Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 11, 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 | 000-27569 | |
Entity Registrant Name | AppTech Corp. | |
Entity Central Index Key | 0001070050 | |
Entity Tax Identification Number | 65-0847995 | |
Entity Incorporation, State or Country Code | WY | |
Entity Address, Address Line One | 5876 Owens Ave | |
Entity Address, Address Line Two | Suite 100 | |
Entity Address, City or Town | Carlsbad | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92008 | |
City Area Code | (760) | |
Local Phone Number | 707-5959 | |
Title of 12(b) Security | Common Stock, $0.001 par value per share | |
Trading Symbol | APCX | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 113,389,601 |
BALANCE SHEETS (UNAUDITED)
BALANCE SHEETS (UNAUDITED) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash | $ 22,495 | $ 57,497 |
Accounts receivable | 34,829 | 40,635 |
Prepaid expenses | 93,516 | 6,696 |
Total current assets | 150,840 | 104,828 |
Capitalized prepaid software development and license | 7,058,922 | 0 |
Prepaid offering cost | 25,000 | 0 |
Note receivable | 25,500 | 17,500 |
Right of use asset | 203,938 | 249,825 |
Security deposit | 7,536 | 7,536 |
TOTAL ASSETS | 7,471,736 | 379,689 |
Current liabilities | ||
Accounts payable | 1,732,924 | 1,635,384 |
Accrued liabilities | 1,726,628 | 2,632,334 |
Right of use liability | 58,979 | 52,161 |
Stock repurchase liability | 430,000 | 430,000 |
Loans payable related parties | 0 | 34,400 |
Convertible notes payable, net of $63,578 and $280,174 debt discount | 665,922 | 639,826 |
Convertible notes payable related parties | 0 | 372,000 |
Notes payable | 384,742 | 1,104,981 |
Notes payable related parties | 684,863 | 708,493 |
Derivative liabilities | 492,830 | 597,948 |
Total current liabilities | 6,176,888 | 8,207,527 |
Long-term liabilities | ||
Accounts payable | 15,000 | 75,000 |
Right of use liability | 179,195 | 224,492 |
Notes Payable, net of current portion | 160,040 | 67,400 |
Total long-term liabilities | 354,235 | 366,892 |
TOTAL LIABILITIES | 6,531,123 | 8,574,419 |
Stockholders’ Equity (Deficit) | ||
Series A preferred stock; $0.001 par value; 100,000 shares authorized; 14 shares issued and outstanding at September 30, 2021 and December 31, 2020 | 0 | 0 |
Common stock, $0.001 par value; 1,000,000,000 shares authorized; 113,125,715 and 88,511,657 and outstanding at September 30, 2021 and December 31, 2020, respectively | 113,126 | 88,512 |
Additional paid-in capital | 121,269,598 | 36,664,488 |
Accumulated deficit | (120,442,111) | (44,947,730) |
Total stockholders’ equity (deficit) | 940,613 | (8,194,730) |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ 7,471,736 | $ 379,689 |
BALANCE SHEETS (UNAUDITED) (Par
BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Convertible notes, net of discount | $ 63,578 | $ 280,174 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 100,000 | 100,000 |
Preferred Stock, Shares Issued | 14 | 14 |
Preferred Stock, Shares Outstanding | 14 | 14 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 1,000,000,000 | 1,000,000,000 |
Common Stock, Shares, Issued | 113,125,715 | 88,511,657 |
Common Stock, Shares, Outstanding | 113,125,715 | 88,511,657 |
STATEMENTS OF OPERATIONS (UNAUD
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] | ||||
Revenues | $ 92,410 | $ 105,357 | $ 258,688 | $ 241,367 |
Cost of revenues | 41,774 | 48,759 | 112,032 | 103,721 |
Gross profit | 50,636 | 56,598 | 146,656 | 137,646 |
Operating expenses: | ||||
General and administrative, including stock based compensation of $31,352, $1,066,386, $1,620,703 and $2,357,125, respectively | 1,360,187 | 1,089,808 | 6,733,594 | 2,781,912 |
Excess fair value of equity issuance over assets received | 1,090,716 | 0 | 66,124,606 | 0 |
Research and development | 0 | 2,999 | 0 | 49,250 |
Total operating expenses | 2,450,903 | 1,092,807 | 72,858,200 | 2,831,162 |
Loss from operations | (2,400,267) | (1,036,209) | (72,711,544) | (2,693,516) |
Other income (expenses) | ||||
Interest expense | (478,009) | (71,723) | (3,038,568) | (213,890) |
Change in fair value of derivative liability | 135,469 | 0 | 80,370 | 0 |
Forgiveness of debt | 0 | 0 | 0 | 9,000 |
Other income (expenses) | 161 | 0 | 175,361 | 0 |
Total other expenses | (342,379) | (71,723) | (2,782,837) | (204,890) |
Loss before provision for income taxes | (2,742,646) | (1,107,932) | (75,494,381) | (2,898,406) |
Provision for income taxes | 0 | 0 | 0 | 0 |
Net loss | $ (2,742,646) | $ (1,107,932) | $ (75,494,381) | $ (2,898,406) |
Basic and diluted net loss per common share | $ (0.02) | $ (0.01) | $ (0.74) | $ (0.03) |
Weighted-average number of shares used basic and diluted per share amounts | 111,906,997 | 86,984,021 | 106,250,552 | 85,941,115 |
STATEMENTS OF OPERATIONS (UNA_2
STATEMENTS OF OPERATIONS (UNAUDITED) (Parenthetical) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Income Statement [Abstract] | ||
Stock based compensation | $ 31,352 | $ 2,357,125 |
STATEMENTS OF STOCKHOLDER'S EQU
STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT) (UNAUDITED) - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2019 | $ 84,154 | $ 33,230,869 | $ (40,760,413) | $ (7,445,390) | |
Beginning balance (in shares) at Dec. 31, 2019 | 14 | 84,153,825 | |||
Net loss | (1,464,050) | (1,464,050) | |||
Imputed interest | 3,450 | 3,450 | |||
Common stock issued for services | $ 2,350 | 1,206,835 | 1,209,185 | ||
Common stock issued for services (in shares) | 2,349,500 | ||||
Proceeds from sale of repurchase option | 186,531 | 186,531 | |||
Ending balance, value at Mar. 31, 2020 | $ 86,504 | 34,627,685 | (42,224,463) | (7,510,274) | |
Ending balance (in shares) at Mar. 31, 2020 | 14 | 86,503,325 | |||
Net loss | (326,424) | (326,424) | |||
Imputed interest | 3,450 | 3,450 | |||
Common stock issued for services | $ 174 | 81,380 | 81,554 | ||
Common stock issued for services (in shares) | 174,500 | ||||
Proceeds from sale of repurchase option | 19,250 | 19,250 | |||
Ending balance, value at Jun. 30, 2020 | $ 86,678 | 34,731,765 | (42,550,887) | (7,732,444) | |
Ending balance (in shares) at Jun. 30, 2020 | 14 | 86,677,825 | |||
Net loss | (1,107,932) | (1,107,932) | |||
Imputed interest | 3,450 | 3,450 | |||
Common stock issued for services | $ 1,044 | 924,397 | 925,441 | ||
Common stock issued for services (in shares) | 1,044,000 | ||||
Proceeds from sale of repurchase option | 45,000 | 45,000 | |||
Common stock issued for services with warrant exercise | $ 100 | 165,845 | 165,945 | ||
Common stock issued for services with warrant exercise, shares | 100,000 | ||||
Ending balance, value at Sep. 30, 2020 | $ 87,822 | 35,870,457 | (43,658,819) | (7,700,540) | |
Ending balance (in shares) at Sep. 30, 2020 | 14 | 87,821,825 | |||
Beginning balance, value at Dec. 31, 2020 | $ 88,512 | 36,664,488 | (44,947,730) | (8,194,730) | |
Beginning balance (in shares) at Dec. 31, 2020 | 14 | 88,511,657 | |||
Net loss | (66,293,498) | (66,293,498) | |||
Imputed interest | 3,450 | 3,450 | |||
Issuance of stock options for board of directors | 17,559 | 17,559 | |||
Issuance of stock options for services | 29,999 | 29,999 | |||
Issuance of stock options for capitalized prepaid software development and license | 1,891,414 | 1,891,414 | |||
Common stock issued for board of directors | $ 87 | 49,087 | 49,174 | ||
Common stock issued for board of directors ,shares | 87,500 | ||||
Common stock issued for services | $ 247 | 315,743 | 315,990 | ||
Common stock issued for services (in shares) | 247,000 | ||||
Common stock issued for merchant equity | $ 5 | 16,245 | 16,250 | ||
Common stock issued for merchant equity, Shares | 5,000 | ||||
Common stock issued for judgment | $ 200 | 999,800 | 1,000,000 | ||
Common stock issued for judgment (in shares) | 200,000 | ||||
Common stock issued for capitalized prepaid software development and license | $ 18,012 | 67,525,170 | 67,543,182 | ||
Common stock issued for capitalized prepaid software development and license (in shares) | 18,011,515 | ||||
Common stock cancelled | $ (150) | (9,850) | (10,000) | ||
Common stock cancelled (in shares) | (150,000) | ||||
Proceeds from sale of repurchase option | 1,972,750 | 1,972,750 | |||
Ending balance, value at Mar. 31, 2021 | $ 106,913 | 109,475,855 | (111,241,228) | (1,658,460) | |
Ending balance (in shares) at Mar. 31, 2021 | 14 | 106,912,672 | |||
Net loss | (6,458,237) | (6,458,237) | |||
Imputed interest | 3,450 | 3,450 | |||
Issuance of stock options for board of directors | 15,217 | 15,217 | |||
Issuance of stock options for services | 2,746,385 | 2,746,385 | |||
Issuance of stock options for capitalized prepaid software development and license | 1,090,716 | 1,090,716 | |||
Common stock issued for board of directors | $ 88 | 49,087 | 49,175 | ||
Common stock issued for board of directors (in shares) | 87,500 | ||||
Common stock issued for services | $ 106 | 174,905 | 175,011 | ||
Common stock issued for services (in shares) | 106,053 | ||||
Common stock issued for merchant equity program | $ 26 | 2,095 | 2,121 | ||
Common stock issued for merchant equity program (in shares) | 26,250 | ||||
Common stock issued for convertible notes payable, accrued interest, derivative liabilities, and accounts payable | $ 4,757 | 3,945,225 | 3,949,982 | ||
Common stock issued for convertible notes payable, accrued interest, derivative liabilities, and accounts payable, Shares | 4,756,895 | ||||
Proceeds from sale of repurchase option | 458,000 | 458,000 | |||
Ending balance, value at Jun. 30, 2021 | $ 111,890 | 117,960,935 | (117,699,465) | 373,360 | |
Ending balance (in shares) at Jun. 30, 2021 | 14 | 111,889,370 | |||
Net loss | (2,742,646) | (2,742,646) | |||
Imputed interest | 3,450 | 3,450 | |||
Issuance of stock options for board of directors | 4,682 | 4,682 | |||
Issuance of stock options for services | 853,556 | 853,556 | |||
Issuance of stock options for capitalized prepaid software development and license | 1,090,716 | 1,090,716 | |||
Common stock issued for board of directors | $ 29 | 16,363 | 16,392 | ||
Common stock issued for board of directors (in shares) | 29,168 | ||||
Common stock issued for services | $ 20 | 14,940 | 14,960 | ||
Common stock issued for services (in shares) | 20,000 | ||||
Common stock issued for forbearance | $ 53 | 63,525 | 63,578 | ||
Common stock issued for forbearance, shares | 53,383 | ||||
Common stock issued for services with warrant exercise | $ 115 | 28,636 | 28,751 | ||
Common stock issued for services with warrant exercise, shares | 115,000 | ||||
Common stock issued for convertible notes payable | $ 1,019 | 1,232,795 | 1,233,814 | ||
Common stock issued for convertible notes payable, shares | 1,018,794 | ||||
Ending balance, value at Sep. 30, 2021 | $ 113,126 | $ 121,269,598 | $ (120,442,111) | $ 940,613 | |
Ending balance (in shares) at Sep. 30, 2021 | 14 | 113,125,715 |
STATEMENTS OF CASH FLOWS (UNAUD
STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (75,494,381) | $ (2,898,406) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Issuance of stock options for board of directors | 37,458 | 0 |
Issuance of stock options for service | 5,058,682 | 0 |
Stock issued for board of directors | 114,741 | 0 |
Stock issued for services | 505,961 | 2,063,680 |
Stock issued for merchant equity | 16,250 | 0 |
Stock issued for exercise of warrants | 0 | 140,945 |
Stock issued for purchase of judgment | 1,000,000 | 0 |
Stock issued for excess fair value of equity over assets received | 64,724,614 | 0 |
Excess fair market value of shares issued recorded as interest expense | 2,705,904 | 0 |
Imputed interest on notes payable | 10,350 | 10,350 |
Amortization of debt discount | 280,175 | 0 |
Gain on extinguishment of accounts payable | (174,925) | 0 |
Change in fair value of derivative liabilities | (80,370) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 5,806 | (8,391) |
Prepaid expenses | (86,820) | 0 |
Accounts payable | 420,717 | 147,265 |
Accrued liabilities | 127,578 | 218,233 |
Right of use asset and liability | 7,408 | 23,089 |
Net cash used in operating activities | (820,852) | (303,235) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Deposit escrow | 0 | 25,000 |
Capitalized prepaid software development and license | (1,567,500) | 0 |
Payments on notes receivable | (8,000) | 0 |
Security deposit | 0 | (1,589) |
Net cash provided by (used in) investing activities | (1,575,500) | 23,411 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Payments for prepaid offering costs | (25,000) | 0 |
Proceeds on loans payable – related parties | 0 | 750 |
Payments on loans payable - related parties | (34,400) | (42,750) |
Repurchase of common stock - related party | (10,000) | 0 |
Proceeds on note payable | 0 | 68,200 |
Proceeds from exercise of warrants | 0 | 25,000 |
Proceeds from sale of repurchase options | 2,430,750 | 250,781 |
Net cash provided by financing activities | 2,361,350 | 301,981 |
Changes in cash and cash equivalents | (35,002) | 22,157 |
Cash and cash equivalents, beginning of period | 57,497 | 24,159 |
Cash and cash equivalents, end of period | 22,495 | 46,316 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 0 | 0 |
Cash paid for income taxes | 0 | 0 |
Non-cash investing and financing activities: | ||
Common stock issued for conversion of accounts payable | 206,250 | 152,500 |
Forgiveness of debt through conversion of accounts payable | 174,925 | 0 |
Common stock issued convertible notes, accrued interest and derivative liabilities | 1,620,411 | 0 |
Common stock and options issued for capitalized software and licensing costs | 5,491,422 | 0 |
Common stock issued with forbearance agreements recorded as a discount | $ 63,578 | $ 0 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS AppTech Corp. (“AppTech” or the “Company”) is a Wyoming Corporation incorporated on July 2, 1998. AppTech Corp. is a FinTech company providing electronic payment processing technologies and merchant services. These technologies allow businesses to accept cashless and/or contactless payments, such as credit cards, ACH, wireless payments, and more. Their patented, exclusively licensed and/or proprietary merchant services software offers or will offer integrated solutions for frictionless digital and mobile payment acceptance; AppTech is supplementing these capabilities with software that solves for multi-use case, multi-channel, API-driven, account-based issuer processing for card, digital tokens, and payment transfer transactions. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Also see Note 3. Use of Estimates The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated liabilities related to various vendors in which communications have ceased, contingent liabilities, realization of tax deferred tax assets and capitalization of software development. Actual results could differ from those estimates. Concentration of Credit Risk Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits of $ 250,000 The accounts receivable from merchant services are paid by the financial institutions on a monthly basis. The Company currently uses nine financial institutions to service their merchants for which represented 100% of accounts receivable as of September 30, 2021 and 2020. The loss of one of these financial institutions would not have a significant impact on the Company’s operations as there are additional financial institutions available to the Company. For the nine months ended September 30, 2021 and 2020, the one merchant (customer) represented approximately 16% and 36% of the total revenues, respectively. The loss of this customer would have significant impact on the Company’s operations. Software Development Costs The Company capitalizes software development costs in developing internal use software when capitalizing requirements have been met. Costs prior to meeting the capitalization requirements are expensed as incurred. Revenue Recognition The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, codified as Accounting Standards Codification (“ASC”) 606 Revenue from Contracts with Customers, which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company adopted ASC 606 effective January 1, 2019 using modified retrospective basis and the cumulative effect was immaterial to the financial statements. The Company provides merchant processing solutions for credit cards and electronic payments. In all cases, the Company acts as an agent between the merchant which generates the credit card and electronic payments, and the bank which processes such payments. The Company’s revenue is generated on services priced as a percentage of transaction value or a specified fee transaction, depending on the card or transaction type. Revenue is recorded as services are performed which is typically when the bank processes the merchant’s credit card and electronic payments. Consideration paid to customers such as amounts earned under our customer equity incentive program, are recorded as a reduction to revenues. There were no amounts paid or incurred during the nine months ended September 30, 2021 and 2020. Fair Value Measurements The Company follows FASB ASC 820, Fair Value Measurements and Disclosures Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3 Pricing inputs that are generally unobservable inputs and not corroborated by market data. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The carrying amounts reported in the Company’s financial statements for cash, accounts payable and accrued expenses approximate their fair value because of the immediate or short-term mature of these financial instruments. Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-marketing dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. The following table presents liabilities that are measured and recognized at fair value as of September 30, 2021 and December 31, 2020 on recurring basis: Schedule of derivative liabilities September 30, 2021 Total Carrying Level 1 Level 2 Level 3 Value Derivative liabilities $ — $ — $ 492,830 $ 492,830 December 31, 2020 Total Carrying Level 1 Level 2 Level 3 Value Derivative liabilities $ — $ — $ 597,948 $ 597,948 See Note 7 for discussion of valuation and roll forward related to derivative liabilities. Per Share Information Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year, increased by the potentially dilutive common shares that were outstanding during the year. Dilutive securities include stock options, warrants granted, convertible debt and convertible preferred stock. The number of common stock equivalents not included in diluted income per share was 12,498,187 and 5,616,624 for the nine months ended September 30, 2021 and 2020, respectively. The weighted average number of common stock equivalents is not included in diluted income (loss) per share, because the effects are anti-dilutive. Schedule of anti dilutive stock September 30, 2021 September 30, 2020 Series A preferred stock 10,920 10,920 Convertible debt 1,639,217 5,605,704 Warrants 200,000 — Options 7,272,500 — Common stock 3,375,550 — Total 12,498,187 5,616,624 New Accounting Pronouncements The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company. |
GOING CONCERN
GOING CONCERN | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN | NOTE 3 – GOING CONCERN As reflected in the accompanying financial statements, during the nine months ended September 30, 2021 and 2020, the Company incurred a net loss of $ 75,494,381 2,898,406 6,026,048 120,442,111 While the Company is continuing operations and generating revenues, the Company’s cash position is not significant enough to support the Company’s daily operations. To fund operations and reduce the working capital deficit, the Company intends to raise additional funds through public or private debt and/or equity offerings. During 2021, the Company received $ 2,430,750 Risks and Uncertainties On January 30, 2020, the World Health Organization declared the coronavirus outbreak a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates. Since the Company derives its revenues from processing of purchases from our merchant services clients, a downturn in economic activity, such as associated with the current coronavirus pandemic, could reduce the volume of purchases it processes, and thus its revenues. In addition, such a downturn could cause its merchant customers to cease operations permanently decreasing our payment processing unless new customers are found. We may also face additional difficulty in raising capital during an economic downturn. The effects of the pandemic had significant impact on revenue at the beginning of the pandemic and the processors gave significant concessions of reduced fees to minimize the impact of the pandemic. The revenue began to increase after several months as the economy began to reopen using different methods of purchasing especially online purchasing, as well as, the Company has been able to add new customers. The continuing effects of the potential impact cannot be estimated at this time. Additionally, it is reasonably possible that the estimates made in the financial statements have been or will be materially and adversely impacted in the near term as a result of these conditions. Also, if the development of the Company’s payment platform is not successful, the software development costs will need to be expensed instead of capitalized. |
PATENTS
PATENTS | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
PATENTS | NOTE 4 – PATENTS Patents On September 22, 2017, AppTech executed an Amendment to Asset Purchase Agreement with GlobalTel Media, Inc. In connection with the asset purchase agreement, 5,000,000 shares of common stock were issued to GlobalTel Media, Inc. The Company valued the common stock issuance at $1,000,000 based on the closing market price of the Company’s common stock on the date in which the performance was complete. This amendment revived the original asset purchase agreement dated December 4, 2013 to purchase the assets of GlobalTel Media, Inc. (AppTech and GlobalTel agree that the asset purchase agreement dated September 30, 2015 is null and void), which include, but is not limited to, all intellectual property, United States Patent Trademark Office (“USPTO”) issued patents, enterprise-grade, patent protected software and intellectual property for advanced messaging incorporating secure payments, databases, documentation, copyrights, trademarks, registrations, and all current development work in process of USPTO application approval; more specifically but not limited to USPTO 8,073,895 & 8,572,166 “System and Method for Delivering Web Content to a Mobile Device”, USPTO 8,315,184 “Computer to Mobile Two-Way Chat System and Method”, and USPTO 8,369,828 “Mobile-to-Mobile Payment System and Method”. GlobalTel’s technology focuses on SMS text-based applications, social media and mobile payment. The USPTO assigned the patents to AppTech on July 25, 2017. AppTech, as part of the various agreements, agreed to pay $1,600,000 which included an assumption of certain liabilities, including costs incurred to continue development of the patents, as well as guaranteed payment of 25% of the net proceeds on revenue created by the patents up to $26,600,000. As of September 30, 2021 and December 31, 2020, amounts included in accounts payable related to the assumption of liabilities in connection with the patents were $280,000 and $280,000, respectively. The Company has expensed the cost of the patents as research and development costs as the future estimated cash flow expected cannot be reasonably estimated at the time of the expense. See Note 9 for more information on capitalized prepaid software development and license. |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 9 Months Ended |
Sep. 30, 2021 | |
Other Liabilities Disclosure [Abstract] | |
ACCRUED LIABILITIES | NOTE 5 – ACCRUED LIABILITIES Accrued liabilities as of September 30, 2021 and December 31, 2020 consist of the following: Schedule of Accrued Liabilities September 30, 2021 December 31, 2020 Accrued interest – related parties $ — $ 1,039,977 Accrued interest – third parties 1,420,690 1,395,133 Accrued payroll 21,672 — Accrued PTO 56,071 — Accrued residuals 100,615 62,174 Accrued merchant equity 88,903 91,023 Other 38,677 44,027 Total accrued liabilities $ 1,726,628 $ 2,632,334 Accrued Interest Notes payable and convertible notes payable incur interest at rates between 10% and 15%, per annum. The accrued interest in most cases is currently in technical default due to the notes being past their maturity date. Accrued Residuals The Company pays commissions to independent agents which refer merchant accounts. The amounts payable to these independent agents is based upon a percentage of the amounts processed monthly by these merchant accounts. Accrued Merchant Equity Liability The Company provided all merchants the opportunity to earn shares of the Company’s common stock through their Merchant Equity Program (the “Program”). Under the Program, the merchant earned 1% of their total Visa/MasterCard volume processed during the first year of their contract. For example, if a merchant processes $1.0 million in credit card charges, the merchant will receive 10,000 shares of the Company’s common stock. The merchant must process with the Company for a period of three years for the shares to vest. All merchants became fully vested when the Company ended the program effective December 31, 2015. The Company accounts for the value of the shares under the program as a sales incentive and thus the amounts in connection with the Program are recorded as a reduction to revenues. As of September 30, 2021, the Company has an obligation to issue approximately 750,000 shares of the Company’s common stock issuable under the Program. |
NOTES PAYABLE AND CONVERTIBLE N
NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE | NOTE 6 – NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE The Company funds operations through cash flows generated from operations and the issuance of loans and notes payable. The following is a summary of loans and notes payable outstanding as of September 30, 2021 and 2020. Related parties noted below are either members of management, board of directors, significant shareholders or individuals in which have significant influence over the Company. Loans Payable – Related Parties During the nine months ended September 30, 2021 and 2020, the Company paid $34,400 and $42,000 loans payable from related parties, net. As of September 30, 2021 and December 31, 2020, the balance of the loans payable was $0 and $34,400, respectively. The loans payable are due on demand, unsecured and non-interest bearing as there are no formal agreements executed. Subordinated Notes Payable In 2016, the Company issued $350,000 in subordinated notes payable to third parties. The subordinated notes payable were due in 30 to 180 days and incurred interest at 10% per annum. As of September 30, 2021 and December 31, 2020, accrued interest related to the subordinated notes was $0 and $153,545, respectively. On September 30, 2021, the Company converted notes issued for $529,795 of principal and interest into 529,795 shares of the Company’s common stock. Convertible Notes Payable In 2020, the Company entered into a Securities Purchase Agreement with an investor pursuant to which the Company agreed to sell to the investor a $300,000 convertible note bearing interest at 12% per annum (the “Note”). The Note matures in 365 days from the date of issuance. The Note is convertible at the option of the holder at any time into shares of the Company’s common stock at $1.00 for the 180 days immediately following the issue date and thereafter shall equal the lower of: 1) the lowest closing price of the common stock during the preceding twenty-five trading days, ending on the last complete trading day prior to the issue date of the Note. 2) seventy-five percent of the lowest trading price for the common stock during the twenty-five consecutive trading days preceding the conversion date with a minimum trading volume of 1,000 shares. In the event of a default of the Note, the Holder in its sole discretion may elect to use a conversion price equal to the lower of: 1) the lowest trading price of the common stock on the trading day immediately preceding the issue date or 2) seventy-five percent of either the lowest trading price or the closing bid price, whichever is lower during any trading day in which the event of default has not been cured. The embedded conversion feature of this Note was deemed to require bifurcation and liability classification, at fair value. Pursuant to the Securities Purchase Agreement, the Company also sold warrants to the investors to purchase up to an aggregate of 200,000 shares of common stock exercisable at $1.50 and expire in five years. The fair value of the derivative liability and warrants as of the date of issuance was in excess of the Note (see Note 7 for valuation) resulting in full discount of the Note. The conversion feature and warrants have various reset provisions for which lower the exercise price and share and warrants issuable. Total interest expense on convertible notes payable, inclusive of amortization of debt discount of $280,175 amounted to $310,588 for the nine months ended September 30, 2021. As of September 30, 2021 and December 31, 2020, the convertible note payable discount is $63,578 and $280,174 and will be amortized over the life of the convertible note payable in 2021. As of September 30, 2021, and December 31, 2021, the derivative liability is as follows: Schedule of notes and convertible notes payable September 30, 2021 December 31, 2020 Convertible notes payable $ 245,551 $ 378,134 Warrants 247,279 219,814 Total notes and convertible notes payable $ 492,830 $ 597,948 See Note 9 – Convertible note and warrant lawsuit. In 2017, the Company received $222,000 in convertible notes payable from related parties. The convertible notes payable are unsecured, were due in 180 days, incur interest at 10% per annum and are convertible at $0.10 per share. As of December 31, 2020, accrued interest related to the convertible notes was $76,187. On the date of the agreement, Management calculated the beneficial conversion feature in connection with the convertible notes payable and recorded a discount of $222,000. The Company amortized the discount over the term of the convertible notes payable of 180 days. On February 24, 2021, the chief executive officer assigned $200,000 in convertible notes to a direct relative. On April 29, 2021, the Company issued 3,055,875 shares of the Company’s common stock to the convertible notes payable holders in connection with debt conversion. The closing market price of the Company’s common stock on the date of the agreement was used to value the excess fair value of equity issuance. The amounts were reflected as a reduction of convertible notes payable, accrued interest, and excess fair value of equity issuance as follows: Schedule of Convertible note and warrant lawsuit Convertibles note payable $ 222,000 Accrued interest 83,588 Excess fair value of equity issuance 1,379,193 Total $ 1,684,781 In 2015, the Company issued $50,000 in convertible notes payable. The convertible notes payable are unsecured, were due in nine months, incur interest at 10% per annum and are convertible at $1.00 per share. As of September 30, 2021 and December 31, 2020, the accrued interest related to the convertible notes was $29,584 and $25,833, respectively. The Company is currently in default on the convertible note payable. In 2014, the Company issued $400,000 in convertible notes payable. The convertible notes payable are unsecured, due in periods ranging up to one year, incurring interest between 10% to 12% per annum and are convertible at prices ranging from $0.33 to $1.00 per share. In addition, the Company issued 400,000 shares of common stock in connection with the convertible notes payable. The Company had the obligation to repurchase the 400,000 shares of common stock at $1.00 per share within one year of the note issuance date. As of September 30, 2021 and December 31, 2020, the Company held the obligation to repurchase the shares for $400,000. As of September 30, 2021 and December 31, 2020, the accrued interest related to the convertible notes was $257,833 and $227,083, respectively. The Company is currently in default of the note agreements. In 2008 and 2009, the Company issued $320,000 in convertible notes payable, of which $150,000 was from related parties. The convertible notes payable are currently due on demand, incur interest at 15% per annum, and convertible at $0.60 per share. As of December 31, 2020, accrued interest related to the convertible notes was $564,013 of which $265,875 was due to related parties. On April 29, 2021, the Company issued 1,500,021 shares of the Company’s common stock, of which 705,625 shares of common stock were issued to related parties to the convertible note holders in connection with debt conversion. On September 27 – 30, 2021, the Company issued 1,018,793 shares of the Company’s common stock, of which 50,631 shares of common stock were issued to related parties to the convertible note holders in connection with debt conversion. The closing market price of the Company’s common stock on the date of the agreement was used to value the excess fair value of equity issuance. The amounts were reflected as a reduction of convertible notes payable, accrued interest, and excess fair value of equity issuance as follows: Schedule of convertible notes payables Convertible notes payable $ 170,000 Convertible notes payable – related parties 150,000 Accrued interest 306,637 Accrued interest – related parties 273,375 Excess fair value of equity issuance 587,723 Excess fair value of equity issuance – related parties 523,968 Total $ 2,011,703 Notes Payable In 2020, the Company entered into a 30-year unsecured note payable with U.S. Small Business Administration for $68,200 in proceeds. The notes payable incurred a $100 fee upon issuance and incurs interest at 3.75% per annum. All payments of principal and interest are deferred for twelve months with the first $333 payment due July 1, 2021. As of September 30, 2021 and December 31, 2020 the balance of the note payable was $68,300, and accrued interest was $3,202 and $1,281, respectively. In 2016, the Company issued $143,000 in notes payable to third parties. The notes payable were due in ninety days or less. During 2019, the Company paid $36,000 in notes payable. On September 27, 2021 and September 30, 2021, the Company converted two of the notes issued for $74,000 into 74,000 shares of the Company’s common stock. On September 30, 2021, the Company entered into a forbearance agreement which granted the holders 1,650 shares of the Company’s common stock with a current fair market value of $1,931 in exchange for not enforcing the terms of the agreement for a period of twelve months. Two significant shareholders funded the Company’s operations through notes payable in primarily 2009 and 2010. The notes payable incur interest at 10% per annum and were due on December 31, 2016. As of September 30, 2021, and December 31, 2020, the aggregate balance of the notes payable was $596,726 and $620,356 and accrued interest was $382,917 and $638,016, respectively. On May 2, 2021, the Company entered into a debt reduction and confirmation agreement with a significant shareholder. The parties agreed to reduce the outstanding accrued interest in the amount of $275,000. On September 29, 2021, the Company converted notes issued for $50,631 of principal and accrued interest into 50,631 shares of the Company’s common stock. On September 29, 2021, the Company entered into a forbearance agreement which granted the holder 29,836 shares with a current fair market value of $34,908 in exchange for not enforcing the terms of the agreement for a period of twelve months. In 2008, the Company entered into a note payable with a third party for $10,000 in total proceeds. The note payable has a flat interest amount due of $21,000. As of September 30, 2021, and 2020, the entire amount of $21,000 has been included in accrued interest. Since the notes payable do not incur interest, the Company imputed interest at $750 and $750, respectively, which represented an interest rate of 10% per annum during the nine months ended September 30, 2021 and 2020. In 2008, the Company entered into notes payable with a third party for $26,000 in total proceeds. The notes payable have a flat interest amount due of $80,000. During 2015, the Company received another $50,000 from the third party. During 2017, the Company entered into an agreement whereby they would repay the principal and accrued interest in the amount of $145,000 by April 4, 2018 and issue the holders 800,000 shares of common stock. The Company recorded the fair market value of the common stock issued at $336,000 based on the date of issuance as interest expense. Other than the issuance of shares of common stock. On September 27, 2021, the Company converted notes issued for $225,000 of principal and accrued interest into 225,000 shares of the Company’s common stock. In 2007 and 2008, the Company entered into notes payable with a related party for $46,000 in proceeds. The notes payable were due on demand and incurred interest at 12% per annum. These were combined into a single note agreement in 2014. As of September 30, 2021, and December 31, 2020, the balance on the note payable was $88,136 and accrued interest related to the note payable was $67,892 and $59,900, respectively. On September 30, 2021, the Company entered into a forbearance agreement which granted the holder 4,407 shares with a current fair market value of $5,156 in exchange for not enforcing the terms of the agreement for a period of twelve months. In 2007, the Company entered into note payable with a third party for $128,000 in proceeds. Under the terms of the agreement the holder received a flat interest amount of $37,496. The entire amount of $37,496 has been included within accrued interest. Since the note payable did not incur interest, the Company imputed interest at $9,600 and $9,600, respectively, which represented an interest rate of 10% per annum during the nine months ended September 30, 2021 and 2020. On September 27, 2021, the Company entered into a forbearance agreement which granted the holder 6,400 shares with a current fair market value of $8,608 in exchange for not enforcing the terms of the agreement for a period of twelve months. In 2007, the Company entered into note payable with a third party for $221,800 in proceeds. The note payable incurs interest at 10% per annum. On December 31, 2013, the holder received an arbitration settlement for the principal and accrued interest. As of September 30, 2021, and December 31, 2020, the Company was in default of the arbitration settlement. As of September 30, 2021, and December 31, 2020, accrued interest related to the note payable was $500,384 and $470,143, respectively. On September 30, 2021, the Company entered into a forbearance agreement which granted the holder 11,090 shares with a current fair market value of $12,975 in exchange for not enforcing the terms of the agreement for a period of twelve months. In 2007, the Company entered into note payable with a significant shareholder for $58,600 in proceeds. The note payable is currently due on demand and incurs interest at 10% per annum. As of September 30, 2021, and December 31, 2020, accrued interest related to the note payable was $0 and $76,372, respectively. On September 30, 2021, the Company converted notes issued for $139,368 of principal and accrued interest into 139,368 shares of the Company’s common stock. |
DERIVATIVE LIABILITIES
DERIVATIVE LIABILITIES | 9 Months Ended |
Sep. 30, 2021 | |
Derivative Liabilities | |
DERIVATIVE LIABILITIES | NOTE 7– DERIVATIVE LIABILITIES The Company issued debts that consist of the issuance of convertible notes with variable conversion provisions. In addition, the Company issued warrants with variable conversion provisions. The conversion terms of the convertible notes and warrants are variable based on certain factors, such as the future price of the Company’s common stock. The number of shares of common stock to be issued is based on the future price of the Company’s common stock. The number of shares of common stock issuable upon conversion of the promissory note is indeterminate. Pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion option and warrants were recorded as derivative liabilities on the issuance date and revalued as of September 30, 2021 and December 31, 2020. Based on the convertible notes described in Note 6, the derivative liability day one loss is $389,712 and the change in fair value as of September 30, 2021 and December 31, 2020 is $(105,118) and $71,464. The fair value of applicable derivative liabilities on note, warrants and change in fair value of derivative liability are as follows for the nine months ended September 30, 2021. Schedule of fair value of derivative liabilities Derivative Liability Convertible Notes Derivative Total Balance as of December 31, 2020 $ 378,134 $ 219,814 $ 597,948 Change in fair value (107,835 ) 27,465 (80,370 ) Change in fair value due to conversion (24,748 ) — (24,748 ) Balance as of September 30, 2021 $ 245,551 $ 247,279 $ 492,830 As of September 30, 2021, the fair value of the derivative liability convertible notes is estimated using a Monte Carlo pricing model with the following assumptions: Schedule of pricing mode with assumptions Market value of common stock $ 1.17 Expected volatility 66.2 % Expected term (in years) 0.11 Risk-free interest rate 0.13 % As of September 30, 2021, the fair value of the derivative liability – warrants is estimated using a Monte Carlo pricing model with the following assumptions: Market value of common stock $ 1.17 Expected volatility 97.7 % Expected term (in years) 4.39 Risk-free interest rate 0.59 % |
RIGHT OF USE ASSET
RIGHT OF USE ASSET | 9 Months Ended |
Sep. 30, 2021 | |
Right Of Use Asset | |
RIGHT OF USE ASSET | NOTE 8– RIGHT OF USE ASSET Lease Agreement In January 2020, the Company entered into a lease agreement commencing February 8, 2020 for its current facility which expires in 2025. The term of the lease is for five years. At inception of the lease, the Company recorded a right of use asset and liability. The Company used an effective borrowing rate of 12% within the calculation. The following are the expected lease payments as of September 30, 2021, including the total amount of related imputed interest: Years ended December 31: Schedule of Future Minimum Rental Payments for Operating Leases 2021 $ 20,691 2022 85,039 2023 87,590 2024 90,217 2025 7,536 Operating Lease Total $ 291,073 Less: Imputed interest (52,899 ) Total $ 238,174 The rent expense was $ 45,885 70,404 |
COMMITMENTS AND CONTIGENCIES
COMMITMENTS AND CONTIGENCIES | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTIGENCIES | NOTE 9 - COMMITMENTS AND CONTIGENCIES Litigation Former Shareholders Lawsuit In November 2017, two shareholders of AppTech, Laura Farris and Eric Ottens, filed a lawsuit against the Company in the State of California, claiming conversion, aiding and abetting conversion, breach of fiduciary duty, breach of contract, breach of implied covenant of good faith and fair dealing and declaratory relief. The lawsuit was removed to the United States District Court for the Southern District of California. On December 19, 2019, the Company entered into a settlement and release agreement with the plaintiffs pursuant to which the Company will pay the plaintiffs an aggregate of $240,000 in installments over three years, commencing on February 15, 2020. On January 24, 2021, the parties entered a stipulation modifying the repayment schedule of the settlement to which altered the timing of payments over the three-year repayment period. The Company is current on the modified repayment schedule. Years ended December 31: Schedule of payment of lawsuit 2021 $ 20,000 2022 75,000 Total $ 95,000 Patent Acquisition Lawsuit In September 2018, a complaint was filed in San Diego superior court for a breach of contract arising from a written agreement for the purchase of a judgment to which AppTech was not a party. The purchase of the judgment was part of the transaction to acquire the patents. AppTech substantially performed under the agreement but the second agreement to extend the final payment was executed under alleged duress. On October 26, 2018, the Company filed an answer that denied each and every purported allegation and cause of action and further denied that they caused any damage or loss. On December 3, 2019, the Company entered into a conditional settlement providing the terms of the conditional settlement have been completed by October 1, 2020. The conditional settlement amount of $150,000 was paid in monthly installments of $15,000. The settlement installments paid for the year ended December 31, 2020 was $135,000. On December 30, 2020, full payment was made in accordance with a modified settlement payment schedule. Other Lawsuit On July 23, 2020, Flowpay Corporation, a Delaware corporation (“Flowpay”), and R. Wayne Steiger, the President of Flowpay, filed a complaint in the Superior Court of California, County of San Diego, North Division against the Company, Luke D’Angelo (the Chairman of the Board, Chief Executive Officer, Executive Officer and Chief Investment Officer of the Company), Robert Sanchez (the former Chief Executive Officer of GlobalTel Media, Inc., and former Chief Technology Officer of the Company) and Christopher Williams (the former Chairman and Chief Operating Officer of Flowpay and current member of the Company’s board of directors). In the complaint, Flowpay and Mr. Steiger alleged breach of contract, intentional misrepresentation and negligent misrepresentation by the Company and Mr. D’Angelo in connection with a Memorandum of Understanding, dated May 7, 2016, between the Plaintiffs and the Company and Mr. D’Angelo, as the Company’s CEO, and unjust enrichment, and violation of the California Uniform Trade Secrets Act by the Company in connection with certain patents, and trade secrets of Flowpay. In the complaint, the plaintiffs sought general and special damages, punitive and exemplary damages, disgorgement of profits, prejudgment interest, costs and other relief to be determined by the court. The Plaintiffs filed an amended complaint on March 15, 2021 which removed the cause of action related to violation of the California Uniform Trade Secrets Act. The Company filed an answer with affirmative defenses on April 26, 2021. The lawsuit is presently in the discovery phase. We believe the plaintiffs’ claims are meritless and intend to vigorously defend against this lawsuit. Convertible Note and Warrant Lawsuit On July 14, 2021, EMA Financial LLC, a Delaware limited liability company (“EMAF”), filed a complaint in the Southern District of New York against the Company. In its complaint, EMAF alleged that the Company breached the terms of a convertible note and a related warrant agreement purchased by EMAF pursuant to a securities purchase agreement between the parties. EMAF sought specific performance, payment of damages to be determined but not in excess of $2,750,000, reimbursement of costs and expenses, including reasonable legal fees, and non-interference. On September 2, 2021, EMAF filed a motion for summary judgment. On September 9, 2021, AppTech filed a motion to dismiss on the grounds the agreements were void as a result of the illegal activity by the plaintiff. On October 15, 2021, the parties filed memorandums in opposition to the respective motion. On October 25, 2021, the parties filed memorandums of law in further support of their respective motions. We believe the EMAF’s claims are meritless and intend to vigorously defend against this lawsuit. The parties have engaged in settlement discussions with an expected range of potential liability between $400,000 and $550,000, which includes principal and accrued interest of the convertible notes payable. Significant Contracts Capital Raise In January 2019, the Company entered into an agreement with a broker dealer to provide capital raising activities. Under the terms of the agreement the broker dealer is to make a minimum of $90,000 in advisory fees. In addition, there are various other provisions within the agreement which include a 10% placement fee, warrants to purchase common stock, a 4% transaction fee, etc. In February 2021, the Company entered into an engagement letter with Maxim Group LLC (“Maxim”) as the lead management underwriter for a follow-on offering which is non-binding. This engages Maxim through September 30, 2021 as exclusive financial advisor, lead managing underwriter and sole book running manager and investment banker in connection with the offering. The offering shall consist of approximately fifteen million worth of securities subject to the due diligence examination of the Company. The actual size of the offering, the precise number of securities to be offered by the Company and Maxim will depend upon the capitalization of the Company among other various factors. Maxim shall be granted an option to acquire an additional 15% of the total number of securities as an over-allotment, an underwriting discount of 7% and an expense allowance equal to 1%. See note 11 for subsequent events. Silver Alert Services, LLC In August 2020, the Company entered into a strategic partnership with Silver Alert Services, LLC. doing business as Lifelight Systems (“Lifelight”), expanding into the telehealth sphere. The partnership will expand AppTech’s reach into new markets and provide advanced technological solutions for the telehealth and personal emergency response systems markets. The strategic partnership provides a promissory note to Lifelight for up to $1.0 million dollars with an interest rate of three percent per annum upon successful completion of Lifelight’s Personal Emergency Response System (“PERS”) pilot program. Also, Lifelight is granted an option for the right to purchase 4,500,000 shares of AppTech Corp. for which 1 million are exercisable at $0.01 and 3,500,000 are exercisable at $0.25 for which vest upon the successful completion of the PERS pilot program and are exercisable for 24 months. These options had a grant date fair value of at $1,549,999 and $5,424,987, respectively using a Black-Scholes options pricing model. No stock-based compensation was recorded during the nine months ended September 30, 2021 as vesting was determined to be highly improbable. On December 30, 2020, the Company amended its strategic partnership agreement and purchase option agreement with Silver Alert dated August 21, 2020. The amendment altered and/or added certain definitions and the loan disbursements in the strategic partnership agreement. Further, the purchase option agreement was amended to incorporate a vesting schedule related to the gross revenue generated from the partnership. The options will vest based on reaching various gross revenue benchmarks for which expire two years after each tranche vests. On March 29, 2021, the Company amended its strategic partnership agreement and purchase option agreement dated December 30, 2020. The amendment altered the agreement reducing the options to purchase to one million shares at a price of $0.01 and two million five thousand shares of stock at $0.25. These options had a grant date fair value of $2,329,999 and $5,824,980, respectively using a Black-Scholes options pricing model. No stock-based compensation was recorded during the nine months ended September 30, 2021 as vesting was determined to be highly improbable. The Company’s ability to deliver on the $1,000,000 loan and fulfill its 50% obligation in 2020 was greatly impacted by the ongoing Covid 19 pandemic. Nursing homes and other senior living facilities were in lock down which did not allow the Silver Alert team into facilities for set-up and equipment training. As of August 9, 2021, the team still does not have access to these facilities and thus revenue could not be generated. Both parties agreed the delay was in the best interest of the long-term growth of the partnership. The Company will assess the probability of vesting at the end of each reporting period. On April 27, 2021, the Company entered an amended and restated strategic partnership agreement and purchase option agreement with Silver Alert Services, LLC which amends and restates earlier agreements dated August 21, 2020, as amended on December 30, 2020 and March 29, 2021. The amended and restated agreements provide for an equity transaction whereby the Company receives a 70% (seventy percent) ownership in Silver Alert, LLC upon certain revenue goals being achieved. Further, upon the occurrence of the revenue goals, the revenue sharing between the companies shall be altered resulting in the Company retaining 70% (seventy percent). Infinios Financial Services (formally NEC Payments) On October 1, 2020, the Company entered into a strategic partnership with Infinios Financial Services BSC (formally NEC Payments B.S.C) (“Infinios”) through a series of agreements, which included the following: (a) Subscription License and Services Agreement; (b) Digital Banking Platform Operating Agreement; (c) Subscription License Order Form; and (d) Registration Rights Agreement (collectively the “Agreements”). The intent of the Agreements was for the Company to deploy Infinios’s technologies, allowing the Company to extend its product offering to include flexible, scalable and secure payment acceptance and issuer payment processing that supports the digitization of business and consumer financial services and the migration of cash and other legally payment types to distanced and contactless card and real time payment transactions. Infinios will assist the Company to complete the development of its text payment solution and provide “best in class” software that complements the Company’s intellectual property. The Agreements, among other things: (a) provide the Company a license to access and use Infinios’s digital banking and payment technology solutions, as identified in the Subscription License Order Form; (b) grant the Company conditional exclusivity in the United States for all of Infinios’s payment acceptance processing technologies contingent upon the Company reaching transaction volume target goals; (c) grant Infinios a license to develop software without the possibility of infringing upon the Company’s intellectual property; (d) creates the parameters in which Infinios shall assist the Company in completing the development of its text payment system related to the Company’s patents; (e) award Infinios a fifteen percent (15%) equity stake in the Company, on a fully diluted basis; (f) set revenue sharing splits between AppTech and Infinios for all revenues generated from digital banking technologies licensed to AppTech. Under the Agreements, either party had the right to terminate the agreement should the Company fail to secure a funding in the amount of $3,000,000 within 45 days from the effective date of the Agreements. On November 19, 2020, the Company entered into Amendment No. 1 to the Subscription License and Services Agreement whereby the funding date was amended to amended to no later than December 18, 2020. All other terms of the original Agreements remained in full force and effect. On February 11, 2021, the Company entered into an amended and restated Subscription License and Services Agreement, Digital Banking Platform Operating Agreement and Subscription License Order Form with Infinios (collectively the “Restated Agreements”). The Restated Agreement created an engagement fee of $100,000 due within three business days from the effective date, reduced the funding amount triggering the enforceability of the Restated Agreements to $707,500 (“Funding”), altered the date in which initial fees are payable to no later than March 5, 2021 (the “Funding Date”) and provided terms to prevent dilution for Infinios’s equity compensation for future funding secured by the Company. The fees in the Restated Agreements are payable within three business days from the effective date, at or before the Funding Date, at the Subscription Service Ready Date annually and monthly. The gross total fees due under the Restated Agreements are $2,212,500, excluding pass-through costs associated with infrastructure hosting fees. On February 19, 2021, the Company completed and validated its contractual obligations and paid to Infinios the $100,000 engagement fee. On February 29, 2021, the Company paid the initial fee of $707,500 to Infinios prior to the Funding Date. On March 25, 2021, the Company issued 18,011,515 shares of common stock to NEC on a fully diluted basis with piggyback rights. The Company valued the common stock issuance at $67,543,182 based upon the closing market price on the effective date of the transaction based on the closing market price of the Company’s common stock. The issuance was recorded as a $5,000,000 asset, as capitalized prepaid software development and licensing and $62,543,182 as an expense, as excess fair value of equity issuance over assets received, as of September 30, 2021 based on the estimated fair market value of services had the Company developed improvements and additional functionality of the Infinios platform. The estimated amortization is a 5-years life based on the term of the licensing agreement. The Company may revise the value of the asset and estimated life as more information is made available. The initial fees paid within three business days from the effective date and at or before the Funding Date included the following costs: Schedule of fees paid to NECP platform Engagement Fee $ 100,000 License subscription fee (50% due at Funding Date) 375,000 Annua l maintenance subscription fee (first year) 112,500 Implementation fee (50% due at Funding Date) 162,500 Infrastructure implementation fee (50% due at Funding Date) 32,500 Training fee (50% due at Funding Date) 25,000 Total $ 807,500 As of September 30, 2021, the following payments are due in the intervals noted over the five-year life of the Restated Agreements: License subscription fee (second 50% due at Subscription Ready Date) $ 375,000 Annual maintenance subscription fees ($112,500 annually) 450,000 Implementation fees (50% due at Subscription Ready Date) 162,500 Infrastructure implementation fees (50% due at Subscription Ready Date) 32,500 Training fees (50% due at Subscription Ready Date) 25,000 Infrastructure support fees ($6,000 monthly after Subscription Ready Date) 360,000 Total $ 1,405,000 * * Infrastructure Hosting Fees, which are pass through hosting fees from a hosting partner are excluded from this calculation. Innovations Realized LLC On October 2, 2020, the Company entered into an independent contractor services agreement with Innovations Realized, LLC (“IR”) to develop a strategic operating plan focused on the design, execution and go to market implementation of the NECP platform to enter the United States market. On February 18, 2021, the Company entered into an amended independent contractor services agreement with IR. On February 19, 2021, the initial payment of $76,000 was made and on February 24, 2021 the second payment of $76,000 was made, on April 5, 2021 the third payment of $152,000 and on May 5, 2021, the fourth and fifth payment of $114,000 was made. The outstanding balance of $171,000 is past due and remains unpaid as of September 30, 2021. Under the October 2020 agreement, the Company granted options to purchase 400,000 shares at a price of $0.01 and 2,500,000 shares at $0.25 and exercisable for two years after vesting. These options vest in equal monthly installments over 24 months. In addition, the options early vesting based on the completion date of the statement of work or the IR principle becoming an employee of AppTech Corp. These options had a grant date fair value of $1,399,992 and $8,749,701 using a Black Scholes pricing model. The options to purchase 400,000 shares valued at $1,399,992 were recorded as an expense, as excess fair value of equity issuance, and to purchase 141,411 shares valued at $491,421 were recorded as an asset, as capitalized prepaid software development and licensing, as of September 30, 2021 based on the estimated fair market value of services had the Company developed the platform. The estimated amortization is a 5-year life based on the term of the licensing agreement. The Company may revise the estimated life upon completion of the platform. Employee versus Contractor Classification The Company compensated various individuals as consultants. Annually, the Company issues Form 1099s for amounts paid to them. In addition, a portion of these consultants did not have arrangements which specified compensation payable to them. The Company risks potential tax and legal actions should these consultants be deemed to be employees by governmental agencies. The Company added all relevant independent contractors as paid full-time employees on April 22, 2021 and April 28, 2021. Executive Compensation On April 28, 2021, the Company entered into new employment and stock options agreements with its named executive officers. The agreements, among other things, each employment agreement, apart from the Chief Executive Officer which implements a guaranteed bonus structure, shall provide for a starting base salary and potential business development revenue sharing at rates ranging from 20-50% of net processing revenue. Each Employment Agreement also provides a potential annual bonus, which is subject to adjustment by the Board from time to time. Further, stock option awards for certain named executives were provided, subject to the applicable vesting schedule. Each Employment Agreement provides that the applicable named executive officer’s employment with us is “at will”. The named executive officers are entitled to receive all other benefits generally available to our executive officers. |
STOCKHOLDERS_ DEFICIT
STOCKHOLDERS’ DEFICIT | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
STOCKHOLDERS’ DEFICIT | NOTE 10 – STOCKHOLDERS’ DEFICIT Series A Preferred Stock The Company is authorized to issue 100,000 shares of $0.001 par value Series A preferred stock (“Series A”). There were fourteen (14) shares of Series A preferred stock outstanding as of September 30, 2021 and December 31, 2020. The holders of Series A preferred stock are entitled to one vote per share on an “as converted” basis on all matters submitted to a vote of stockholders and are not entitled to cumulate their votes in the election of directors. The holders of Series A preferred stock are entitled to any dividends that may be declared by the Board of Directors out of funds legally available, therefore on a pro rata basis according to their holdings of shares of Series A preferred stock, on an as converted basis. In the event of liquidation or dissolution of the Company, holders of Series A preferred stock are entitled to share ratably in all assets remaining after payment of liabilities and have no liquidation preferences. Holders of Series A preferred stock have a right to convert each share of Series A into 780 shares common stock. Common Stock The Company is authorized to issue 1,000,000,000 shares of $0.001 par value common stock. There were 113,125,715 and 88,511,657, respectively, shares of common stock outstanding as of September 30, 2021 and December 31, 2020. The holders of common stock are entitled to one vote per share on all matters submitted to a vote of stockholders and are not entitled to cumulate their votes in the election of directors. The holders of common stock are entitled to any dividends that may be declared by the board of directors out of funds legally available, therefore subject to the prior rights of holders of any outstanding shares of preferred stock and any contractual restrictions against the payment of dividends on common stock. In the event of liquidation or dissolution of the Company, holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preferences of any outstanding shares of preferred stock. Holders of common stock have no preemptive or other subscription rights and no right to convert their common stock into any other securities. During the nine months ended September 30, 2021 and 2020, the Company issued 488,053 and 3,568,000, respectively, shares of common stock to several consultants in connection with business development and professional services. The Company valued the common stock issuances at $2,512,693 and $2,357,125, respectively, based upon the closing market price of the Company’s common stock on the date in which the performance was complete or issued based upon the vesting schedule and the closing market price of the Company’s common stock on the date of the agreement. The amounts were expensed to general and administrative expenses on the accompanying statements of operations. The accounts payable conversion was $424,885 and $152,500 during 2021 and 2020, respectively. During the year ended December 31, 2020, the Company granted 350,000 shares of common stock to the board of directors valued at $196,700 or $0.562 per share. The shares vest quarterly over the period of approximately one year. The Company valued the stock issuances, earned for the nine months ended September 30, 2021, at $114,741 based on the closing market price of the Company’s common stock on the date of the agreement. The amount was expensed to general and administrative expenses on the accompanying statement of operations. The Company will issue 116,668 shares of common stock during 2021 valued at $65,567 based on the closing market price of the Company’s common stock on the date of the agreement, over the remaining term of the directors. During the nine months ended September 30, 2021, the Company issued 31,250 shares of common stock to a merchant in connection with a new contract extension. The Company valued the common stock issuance at $18,371 based upon the closing market price of the Company’s common stock on the date of the agreement. The amount was reflected as a reduction of revenue on the accompanying statement of operations. During the nine months ended September 30, 2021, the Company issued 200,000 shares of common stock in connection with a judgment purchase agreement from a third party. The judgment is for damages in the amount of $516,932 plus statutory interest against FlowPay Corporation and R. Wayne Steiger. The Company valued the common stock issuance at $1,000,000 based on the closing market price of the Company’s common stock on the date of the judgment purchase. During the nine months ended September 30, 2021, the Company issued 31,250 shares of common stock to two merchants in connection with the merchant equity program. The Company recorded the common stock issuance at the historical price of $2,121 based upon the closing market price of the Company’s common stock on the date of the qualification. The amount was reflected as a reduction of the merchant equity liability. During the nine months ended September 30, 2021, the Company issued 5,574,689 shares of common stock to several convertible note payable holders of which 3,812,131 shares of common stock were issued to related parties in connection with debt conversions. The closing market price of the Company’s common stock on the date of the agreement was used to value the excess fair value of equity issuance. The amounts were reflected as a reduction of convertible notes payable, accrued interest, and excess fair value of equity issuance as follows: Schedule of convertible related party Convertible notes payable $ 797,600 Convertible notes payable – related parties 395,630 Accrued interest 647,199 Accrued interest – related parties 383,964 Excess fair value of equity issuance 794,136 Excess fair value of equity issuance – related parties 1,911,769 Total $ 4,930,298 See Note 9 – Significant Contracts for additional common stock issuance. Stock Options On July 28, 2020, the Company entered into an agreement for board of director services. As compensation the Company granted options to purchase 125,000 shares at a price of $0.562 and are exercisable for two years. The options vest in equal monthly installments over 24 months. These options were valued at $70,235 using a Black-Scholes options pricing model. On August 25, 2020, the Company entered into an agreement for accounting services in general and administrative expenses. As compensation the Company granted options to purchase 100,000 shares of common stock at a price of $0.25 and are exercisable for nine months. These options were valued at $140,945 using a Black-Scholes options pricing model. The options were exercised on August 26, 2020. On September 21, 2020, the Company entered into an agreement for sales and marketing services in general and administrative expenses. As compensation the Company granted options to purchase 10,000 shares at a price of $0.01 and to purchase 120,000 shares at a price of $0.25 and are exercisable for two years. These options vest upon execution of the contract and in equal quarterly installments of 24 months. These options were valued at $13,498 and $161,999, respectively using a Black-Scholes options pricing model. On September 22, 2020, the Company entered into an agreement for IT services in general and administrative expenses. As compensation the Company granted options to purchase 52,000 shares at a price of $0.25 and are exercisable for two years. The options vest in equal quarterly installments of 24 months. These options were valued at $77,995 using a Black-Scholes options pricing model. On October 29, 2020, the Company entered into an agreement for sales and marketing in general and administrative expenses. As compensation the Company granted options to purchase 100,000 shares of common stock at a price of $0.30 and are exercisable for two years. These options were valued at $156,999 using a Black-Scholes options pricing model. The options were exercised on October 29, 2020. On April 22, 2021, the Company entered into four agreements for administrative services, sales and marketing services in general and administrative expenses. As compensation the Company granted non-statutory stock options to purchase 282,000 shares at a price of $1.91 and are exercisable for three years. These options were valued at $606,278 using a Black-Scholes option pricing model. On April 28, 2021, the Company entered into three agreements for executive officers’ compensation in general and administrative expenses. As compensation the Company granted non-statutory stock options to purchase 1,600,000 shares at a price of $2.036 and are exercisable for three years. These options were valued at $3,663,820 using a Black-Scholes option pricing model. During the third quarter, the Company entered into an agreement for administrative services in general and administrative expenses. As compensation, the Company granted non-statutory stock options to purchase 200,000 shares of the Company’s common stock at a price of $1.80 per share. These options were valued at $360,000 using a Black-Scholes option pricing model. During the third quarter, the Company entered into two agreements for administrative services in general and administrative expenses. As compensation, the Company granted non-statutory stock options to purchase 365,000 shares of the Company’s common stock at prices of $0.25 and $1.304 per share. These options were valued at $354,750 using a Black-Scholes option pricing model. See Note 9 – Significant Contracts for additional stock options granted. The fair value of the options is estimated using a Black-Scholes option pricing model with the following range of assumptions as of September 30, 2021: Schedule of Black Scholes option pricing Market value of common stock on issuance date $ 0.562 3.50 Expected price $ 0.01 2.036 Expected volatility 467 608 % Expected term (in years) 0.3 2.8 Risk-free interest rate 0.11 % Expected dividend yields — The following table summarizes option activity: Schedule of option activity Weighted Weighted Number of Average Average shares exercise price remaining years Outstanding December 31, 2020 7,707,000 $ 0.21 Issued 2,447,000 $ 2.02 Cancelled (1,079,749 ) $ 0.36 Outstanding as of September 30, 2021 9,074,251 $ 0.56 2.75 Outstanding as of September 30, 2021, vested 3,010,785 $ 1.11 2.80 The remaining expense outstanding through September 30, 2021 is $8,869,318 for which $1,701,755 is expected to be expensed over the next 30 months in general and administrative expense and $7,167,563 is expected to be recorded over the next 16 ½ months as an asset, as capitalized prepaid software development and licensing or as an expense excess fair value of equity issuance over assets received. On July 28, 2020, the board authorized the Company’s AppTech Equity Incentive Plan in order to facilitate the grant of equity incentives to employees (including our named executive officers), directors, independent contractors, merchants, referral partners, channel partners and consultants of our company to enable our company to attract, retain and motivate employees, directors, merchants, referral partners and channel partners, which is essential to our long-term success. A total of 5,000,000 shares of common stock were authorized under the AppTech Equity Incentive Plan, for which as of September 30, 2021 a total of 3,204,500 are available for issuance. Warrants In 2020, the Company entered into a security purchase agreement with an investor pursuant to which the Company agreed to sell the investor a $300,000 convertible note bearing interest at 12% per annum. The Company also sold warrants to the investors to purchase up to an aggregate of 200,000 shares of common stock, with an exercise term of five (5) years, at a per share price of one dollar and fifty cents ($1.50) which may be exercised by cashless exercise. The number of warrants adjusted in the period ending September 30, 2021 due to a reset event on September 27, 2021 changed the exercise price from one dollar and fifty cents ($1.50) to one dollar ($1.00) and increased the number of warrants from 200,000 to 300,000. The warrants were deemed a derivative liability and were recorded as a debt discount at date of issuance. See Note 7. Common Stock Repurchase Option On February 3, 2021, the Company entered into a common stock repurchase option agreement with a former officer and significant shareholder to purchase or assign 2,000,000 shares of common stock from a third party at $0.20 per share. The Company assigned its rights to the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option for 50,000 shares was exercised on February 11, 2021 for which the Company received $33,750 in proceeds which was recorded as additional paid-in capital. On February 3, 2021, the Company entered into a common stock repurchase option agreement with a former officer and significant shareholder to purchase or assign 2,000,000 shares of common stock from a third party at $0.20 per share. The Company assigned a portion of the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option for 350,000 shares was exercised on February 17, 2021 for which the Company received $222,250 in proceeds which was recorded as additional paid-in capital. On February 3, 2021, the Company entered into a common stock repurchase option agreement with a former officer and significant shareholder to purchase or assign 2,000,000 shares of common stock from a third party at $0.20 per share. The Company assigned a portion of the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option for 850,000 shares was exercised on February 19, 2021 for which the Company received $539,750 in proceeds which was recorded as additional paid-in capital. On February 3, 2021, the Company entered into a common stock repurchase option agreement to purchase or assign 1,000,000 shares of common stock from a third party at $0.20 per share. The Company assigned a portion of the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option for 750,000 shares was exercised on February 22, 2021 for which the Company received $881,250 in proceeds which was recorded as additional paid-in capital. On February 23, 2021, the Company entered into a common stock repurchase option agreement to purchase or assign 500,000 shares of common stock from a third party at $0.225 per share. The Company assigned a portion of the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option for 250,000 shares was exercised on March 1, 2021 for which the Company received $193,750 in proceeds which was recorded as additional paid-in capital. On February 23, 2021, the Company entered into a common stock repurchase option agreement to purchase or assign 500,000 shares of common stock from a third party at $0.225 per share. The Company assigned a portion of the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option for 150,000 shares was exercised on March 5, 2021 for which the Company received $102,000 in proceeds which was recorded as additional paid-in capital. On March 4, 2021, the Company entered into a common stock repurchase option agreement to purchase or assign 2,000,000 shares of common stock from a related party at $0.20 per share. The common stock repurchase option for 50,000 of the 2,000,000 shares was exercised on March 10, 2021. On March 10, 2021, the Company cancelled the 50,000 shares exercised. On March 15, 2021, the Company entered into a common stock repurchase option agreement to purchase or assign 100,000 shares of common stock from a third party at $0.20 per share. The Company assigned a portion of the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option was exercised on April 7, 2021 for which the Company received $117,500 in proceeds which was recorded as additional paid-in capital. On March 17, 2021, the Company entered into a common stock repurchase option agreement with a former officer and significant shareholder to purchase or assign 750,000 shares of common stock from a third party at $0.20 per share. The Company assigned its rights to the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option for 35,000 shares was exercised on April 8, 2021 for which the Company received $28,000 in proceeds which was recorded as additional paid-in capital. On June 17, 2021, the Company entered into a common stock repurchase option agreement with a former officer and significant shareholder to purchase or assign 706,667 shares of common stock from a third party at $0.20 per share. The Company assigned a portion of the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option for 500,000 shares was exercised on September 18, 2021 for which the Company received $87,500 in proceeds which was recorded as additional paid-in capital. On June 18, 2021, the Company entered into a common stock repurchase option agreement to purchase or assign 1,000,000 shares of common stock from a third party at $0.15 per share. The Company assigned the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option for 1,000,000 shares was exercised on September 18, 2021 for which the Company received $225,000 in proceeds which was recorded as additional paid-in capital. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 11 – SUBSEQUENT EVENTS Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855 and has determined that no material subsequent events exist other than those disclosed below. On October 4, 2021, the Company entered into a loan forbearance agreement with a lender with a balance outstanding of $13,895, including principal and interest, to forebear enforcement of any of the payment terms of the promissory note in exchange for 5,695 shares of the Company’s common stock as an equity bonus. On October 4, 2021, the Company entered into a loan forbearance agreement with a lender with a balance outstanding of $40,189, including principal and interest, to forebear enforcement of any of the payment terms of the promissory note in exchange for 7,009 shares of the Company’s common stock as an equity bonus. On October 5, 2021, the Company entered into a debt conversion agreement to convert a non-interest bearing promissory note with an outstanding balance of $29,598 for 29,598 shares of the Company’s common stock as of the effective date of the agreement at a conversion price of $1.00 per share. On August 24, 2021, the Company entered into a common stock repurchase option agreement to purchase or assign 300,000 shares of common stock from a third party at $0.175 per share. The Company assigned the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option for 300,000 shares was exercised on October 13, 2021 for which the Company received $127,500 in proceeds which was recorded as additional paid in capital. On October 18, 2021, the Company entered in an engagement letter with EF Hutton, division of Benchmark Investments, LLC. (“EF Hutton”) to act as lead underwriter, deal manager and investment banker for the Company’s proposed firm commitment public offering and uplisting. The engagement letter is subject to the signing of an underwriting agreement between the parties covering the sale of up to $15,00,000 of securities subject to the due diligence examination of the Company. The actual size of the offering, the precise number of securities to be offered by the Company and EF Hutton will depend upon the capitalization of the Company among other various factors. EF Hutton shall be granted an option to acquire an additional 15% of the total number of securities as an over-allotment, an underwriting discount of 8% and an expense allowance equal to 1%. On October 20, 2021, the Company entered into a debt conversion agreement to convert a promissory note with an outstanding balance of $35,000, including principal and accrued interest for 35,000 shares of the Company’s common stock as of the effective date at a conversion price of $1.00 per share. On October 27, 2021, Maxim and the Company terminated all relevant agreements. In satisfaction of all amounts due and owning, and all amounts that shall become due and owing, the Company shall issue Maxim 200,000 shares of the Company’s common stock in association with the termination. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Also see Note 3. |
Use of Estimates | Use of Estimates The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated liabilities related to various vendors in which communications have ceased, contingent liabilities, realization of tax deferred tax assets and capitalization of software development. Actual results could differ from those estimates. |
Concentration of Credit Risk | Concentration of Credit Risk Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits of $ 250,000 The accounts receivable from merchant services are paid by the financial institutions on a monthly basis. The Company currently uses nine financial institutions to service their merchants for which represented 100% of accounts receivable as of September 30, 2021 and 2020. The loss of one of these financial institutions would not have a significant impact on the Company’s operations as there are additional financial institutions available to the Company. For the nine months ended September 30, 2021 and 2020, the one merchant (customer) represented approximately 16% and 36% of the total revenues, respectively. The loss of this customer would have significant impact on the Company’s operations. |
Software Development Costs | Software Development Costs The Company capitalizes software development costs in developing internal use software when capitalizing requirements have been met. Costs prior to meeting the capitalization requirements are expensed as incurred. |
Revenue Recognition | Revenue Recognition The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, codified as Accounting Standards Codification (“ASC”) 606 Revenue from Contracts with Customers, which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company adopted ASC 606 effective January 1, 2019 using modified retrospective basis and the cumulative effect was immaterial to the financial statements. The Company provides merchant processing solutions for credit cards and electronic payments. In all cases, the Company acts as an agent between the merchant which generates the credit card and electronic payments, and the bank which processes such payments. The Company’s revenue is generated on services priced as a percentage of transaction value or a specified fee transaction, depending on the card or transaction type. Revenue is recorded as services are performed which is typically when the bank processes the merchant’s credit card and electronic payments. Consideration paid to customers such as amounts earned under our customer equity incentive program, are recorded as a reduction to revenues. There were no amounts paid or incurred during the nine months ended September 30, 2021 and 2020. |
Fair Value Measurements | Fair Value Measurements The Company follows FASB ASC 820, Fair Value Measurements and Disclosures Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3 Pricing inputs that are generally unobservable inputs and not corroborated by market data. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The carrying amounts reported in the Company’s financial statements for cash, accounts payable and accrued expenses approximate their fair value because of the immediate or short-term mature of these financial instruments. Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-marketing dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. The following table presents liabilities that are measured and recognized at fair value as of September 30, 2021 and December 31, 2020 on recurring basis: Schedule of derivative liabilities September 30, 2021 Total Carrying Level 1 Level 2 Level 3 Value Derivative liabilities $ — $ — $ 492,830 $ 492,830 December 31, 2020 Total Carrying Level 1 Level 2 Level 3 Value Derivative liabilities $ — $ — $ 597,948 $ 597,948 See Note 7 for discussion of valuation and roll forward related to derivative liabilities. |
Per Share Information | Per Share Information Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year, increased by the potentially dilutive common shares that were outstanding during the year. Dilutive securities include stock options, warrants granted, convertible debt and convertible preferred stock. The number of common stock equivalents not included in diluted income per share was 12,498,187 and 5,616,624 for the nine months ended September 30, 2021 and 2020, respectively. The weighted average number of common stock equivalents is not included in diluted income (loss) per share, because the effects are anti-dilutive. Schedule of anti dilutive stock September 30, 2021 September 30, 2020 Series A preferred stock 10,920 10,920 Convertible debt 1,639,217 5,605,704 Warrants 200,000 — Options 7,272,500 — Common stock 3,375,550 — Total 12,498,187 5,616,624 |
New Accounting Pronouncements | New Accounting Pronouncements The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Schedule of derivative liabilities | Schedule of derivative liabilities September 30, 2021 Total Carrying Level 1 Level 2 Level 3 Value Derivative liabilities $ — $ — $ 492,830 $ 492,830 December 31, 2020 Total Carrying Level 1 Level 2 Level 3 Value Derivative liabilities $ — $ — $ 597,948 $ 597,948 |
Schedule of anti dilutive stock | Schedule of anti dilutive stock September 30, 2021 September 30, 2020 Series A preferred stock 10,920 10,920 Convertible debt 1,639,217 5,605,704 Warrants 200,000 — Options 7,272,500 — Common stock 3,375,550 — Total 12,498,187 5,616,624 |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Accrued Liabilities | Schedule of Accrued Liabilities September 30, 2021 December 31, 2020 Accrued interest – related parties $ — $ 1,039,977 Accrued interest – third parties 1,420,690 1,395,133 Accrued payroll 21,672 — Accrued PTO 56,071 — Accrued residuals 100,615 62,174 Accrued merchant equity 88,903 91,023 Other 38,677 44,027 Total accrued liabilities $ 1,726,628 $ 2,632,334 |
NOTES PAYABLE AND CONVERTIBLE_2
NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of notes and convertible notes payable | Schedule of notes and convertible notes payable September 30, 2021 December 31, 2020 Convertible notes payable $ 245,551 $ 378,134 Warrants 247,279 219,814 Total notes and convertible notes payable $ 492,830 $ 597,948 |
Schedule of Convertible note and warrant lawsuit | Schedule of Convertible note and warrant lawsuit Convertibles note payable $ 222,000 Accrued interest 83,588 Excess fair value of equity issuance 1,379,193 Total $ 1,684,781 |
Schedule of convertible notes payables | Schedule of convertible notes payables Convertible notes payable $ 170,000 Convertible notes payable – related parties 150,000 Accrued interest 306,637 Accrued interest – related parties 273,375 Excess fair value of equity issuance 587,723 Excess fair value of equity issuance – related parties 523,968 Total $ 2,011,703 |
DERIVATIVE LIABILITIES (Tables)
DERIVATIVE LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Derivative Liabilities | |
Schedule of fair value of derivative liabilities | Schedule of fair value of derivative liabilities Derivative Liability Convertible Notes Derivative Total Balance as of December 31, 2020 $ 378,134 $ 219,814 $ 597,948 Change in fair value (107,835 ) 27,465 (80,370 ) Change in fair value due to conversion (24,748 ) — (24,748 ) Balance as of September 30, 2021 $ 245,551 $ 247,279 $ 492,830 |
Schedule of pricing mode with assumptions | Schedule of pricing mode with assumptions Market value of common stock $ 1.17 Expected volatility 66.2 % Expected term (in years) 0.11 Risk-free interest rate 0.13 % As of September 30, 2021, the fair value of the derivative liability – warrants is estimated using a Monte Carlo pricing model with the following assumptions: Market value of common stock $ 1.17 Expected volatility 97.7 % Expected term (in years) 4.39 Risk-free interest rate 0.59 % |
RIGHT OF USE ASSET (Tables)
RIGHT OF USE ASSET (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Right Of Use Asset | |
Schedule of Future Minimum Rental Payments for Operating Leases | Schedule of Future Minimum Rental Payments for Operating Leases 2021 $ 20,691 2022 85,039 2023 87,590 2024 90,217 2025 7,536 Operating Lease Total $ 291,073 Less: Imputed interest (52,899 ) Total $ 238,174 |
COMMITMENTS AND CONTIGENCIES (T
COMMITMENTS AND CONTIGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of payment of lawsuit | Schedule of payment of lawsuit 2021 $ 20,000 2022 75,000 Total $ 95,000 |
Schedule of fees paid to NECP platform | Schedule of fees paid to NECP platform Engagement Fee $ 100,000 License subscription fee (50% due at Funding Date) 375,000 Annua l maintenance subscription fee (first year) 112,500 Implementation fee (50% due at Funding Date) 162,500 Infrastructure implementation fee (50% due at Funding Date) 32,500 Training fee (50% due at Funding Date) 25,000 Total $ 807,500 As of September 30, 2021, the following payments are due in the intervals noted over the five-year life of the Restated Agreements: License subscription fee (second 50% due at Subscription Ready Date) $ 375,000 Annual maintenance subscription fees ($112,500 annually) 450,000 Implementation fees (50% due at Subscription Ready Date) 162,500 Infrastructure implementation fees (50% due at Subscription Ready Date) 32,500 Training fees (50% due at Subscription Ready Date) 25,000 Infrastructure support fees ($6,000 monthly after Subscription Ready Date) 360,000 Total $ 1,405,000 * |
STOCKHOLDERS_ DEFICIT (Tables)
STOCKHOLDERS’ DEFICIT (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
Schedule of convertible related party | Schedule of convertible related party Convertible notes payable $ 797,600 Convertible notes payable – related parties 395,630 Accrued interest 647,199 Accrued interest – related parties 383,964 Excess fair value of equity issuance 794,136 Excess fair value of equity issuance – related parties 1,911,769 Total $ 4,930,298 |
Schedule of Black Scholes option pricing | Schedule of Black Scholes option pricing Market value of common stock on issuance date $ 0.562 3.50 Expected price $ 0.01 2.036 Expected volatility 467 608 % Expected term (in years) 0.3 2.8 Risk-free interest rate 0.11 % Expected dividend yields — |
Schedule of option activity | Schedule of option activity Weighted Weighted Number of Average Average shares exercise price remaining years Outstanding December 31, 2020 7,707,000 $ 0.21 Issued 2,447,000 $ 2.02 Cancelled (1,079,749 ) $ 0.36 Outstanding as of September 30, 2021 9,074,251 $ 0.56 2.75 Outstanding as of September 30, 2021, vested 3,010,785 $ 1.11 2.80 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -Derivative liabilities (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Offsetting Assets [Line Items] | ||
Derivative liabilities | $ 492,830 | $ 597,948 |
Fair Value, Inputs, Level 1 [Member] | ||
Offsetting Assets [Line Items] | ||
Derivative liabilities | ||
Fair Value, Inputs, Level 2 [Member] | ||
Offsetting Assets [Line Items] | ||
Derivative liabilities | ||
Fair Value, Inputs, Level 3 [Member] | ||
Offsetting Assets [Line Items] | ||
Derivative liabilities | $ 492,830 | $ 597,948 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | Sep. 30, 2021 | Sep. 30, 2020 |
Accounting Policies [Abstract] | ||
Series A preferred stock | $ 10,920 | $ 10,920 |
Convertible debt | 1,639,217 | 5,605,704 |
Warrants | 200,000 | |
Options | 7,272,500 | |
Common stock | 3,375,550 | |
Total | $ 12,498,187 | $ 5,616,624 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | Sep. 30, 2021USD ($) |
Accounting Policies [Abstract] | |
Federal Deposit Insurance Corporation | $ 250,000 |
GOING CONCERN (Details Narrativ
GOING CONCERN (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Net Income (Loss) Attributable to Parent | $ 2,742,646 | $ 1,107,932 | $ 75,494,381 | $ 2,898,406 | |
Negative working capital | 6,026,048 | 6,026,048 | |||
Retained Earnings (Accumulated Deficit) | $ 120,442,111 | 120,442,111 | $ 44,947,730 | ||
Proceeds from sale of repurchase option | $ 2,430,750 |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Other Liabilities Disclosure [Abstract] | ||
Accrued interest – related parties | $ 1,039,977 | |
Accrued interest – third parties | 1,420,690 | 1,395,133 |
Accrued payroll | 21,672 | |
Accrued PTO | 56,071 | |
Accrued residuals | 100,615 | 62,174 |
Accrued merchant equity | 88,903 | 91,023 |
Other | 38,677 | 44,027 |
Total accrued liabilities | $ 1,726,628 | $ 2,632,334 |
NOTES PAYABLE AND CONVERTIBLE_3
NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Debt Disclosure [Abstract] | ||
Convertible notes payable | $ 245,551 | $ 378,134 |
Warrants | 247,279 | 219,814 |
Total notes and convertible notes payable | $ 492,830 | $ 597,948 |
NOTES PAYABLE AND CONVERTIBLE_4
NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE (Details 1) | Sep. 30, 2021USD ($) |
Debt Disclosure [Abstract] | |
Convertibles note payable | $ 222,000 |
Accrued interest | 83,588 |
Excess fair value of equity issuance | 1,379,193 |
Total | $ 1,684,781 |
NOTES PAYABLE AND CONVERTIBLE_5
NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE (Details 2) | Sep. 30, 2021USD ($) |
Debt Disclosure [Abstract] | |
Convertible notes payable | $ 170,000 |
Convertible notes payable – related parties | 150,000 |
Accrued interest | 306,637 |
Accrued interest – related parties | 273,375 |
Excess fair value of equity issuance | 587,723 |
Excess fair value of equity issuance – related parties | 523,968 |
Total | $ 2,011,703 |
DERIVATIVE LIABILITIES (Details
DERIVATIVE LIABILITIES (Details) | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Offsetting Assets [Line Items] | |
Balance as of December 31, 2020 | $ 597,948 |
Change in fair value | (80,370) |
Change in fair value due to conversion | (24,748) |
Balance as of September 30, 2021 | 492,830 |
Derivative Liability Convertible Notes [Member] | |
Offsetting Assets [Line Items] | |
Balance as of December 31, 2020 | 378,134 |
Change in fair value | (107,835) |
Change in fair value due to conversion | (24,748) |
Balance as of September 30, 2021 | 245,551 |
Derivative Liability Warrants [Member] | |
Offsetting Assets [Line Items] | |
Balance as of December 31, 2020 | 219,814 |
Change in fair value | 27,465 |
Change in fair value due to conversion | |
Balance as of September 30, 2021 | $ 247,279 |
DERIVATIVE LIABILITIES - Valuat
DERIVATIVE LIABILITIES - Valuation Assumptions (Details) | 9 Months Ended |
Sep. 30, 2021$ / shares | |
Convertible Notes [Member] | |
Offsetting Assets [Line Items] | |
Market value of common stock | $ 1.17 |
Expected volatility | 66.20% |
Expected term (in years) | 1 month 9 days |
Risk-free interest rate | 0.13% |
Warrants | |
Offsetting Assets [Line Items] | |
Expected volatility | 97.70% |
Expected term (in years) | 4 years 4 months 20 days |
Risk-free interest rate | 0.59% |
RIGHT OF USE ASSET (Details)
RIGHT OF USE ASSET (Details) | Sep. 30, 2021USD ($) |
Right Of Use Asset | |
2021 | $ 20,691 |
2022 | 85,039 |
2023 | 87,590 |
2024 | 90,217 |
2025 | 7,536 |
Less: Imputed interest | (52,899) |
Total | $ 238,174 |
RIGHT OF USE ASSET (Details Nar
RIGHT OF USE ASSET (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Right Of Use Asset | ||
Rent expense | $ 45,885 | $ 70,404 |
COMMITMENTS AND CONTIGENCIES (D
COMMITMENTS AND CONTIGENCIES (Details) | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
2021 | $ 20,000 |
2022 | 75,000 |
Total | $ 95,000 |
COMMITMENTS AND CONTIGENCIES _2
COMMITMENTS AND CONTIGENCIES (Details 1) | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Engagement Fee | $ 100,000 |
License subscription fee (50% due at Funding Date) | 375,000 |
Annua l maintenance subscription fee (first year) | 112,500 |
Implementation fee (50% due at Funding Date) | 162,500 |
Infrastructure implementation fee (50% due at Funding Date) | 32,500 |
Training fee (50% due at Funding Date) | 25,000 |
Total | 807,500 |
License subscription fee (second 50% due at Subscription Ready Date) | 375,000 |
Annual maintenance subscription fees ($112,500 annually) | 450,000 |
Implementation fees (50% due at Subscription Ready Date) | 162,500 |
Infrastructure implementation fees (50% due at Subscription Ready Date) | 32,500 |
Training fees (50% due at Subscription Ready Date) | 25,000 |
Infrastructure support fees ($6,000 monthly after Subscription Ready Date) | 360,000 |
Total | $ 1,405,000 |
STOCKHOLDERS' DEFICIT (Details)
STOCKHOLDERS' DEFICIT (Details) | Sep. 30, 2021USD ($) |
Equity [Abstract] | |
Convertible notes payable | $ 797,600 |
Convertible notes payable – related parties | 395,630 |
Accrued interest | 647,199 |
Accrued interest – related parties | 383,964 |
Excess fair value of equity issuance | 794,136 |
Excess fair value of equity issuance – related parties | 1,911,769 |
Total | $ 4,930,298 |
STOCKHOLDERS' DEFICIT (Details
STOCKHOLDERS' DEFICIT (Details 1) | 9 Months Ended |
Sep. 30, 2021$ / shares | |
Option Indexed to Issuer's Equity [Line Items] | |
Expected dividend yields | 0.00% |
Minimum [Member] | |
Option Indexed to Issuer's Equity [Line Items] | |
Market value of common stock on issuance date | $ 0.562 |
Expected price | 1.00% |
Expected volatility | 467.00% |
Expected term (in years) | 9 days |
Risk-free interest rate | 0.11% |
Maximum [Member] | |
Option Indexed to Issuer's Equity [Line Items] | |
Market value of common stock on issuance date | $ 3.50 |
Expected price | 203.60% |
Expected volatility | 608.00% |
Expected term (in years) | 2 years 9 months 18 days |
STOCKHOLDERS' DEFICIT (Detail_2
STOCKHOLDERS' DEFICIT (Details 2) - Option Activity [Member] | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Option Indexed to Issuer's Equity [Line Items] | |
Begining Balance | shares | 7,707,000 |
Options Outstanding, Begining Balance, Weighted Average Exercise Price | $ / shares | $ 0.21 |
Issued | shares | 2,447,000 |
Issued | $ / shares | $ 2.02 |
Cancelled | shares | (1,079,749) |
Cancelled | $ / shares | $ 0.36 |
Ending Balance | shares | 9,074,251 |
Options Outstanding, Ending Balance, Weighted Average Exercise Price | $ / shares | $ 0.56 |
Options outstanding weighted average remaining years | 2 years 9 months |
Option outstanding vested | shares | 3,010,785 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price | $ / shares | $ 1.11 |
Options outstanding weighted average remaining years, vested | 2 years 9 months 18 days |