Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2021 | Oct. 26, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2021 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2021 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 000-30542 | |
Entity Registrant Name | DATA443 RISK MITIGATION, INC. | |
Entity Central Index Key | 0001068689 | |
Entity Tax Identification Number | 86-0914051 | |
Entity Incorporation, State or Country Code | NV | |
Entity Address, Address Line One | 101 J Morris Commons Lane | |
Entity Address, Address Line Two | Suite 105 | |
Entity Address, City or Town | Morrisville | |
Entity Address, State or Province | NC | |
Entity Address, Postal Zip Code | 27560 | |
City Area Code | (919) | |
Local Phone Number | 858-6542 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 867,084 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash | $ 1,377,579 | $ 58,783 |
Accounts receivable, net | 101,581 | 136,503 |
Prepaid expense and other current assets | 10,638 | |
Total current assets | 1,489,798 | 195,286 |
Property and equipment, net | 354,422 | 324,349 |
Operating lease right-of-use assets, net | 193,524 | 248,237 |
Intellectual property, net of accumulated amortization | 1,586,341 | 2,310,907 |
Deposits | 31,440 | 31,440 |
Total Assets | 3,655,525 | 3,110,219 |
Current Liabilities | ||
Accounts payable and accrued liabilities | 204,916 | 401,014 |
Deferred revenue | 1,134,535 | 1,478,430 |
Interest payable | 119,203 | 62,212 |
Notes payable, net of unamortized discount | 1,225,672 | 585,310 |
Convertible notes payable, net of unamortized discount | 586,663 | 1,241,412 |
Derivative liability | 39,993 | |
Due to a related party | 389,229 | 561,230 |
License fee payable | 1,094,691 | |
Operating lease liability | 109,193 | 100,170 |
Finance lease liability | 80,989 | 90,565 |
Total Current Liabilities | 3,890,393 | 5,615,034 |
Commitments and contingencies | ||
Series B Preferred Stock, 80,000 shares designated; $0.001 par value; Stated value $10.00 28,175 and 5,300 shares issued and outstanding, net of discount, respectively | 233,881 | 50,203 |
Notes payable, net of unamortized discount - non-current | 1,817,520 | 572,495 |
Convertible notes payable, net of unamortized discount - non-current | 17,315 | 2,356 |
Deferred revenues - non-current | 510,825 | 39,733 |
Operating lease liability - non-current | 154,565 | 237,961 |
Finance lease liability - non-current | 25,784 | 83,109 |
Total Liabilities | 6,650,283 | 6,600,891 |
Stockholders’ Deficit | ||
Preferred stock: 337,500 authorized; $0.001 par value Series A Preferred Stock, 150,000 shares designated; $0.001 par value; 150,000 shares issued and outstanding, respectively | 150 | 150 |
Common stock: 1,000,000,000 authorized; $0.001 par value 829,518 and 522,006 shares issued and outstanding, respectively | 830 | 522 |
Additional paid in capital | 37,234,387 | 32,027,240 |
Accumulated deficit | (40,230,125) | (35,518,584) |
Total Stockholders’ Deficit | (2,994,758) | (3,490,672) |
Total Liabilities and Stockholders’ Deficit | $ 3,655,525 | $ 3,110,219 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2021 | Dec. 31, 2020 |
Temporary equity, shares authorized | 80,000 | 80,000 |
Temporary equity, par value | $ 0.001 | $ 0.001 |
Temporary equity, stated value | $ 10 | $ 10 |
Temporary equity, shares issued | 28,175 | 5,300 |
Temporary equity, shares outstanding | 28,175 | 5,300 |
Preferred stock, shares authorized | 337,500 | 337,500 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, par or stated value per share | $ 0.001 | $ 0.001 |
Common stock, shares, issued | 829,518 | 522,006 |
Common stock, shares, outstanding | 829,518 | 522,006 |
Series A Preferred Stock [Member] | ||
Preferred stock, shares authorized | 150,000 | 150,000 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 150,000 | 150,000 |
Preferred stock, shares outstanding | 150,000 | 150,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Statement [Abstract] | ||||
Revenue | $ 1,495,059 | $ 700,275 | $ 3,095,279 | $ 1,644,087 |
Cost of revenue | 148,721 | 108,363 | 412,545 | 161,749 |
Gross profit | 1,346,338 | 591,912 | 2,682,734 | 1,482,338 |
Operating expenses | ||||
General and administrative | 1,061,178 | 858,205 | 3,806,139 | 3,949,635 |
Sales and marketing | 89,175 | 3,010 | 233,819 | 151,221 |
Total operating expenses | 1,150,353 | 861,215 | 4,039,958 | 4,100,856 |
Net income (loss) from operations | 195,985 | (269,303) | (1,357,224) | (2,618,518) |
Other income (expense) | ||||
Interest expense | (1,101,910) | (618,934) | (2,679,198) | (1,691,099) |
Loss on settlement of debt | (191,833) | (227,501) | (245,833) | |
Change in fair value of derivative liability | (68,199) | (420,070) | (431,853) | (9,698,885) |
Total other expense | (1,170,109) | (1,230,837) | (3,338,552) | (11,635,817) |
Loss before income taxes | (974,124) | (1,500,140) | (4,695,776) | (14,254,335) |
Provision for income taxes | ||||
Net loss | (974,124) | (1,500,140) | (4,695,776) | (14,254,335) |
Dividend on Series B Preferred Stock | (6,324) | (15,765) | ||
Net loss attributable to common stockholders | $ (980,448) | $ (1,500,140) | $ (4,711,541) | $ (14,254,335) |
Basic and diluted loss per Common Share | $ (1.25) | $ (7.77) | $ (6.63) | $ (182.64) |
Basic and diluted weighted average number of common shares outstanding | 779,813 | 193,007 | 708,058 | 78,048 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit (Unaudited) - USD ($) | Series A Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Balance at Dec. 31, 2019 | $ 1 | $ 5 | $ 15,214,458 | $ (21,610,915) | $ (6,396,451) |
Balance, shares at Dec. 31, 2019 | 1,334 | 4,846 | |||
Preferred stock issued for service | $ 5 | 158,639 | 158,644 | ||
Preferred stock issued for service , shares | 4,666 | ||||
Common stock issued for conversion of debt | $ 278 | 12,511,847 | 12,512,125 | ||
Common stock issued for conversion of debt, shares | 278,294 | ||||
Common stock issued in conjunction with convertible note | |||||
Common stock issued for exercised cashless warrant | $ 13 | (13) | |||
Common stock issued for exercised cashless warrant, shares | 12,650 | ||||
Warrant issued in conjunction with debts | |||||
Resolution of derivative liability upon exercise of warrant | 300,387 | 300,387 | |||
Stock issued for acquisition | $ 1 | (1) | |||
Stock issued for acquisition , shares | 1,233 | ||||
Settlement of stock subscriptions | $ 144 | $ 1 | (145) | ||
Settlement of stock subscriptions, shares | 144,000 | 748 | |||
Issuance of restricted stock | |||||
Warrants on stock subscriptions | |||||
Stock-based compensation | $ 6 | 473,930 | 473,936 | ||
Stock-based compensation, shares | 6,218 | ||||
Net loss | (14,254,335) | (14,254,335) | |||
Balance at Sep. 30, 2020 | $ 150 | $ 304 | 28,659,102 | (35,865,250) | (7,205,694) |
Balance, shares at Sep. 30, 2020 | 150,000 | 303,988 | |||
Balance at Jun. 30, 2020 | $ 1 | $ 80 | 20,242,548 | (34,365,110) | (14,122,481) |
Balance, shares at Jun. 30, 2020 | 1,334 | 80,054 | |||
Preferred stock issued for service | $ 5 | 158,639 | 158,644 | ||
Preferred stock issued for service , shares | 4,666 | ||||
Common stock issued for conversion of debt | $ 211 | 8,182,755 | 8,182,966 | ||
Common stock issued for conversion of debt, shares | 211,284 | ||||
Common stock issued for exercised cashless warrant | $ 13 | (13) | |||
Common stock issued for exercised cashless warrant, shares | 12,650 | ||||
Resolution of derivative liability upon exercise of warrant | 300,387 | 300,387 | |||
Settlement of stock subscriptions | $ 144 | (144) | |||
Settlement of stock subscriptions, shares | 144,000 | ||||
Stock-based compensation | (225,070) | (225,070) | |||
Net loss | (1,500,140) | (1,500,140) | |||
Balance at Sep. 30, 2020 | $ 150 | $ 304 | 28,659,102 | (35,865,250) | (7,205,694) |
Balance, shares at Sep. 30, 2020 | 150,000 | 303,988 | |||
Balance at Dec. 31, 2020 | $ 150 | $ 522 | 32,027,240 | (35,518,584) | (3,490,672) |
Balance, shares at Dec. 31, 2020 | 150,000 | 522,006 | |||
Common stock issued for cash | $ 83 | 846,718 | 846,801 | ||
Common stock issued for cash, shares | 83,336 | ||||
Common stock issued for conversion of preferred stock | $ 72 | 624,914 | 624,986 | ||
Common stock issued for conversion of preferred stock, shares | 71,678 | ||||
Common stock issued for conversion of debt | $ 116 | 1,601,405 | 1,601,521 | ||
Common stock issued for conversion of debt, shares | 115,860 | ||||
Common stock issued in conjunction with convertible note | $ 11 | 133,652 | 133,663 | ||
Common stock issued in conjunction with convertible note, shares | 11,298 | ||||
Common stock issued for exercised cashless warrant | $ 9 | (9) | |||
Common stock issued for exercised cashless warrant, shares | 8,923 | ||||
Warrant issued in conjunction with debts | 1,075,660 | 1,075,660 | |||
Resolution of derivative liability upon exercise of warrant | 139,067 | 139,067 | |||
Settlement of stock subscriptions | |||||
Stock-based compensation | $ 10 | 785,747 | 785,757 | ||
Stock-based compensation, shares | 9,793 | ||||
Adjustment of reverse stock split | $ 7 | (7) | |||
Adjustment of reverse stock split, shares | 6,624 | 6,624 | |||
Net loss | (4,711,541) | $ (4,711,541) | |||
Balance at Sep. 30, 2021 | $ 150 | $ 830 | 37,234,387 | (40,230,125) | (2,994,758) |
Balance, shares at Sep. 30, 2021 | 150,000 | 829,518 | |||
Balance at Jun. 30, 2021 | $ 150 | $ 743 | 35,618,250 | (39,249,677) | (3,630,534) |
Balance, shares at Jun. 30, 2021 | 150,000 | 743,246 | |||
Common stock issued for conversion of preferred stock | $ 57 | 312,006 | 312,063 | ||
Common stock issued for conversion of preferred stock, shares | 57,145 | ||||
Common stock issued for conversion of debt | $ 14 | 78,249 | 78,263 | ||
Common stock issued for conversion of debt, shares | 14,112 | ||||
Common stock issued in conjunction with convertible note | $ 8 | 44,917 | 44,925 | ||
Common stock issued in conjunction with convertible note, shares | 8,435 | ||||
Warrant issued in conjunction with debts | 1,075,660 | 1,075,660 | |||
Stock-based compensation | $ 1 | 105,312 | 105,313 | ||
Stock-based compensation, shares | 625 | ||||
Adjustment of reverse stock split | $ 7 | (7) | |||
Adjustment of reverse stock split, shares | 5,955 | ||||
Net loss | (980,448) | (980,448) | |||
Balance at Sep. 30, 2021 | $ 150 | $ 830 | $ 37,234,387 | $ (40,230,125) | $ (2,994,758) |
Balance, shares at Sep. 30, 2021 | 150,000 | 829,518 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (4,695,776) | $ (14,254,335) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Change in fair value of derivative liability | 431,853 | 9,698,885 |
Loss on settlement of debt | 227,501 | 245,833 |
Stock-based compensation expense | 785,757 | 632,580 |
Depreciation and amortization | 832,824 | 1,222,485 |
Amortization of debt discount | 2,356,631 | 1,309,125 |
Bad debt expense | 50,800 | |
Lease liability amortization | (19,660) | 16,564 |
Penalty interest | 65,838 | 25,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 34,922 | (64,221) |
Prepaid expenses and other assets | (10,638) | 86 |
Accounts payable and accrued liabilities | (193,302) | (305,423) |
Deferred revenue | 127,197 | 515,247 |
Payroll liability | 82,227 | |
Accrued interest | 130,442 | 251,786 |
Accrued dividend | (15,765) | |
Deposit | (10,496) | |
Net Cash provided by (used in) Operating Activities | 57,824 | (583,857) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of intellectual property | (190,000) | |
Purchase of property and equipment | (138,331) | (95,425) |
Net Cash used in Investing Activities | (138,331) | (285,425) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of convertible notes payable | 642,000 | 1,352,250 |
Proceeds from issuance of common stock | 846,801 | |
Proceeds from issuance of series B Preferred Stock | 390,000 | |
Finance lease payments | (66,901) | (52,326) |
Proceeds from issuance of notes payable | 3,712,775 | 1,168,664 |
Repayment of notes payable | (3,953,371) | (685,295) |
Proceeds from related parties | 365,873 | 241,942 |
Repayment to related parties | (537,874) | (691,911) |
Net Cash provided by Financing Activities | 1,399,303 | 1,333,324 |
Net change in cash | 1,318,796 | 464,042 |
Cash, beginning of period | 58,783 | 18,673 |
Cash, end of period | 1,377,579 | 482,715 |
Supplemental cash flow information | ||
Cash paid for interest | 134,157 | 65,063 |
Cash paid for taxes | ||
Non-cash Investing and Financing transactions: | ||
Settlement of stock subscriptions | 1,640 | |
Common stock issued for purchase of intangibles | 2,466 | |
Common stock issued for exercised cashless warrant | 9 | 25,300 |
Settlement of series B preferred stock through issuance of common stock | 624,986 | |
Settlement of convertible notes payable through issuance of common stock | 1,601,521 | 2,963,994 |
Common stock issued in conjunction with convertible note | 133,663 | |
Warrant issued in conjunction with debts | 1,075,660 | |
Resolution of derivative liability upon exercise of warrant | 139,067 | 300,389 |
Resolution of derivative liability upon conversion of debt | 9,548,131 | |
Equipment paid by capital lease | 159,096 | |
Derivative liability recognized as debt discount | 340,000 | 792,175 |
Settlement of convertible notes payable through issuance of preferred common stock | 65,600 | |
Accounts payable for purchase of intellectual property | 80,000 | |
Issuance of convertible notes for repayment of due to related party | 150,000 | |
Note payable issued for settlement of License fee payable | $ 1,404,000 |
GENERAL
GENERAL | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
GENERAL | NOTE 1: GENERAL Description of Business 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. We are in the data security and privacy business, operating as a software and services provider. We provide software products, services, and solutions for the marketplace that are designed to protect, manage, analyze, alert, and secure enterprise data via the cloud, hybrid, and on-premises architectures. Our suite of security products focus on the protection of: sensitive files and emails; confidential customer, patient, and employee data; financial records; strategic and product plans; intellectual property; and any other data requiring security, allowing our clients to create, share, and protect their data wherever it is stored. We deliver solutions and capabilities via all technical architectures, and in formats designed for each client. Licensing and subscription models are available to conform to customer purchasing requirements. Our solutions are driven by several proprietary technologies and methodologies that we have developed or acquired, giving us our primary competitive advantage. Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements as of September 30, 2021 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 LandStar, 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, LandStar, 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, 2020 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 March 23, 2021. The results of operations for the nine months ended September 30, 2021, are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2021. DATA443 RISK MITIGATION, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 Share-Based Compensation Employees Nonemployees Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting The Company recorded approximately $ 785,757 473,936 Basic and Diluted Net Loss Per Common Share 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 nine months ended September 30, 2021 and 2020, respectively, 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: SCHEDULE OF ANTI-DILUTIVE BASIC AND DILUTED EARNINGS PER SHARE Nine Months Ended September 30, 2021 2020 (Shares) (Shares) Series A Preferred Stock 150,000,000 150,000,000 Stock options 12,471 5,664 Warrants 254,134 165,252 Convertible notes - 10,289 Preferred B stock 18,535 - Total 150,285,150 150,181,205 DATA443 RISK MITIGATION, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 COVID-19 In March 2020, the World Health Organization (“WHO”) declared the novel coronavirus COVID-19 (“COVID-19”) a global pandemic. The pandemic adversely affected workforces, economies, and financial markets globally in 2020 and, until contained, is still expected to disrupt general business operations. The COVID-19 pandemic and the measures taken by many governments around the world in response could in the future meaningfully impact our business, results of operations and financial condition. The Company is currently unable to predict the duration of that impact but continues to monitor its accounting estimates of the carrying value of certain assets and liabilities relating to its leases and will continue to do so as additional information is obtained or new events occur. Actual results could differ from our estimates and judgments, and any such differences may be material to our financial statements. Recently Issued Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with “Conversion and Other Options” and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity”. The standard reduced the number of accounting models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting; and, (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently assessing the impact of the adoption of this standard on its consolidated financial statements. On June 16, 2016, the FASB completed its Financial Instruments—Credit Losses project by issuing Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326). The new guidance requires organizations to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The new guidance; (i) eliminates the probable initial recognition threshold in current GAAP and, instead, reflects an organization’s current estimate of all expected credit losses over the contractual term of its financial assets, (ii) broadens the information that an entity can consider when measuring credit losses to include forward-looking information, (iii) increases usefulness of the financial statements by requiring timely inclusion of forecasted information in forming expectations of credit losses, (iv) increases comparability of purchased financial assets with credit deterioration (PCD assets) with other purchased assets that do not have credit deterioration as well as originated assets because credit losses that are expected will be recorded through an allowance for credit losses for all assets, (v) increases users’ understanding of underwriting standards and credit quality trends by requiring additional information about credit quality indicators by year of origination (vintage), and (vi) aligns the income statement recognition of credit losses, for available-for-sale debt securities, with the reporting period in which changes occur by recording credit losses (and subsequent changes in credit losses) through an allowance rather than a write down. The new guidance affects organizations that hold financial assets and net investments in leases that are not accounted for at fair value with changes in fair value reported in net income. It affects loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. For public business entities that meet the definition of a U.S. Securities and Exchange (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For all other entities, it is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early application is permitted. The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its consolidated financial statements. |
LIQUIDITY AND GOING CONCERN
LIQUIDITY AND GOING CONCERN | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
LIQUIDITY AND GOING CONCERN | NOTE 2: 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. The Company has only recently started to generate significant income. The Company is subject to the risks and uncertainties associated with a business with a limited history of substantive 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®, and completed the acquisition of one entity, Data443 Risk Mitigation, Inc. (“ Data443 ™ 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. COVID-19 has also impacted our ability to travel, meet distribution partners in their offices, present at tradeshows, and perform other enterprise-related sales functions. While most customers have returned to their pre-pandemic “normal” office working conditions, a number have yet to do so. These continued operating conditions have impacted our ability to execute and deploy some of our normal sales and marketing activities. While we are not unique in this position, these factors, among others, raise some 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. DATA443 RISK MITIGATION, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 3: PROPERTY AND EQUIPMENT The following table summarizes the components of the Company’s property and equipment as of the dates presented: SUMMARY OF COMPONENTS OF PROPERTY AND EQUIPMENT September 30, December 31, 2021 2020 Furniture and Fixtures $ 2,991 $ 2,991 Computer Equipment 559,654 421,323 562,645 424,314 Accumulated depreciation (208,223 ) (99,965 ) Property and equipment, net of accumulated depreciation $ 354,422 $ 324,349 Depreciation expense for the nine months ended September 30, 2021 and 2020, was $ 108,258 54,226 During the nine months years ended September 30, 2021 and 2020, the Company purchased property and equipment of $ 138,331 95,425 |
INTELLECTUAL PROPERTY
INTELLECTUAL PROPERTY | 9 Months Ended |
Sep. 30, 2021 | |
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: SCHEDULE OF INTELLECTUAL PROPERTY September 30, December 31, 2021 2020 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 TM 1,388,051 1,388,051 FileFacets TM 135,000 135,000 IntellyWP™ 135,000 135,000 Resilient Network Systems 305,000 305,000 5,304,851 5,304,851 Accumulated amortization (3,718,510 ) (2,993,944 ) Intellectual property, net of accumulated amortization $ 1,586,341 $ 2,310,907 The Company recognized amortization expense of $ 724,566 1,168,259 Based on the carrying value of definite-lived intangible assets as of September 30, 2021, we estimate our amortization expense for the next five years will be as follows: SCHEDULE OF FUTURE AMORTIZATION EXPENSE OF INTANGIBLE ASSETS Amortization Year Ended December 31, Expense 2021 (excluding the nine months ended September 30, 2021) $ 241,522 2022 860,484 2023 441,585 2024 27,000 Thereafter 15,750 Intellectual property, net of accumulated amortization 1,586,341 DATA443 RISK MITIGATION, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 |
ACCOUNTS PAYABLE AND ACCRUED LI
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 9 Months Ended |
Sep. 30, 2021 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | NOTE 5: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES The following table summarizes the components of the Company’s accounts payable and accrued liabilities as of the dates presented: SUMMARY OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES September 30, December 31, 2021 2020 Accounts payable $ 101,808 $ 178,319 Payroll liabilities 81,440 102,793 Credit cards 15,050 31,918 Accrued dividend - preferred stock 6,618 484 Accrued liabilities - 87,500 Accounts payable and accrued liabilities $ 204,916 $ 401,014 |
DEFERRED REVENUE
DEFERRED REVENUE | 9 Months Ended |
Sep. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
DEFERRED REVENUE | NOTE 6: DEFERRED REVENUE For the nine months ended September 30, 2021 and as of December 31 changes in deferred revenue were as follows: SUMMARY OF CHANGES IN DEFERRED REVENUE September 30, December 31, 2021 2020 Balance, beginning of period $ 1,518,163 $ 953,546 Deferral of revenue 2,153,640 2,961,749 Recognition of deferred revenue (2,026,443 ) (2,397,132 ) Balance, end of period $ 1,645,360 $ 1,518,163 As of September 30, 2021 and December 31, 2020, is classified as follows: SCHEDULE OF DEFERRED REVENUE September 30, December 31, 2021 2020 Current $ 1,134,535 $ 1,478,430 Non-current 510,825 39,733 Deferred revenue $ 1,645,360 $ 1,518,163 |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2021 | |
Leases | |
LEASES | NOTE 7: LEASES Operating lease We have a noncancelable operating lease for our office facility that expires in 2024. We recognized total lease expense of approximately $ 83,339 76,564 10,000 DATA443 RISK MITIGATION, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 Future minimum lease payments under operating leases that have initial noncancelable lease terms in excess of one year at September 30, 2021 were as follows: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER OPERATING LEASES Total Year Ended December 31, 2021 (excluding the nine months ended September 30, 2021) $ 30,900 2022 127,300 2023 131,150 Thereafter - Total lease payment 289,350 Less: Imputed interest (25,592 ) Operating lease liabilities 263,758 Operating lease liability – current 109,193 Operating lease liability - non-current $ 154,565 The following summarizes other supplemental information about the Company’s operating lease as of September 30, 2021: SCHEDULE OF OTHER SUPPLEMENTAL INFORMATION UNDER OPERATING LEASE Weighted average discount rate 8 % Weighted average remaining lease term (years) 2.29 Finance lease The Company leases computer and hardware under non-cancellable capital lease arrangements. The term of those capital leases is 3 12% 80,989 87,901 25,784 106,744 10,944 At September 30, 2021, future minimum lease payments under the finance lease obligations, are as follows: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER FINANCE LEASES Total 2021 (excluding the nine months ended September 30, 2021) $ 26,633 2022 78,379 2023 10,496 Thereafter - Total finance lease payment 115,508 Less: Imputed interest (8,735 ) Finance lease liabilities 106,773 Finance lease liability 80,989 Finance lease liability - non-current $ 25,784 As of September 30, 2021 and December 31 2020, finance lease assets are included in property and equipment as follows: SCHEDULE OF FINANCE LEASE ASSETS September 30, December 31, 2021 2020 Finance lease assets $ 267,284 $ 267,284 Accumulated depreciation (126,486 ) (87,337 ) Finance lease assets, net of accumulated depreciation $ 140,798 $ 179,947 DATA443 RISK MITIGATION, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 |
CONVERTIBLE NOTES PAYABLE
CONVERTIBLE NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES PAYABLE | NOTE 8: CONVERTIBLE NOTES PAYABLE Convertible notes payable consists of the following: SCHEDULE OF CONVERTIBLE NOTES PAYABLE September 30, December 31, 2021 2020 Convertible Notes - Issued in fiscal year 2020 100,000 1,526,000 Convertible Notes - Issued in fiscal year 2021 738,563 - 838,563 1,526,000 Less debt discount and debt issuance cost (234,585 ) (282,232 ) 603,978 1,243,768 Less current portion of convertible notes payable (586,663 ) (1,241,412 ) Long-term convertible notes payable $ 17,315 $ 2,356 During the nine months ended September 30, 2021 and 2020, the Company recognized interest expense of $ 90,421 249,907 379,890 1,126,906 Conversion During the nine months ended September 30, 2021, the Company converted notes with principal amounts and accrued interest of $ 1,370,150 115,859 231,371 Convertible notes payable consists of the following: Promissory Notes - Issued in fiscal year 2020 During the twelve months ended December 31, 2020, the Company issued a total of $ 2,466,500 ● Terms ranging from 5 60 ● Annual interest rates of 0% 25% ● Convertible at the option of the holders at issuance date, after maturity 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 ranging from $0.001 to $0.007. 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. Promissory Notes - Issued during first nine months of fiscal year 2021 During the nine months ended September 30, 2021, the Company issued convertible notes of $ 697,000 642,000 55,000 ● Terms ranging from 90 12 ● Annual interest rates of 5% 22% ● Convertible at the option of the holders after varying dates. ● Conversion prices are typically based on the discounted (39% discount) average closing prices or lowest trading prices of the Company’s shares during 20 periods prior to conversion. Certain note has a fixed conversion price $3.50. ● 11,298 133,663 DATA443 RISK MITIGATION, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 |
DERIVATIVE LIABILITIES
DERIVATIVE LIABILITIES | 9 Months Ended |
Sep. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE LIABILITIES | NOTE 9: 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 during the year based on management’s estimate of the expected future cash flows required to settle the liabilities, and used the Binomial pricing model to calculate the fair value as of September 30, 2021. As of the nine month period ended September 30, 2021, there were no derivative liabilities. 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 nine months ended September 30, 2021 and 2020, the estimated fair values of the liabilities measured on a recurring basis are as follows: The Company valued the conversion feature using the Binomial pricing model. The fair value of the derivative liability for all the notes and convertible preferred stock that became convertible, including the notes and convertible preferred stock issued in prior years, during the nine months ended September 30, 2021 amounted to $ 727,767 340,000 384,767 For the nine months September 30, 2021 and year ended December 31, 2020, the estimated fair values of the liabilities measured on a recurring basis are as follows: SCHEDULE OF FAIR VALUE OF LIABILITIES MEASURED ON RECURRING BASIS Nine months Ended Year Ended September 30, December 31, 2021 2020 Expected term 0.48 1.94 0.02 - 5.00 years Expected average volatility 160 302 % 187 464 % Expected dividend yield - - Risk-free interest rate 0.04 0.16 % 0.01 1.57 % The following table summarizes the changes in the derivative liabilities during the nine months ended September 30, 2021 and 2020: SCHEDULE OF CHANGES IN DERIVATIVE LIABILITIES Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Derivative liability as of December 31, 2020 $ - Addition of new derivatives recognized as debt discounts 340,000 Addition of new derivatives recognized as day-one loss 384,767 Derivative liabilities settled upon conversion of convertible note (731,860 ) Reclassification to common stock payable (39,993 ) Change in derivative liabilities recognized as loss on derivative 47,086 Derivative liability as of September 30, 2021 $ - The aggregate loss on derivatives during the nine months ended September 30, 2021 and 2020 was $ 431,853 9,698,885 DATA443 RISK MITIGATION, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2021 | |
Notes Payable | |
NOTES PAYABLE | NOTE 10: NOTES PAYABLE Notes payable consists of the following: SCHEDULE OF NOTES PAYABLE September 30, December 31, 2021 2020 Maturity Interest Rate 10% 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 April 2020 10,000 10,000 Due on demand No interest Paycheck Protection Program Promissory note - originated in April 2020 (1) 339,000 339,000 2 years 1.0 % Economic Injury Disaster Loan - originated in May 2020 (2,4) 500,000 150,000 30 years 3.75 % Promissory note - originated in June 2020 - 43,356 $ 3,942 16.0 % Promissory note - originated in September 2020 58,025 80,730 $ 2,873 36 months 14.0 % Promissory note - originated in October 2020 - 158,169 $ 2,293 25.0 % Promissory note - originated in November 2020 - 170,886 $ 4,497 25.0 % Promissory note - originated in November 2020 - 394,846 $ 6,999 25.0 % Promissory note - originated in December 2020 37,287 50,030 $ 1,854 36 months 8.0 % Promissory note - originated in February 2021 (3) 1,344,000 - 5 years 4.0 % Promissory note - originated in January 2021 55,168 - $ 2,675 36 months 18.0 % Promissory note - originated in April 2021 832,000 - 1 year 12 % Promissory note - originated in April 2021 132,559 - $ 8,284 24 % Promissory note - originated in July 2021 282,000 - 1 year 12 % Promissory note - originated in August 2021 301,106 - $ 4,842 49 % Promissory note - originated in September 2021 58,554 - $ 1,383 60 months 28 % 3,999,819 1,447,137 Less debt discount and debt issuance cost (956,627 ) (289,332 ) 3,043,192 1,157,805 Less current portion of promissory notes payable 1,225,672 585,310 Long-term promissory notes payable $ 1,817,520 $ 572,494 DATA443 RISK MITIGATION, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 (1) In response to the Coronavirus (COVID-19) pandemic, the US Government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, 2020. The CARES Act provides fast and direct economic assistance for entrepreneurs and small businesses through the US Small Business Administration (“SBA”). During the period, the Company received a loan issued under the CARES Act program - Paycheck Protection Program (“PPP”). This loan program provides small businesses with funds to pay up to 8 weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities. Under the PPP, the Company has applied to have certain amounts forgiven under the direction of the Administrator of the SBA as the Company believes it has satisfied certain criteria. Repayment of the PPP loan will commence earlier of when the SBA remits the forgiveness amount to the lender or the Maturity Date. (2) The Company received an advance under the Economic Injury Disaster Loan (EIDL) program. As the Company received an EIDL advance and a PPP loan, the EIDL advance portion will be applied against the PPP forgiveness amount as repayment to the SBA upon approval of the Company’s PPP forgiveness application. (3) On February 12, 2021, the Company issued notes payable of $ 1,404,000 1,094,691 309,309 (4) The Company received a second advance under the EIDL program. During the nine months ended September 30, 2021 and 2020, the Company recognized interest expense of $ 202,657 22,775 1,721,983 182,219 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 11: COMMITMENTS AND CONTINGENCIES The Company accounts for contingent liabilities in accordance with Accounting Standards Codification (“ASC”) Topic 450, Contingencies DMB Note Collection Action DMB Group, LLC (“ DMB Subsidiary Complaint 940,000 DMB Note DATA443 RISK MITIGATION, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 Employment Related Claims The Company views most legal proceedings involving claims of former employees as routine litigation incidental to the business, and therefore not material. The Company is currently involved in two such matters with former employees. One matter involves three former employees, and that matter has been resolved and settled. The other matter involves one former employee who is seeking additional compensation. In response, the Company believes that the former employee was terminated “for cause” and is owed no further consideration or compensation. The Company intends to vigorously dispute the claim. Litigation In the ordinary course of business, we are involved in a number of lawsuits incidental to our business, including litigation related to intellectual property, employees, and commercial matters. Although it is difficult to predict the ultimate outcome of these cases, management believes that any ultimate liability would not have a material adverse effect on our consolidated financial condition or results of operations. However, an unforeseen unfavorable development in any of these cases could have a material adverse effect on our consolidated financial condition, results of operations, or cash flows in the period in which it is recorded. |
CAPITAL STOCK AND REVERSE STOCK
CAPITAL STOCK AND REVERSE STOCK SPLIT | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
CAPITAL STOCK AND REVERSE STOCK SPLIT | NOTE 12: CAPITAL STOCK AND REVERSE STOCK SPLIT Changes in Authorized Shares On February 19, 2021 the written consent of the holders of a majority of the voting power of the outstanding capital stock of the Company as of the Record Date (the “Consenting Stockholders”) approved the following corporate actions: (1) Amendment of our articles of incorporation (the “Articles of Incorporation”) to provide for a decrease in the authorized shares of the Company’s Common Stock from 1,800,000,000 10,000,000 1,000,000,000 (2) That the Board be authorized to implement through the amendment to our Articles of Incorporation a reverse stock split of the Company’s Common Stock by a ratio of not less than 1-for-10 and not more than 1-for-2,000 On April 21, 2021, the Company increased the number of authorized shares of common stock from 1.8 3.8 On June 10, 2021, the Company filed a Certificate of Amendment to the Articles of Incorporation (the “ Certificate of Amendment 1,000,000,000 Reverse Stock Split common stock in a ratio of 1-for-2,000. The preferred stock of the Company was not changed. The 1-for-2,000 Reverse Stock split was processed by FINRA and became effective at the start of trading on July 1, 2021. As a result of the Reverse Stock Split, every 2,000 shares of the Company’s issued and outstanding common stock, par value $0.001 per share, were converted into one (1) share of common stock, par value $0.001 per share. No fractional shares will be issued in connection with the Reverse Stock Split. Stockholders who otherwise would be entitled to receive fractional shares because they hold a number of pre-Reverse Stock Split shares of the Company’s common stock not evenly divisible by 2,000 will have the number of post-Reverse Stock Split shares of the Company’s common stock to which they are entitled rounded up to the nearest whole number of shares of the Company’s common stock. 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 DATA443 RISK MITIGATION, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 Preferred Stock Series A Preferred Stock As of September 30, 2021 and December 31, 2020, 150,000 1,000 entitled to vote 15,000 shares of common stock on all matters submitted to a vote by shareholders voting common stock. Series B Preferred Stock As of September 30, 2021 and December 31, 2020, 28,175 5,300 10.00 9% During the nine months ended September 30, 2021, the Company issued a total of 41,775 ● 41,375 shares for $ 390,000 24,750 ● 6,560 shares in exchange for convertible note and accrued interest of $ 65,600 During the nine months ended September 30, 2021, 25,200 71,678 Common Stock As of September 30, 2021, the Company is authorized to issue 1,000,000,000 0.001 829,518 522,006 During the nine months ended September 30, 2021, the Company issued common stock as follows: ● 115,860 shares issued for conversion of debt; ● 83,336 1,000,000 10,000 143,199 ● ● 9,793 8,923 ● 71,678 shares issued for conversion of Series B preferred stock; ● 11,298 shares issued as a loan fee in connection with the issuance of promissory notes; and ● 6,624 shares issued for adjustment of reverse stock split DATA443 RISK MITIGATION, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 Warrants During the nine months ended September 30, the Company issued the following warrants: (i) to acquire 55,467 15.00 55,467 15.00 832,000 125,334 4.50 282,000 22,333 4.50 282,000 A summary of activity during the nine months ended September 30, 2021 follows: SCHEDULE OF WARRANTS ACTIVITY Warrants Outstanding Weighted Average Shares Exercise Price Outstanding, December 31, 2020 50,000 $ 20.00 Granted 213,164 7.29 Reset feature - - Exercised (9,030 ) 5.80 Forfeited/canceled - - Outstanding, September 30, 2021 254,134 $ 9.84 The following table summarizes information relating to outstanding and exercisable warrants as of September 30, 2021: SCHEDULE OF OUTSTANDING AND EXERCISABLE WARRANTS Warrants Outstanding Warrants Exercisable Weighted Average Remaining Weighted Number of Shares Contractual life Average Exercise Price Number of Shares Weighted Average Exercise Price 50,000 4.20 $ 20.00 - $ - 55,467 4.56 $ 15.00 - $ - 125,334 4.82 $ 4.50 - $ - 23,333 5.00 $ 4.50 - $ - |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
SHARE-BASED COMPENSATION | NOTE 13: SHARE-BASED COMPENSATION Stock Options During the nine months ended September 30, 2021, 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 ten years The following summarizes the stock option activity for the nine months ended September 30, 2021: SCHEDULE OF STOCK OPTION ACTIVITY Options Weighted-Average Outstanding Exercise Price Balance as of December 31, 2020 5,875 $ 96.99 Grants 6,596 40.81 Exercised - - Cancelled - - Balance as of September 30, 2021 12,471 $ 67.28 DATA443 RISK MITIGATION, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 The weighted average grant date fair value of stock options granted during the nine months ended September 30, 2021 was $ 43.01 284,000 SCHEDULE OF WEIGHTED AVERAGE ASSUMPTIONS FOR STOCK OPTIONS GRANTED Expected term (years) 5.74 Expected stock price volatility 296.17 % Weighted-average risk-free interest rate 0.64 % 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 September 30, 2021: SCHEDULE OF STOCK OPTIONS VESTED AND EXPECTED TO VEST Weighted-Average Number of Remaining Contractual Life Weighted- Average Options (In Years) Exercise Price Outstanding 12,471 9.08 $ 67.28 Exercisable 1,948 8.62 $ 222.66 Expected to vest 10,523 9.16 $ 38.52 As of September 30, 2021 and December 31, 2020, there was $ 333,206 211,661 Restricted Stock Awards During the nine months ended September 30, 2021, 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 nine months ended September 30, 2021: SCHEDULE OF RESTRICTED STOCK ACTIVITY Weighted-Average Shares Fair Value Balance as of December 31, 2020 7,356 93.61 Shares of restricted stock granted 4,501 51.40 Exercised - - Cancelled - - Balance as of September 30, 2021 11,857 77.59 SCHEDULE OF RESTRICTED STOCK AWARD September 30, December 31, Number of Restricted Stock Awards 2021 2020 Vested 7,046 226 Non-vested 4,811 7,130 As of September 30, 2021 and December 31, 2020, there was $ 44,122 144,964 DATA443 RISK MITIGATION, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 14: 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. On September 16, 2019, the Company entered into an Asset Purchase Agreement with DMBGroup, LLC (“ DMB Group 940,000 97,689 159,731 6,915 245,652 405,382 During the nine months ended September 30, 2021, the Company borrowed $ 231,150 134,723 378,143 As of September 30, 2021 and December 31, 2020, the Company had due to related party of $ 389,229 561,230 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 15: SUBSEQUENT EVENTS Subsequent to September 30, 2021, and through the date these interim consolidated financial statements were approved for issuance, the following transactions occurred: ● ● On October 4, 2021, the Company converted 3,300 18,535 On October 19, 2021, the Company converted $ 30,000 20,281 ● On October 19, 2021, the Company closed a financing transaction pursuant to the terms and conditions of a Securities Purchase Agreement (the “ Purchase Agreement Mast Hill Note 444,444.00 Principal Amount 3650,000.00 40,000 28,000 7,000 Second Warrant 161,616 3.20 12% Repayment of all amounts due under the Note shall be tendered on the 12-month anniversary of the Note, though certain amounts are due earlier upon the closing certain designated investments. The Note may be prepaid in whole at any time without prepayment penalty or premium. If the Company fails to meet its obligations under the terms of the Note, the Note shall become immediately due and payable and subject to penalties provided for in the Note. Upon an event of default under the Note, Mast Hill may also convert all amounts due thereunder into shares of the Company’s common stock at a price of $4.00 per share. 161,616 First Warrant 3.20 |
GENERAL (Policies)
GENERAL (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business 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. We are in the data security and privacy business, operating as a software and services provider. We provide software products, services, and solutions for the marketplace that are designed to protect, manage, analyze, alert, and secure enterprise data via the cloud, hybrid, and on-premises architectures. Our suite of security products focus on the protection of: sensitive files and emails; confidential customer, patient, and employee data; financial records; strategic and product plans; intellectual property; and any other data requiring security, allowing our clients to create, share, and protect their data wherever it is stored. We deliver solutions and capabilities via all technical architectures, and in formats designed for each client. Licensing and subscription models are available to conform to customer purchasing requirements. Our solutions are driven by several proprietary technologies and methodologies that we have developed or acquired, giving us our primary competitive advantage. |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements as of September 30, 2021 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 LandStar, 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, LandStar, 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, 2020 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 March 23, 2021. The results of operations for the nine months ended September 30, 2021, are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2021. DATA443 RISK MITIGATION, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 |
Share-Based Compensation | Share-Based Compensation Employees Nonemployees Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting The Company recorded approximately $ 785,757 473,936 |
Basic and Diluted Net Loss Per Common Share | Basic and Diluted Net Loss Per Common Share 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 nine months ended September 30, 2021 and 2020, respectively, 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: SCHEDULE OF ANTI-DILUTIVE BASIC AND DILUTED EARNINGS PER SHARE Nine Months Ended September 30, 2021 2020 (Shares) (Shares) Series A Preferred Stock 150,000,000 150,000,000 Stock options 12,471 5,664 Warrants 254,134 165,252 Convertible notes - 10,289 Preferred B stock 18,535 - Total 150,285,150 150,181,205 DATA443 RISK MITIGATION, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 |
COVID-19 | COVID-19 In March 2020, the World Health Organization (“WHO”) declared the novel coronavirus COVID-19 (“COVID-19”) a global pandemic. The pandemic adversely affected workforces, economies, and financial markets globally in 2020 and, until contained, is still expected to disrupt general business operations. The COVID-19 pandemic and the measures taken by many governments around the world in response could in the future meaningfully impact our business, results of operations and financial condition. The Company is currently unable to predict the duration of that impact but continues to monitor its accounting estimates of the carrying value of certain assets and liabilities relating to its leases and will continue to do so as additional information is obtained or new events occur. Actual results could differ from our estimates and judgments, and any such differences may be material to our financial statements. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with “Conversion and Other Options” and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity”. The standard reduced the number of accounting models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting; and, (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently assessing the impact of the adoption of this standard on its consolidated financial statements. On June 16, 2016, the FASB completed its Financial Instruments—Credit Losses project by issuing Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326). The new guidance requires organizations to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The new guidance; (i) eliminates the probable initial recognition threshold in current GAAP and, instead, reflects an organization’s current estimate of all expected credit losses over the contractual term of its financial assets, (ii) broadens the information that an entity can consider when measuring credit losses to include forward-looking information, (iii) increases usefulness of the financial statements by requiring timely inclusion of forecasted information in forming expectations of credit losses, (iv) increases comparability of purchased financial assets with credit deterioration (PCD assets) with other purchased assets that do not have credit deterioration as well as originated assets because credit losses that are expected will be recorded through an allowance for credit losses for all assets, (v) increases users’ understanding of underwriting standards and credit quality trends by requiring additional information about credit quality indicators by year of origination (vintage), and (vi) aligns the income statement recognition of credit losses, for available-for-sale debt securities, with the reporting period in which changes occur by recording credit losses (and subsequent changes in credit losses) through an allowance rather than a write down. The new guidance affects organizations that hold financial assets and net investments in leases that are not accounted for at fair value with changes in fair value reported in net income. It affects loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. For public business entities that meet the definition of a U.S. Securities and Exchange (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For all other entities, it is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early application is permitted. The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its consolidated financial statements. |
GENERAL (Tables)
GENERAL (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
SCHEDULE OF ANTI-DILUTIVE BASIC AND DILUTED EARNINGS PER SHARE | For the nine months ended September 30, 2021 and 2020, respectively, 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: SCHEDULE OF ANTI-DILUTIVE BASIC AND DILUTED EARNINGS PER SHARE Nine Months Ended September 30, 2021 2020 (Shares) (Shares) Series A Preferred Stock 150,000,000 150,000,000 Stock options 12,471 5,664 Warrants 254,134 165,252 Convertible notes - 10,289 Preferred B stock 18,535 - Total 150,285,150 150,181,205 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
SUMMARY OF COMPONENTS OF PROPERTY AND EQUIPMENT | The following table summarizes the components of the Company’s property and equipment as of the dates presented: SUMMARY OF COMPONENTS OF PROPERTY AND EQUIPMENT September 30, December 31, 2021 2020 Furniture and Fixtures $ 2,991 $ 2,991 Computer Equipment 559,654 421,323 562,645 424,314 Accumulated depreciation (208,223 ) (99,965 ) Property and equipment, net of accumulated depreciation $ 354,422 $ 324,349 |
INTELLECTUAL PROPERTY (Tables)
INTELLECTUAL PROPERTY (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
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: SCHEDULE OF INTELLECTUAL PROPERTY September 30, December 31, 2021 2020 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 TM 1,388,051 1,388,051 FileFacets TM 135,000 135,000 IntellyWP™ 135,000 135,000 Resilient Network Systems 305,000 305,000 5,304,851 5,304,851 Accumulated amortization (3,718,510 ) (2,993,944 ) Intellectual property, net of accumulated amortization $ 1,586,341 $ 2,310,907 |
SCHEDULE OF FUTURE AMORTIZATION EXPENSE OF INTANGIBLE ASSETS | Based on the carrying value of definite-lived intangible assets as of September 30, 2021, we estimate our amortization expense for the next five years will be as follows: SCHEDULE OF FUTURE AMORTIZATION EXPENSE OF INTANGIBLE ASSETS Amortization Year Ended December 31, Expense 2021 (excluding the nine months ended September 30, 2021) $ 241,522 2022 860,484 2023 441,585 2024 27,000 Thereafter 15,750 Intellectual property, net of accumulated amortization 1,586,341 |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Payables and Accruals [Abstract] | |
SUMMARY OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | The following table summarizes the components of the Company’s accounts payable and accrued liabilities as of the dates presented: SUMMARY OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES September 30, December 31, 2021 2020 Accounts payable $ 101,808 $ 178,319 Payroll liabilities 81,440 102,793 Credit cards 15,050 31,918 Accrued dividend - preferred stock 6,618 484 Accrued liabilities - 87,500 Accounts payable and accrued liabilities $ 204,916 $ 401,014 |
DEFERRED REVENUE (Tables)
DEFERRED REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
SUMMARY OF CHANGES IN DEFERRED REVENUE | For the nine months ended September 30, 2021 and as of December 31 changes in deferred revenue were as follows: SUMMARY OF CHANGES IN DEFERRED REVENUE September 30, December 31, 2021 2020 Balance, beginning of period $ 1,518,163 $ 953,546 Deferral of revenue 2,153,640 2,961,749 Recognition of deferred revenue (2,026,443 ) (2,397,132 ) Balance, end of period $ 1,645,360 $ 1,518,163 |
SCHEDULE OF DEFERRED REVENUE | As of September 30, 2021 and December 31, 2020, is classified as follows: SCHEDULE OF DEFERRED REVENUE September 30, December 31, 2021 2020 Current $ 1,134,535 $ 1,478,430 Non-current 510,825 39,733 Deferred revenue $ 1,645,360 $ 1,518,163 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Leases | |
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER OPERATING LEASES | Future minimum lease payments under operating leases that have initial noncancelable lease terms in excess of one year at September 30, 2021 were as follows: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER OPERATING LEASES Total Year Ended December 31, 2021 (excluding the nine months ended September 30, 2021) $ 30,900 2022 127,300 2023 131,150 Thereafter - Total lease payment 289,350 Less: Imputed interest (25,592 ) Operating lease liabilities 263,758 Operating lease liability – current 109,193 Operating lease liability - non-current $ 154,565 |
SCHEDULE OF OTHER SUPPLEMENTAL INFORMATION UNDER OPERATING LEASE | The following summarizes other supplemental information about the Company’s operating lease as of September 30, 2021: SCHEDULE OF OTHER SUPPLEMENTAL INFORMATION UNDER OPERATING LEASE Weighted average discount rate 8 % Weighted average remaining lease term (years) 2.29 |
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER FINANCE LEASES | At September 30, 2021, future minimum lease payments under the finance lease obligations, are as follows: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER FINANCE LEASES Total 2021 (excluding the nine months ended September 30, 2021) $ 26,633 2022 78,379 2023 10,496 Thereafter - Total finance lease payment 115,508 Less: Imputed interest (8,735 ) Finance lease liabilities 106,773 Finance lease liability 80,989 Finance lease liability - non-current $ 25,784 |
SCHEDULE OF FINANCE LEASE ASSETS | As of September 30, 2021 and December 31 2020, finance lease assets are included in property and equipment as follows: SCHEDULE OF FINANCE LEASE ASSETS September 30, December 31, 2021 2020 Finance lease assets $ 267,284 $ 267,284 Accumulated depreciation (126,486 ) (87,337 ) Finance lease assets, net of accumulated depreciation $ 140,798 $ 179,947 |
CONVERTIBLE NOTES PAYABLE (Tabl
CONVERTIBLE NOTES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
SCHEDULE OF CONVERTIBLE NOTES PAYABLE | Convertible notes payable consists of the following: SCHEDULE OF CONVERTIBLE NOTES PAYABLE September 30, December 31, 2021 2020 Convertible Notes - Issued in fiscal year 2020 100,000 1,526,000 Convertible Notes - Issued in fiscal year 2021 738,563 - 838,563 1,526,000 Less debt discount and debt issuance cost (234,585 ) (282,232 ) 603,978 1,243,768 Less current portion of convertible notes payable (586,663 ) (1,241,412 ) Long-term convertible notes payable $ 17,315 $ 2,356 |
DERIVATIVE LIABILITIES (Tables)
DERIVATIVE LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
SCHEDULE OF FAIR VALUE OF LIABILITIES MEASURED ON RECURRING BASIS | For the nine months September 30, 2021 and year ended December 31, 2020, the estimated fair values of the liabilities measured on a recurring basis are as follows: SCHEDULE OF FAIR VALUE OF LIABILITIES MEASURED ON RECURRING BASIS Nine months Ended Year Ended September 30, December 31, 2021 2020 Expected term 0.48 1.94 0.02 - 5.00 years Expected average volatility 160 302 % 187 464 % Expected dividend yield - - Risk-free interest rate 0.04 0.16 % 0.01 1.57 % |
SCHEDULE OF CHANGES IN DERIVATIVE LIABILITIES | The following table summarizes the changes in the derivative liabilities during the nine months ended September 30, 2021 and 2020: SCHEDULE OF CHANGES IN DERIVATIVE LIABILITIES Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Derivative liability as of December 31, 2020 $ - Addition of new derivatives recognized as debt discounts 340,000 Addition of new derivatives recognized as day-one loss 384,767 Derivative liabilities settled upon conversion of convertible note (731,860 ) Reclassification to common stock payable (39,993 ) Change in derivative liabilities recognized as loss on derivative 47,086 Derivative liability as of September 30, 2021 $ - |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Notes Payable | |
SCHEDULE OF NOTES PAYABLE | Notes payable consists of the following: SCHEDULE OF NOTES PAYABLE September 30, December 31, 2021 2020 Maturity Interest Rate 10% 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 April 2020 10,000 10,000 Due on demand No interest Paycheck Protection Program Promissory note - originated in April 2020 (1) 339,000 339,000 2 years 1.0 % Economic Injury Disaster Loan - originated in May 2020 (2,4) 500,000 150,000 30 years 3.75 % Promissory note - originated in June 2020 - 43,356 $ 3,942 16.0 % Promissory note - originated in September 2020 58,025 80,730 $ 2,873 36 months 14.0 % Promissory note - originated in October 2020 - 158,169 $ 2,293 25.0 % Promissory note - originated in November 2020 - 170,886 $ 4,497 25.0 % Promissory note - originated in November 2020 - 394,846 $ 6,999 25.0 % Promissory note - originated in December 2020 37,287 50,030 $ 1,854 36 months 8.0 % Promissory note - originated in February 2021 (3) 1,344,000 - 5 years 4.0 % Promissory note - originated in January 2021 55,168 - $ 2,675 36 months 18.0 % Promissory note - originated in April 2021 832,000 - 1 year 12 % Promissory note - originated in April 2021 132,559 - $ 8,284 24 % Promissory note - originated in July 2021 282,000 - 1 year 12 % Promissory note - originated in August 2021 301,106 - $ 4,842 49 % Promissory note - originated in September 2021 58,554 - $ 1,383 60 months 28 % 3,999,819 1,447,137 Less debt discount and debt issuance cost (956,627 ) (289,332 ) 3,043,192 1,157,805 Less current portion of promissory notes payable 1,225,672 585,310 Long-term promissory notes payable $ 1,817,520 $ 572,494 DATA443 RISK MITIGATION, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 (1) In response to the Coronavirus (COVID-19) pandemic, the US Government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, 2020. The CARES Act provides fast and direct economic assistance for entrepreneurs and small businesses through the US Small Business Administration (“SBA”). During the period, the Company received a loan issued under the CARES Act program - Paycheck Protection Program (“PPP”). This loan program provides small businesses with funds to pay up to 8 weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities. Under the PPP, the Company has applied to have certain amounts forgiven under the direction of the Administrator of the SBA as the Company believes it has satisfied certain criteria. Repayment of the PPP loan will commence earlier of when the SBA remits the forgiveness amount to the lender or the Maturity Date. (2) The Company received an advance under the Economic Injury Disaster Loan (EIDL) program. As the Company received an EIDL advance and a PPP loan, the EIDL advance portion will be applied against the PPP forgiveness amount as repayment to the SBA upon approval of the Company’s PPP forgiveness application. (3) On February 12, 2021, the Company issued notes payable of $ 1,404,000 1,094,691 309,309 (4) The Company received a second advance under the EIDL program. |
CAPITAL STOCK AND REVERSE STO_2
CAPITAL STOCK AND REVERSE STOCK SPLIT (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
SCHEDULE OF WARRANTS ACTIVITY | A summary of activity during the nine months ended September 30, 2021 follows: SCHEDULE OF WARRANTS ACTIVITY Warrants Outstanding Weighted Average Shares Exercise Price Outstanding, December 31, 2020 50,000 $ 20.00 Granted 213,164 7.29 Reset feature - - Exercised (9,030 ) 5.80 Forfeited/canceled - - Outstanding, September 30, 2021 254,134 $ 9.84 |
SCHEDULE OF OUTSTANDING AND EXERCISABLE WARRANTS | The following table summarizes information relating to outstanding and exercisable warrants as of September 30, 2021: SCHEDULE OF OUTSTANDING AND EXERCISABLE WARRANTS Warrants Outstanding Warrants Exercisable Weighted Average Remaining Weighted Number of Shares Contractual life Average Exercise Price Number of Shares Weighted Average Exercise Price 50,000 4.20 $ 20.00 - $ - 55,467 4.56 $ 15.00 - $ - 125,334 4.82 $ 4.50 - $ - 23,333 5.00 $ 4.50 - $ - |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
SCHEDULE OF STOCK OPTION ACTIVITY | The following summarizes the stock option activity for the nine months ended September 30, 2021: SCHEDULE OF STOCK OPTION ACTIVITY Options Weighted-Average Outstanding Exercise Price Balance as of December 31, 2020 5,875 $ 96.99 Grants 6,596 40.81 Exercised - - Cancelled - - Balance as of September 30, 2021 12,471 $ 67.28 |
SCHEDULE OF WEIGHTED AVERAGE ASSUMPTIONS FOR STOCK OPTIONS GRANTED | SCHEDULE OF WEIGHTED AVERAGE ASSUMPTIONS FOR STOCK OPTIONS GRANTED Expected term (years) 5.74 Expected stock price volatility 296.17 % Weighted-average risk-free interest rate 0.64 % 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 September 30, 2021: SCHEDULE OF STOCK OPTIONS VESTED AND EXPECTED TO VEST Weighted-Average Number of Remaining Contractual Life Weighted- Average Options (In Years) Exercise Price Outstanding 12,471 9.08 $ 67.28 Exercisable 1,948 8.62 $ 222.66 Expected to vest 10,523 9.16 $ 38.52 |
SCHEDULE OF RESTRICTED STOCK ACTIVITY | The following summarizes the restricted stock activity for the nine months ended September 30, 2021: SCHEDULE OF RESTRICTED STOCK ACTIVITY Weighted-Average Shares Fair Value Balance as of December 31, 2020 7,356 93.61 Shares of restricted stock granted 4,501 51.40 Exercised - - Cancelled - - Balance as of September 30, 2021 11,857 77.59 |
SCHEDULE OF RESTRICTED STOCK AWARD | SCHEDULE OF RESTRICTED STOCK AWARD September 30, December 31, Number of Restricted Stock Awards 2021 2020 Vested 7,046 226 Non-vested 4,811 7,130 |
SCHEDULE OF ANTI-DILUTIVE BASIC
SCHEDULE OF ANTI-DILUTIVE BASIC AND DILUTED EARNINGS PER SHARE (Details) - shares | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Antidilutive earnings per share | 150,285,150 | 150,181,205 |
Stock Options [Member] | ||
Antidilutive earnings per share | 12,471 | 5,664 |
Warrant [Member] | ||
Antidilutive earnings per share | 254,134 | 165,252 |
Convertible Notes [Member] | ||
Antidilutive earnings per share | 10,289 | |
Series A Preferred Stock [Member] | ||
Antidilutive earnings per share | 150,000,000 | 150,000,000 |
Preferred B Stock [Member] | ||
Antidilutive earnings per share | 18,535 |
GENERAL (Details Narrative)
GENERAL (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Accounting Policies [Abstract] | ||
Share-based compensation expense | $ 785,757 | $ 473,936 |
SUMMARY OF COMPONENTS OF PROPER
SUMMARY OF COMPONENTS OF PROPERTY AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 562,645 | $ 424,314 |
Accumulated depreciation | (208,223) | (99,965) |
Property and equipment, net of accumulated depreciation | 354,422 | 324,349 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 2,991 | 2,991 |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 559,654 | $ 421,323 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 108,258 | $ 54,226 |
Payments to purchase property and equipment | $ 138,331 | $ 95,425 |
SCHEDULE OF INTELLECTUAL PROPER
SCHEDULE OF INTELLECTUAL PROPERTY (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets [Line Items] | ||
Intellectual property | $ 5,304,851 | $ 5,304,851 |
Accumulated amortization | (3,718,510) | (2,993,944) |
Intellectual property, net of accumulated amortization | 1,586,341 | 2,310,907 |
Word Press GDPR Rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intellectual property | 46,800 | 46,800 |
ARALOC [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intellectual property | 1,850,000 | 1,850,000 |
ArcMail License [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intellectual property | 1,445,000 | 1,445,000 |
DataExpress [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intellectual property | 1,388,051 | 1,388,051 |
FileFacets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intellectual property | 135,000 | 135,000 |
IntellyWP [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intellectual property | 135,000 | 135,000 |
Resilient Network Systems [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intellectual property | $ 305,000 | $ 305,000 |
SCHEDULE OF FUTURE AMORTIZATION
SCHEDULE OF FUTURE AMORTIZATION EXPENSE OF INTANGIBLE ASSETS (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2021 (excluding the nine months ended September 30, 2021) | $ 241,522 | |
2022 | 860,484 | |
2023 | 441,585 | |
2024 | 27,000 | |
Thereafter | 15,750 | |
Intellectual property, net of accumulated amortization | $ 1,586,341 | $ 2,310,907 |
INTELLECTUAL PROPERTY (Details
INTELLECTUAL PROPERTY (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 724,566 | $ 1,168,259 |
SUMMARY OF ACCOUNTS PAYABLE AND
SUMMARY OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 101,808 | $ 178,319 |
Payroll liabilities | 81,440 | 102,793 |
Credit cards | 15,050 | 31,918 |
Accrued dividend - preferred stock | 6,618 | 484 |
Accrued liabilities | 87,500 | |
Accounts payable and accrued liabilities | $ 204,916 | $ 401,014 |
SUMMARY OF CHANGES IN DEFERRED
SUMMARY OF CHANGES IN DEFERRED REVENUE (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | ||
Balance, beginning of period | $ 1,518,163 | $ 953,546 |
Deferral of revenue | 2,153,640 | 2,961,749 |
Recognition of deferred revenue | (2,026,443) | (2,397,132) |
Balance, end of period | $ 1,645,360 | $ 1,518,163 |
SCHEDULE OF DEFERRED REVENUE (D
SCHEDULE OF DEFERRED REVENUE (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Revenue from Contract with Customer [Abstract] | |||
Current | $ 1,134,535 | $ 1,478,430 | |
Non-current | 510,825 | 39,733 | |
Deferred revenue | $ 1,645,360 | $ 1,518,163 | $ 953,546 |
SCHEDULE OF FUTURE MINIMUM LEAS
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER OPERATING LEASES (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Leases | ||
2021 (excluding the nine months ended September 30, 2021) | $ 30,900 | |
2022 | 127,300 | |
2023 | 131,150 | |
Thereafter | ||
Total lease payment | 289,350 | |
Less: Imputed interest | (25,592) | |
Operating lease liabilities | 263,758 | |
Operating lease liability – current | 109,193 | $ 100,170 |
Operating lease liability - non-current | $ 154,565 | $ 237,961 |
SCHEDULE OF OTHER SUPPLEMENTAL
SCHEDULE OF OTHER SUPPLEMENTAL INFORMATION UNDER OPERATING LEASE (Details) | Sep. 30, 2021 |
Leases | |
Weighted average discount rate | 8.00% |
Weighted average remaining lease term (years) | 2 years 3 months 14 days |
SCHEDULE OF FUTURE MINIMUM LE_2
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER FINANCE LEASES (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Leases | ||
2021 (excluding the nine months ended September 30, 2021) | $ 26,633 | |
2022 | 78,379 | |
2023 | 10,496 | |
Thereafter | ||
Total finance lease payment | 115,508 | |
Less: Imputed interest | (8,735) | |
Finance lease liabilities | 106,773 | |
Finance lease liability | 80,989 | $ 90,565 |
Finance lease liability - non-current | $ 25,784 | $ 83,109 |
SCHEDULE OF FINANCE LEASE ASSET
SCHEDULE OF FINANCE LEASE ASSETS (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Leases | ||
Finance lease assets | $ 267,284 | $ 267,284 |
Accumulated depreciation | (126,486) | (87,337) |
Finance lease assets, net of accumulated depreciation | $ 140,798 | $ 179,947 |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Leases | |||
Lessee, operating lease, description | We have a noncancelable operating lease for our office facility that expires in 2024. | ||
Lease expense | $ 83,339 | $ 76,564 | |
Security deposit | $ 10,000 | $ 10,000 | |
Capital lease term | 3 years | ||
Capital leases annual interest rate | 12.00% | ||
Capital lease obligations current | $ 80,989 | 87,901 | |
Capital lease obligations noncurrent | 25,784 | 106,744 | |
Capital lease security deposit | $ 10,944 | $ 10,944 |
SCHEDULE OF CONVERTIBLE NOTES P
SCHEDULE OF CONVERTIBLE NOTES PAYABLE (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Short-term Debt [Line Items] | ||
Convertible notes payable, Gross | $ 838,563 | $ 1,526,000 |
Less debt discount and debt issuance cost | (234,585) | (282,232) |
Convertible notes payable | 603,978 | 1,243,768 |
Less current portion of convertible notes payable | (586,663) | (1,241,412) |
Long-term convertible notes payable | 17,315 | 2,356 |
Issued in Fiscal Year 2020 [Member] | ||
Short-term Debt [Line Items] | ||
Convertible notes payable, Gross | 100,000 | 1,526,000 |
Issued in Fiscal Year 2021 [Member] | ||
Short-term Debt [Line Items] | ||
Convertible notes payable, Gross | $ 738,563 |
CONVERTIBLE NOTES PAYABLE (Deta
CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Short-term Debt [Line Items] | |||||
Interest expense | $ 90,421 | $ 249,907 | |||
Amortization of debt discount | 379,890 | 1,126,906 | |||
Derivative liability | $ 340,000 | 340,000 | |||
Convertible outstanding amount | 603,978 | 603,978 | $ 1,243,768 | ||
Proceeds from convertible debt | 642,000 | 1,352,250 | |||
Common stock issued for conversion, value | 78,263 | $ 8,182,966 | 1,601,521 | $ 12,512,125 | |
Convertible Note [Member] | |||||
Short-term Debt [Line Items] | |||||
Debt converted into common stock | $ 1,370,150 | ||||
Debt converted into common stock, shares | 115,859 | ||||
Derivative liability | 231,371 | $ 231,371 | |||
Promissory Notes - Issued in Fiscal Year 2020 [Member] | |||||
Short-term Debt [Line Items] | |||||
Convertible outstanding amount | $ 2,466,500 | ||||
Debt instrument maturity date, description | Convertible at the option of the holders at issuance date, after maturity date or 6 months after issuance date. | ||||
Debt conversion, description | 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 ranging from $0.001 to $0.007. 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. | ||||
Promissory Notes - Issued in Fiscal Year 2020 [Member] | Minimum [Member] | |||||
Short-term Debt [Line Items] | |||||
Debt instrument term | 5 months | ||||
Debt interest rate | 0.00% | ||||
Promissory Notes - Issued in Fiscal Year 2020 [Member] | Maximum [Member] | |||||
Short-term Debt [Line Items] | |||||
Debt instrument term | 60 months | ||||
Debt interest rate | 25.00% | ||||
Promissory Notes - Issued in Fiscal Year 2020 [Member] | |||||
Short-term Debt [Line Items] | |||||
Convertible outstanding amount | 697,000 | $ 697,000 | |||
Debt instrument maturity date, description | Convertible at the option of the holders after varying dates. | ||||
Debt conversion, description | Conversion prices are typically based on the discounted (39% discount) average closing prices or lowest trading prices of the Company’s shares during 20 periods prior to conversion. Certain note has a fixed conversion price $3.50. | ||||
Proceeds from convertible debt | $ 642,000 | ||||
Financing fee | $ 55,000 | $ 55,000 | |||
Common stock issued for conversion, shares | 11,298 | ||||
Common stock issued for conversion, value | $ 133,663 | ||||
Promissory Notes - Issued in Fiscal Year 2020 [Member] | Minimum [Member] | |||||
Short-term Debt [Line Items] | |||||
Debt instrument term | 90 days | ||||
Debt interest rate | 5.00% | 5.00% | |||
Promissory Notes - Issued in Fiscal Year 2020 [Member] | Maximum [Member] | |||||
Short-term Debt [Line Items] | |||||
Debt instrument term | 12 months | ||||
Debt interest rate | 22.00% | 22.00% |
SCHEDULE OF FAIR VALUE OF LIABI
SCHEDULE OF FAIR VALUE OF LIABILITIES MEASURED ON RECURRING BASIS (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Measurement Input, Expected Term [Member] | Minimum [Member] | ||
Derivative [Line Items] | ||
Expected term | 5 months 23 days | 7 days |
Measurement Input, Expected Term [Member] | Maximum [Member] | ||
Derivative [Line Items] | ||
Expected term | 1 year 11 months 8 days | 5 years |
Measurement Input, Price Volatility [Member] | Minimum [Member] | ||
Derivative [Line Items] | ||
Derivative liability, measurement input, percentage | 160 | 187 |
Measurement Input, Price Volatility [Member] | Maximum [Member] | ||
Derivative [Line Items] | ||
Derivative liability, measurement input, percentage | 302 | 464 |
Measurement Input, Expected Dividend Rate [Member] | ||
Derivative [Line Items] | ||
Derivative liability, measurement input, percentage | ||
Measurement Input, Risk Free Interest Rate [Member] | Minimum [Member] | ||
Derivative [Line Items] | ||
Derivative liability, measurement input, percentage | 0.04 | 0.01 |
Measurement Input, Risk Free Interest Rate [Member] | Maximum [Member] | ||
Derivative [Line Items] | ||
Derivative liability, measurement input, percentage | 0.16 | 1.57 |
SCHEDULE OF CHANGES IN DERIVATI
SCHEDULE OF CHANGES IN DERIVATIVE LIABILITIES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Change in derivative liabilities recognized as loss on derivative | $ (68,199) | $ (420,070) | $ (431,853) | $ (9,698,885) |
Derivative liability ending | 340,000 | 340,000 | ||
Fair Value, Inputs, Level 3 [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Derivative liability beginning | ||||
Addition of new derivatives recognized as debt discounts | 340,000 | |||
Addition of new derivatives recognized as day-one loss | 384,767 | |||
Derivative liabilities settled upon conversion of convertible note | (731,860) | |||
Reclassification to common stock payable | (39,993) | |||
Change in derivative liabilities recognized as loss on derivative | 47,086 | |||
Derivative liability ending |
DERIVATIVE LIABILITIES (Details
DERIVATIVE LIABILITIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Fair value of derivative liability | $ 727,767 | $ 727,767 | ||
Derivative liability | 340,000 | 340,000 | ||
Loss on derivative | 384,767 | |||
Aggregate loss on derivatives | $ 68,199 | $ 420,070 | $ 431,853 | $ 9,698,885 |
SCHEDULE OF NOTES PAYABLE (Deta
SCHEDULE OF NOTES PAYABLE (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Short-term Debt [Line Items] | ||
Promissory notes payable, Gross | $ 3,999,819 | $ 1,447,137 |
Less debt discount and debt issuance cost | (956,627) | (289,332) |
Promissory notes payable | 3,043,192 | 1,157,805 |
Less current portion of promissory notes payable | 1,225,672 | 585,310 |
Long-term promissory notes payable | 1,817,520 | 572,494 |
10% Promissory Note Originated in October 2019 [Member] | ||
Short-term Debt [Line Items] | ||
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 [Member] | ||
Short-term Debt [Line Items] | ||
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 April 2020 [Member] | ||
Short-term Debt [Line Items] | ||
Promissory notes payable, Gross | $ 10,000 | $ 10,000 |
Maturity | Due on demand | Due on demand |
Paycheck Protection Program Promissory Note - Originated in April 2020 [Member] | ||
Short-term Debt [Line Items] | ||
Promissory notes payable, Gross | $ 339,000 | $ 339,000 |
Maturity | 2 years | 2 years |
Interest Rate | 1.00% | 1.00% |
Economic Injury Disaster Loan - Originated in May 2020 [Member] | ||
Short-term Debt [Line Items] | ||
Promissory notes payable, Gross | $ 500,000 | $ 150,000 |
Maturity | 30 years | 30 years |
Interest Rate | 3.75% | 3.75% |
Promissory Note - Originated in June 2020 [Member] | ||
Short-term Debt [Line Items] | ||
Promissory notes payable, Gross | $ 43,356 | |
Interest Rate | 16.00% | 16.00% |
Daily/monthly payment | $ 3,942 | |
Promissory Note - Originated in September 2020 [Member] | ||
Short-term Debt [Line Items] | ||
Promissory notes payable, Gross | $ 58,025 | $ 80,730 |
Maturity | 36 months | 36 months |
Interest Rate | 14.00% | 14.00% |
Daily/monthly payment | $ 2,873 | |
Promissory Note - Originated in October 2020 [Member] | ||
Short-term Debt [Line Items] | ||
Promissory notes payable, Gross | $ 158,169 | |
Interest Rate | 25.00% | 25.00% |
Daily/monthly payment | $ 2,293 | |
Promissory Note - Originated in November 2020 [Member] | ||
Short-term Debt [Line Items] | ||
Promissory notes payable, Gross | $ 170,886 | |
Interest Rate | 25.00% | 25.00% |
Daily/monthly payment | $ 4,497 | |
Promissory Note - Originated in November 2020 One [Member] | ||
Short-term Debt [Line Items] | ||
Promissory notes payable, Gross | $ 394,846 | |
Interest Rate | 25.00% | 25.00% |
Daily/monthly payment | $ 6,999 | |
Promissory Note - Originated in December 2020 [Member] | ||
Short-term Debt [Line Items] | ||
Promissory notes payable, Gross | $ 37,287 | $ 50,030 |
Maturity | 36 months | 36 months |
Interest Rate | 8.00% | 8.00% |
Daily/monthly payment | $ 1,854 | |
Promissory Note Originated In February Two Thousand And Twenty One [Member] | ||
Short-term Debt [Line Items] | ||
Promissory notes payable, Gross | $ 1,344,000 | |
Maturity | 5 years | |
Interest Rate | 4.00% | |
Promissory Note - Originated in January 2021 [Member] | ||
Short-term Debt [Line Items] | ||
Promissory notes payable, Gross | $ 55,168 | |
Maturity | 36 months | |
Interest Rate | 18.00% | |
Daily/monthly payment | $ 2,675 | |
Promissory Note Originated in April Two Thousand and Twenty One Two [Member] | ||
Short-term Debt [Line Items] | ||
Promissory notes payable, Gross | $ 832,000 | |
Maturity | 1 year | |
Interest Rate | 12.00% | |
Promissory Note Originated in April Two Thousand and Twenty One Two One [Member] | ||
Short-term Debt [Line Items] | ||
Promissory notes payable, Gross | $ 132,559 | |
Interest Rate | 24.00% | |
Daily/monthly payment | $ 8,284 | |
Promissory Note Originated in July Two Thousand and Twenty One [Member] | ||
Short-term Debt [Line Items] | ||
Promissory notes payable, Gross | $ 282,000 | |
Maturity | 1 year | |
Interest Rate | 12.00% | |
Promissory Note Originated in August Two Thousand and Twenty One [Member] | ||
Short-term Debt [Line Items] | ||
Promissory notes payable, Gross | $ 301,106 | |
Interest Rate | 49.00% | |
Daily/monthly payment | $ 4,842 | |
Promissory Note Originated in September Two Thousand and Twenty One [Member] | ||
Short-term Debt [Line Items] | ||
Promissory notes payable, Gross | $ 58,554 | |
Maturity | 60 months | |
Interest Rate | 28.00% | |
Daily/monthly payment | $ 1,383 |
SCHEDULE OF NOTES PAYABLE (De_2
SCHEDULE OF NOTES PAYABLE (Details) (Parenthetical) - USD ($) | Feb. 12, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 |
Notes Payable | ||||||
Note payable issued for settlement of license fee payable | $ 1,404,000 | $ 1,404,000 | ||||
License fee payable | 1,094,691 | $ 1,094,691 | ||||
Loss on loan settlement | $ 309,309 | $ (191,833) | $ (227,501) | $ (245,833) |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Short-term Debt [Line Items] | ||
Interest expense | $ 90,421 | $ 249,907 |
Amortization of debt discount | 2,356,631 | 1,309,125 |
Notes Payable, Other Payables [Member] | ||
Short-term Debt [Line Items] | ||
Interest expense | 202,657 | 22,775 |
Amortization of debt discount | $ 1,721,983 | $ 182,219 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | Sep. 30, 2021 | Sep. 16, 2019 |
Short-term Debt [Line Items] | ||
Original principal amount | $ 832,000 | |
D M B Note [Member] | ||
Short-term Debt [Line Items] | ||
Original principal amount | $ 940,000 |
SCHEDULE OF WARRANTS ACTIVITY (
SCHEDULE OF WARRANTS ACTIVITY (Details) | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Equity [Abstract] | |
Warrants Outstanding Beginning balance, Shares | shares | 50,000 |
Warrants Outstanding Beginning balance, Weighted Average Exercise Price | $ / shares | $ 20 |
Warrants Granted, Shares | shares | 213,164 |
Warrants Granted, Weighted Average Exercise Price | $ / shares | $ 7.29 |
Warrants Reset feature, Shares | shares | |
Warrants Reset feature, Weighted Average Exercise Price | $ / shares | |
Warrants Exercised, Shares | shares | (9,030) |
Warrants Exercised, Weighted Average Exercise Price | $ / shares | $ 5.80 |
Warrants Forfeited/canceled, Shares | shares | |
Warrants Forfeited/canceled, Weighted Average Exercise Price | $ / shares | |
Warrants Outstanding Ending balance, Shares | shares | 254,134 |
Warrants Outstanding Ending balance, Weighted Average Exercise Price | $ / shares | $ 9.84 |
SCHEDULE OF OUTSTANDING AND EXE
SCHEDULE OF OUTSTANDING AND EXERCISABLE WARRANTS (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Number of shares,Warrants Outstanding | 254,134 | 50,000 |
Warrant One [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Number of shares,Warrants Outstanding | 50,000 | |
Weighted Average Remaining Contractual life, Warrants Outstanding | 4 years 2 months 12 days | |
Weighted Average Exercise Price, Warrants Outstanding | $ 20 | |
Number of Shares, Warrants Exercisable | ||
Weighted Average Exercise Price, Warrants Exercisable | ||
Warrant Two [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Number of shares,Warrants Outstanding | 55,467 | |
Weighted Average Remaining Contractual life, Warrants Outstanding | 4 years 6 months 21 days | |
Weighted Average Exercise Price, Warrants Outstanding | $ 15 | |
Number of Shares, Warrants Exercisable | ||
Weighted Average Exercise Price, Warrants Exercisable | ||
Warrant Three [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Number of shares,Warrants Outstanding | 125,334 | |
Weighted Average Remaining Contractual life, Warrants Outstanding | 4 years 9 months 25 days | |
Weighted Average Exercise Price, Warrants Outstanding | $ 4.50 | |
Number of Shares, Warrants Exercisable | ||
Weighted Average Exercise Price, Warrants Exercisable | ||
Warrant Four [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Number of shares,Warrants Outstanding | 23,333 | |
Weighted Average Remaining Contractual life, Warrants Outstanding | 5 years | |
Weighted Average Exercise Price, Warrants Outstanding | $ 4.50 | |
Number of Shares, Warrants Exercisable | ||
Weighted Average Exercise Price, Warrants Exercisable |
CAPITAL STOCK AND REVERSE STO_3
CAPITAL STOCK AND REVERSE STOCK SPLIT (Details Narrative) - USD ($) | Jun. 10, 2021 | Feb. 19, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Apr. 21, 2021 | Apr. 20, 2021 |
Class of Stock [Line Items] | |||||||||
Common stock authorized | 1,800,000,000 | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 | 3,800,000,000 | 1,800,000,000 | |||
Common stock, authorized reduction | 1,000,000,000 | ||||||||
Reverse stock split | common stock in a ratio of 1-for-2,000. The preferred stock of the Company was not changed. The 1-for-2,000 Reverse Stock split was processed by FINRA and became effective at the start of trading on July 1, 2021. As a result of the Reverse Stock Split, every 2,000 shares of the Company’s issued and outstanding common stock, par value $0.001 per share, were converted into one (1) share of common stock, par value $0.001 per share. No fractional shares will be issued in connection with the Reverse Stock Split. Stockholders who otherwise would be entitled to receive fractional shares because they hold a number of pre-Reverse Stock Split shares of the Company’s common stock not evenly divisible by 2,000 will have the number of post-Reverse Stock Split shares of the Company’s common stock to which they are entitled rounded up to the nearest whole number of shares of the Company’s common stock. | not less than 1-for-10 and not more than 1-for-2,000 | |||||||
Stock issued during period, value | $ 846,801 | ||||||||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 | ||||||
Common Stock, Shares, Outstanding | 829,518 | 829,518 | 522,006 | ||||||
Common Stock, Shares, Issued | 829,518 | 829,518 | 522,006 | ||||||
Financing cost | $ 10,000 | $ 10,000 | |||||||
Financing discount | $ 143,199 | $ 143,199 | |||||||
Shares issued upon exercise of warrant | 8,923 | 8,923 | |||||||
Number of reverse stock split shares issued | 6,624 | ||||||||
Number of warrants to acquire common stock | 213,164 | ||||||||
Warrants granted, weighted average exercise price | $ 7.29 | ||||||||
Original principal amount | $ 832,000 | $ 832,000 | |||||||
Warrant One [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Number of warrants to acquire common stock | 55,467 | ||||||||
Warrants granted, weighted average exercise price | $ 15 | ||||||||
Warrant Two [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Number of warrants to acquire common stock | 55,467 | ||||||||
Warrants granted, weighted average exercise price | $ 15 | ||||||||
Warrant Three [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Number of warrants to acquire common stock | 125,334 | ||||||||
Warrants granted, weighted average exercise price | $ 4.50 | ||||||||
Original principal amount | 282,000 | $ 282,000 | |||||||
Warrant Four [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Number of warrants to acquire common stock | 22,333 | ||||||||
Warrants granted, weighted average exercise price | $ 4.50 | ||||||||
Original principal amount | $ 282,000 | $ 282,000 | |||||||
Commercial Paper [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Stock conversion, shares issued | 11,298 | ||||||||
Common Stock [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Shares issued during the period | 83,336 | ||||||||
Stock issued during period, value | $ 83 | ||||||||
Stock issued for conversion of debt | 14,112 | 211,284 | 115,860 | 278,294 | |||||
Number of reverse stock split shares issued | 5,955 | 6,624 | |||||||
Shares Issued for Conversion of Debt [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Stock issued for conversion of debt | 115,860 | ||||||||
Shares Issuance for Cash [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Shares issued during the period | 83,336 | ||||||||
Shares Issuance for Cash [Member] | Common Stock [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Stock issued during period, value | $ 1,000,000 | ||||||||
Series A Preferred Stock [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Preferred stock, shares issued | 150,000 | 150,000 | 150,000 | ||||||
Preferred stock, shares outstanding | 150,000 | 150,000 | 150,000 | ||||||
Debt converted of common stock, shares | 1,000 | 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. | entitled to vote 15,000 shares of common stock on all matters submitted to a vote by shareholders voting common stock. | |||||||
Series B Preferred Stock [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Preferred stock, shares issued | 28,175 | 28,175 | 5,300 | ||||||
Preferred stock, shares outstanding | 28,175 | 28,175 | 5,300 | ||||||
Preferred stock, stated value | $ 10 | $ 10 | $ 10 | ||||||
Preferred stock, dividend rate | 9.00% | ||||||||
Shares issued during the period | 41,775 | ||||||||
Stock issued for conversion of debt | 6,560 | ||||||||
Accrued interest | $ 65,600 | ||||||||
Stock conversion, shares converted | 25,200 | ||||||||
Series B Preferred Stock [Member] | Issuance of Shares [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Shares issued during the period | 41,375 | ||||||||
Stock issued during period, value | $ 390,000 | ||||||||
Financing fee | $ 24,750 | $ 24,750 | |||||||
Common Stock [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Stock conversion, shares issued | 71,678 | ||||||||
Shares issued for service | 9,793 | ||||||||
Minimum [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Common stock, authorized reduction | 10,000,000 | ||||||||
Maximum [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Common stock, authorized reduction | 1,000,000,000 |
SCHEDULE OF STOCK OPTION ACTIVI
SCHEDULE OF STOCK OPTION ACTIVITY (Details) - Employees Consultants and Advisors [Member] | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |
Options Outstanding, Balance Beginning | shares | 5,875 |
Weighted-Average Exercise Price, Balance Beginning | $ / shares | $ 96.99 |
Options Outstanding, Grants | shares | 6,596 |
Weighted-Average Exercise Price, Grants | $ / shares | $ 40.81 |
Options Outstanding, Exercised | shares | |
Weighted-Average Exercise Price, Exercised | $ / shares | |
Options Outstanding, Cancelled | shares | |
Weighted-Average Exercise Price, Cancelled | $ / shares | |
Options Outstanding, Balance Ending | shares | 12,471 |
Weighted-Average Exercise Price, Balance Ending | $ / shares | $ 67.28 |
SCHEDULE OF WEIGHTED AVERAGE AS
SCHEDULE OF WEIGHTED AVERAGE ASSUMPTIONS FOR STOCK OPTIONS GRANTED (Details) - Stock Options [Member] | 9 Months Ended |
Sep. 30, 2021 | |
Option Indexed to Issuer's Equity [Line Items] | |
Expected term (years) | 5 years 8 months 26 days |
Expected stock price volatility | 296.17% |
Weighted-average risk-free interest rate | 0.64% |
Expected dividend | 0.00% |
SCHEDULE OF STOCK OPTIONS VESTE
SCHEDULE OF STOCK OPTIONS VESTED AND EXPECTED TO VEST (Details) | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Equity [Abstract] | |
Number of Options, Outstanding | shares | 12,471 |
Weighted-Average Remaining Contractual Life (In Years), Outstanding | 9 years 29 days |
Weighted-Average Exercise Price, Outstanding | $ / shares | $ 67.28 |
Number of Options, Exercisable | shares | 1,948 |
Weighted-Average Remaining Contractual Life (In Years), Exercisable | 8 years 7 months 13 days |
Weighted-Average Exercise Price, Exercisable | $ / shares | $ 222.66 |
Number of Options, Expected to vest | shares | 10,523 |
Weighted-Average Remaining Contractual Life (In Years), Expected to vest | 9 years 1 month 28 days |
Weighted-Average Exercise Price, Expected to vest | $ / shares | $ 38.52 |
SCHEDULE OF RESTRICTED STOCK AC
SCHEDULE OF RESTRICTED STOCK ACTIVITY (Details) | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Restricted Stock, Exercised | 9,030 |
Restricted Stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Restricted Stock, Balance Beginning | 7,356 |
Weighted-Average Fair Value of Restricted Stock, Balance Beginning | $ / shares | $ 93.61 |
Number of Restricted Stock, Shares of restricted stock granted | 4,501 |
Weighted-Average Fair Value of Restricted Stock, Shares of restricted stock granted | $ / shares | $ 51.40 |
Number of Restricted Stock, Exercised | |
Weighted-Average Fair Value of Restricted Stock, Exercised | $ / shares | |
Number of Restricted Stock, Cancelled | |
Weighted-Average Fair Value of Restricted Stock, Cancelled | $ / shares | |
Number of Restricted Stock, Balance Ending | 11,857 |
Weighted-Average Fair Value of Restricted Stock, Balance Ending | $ / shares | $ 77.59 |
SCHEDULE OF RESTRICTED STOCK AW
SCHEDULE OF RESTRICTED STOCK AWARD (Details) - shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Equity [Abstract] | ||
Vested | 7,046 | 226 |
Non-vested | 4,811 | 7,130 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Restricted Stock [Member] | ||
Option Indexed to Issuer's Equity [Line Items] | ||
Unrecognized compensation and non-vested | $ 44,122 | $ 144,964 |
Stock Options [Member] | ||
Option Indexed to Issuer's Equity [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights | one-year | |
Weighted average granted date fair value stock options granted | $ 43.01 | |
Fair value of option vested | $ 284,000 | |
Unrecognized compensation and non-vested | $ 333,206 | $ 211,661 |
Stock Options [Member] | Maximum [Member] | ||
Option Indexed to Issuer's Equity [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 10 years |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Sep. 16, 2019 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
Notes payable | $ 3,043,192 | $ 3,043,192 | $ 1,157,805 | |||
Due to related party | 389,229 | 389,229 | 561,230 | |||
Repayment of notes payable | 3,953,371 | $ 685,295 | ||||
Borrowings | 365,873 | 241,942 | ||||
Operating expenses | 1,150,353 | $ 861,215 | 4,039,958 | $ 4,100,856 | ||
Chief Executive Officer [Member] | ||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
Borrowings | 231,150 | |||||
Operating expenses | 134,723 | |||||
Repayment of debt | 378,143 | |||||
Asset Purchase Agreement [Member] | DMB Group LLC [Member] | ||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
Notes payable | $ 245,652 | 245,652 | $ 405,382 | $ 940,000 | ||
Due to related party | $ 97,689 | |||||
Repayment of notes payable | 159,731 | |||||
Interest expenses | $ 6,915 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | Oct. 19, 2021 | Oct. 19, 2021 | Oct. 04, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
Subsequent Event [Line Items] | |||||
Principal amount | $ 832,000 | ||||
Debtl issue discount | $ 234,585 | $ 282,232 | |||
Series B Preferred Stock [Member] | |||||
Subsequent Event [Line Items] | |||||
Number of shares converted into common stock | 25,200 | ||||
Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Number of shares converted into common stock | 3,300 | ||||
Conversion of stock, amount converted | $ 30,000 | ||||
Conversion of stock, shares issued | 20,281 | ||||
Subsequent Event [Member] | Senior Secured Promissory Note [Member] | Purchase Agreement [Member] | |||||
Subsequent Event [Line Items] | |||||
Debt Issuance Costs, Net | $ 28,000 | $ 28,000 | |||
Subsequent Event [Member] | Senior Secured Promissory Note [Member] | Purchase Agreement [Member] | Mast Hill Fund L.P. [Member] | |||||
Subsequent Event [Line Items] | |||||
Principal amount | 444,444 | 444,444 | |||
Gross proceeds from note | 3,650,000 | ||||
Debtl issue discount | 40,000 | $ 40,000 | |||
Legal fees | $ 7,000 | ||||
Interest rate | 12.00% | 12.00% | |||
Debt Instrument, Payment Terms | Repayment of all amounts due under the Note shall be tendered on the 12-month anniversary of the Note, though certain amounts are due earlier upon the closing certain designated investments. The Note may be prepaid in whole at any time without prepayment penalty or premium. If the Company fails to meet its obligations under the terms of the Note, the Note shall become immediately due and payable and subject to penalties provided for in the Note. Upon an event of default under the Note, Mast Hill may also convert all amounts due thereunder into shares of the Company’s common stock at a price of $4.00 per share. | ||||
Subsequent Event [Member] | Second Warrant [Member] | Security Agreement [Member] | Mast Hill Fund L.P. [Member] | |||||
Subsequent Event [Line Items] | |||||
Warrant issued | 161,616 | 161,616 | |||
Exercise price | $ 3.20 | $ 3.20 | |||
Subsequent Event [Member] | First Warrant [Member] | Security Agreement [Member] | Mast Hill Fund L.P. [Member] | |||||
Subsequent Event [Line Items] | |||||
Warrant issued | 161,616 | 161,616 | |||
Exercise price | $ 3.20 | $ 3.20 | |||
Subsequent Event [Member] | Series B Preferred Stock [Member] | |||||
Subsequent Event [Line Items] | |||||
Number of shares converted into common stock | 18,535 |