a)(2) of the Securities Act. On July 17, the Company converted $37,336.90 of a promissory note into 9,825,500 shares of its common stock. The issuance was exempt under Section 4(a)(2) of the Securities Act. On July 20, the Company converted $34,200 of a promissory note into 9,000,000 shares of its common stock. The issuance was exempt under Section 4(a)(2) of the Securities Act. On July 21, the Company converted $3,800 of a promissory note into 1,000,000 shares of its common stock. The issuance was exempt under Section 4(a)(2) of the Securities Act. On July 22, the Company converted $40,906.62 of a promissory note into 10,764,900 shares of its common stock. The issuance was exempt under Section 4(a)(2) of the Securities Act. On July 23, the Company converted $39,900 of a promissory note into 10,500,000 shares of its common stock. The issuance was exempt under Section 4(a)(2) of the Securities Act. On July 23, 2020, the Company issued a Convertible Promissory Note (the “July 23 Geneva Note”) in the aggregate principal amount of $43,000, and received gross proceeds of $40,000 from the lender, Geneva Roth Remark Holdings, Inc. The proceeds will be used for general corporate purposes. The July 23 Geneva Note (i) accrues interest at a rate of 22% per annum, (ii) can be converted 180 days from July 23, 2020 at a discount of 39% to the lowest trading price during the twenty consecutive trading days immediately preceding the date of conversion, and, (iii) is due and payable July 23, 2021. The conversion price is subject to adjustment for stock splits, reverse stock splits, stock dividends, and other similar transactions and terms. The July 23 Geneva Note was issued in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder, and in reliance on similar exemptions under applicable state laws. On July 27, the Company converted $14,469.19 of a promissory note into 3,014,415 shares of its common stock. The issuance was exempt under Section 4(a)(2) of the Securities Act. On July 27, the Company converted $43,700 of a promissory note into 11,500,000 shares of its common stock. The issuance was exempt under Section 4(a)(2) of the Securities Act. Effective July 28, the company entered into an Advisory Board Agreement (the “ Advisory Agreement Advisor On July 29, the Company converted $45,600 of a promissory note into 12,000,000 shares of its common stock. The issuance was exempt under Section 4(a)(2) of the Securities Act. On July 29, the Company converted $47,880.38 of a promissory note into 12,600,100 shares of its common stock. The issuance was exempt under Section 4(a)(2) of the Securities Act. On July 31, the Company converted $46,130 of a promissory note into 12,139,479 shares of its common stock. The issuance was exempt under Section 4(a)(2) of the Securities Act. On August 03, the Company issued a Convertible Promissory Note (the “August Blue Citi Note”) in the aggregate principal amount of $200,000, and received gross proceeds of $185,000 from the lender, Blue Citi. The proceeds will be used for general corporate purposes. The August Blue Citi Note (i) accrues interest at a rate of 10% per annum; (ii) can be converted starting on February 03, 2021, at a discount of 40% to the lowest trading price during the twenty consecutive trading days immediately preceding the (a) date of conversion or (b) issue date of the August Blue Citi Note; (iii) Blue Citi has no right to match a lower conversion rate; (iv) has prepayment premiums, and can be prepaid only during the first 6-months of the August Blue Citi Note; and, (v) is due and payable August 03, 2021. The conversion price is subject to adjustment for stock splits, reverse stock splits, stock dividends, and other similar transactions and terms. The August Blue Citi Note was issued in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder, and in reliance on similar exemptions under applicable state laws. Effective August 03, the Company entered into an agreement with Blue Citi under which Blue Citi agreed to the following amendments to the respective convertible promissory notes: AFT Note: maturity date extended to June 30, 2021. Credit Line Note: (i) add the same prepayment premiums as under the August Blue Citi Note; and, (ii) six (6) months to prepay the Credit Line Note commencing on August 03, 2020. July Blue Citi Note: (i) six (6) months to prepay the July Blue Citi Note; and, (ii) no prepayment premiums. The conversion of all convertible promissory notes held by Blue Citi shall be covered by a single account of reserved shares with the transfer agent for the Company. Effective August 03, the Company entered into an agreement with Smea2z LLC to amend the Smea2z Note by extending the maturity date to June 30, 2021. On August 04, the Company converted $53,200 of a promissory note into 14,000,000 shares of its common stock. The issuance was exempt under Section 4(a)(2) of the Securities Act. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying unaudited consolidated financial statements as of June 30, 2020 include the accounts of the Company and its wholly-owned subsidiary, Data 443 Risk Mitigation, Inc., a North Carolina operating company, and the operations of Myriad Software Productions, LLC through September 2018 when it was liquidated. Prior to the acquisition of Data 443 Risk Mitigation, Inc. in North Carolina and the assets of Myriad Software Productions, LLC in 2018, these two entities were controlled by our sole director and officer, Jason Remillard. On November 17, 2017, Mr. Remillard acquired control of Data443 Risk Mitigation, Inc. through his purchase of all the outstanding Series A preferred shares of the Company, and as a result, these two entities became common controlled entities that require consolidation of results with the reporting company, Data443 Risk Mitigation, Inc., from the time common control occurred. All intercompany accounts and activities have been eliminated. These consolidated financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). |
Interim Financial Statements | Interim Financial Statements These unaudited consolidated financial statements have been prepared in accordance U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2019 and notes thereto and other pertinent information contained in our Form 10-K the Company has filed with the Securities and Exchange Commission (the “SEC”) on April 17, 2020. The results of operations for the six months ended June 30, 2020, are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2020. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Revenue Recognition | Revenue Recognition The Company derives revenue primarily from contracts for subscription to access our SaaS platforms and, to a much lesser degree, ancillary services provided in connection with subscription services. The Company’s contracts include the performance obligations that require us to provide access to the platforms, usually on an annual subscription. The Company’s contracts are for subscriptions to DataExpress ® TM ® TM Revenue related to contracts with customers is evaluated utilizing the following steps: (i) Identify the contract, or contracts, with a customer; (ii) Identify the performance obligations in the contract; (iii) Determine the transaction price; (iv) Allocate the transaction price to the performance obligations in the contract; (v) Recognize revenue when the Company satisfies a performance obligation. |
Deferred Revenue | Deferred Revenue Deferred revenue mostly consists of service subscriptions received from users in advance of revenue recognition. The deferred revenue balance for the period ended June 30, 2020 was driven by cash payments from customers in advance of satisfying our performance obligations, offset by revenue recognized that was included in the deferred revenue balance at the beginning of the period. |
Convertible Financial Instruments | Convertible Financial Instruments The Company bifurcates conversion options from their host instruments and accounts for them as free-standing derivative financial instruments if certain criteria are met. The 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 remeasured 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. An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable U.S. GAAP. When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, discounts are recorded for the intrinsic value of conversion options embedded in the instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the instrument. |
Common Stock Purchase Warrants and Derivative Financial Instruments | Common stock purchase warrants and derivative financial instruments - |
Beneficial Conversion Feature | Beneficial Conversion Feature |
Stock-Based Compensation | Stock-Based Compensation Employees Nonemployees The Company recorded $699,006 in stock-based compensation expense for the six months ended June 30, 2020, compared to $363,409 in stock-based compensation expense for the six months ended June 30, 2019. |
Fair Value Measurements | Fair Value Measurements The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows: ● Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; ● Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and ● Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. The Company’s financial instruments, including cash, accounts receivable, accounts payable, note payable, due to related parties and accrued liabilities, are carried at historical cost. At June 30, 2020 and December 31, 2019, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. Management determined that liabilities created by beneficial conversion features associated with the issuance of certain convertible notes payable (see Note 5), meet the criteria of derivatives and are required to be measured at fair value. The fair value of these derivative liabilities was determined based on management’s estimate of the expected future cash flows required to settle the liabilities. This valuation technique involves management’s estimates and judgment based on unobservable inputs and is classified in level 3. |
Basic and Diluted Net Income (Loss) Per Share of Common Stock | Basic and Diluted Net Income (Loss) Per Share of Common Stock Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method and as if converted method. Dilutive potential common shares include outstanding stock options, warrant and convertible notes. For the six months ended June 30, 2020, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive. June 30, 2020 (Shares) Stock options 996,693 Warrants 275,189,822 Convertible notes 558,016,399 Total 834,202,914 |
Covid-19 | COVID-19 A novel strain of coronavirus (COVID-19) was first identified in December 2019, and subsequently declared a global pandemic by the World Health Organization on March 11, 2020. As a result of the outbreak, many companies have experienced disruptions in their operations and in markets served. The Company has instituted some and may take additional temporary precautionary measures intended to help ensure the well-being of its employees and minimize business disruption. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there were no material adverse impacts on the Company’s results of operations and financial position at March 31, 2020. The full extent of the future impacts of COVID-19 on the Company’s operations is uncertain. A prolonged outbreak could have a material adverse impact on financial results and business operations of the Company, including the timing and ability of the Company to collect accounts receivable and the ability of the Company to continue to provide high quality services to its clients. The Company is not 10 may |
Cares Act | CARES Act The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted on March 27, 2020. There are several different provisions of the CARES Act that impact income taxes for corporations. While the Company continues to evaluate the tax implications, it believes these provisions will not have a material impact to the financial statements. Additionally, the Company has applied for, and has received, funds under the Paycheck Protection Program (the “PPP Loan”) after the period covered in these financial statements in the amount of $339,000. The receipt of these funds, and the forgiveness of the loan attendant to these funds, is dependent on the Company having initially qualified for the loan and qualifying for the forgiveness of such loan based on its future adherence to the forgiveness criteria. The PPP Loan has a two-year term and bears interest at a rate of 1.0% per annum. Monthly principal and interest payments are deferred for six months after the date of disbursement. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. The promissory note executed by the Company in connection with the PPP Loan contains events of default and other provisions customary for a loan of this type. The PPP Loan is being used to retain the Company’s employees and allow them to be able to continue to provide essential services for the customers of the Company. Proceeds of the PPP Loan may also be used for other purposes permitted under applicable terms of the PPP. The Company also received a $150,000 loan (the “EID Loan”) from the U.S. Small Business Administration (the “SBA”) under the SBA’s Economic Injury Disaster Loan program. The Company received the loan proceeds on or around May 27, 2020. The EID Loan has a thirty year term and bears interest at a rate of 3.75% per annum. Monthly principal and interest payments are deferred for twelve months after the date of disbursement. The EID Loan may be prepaid at any time prior to maturity with no prepayment penalties, and is otherwise repaid at the rate of $731 per month. The proceeds from the EID Loan must be used for working capital. The Loan Authorization and Agreement and the Note executed by the Company in connection with the EID Loan contains events of default and other provisions customary for a loan of this type. |
Recent Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements Not Yet Adopted In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. This guidance will be effective for entities for the fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 on a prospective basis, with early adoption permitted. We will adopt the new standard effective January 1, 2021 and do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Anti-dilutive Basic and Diluted Earnings Per Share | For the six months ended June 30, 2020, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive. June 30, 2020 (Shares) Stock options 996,693 Warrants 275,189,822 Convertible notes 558,016,399 Total 834,202,914 |
Intellectual Property (Tables)
Intellectual Property (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intellectual Property | The following table summarizes the components of the Company’s intellectual property as of the dates presented: June 30, December 31, 2020 2019 Intellectual property: Word press GDPR rights $ 46,800 $ 46,800 ARALOC™ 1,850,000 1,850,000 ArcMail™ License 1,445,000 1,445,000 DataExpress ® 1,388,051 1,388,051 4,729,851 4,729,851 Accumulated amortization (2,465,789 ) (1,587,913 ) Intellectual property, net of accumulated amortization $ 2,264,062 $ 3,141,938 |
Schedule of Future Amortization Expense of Intangible Assets | Based on the carrying value of definite-lived intangible assets as of June 30, 2020, we estimate our amortization expense for the next five years will be as follows: Amortization Year Ended December 31, Expense 2020 (excluding the six months ended June 30, 2020) $ 476,490 2021 792,422 2022 686,816 2023 308,334 Thereafter - 2,264,062 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Schedule of Future Minimum Lease Payments Under Operating Leases | Future minimum lease payments under operating leases that have initial non-cancelable lease terms in excess of one year at June 30, 2020 were as follows: Total Year Ended December 31, 2020 (excluding the six months ended June 30, 2020) $ 45,000 2021 123,600 2022 127,300 2023 131,150 Thereafter - 427,050 Less: Imputed interest (58,149 ) Operating lease liabilities 368,901 Operating lease liability - current 79,856 Operating lease liability - non-current $ 289,045 |
Schedule of Other Supplemental Information Under Operating Lease | The following summarizes other supplemental information about the Company’s operating lease as of June 30, 2020: Weighted average discount rate 8 % Weighted average remaining lease term (years) 3.54 |
Schedule of Future Minimum Lease Payments Under Finance Leases | At June 30, 2020, future minimum lease payments under the capital lease obligations, are as follows: Total 2020 (excluding the six months ended June 30, 2020) $ 53,266 2021 106,532 2022 78,379 2023 10,496 Thereafter - 248,673 Less: Imputed interest (33,615 ) Finance lease liabilities 215,058 Finance lease liability 85,316 Finance lease liability - non-current $ 129,742 |
Convertible Notes Payable (Tabl
Convertible Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Convertible Notes Payable | Convertible notes payable consists of the following: June 30, December 31, 2020 2019 Convertible Notes - originated in September 2018 $ 993,656 $ 1,700,000 Convertible Notes - originated in October 2018 294,150 444,150 Convertible Notes - originated in October 2018 608,850 608,850 Convertible Notes - originated in April 2019 444,450 600,000 Convertible Notes - originated in June 2019 - 63,000 Convertible Notes - originated in November 2019 - 38,000 Convertible Notes - originated in December 2019 - 38,000 Convertible Notes - originated in January 2020 200,000 - Convertible Notes - originated in March 2020 136,250 - Convertible Notes - originated in March 2020 78,750 - Convertible Notes - originated in March 2020 28,877 - Convertible Notes - originated in March 2020 125,000 - Convertible Notes - originated in June 2020 84,500 - Convertible Notes - originated in June 2020 43,000 - Convertible Notes - originated in June 2020 43,000 - 3,080,483 3,492,000 Less debt discount and debt issuance cost (189,230 ) (279,214 ) 2,891,253 3,212,786 Less current portion of convertible notes payable 2,891,253 3,212,786 Long-term convertible notes payable $ - $ - |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Fair Value of Liabilities Measured on Recurring Basis | For the period ended June 30, 2020 and the year ended December 31, 2019, the estimated fair values of the liabilities measured on a recurring basis are as follows: Six Months Ended Year Ended June 30, December 31, 2020 2019 Expected term 0.02 - 5.00 years 0.25 - 5.00 years Expected average volatility 187%- 464 % 160%- 305 % Expected dividend yield - - Risk-free interest rate 0.01% - 1.57 % 1.55% - 2.50 % |
Schedule of Changes in Derivative Liabilities | The following table summarizes the changes in the derivative liabilities during the period ended June 30, 2020: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Derivative liability as of December 31, 2019 $ 2,601,277 Addition of new derivatives recognized as debt discounts 570,675 Addition of new derivatives recognized as day-one loss 8,112,157 Addition of new derivatives recognized upon issuance of warrant - Derivative liabilities settled upon conversion of convertible note (3,175,563 ) Reclassification from APIC to derivative due to tainted instruments - Change in derivative liabilities recognized as loss on derivative 1,166,658 Derivative liability as of June 30, 2020 $ 9,275,204 |
Notes Payable (Tables)
Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Notes Payable [Abstract] | |
Schedule of Notes Payable | Notes payable consists of the following: June 30, December 31, 2020 2019 Maturity Interest Rate Promissory note - originated in October 2019 $ 25,060 $ 25,060 Due on demand 10.0 % Promissory note - originated in October 2019 25,060 25,060 Due on demand 10.0 % Promissory note - originated in November 2019 - 115,000 Due on August 19, 2020 10.0 % Promissory note - originated in April 2020 10,000 - Due on demand No interest Promissory note - originated in April 2020 339,000 - 2 years 1.0 % Promissory note - originated in May 2020 150,000 - 30 years 1.0 % Promissory note - originated in June 2020 544,114 - $3,942.86 daily payment 16.0 % 1,093,234 165,120 Less debt discount and debt issuance cost (178,717 ) - 914,517 165,120 Less current portion of promissory notes payable (425,517 ) (165,120 ) Long-term promissory notes payable $ 489,000 $ - |
Capital Stock and Reverse Sto_2
Capital Stock and Reverse Stock Split (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Summary of Warrants Activity | A summary of activity during the period ended June 30, 2020 follows: Warrants Outstanding Weighted Average Shares Exercise Price Outstanding, December 31, 2019 1,873,684 $ 0.4914 Granted 250,000 0.5000 Reset feature 273,066,138 0.0038 Exercised - - Forfeited/canceled - - Outstanding, June 30, 2020 275,189,822 $ 0.0038 |
Schedule of Outstanding and Exercisable Warrants | The following table summarizes information relating to outstanding and exercisable warrants as of June 30, 2020: Warrants Outstanding Warrants Exercisable Weighted Average Remaining Number of Shares Contractual life (in years) Weighted Average Exercise Price Number of Shares Weighted Average Exercise Price 39,792,020 3.45 $ 0.0038 39,792,020 $ 0.0038 166,684,352 3.61 $ 0.0038 166,684,352 $ 0.0038 35,818,713 4.03 $ 0.0038 35,818,713 $ 0.0038 32,894,737 4.72 $ 0.0038 32,894,737 $ 0.0038 275,189,822 3.77 $ 0.0038 242,295,085 $ 0.0038 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock Option Activity | The following summarizes the stock option activity for the six months ended June 30, 2020: Weighted-Average Options Outstanding Exercise Price Balance as of December 31, 2019 377,227 $ 1.86 Grants 701,434 0.12 Exercised (6 ) 3,750.00 Cancelled (81,962 ) 1.53 Balance as of June 30, 2020 996,693 $ 0.64 |
Schedule of Weighted Average Assumptions for Stock Options Granted | The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option pricing model with the following weighted average assumptions for stock options granted during the six months ended June 30, 2020: Expected term (years) 5.2 Expected stock price volatility 510.07 % Weighted-average risk-free interest rate 0.41 % Expected dividend $ 0.00 |
Schedule of Stock Options Vested and Expected to Vest | The following summarizes certain information about stock options vested and expected to vest as of June 30, 2020: Weighted-Average Number of Remaining Contractual Life Weighted- Average Options (In Years) Exercise Price Outstanding 996,693 9.10 $ 0.64 Exercisable 792,602 8.99 0.71 Expected to vest 204,091 9.55 $ 0.38 |
Schedule of Restricted Stock Activity | The following summarizes the restricted stock activity for the six months ended June 30, 2020: Weighted-Average Shares Fair Value Balance as of December 31, 2019 524,337 0.97 Shares of restricted stock granted 12,230,000 0.0002 Exercised - - Cancelled (72,145 ) 0.60 Balance as of June 30, 2020 12,682,192 0.04 |
Schedule of Restricted Stock Award | June 30, December 31, Number of Restricted Stock Awards 2020 2019 Vested 12,435,525 57,243 Non-vested 246,667 467,094 |
Net Income Per Common Share (Ta
Net Income Per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Net Income Per Common Share | Antidilutive stock awards consist of stock options that would have been antidilutive in the application of the treasury stock method. Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Numerator: Net Income (Loss) $ (2,573,180 ) $ 1,193,628 $ (12,754,195 ) $ 7,223,731 Denominator: Weighted average common shares outstanding 65,203,957 9,168,114 39,873,339 8,343,879 Effect of dilutive shares - 659,062 - 629,039 Diluted 65,203,957 9,827,176 39,873,339 8,972,919 Net income per common share: Basic $ (0.04 ) $ 0.13 $ (0.32 ) $ 0.87 Diluted $ (0.04 ) $ 0.12 $ (0.32 ) $ 0.81 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Mar. 27, 2020 | Jun. 30, 2020 | Jun. 30, 2019 |
Stock-based compensation expense | $ 699,006 | $ 363,409 | |
Loans payable | $ 150,000 | ||
EID Loan [Member] | |||
Debt instrument term | 30 years | ||
Debt interest rate | 3.75% | ||
Repayment of debt | $ 731 | ||
Paycheck Protection Program [Member] | |||
Proceeds from loans | $ 339,000 | ||
Debt instrument term | 2 years | ||
Debt interest rate | 1.00% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Anti-dilutive Basic and Diluted Earnings Per Share (Details) | 6 Months Ended |
Jun. 30, 2020shares | |
Antidilutive Earnings Per Share | 834,202,914 |
Stock Options [Member] | |
Antidilutive Earnings Per Share | 996,693 |
Warrants [Member] | |
Antidilutive Earnings Per Share | 275,189,822 |
Convertible Notes [Member] | |
Antidilutive Earnings Per Share | 558,016,399 |
Intellectual Property (Details
Intellectual Property (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 877,876 | $ 586,389 |
Intellectual Property - Schedul
Intellectual Property - Schedule of Intellectual Property (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Intellectual property | $ 4,729,851 | $ 4,729,851 |
Accumulated amortization | (2,465,789) | (1,587,913) |
Intellectual property, net of accumulated amortization | 2,264,062 | 3,141,938 |
Word Press GDPR Rights [Member] | ||
Intellectual property | 46,800 | 46,800 |
ARALOC™ [Member] | ||
Intellectual property | 1,850,000 | 1,850,000 |
ArcMail License [Member] | ||
Intellectual property | 1,445,000 | 1,445,000 |
DataExpress® [Member] | ||
Intellectual property | $ 1,388,051 | $ 1,388,051 |
Intellectual Property - Sched_2
Intellectual Property - Schedule of Future Amortization Expense of Intangible Assets (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2020 (excluding the six months ended June 30, 2020) | $ 476,490 | |
2021 | 792,422 | |
2022 | 686,816 | |
2023 | 308,334 | |
Thereafter | ||
Total | $ 2,264,062 | $ 3,141,938 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Operating lease expire year | Operating leases for our office facility that expire in 2024. | ||
Recognized lease expense | $ 52,217 | $ 55,742 | |
Capital lease term | 3 years | ||
Capital leases annual interest rate | 12.00% | ||
Capital lease obligations current | $ 85,316 | $ 34,425 | |
Capital lease obligations noncurrent | 129,742 | 53,480 | |
Operating Lease [Member] | |||
Security deposit | 10,000 | 10,000 | |
Finance lease security deposit | $ 10,944 | $ 10,944 |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Lease Payments Under Operating Leases (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
2020 (excluding the six months ended June 30, 2020) | $ 45,000 | |
2021 | 123,600 | |
2022 | 127,300 | |
2023 | 131,150 | |
Thereafter | ||
Total lease payment | 427,050 | |
Less: Imputed interest | (58,149) | |
Operating lease liabilities | 368,901 | |
Operating lease liability - current | 79,856 | $ 86,372 |
Operating lease liability - non-current | $ 289,045 | $ 373,000 |
Leases - Schedule of Other Supp
Leases - Schedule of Other Supplemental Information Under Operating Lease (Details) | Jun. 30, 2020 |
Leases [Abstract] | |
Weighted average discount rate | 8.00% |
Weighted average remaining lease term (years) | 3 years 6 months 14 days |
Leases - Schedule of Future M_2
Leases - Schedule of Future Minimum Lease Payments Under Finance Leases (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
2020 (excluding the six months ended June 30, 2020) | $ 53,266 | |
2021 | 106,532 | |
2022 | 78,379 | |
2023 | 10,496 | |
Thereafter | ||
Total finance lease payment | 248,673 | |
Less: Imputed interest | (33,615) | |
Finance lease liabilities | 215,058 | |
Finance lease liability | 85,316 | $ 34,425 |
Finance lease liability - non-current | $ 129,742 | $ 53,480 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details Narrative) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2020USD ($)$ / sharesshares | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($)$ / shares | |
Interest expense | $ 169,760 | $ 361,714 | |
Amortization of debt discount | 816,949 | 677,021 | |
Repayments for related party | 287,104 | ||
Derivative liability | 570,675 | ||
Proceeds from convertible debt | 652,250 | $ 725,000 | |
Convertible outstanding amount | 2,891,253 | $ 3,212,786 | |
Fair value of derivative liability | 8,682,832 | ||
Loss on derivative | 8,112,157 | ||
CEO [Member] | |||
Debt instrument principal amount | 81,000 | ||
Repayments for related party | 135,000 | ||
Due to related party | 135,000 | ||
Loss on settlement of debt | 54,000 | ||
Convertible Note [Member] | |||
Debt converted into common stock | $ 1,153,596 | ||
Debt converted into common stock, shares | shares | 134,019,210 | ||
Derivative liability | $ 3,175,563 | ||
Convertible Note [Member] | Lender [Member] | |||
Debt instrument principal amount | 150,000 | ||
Promissory Notes - Issued in Fiscal Year 2018 [Member] | |||
Loss on settlement of debt | $ 1,206,329 | ||
Debt interest rate | 12.00% | ||
Debt instrument maturity date, description | (i) January 12, 2020 or April 15, 2020 or (ii) any event of default under the note. | ||
Debt conversion, description | The conversion price shall be equal to 60% of the lesser of the lowest trading price of the Company's common stock for (i) the 20 days immediately preceding December 31, 2019 or (ii) the 20 days immediately preceding the date of conversion. | ||
Convertible outstanding amount | $ 739,000 | ||
Promissory Notes - Issued in Fiscal Year 2018 [Member] | Minimum [Member] | |||
Debt instrument term | 4 months | ||
Promissory Notes - Issued in Fiscal Year 2018 [Member] | Maximum [Member] | |||
Debt instrument term | 15 months | ||
Promissory Notes - Issued in Fiscal Year 2019 [Member] | |||
Debt instrument principal amount | $ 15,000 | ||
Debt instrument term | 12 months | ||
Debt instrument maturity date, description | Convertible at the option of the holders at 4 months or 180 days after issuance date. | ||
Debt conversion, description | Conversion prices are typically based on the discounted (39% to 50% discount) average closing prices or lowest trading prices of the Company's shares during various periods prior to conversion. | ||
Debt instrument price rate | 0.10 | ||
Debt conversion price | $ / shares | $ 0.005 | ||
Debt instrument penalty fees | $ 15,000 | ||
Financing costs | 63,000 | ||
Proceeds from convertible debt | $ 676,000 | ||
Promissory Notes - Issued in Fiscal Year 2019 [Member] | Minimum [Member] | |||
Debt interest rate | 10.00% | ||
Debt instrument price rate | 0.39 | ||
Promissory Notes - Issued in Fiscal Year 2019 [Member] | Maximum [Member] | |||
Debt interest rate | 12.00% | ||
Debt instrument price rate | 0.50 | ||
Promissory Notes - Issued in Fiscal Year 2020 [Member] | |||
Debt instrument principal amount | $ 15,000 | ||
Debt instrument maturity date, description | Convertible at the option of the holders at issuance date or 6 months after issuance date. | ||
Debt conversion, description | Conversion prices are typically based on the discounted (35% to 50% discount) average closing prices or lowest trading prices of the Company's shares during various periods prior to conversion. Certain note has a fixed conversion price of $0.5 for a first 5 months | ||
Debt instrument price rate | 0.18 | ||
Debt conversion price | $ / shares | $ 0.01 | ||
Convertible outstanding amount | $ 710,500 | ||
Promissory Notes - Issued in Fiscal Year 2020 [Member] | Minimum [Member] | |||
Debt instrument term | 9 months | ||
Debt interest rate | 10.00% | ||
Promissory Notes - Issued in Fiscal Year 2020 [Member] | Maximum [Member] | |||
Debt instrument term | 12 months | ||
Debt interest rate | 12.00% |
Convertible Notes Payable - Sch
Convertible Notes Payable - Schedule of Convertible Notes Payable (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Convertible notes payable, Gross | $ 3,080,483 | $ 3,492,000 |
Debt discount and debt issuance cost | (189,230) | (279,214) |
Convertible notes payable | 2,891,253 | 3,212,786 |
Less current portion of convertible notes payable | 2,891,253 | 3,212,786 |
Long-term convertible notes payable | ||
Originated in September 2018 [Member] | ||
Convertible notes payable, Gross | 993,656 | 1,700,000 |
Originated in October 2018 [Member] | ||
Convertible notes payable, Gross | 294,150 | 444,150 |
Originated in October 2018 [Member] | ||
Convertible notes payable, Gross | 608,850 | 608,850 |
Originated in April 2019 [Member] | ||
Convertible notes payable, Gross | 444,450 | 600,000 |
Originated in June 2019 [Member] | ||
Convertible notes payable, Gross | 63,000 | |
Originated in November 2019 [Member] | ||
Convertible notes payable, Gross | 38,000 | |
Originated in December 2019 [Member] | ||
Convertible notes payable, Gross | 38,000 | |
Originated in January 2020 [Member] | ||
Convertible notes payable, Gross | 200,000 | |
Originated in March 2020 [Member] | ||
Convertible notes payable, Gross | 136,250 | |
Originated in March 2020 [Member] | ||
Convertible notes payable, Gross | 78,750 | |
Originated in March 2020 [Member] | ||
Convertible notes payable, Gross | 28,877 | |
Originated in March 2020 [Member] | ||
Convertible notes payable, Gross | 125,000 | |
Originated in June 2020 [Member] | ||
Convertible notes payable, Gross | 84,500 | |
Originated in June 2020 [Member] | ||
Convertible notes payable, Gross | 43,000 | |
Originated in June 2020 [Member] | ||
Convertible notes payable, Gross | $ 43,000 |
Derivative Liabilities (Details
Derivative Liabilities (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Derivative, gain (loss) on derivative, net | $ (772,664) | $ 2,420,622 | $ (9,278,815) | $ 9,233,775 |
Derivative Liabilities - Schedu
Derivative Liabilities - Schedule of Fair Value of Liabilities Measured on Recurring Basis (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Expected Dividend Yield [Member] | ||
Derivative liability, measurement input | 0 | 0 |
Minimum [Member] | Measurement Input, Expected Term [Member] | ||
Expected term | 7 days | 2 months 30 days |
Minimum [Member] | Expected Average Volatility [Member] | ||
Derivative liability, measurement input | 187 | 160 |
Minimum [Member] | Risk Free Interest Rate [Member] | ||
Derivative liability, measurement input | 0.01 | 1.55 |
Maximum [Member] | Measurement Input, Expected Term [Member] | ||
Expected term | 5 years | 5 years |
Maximum [Member] | Expected Average Volatility [Member] | ||
Derivative liability, measurement input | 464 | 305 |
Maximum [Member] | Risk Free Interest Rate [Member] | ||
Derivative liability, measurement input | 1.57 | 2.50 |
Derivative Liabilities - Sche_2
Derivative Liabilities - Schedule of Changes in Derivative Liabilities (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Change in derivative liabilities recognized as loss on derivative | $ (772,664) | $ 2,420,622 | $ (9,278,815) | $ 9,233,775 |
Derivative liability ending | 570,675 | 570,675 | ||
Fair Value, Inputs, Level 3 [Member] | ||||
Derivative liability beginning | 2,601,277 | |||
Addition of new derivatives recognized as debt discounts | 570,675 | |||
Addition of new derivatives recognized as day-one loss | 8,112,157 | |||
Addition of new derivatives recognized upon issuance of warrant | ||||
Derivative liabilities settled upon conversion of convertible note | (3,175,563) | |||
Reclassification from APIC to derivative due to tainted instruments | ||||
Change in derivative liabilities recognized as loss on derivative | 1,166,658 | |||
Derivative liability ending | $ 9,275,204 | $ 9,275,204 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Interest expense | $ 169,760 | $ 361,714 |
Amortization of debt discount | 816,949 | 677,021 |
Notes Payable [Member] | ||
Interest expense | 18,878 | 361,714 |
Amortization of debt discount | $ 98,040 | $ 549,521 |
Notes Payable - Schedule of Not
Notes Payable - Schedule of Notes Payable (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Promissory notes payable, Gross | $ 1,093,234 | $ 165,120 |
Less debt discount and debt issuance cost | (178,717) | |
Promissory notes payable | 914,517 | 165,120 |
Less current portion of Promissory notes payable | (425,517) | (165,120) |
Long-term Promissory notes payable | 489,000 | |
Promissory Note Originated In October 2019 [Member] | ||
Promissory notes payable, Gross | $ 25,060 | $ 25,060 |
Maturity | Due on demand | Due on demand |
Interest Rate | 10.00% | 10.00% |
Promissory Note Originated In October 2019 One [Member] | ||
Promissory notes payable, Gross | $ 25,060 | $ 25,060 |
Maturity | Due on demand | Due on demand |
Interest Rate | 10.00% | 10.00% |
Promissory Note - Originated In November 2019 [Member] | ||
Promissory notes payable, Gross | $ 115,000 | |
Maturity | Due on August 19, 2020 | Due on August 19, 2020 |
Interest Rate | 10.00% | 10.00% |
Promissory Note - Originated In April 2020 [Member] | ||
Promissory notes payable, Gross | $ 10,000 | |
Maturity | Due on demand | Due on demand |
Interest Rate | ||
Promissory Note - Originated In April 2020 One [Member] | ||
Promissory notes payable, Gross | $ 339,000 | |
Maturity | 2 years | 2 years |
Interest Rate | 1.00% | 1.00% |
Promissory Note - Originated In May 2020 [Member] | ||
Promissory notes payable, Gross | $ 150,000 | |
Maturity | 30 years | 30 years |
Interest Rate | 1.00% | 1.00% |
Promissory Note - Originated In June 2020 [Member] | ||
Promissory notes payable, Gross | $ 544,114 | |
Interest Rate | 16.00% | 16.00% |
Daily payment | $ 3,943 | $ 3,943 |
Capital Stock and Reverse Sto_3
Capital Stock and Reverse Stock Split (Details Narrative) - $ / shares | Oct. 14, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Mar. 05, 2020 |
Reverse stock split | 1-for-750 | ||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | |||||
Common stock, shares authorized | 250,000,000 | 250,000,000 | |||||
Preferred stock, shares authorized | 337,500 | ||||||
Preferred stock, shares issued | 1,334 | ||||||
Preferred stock, shares outstanding | 1,334 | ||||||
Common stock, par value | $ 0.001 | ||||||
Common stock, shares issued | 9,692,065 | ||||||
Common stock, shares outstanding | 160,108,545 | 160,108,545 | 9,692,065 | ||||
Warrants exercisable | 275,189,822 | 275,189,822 | 1,873,684 | ||||
Warrants weighted average exercise price | $ 0.0038 | $ 0.0038 | $ 0.4914 | ||||
Common Stock [Member] | |||||||
Common stock voting rights | All shares have equal voting rights, are non-assessable, and have one vote per share. | All shares have equal voting rights, are non-assessable, and have one vote per share. | |||||
Common stock issued for conversion of debt | 127,194,938 | 134,019,210 | 557,942 | ||||
Stock issued for asset acquisition, shares | 2,465,754 | ||||||
Shares issued for the settlement of stock subscription, shares | 1,496,516 | ||||||
Shares issued during the period, New issues | 11,935,000 | ||||||
Share-based compensation, shares | 11,935,000 | 12,435,000 | |||||
Common Stock [Member] | CEO [Member] | |||||||
Shares issued during the period, New issues | 6,000,000 | ||||||
Warrant [Member] | |||||||
Number of warrants to acquire common stock | 250,000 | 250,000 | |||||
Warrants term | 5 years | 5 years | |||||
Warrants exercise price | $ 0.50 | $ 0.50 | |||||
Increase in warrants | 273,066,138 | ||||||
Warrants exercisable | 275,189,822 | 275,189,822 | |||||
Warrants weighted average exercise price | $ 0.0038 | $ 0.0038 | |||||
Series A Preferred Stock [Member] | |||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | |||||
Preferred stock, designated shares | 337,500 | 337,500 | |||||
Preferred stock, shares issued | |||||||
Preferred stock, shares outstanding | 1,334 | 1,334 | 1,334 | ||||
Debt converted of common stock, shares | 1,000 | ||||||
Preferred stock voting rights | Entitled to vote 15,000 shares of common stock on all matters submitted to a vote by shareholders voting common stock. |
Capital Stock and Reverse Sto_4
Capital Stock and Reverse Stock Split - Summary of Warrants Activity (Details) | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Equity [Abstract] | |
Warrants Outstanding Beginning balance, Shares | shares | 1,873,684 |
Warrants Granted, Shares | shares | 250,000 |
Warrants Reset feature, Shares | shares | 273,066,138 |
Warrants Exercised, Shares | shares | |
Warrants Forfeited/canceled, Shares | shares | |
Warrants Outstanding Ending balance, Shares | shares | 275,189,822 |
Warrants Outstanding Beginning balance, Weighted Average Exercise Price | $ / shares | $ 0.4914 |
Warrants Granted, Weighted Average Exercise Price | $ / shares | 0.5000 |
Warrants Reset feature, Weighted Average Exercise Price | $ / shares | 0.0038 |
Warrants Exercised, Weighted Average Exercise Price | $ / shares | |
Warrants Forfeited/canceled, Weighted Average Exercise Price | $ / shares | |
Warrants Outstanding Ending balance, Weighted Average Exercise Price | $ / shares | $ 0.0038 |
Capital Stock and Reverse Sto_5
Capital Stock and Reverse Stock Split - Schedule of Outstanding and Exercisable Warrants (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Number of Shares, Warrants Outstanding | 275,189,822 | 1,873,684 |
Weighted Average Remaining Contractual life, Warrants Outstanding | 3 years 9 months 7 days | |
Weighted Average Exercise Price, Warrants Outstanding | $ 0.0038 | |
Number of Shares, Warrants Exercisable | 242,295,085 | |
Weighted Average Exercise Price, Warrants Exercisable | $ 0.0038 | |
Warrant One [Member] | ||
Number of Shares, Warrants Outstanding | 39,792,020 | |
Weighted Average Remaining Contractual life, Warrants Outstanding | 3 years 5 months 12 days | |
Weighted Average Exercise Price, Warrants Outstanding | $ 0.0038 | |
Number of Shares, Warrants Exercisable | 39,792,020 | |
Weighted Average Exercise Price, Warrants Exercisable | $ 0.0038 | |
Warrant Two [Member] | ||
Number of Shares, Warrants Outstanding | 166,684,352 | |
Weighted Average Remaining Contractual life, Warrants Outstanding | 3 years 7 months 10 days | |
Weighted Average Exercise Price, Warrants Outstanding | $ 0.0038 | |
Number of Shares, Warrants Exercisable | 166,684,352 | |
Weighted Average Exercise Price, Warrants Exercisable | $ 0.0038 | |
Warrant Three [Member] | ||
Number of Shares, Warrants Outstanding | 35,818,713 | |
Weighted Average Remaining Contractual life, Warrants Outstanding | 4 years 11 days | |
Weighted Average Exercise Price, Warrants Outstanding | $ 0.0038 | |
Number of Shares, Warrants Exercisable | 35,818,713 | |
Weighted Average Exercise Price, Warrants Exercisable | $ 0.0038 | |
Warrant Four [Member] | ||
Number of Shares, Warrants Outstanding | 32,894,737 | |
Weighted Average Remaining Contractual life, Warrants Outstanding | 4 years 8 months 19 days | |
Weighted Average Exercise Price, Warrants Outstanding | $ 0.0038 | |
Number of Shares, Warrants Exercisable | 32,894,737 | |
Weighted Average Exercise Price, Warrants Exercisable | $ 0.0038 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Restricted Stock [Member] | ||
Share-based compensation, vesting period | 1 year | |
Share-based compensation, expiration term | 10 years | |
Unrecognized compensation and non-vested | $ 24,831 | $ 18,229 |
Stock Options [Member] | ||
Share-based compensation, vesting period | 1 year | |
Share-based compensation, expiration term | 10 years | |
Weighted average granted date fair value stock options granted | $ 0.0976 | |
Fair value of option vested | $ 68,429 | |
Unrecognized compensation and non-vested | $ 28,972 | $ 147,743 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Stock Option Activity (Details) | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Options Outstanding, Balance Beginning | shares | 377,227 |
Options Outstanding, Exercised stock options | shares | (6) |
Options Outstanding, Cancelled stock options | shares | (81,962) |
Options Outstanding, Balance Ending | shares | 996,693 |
Weighted-Average Exercise Price, Balance Beginning | $ 1.86 |
Weighted-Average Exercise Price, Grants of stock options | 0.12 |
Weighted-Average Exercise Price, Exercised stock options | 3,750 |
Weighted-Average Exercise Price, Cancelled stock options | 1.53 |
Weighted-Average Exercise Price, Balance Ending | $ 0.64 |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of Weighted Average Assumptions for Stock Options Granted (Details) - Stock Options [Member] | 6 Months Ended |
Jun. 30, 2020 | |
Expected term (years) | 5 years 2 months 12 days |
Expected stock price volatility | 510.07% |
Weighted-average risk-free interest rate | 0.41% |
Expected dividend | 0.00% |
Stock-Based Compensation - Sc_3
Stock-Based Compensation - Schedule of Stock Options Vested and Expected to Vest (Details) | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Number of Options, Outstanding | shares | 996,693 |
Number of Options, Exercisable | shares | 792,602 |
Number of Options, Expected to vest | shares | 204,091 |
Weighted-Average Remaining Contractual Life (In Years), Outstanding | 9 years 1 month 6 days |
Weighted-Average Remaining Contractual Life (In Years), Exercisable | 8 years 11 months 26 days |
Weighted-Average Remaining Contractual Life (In Years), Expected to vest | 9 years 6 months 18 days |
Weighted-Average Exercise Price, Outstanding | $ / shares | $ 0.64 |
Weighted-Average Exercise Price, Exercisable | $ / shares | 0.71 |
Weighted-Average Exercise Price, Expected to vest | $ / shares | $ 0.38 |
Stock-Based Compensation - Sc_4
Stock-Based Compensation - Schedule of Restricted Stock Activity (Details) | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Number of Restricted Stock, Exercised | |
Restricted Stock [Member] | |
Number of Restricted Stock, Balance Beginning | 524,337 |
Number of Restricted Stock, Shares of restricted stock granted | 12,230,000 |
Number of Restricted Stock, Exercised | |
Number of Restricted Stock, Cancelled | (72,145) |
Number of Restricted Stock, Balance Ending | 12,682,192 |
Weighted-Average Fair Value of Restricted Stock, Balance Beginning | $ / shares | $ 0.97 |
Weighted-Average Fair Value of Restricted Stock, Shares of restricted stock granted | $ / shares | 0.0002 |
Weighted-Average Fair Value of Restricted Stock, Exercised | $ / shares | |
Weighted-Average Fair Value of Restricted Stock, Cancelled | $ / shares | 0.60 |
Weighted-Average Fair Value of Restricted Stock, Balance Ending | $ / shares | $ 0.04 |
Stock-Based Compensation - Sc_5
Stock-Based Compensation - Schedule of Restricted Stock Awards (Details) - Restricted Stock [Member] - shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Number of Restricted Stock Awards, Vested | 12,435,525 | 57,243 |
Number of Restricted Stock Awards, Non-vested | 246,667 | 467,094 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Jan. 31, 2018 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Sep. 16, 2019 | |
Notes payable | $ 914,517 | $ 914,517 | $ 165,120 | ||||
Due to related party | 1,083,866 | 1,083,866 | 1,103,314 | ||||
Repayment of notes payable | 426,486 | $ 450,000 | |||||
Operating expenses | 1,693,589 | $ 1,352,483 | 3,239,641 | $ 2,257,874 | |||
CEO [Member] | |||||||
Due to related party | 135,000 | 135,000 | |||||
Operating expenses | 132,655 | ||||||
Repayment of debt | 135,900 | ||||||
Convertible note | 81,000 | 81,000 | |||||
Prepayment penalty | 54,000 | ||||||
Loss on settlement of debt | 54,000 | ||||||
Asset Purchase Agreement [Member] | DMB Group LLC [Member] | |||||||
Notes payable | $ 677,357 | 677,357 | $ 828,561 | $ 940,000 | |||
Due to related party | $ 97,689 | ||||||
Repayment of notes payable | 166,646 | ||||||
Interest expenses | $ 15,442 | ||||||
Mr. Remillard [Member] | |||||||
Purchase consideration, common stock shares issuable | $ 1,600,000 | ||||||
Mr. Remillard [Member] | Myriad Software Productions, LLC [Member] | |||||||
Ownership percentage | 100.00% | ||||||
Purchase consideration | $ 1,500,000 | ||||||
Purchase consideration, paid at closing | 50,000 | ||||||
Purchase consideration, promissory note | 250,000 | ||||||
Purchase consideration, common stock shares issuable | $ 1,200,000 |
Net Income Per Common Share - S
Net Income Per Common Share - Schedule of Net Income Per Common Share (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Earnings Per Share [Abstract] | ||||
Numerator: Net income (loss) | $ (2,573,180) | $ 1,193,628 | $ (12,754,195) | $ 7,223,731 |
Denominator: Weighted average common shares outstanding | 65,203,957 | 9,168,114 | 39,873,339 | 8,343,879 |
Denominator: Effect of dilutive shares | 659,062 | 629,039 | ||
Denominator: Diluted | 65,203,957 | 9,827,784 | 39,873,339 | 8,972,919 |
Net income per common share: Basic | $ (0.04) | $ 0.13 | $ (0.32) | $ 0.87 |
Net income per common share: Diluted | $ (0.04) | $ 0.12 | $ (0.32) | $ 0.81 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Aug. 04, 2020USD ($)shares | Aug. 03, 2020USD ($) | Jul. 31, 2020USD ($)shares | Jul. 29, 2020USD ($)shares | Jul. 28, 2020shares | Jul. 27, 2020USD ($)shares | Jul. 23, 2020USD ($)Integershares | Jul. 22, 2020USD ($)shares | Jul. 21, 2020USD ($)shares | Jul. 20, 2020USD ($)shares | Jul. 17, 2020USD ($)shares | Jul. 16, 2020USD ($)shares | Jul. 10, 2020USD ($)shares | Jul. 06, 2020USD ($)shares | Jul. 01, 2020USD ($)Integershares | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) |
Proceeds from convertible debt | $ 652,250 | $ 725,000 | |||||||||||||||
Advisory Board Agreement [Member] | Omkharan Arasaratnam [Member] | |||||||||||||||||
Number of common stock issued | shares | 5,000,000 | ||||||||||||||||
Vesting percentage | 25.00% | ||||||||||||||||
Subsequent Event [Member] | Agreement With Blue Citi [Member] | |||||||||||||||||
Debt instrument conversion description | Effective July 01, the Company entered into an agreement with Blue Citi under which Blue Citi agreed to forbear from enforcing its rights under the Consolidated Note with regard certain possible events of default under the Consolidated Note, and the Company and Blue Citi further agreed to amend the Consolidated Note as follows: (i) maturity date will be March 31, 2021; (ii) Blue Citi's right to match a lower conversion rate will now only apply to convertible notes issued after July 01, 2020; and, (iii) no further interest shall accrue on the Consolidated Note so long as there is no event of default | ||||||||||||||||
Debt instrument maturity date | Mar. 31, 2021 | ||||||||||||||||
Subsequent Event [Member] | Agreement With Smea2z LLC [Member] | |||||||||||||||||
Debt instrument conversion description | Effective July 01, the Company entered into an agreement with Smea2z LLC ("Smea2z") under which Smea2z agreed to forbear from enforcing its rights with regard certain possible events of default under that certain 8% Convertible Redeemable Note in the original principal amount of Two Hundred Twenty Thousand Dollars ($220,000) on 23 October 2018, with a maturity date of 23 July 2019 (the "SME Note"). The Company and Smea2z further agreed to amend the SME Note as follows: (i) maturity date will be September 30, 2020; (ii) Smea2z has no right to match a lower conversion rate; (iii) no conversions until October 01, 2020; and, (iv) no further interest shall accrue on the SME Note so long as there is no event of default. | ||||||||||||||||
Percentage of Convertible Redeemable Note | 8.00% | ||||||||||||||||
Debt instrument original principal amount | $ 220,000 | ||||||||||||||||
Debt instrument maturity date | Sep. 30, 2020 | ||||||||||||||||
Subsequent Event [Member] | Agreement With Blue Citi One [Member] | |||||||||||||||||
Debt instrument conversion description | Effective July 01, the Company entered into an agreement with Blue Citi under which Blue Citi agreed to forbear from enforcing its rights with regard certain possible events of default under that certain 8% Convertible Redeemable Note in the original principal amount of One Hundred Ten Thousand Dollars ($110,000) on 16 October 2018, with a maturity date of 16 July 2019 (the "AFT Note"). The Company and Blue Citi further agreed to amend the AFT Note as follows: (i) maturity date will be September 30, 2020; (ii) Blue Citi has no right to match a lower conversion rate; (iii) no conversions until October 01, 2020; and, (iv) no further interest shall accrue on the AFT Note so long as there is no event of default. | ||||||||||||||||
Percentage of Convertible Redeemable Note | 8.00% | ||||||||||||||||
Debt instrument original principal amount | $ 110,000 | ||||||||||||||||
Debt instrument maturity date | Sep. 30, 2020 | ||||||||||||||||
Subsequent Event [Member] | Agreement With Blue Citi Two [Member] | |||||||||||||||||
Debt instrument conversion description | Effective July 01, the Company entered into an agreement with Blue Citi under which Blue Citi agreed to forbear from enforcing its rights under the Credit Line Note with regard certain possible events of default under the Credit Line Note, and the Company and Blue Citi further agreed to amend the Credit Line Note as follows: (i) maturity date will be June 30, 2021; (ii) Blue Citi no longer has a right to match a lower conversion rate; (iii) the conversion rate will be set at 40%; (iv) conversions can start at the earlier of (a) the maturity date or, (b) both the AFT Note and Smea2z Note are paid in full; and, (v) as additional consideration, the Company issued the Penalty Note to Blue, as discussed below. | ||||||||||||||||
Debt instrument maturity date | Jun. 30, 2021 | ||||||||||||||||
Subsequent Event [Member] | Promissory Note [Member] | |||||||||||||||||
Value of debt converted into common stock | $ 53,200 | $ 46,130 | $ 45,600 | $ 14,469 | $ 39,900 | $ 40,907 | $ 3,800 | $ 34,200 | $ 37,337 | $ 33,060 | $ 33,231 | $ 28,500 | $ 29,032 | ||||
Debt converted into common stock shares | shares | 14,000,000 | 12,139,479 | 12,000,000 | 3,014,415 | 10,500,000 | 10,764,900 | 1,000,000 | 9,000,000 | 9,825,500 | 8,700,000 | 8,744,900 | 7,500,000 | 7,640,100 | ||||
Subsequent Event [Member] | Penalty Note [Member] | |||||||||||||||||
Debt instrument conversion description | Effective July 01, the Company issued to Blue Citi a Convertible Promissory Note (the "Penalty Note") in the aggregate principal amount of $25,000 as additional consideration for amendment and forbearance of the Credit Line Note. The Penalty Note (i) accrues interest at a rate of 10% per annum; (ii) can be converted starting on April 01, 2021, at a discount of 40% to the lowest trading price during the twenty consecutive trading days immediately preceding the date of conversion; (iii) Blue Citi has no right to match a lower conversion rate; and, (iv) is due and payable July 01, 2021. The conversion price is subject to adjustment for stock splits, reverse stock splits, stock dividends, and other similar transactions and terms. The Penalty Note was issued in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder, and in reliance on similar exemptions under applicable state laws. | ||||||||||||||||
Debt instrument original principal amount | $ 25,000 | ||||||||||||||||
Debt instrument maturity date | Jul. 1, 2021 | ||||||||||||||||
Debt interest rate | 10.00% | ||||||||||||||||
Debt discount percentage | 40.00% | ||||||||||||||||
Trading days | Integer | 20 | ||||||||||||||||
Subsequent Event [Member] | July Blue Citi Note[Member] | |||||||||||||||||
Debt instrument conversion description | On July 01, the Company issued a Convertible Promissory Note (the "July Blue Citi Note") in the aggregate principal amount of $150,000, and received gross proceeds of $140,000 from the lender, Blue Citi. The proceeds will be used for general corporate purposes. The July Blue Citi Note (i) accrues interest at a rate of 10% per annum, (ii) can be converted starting on April 01, 2020, at a discount of 40% to the lowest trading price during the twenty consecutive trading days immediately preceding the date of conversion; (iii) Blue Citi has no right to match a lower conversion rate; and, (iv) is due and payable July 01, 2021. The conversion price is subject to adjustment for stock splits, reverse stock splits, stock dividends, and other similar transactions and terms. The July 23 Geneva Note was issued in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder, and in reliance on similar exemptions under applicable state laws. | ||||||||||||||||
Debt instrument original principal amount | $ 150,000 | ||||||||||||||||
Debt instrument maturity date | Jul. 1, 2021 | ||||||||||||||||
Proceeds from convertible debt | $ 140,000 | ||||||||||||||||
Debt interest rate | 10.00% | ||||||||||||||||
Debt discount percentage | 40.00% | ||||||||||||||||
Subsequent Event [Member] | Promissory Note [Member] | |||||||||||||||||
Value of debt converted into common stock | $ 47,880 | $ 43,700 | $ 20,000 | ||||||||||||||
Debt converted into common stock shares | shares | 12,600,100 | 11,500,000 | 4,210,526 | ||||||||||||||
Subsequent Event [Member] | July 23 Geneva Note [Member] | |||||||||||||||||
Debt instrument conversion description | On July 23, 2020, the Company issued a Convertible Promissory Note (the "July 23 Geneva Note") in the aggregate principal amount of $43,000, and received gross proceeds of $40,000 from the lender, Geneva Roth Remark Holdings, Inc. The proceeds will be used for general corporate purposes. The July 23 Geneva Note (i) accrues interest at a rate of 22% per annum, (ii) can be converted 180 days from July 23, 2020 at a discount of 39% to the lowest trading price during the twenty consecutive trading days immediately preceding the date of conversion, and, (iii) is due and payable July 23, 2021. The conversion price is subject to adjustment for stock splits, reverse stock splits, stock dividends, and other similar transactions and terms. The July 23 Geneva Note was issued in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder, and in reliance on similar exemptions under applicable state laws. | ||||||||||||||||
Debt instrument original principal amount | $ 43,000 | ||||||||||||||||
Proceeds from convertible debt | $ 40,000 | ||||||||||||||||
Debt interest rate | 22.00% | ||||||||||||||||
Debt discount percentage | 39.00% | ||||||||||||||||
Trading days | Integer | 20 | ||||||||||||||||
Subsequent Event [Member] | Convertible Promissory Note [Member] | |||||||||||||||||
Debt instrument original principal amount | $ 200,000 | ||||||||||||||||
Debt instrument maturity date | Jun. 30, 2021 | ||||||||||||||||
Debt interest rate | 10.00% | ||||||||||||||||
Debt discount percentage | 40.00% | ||||||||||||||||
Subsequent Event [Member] | Convertible Promissory Note [Member] | Lender [Member] | |||||||||||||||||
Debt instrument original principal amount | $ 185,000 |