Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 16, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | C-Bond Systems, Inc | |
Entity Central Index Key | 0001421636 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 | |
Entity Filer Number | 0-53029 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 225,922,177 | |
Entity Incorporation State Country Code | CO |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 |
CURRENT ASSETS: | |||
Cash | $ 173,592 | $ 77,211 | $ 101,487 |
Accounts receivable, net | 72,510 | 151,989 | |
Inventory | 42,805 | 14,820 | |
Prepaid expenses and other current assets | 6,387 | 18,577 | |
Total Current Assets | 295,294 | 262,597 | |
OTHER ASSETS: | |||
Property, plant and equipment, net | 21,635 | 32,776 | |
Right of use asset, net | 34,317 | 69,808 | |
Security deposit | 7,132 | 7,132 | |
Total Other Assets | 63,084 | 109,716 | |
TOTAL ASSETS | 358,378 | 372,313 | |
CURRENT LIABILITIES: | |||
Notes payable - related party | 400,000 | 400,000 | |
Convertible notes payable, net | 135,833 | ||
Note payable, current portion | 94,917 | ||
Accounts payable | 711,326 | 746,663 | |
Accrued expenses | 163,264 | 126,986 | |
Accrued compensation | 870,444 | 351,708 | |
Lease liability | 34,762 | 47,636 | |
Derivative liability | 890,410 | ||
Total Current Liabilities | 2,274,713 | 2,699,236 | |
LONG-TERM LIABILITIES: | |||
Note payable, net of current portion | 61,283 | ||
Lease liability, net of current portion | 22,216 | ||
Mandatorily redeemable convertible Series A preferred stock; $0.10 par value, 800,000 shares designated; 0 and 159,600 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively ($1.00 per share redemption and liquidation value) | 159,798 | ||
Total Long-term Liabilities | 61,283 | 182,014 | |
LiabilitiesCurrent | 2,335,996 | 2,881,250 | |
Commitments and Contingencies (See Note 10) | |||
SHAREHOLDERS' DEFICIT: | |||
Preferred stock: $0.10 par value, 2,000,000 shares authorized; 100,000 Series B and 100,000 Series C designated | |||
Common stock: $0.001 par value, 4,998,000,000 shares authorized; 215,147,177 and 116,749,633 issued and outstanding at September 30, 2020 and December 31, 2019, respectively | 215,147 | 116,750 | |
Additional paid-in capital | 39,689,002 | 37,266,328 | |
Accumulated deficit | (42,622,562) | (40,000,015) | |
Total Shareholders' Deficit | (2,718,413) | (2,616,937) | (1,964,277) |
Total Liabilities and Shareholders' Deficit | 358,378 | $ 372,313 | |
Series B Preferred Stock | |||
LONG-TERM LIABILITIES: | |||
Convertible preferred stock | 109,740 | 108,000 | |
Series C Preferred Stock | |||
LONG-TERM LIABILITIES: | |||
Convertible preferred stock | $ 631,055 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Preferred stock, par value | $ 0.10 | $ 0.10 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 4,998,000,000 | 4,998,000,000 |
Common stock, shares issued | 215,147,177 | 116,749,633 |
Common stock, shares outstanding | 215,147,177 | 116,749,633 |
Series A Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.10 | $ 0.10 |
Shares designated | 800,000 | 800,000 |
Preferred stock, shares issued | 0 | 159,600 |
Preferred stock, shares outstanding | 0 | 159,600 |
Redemption and liquidation value per share | $ 1 | $ 1 |
Series B Preferred Stock | ||
Preferred stock, par value | $ 0.10 | $ 0.10 |
Shares designated | 100,000 | 100,000 |
Preferred stock, shares issued | 108 | 108 |
Preferred stock, shares outstanding | 108 | 108 |
Share redemption and liquidation value | $ 1,000 | $ 1,000 |
Series C Preferred Stock | ||
Preferred stock, par value | $ 0.10 | $ 0.10 |
Shares designated | 100,000 | 100,000 |
Preferred stock, shares issued | 6,300 | 0 |
Preferred stock, shares outstanding | 6,300 | 0 |
Share redemption and liquidation value | $ 100 | $ 100 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
SALES | $ 252,940 | $ 171,383 | $ 356,770 | $ 416,178 |
COST OF SALES (excluding depreciation expense) | 65,638 | 30,230 | 106,307 | 86,367 |
GROSS PROFIT | 187,302 | 141,153 | 250,463 | 329,811 |
OPERATING EXPENSES: | ||||
Compensation and related benefits (including stock-based compensation of $272,648 and $913,348 for the three months ended September 30, 2020 and 2019, and $942,850 and $3,392,522 for the nine months ended September 30, 2020 and 2019, respectively) | 628,701 | 1,252,366 | 2,234,525 | 4,573,248 |
Research and development | 9,868 | 3,525 | 14,597 | 23,925 |
Professional fees | 117,065 | 171,882 | 404,145 | 681,986 |
General and administrative expenses | 97,126 | 106,628 | 279,601 | 352,962 |
Total Operating Expenses | 852,760 | 1,534,401 | 2,932,868 | 5,632,121 |
LOSS FROM OPERATIONS | (665,458) | (1,393,248) | (2,682,405) | (5,302,310) |
OTHER INCOME (EXPENSES): | ||||
Gain on debt extinguishment, net | 767,415 | 31,009 | 877,823 | 31,009 |
Other income | 8,000 | |||
Derivative income (expense) | 653,405 | (381,005) | (90,623) | (381,005) |
Interest expense | (274,966) | (58,421) | (732,547) | (171,060) |
Total Other Income (Expenses) | 1,145,854 | (408,417) | 62,653 | (521,056) |
NET (LOSS) INCOME | 480,396 | (1,801,665) | (2,619,752) | (5,823,366) |
PREFERRED STOCK DIVIDEND | (2,795) | (2,795) | ||
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 477,601 | $ (1,801,665) | $ (2,622,547) | $ (5,823,366) |
NET (LOSS) INCOME PER COMMON SHARE: | ||||
Basic and diluted | $ 0 | $ (0.02) | $ (0.02) | $ (0.07) |
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING: | ||||
Basic and diluted | 201,624,719 | 102,189,132 | 155,441,343 | 88,146,289 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Stock-based compensation | $ 272,648 | $ 913,348 | $ 942,850 | $ 3,392,522 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Shareholders' Deficit (Unaudited) - USD ($) | Non-vested, forfeitable common shares [Member] | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2018 | $ 80,459 | $ 31,863,693 | $ (32,759,275) | $ (815,123) |
Balance, shares at Dec. 31, 2018 | 80,459,006 | |||
Common shares issued for services and prepaid services | $ 685 | 113,775 | 114,460 | |
Common shares issued for services and prepaid services, shares | 685,060 | |||
Stock option exercise compensation | 7,500 | 7,500 | ||
Accretion of stock-based compensation | 909,375 | 909,375 | ||
Accretion of stock option and warrant expense | 586,934 | 586,934 | ||
Net income (loss) | (2,360,423) | (2,360,423) | ||
Balance at Mar. 31, 2019 | $ 81,144 | 33,481,277 | (35,119,698) | (1,557,277) |
Balance, shares at Mar. 31, 2019 | 81,144,066 | |||
Balance at Dec. 31, 2018 | $ 80,459 | 31,863,693 | (32,759,275) | (815,123) |
Balance, shares at Dec. 31, 2018 | 80,459,006 | |||
Net income (loss) | (5,823,366) | |||
Balance at Sep. 30, 2019 | $ 108,590 | 36,509,774 | (38,582,641) | (1,964,277) |
Balance, shares at Sep. 30, 2019 | 108,589,633 | |||
Balance at Mar. 31, 2019 | $ 81,144 | 33,481,277 | (35,119,698) | (1,557,277) |
Balance, shares at Mar. 31, 2019 | 81,144,066 | |||
Common shares issued for cash | $ 2,000 | 298,000 | 300,000 | |
Common shares issued for cash, shares | 2,000,000 | |||
Common shares issued for services and prepaid services | $ 500 | 46,500 | 47,000 | |
Common shares issued for services and prepaid services, shares | 500,000 | |||
Accretion of stock-based compensation | 519,792 | 519,792 | ||
Accretion of stock option and warrant expense | 589,029 | 589,029 | ||
Net income (loss) | (1,661,278) | (1,661,278) | ||
Balance at Jun. 30, 2019 | $ 83,644 | 34,934,598 | (36,780,976) | (1,762,734) |
Balance, shares at Jun. 30, 2019 | 83,644,066 | |||
Shares issued for conversion of accounts payable | $ 6,400 | 267,600 | 274,000 | |
Shares issued for conversion of accounts payable, shares | 6,400,000 | |||
Common shares issued for cash | $ 7,750 | 322,250 | 330,000 | |
Common shares issued for cash, shares | 7,750,000 | |||
Common shares issued for services and prepaid services | $ 10,500 | (10,500) | ||
Common shares issued for services and prepaid services, shares | 10,500,000 | |||
Issuance of warrants in connection with convertible debt | 44,530 | 44,530 | ||
Common shares issued for debt conversion | $ 296 | 11,704 | 12,000 | |
Common shares issued for debt conversion,shares | 295,567 | |||
Accretion of stock-based compensation | 416,667 | 416,667 | ||
Accretion of stock option and warrant expense | 522,925 | 522,925 | ||
Net income (loss) | (1,801,665) | (1,801,665) | ||
Balance at Sep. 30, 2019 | $ 108,590 | 36,509,774 | (38,582,641) | (1,964,277) |
Balance, shares at Sep. 30, 2019 | 108,589,633 | |||
Balance at Dec. 31, 2019 | $ 116,750 | 37,266,328 | (40,000,015) | (2,616,937) |
Balance, shares at Dec. 31, 2019 | 116,749,633 | |||
Shares issued for conversion of accounts payable | $ 151 | 5,907 | 6,058 | |
Shares issued for conversion of accounts payable, shares | 151,456 | |||
Common shares issued for cash | $ 7,000 | 273,000 | 280,000 | |
Common shares issued for cash, shares | 7,000,000 | |||
Common shares issued for conversion of accrued interest | $ 475 | 12,245 | 12,720 | |
Common shares issued for conversion of accrued interest, shares | 475,000 | |||
Common shares issued for services | $ 1,250 | 48,750 | 50,000 | |
Common shares issued for services, shares | 1,250,000 | |||
Issuance of warrants in connection with convertible debt | 8,676 | 8,676 | ||
Accretion of stock-based compensation | 170,072 | 170,072 | ||
Accretion of stock option and warrant expense | 191,308 | 191,308 | ||
Net income (loss) | (1,508,288) | (1,508,288) | ||
Balance at Mar. 31, 2020 | $ 125,626 | 37,976,286 | (41,508,303) | (3,406,391) |
Balance, shares at Mar. 31, 2020 | 125,626,089 | |||
Balance at Dec. 31, 2019 | $ 116,750 | 37,266,328 | (40,000,015) | (2,616,937) |
Balance, shares at Dec. 31, 2019 | 116,749,633 | |||
Common shares issued for services | 50,000 | |||
Net income (loss) | (2,619,752) | |||
Balance at Sep. 30, 2020 | $ 215,147 | 39,689,002 | (42,622,562) | (2,718,413) |
Balance, shares at Sep. 30, 2020 | 215,147,177 | |||
Balance at Mar. 31, 2020 | $ 125,626 | 37,976,286 | (41,508,303) | (3,406,391) |
Balance, shares at Mar. 31, 2020 | 125,626,089 | |||
Shares issued for conversion of acrued compensation | $ 203 | 16,047 | 16,250 | |
Shares issued for conversion of acrued compensation, shares | 203,125 | |||
Common shares issued for cash | $ 7,000 | 154,000 | 161,000 | |
Common shares issued for cash, shares | 7,000,000 | |||
Common shares issued for conversion of debt, accrued interest and fees | $ 12,800 | 78,565 | 91,365 | |
Common shares issued for conversion of debt, accrued interest and fees, shares | 12,800,000 | |||
Extinguishment loss related to conversion of debt | 123,455 | 123,455 | ||
Common shares issued for conversion of Series A preferred shares and dividends | $ 9,983 | 152,809 | 162,792 | |
Common shares issued for conversion of Series A preferred shares and dividends, shares | 9,982,616 | |||
Common shares issued for services | $ 7,450 | (7,450) | ||
Common shares issued for services, shares | 7,450,000 | |||
Issuance of warrants in connection with convertible debt | 5,822 | 5,822 | ||
Reclassification of put premium to equity upon conversion of Series A preferred | 37,438 | 37,438 | ||
Accretion of stock-based compensation | 117,515 | 117,515 | ||
Accretion of stock-based professional fees | 5,000 | 5,000 | ||
Accretion of stock option and warrant expense | 191,307 | 191,307 | ||
Net income (loss) | (1,591,860) | (1,591,860) | ||
Balance at Jun. 30, 2020 | $ 163,062 | 38,850,794 | (43,100,163) | (4,086,307) |
Balance, shares at Jun. 30, 2020 | 163,061,830 | |||
Common shares issued for cash | $ 21,538 | 258,462 | 280,000 | |
Common shares issued for cash, shares | 21,538,462 | |||
Common shares issued for conversion of debt, accrued interest and fees | $ 23,897 | 63,047 | 86,944 | |
Common shares issued for conversion of debt, accrued interest and fees, shares | 23,896,800 | |||
Extinguishment loss related to conversion of debt | 174,464 | 174,464 | ||
Common shares issued for conversion of Series A preferred shares and dividends | $ 6,150 | 46,482 | 52,632 | |
Common shares issued for conversion of Series A preferred shares and dividends, shares | 6,150,085 | |||
Common shares issued for services | $ 500 | 6,000 | 6,500 | |
Common shares issued for services, shares | 500,000 | |||
Reclassification of put premium to equity upon conversion of Series A preferred | 12,105 | 12,105 | ||
Accretion of stock-based compensation | 79,238 | 79,238 | ||
Accretion of stock-based professional fees | 5,000 | 5,000 | ||
Accretion of stock option and warrant expense | 193,410 | 193,410 | ||
Preferred stock dividends | (2,795) | (2,795) | ||
Net income (loss) | 480,396 | 480,396 | ||
Balance at Sep. 30, 2020 | $ 215,147 | $ 39,689,002 | $ (42,622,562) | $ (2,718,413) |
Balance, shares at Sep. 30, 2020 | 215,147,177 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (2,619,752) | $ (5,823,366) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization expense | 11,141 | 19,208 |
Amortization of debt discount to interest expense | 424,001 | 49,042 |
Accretion of preferred shares stated value to interest expense | 52,400 | |
Stock-based compensation | 942,850 | 3,392,522 |
Stock-based professional fees | 69,917 | 292,785 |
Bad debt expense | 19,400 | |
Interest expense related to put premium on convertible debt | 47,405 | 57,423 |
Derivative expense | 90,623 | 381,005 |
Non-cash gain on debt extinguishment | (877,823) | (31,009) |
Non-cash fees upon conversion | 2,500 | |
Lease costs | 401 | |
Change in operating assets and liabilities: | ||
Accounts receivable | 60,079 | 45,096 |
Inventory | (27,985) | (6,928) |
Prepaid expenses and other assets | 8,773 | 11,164 |
Accounts payable | 55,721 | 161,330 |
Accrued expenses | 88,771 | 51,097 |
Accrued compensation | 518,736 | 490,696 |
NET CASH USED IN OPERATING ACTIVITIES | (1,132,842) | (909,935) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from sale of common stock | 721,000 | 630,000 |
Proceeds from sale of series A preferred stock | 120,000 | |
Redemption of series A preferred stock | (104,762) | |
Proceeds from sale of series C preferred stock | 630,000 | |
Proceeds from exercise of stock options | 19,185 | |
Proceeds from note payable | 156,200 | 25,000 |
Repayment of note payable | (12,500) | |
Repayment of convertible note payable | (393,215) | (238,080) |
Proceeds from convertible notes payable | 100,000 | 459,250 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 1,229,223 | 882,855 |
NET INCREASE (DECREASE) IN CASH | 96,381 | (27,080) |
CASH, beginning of period | 77,211 | 128,567 |
CASH, end of period | 173,592 | 101,487 |
Cash paid for: | ||
Interest | 130,303 | 8,018 |
Income taxes | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Common stock issued as prepaid for services | 56,500 | 161,460 |
Common stock issued for accrued compensation | 16,250 | 274,000 |
Common stock issued for accounts payable | 6,058 | |
Common stock issued for conversion of debt and accrued interest | 188,529 | 12,000 |
Common stock issued for conversion of Series A preferred shares and related dividends | 215,424 | |
Preferred stock dividend accrued | 2,795 | |
Reclassification of put premium to equity | 49,543 | |
Increase in debt discount and derivative liability | 85,502 | 222,720 |
Increase in debt discount and paid-n capital for warrants | $ 14,498 | $ 44,530 |
Nature of Organization and Summ
Nature of Organization and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Organization C-Bond Systems, Inc. and its subsidiaries (the "Company") is a materials development company and sole owner, developer and manufacturer of the patented C-Bond technology. The Company is engaged in the implementation of proprietary nanotechnology applications and processes to enhance properties of strength, functionality and sustainability of brittle material systems. The Company's present primary focus is in the multi-billion-dollar glass and window film industry with target markets in the United States and internationally. Additionally, the Company has expanded its product line to include disinfection products. The Company operates in two divisions: C-Bond Transportation Solutions, which sells a windshield strengthening water repellant solution as well as a disinfection product, and C-Bond Safety Solutions, which sells multi-purpose glass strengthening primer and window film mounting solutions, ballistic-resistant film systems and disinfection products. On April 25, 2018, the Company (which was formerly known as West Mountain Alternative Energy, Inc.) and its subsidiary, WETM Acquisition Corp. ("Acquisition Sub") entered into an Agreement and Plan of Merger and Reorganization, or the Merger Agreement with C-Bond Systems, LLC which was organized as a limited liability company in Texas and started business on August 7, 2013 and had three subsidiaries. Pursuant to the terms of the Merger Agreement, on April 25, 2018, referred to as the Closing Date, the Acquisition Sub merged with and into C-Bond Systems, LLC, which was the surviving corporation. Accordingly, C-Bond Systems, LLC became a wholly-owned subsidiary of the Company. Any reference to contractual agreements throughout these footnotes may relate to C-Bond Systems Inc., or one of its subsidiaries. The Merger was treated as a reverse merger and recapitalization of C-Bond Systems, LLC for financial reporting purposes since the C-Bond Systems LLC members retained an approximate 87% controlling interest in the post-merger consolidated entity. C-Bond Systems, LLC is considered the acquirer for accounting purposes, and the Company's historical financial statements before the Merger will be replaced with the historical financial statements of C-Bond Systems, LLC and Subsidiaries before the Merger in future filings with the SEC. The balance sheets at their historical cost basis of both entities are combined at the merger date and the results of operations from the merger date forward will include the historical results of C-Bond Systems, LLC and its subsidiaries and results of C-Bond Systems, Inc. from the merger date forward. The Merger was intended to be treated as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended. Basis of Presentation and Principles of Consolidation The Company's unaudited condensed consolidated financial statements include the financial statements of its wholly-owned subsidiary, C-Bond Systems, LLC and its inactive wholly-owned subsidiaries, C-Bond R&D Solutions, LLC, C-Bond Industrial Solutions, LLC, and C-Bond Security Solutions, LLC. All significant intercompany accounts and transactions have been eliminated in consolidation. Management acknowledges its responsibility for the preparation of the accompanying unaudited condensed consolidated financial statements which reflect all adjustments, consisting of normal recurring adjustments, considered necessary in its opinion for a fair statement of its financial position and the results of its operations for the periods presented. The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (the "U.S. GAAP") for interim financial information and with the instructions Article 8-03 of Regulation S-X. Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole. Certain information and note disclosure normally included in consolidated financial statements prepared in accordance with U.S. GAAP has been condensed or omitted from these statements pursuant to such accounting principles and, accordingly, they do not include all the information and notes necessary for comprehensive consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the summary of significant accounting policies and notes to the consolidated financial statements for the years ended December 31, 2019 and 2018 of the Company which were included in the Company's Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 25, 2020. Going Concern These unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying unaudited condensed consolidated financial statements, the Company had a net loss of $2,619,752 for the nine months ended September 30, 2020. The net cash used in operations was $1,132,842 for the nine months ended September 30, 2020. Additionally, the Company had an accumulated deficit, shareholders' deficit, and working capital deficit of $42,622,562, $2,718,413 and $1,979,419, respectively, at September 30, 2020. These factors raise substantial doubt about the Company's ability to continue as a going concern for a period of twelve months from the issuance date of this report. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. The Company is seeking to raise capital through additional debt and/or equity financings to fund its operations in the future. Although the Company has historically raised capital from sales of common shares, preferred shares and from the issuance of convertible and other promissory notes, there is no assurance that it will be able to continue to do so. If the Company is unable to raise additional capital or secure additional lending in the near future, management expects that the Company will need to curtail its operations. These unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States 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 unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates during the nine months ended September 30, 2020 and 2019 include estimates for allowance for doubtful accounts on accounts receivable, the estimates for obsolete or slow moving inventory, the useful life of property and equipment, assumptions used in assessing impairment of long-term assets, the estimate of the fair value of the right of use asset and lease liability, the valuation of redeemable and mandatorily redeemable preferred stock, the fair value of derivative liabilities, the value of beneficial conversion features, and the fair value of non-cash equity transactions. Fair Value of Financial Instruments and Fair Value Measurements The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board's (the "FASB") accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Disclosures about the fair value of financial instruments are based on pertinent information available to the Company on September 30, 2020. Accordingly, the estimates presented in these consolidated financial statements are not necessarily indicative of the amounts that could be realized on disposition of the financial instruments. FASB ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows: Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2—Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3—Inputs are unobservable inputs which reflect the reporting entity's own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The carrying amounts reported in the condensed consolidated balance sheets for cash, accounts receivable, notes payable – related party, convertible note payable, accounts payable, accrued expenses, accrued compensation, and subscription payable approximate their fair market value based on the short-term maturity of these instruments. Assets and liabilities measured at fair value on a recurring basis at September 30, 2020 and December 31, 2019 is as follows: At At Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Derivative liabilities - - $ - - - $ 890,410 A roll forward of the level 3 valuation financial instruments is as follows: For the Nine Months Ended 2020 2019 Balance at beginning of period $ 890,410 $ - Initial valuation of derivative liabilities included in debt discount 85,502 222,720 Initial valuation of derivative liabilities included in derivative expense 160,416 371,103 Gain on extinguishment of debt related to repayment/conversion of debt (1,066,535 ) - Change in fair value included in derivative expense (69,793 ) 9,902 Balance at end of period $ - $ 603,725 ASC 825-10 "Financial Instruments", allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments. Cash and Cash Equivalents For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. The Company has no cash equivalents as of September 30, 2020 and December 31, 2019. Accounts Receivable The Company recognizes an allowance for losses on accounts receivable in an amount equal to the estimated probable losses net of recoveries. The allowance is based on an analysis of historical bad debt experience, current receivables aging, and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. The expense associated with the allowance for doubtful accounts is recognized as general and administrative expense. Inventory Inventory, consisting of raw materials and finished goods, are stated at the lower of cost and net realizable value utilizing the first-in, first-out (FIFO) method. A reserve is established when management determines that certain inventories may not be saleable. If inventory costs exceed expected net realizable value due to obsolescence or quantities in excess of expected demand, the Company will record reserves for the difference between the cost and the net realizable value. These reserves are recorded based on estimates and included in cost of sales. Property and Equipment Property and equipment are stated at cost and are depreciated using the straight-line method over their estimated useful lives, which range from three to ten years. Leasehold improvements are depreciated over the shorter of the useful life or lease term including scheduled renewal terms. Maintenance and repairs are charged to expense as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of these assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. Impairment of Long-Lived Assets In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset's estimated fair value and its book value. Derivative Financial Instruments The Company has certain financial instruments that are embedded derivatives. The Company evaluates all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815-10-05-4, Derivatives and Hedging Contracts in Entity's Own Equity In July 2017, FASB issued ASU No. 2017-11, Earnings Per Share Distinguishing Liabilities from Equity Derivatives and Hedging Accounting for Certain Financial Instruments with Down Round Features Revenue Recognition The Company follows Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers The Company sells its products which include standard warranties primarily to distributors and authorized dealers. Product sales are recognized when the product is shipped to the customer and title is transferred and are recorded net of any discounts or allowances. The warranty does not represent a separate performance obligation. Cost of Sales Cost of sales includes inventory costs, packaging costs and warranty expenses. Shipping and Handling Costs Shipping and handling costs incurred for product shipped to customers are included in general and administrative expenses and amounted to $29,752 and $27,715 for the nine months ended September 30, 2020 and 2019, respectively. Shipping and handling costs charged to customers are included in sales. Research and Development Research and development costs incurred in the development of the Company's products are expensed as incurred and includes costs such as labor, materials, and other allocated costs incurred. For the nine months ended September 30, 2020 and 2019, research and development costs incurred in the development of the Company's products were $14,597 and $23,925, respectively, and are included in operating expenses on the accompanying unaudited condensed consolidated statements of operations. Warranty Liability The Company provides limited warranties on its products for product defects for periods ranging from 12 months to the life of the product. Warranty costs may include the cost of product replacement, refunds, labor costs and other costs. Allowances for estimated warranty costs are recorded during the period of sale. The determination of such allowances requires the Company to make estimates of product warranty claim rates and expected costs to repair or to replace the products under warranty. The Company currently establishes warranty reserves based on historical warranty costs for each product line combined with liability estimates based on the prior 12 months' sales activities. If actual return rates and/or repair and replacement costs differ significantly from the Company's estimates, adjustments to recognize additional cost of sales may be required in future periods. Historically the warranty accrual and the expense amounts have been immaterial. The warranty liability is included in accrued expenses on the accompanying unaudited condensed consolidated balance sheets and amounted $26,833 at September 30, 2020 and December 31, 2019, respectively. For the nine months ended September 30, 2020 and 2019, warranty expense amounted to $0 and $4,650, respectively, and is included in cost of sales on the accompanying unaudited condensed consolidated statements of operations. For the nine months ended September 30, 2020 and 2019, a roll forward of warranty liability is as follows: For the Nine Months Ended 2020 2019 Balance at beginning of period $ 26,933 $ 24,190 Increase in estimated warranty liability - 4,650 Warranty expenses incurred (100 ) (1,837 ) Balance at end of period $ 26,833 $ 27,003 Advertising Costs The Company participates in various advertising programs. All costs related to advertising of the Company's products are expensed in the period incurred. For the nine months ended September 30, 2020 and 2019, advertising costs charged to operations were $30,900 and $31,692, respectively and are included in general and administrative expenses on the accompanying unaudited condensed consolidated statements of operations. These advertising expenses do not include cooperative advertising and sales incentives which have been deducted from sales. Federal and State Income Taxes The Company accounts for income tax using the liability method prescribed by ASC 740, "Income Taxes". Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. The Company follows the accounting guidance for uncertainty in income taxes using the provisions of Accounting Standards Codification (ASC) 740 "Income Taxes Stock-Based Compensation Stock-based compensation is accounted for based on the requirements of ASC 718 – "Compensation –Stock Compensation Improvements to Employee Share-Based Payment Loss Per Common Share ASC 260 "Earnings Per Share", requires dual presentation of basic and diluted earnings per common share ("EPS") with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilutive securities and non-vested forfeitable shares. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares or resulted in the issuance of common shares that then shared in the earnings of the entity. Basic net loss per common share is computed by dividing net loss available to members by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of common shares, common share equivalents and potentially dilutive securities outstanding during each period. Potentially dilutive common shares consist of stock options and non-vested forfeitable shares (using the treasury stock method) and shares issuable upon conversion of convertible notes payable (using the as-if converted method). These common share equivalents may be dilutive in the future. All potentially dilutive common shares were excluded from the computation of diluted common shares outstanding as they would have an anti-dilutive impact on the Company's net losses and consisted of the following: September 30, 2020 2019 Convertible notes - 16,666,667 Stock options 8,445,698 11,445,698 Warrants 2,050,000 1,750,000 Series B preferred stock 17,142,857 - Series C preferred stock 100,000,000 - Non-vested, forfeitable common shares 23,851,926 16,375,299 Leases In February 2016, the FASB issued ASU 2016-02, " Leases (Topic 842)" Operating lease ROU assets represents the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company use an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and is included in general and administrative expenses in the unaudited condensed consolidated statements of operations. Segment Reporting During the nine months ended September 30, 2020 and 2019, the Company operated in one business segment. Risk Factors The Company's results of operations could be adversely affected by general conditions in the global economy and in the global financial markets, including conditions that are outside of its control, including the impact of health and safety concerns, such as those relating to the current COVID-19 outbreak. The most recent global financial crisis caused extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn could result in a variety of risks to our business, including weakened demand for the company's products and its ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could strain the Company's domestic and international customers, possibly resulting in delays in customer payments. Any of the foregoing could harm the Company's business and it cannot anticipate all the ways in which the current economic climate and financial market conditions could adversely impact the Company's business. Recent Accounting Pronouncements In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement In December 2019, the FASB issued Accounting Standards Update No. 2019-12 – Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes, as part of its initiative to reduce complexity in the accounting standards. The amendments in ASU 2019-12 eliminate certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also clarifies and simplifies other aspects of the accounting for income taxes. The amendments in ASU 2019-12 will become effective for us as of the beginning of our 2022 fiscal year. Early adoption is permitted, including adoption in any interim period. We are currently evaluating the impact that this guidance will have upon our financial position and results of operations, if any. In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exception. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of the standard on the condensed consolidated financial statements. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. |
Accounts Receivable
Accounts Receivable | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE | NOTE 3 – ACCOUNTS RECEIVABLE At September 30, 2020 and December 31, 2019, accounts receivable consisted of the following: September 30, December 31, Accounts receivable $ 91,910 $ 151,989 Less: allowance for doubtful accounts (19,400 ) - Accounts receivable, net $ 72,510 $ 151,989 For the nine months ended September 30, 2020 and 2019, bad debt expense amounted to $19,400 and $0, respectively. |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORY | NOTE 4 – INVENTORY At September 30, 2020 and December 31, 2019, inventory consisted of the following: September 30, December 31, Raw materials $ 12,930 $ 12,250 Finished goods 29,875 2,570 Inventory $ 42,805 $ 14,820 |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 5 – PROPERTY AND EQUIPMENT At September 30, 2020 and December 31, 2019, property and equipment consisted of the following: Useful Life 2020 2019 Machinery and equipment 5 - 7 years $ 52,184 $ 52,184 Furniture and office equipment 3 - 7 years 45,063 45,063 Vehicles 5 years 68,341 68,341 Leasehold improvements 3 years 16,701 16,701 182,289 182,289 Less: accumulated depreciation (160,654 ) (149,513 ) Property and equipment, net $ 21,635 $ 32,776 For the nine months ended September 30, 2020 and 2019, depreciation and amortization expense is included in general and administrative expenses and amounted to $11,141 and $19,208, respectively. |
Convertible Notes Payable
Convertible Notes Payable | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES PAYABLE | NOTE 6 – CONVERTIBLE NOTES PAYABLE On September 6, 2019 and on December 9, 2019, the Company closed on Securities Purchase Agreements (the "SPAs") with an accredited investor. Pursuant to the terms of the September 6, 2019 and December 9, 2019 SPAs, the Company issued and sold to this investor convertible promissory notes in the aggregate principal amount of $430,000 and warrants to purchase up to 1,050,000 shares of the Company's common stock. The Company received net proceeds of $382,250, net of original issue discount of $45,000 and origination fees of $2,750. These Notes bore interest at 12% per annum. The September 6, 2019 Note was due and payable on June 6, 2020 and the December 9, 2019 Note was due and payable on September 9, 2020. The September 6, 2019 Note and the December 9, 2019 were repaid in full on September 11, 2020. On March 30, 2020, the Company closed on a Securities Purchase Agreement (the "March 2020 SPA") with an accredited investor. Pursuant to the terms of the March 2020 SPA, the Company issued and sold to this investor a convertible promissory note in the aggregate principal amount of $57,750 and a warrant to purchase up to 144,375 shares of the Company's common stock. The Company received net proceeds of $50,000, net of original issue discount of $5,000 and origination fees of $2,750. The Note bore interest at 12% per annum and was due and payable on December 30, 2020. The March 30, 2020 Note was repaid in full on August 24, 2020 and the 144,375 warrants were cancelled. On April 23, 2020, the Company closed on a Securities Purchase Agreement (the "April 2020 SPA") with an accredited investor. Pursuant to the terms of the April 2020 SPA, the Company issued and sold to this investor a convertible promissory note in the aggregate principal amount of $57,750 and a warrant to purchase up to 144,375 shares of the Company's common stock. The Company received net proceeds of $50,000, net of original issue discount of $5,000 and origination fees of $2,750. The Note bore interest at 12% per annum and was due and payable on January 23, 2021. The April 23, 2020 Note was repaid in full on August 24, 2020 and the 144,375 warrants were cancelled. In accordance with the SPAs, the March 2020 SPA, the April 2020 SPA and the related Notes, subject to the adjustments as defined in the respective SPA and Note, the conversion price (the "Conversion Price") equaled the lesser of: (i) the lowest Trading Price (as defined below) during the previous twenty-five Trading Day period ending on the latest complete Trading Day prior to the date of this Note, and (ii) the Variable Conversion Price (as defined below) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Company). The "Variable Conversion Price" meant 60% multiplied by the Market Price (as defined herein) (representing a discount rate of 40%). "Market Price" meant the lowest Trading Price (as defined below) for the Company's common stock during the twenty-five Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. "Trading Price" meant, for any security as of any date, the lesser of: (i) the lowest trade price on the applicable trading market as reported by a reliable reporting service ("Reporting Service") designated by the Holder or (ii) the closing bid price on the applicable trading market as reported by a Reporting Service designated by the Holder. The Company had the option to prepay the Note at any time prior to its six-month anniversary, subject to pre-payment charges as detailed in the Note, which it did on August 24, 2020. The SPAs and Notes contained customary representations, warranties and covenants, including certain restrictions on the Company's ability to sell, lease or otherwise dispose of any significant portion of its assets. The Investor also had the right of first refusal with respect to any future equity offerings (or debt with an equity component) conducted by the Company until the 12-month anniversary of the Closing. The SPA and the Note also provided for certain events of default, including, among other things, payment defaults, breaches of representations and warranties, bankruptcy or insolvency proceedings, delinquency in periodic report filings with the Securities and Exchange Commission, and cross default with other agreements. Upon the occurrence of an event of default, this investor could declare the outstanding obligations due and payable at significant applicable default rates and take such other actions as set forth in the Notes. The Warrants are exercisable at any time on or after the date of the issuance and entitles this investor to purchase shares of the Company's common stock for a period of five years from the initial date the warrants become exercisable. Under the terms of the Warrants, the holder is entitled to exercise the Warrant to purchase up to an aggregate of 1,050,000 shares of the Company's common stock at a fixed exercise price of $0.01. These Notes and related Warrants included a down-round provision under which the Notes conversion price and warrant exercise price could have been affected by future equity offerings undertaken by the Company. In connection with the issuance of the Notes, the Company determined that the terms of the Note contain terms that are not fixed monetary amounts at inception. Accordingly, under the provisions of ASC 815-40 - Derivatives and Hedging – Contracts in an Entity's Own Stock In connection with the issuance of the March 30, 2020 and April 23, 2020 Notes, in March and April 2020, on the initial measurement dates, the fair values of the embedded conversion option derivatives of $245,918 was recorded as a derivative liability and was allocated as a debt discount up to the net proceeds of the Notes of $85,502, with the remainder of $160,416 charged to current period operations as initial derivative expense. During the nine months ended September 30, 2020, at the end of each period and upon conversion or repayment, the Company revalued the embedded conversion option derivative liabilities and recorded a derivative gain of $69,793. In connection with the revaluation and the initial derivative expense, the Company recorded an aggregate derivative expense of $90,623 during the nine months ended September 30, 2020. In connection with the warrants issued in connection with the March 2020 and April 2020 Notes, the Company determined that the terms of the warrants contain terms that are fixed monetary amounts at inception and, accordingly, the warrant was not considered a derivative. The fair value of the warrant was determined using the Binomial valuation model. In connection with the issuance of this warrants, on the initial measurement date, the relative fair value of the warrants of $14,498 was recorded as a debt discount and an increase in paid-in capital. During the nine months ended September 30, 2020, the fair value of the derivative liabilities and warrants was estimated using the Binomial valuation model with the following assumptions: 2020 Dividend rate — % Term (in years) 0.25 to 5.00 years Volatility 293.4% to 345.7 % Risk—free interest rate 0.12% to 0.39 % During the nine months ended September 30, 2020, the Company issued 37,171,800 shares its common stock upon the conversion of principal of $152,285, accrued interest of $36,244 and fees of $2,500. Additionally, the Company repaid principal of $393,215 and accrued interest of $15,917. Upon conversion, exercise or repayment, the respective derivative liability was marked to fair value at the conversion, repayment or exercise date and then the related fair value amount of $1,066,535 was reclassified to other income as part of gain or loss on extinguishment. Additionally, upon repayment, the Company and Investor agreed to cancel 288,750 warrants and agreed to modify the exercise price of the remaining warrants to $0.01 per share (see Note 8). As of September 30, 2020, all of these convertible notes were either converted or repaid off resulting in a zero balance. For the nine months ended September 30, 2020 and 2019, interest expense related to convertible notes amounted to $551,100 and $116,555, including amortization of debt discount and debt premium charged to interest expense of $409,668 and $106,465, respectively. The weighted average interest rate on the above notes and notes payable – related party (see note 7) during the nine months ended September 30, 2020 and 2019 was 13.2% and 12.8%, respectively. At September 30, 2020 and December 31, 2019, convertible notes payable consisted of the following: September 30, December 31, Principal amount $ - $ 430,000 Less: unamortized debt discount - (294,167 ) Convertible notes payable, net $ - $ 135,833 |
Notes Payable - Related Party
Notes Payable - Related Party | 9 Months Ended |
Sep. 30, 2020 | |
Notes Payable - Related Party [Abstract] | |
NOTES PAYABLE - RELATED PARTY | NOTE 7 – NOTES PAYABLE – RELATED PARTY On November 14, 2018, the Company entered into a Revolving Credit Facility Loan and Security Agreement ("Loan Agreement") and a Secured Promissory Note (the "Note") with BOCO Investments, LLC (the "Lender"), a beneficial shareholder of the Company. Subject to and in accordance with the terms and conditions of the Loan Agreement and the Note, the Lender agrees to lend to the Company up to $400,000 (the "Maximum Loan Amount") against the issuance and delivery by the Company of the Note for use as working capital and to assist in inventory acquisition. The Lender loaned an initial amount of $200,000 at closing and loaned an additional $200,000 to the Company in December 2018, and may loan at any time and from time to time through November 14, 2020, up to an aggregate amount not to exceed the Maximum Loan Amount. The Company must repay all principal, interest and other amounts outstanding on or before November 14, 2020. The Company's obligations under the Loan Agreement and the Note are secured by a first-priority security interest in substantially all of the Company's assets (the "Collateral"). The outstanding principal advanced to Company pursuant to the Loan Agreement bears interest at the rate of 12% per annum, compounded annually. Upon the occurrence of an Event of Default under the Loan Agreement and Note, all amounts then outstanding (including principal and interest) shall bear interest at the rate of 18% per annum, compounded annually until the Event of Default is cured. Additionally, at or prior to December 31, 2018, the Company should have achieved an accounts receivable balance plus inventory equal to the unpaid principal balance of the Note (the "Minimum Asset Amount"). In the event that the Company's accounts receivable balance plus inventory balance is less than paid principal balance of the Note as of December 31, 2018 , Commencing on January 10, 2019 and on or before the l0th day of each month thereafter, the Company shall pay Lender all interest accrued on outstanding principal under the Loan Agreement and Notes as of the end of the month then concluded. Upon the occurrence of any Event of Default and at any time thereafter, Lender may, at its option, declare any and all obligations immediately due and payable without demand or notice. As of September 30, 2020 and December 31, 2019, the Company did not meet the Minimum Asset Amount covenant as defined in the Loan Agreement, failed to timely pay interest payments due, and has violated other default provisions. Accordingly, the note balance due of $400,000 has been reflected as a current liability on the accompanying consolidated balance sheet and interest shall accrue at 18% per annum. The Loan Agreement and Note contain customary representations, warranties and covenants, including certain restrictions on the Company's ability to incur additional debt or create liens on its property. The Loan Agreement and the Note also provide for certain events of default, including, among other things, payment defaults, breaches of representations and warranties, breach of covenants, and bankruptcy or insolvency proceedings, the occurrence of which, after any applicable cure period, would permit Lender, among other things, to accelerate payment of all amounts outstanding under the Loan Agreement and the Note, as applicable, and to exercise its remedies with respect to the Collateral, including the sale of the Collateral. For the nine months ended September 30, 2020 and 2019, interest expense related to this Note amounted to $54,049 and $53,852, respectively. |
Note Payable
Note Payable | 9 Months Ended |
Sep. 30, 2020 | |
Notes Payable [Abstract] | |
NOTE PAYABLE | NOTE 8 – NOTE PAYABLE On April 28, 2020, the Company entered into a Paycheck Protection Program Promissory Note (the "PPP Note") with respect to a loan of $156,200 (the "PPP Loan") from Comerica Bank. The PPP Loan was obtained pursuant to the Paycheck Protection Program (the "PPP") of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES act") administered by the U.S. Small Business Administration ("SBA"). The PPP Loan matures on April 28, 2022 and bears interest at a rate of 1.00% per annum. The PPP Loan is payable in 18 equal monthly payments of approximately $8,900 commencing November 1, 2020. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. The Company may apply to have the loan forgiven pursuant to the terms of the PPP if certain criteria are met. For the nine months ended September 30, 2020, interest expense related to this Note amounted to $668. |
Shareholders' Deficit
Shareholders' Deficit | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
SHAREHOLDERS' DEFICIT | NOTE 9 - SHAREHOLDERS' DEFICIT Preferred Stock Series A Preferred stock On October 16, 2019, the Company filed an Amendment to its Articles of Incorporation to designate a series of preferred stock, the Series A Convertible Preferred Stock, with the Secretary of State of the State of Colorado. The Certificate of Designations established 800,000 shares of the Series A Preferred Stock, par value $0.10, having such designations, preferences, and rights as determined by the Company's Board of Directors in its sole discretion, in accordance with the Company's Articles of Incorporation and Amended and Restated Bylaws. The Certificate of Designations, Preferences, Rights, and Limitations of Series A Convertible Preferred Stock ("Certificate of Designations") provides that the Series A Convertible Preferred Stock shall have no right to vote on any matters on which the common shareholders are permitted to vote. The Series A Convertible Preferred Stock ranks senior with respect to dividends and right of liquidation to the Company's common stock and junior with respect to dividends and right of liquidation to all existing and future indebtedness of the Company and existing and outstanding preferred stock of the Company. Each share of Series A Preferred Stock shall have a stated value of $1.00 (the "Stated Value"). Upon the redemption or conversion of all of the Series A Preferred stock, on August 25, 2020, the Company filed a Certificate of Elimination with the Secretary of State of the State of Colorado to eliminate the Series A Convertible Preferred Stock. Each share of Series A Preferred Stock carried an annual dividend in the amount of 4% of the Stated Value (the "Dividend Rate"), which was cumulative and compounded daily, payable solely upon redemption, liquidation or conversion. Upon the occurrence of an Event of Default, the Dividend Rate shall automatically increase to 22%. At any time during the periods set forth on the table immediately following this paragraph (the "Redemption Periods") provided that an Event of Default has not occurred, the Company had the right, at the Company's option, to redeem all or any portion of the shares of Series A Preferred Stock for an amount equal to (i) the total number of Series A Preferred Stock held by the applicable Holder multiplied by (ii) the Stated Value plus the Adjustment Amount, (the "Optional Redemption Amount"). The Adjustment Amount shall equal to any accrued but unpaid dividends, the default adjustment amounts, as defined in the Certificate of Designation, if applicable, failure to deliver fees, if any, and any other fees as set forth in the Certificate of Designation. After the expiration of 180 days following the Issuance Date of the applicable shares of Series A Preferred Stock, the Company shall have no right of redemption. Redemption Period Redemption Percentage 1. The period beginning on the date of the issuance of shares of Series A Preferred Stock and ending on the date which is sixty days following the Issuance Date. 100 % 2. The period beginning on the date that is sixty-one days from the Issuance Date and ending ninety days following the Issuance Date. 107 % 3. The period beginning on the date that is ninety-one days from the Issuance Date and ending one hundred twenty days following the Issuance Date. 112 % 4. The period beginning on the date that is one hundred twenty-one days from the Issuance Date and ending one hundred fifty days following the Issuance Date. 117 % 5. The period beginning on the date that is one hundred fifty-one days from the Issuance Date and ending one hundred eighty days following the Issuance Date. 120 % On the earlier to occur of (i) the date which is eighteen months following the Issuance Date and (ii) the occurrence of an Event of Default (the "Mandatory Redemption Date"), the Company shall redeem all of the shares of Series A Preferred Stock of the Holders (which have not been previously redeemed or converted). Within five days of the Mandatory Redemption Date, the Company shall make payment to each Holder of an amount in cash equal to (i) the total number of Series A Preferred Stock held by such Holder multiplied by (ii) the Stated Value plus the Adjustment Amount. The Holder of Series A Preferred stock had the right from time to time, and at any time during the period beginning on the date which is 180 days following the issuance date, to convert all or any part of the outstanding Series A Preferred Stock into the Company's common stock. The conversion price (the "Conversion Price") shall equal the Variable Conversion Price (as defined below) (subject to equitable adjustments by the Company relating to the Company's securities or the securities of any subsidiary of the Company, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The "Variable Conversion Price" shall mean 81% multiplied by the Market Price (as defined below) (representing a discount rate of 19%). "Market Price" means the average of the two lowest Trading Prices for the common stock during the ten Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. "Trading Price" means, for any security as of any date, the closing bid price on the applicable trading market as reported by a reliable reporting service designated by the Holder. "Trading Day" shall mean any day on which the Common Stock is tradable for any period on the OTC, or on the principal securities exchange or other securities market on which the common stock is then being traded. The Company has accounted for the Series A Preferred Stock as stock settled debt under ASC 480. During the nine months ended September 30, 2020, the Company recorded an aggregate debt premium of $42,553 with a charge to interest expense. The Company did not record any debt premium during the nine months ended September 30, 2019. During October and November 2019, the Company entered into a Series A Preferred Stock Purchase Agreements with an accredited investor whereby the investor agreed to purchase an aggregate of 159,600 unregistered shares of the Company's Series A Preferred stock, par value $0.10 for $133,000, or $0.833 per share. During October and November 2019, the Company received the cash proceeds of $127,000, net of fees of $6,000. This discount of $6,000 was recognized and is being amortized to interest expense over the redemption terms of the Series A preferred shares or the date that the debt is convertible into common shares, whichever is shorter. During the nine months ended September 30, 2020, the Company entered into Series A Preferred Stock Purchase Agreements with an accredited investor whereby the investor agreed to purchase an aggregate of 154,800 unregistered shares of the Company's Series A Preferred stock, par value $0.10 for $129,000, or $0.833 per share. During the nine months ended September 30, 2020, the Company received cash proceeds of $120,000, net of fees of $9,000. This discount of $9,000 was recognized and is being amortized to interest expense over the redemption terms of the Series A preferred shares or the date that the debt is convertible into common shares, whichever is shorter. For the nine months ended September 30, 2020, amortization of discount charged to interest expense amounted to $14,333. During the nine months ended September 30, 2020, the Company accrued a dividend payable of $4,852 which was included in interest expense on the accompanying condensed consolidated statement of operations. As of September 30, 2020, the Company had paid or converted into common stock all accrued dividends due. During the nine months ended September 30, 2020, the Company issued 16,132,701 shares its common stock upon the conversion of 211,200 shares of Series A preferred with a stated redemption value of $211,200 and related accrued dividends payable of $4,224. The conversion price was based on contractual terms of the related Series A preferred shares. Upon conversion, the Company reclassified put premium of $49,543 to paid-in capital. Additionally, on August 24, 2020, the Company settled with the investor and redeemed the remaining 103,200 Series A preferred shares for a cash payment of $117,047 which included the redemption of stated value of $103,200, accrued dividends of $1,562, and redemption penalties of $12,285 which was included in interest expense on the accompanying condensed consolidated statement of operations. Additionally, upon repayment, the Company wrote off the remaining put premium balance of $24,207 and recorded a gain on extinguishment of $24,207. The Company has classified the Series A Preferred Stock as a liability in accordance with ASC Topic No. 480, " Distinguishing from Equity The mandatorily redeemable Series A preferred stock is recorded at the liquidation preference, less unamortized discounts plus the debt premium and accrued dividends due, on the Company's accompanying consolidated statements of operations as of December 31, 2019 which in total exceeds the redemption value. As of September 30, 2020, the net Series A Preferred Stock balance was $0 and fully redeemed. The Company recognized interest expense on the Series A Preferred Stock of $126,423 for the nine months ended September 30, 2020, which includes accretion expense, put premium on stock-settled debt, accrued dividends, amortization of offering costs and redemption penalties paid . Series B Preferred Stock On December 12, 2019, the Company filed an Amendment to its Articles of Incorporation to designate a series of preferred stock, the Series B Convertible Preferred Stock (the "Series B"), with the Secretary of State of the State of Colorado. The Certificate of Designations established 100,000 shares of the Series B, par value $0.10, having such designations, preferences, and rights as determined by the Company's Board of Directors in its sole discretion, in accordance with the Company's Articles of Incorporation and Amended and Restated Bylaws. The Certificate of Designations became effective with the State of Colorado upon filing. The Series B ranks senior with respect to dividends and right of liquidation with the Company's common stock and junior to all existing and future indebtedness of the Company. The Series B has a stated value per share of $1,000, subject to adjustment as provided in the Certificate of Designations (the "Stated Value"), and a dividend rate of 2% per annum of the Stated Value. The Series B is subject to redemption (at Stated Value, plus any accrued, but unpaid dividends (the "Liquidation Value")) by the Company no later than three years after a Deemed Liquidation Event and at the Company's option after one year from the issuance date of the Series B, subject to a ten-day notice (to allow holder conversion). A "Deemed Liquidation Event" will mean: (a) a merger or consolidation in which the Company is a constituent party or a subsidiary of the Company is a constituent party and the Company issues shares of its capital stock pursuant to such merger or consolidation, except any such merger or consolidation involving the Company or a subsidiary in which the shares of capital stock of the Company outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital stock of the surviving or resulting corporation or, if the surviving or resulting corporation is a wholly-owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation; or (b) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any subsidiary of the Company of all or substantially all the assets of the Company and its subsidiaries taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Company if substantially all of the assets of the Company and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Company. The Series B is convertible at the option of a holder or if the closing price of the common stock exceeds 400% of the Conversion Price for a period of twenty consecutive trading days, at the option of the Company. Conversion Price means a price per share of the common stock equal to 100% of the lowest daily volume weighted average price of the common stock during the two years preceding or subsequent two years following the Issuance Date, subject to adjustment as otherwise provided in the Certificate of Designations (the "Conversion Price"). In the event of a conversion of any Series B, the Company shall issue to the holder a number of shares of common stock equal to the Liquidation Value multiplied by the number of shares of Series B Preferred Stock being converted divided by the Conversion Price. Upon liquidation of the Company after payment or provision for payment of liabilities of the Company and after payment or provision for any liquidation preference payable to the holders of any preferred stock ranking senior to the Series B but prior to any distribution to the holders of Common Stock or preferred stock ranking junior upon liquidation to the Series B, the holders of Series B will be entitled to be paid out of the assets of the Company available for distribution to its stockholders an amount with respect to each share of Series B equal to the Liquidation Value. The Series B has voting rights per Series B Share equal to the Liquidation Value per share, divided by the Conversion Price, multiplied by fifty (50). Subject to applicable Colorado law, the holders of Series B will have functional voting control in situations requiring shareholder vote. The Series B Preferred Stock will vest on May 1, 2021, subject to acceleration in the event of conversion or redemption. On December 12, 2019, the Board of Directors of the Company agreed to satisfy $108,000 of accrued compensation owed to its directors and executive officers (collectively, the "Management") through a Liability Reduction Plan (the "Plan"). Under this Plan, Management agreed to accept 108 shares of the Company's Series B convertible preferred stock in settlement of accrued compensation. These Series B preferred share issuances with redemption provisions that permit the issuer to settle in either cash or common stock, at the option of the issuer, were evaluated to determine whether temporary or permanent equity classification on the consolidated balance sheet was appropriate. As per the terms of the Series B preferred stock agreements, Series B preferred stock is redeemable for cash and other assets on the occurrence of a deemed liquidation event. A deemed liquidation event includes a change of control which is not in the Company's control. As such, since Series B preferred stock is redeemable upon the occurrence of an event that is not within the Company's control, the Series B preferred stock is classified as temporary equity. The Company concluded that the Series B Preferred Stock represented an equity host and, therefore, the redemption feature of the Series B Preferred Stock was not considered to be clearly and closely related to the associated equity host instrument. However, the redemption features did not meet the net settlement criteria of a derivative and, therefore, were not considered embedded derivatives that required bifurcation. The Company also concluded that the conversion rights under the Series B Preferred Stock were clearly and closely related to the equity host instrument. Accordingly, the conversion rights feature on the Series B Preferred Stock were not considered an embedded derivative that required bifurcation. During the nine months ended September 30, 2020, the Company accrued a dividend payable of $1,740 which was included in preferred stock dividends on the accompanying condensed consolidated statement of shareholders' deficit. As of September 30, 2020, the net Series B Preferred Stock balance was $109,740 which includes stated liquidation value of $108,000 and accrued dividends payable of $1,740. Series C Preferred Stock On August 20, 2020, the Company filed an Amendment to its Articles of Incorporation to designate a series of preferred stock, the Series C Convertible Preferred Stock (the "Series C"), with the Secretary of State of the State of Colorado. The Certificate of Designations established 100,000 shares of the Series C, par value $0.10, having such designations, preferences, and rights as determined by the Company's Board of Directors in its sole discretion, in accordance with the Company's Articles of Incorporation and Amended and Restated Bylaws. The Certificate of Designations became effective with the State of Colorado upon filing. The Series C ranks senior with respect to dividends and right of liquidation with the Company's common stock and junior to all existing and future indebtedness of the Company. The Series C has a stated value per share of $100, subject to adjustment as provided in the Certificate of Designations (the "Stated Value"), and a dividend rate of 2% per annum of the Stated Value. The Company has no option to redeem the Series C Preferred Stock. If the Company determines to liquidate, dissolve or wind-up its business and affairs, or effect any Deemed Liquidation Event as defined below, each of which has been approved by the holders of a majority of the shares of Series C Preferred Stock then outstanding, the Company will redeem all of the shares of Series C Preferred Stock outstanding immediately prior to such mandatory redemption event at a price per share of Series C Preferred Stock equal to the aggregate Series C Liquidation Value for the shares of Series C Preferred Stock being redeemed. The Company will deliver ten-day advance written notice prior to the consummation of any mandatory redemption event via email or overnight courier ("Notice of Mandatory Redemption") to each Holder whose shares are to be redeemed. The Series C is subject to redemption at Stated Value, plus any accrued, but unpaid dividends (the "Liquidation Value")) by the Company. Upon receipt by any Holder of a Notice of Mandatory Redemption, if Holder does not choose to convert, such Holder will promptly submit to the Company such Holder's Series C Preferred Stock certificates on the Redemption Payment Date. Upon receipt of such Holder's Series C Preferred Stock certificates, the Company will pay the applicable redemption price to such Holder in cash. A "Deemed Liquidation Event" will mean: (a) a merger or consolidation in which the Company is a constituent party or a subsidiary of the Company is a constituent party and the Company issues shares of its capital stock pursuant to such merger or consolidation, except any such merger or consolidation involving the Company or a subsidiary in which the shares of capital stock of the Company outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital stock of the surviving or resulting corporation or, if the surviving or resulting corporation is a wholly-owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation; or (b) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any subsidiary of the Company of all or substantially all the assets of the Company and its subsidiaries taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Company if substantially all of the assets of the Company and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Company. The Series C is convertible at the option of a holder at any time following the issuance date. In the event of a conversion of any Series C Preferred Stock, the Company shall issue to such Holder a number of Conversion Shares equal to (x) the sum of (1) the Stated Value per share of Series C Preferred Stock plus (2) any accrued but unpaid dividends thereon multiplied by (y) the number of shares of Series C Preferred Stock held by such Holder and subject to the Holder Conversion Notice, divided by (z) the Conversion Price with respect to such Series C Preferred Stock. Conversion Price means a price per share of the common stock equal to the lowest daily volume weighted average price of the common stock for any trading day during the two years preceding the date of delivery of the conversion notice, subject to adjustment as otherwise provided in the Series C Certificate of Designation. Upon liquidation of the Company after payment or provision for payment of liabilities of the Company and after payment or provision for any liquidation preference payable to the holders of any preferred stock ranking senior to the Series C but prior to any distribution to the holders of Common Stock or preferred stock ranking junior upon liquidation to the Series C, the holders of Series C will be entitled to be paid out of the assets of the Company available for distribution to its stockholders an amount with respect to each share of Series C equal to the Liquidation Value. Each share of Series C Preferred Stock shall be entitled to vote on all matters requiring shareholder vote. Each share of Series C Preferred Stock will be entitled to the number of votes per share based on the calculation of the number of conversion shares of Series C Preferred Stock is then convertible. During August and September 2020, the Company entered into subscription agreements with an accredited investor whereby the investor agreed to purchase an aggregate of purchase 6,300 shares of the Company's Series C Convertible Preferred Stock for $630,000, or $100.00 per share (the "Stated Value"), which were used to pay off various discounted convertible instruments and redeem Series A preferred stock. These Series C preferred share issuances with redemption provisions that permit the issuer to settle in either cash or common stock, at the option of the holder, were evaluated to determine whether temporary or permanent equity classification on the condensed consolidated balance sheet was appropriate. As per the terms of the Series C preferred stock agreements, Series C preferred stock is redeemable for cash and other assets on the occurrence of a deemed liquidation event. A deemed liquidation event includes a change of control which is not in the Company's control. As such, since Series C preferred stock is redeemable upon the occurrence of an event that is not within the Company's control, the Series C preferred stock is classified as temporary equity. The Company concluded that the Series C Preferred Stock represented an equity host and, therefore, the redemption feature of the Series C Preferred Stock was not considered to be clearly and closely related to the associated equity host instrument. However, the redemption features did not meet the net settlement criteria of a derivative and, therefore, were not considered embedded derivatives that required bifurcation. The Company also concluded that the conversion rights under the Series C Preferred Stock were clearly and closely related to the equity host instrument. Accordingly, the conversion rights feature on the Series C Preferred Stock were not considered an embedded derivative that required bifurcation. During the nine months ended September 30, 2020, the Company accrued a dividend payable of $1,055 which was included in preferred stock dividends on the accompanying condensed consolidated statement of shareholders' deficit. As of September 30, 2020, the net Series C Preferred Stock balance was $631,055 which includes stated liquidation value of $630,000 and accrued dividends payable of $1,055. Sale of Common Stock In connection with subscription agreements dated January 13, 2020 and February 18, 2020, the Company received cash proceeds of $280,000 from an investor for the purchase of 7,000,000 shares of the Company's common stock at $0.04 per share. In connection with subscription agreements dated May 8, 2020, the Company received cash proceeds of $161,000 from an investor for the purchase of 7,000,000 shares of the Company's common stock at $0.023 per share. In connection with subscription agreements dated July 2, 2020, the Company received cash proceeds of $280,000 from investors for the purchase of 21,538,462 shares of the Company's common stock at $0.013 per share. Issuance of Common Shares for Services On February 20, 2020 and effective March 1, 2020, the Company entered into a six-month consulting agreement with an entity for investor relations services. In connection with this consulting agreement, the Company issued 1,250,000 restricted common shares of the Company to the consultant. These shares vest immediately. These shares were valued at $50,000, or $0.04 per common share, based on contemporaneous common share sales by the Company. In connection with this consulting agreement, as of September 30, 2020, the Company recorded stock-based professional fees of $50,000. On March 31, 2020 and effective April 1, 2020, the Company entered into two one-year advisory board agreements with two individuals for services to be rendered on the Company's medical advisory board. In connection with these advisory board agreements, the Company issued an aggregate of 500,000 restricted common shares of the Company to these advisory board members. These shares vest on April 1, 2021. These shares were valued at $20,000, or $0.04 per common share, based on contemporaneous common share sales by the Company. In connection with this consulting agreement, during the nine months ended September 30, 2020, accretion of stock-based consulting fees amounted to $10,000 and the remaining stock-based consulting fees of $10,000 shall be accreted over the remaining vesting period. On April 1, 2020, the Company entered into an employment agreement with an accounting manager. Pursuant to this employment agreement, the Company agreed to grant a restricted stock award of 200,000 common shares of the Company which will vest on May 1, 2021. If the employee's employment is terminated without cause or for good reason (both as defined in the employment agreement), or a change of control event (as defined in the employment agreement) occurs, these shares will immediately vest. For any other termination of employment, unvested restricted stock shall immediately terminate. These shares were valued on the date of grant at $8,000, or $0.04 per common share, based on contemporaneous common share sales. In connection with these shares, the Company shall record stock-based compensation over the vesting period, which is included in the aggregate accretion of stock-based compensation reflected below. On April 28, 2020, the Company entered into restricted stock award agreements (the "Restricted Stock Award Agreements") with executive officers and employees. Pursuant to the Restricted Stock Award Agreements, the Company agreed to grant restricted stock awards for an aggregate of 6,750,000 common shares of the Company which were valued at $270,000, or $0.04 per common share, based on contemporaneous common share sales. These shares will vest on May 1, 2021. If the employee's employment is terminated for any reason, these shares will immediately be forfeited. In the event of a change of control, the employee shall be 100% vested in all shares of restricted shares subject to these Agreements. Each executive officer and employee shall have the right to vote the restricted shares awarded to them and to receive and retain all regular dividends paid in cash or property (other than retained distributions), and to exercise all other rights, powers and privileges of a holder of shares of the stock, with respect to such restricted shares, with the exception that (a) the employee shall not be entitled to delivery of the stock certificate or certificates or electronic book entries representing such restricted shares until the shares are vested, (b) the Company shall retain custody of all retained distributions made or declared with respect to the restricted shares until such time, if ever, as the restricted shares have become vested, and (c) the employee may not sell, assign, transfer, pledge, exchange, encumber, or dispose of the restricted shares. In connection with these shares, the Company shall record stock-based compensation over the vesting period, which is included in the aggregate accretion of stock-based compensation reflected below. On July 1, 2020, the Company entered into a six-month consulting agreement with an entity for investor relations services. In connection with this consulting agreement, the Company issued 500,000 restricted common shares of the Company to the consultant. These shares vest immediately. These shares were valued at $6,500, or $0.013 per common share, based on contemporaneous common share sales by the Company. In connection with this consulting agreement, as of September 30, 2020, the Company recorded stock-based professional fees of $3,250 and prepaid expenses of $3,250 which will be amortized over the remaining term of the agreement. The following table summarizes activity related to non-vested shares: Number of Weighted Non-vested, December 31, 2019 17,675,299 $ 0.23 Granted 7,450,000 0.04 Shares vested (1,273,373 ) (0.41 ) Non-vested, September 30, 2020 23,851,926 $ 0.16 During the nine months ended September 30, 2020 and 2019, aggregate accretion of stock-based compensation expense on granted non-vested shares amounted to $366,825 and $1,845,834, respectively. Total unrecognized compensation expense related to these unvested common shares at September 30, 2020 amounted to $194,889 which will be amortized over the remaining vesting period. Shares Issued for Accounts Payable On January 13, 2020, the Company issued 151,456 common shares upon conversion of accounts payable of $6,058, or $0.04 per common share, based on contemporaneous common share sales by the Company. Common Stock Issued for Debt Conversion During the nine months ended September 30, 2020, the Company issued 37,171,800 shares of its common stock upon the conversion of convertible notes with bifurcated embedded conversion option derivatives including principal of $152,285, accrued interest of $36,244, and fees of $2,500. The conversion price was based on contractual terms of the related debt. The Company accounted for the partial conversion of these convertible notes pursuant to the guidance of ASC 470-20, Debt with Conversion and Other Options. Common Stock Issued for Conversion of Series A Preferred Shares During the nine months ended September 30, 2020, the Company issued 16,132,701 shares its common stock upon the conversion of 211,200 shares of Series A preferred with a stated redemption value of $211,200 and related accrued dividends payable of $4,224. The conversion price was based on contractual terms of the related Series A preferred shares. Upon conversion, the Company reclassified put premium of $49,543 to paid-in capital. Common Stock Issued for Deferred Compensation On April 17, 2020, the Company issued 203,125 common shares upon conversion of an accrued deferred compensation liability of $16,250. Stock Options For the nine months ended September 30, 2020 and 2019, the Company recorded $576,025 and $1,539,188 of compensation expense related to stock options, respectively. Total unrecognized compensation expense related to unvested stock options at September 30, 2020 amounted to $33,636. The weighted average period over which stock-based compensation expense related to these options will be recognized is approximately one month. Stock option activities for the nine months ended September 30, 2020 are summarized as follows: Number of Options Weighted Average Weighted Aggregate Balance Outstanding, December 31, 2019 8,445,698 $ 0.40 Granted - - Forfeited - - Balance Outstanding, September 30, 2020 8,445,698 $ 0.40 5.39 $ 0 Exercisable, Septembe |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 10 – COMMITMENTS AND CONTINGENCIES Legal Matters From time to time, the Company may be involved in litigation related to claims arising out of its operations in the normal course of business. Other than the matter discussed below, as of September 30, 2020, the Company is not involved in any other pending or threatened legal proceedings that it believes could reasonably be expected to have a material adverse effect on its financial condition, results of operations, or cash flows. Roy Duplantier and Sleeping Creek Partners vs. C-Bond Systems LLC; Court Filed: Harris County, Texas, Precinct 7; Small Claims Case Number: 207100033133; Date Filed: January 24, 2020. On January 24, 2020, Roy Duplantier and Sleeping Creek Partners ("Plaintiff") Employment Agreements On October 18, 2017, the Company entered into an employment agreement with Mr. Scott Silverman, pursuant to which he serves as the Chief Executive Officer of the Company for an initial term of three years that extends for successive one-year renewal terms unless either party gives 30-days' advance notice of non-renewal. As consideration for these services, the employment agreement provides Mr. Silverman with the following compensation and benefits: ● An annual base salary of $300,000, with a 10% increase on each anniversary date contingent upon achieving certain performance objectives as set by the Board. Until the Company raises $1,000,000 in debt or equity financing after entering into this agreement, Mr. Silverman will receive ½ of the base salary on a monthly basis with the other ½ being deferred. Upon the financing being raised, Mr. Silverman will receive the deferred portion of his compensation and his base salary will be paid in full moving forward. ● After the first $500,000 of equity investments is raised by the Company, after entering into this employment agreement, Mr. Silverman will receive a capital raise success bonus of 5% of all equity capital raised from investors/lenders introduced by him to the Company. ● Annual cash performance bonus opportunity as determined by the Board. ● An option to acquire 3,000,000 common shares of the Company, with a strike price of $0.31 per unit. These options will vest pro rata on a monthly basis for the term of the employment agreement. On each anniversary, Mr. Silverman will be eligible to be granted a minimum of 500,000 stock options of the Company at a strike price of $0.85 per common unit contingent upon the achievement of certain performance objectives. ● Certain other employee benefits and perquisites, including reimbursement of necessary and reasonable travel and participation in retirement and welfare benefits. The April 25, 2018 financing received of $1,240,000 triggered the right of the employee to receive the deferred salary and the 5% bonus provision disclosed above. Mr. Silverman's employment agreement provides that, in the event that his employment is terminated by the Company without "cause" (as defined in his employment agreement), or if Mr. Silverman resigned for "good reasons" (as defined in his new employment agreement), subject to a complete release of claims, he will be entitled to (i) retain all stock options previously granted; and (ii) receive any benefits then owed or accrued along with one year of base salary and any unreimbursed expenses incurred by him. All amounts shall be paid on the termination date. In the event that Mr. Silverman's employment is terminated by the Company for "cause" (as defined in his employment agreement), or if Mr. Silverman resigned without "good reasons" (as defined in his employment agreement), subject to a complete release of claims, he will be entitled to receive any unpaid base salary and benefits then owed or accrued and any unreimbursed expenses incurred by him. Additionally, if a change of control (as defined in his employment agreement) occurs during the term of this agreement, all unvested stock options will vest in full and if the valuation of the Company in the change of control transaction is greater than $0.85 per common share, then Mr. Silverman shall be paid a bonus equal to two times his minimum base salary and minimum target bonus. Pursuant to the employment agreement, Mr. Silverman will be subject to a confidentiality covenant, a two-year post-termination non-competition covenant and a two-year post-termination non-solicitation covenant. On June 30, 2020, the Company amended the employment agreement of Mr. Silverman to provide for successive one-year extensions until either the executive or the Board of Directors of the Company gives notice to terminate the employment agreement per its terms. This employment agreement amendment also includes an allowance of up to $10,000 per year to cover uncovered medical/dental expenses for Mr. Silverman and his family. On March 27, 2019 and effective March 1, 2019, the Company entered into an employment agreement with Mr. Vincent Pugliese. Pursuant to this employment agreement, he serves as the President and Chief Operating Officer of the Company. The employment agreement shall terminate on the earliest of a) the third anniversary or b) terminated pursuant to terms in the employment agreement. As consideration for these services, the employment agreement provided Mr. Pugliese with the following compensation and benefits: ● An annual base salary of $240,000. ● Annual cash performance bonus opportunity as determined by the Board. ● Annual stock grant as determined by the Board. ● Certain other employee benefits and perquisites, including reimbursement of necessary and reasonable travel. In the event that the Company terminates the term of Mr. Pugliese's employment hereunder without Cause or for "good reason" (as defined in this employment agreement) by Mr. Pugliese, then in such event: (A) Mr. Pugliese will retain and vest immediately all stock options/grants previously granted and will be exercisable over a ten-year period; (B) the Company shall pay any benefits but not limited to accrued and deferred base salary, commissions and expense reimbursements then owed or accrued plus eighteen (18) months of the current Base Salary, and any unreimbursed expenses incurred through the termination date, and each of which shall be paid on the termination date (in cash and/or stock as mutually agreed between the Parties) In the event of a change of control (as defined in this employment agreement), all unvested stock options/grants of Mr. Pugliese shall vest in full, and Mr. Pugliese will be entitled to receive, subject to a complete release of all claims, a lump sum payment equal to two times his current annual base salary upon closing of the change in control transaction, and then this employment agreement shall terminate. Pursuant to the employment agreement, Mr. Pugliese will be subject to a confidentiality covenant, a two-year post-termination non-competition covenant and a two-year post-termination non-solicitation covenant. All unvested stock will expire upon termination unless termination is with cause for incapacity for physical or mental illness, without cause or change of control as defined in the employment agreement. On April 28, 2020, the Company's board of directors approved a bonus to officers and an employee of the Company in the aggregate amount of $280,000 which shall be deferred and was recorded as an accrued liability. Licensing Agreement Pursuant to an agreement dated April 8, 2016, between the Company and Rice University, Rice University has granted a non-exclusive license to the Company, in nanotube-based surface treatment for strengthening glass and related materials under Rice's intellectual property rights, to use, make, distribute, offer and sell the licensed products specified in the agreement. In consideration for which, the Company had to pay a one-time non-refundable license fee of $10,000 and royalty payments of 5% of net sales of the licensed products during the term of the agreement and a sell-off period of 180 days from termination, In addition, the Company is required to pay for the maintenance of the patents, This agreement will continue until the expiration of the last to expire of the licensed property rights, unless terminated earlier in accordance with the terms of the agreement. There have been no royalty payments paid or due through September 30, 2020. Anti-Dilution Rights Related to C-Bond Systems, LLC Prior to the Merger, C-Bond Systems, LLC entered into certain contracts, described below, which provided certain anti-dilution protection to the counterparties to those contracts. The Company believes that these contracts do not apply to any future issuances of equity by C-Bond Systems, Inc. In 2013, pursuant to a subscription agreement, the Company's subsidiary. C-Bond Systems, LLC issued 2,425,300 common shares. To the extent that during the term of the agreement C-Bond Systems, LLC issues any "down-round" or subsequent investments based upon an enterprise value of less than $2,000,000 ("Dilutive Transaction") (other than an issuance pursuant to an option agreement with an employee or otherwise to compensate an employee, or incident to an acquisition of assets by C-Bond Systems, LLC in which common units were issued to the seller of such assets) contemporaneously with the Dilutive Transaction, the contract obligated C-Bond Systems, LLC to issue the investor additional common units in C-Bond Systems, LLC in an amount which would provide them with the ownership percentage interest which they would have held in C-Bond Systems, LLC represented by the common units purchased by them on this date. In 2015, pursuant to a subscription agreement, C-Bond Systems, LLC issued 3,880,480 common shares to an entity at $0.77 per common share. This agreement entitled the subscriber to anti-dilution protection to the extent that C-Bond Systems, LLC issued any equity in a "down-round" based upon a value of less than $0.77 per common unit of C-Bond Systems, LLC (other than an issuance pursuant to an option agreement with an employee or consultant or otherwise to compensate an employee or consultant, or incident to an acquisition of assets by C-Bond Systems, LLC in which common units are issued to the seller of such assets ("Dilutive Transaction")). Contemporaneously with the Dilutive Transaction the contract obligated C-Bond Systems, LLC to issue the Subscriber additional common units in C-Bond Systems, LLC in an amount which would provide the investor with the ownership percentage interest in C-Bond Systems, LLC on a fully diluted basis which Subscriber held immediately prior to the Dilutive Transaction. In 2016, pursuant to a subscription agreement, C-Bond Systems, LLC issued 1,175,902 common shares to an entity at $0.85 per common share. This agreement entitled this investor to customary broad-based weighted average anti-dilution protection to the extent that after the date of this subscription agreement C-Bond Systems, LLC issued any equity in a "down round" based upon a value of less than $0.85 per common share, including the issuance of options with an exercise price per share of less than $0.85 to compensate employees or consultants ("Dilutive Transaction"), subject to exclusions for issuances of common shares or options in connection with strategic partnerships, equity kickers to lenders or vendors, mergers or acquisitions. The agreement obligated C-Bond Systems, LLC to give to this investor written notice (an "Issuance Notice") of any proposed issuance by C-Bond Systems, LLC of any C-Bond Systems, LLC common units, or other form of equity interest (excluding issuances of C-Bond Systems, LLC options or other equity to compensate employees or consultants and the issuance of shares in connection with strategic partnerships, equity kickers to lenders or vendors, mergers or acquisitions) at least ten business days prior to the proposed issuance date. This contract entitled the investor to purchase their pro rata portion of such shares or other equity interest of C-Bond Systems, LLC at the price and on the other terms and conditions specified in the issuance notice. COVID-19 In March 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. The Company is monitoring this closely, and although operations have not been materially affected by the COVID-19 outbreak to date, the ultimate duration and severity of the outbreak and its impact on the economic environment and the Company's business is uncertain. As of November 16, 2020, the Company's facilities are open. However, the Company has seen a material decrease in sales from its international customers as a result of the unprecedented public health crisis from the COVID-19 pandemic and a decrease in domestic sales due to a decrease in business spending on discretionary items. As a result, the Company's international customers have delayed the ordering of products and have delayed payment of balances due to the Company. Accordingly, the Company anticipates that there will be an impact on its operations. The Company cannot estimate the duration of the pandemic and potential impact on its business if customer's business remains closed or if customers are otherwise unable or unwilling to make payments to the Company. In addition, a severe or prolonged economic downturn could result in a variety of risks to the Company's business, including weakened demand for its products and a decreased ability to raise additional capital when needed on acceptable terms, if at all. At this time, the Company is unable to estimate the impact of this event on its operations. |
Concentrations
Concentrations | 9 Months Ended |
Sep. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | NOTE 11 – CONCENTRATIONS Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of trade accounts receivable and cash deposits. The Company places its cash in banks at levels that, at times, may exceed federally insured limits. There were no balances in excess of FDIC insured levels as of September 30, 2020 and December 31, 2019. The Company has not experienced any losses in such accounts through September 30, 2020. Geographic Concentrations of Sales For the nine months ended September 30, 2020 and 2019, all sales were in the United States. No other geographical area accounted for any sales during the nine months ended September 30, 2020 and 2019. Customer Concentrations For the nine months ended September 30, 2020, one customer accounted for approximately 24.0% of total sales. For the nine months ended September 30, 2019, one customer accounted for approximately 20.1% of total sales. A reduction in sales from or loss of such customers would have a material adverse effect on the Company's consolidated results of operations and financial condition. At September 30, 2020, three customers accounted for 77.5% of the total accounts receivable balance. Vendor Concentrations Generally, the Company purchases substantially all of its inventory from three suppliers. The loss of these suppliers may have a material adverse effect on the Company's consolidated results of operations and financial condition. However, the Company believes that, if necessary, alternate vendors could supply similar products in adequate quantities to avoid material disruptions to operations. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2020 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
REVENUE RECOGNITION | NOTE 12 – REVENUE RECOGNITION The revenue that the Company recognizes arises from purchase requests the Company receives from its customers. The Company's performance obligations under the purchase orders correspond to each shipment of product that the Company makes to its customer under the purchase orders; as a result, each purchase order generally contains more than one performance obligation based on the number of products ordered, the quantity of product to be shipped and the mode of shipment requested by the customer. Control of the Company's products transfers to its customers when the customer is able to direct the use of, and obtain substantially all of the benefits from, the Company's products, which generally occurs at the later of when the customer obtains title to the product or when the customer assumes risk of loss of the product. The transfer of control generally occurs at a point of shipment from the Company's warehouse. Once this occurs, the Company has satisfied its performance obligation and the Company recognizes revenue. When the Company receives a purchase order from a customer, the Company is obligated to provide the product during a mutually agreed upon time period. Depending on the terms of the purchase order, either the Company or the customer arranges delivery of the product to the customer's intended destination. In situations where the Company has agreed to arrange delivery of the product to the customer's intended destination and control of the product transfers upon loading of the Company's product onto transportation equipment, the Company has elected to account for any freight income associated with the delivery of these products as freight revenue, since this activity fulfills the Company's obligation to transfer the product to the customer. Transaction Price The Company agrees with its customers on the selling price of each transaction. This transaction price is generally based on the product, market conditions, including supply and demand balances and freight. In the Company's contracts with customers, the Company allocates the entire transaction price to the sale of product to the customer, which is the basis for the determination of the relative standalone selling price allocated to each performance obligation. Returns of the Company's product by its customers are permitted only when the product is not to specification and were not material for the nine months ended September 30, 2020 and 2019. Any sales tax, value added tax, and other tax the Company collects concurrently with its revenue-producing activities are excluded from revenue. Revenue Disaggregation The Company tracks its revenue by product. The following table summarizes our revenue by product for the nine months ended September 30, 2020 and 2019: For the Nine Months Ended 2020 2019 C-Bond Secure multi-purpose and BRS ballistic resistant glass protection systems $ 116,388 $ 300,501 C-Bond Nanoshield solution sales 90,028 89,381 Disinfection products 134,989 - Installation and other services 4,892 10,409 Freight and delivery 10,473 15,887 Total $ 356,770 $ 416,178 |
Operating Lease Right-Of-Use (R
Operating Lease Right-Of-Use (ROU) Assets and Operating Lease Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements [Abstract] | |
OPERATING LEASE RIGHT-OF-USE ("ROU") ASSETS AND OPERATING LEASE LIABILITIES | NOTE 13 – OPERATING LEASE RIGHT-OF-USE ("ROU") ASSETS AND OPERATING LEASE LIABILITIES In October 2019, the Company entered into an 18-month lease agreement for the lease of office and warehouse space under a non-cancelable operating lease through May 31, 2021. From the lease commencement date of December 1, 2019 until November 30, 2020, monthly rent shall be $4,444 and from December 1, 2020 to May 31, 2021, monthly rent shall be $4,577 per month. In adopting ASC Topic 842, Leases (Topic 842) on January 1, 2019, the Company had elected the 'package of practical expedients', which permitted it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs (see Note 2). In addition, the Company elected not to apply ASC Topic 842 to arrangements with lease terms of 12 month or less. Since the terms of the Company's operating lease for its office space prior to October 2019 was 12 months or less on the date of adoption, pursuant to ASC 842, the Company determined that the lease met the definition of a short-term lease and the Company did not recognize the right-of use asset and lease liability arising from this lease. Upon renewal of the lease in October 2019, the Company analyzed the new lease and determined it is required to record a lease liability and a right of use asset on its consolidated balance sheet, at fair value. During the nine months ended September 30, 2020 and 2019, in connection with its operating leases, the Company recorded rent expense of $69,260 and $75,434, respectively, which is expensed during the period and included in operating expenses on the accompanying condensed consolidated statements of operations. The significant assumption used to determine the present value of the lease liability in October 2019 was a discount rate of 12% which was based on the Company's estimated incremental borrowing rate. At September 30, 2020 and December 31, 2019, right-of-use asset ("ROU") is summarized as follows: September 30, 2020 December 31, Office leases right of use assets $ 74,296 $ 74,296 Less: accumulated amortization (39,979 ) (4,488 ) Balance of ROU assets $ 34,317 $ 69,808 At September 30, 2020 and December 31, 2019, operating lease liabilities related to the ROU assets are summarized as follows: September 30, 2020 December 31, Lease liabilities related to office leases right of use assets $ 34,762 $ 69,852 Less: current portion of lease liabilities (34,762 ) (47,636 ) Lease liabilities – long-term $ - $ 22,216 At September 30, 2020, future minimum base lease payments due under non-cancelable operating leases are as follows: Amount Year Ended June 30, 2021 $ 36,352 Total minimum non-cancelable operating lease payments 36,352 Less: discount to fair value (1,590 ) Total lease liability at September 30, 2020 $ 34,762 |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | NOTE 14 – SUBSEQUENT EVENT On October 6, 2020, the Company entered into a settlement agreement related to the termination of a previous investor relations agreement. In connection with this settlement agreement, the Company issued 1,275,000 restricted common shares of the Company to this consultant. These shares were valued at $10,200, or $0.008 per common share, based on the quoted closing price of the Company's common stock on the measurement date. In connection with this settlement agreement, the Company recorded stock-based consulting fees of $10,200. On October 7, 2020, the Company entered into a six-month consulting agreement for investor relations services to be rendered. In connection with this consulting agreement, the Company issued 9,000,000 restricted common shares of the Company to this consultant. These shares were valued at $76,500, or $0.0085 per common share, based on the quoted closing price of the Company's common stock on the measurement date and will be amortized into stock-based consulting fees over the term of the agreement. On October 9, 2020, the Company issued 500,000 shares of its common stock for strategic consulting services to be rendered. These shares were valued at $6,000, or $0.012 per common share, based on the quoted closing price of the Company's common stock on the measurement date. On October 20, 2020, the Company entered into a subscription agreement with an existing accredited investor whereby the investor agreed to purchase 2,000 shares of the Company's Series C Preferred Stock for $200,000, or $100.00 per share. On November 9, 2020, the Company closed a subscription agreement with an existing accredited investor whereby the investor agreed to purchase 2,500 shares of the Company's Series C Preferred Stock for $250,000, or $100.00 per share. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States 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 unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates during the nine months ended September 30, 2020 and 2019 include estimates for allowance for doubtful accounts on accounts receivable, the estimates for obsolete or slow moving inventory, the useful life of property and equipment, assumptions used in assessing impairment of long-term assets, the estimate of the fair value of the right of use asset and lease liability, the valuation of redeemable and mandatorily redeemable preferred stock, the fair value of derivative liabilities, the value of beneficial conversion features, and the fair value of non-cash equity transactions. |
Fair Value of Financial Instruments and Fair Value Measurements | Fair Value of Financial Instruments and Fair Value Measurements The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board's (the "FASB") accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Disclosures about the fair value of financial instruments are based on pertinent information available to the Company on September 30, 2020. Accordingly, the estimates presented in these consolidated financial statements are not necessarily indicative of the amounts that could be realized on disposition of the financial instruments. FASB ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows: Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2—Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3—Inputs are unobservable inputs which reflect the reporting entity's own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The carrying amounts reported in the condensed consolidated balance sheets for cash, accounts receivable, notes payable – related party, convertible note payable, accounts payable, accrued expenses, accrued compensation, and subscription payable approximate their fair market value based on the short-term maturity of these instruments. Assets and liabilities measured at fair value on a recurring basis at September 30, 2020 and December 31, 2019 is as follows: At At Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Derivative liabilities - - $ - - - $ 890,410 A roll forward of the level 3 valuation financial instruments is as follows: For the Nine Months Ended 2020 2019 Balance at beginning of period $ 890,410 $ - Initial valuation of derivative liabilities included in debt discount 85,502 222,720 Initial valuation of derivative liabilities included in derivative expense 160,416 371,103 Gain on extinguishment of debt related to repayment/conversion of debt (1,066,535 ) - Change in fair value included in derivative expense (69,793 ) 9,902 Balance at end of period $ - $ 603,725 ASC 825-10 "Financial Instruments", allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments. |
Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. The Company has no cash equivalents as of September 30, 2020 and December 31, 2019. |
Accounts Receivable | Accounts Receivable The Company recognizes an allowance for losses on accounts receivable in an amount equal to the estimated probable losses net of recoveries. The allowance is based on an analysis of historical bad debt experience, current receivables aging, and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. The expense associated with the allowance for doubtful accounts is recognized as general and administrative expense. |
Inventory | Inventory Inventory, consisting of raw materials and finished goods, are stated at the lower of cost and net realizable value utilizing the first-in, first-out (FIFO) method. A reserve is established when management determines that certain inventories may not be saleable. If inventory costs exceed expected net realizable value due to obsolescence or quantities in excess of expected demand, the Company will record reserves for the difference between the cost and the net realizable value. These reserves are recorded based on estimates and included in cost of sales. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost and are depreciated using the straight-line method over their estimated useful lives, which range from three to ten years. Leasehold improvements are depreciated over the shorter of the useful life or lease term including scheduled renewal terms. Maintenance and repairs are charged to expense as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of these assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset's estimated fair value and its book value. |
Derivative Financial Instruments | Derivative Financial Instruments The Company has certain financial instruments that are embedded derivatives. The Company evaluates all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815-10-05-4, Derivatives and Hedging Contracts in Entity's Own Equity In July 2017, FASB issued ASU No. 2017-11, Earnings Per Share Distinguishing Liabilities from Equity Derivatives and Hedging Accounting for Certain Financial Instruments with Down Round Features |
Revenue Recognition | Revenue Recognition The Company follows Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers The Company sells its products which include standard warranties primarily to distributors and authorized dealers. Product sales are recognized when the product is shipped to the customer and title is transferred and are recorded net of any discounts or allowances. The warranty does not represent a separate performance obligation. |
Cost of Sales | Cost of Sales Cost of sales includes inventory costs, packaging costs and warranty expenses. |
Shipping and Handling Costs | Shipping and Handling Costs Shipping and handling costs incurred for product shipped to customers are included in general and administrative expenses and amounted to $29,752 and $27,715 for the nine months ended September 30, 2020 and 2019, respectively. Shipping and handling costs charged to customers are included in sales. |
Research and Development | Research and Development Research and development costs incurred in the development of the Company's products are expensed as incurred and includes costs such as labor, materials, and other allocated costs incurred. For the nine months ended September 30, 2020 and 2019, research and development costs incurred in the development of the Company's products were $14,597 and $23,925, respectively, and are included in operating expenses on the accompanying unaudited condensed consolidated statements of operations. |
Warranty Liability | Warranty Liability The Company provides limited warranties on its products for product defects for periods ranging from 12 months to the life of the product. Warranty costs may include the cost of product replacement, refunds, labor costs and other costs. Allowances for estimated warranty costs are recorded during the period of sale. The determination of such allowances requires the Company to make estimates of product warranty claim rates and expected costs to repair or to replace the products under warranty. The Company currently establishes warranty reserves based on historical warranty costs for each product line combined with liability estimates based on the prior 12 months' sales activities. If actual return rates and/or repair and replacement costs differ significantly from the Company's estimates, adjustments to recognize additional cost of sales may be required in future periods. Historically the warranty accrual and the expense amounts have been immaterial. The warranty liability is included in accrued expenses on the accompanying unaudited condensed consolidated balance sheets and amounted $26,833 at September 30, 2020 and December 31, 2019, respectively. For the nine months ended September 30, 2020 and 2019, warranty expense amounted to $0 and $4,650, respectively, and is included in cost of sales on the accompanying unaudited condensed consolidated statements of operations. For the nine months ended September 30, 2020 and 2019, a roll forward of warranty liability is as follows: For the Nine Months Ended 2020 2019 Balance at beginning of period $ 26,933 $ 24,190 Increase in estimated warranty liability - 4,650 Warranty expenses incurred (100 ) (1,837 ) Balance at end of period $ 26,833 $ 27,003 |
Advertising Costs | Advertising Costs The Company participates in various advertising programs. All costs related to advertising of the Company's products are expensed in the period incurred. For the nine months ended September 30, 2020 and 2019, advertising costs charged to operations were $30,900 and $31,692, respectively and are included in general and administrative expenses on the accompanying unaudited condensed consolidated statements of operations. These advertising expenses do not include cooperative advertising and sales incentives which have been deducted from sales. |
Federal and State Income Taxes | Federal and State Income Taxes The Company accounts for income tax using the liability method prescribed by ASC 740, "Income Taxes". Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. The Company follows the accounting guidance for uncertainty in income taxes using the provisions of Accounting Standards Codification (ASC) 740 "Income Taxes |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation is accounted for based on the requirements of ASC 718 – "Compensation –Stock Compensation Improvements to Employee Share-Based Payment |
Loss Per Common Share | Loss Per Common Share ASC 260 "Earnings Per Share", requires dual presentation of basic and diluted earnings per common share ("EPS") with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilutive securities and non-vested forfeitable shares. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares or resulted in the issuance of common shares that then shared in the earnings of the entity. Basic net loss per common share is computed by dividing net loss available to members by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of common shares, common share equivalents and potentially dilutive securities outstanding during each period. Potentially dilutive common shares consist of stock options and non-vested forfeitable shares (using the treasury stock method) and shares issuable upon conversion of convertible notes payable (using the as-if converted method). These common share equivalents may be dilutive in the future. All potentially dilutive common shares were excluded from the computation of diluted common shares outstanding as they would have an anti-dilutive impact on the Company's net losses and consisted of the following: September 30, 2020 2019 Convertible notes - 16,666,667 Stock options 8,445,698 11,445,698 Warrants 2,050,000 1,750,000 Series B preferred stock 17,142,857 - Series C preferred stock 100,000,000 - Non-vested, forfeitable common shares 23,851,926 16,375,299 |
Leases | Leases In February 2016, the FASB issued ASU 2016-02, " Leases (Topic 842)" Operating lease ROU assets represents the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company use an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and is included in general and administrative expenses in the unaudited condensed consolidated statements of operations. |
Segment Reporting | Segment Reporting During the nine months ended September 30, 2020 and 2019, the Company operated in one business segment. |
Risk Factors | Risk Factors The Company's results of operations could be adversely affected by general conditions in the global economy and in the global financial markets, including conditions that are outside of its control, including the impact of health and safety concerns, such as those relating to the current COVID-19 outbreak. The most recent global financial crisis caused extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn could result in a variety of risks to our business, including weakened demand for the company's products and its ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could strain the Company's domestic and international customers, possibly resulting in delays in customer payments. Any of the foregoing could harm the Company's business and it cannot anticipate all the ways in which the current economic climate and financial market conditions could adversely impact the Company's business. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement In December 2019, the FASB issued Accounting Standards Update No. 2019-12 – Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes, as part of its initiative to reduce complexity in the accounting standards. The amendments in ASU 2019-12 eliminate certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also clarifies and simplifies other aspects of the accounting for income taxes. The amendments in ASU 2019-12 will become effective for us as of the beginning of our 2022 fiscal year. Early adoption is permitted, including adoption in any interim period. We are currently evaluating the impact that this guidance will have upon our financial position and results of operations, if any. In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exception. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of the standard on the condensed consolidated financial statements. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of assets and liabilities measured at fair value on a recurring basis | At At Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Derivative liabilities - - $ - - - $ 890,410 |
Schedule of roll forward of the level 3 valuation financial instruments | For the Nine Months Ended 2020 2019 Balance at beginning of period $ 890,410 $ - Initial valuation of derivative liabilities included in debt discount 85,502 222,720 Initial valuation of derivative liabilities included in derivative expense 160,416 371,103 Gain on extinguishment of debt related to repayment/conversion of debt (1,066,535 ) - Change in fair value included in derivative expense (69,793 ) 9,902 Balance at end of period $ - $ 603,725 |
Schedule of warranty liability | For the Nine Months Ended 2020 2019 Balance at beginning of period $ 26,933 $ 24,190 Increase in estimated warranty liability - 4,650 Warranty expenses incurred (100 ) (1,837 ) Balance at end of period $ 26,833 $ 27,003 |
Schedule of diluted common shares outstanding | September 30, 2020 2019 Convertible notes - 16,666,667 Stock options 8,445,698 11,445,698 Warrants 2,050,000 1,750,000 Series B preferred stock 17,142,857 - Series C preferred stock 100,000,000 - Non-vested, forfeitable common shares 23,851,926 16,375,299 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Schedule of accounts receivable | September 30, December 31, Accounts receivable $ 91,910 $ 151,989 Less: allowance for doubtful accounts (19,400 ) - Accounts receivable, net $ 72,510 $ 151,989 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | September 30, December 31, Raw materials $ 12,930 $ 12,250 Finished goods 29,875 2,570 Inventory $ 42,805 $ 14,820 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Useful Life 2020 2019 Machinery and equipment 5 - 7 years $ 52,184 $ 52,184 Furniture and office equipment 3 - 7 years 45,063 45,063 Vehicles 5 years 68,341 68,341 Leasehold improvements 3 years 16,701 16,701 182,289 182,289 Less: accumulated depreciation (160,654 ) (149,513 ) Property and equipment, net $ 21,635 $ 32,776 |
Convertible Notes Payable (Tabl
Convertible Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of fair value of the derivative liabilities and warrants | Number of Options Weighted Average Weighted Aggregate Balance Outstanding, December 31, 2019 8,445,698 $ 0.40 Granted - - Forfeited - - Balance Outstanding, September 30, 2020 8,445,698 $ 0.40 5.39 $ 0 Exercisable, September 30, 2020 8,404,602 $ 0.40 5.39 $ 0 |
Schedule of convertible notes payable | Number of Warrants Weighted Average Weighted Aggregate Balance Outstanding December 31, 2019 2,050,000 $ 0.10 - $ - Granted 288,750 0.10 Cancelled (288,750 ) 0.10 Balance Outstanding September 30, 2020 2,050,000 $ 0.05 3.91 $ - Exercisable, September 30, 2020 2,050,000 $ 0.05 3.91 $ - |
Shareholders' Deficit (Tables)
Shareholders' Deficit (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Schedule of redemption period | Redemption Period Redemption Percentage 1. The period beginning on the date of the issuance of shares of Series A Preferred Stock and ending on the date which is sixty days following the Issuance Date. 100 % 2. The period beginning on the date that is sixty-one days from the Issuance Date and ending ninety days following the Issuance Date. 107 % 3. The period beginning on the date that is ninety-one days from the Issuance Date and ending one hundred twenty days following the Issuance Date. 112 % 4. The period beginning on the date that is one hundred twenty-one days from the Issuance Date and ending one hundred fifty days following the Issuance Date. 117 % 5. The period beginning on the date that is one hundred fifty-one days from the Issuance Date and ending one hundred eighty days following the Issuance Date. 120 % |
Schedule of nonvested activity | Number of Weighted Non-vested, December 31, 2019 17,675,299 $ 0.23 Granted 7,450,000 0.04 Shares vested (1,273,373 ) (0.41 ) Non-vested, September 30, 2020 23,851,926 $ 0.16 |
Schedule of stock option activities | Number of Options Weighted Average Weighted Aggregate Balance Outstanding, December 31, 2019 8,445,698 $ 0.40 Granted - - Forfeited - - Balance Outstanding, September 30, 2020 8,445,698 $ 0.40 5.39 $ 0 Exercisable, September 30, 2020 8,404,602 $ 0.40 5.39 $ 0 |
Schedule of warrant activities | Number of Warrants Weighted Average Weighted Aggregate Balance Outstanding December 31, 2019 2,050,000 $ 0.10 - $ - Granted 288,750 0.10 Cancelled (288,750 ) 0.10 Balance Outstanding September 30, 2020 2,050,000 $ 0.05 3.91 $ - Exercisable, September 30, 2020 2,050,000 $ 0.05 3.91 $ - |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Schedule of revenue by product | For the Nine Months Ended 2020 2019 C-Bond Secure multi-purpose and BRS ballistic resistant glass protection systems $ 116,388 $ 300,501 C-Bond Nanoshield solution sales 90,028 89,381 Disinfection products 134,989 - Installation and other services 4,892 10,409 Freight and delivery 10,473 15,887 Total $ 356,770 $ 416,178 |
Operating Lease Right-Of-Use _2
Operating Lease Right-Of-Use (ROU) Assets and Operating Lease Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements [Abstract] | |
Schedule of right-of-use asset | September 30, 2020 December 31, Office leases right of use assets $ 74,296 $ 74,296 Less: accumulated amortization (39,979 ) (4,488 ) Balance of ROU assets $ 34,317 $ 69,808 |
Schedule of operating lease liabilities related to the ROU assets | September 30, 2020 December 31, Lease liabilities related to office leases right of use assets $ 34,762 $ 69,852 Less: current portion of lease liabilities (34,762 ) (47,636 ) Lease liabilities – long-term $ - $ 22,216 |
Schedule of future minimum base lease payments due under non-cancelable operating leases | Amount Year Ended June 30, 2021 $ 36,352 Total minimum non-cancelable operating lease payments 36,352 Less: discount to fair value (1,590 ) Total lease liability at September 30, 2020 $ 34,762 |
Nature of Organization and Su_2
Nature of Organization and Summary of Significant Accounting Policies (Details) - USD ($) | 9 Months Ended | ||||||||
Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Apr. 25, 2018 | |
Nature of Organization and Summary of Significant Accounting Policies (Textual) | |||||||||
Net loss | $ (2,619,752) | $ (5,823,366) | |||||||
Net cash used in operations | (1,132,842) | (909,935) | |||||||
Controlling interest, percentage | 87.00% | ||||||||
Accumulated deficit | (42,622,562) | $ (40,000,015) | |||||||
Shareholders' deficit | (2,718,413) | $ (1,964,277) | $ (4,086,307) | $ (3,406,391) | $ (2,616,937) | $ (1,762,734) | $ (1,557,277) | $ (815,123) | |
Working capital deficit | $ 1,979,419 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Derivative liabilities | $ 890,410 | |
Level 1 [Member] | ||
Derivative liabilities | ||
Level 2 [Member] | ||
Derivative liabilities | ||
Level 3 [Member] | ||
Derivative liabilities | $ 1,571,077 | $ 890,410 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Accounting Policies [Abstract] | ||
Balance at beginning of period | $ 890,410 | |
Initial valuation of derivative liabilities included in debt discount | 85,502 | 222,720 |
Initial valuation of derivative liabilities included in derivative expense | 160,416 | 371,103 |
Gain on extinguishment of debt related to repayment/conversion of debt | (1,066,535) | |
Change in fair value included in derivative expense | (69,793) | 9,902 |
Balance at end of period | $ 603,725 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Accounting Policies [Abstract] | ||
Balance at beginning of period | $ 26,933 | $ 24,190 |
Increase in estimated warranty liability | 4,650 | |
Warranty expenses incurred | (100) | (1,837) |
Balance at end of period | $ 26,833 | $ 27,003 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details 3) - shares | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Series B Preferred Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | 17,142,857 | |
Series C Preferred Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | 100,000,000 | |
Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | 2,050,000 | 1,750,000 |
Convertible notes [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | 16,666,667 | |
Stock options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | 8,445,698 | 11,445,698 |
Non-vested, forfeitable common shares [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | 23,851,926 | 16,375,299 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details Textual) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)Segment | Sep. 30, 2019USD ($)Segment | Dec. 31, 2019USD ($) | |
Summary of Significant Accounting Policies (Textual) | |||||
Shipping and handling costs | $ 29,752 | $ 27,715 | |||
Warranty liability | $ 26,833 | 26,833 | $ 26,833 | ||
Warranty expense | 0 | 4,650 | |||
Research and development costs | $ 9,868 | $ 3,525 | 14,597 | 23,925 | |
Advertising costs | $ 30,900 | $ 31,692 | |||
Number of operating segments | Segment | 1 | 1 |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Receivables [Abstract] | ||
Accounts receivable | $ 91,910 | $ 151,989 |
Less: allowance for doubtful accounts | (19,400) | |
Accounts receivable, net | $ 72,510 | $ 151,989 |
Accounts Receivable (Details Te
Accounts Receivable (Details Textual) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Accounts Receivable (Textual) | ||
Bad debt (recovery) expense | $ 19,400 | $ 0 |
Inventory (Details)
Inventory (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 12,930 | $ 12,250 |
Finished goods | 29,875 | 2,570 |
Inventory | $ 42,805 | $ 14,820 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Property and equipment, gross | $ 182,289 | $ 182,289 |
Less: accumulated depreciation | (160,654) | (149,513) |
Property and equipment, net | 21,635 | 32,776 |
Machinery and equipment [Member] | ||
Property and equipment, gross | $ 52,184 | 52,184 |
Machinery and equipment [Member] | Minimum [Member] | ||
Estimated useful life | 5 years | |
Machinery and equipment [Member] | Maximum [Member] | ||
Estimated useful life | 7 years | |
Furniture and office equipment [Member] | ||
Property and equipment, gross | $ 45,063 | 45,063 |
Furniture and office equipment [Member] | Minimum [Member] | ||
Estimated useful life | 3 years | |
Furniture and office equipment [Member] | Maximum [Member] | ||
Estimated useful life | 7 years | |
Vehicles [Member] | ||
Estimated useful life | 5 years | |
Property and equipment, gross | $ 68,341 | 68,341 |
Leasehold improvements [Member] | ||
Estimated useful life | 3 years | |
Property and equipment, gross | $ 16,701 | $ 16,701 |
Property and Equipment (Detai_2
Property and Equipment (Details Textual) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Property and Equipment (Textual) | ||
Depreciation and amortization expense | $ 11,141 | $ 19,208 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details) | 9 Months Ended |
Sep. 30, 2020 | |
Dividend rate | |
Minimum [Member] | |
Term (in years) | 2 months 30 days |
Volatility | 293.40% |
Risk-free interest rate | 0.12% |
Maximum [Member] | |
Term (in years) | 5 years |
Volatility | 345.70% |
Risk-free interest rate | 0.39% |
Convertible Notes Payable (De_2
Convertible Notes Payable (Details 1) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Disclosure [Abstract] | ||
Principal amount | $ 430,000 | |
Less: unamortized debt discount | (294,167) | |
Convertible note payable, net | $ 135,833 |
Convertible Notes Payable (De_3
Convertible Notes Payable (Details Textual) - USD ($) | Dec. 09, 2019 | Sep. 06, 2019 | Apr. 23, 2020 | Mar. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Aug. 24, 2020 |
Convertible Notes Payable (Textual) | |||||||||
Conversion of principal balance | $ 152,285 | ||||||||
Gain on debt extinguishment | $ 767,415 | $ 31,009 | 877,823 | $ 31,009 | |||||
Amortization of debt discount | 424,001 | 49,042 | |||||||
Interest expense | $ 274,966 | $ 58,421 | 732,547 | 171,060 | |||||
Convertible Promissory Notes [Member] | |||||||||
Convertible Notes Payable (Textual) | |||||||||
Interest expense related to convertible note | $ 551,100 | $ 116,555 | |||||||
Weighted average interest rate | 13.20% | 12.80% | 13.20% | 12.80% | |||||
Conversion of principal balance | $ 152,285 | ||||||||
Warrant to purchase shares of common stock | 37,171,800 | ||||||||
Warrant initial exercise price | $ 0.01 | $ 0.01 | |||||||
Accrued interest | $ 36,244 | $ 36,244 | |||||||
Aggregate warrants to purchase | 1,050,000 | 1,050,000 | |||||||
Fair value of the warrants | $ 1,066,535 | ||||||||
Amortization of debt discount | 409,668 | $ 106,465 | |||||||
Interest expense | 14,498 | ||||||||
Derivative expense | 90,623 | ||||||||
Repaid principal | $ 393,215 | ||||||||
Investor agreed to warrants | 288,750 | ||||||||
Convertible promissory note | |||||||||
Convertible Notes Payable (Textual) | |||||||||
Warrant initial exercise price | $ 0.01 | $ 0.01 | |||||||
Accrued interest | $ 15,917 | $ 15,917 | |||||||
Accrued fees | 2,500 | 2,500 | |||||||
Securities Purchase Agreements [Member] | |||||||||
Convertible Notes Payable (Textual) | |||||||||
Convertible promissory note | $ 430,000 | ||||||||
Maturity date | Sep. 9, 2020 | ||||||||
Principal balance | $ 57,750 | $ 57,750 | |||||||
Warrant to purchase | $ 144,375 | $ 144,375 | $ 144,375 | ||||||
Interest rate | 12.00% | 12.00% | 12.00% | 12.00% | |||||
Original issue discount | $ 5,000 | $ 5,000 | $ 5,000 | ||||||
Origination fees, net | 2,750 | 2,750 | 2,750 | ||||||
Debt discount charged to interest expense | 85,502 | 85,502 | |||||||
Warrant initial exercise price | $ 0.10 | ||||||||
Net proceeds value | 50,000 | 50,000 | |||||||
Embedded conversion option as derivative liabilities | $ 69,793 | $ 69,793 | |||||||
Current period operations as initial derivative expense | $ 245,918 | $ 245,918 | |||||||
Warrants to cancelled | 144,375 | 144,375 | |||||||
Securities Purchase Agreements [Member] | Convertible Promissory Notes [Member] | |||||||||
Convertible Notes Payable (Textual) | |||||||||
Convertible promissory note | $ 430,000 | ||||||||
Debt conversion, description | (i) the lowest Trading Price (as defined below) during the previous twenty-five Trading Day period ending on the latest complete Trading Day prior to the date of this Note, and (ii) the Variable Conversion Price (as defined below) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Company). The "Variable Conversion Price" shall mean 60% multiplied by the Market Price (as defined herein) (representing a discount rate of 40%). "Market Price" means the lowest Trading Price (as defined below) for the Company's common stock during the twenty-five Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. | ||||||||
Maturity date | Jun. 6, 2020 | ||||||||
Original issue discount | $ 45,000 | $ 45,000 | |||||||
Received net proceeds | 382,250 | 382,250 | |||||||
Origination fees, net | $ 2,750 | $ 2,750 | |||||||
Warrant to purchase shares of common stock | 1,050,000 | 1,050,000 | |||||||
Warrant initial exercise price | $ 0.10 | ||||||||
Net proceeds value | $ 267,250 | $ 267,250 | |||||||
Net of origination fees | $ 2,750 | $ 2,750 |
Notes Payable - Related Party (
Notes Payable - Related Party (Details) - USD ($) | Nov. 14, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Notes Payable - Related Party (Textual) | ||||
Maximum loan amount | $ 156,200 | $ 25,000 | ||
Note balance due | 400,000 | $ 400,000 | ||
Notes payable related interest expense | $ 54,049 | $ 53,852 | ||
Bear interest percentage | 18.00% | |||
Interest shall accrue | $ 0.18 | |||
Revolving Credit Facility Loan and Security Agreement [Member] | ||||
Notes Payable - Related Party (Textual) | ||||
Maximum loan amount | $ 400,000 | |||
Initial amount | 200,000 | |||
Additional loan amount | $ 200,000 | |||
Maturity date | Nov. 14, 2020 | |||
Loan agreement, description | In the event that the Company’s accounts receivable balance plus inventory balance is less than paid principal balance of the Note as of December 31, 2018, the Company shall have 45 days (through and until February 15, 2019) to cure such violation and an establish accounts receivable plus inventory equal to the unpaid principal balance of the Note. Commencing March 31, 2019 and at all times thereafter through the remainder of the commitment period and for so long thereafter as there is any amount still due and owing under the Note, the Company must maintain an accounts receivable balances plus inventory such that the outstanding principal borrowed by Company under the Loan Agreement and Note is less than or equal to eighty five percent (85%) of accounts receivable plus fifty percent (50%) of inventory, all as measured at the same point in time. | |||
Bear interest percentage | 12.00% |
Note Payable (Details)
Note Payable (Details) - Paycheck Protection Program [Member] - USD ($) | 1 Months Ended | 9 Months Ended |
Apr. 28, 2020 | Sep. 30, 2020 | |
Note Payable (Textual) | ||
Principal amount | $ 156,200 | |
Maturity date | Apr. 28, 2022 | |
Interest rate | 1.00% | |
Repayment of notes payable | $ 8,900 | |
Interest expenses | $ 668 |
Shareholders' Deficit (Details)
Shareholders' Deficit (Details) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Instrument, Redemption, Period One [Member] | |
Redemption Percentage | 100.00% |
Redemption Period, description | The period beginning on the date of the issuance of shares of Series A Preferred Stock and ending on the date which is sixty days following the Issuance Date. |
Debt Instrument, Redemption, Period Two [Member] | |
Redemption Percentage | 107.00% |
Redemption Period, description | The period beginning on the date that is sixty-one days from the Issuance Date and ending ninety days following the Issuance Date. |
Debt Instrument, Redemption, Period Three [Member] | |
Redemption Percentage | 112.00% |
Redemption Period, description | The period beginning on the date that is ninety-one days from the Issuance Date and ending one hundred twenty days following the Issuance Date. |
Debt Instrument, Redemption, Period Four [Member] | |
Redemption Percentage | 117.00% |
Redemption Period, description | The period beginning on the date that is one hundred twenty-one days from the Issuance Date and ending one hundred fifty days following the Issuance Date. |
Debt Instrument, Redemption, Period Five [Member] | |
Redemption Percentage | 120.00% |
Redemption Period, description | The period beginning on the date that is one hundred fifty-one days from the Issuance Date and ending one hundred eighty days following the Issuance Date. |
Shareholders' Deficit (Details
Shareholders' Deficit (Details 1) | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Number of Non-vested Shares | |
Balance, Beginning | shares | 17,675,299 |
Granted | shares | 7,450,000 |
Shares vested | shares | (1,273,373) |
Balance, Ending | shares | 23,851,926 |
Weighted Average Grant Date Fair Value | |
Balance, Beginning | $ / shares | $ 0.23 |
Granted | $ / shares | 0.04 |
Shares vested | $ / shares | (0.41) |
Balance, Ending | $ / shares | $ 0.16 |
Shareholders' Deficit (Detail_2
Shareholders' Deficit (Details 2) - Stock options [Member] | 9 Months Ended |
Sep. 30, 2020USD ($)$ / sharesshares | |
Number of Options | |
Balance Outstanding, Beginning | shares | 8,445,698 |
Granted | shares | |
Forfeited | shares | |
Balance Outstanding, Ending | shares | 8,445,698 |
Exercisable | shares | 8,404,602 |
Weighted Average Exercise Price | |
Balance Outstanding, Beginning | $ / shares | $ 0.40 |
Granted | $ / shares | |
Forfeited | $ / shares | |
Balance Outstanding, Ending | $ / shares | 0.40 |
Exercisable | $ / shares | $ 0.40 |
Weighted Average Remaining Contractual Term (Years) | |
Balance Outstanding, Ending | 5 years 4 months 20 days |
Exercisable, Ending | 5 years 4 months 20 days |
Aggregate Intrinsic Value | |
Balance Outstanding, Ending | $ | $ 0 |
Exercisable | $ | $ 0 |
Shareholders' Deficit (Detail_3
Shareholders' Deficit (Details 3) - Warrants [Member] | 9 Months Ended |
Sep. 30, 2020USD ($)$ / sharesshares | |
Number of Warrants | |
Balance Outstanding, Beginning | shares | 2,050,000 |
Granted | shares | 288,750 |
Cancelled | shares | (288,750) |
Balance Outstanding, Ending | shares | 2,050,000 |
Exercisable | shares | 2,050,000 |
Weighted Average Exercise Price | |
Balance Outstanding, Beginning | $ / shares | $ 0.10 |
Granted | $ / shares | 0.10 |
Cancelled | $ / shares | 0.10 |
Balance Outstanding, Ending | $ / shares | 0.05 |
Exercisable | $ / shares | $ 0.05 |
Weighted Average Remaining Contractual Term (Years) | |
Balance Outstanding, Ending | 3 years 10 months 28 days |
Exercisable | 3 years 10 months 28 days |
Aggregate Intrinsic Value | |
Balance Outstanding, Beginning | $ | |
Balance Outstanding, Ending | $ | |
Exercisable | $ |
Shareholders' Deficit (Detail_4
Shareholders' Deficit (Details Textual) | Jul. 02, 2020USD ($)shares | May 08, 2020USD ($)$ / sharesshares | Apr. 17, 2020USD ($)shares | Apr. 02, 2020USD ($)$ / sharesshares | Jan. 13, 2020USD ($)$ / sharesshares | Dec. 12, 2019USD ($)$ / sharesshares | Aug. 20, 2020$ / sharesshares | Apr. 28, 2020USD ($)$ / sharesshares | Feb. 20, 2020USD ($)$ / sharesshares | Feb. 18, 2020USD ($)$ / sharesshares | Nov. 30, 2019USD ($)$ / sharesshares | Oct. 31, 2019USD ($)$ / sharesshares | Sep. 30, 2020USD ($)$ / sharesshares | Jun. 30, 2020USD ($)shares | Mar. 31, 2020USD ($)shares | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)$ / sharesshares | Sep. 30, 2019USD ($)shares | Dec. 31, 2019USD ($)$ / sharesshares |
Shareholders' Deficit (Textual) | |||||||||||||||||||
Preferred Stock par value | $ / shares | $ 0.10 | $ 0.10 | $ 0.10 | ||||||||||||||||
Net of fees | $ 2,500 | ||||||||||||||||||
Amortization of debt discount | 424,001 | $ 49,042 | |||||||||||||||||
Accrued interest | $ 36,244 | $ 36,244 | |||||||||||||||||
Common shares issued for debt conversion, shares | shares | 203,125 | 37,171,800 | |||||||||||||||||
Amount of common stock upon conversion | 86,944 | $ 91,365 | |||||||||||||||||
Accrued dividends | 1,055 | $ 1,055 | |||||||||||||||||
Stock-based compensation | 366,825 | 1,845,834 | |||||||||||||||||
Interest expense | 274,966 | $ 58,421 | 732,547 | 171,060 | |||||||||||||||
Issuance of common shares for services, amount | 6,500 | $ 50,000 | 50,000 | ||||||||||||||||
Stock-based professional fees | $ (69,917) | (292,785) | |||||||||||||||||
Common share exercise compensation, shares | shares | 16,132,701 | ||||||||||||||||||
Total unrecognized compensation expense related to unvested common shares | $ 194,889 | $ 194,889 | |||||||||||||||||
Weighted average period | 1 year | ||||||||||||||||||
Cash proceeds from investor | $ 117,047 | ||||||||||||||||||
Warrant exercise price reduced | $ / shares | $ 0.01 | $ 0.01 | |||||||||||||||||
Aggregate principal amount | $ 135,833 | ||||||||||||||||||
Convert of deferred compensation | $ 16,250 | ||||||||||||||||||
Exercise of stock options, value | 19,185 | ||||||||||||||||||
Recorded settlement expense | |||||||||||||||||||
Increase decrease in accounts payable | 55,721 | 161,330 | |||||||||||||||||
Increase decrease in accrued expenses | 88,771 | 51,097 | |||||||||||||||||
Shares issued for deferred compensation, description | the Company entered into two one-year advisory board agreements with two individuals for services to be rendered on the Company's medical advisory board. In connection with these advisory board agreements, the Company issued an aggregate of 500,000 restricted common shares of the Company to these advisory board members. These shares vest on April 1, 2021. These shares were valued at $20,000, or $0.04 per common share, based on contemporaneous common share sales by the Company. In connection with this consulting agreement, during the nine months ended September 30, 2020, accretion of stock-based consulting fees amounted to $10,000 and the remaining stock-based consulting fees of $10,000 shall be accreted over the remaining vesting period. | ||||||||||||||||||
Conversion of principal balance | $ 152,285 | ||||||||||||||||||
Stock option, description | The weighted average period over which stock-based compensation expense related to these options will be recognized is approximately 4 months. | ||||||||||||||||||
Accrued dividend payable | $ 4,852 | $ 1,562 | |||||||||||||||||
Investor and redeemed | shares | 103,200 | ||||||||||||||||||
Redemption penalties | 12,285 | ||||||||||||||||||
Remaining put premium balance | $ 24,207 | ||||||||||||||||||
Gain on extinguishment | 24,207 | ||||||||||||||||||
Conversion Price | 450,204 | ||||||||||||||||||
Equity Option [Member] | |||||||||||||||||||
Shareholders' Deficit (Textual) | |||||||||||||||||||
Recognized compensation expense | 576,025 | $ 1,539,188 | |||||||||||||||||
Total unrecognized compensation expense related to unvested common shares | $ 33,636 | 33,636 | |||||||||||||||||
Accounts Payable [Member] | |||||||||||||||||||
Shareholders' Deficit (Textual) | |||||||||||||||||||
Common shares per share | $ / shares | $ 0.04 | ||||||||||||||||||
Sale of common shares, shares | shares | 151,456 | ||||||||||||||||||
Sale of common shares, value | $ 6,058 | ||||||||||||||||||
Consulting Agreement [Member] | |||||||||||||||||||
Shareholders' Deficit (Textual) | |||||||||||||||||||
Common shares per share | $ / shares | $ 0.04 | ||||||||||||||||||
Shares of grant restricted stock award of common shares | shares | 1,250,000 | ||||||||||||||||||
Value of grant restricted stock award of common shares | $ 50,000 | ||||||||||||||||||
Stock-based professional fees | $ 50,000 | ||||||||||||||||||
Employment Agreements [Member] | |||||||||||||||||||
Shareholders' Deficit (Textual) | |||||||||||||||||||
Common shares per share | $ / shares | $ 0.04 | ||||||||||||||||||
Shares of grant restricted stock award of common shares | shares | 200,000 | ||||||||||||||||||
Value of grant restricted stock award of common shares | $ 8,000 | ||||||||||||||||||
Restricted Stock Award Agreements [Member] | |||||||||||||||||||
Shareholders' Deficit (Textual) | |||||||||||||||||||
Common shares per share | $ / shares | $ 0.04 | ||||||||||||||||||
Shares of grant restricted stock award of common shares | shares | 6,750,000 | ||||||||||||||||||
Value of grant restricted stock award of common shares | $ 270,000 | ||||||||||||||||||
Percentage of restricted shares | 100.00% | ||||||||||||||||||
Investor [Member] | |||||||||||||||||||
Shareholders' Deficit (Textual) | |||||||||||||||||||
Common shares per share | $ / shares | $ 0.023 | $ 0.04 | $ 0.04 | ||||||||||||||||
Sale of common shares, shares | shares | 7,000,000 | 7,000,000 | 7,000,000 | ||||||||||||||||
Sale of common shares, value | $ 161,000 | $ 280,000 | $ 280,000 | ||||||||||||||||
Warrants [Member] | |||||||||||||||||||
Shareholders' Deficit (Textual) | |||||||||||||||||||
Exercise price | $ / shares | $ 0.10 | $ 0.10 | |||||||||||||||||
Warrant exercise price reduced | $ / shares | $ 0.003 | $ 0.003 | |||||||||||||||||
Warrant purchase, description | On March 30, 2020 and on April 23, 2020, in connection with Purchase Agreements with an accredited investor (See Note 6), the Company issued warrants to purchase an aggregate amount up to 288,750 shares of the Company's common stock (the "Warrants"). The Warrants were exercisable at any time on or after the date of the issuance and entitled this investor to purchase shares of the Company's common stock for a period of five years from the initial date the warrants become exercisable. Under the terms of the Warrants, the holder was entitled to exercise the Warrants to purchase up to 288,750 shares of the Company's common stock at an initial exercise price of $0.10, subject to adjustment as detailed in the Warrants. In connection with the issuance of the warrants, on the initial measurement date, the relative fair value of the warrants of $14,498 was recorded as a debt discount and an increase in paid-in capital (See Note 6). | ||||||||||||||||||
Preferred Stock | |||||||||||||||||||
Shareholders' Deficit (Textual) | |||||||||||||||||||
Accrued dividend payable | $ 1,740 | ||||||||||||||||||
Non-vested, forfeitable common shares [Member] | |||||||||||||||||||
Shareholders' Deficit (Textual) | |||||||||||||||||||
Common shares issued for debt conversion, shares | shares | 500,000 | ||||||||||||||||||
Common shares issued for debt conversion, amount | $ 6,500 | ||||||||||||||||||
Shares conversion price | 0.013 | ||||||||||||||||||
Amount of common stock upon conversion | $ 23,897 | $ 12,800 | |||||||||||||||||
Shares of common stock upon conversion | shares | 23,896,800 | 12,800,000 | |||||||||||||||||
Issuance of common shares for services, shares | shares | 500,000 | 7,450,000 | 1,250,000 | ||||||||||||||||
Issuance of common shares for services, amount | $ 500 | $ 7,450 | $ 1,250 | ||||||||||||||||
Stock-based professional fees | $ 3,250 | ||||||||||||||||||
Prepaid expenses | $ 3,250 | ||||||||||||||||||
2018 Long-term Incentive Plan [Member] | |||||||||||||||||||
Shareholders' Deficit (Textual) | |||||||||||||||||||
Aggregate shares of common stock issued without any minimum vesting period | shares | 25,000,000 | ||||||||||||||||||
Aggregate number of common stock issued under plan | shares | 50,000,000 | ||||||||||||||||||
Incentive stock options | shares | 11,445,698 | 11,445,698 | |||||||||||||||||
Description of options to acquire common stock | The exercise price of options granted under our 2018 Plan must at least be equal to the fair market value of the Company's common stock on the date of grant and the term of an option may not exceed ten years, except that with respect to an incentive stock option granted to any employee who owns more than 10% of the voting power of all classes of the Company's outstanding stock as of the grant date the term must not exceed five years and the exercise price must equal at least 110% of the fair market value on the grant date. | ||||||||||||||||||
Restricted stock have been issued | $ 23,700,000 | $ 23,700,000 | |||||||||||||||||
Series A Preferred Stock [Member] | |||||||||||||||||||
Shareholders' Deficit (Textual) | |||||||||||||||||||
Shares designated | shares | 800,000 | 800,000 | 800,000 | ||||||||||||||||
Preferred Stock par value | $ / shares | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | ||||||||||||||
Preferred stock stated value | $ / shares | $ 1 | $ 1 | |||||||||||||||||
Preferred stock unregistered | shares | 211,200 | 211,200 | 154,800 | 154,800 | |||||||||||||||
Preferred stock unregistered value | $ 133,000 | $ 133,000 | $ 129,000 | $ 129,000 | |||||||||||||||
Cash proceeds | 127,000 | 127,000 | |||||||||||||||||
Net of fees | 6,000 | 6,000 | |||||||||||||||||
Amortization of debt discount | $ 6,000 | $ 6,000 | |||||||||||||||||
Debt premium to paid-in capital. | 49,543 | 49,543 | |||||||||||||||||
Stated value | $ 211,200 | $ 211,200 | |||||||||||||||||
Common shares per share | $ / shares | $ 0.833 | $ 0.833 | $ 0.833 | $ 0.833 | |||||||||||||||
Accrued dividends | $ 4,224 | $ 4,224 | |||||||||||||||||
Aggregate premium | $ 0 | $ 0 | |||||||||||||||||
Series C Preferred Stock [Member] | |||||||||||||||||||
Shareholders' Deficit (Textual) | |||||||||||||||||||
Shares designated | shares | 100,000 | 100,000 | 100,000 | ||||||||||||||||
Preferred Stock par value | $ / shares | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | |||||||||||||||
Preferred stock stated value | $ / shares | $ 100 | $ 100 | |||||||||||||||||
Preferred Stock dividend Rate | 2.00% | 4.00% | |||||||||||||||||
Preferred stock dividend increased | 22.00% | ||||||||||||||||||
Conversion price converted into market price | 81.00% | ||||||||||||||||||
Market price representing at discount rate | 19.00% | ||||||||||||||||||
Debt premium charge to interest expenses | $ 42,553 | ||||||||||||||||||
Preferred stock unregistered value | $ 630,000 | 630,000 | |||||||||||||||||
Cash proceeds | 120,000 | ||||||||||||||||||
Net of fees | 9,000 | ||||||||||||||||||
Amortization of debt discount | 9,000 | ||||||||||||||||||
Amortization of discount charged to interest expense | 14,333 | ||||||||||||||||||
Amount of common stock upon conversion | $ 211,200 | ||||||||||||||||||
Shares of common stock upon conversion | shares | 16,132,701 | ||||||||||||||||||
Interest expense | $ 126,423 | ||||||||||||||||||
Description of options to acquire common stock | The Company issued 16,132,701 shares its common stock upon the conversion of 211,200 shares of Series A preferred with a stated redemption value of $211,200 and related accrued dividends payable of $4,224. The conversion price was based on contractual terms of the related Series A preferred shares. Upon conversion, the Company reclassified put premium of $49,543 to paid-in capital. | ||||||||||||||||||
Purchase of shares | shares | 6,300 | 6,300 | |||||||||||||||||
Designations established share | shares | 100,000 | ||||||||||||||||||
Series B Preferred Stock [Member] | |||||||||||||||||||
Shareholders' Deficit (Textual) | |||||||||||||||||||
Shares designated | shares | 100,000 | 100,000 | 100,000 | 100,000 | |||||||||||||||
Preferred Stock par value | $ / shares | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | |||||||||||||||
Preferred Stock dividend Rate | 2.00% | ||||||||||||||||||
Stated value | $ 1,000 | ||||||||||||||||||
Accrued dividends | $ 1,055 | $ 1,055 | |||||||||||||||||
Series A preferred stock balance | 109,740 | 109,740 | |||||||||||||||||
Liquidation value | $ 630,000 | 630,000 | |||||||||||||||||
Conversion of principal balance | 631,055 | ||||||||||||||||||
Stock option, description | The Series B is convertible at the option of a holder or if the closing price of the common stock exceeds 400% of the Conversion Price for a period of twenty consecutive trading days, at the option of the Company. Conversion Price means a price per share of the common stock equal to 100% of the lowest daily volume weighted average price of the common stock during the two years preceding or subsequent two years following the Issuance Date, subject to adjustment as otherwise provided in the Certificate of Designations (the "Conversion Price"). | ||||||||||||||||||
Accrued dividend payable | $ 1,740 | ||||||||||||||||||
Convertible Preferred Stock [Member] | |||||||||||||||||||
Shareholders' Deficit (Textual) | |||||||||||||||||||
Settlement of accrued compensation | shares | 108 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Apr. 02, 2020 | Apr. 08, 2016 | Apr. 28, 2020 | Mar. 27, 2019 | Apr. 25, 2018 | Oct. 18, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2013 | Sep. 30, 2020 | Jan. 24, 2020 |
Commitments and Contingencies (Textual) | |||||||||||
Unpaid commissions and damages | $ 10,000 | ||||||||||
Bonus to officers and an employee | $ 280,000 | ||||||||||
Employment Agreements [Member] | |||||||||||
Commitments and Contingencies (Textual) | |||||||||||
Annual base salary | $ 240,000 | ||||||||||
Common shares per share | $ 0.04 | ||||||||||
Shares of grant restricted stock award of common shares | 200,000 | ||||||||||
Value of grant restricted stock award of common shares | $ 8,000 | ||||||||||
Employment Agreements [Member] | Mr. Scott Silverman [Member] | |||||||||||
Commitments and Contingencies (Textual) | |||||||||||
Annual base salary | $ 300,000 | ||||||||||
Stock options granted minimum | 500,000 | ||||||||||
Strike price | $ 0.31 | ||||||||||
Description of employment agreement | As consideration for these services, the employment agreement provides Mr. Silverman with the following compensation and benefits: ● An annual base salary of $300,000, with a 10% increase on each anniversary date contingent upon achieving certain performance objectives as set by the Board. Until the Company raises $1,000,000 in debt or equity financing after entering into this agreement, Mr. Silverman will receive ½ of the base salary on a monthly basis with the other ½ being deferred. Upon the financing being raised, Mr. Silverman will receive the deferred portion of his compensation and his base salary will be paid in full moving forward. ● After the first $500,000 of equity investments is raised by the Company, after entering into this employment agreement, Mr. Silverman will receive a capital raise success bonus of 5% of all equity capital raised from investors/lenders introduced by him to the Company. ● Annual cash performance bonus opportunity as determined by the Board. ● An option to acquire 3,000,000 common shares of the Company, with a strike price of $0.31 per unit. These options will vest pro rata on a monthly basis for the term of the employment agreement. On each anniversary, Mr. Silverman will be eligible to be granted a minimum of 500,000 stock options of the Company at a strike price of $0.85 per common unit contingent upon the achievement of certain performance objectives. ● Certain other employee benefits and perquisites, including reimbursement of necessary and reasonable travel and participation in retirement and welfare benefits. | ||||||||||
Financing received | $ 1,240,000 | ||||||||||
Percentage of bonus provision | 5.00% | ||||||||||
Common shares per share | $ 0.85 | ||||||||||
Unpaid commissions and damages | $ 10,000 | ||||||||||
Licensing agreement [Member] | |||||||||||
Commitments and Contingencies (Textual) | |||||||||||
Refundable license fee | $ 10,000 | ||||||||||
Percentage of royalty payments on net sales | 5.00% | ||||||||||
Subscription Agreement [Member] | |||||||||||
Commitments and Contingencies (Textual) | |||||||||||
Anti-dilution rights on common stock sales | 1,175,902 | 3,880,480 | 2,425,300 | ||||||||
Subsequent investments based upon enterprise value | $ 2,000,000 | ||||||||||
Common shares per share | $ 0.85 | $ 0.77 | |||||||||
Exercise price per share | 0.85 | ||||||||||
Subscription Agreement [Member] | Minimum [Member] | |||||||||||
Commitments and Contingencies (Textual) | |||||||||||
Common shares per share | $ 0.85 | $ 0.77 |
Concentrations (Details)
Concentrations (Details) - Segment | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Total sales [Member] | ||
Concentrations (Textual) | ||
Concentration risk, percentage | 24.00% | |
Number of customers | 1 | |
Total sales [Member] | One customer [Member] | ||
Concentrations (Textual) | ||
Concentration risk, percentage | 20.10% | |
Number of customers | 1 | |
Accounts Receivable [Member] | One customer [Member] | ||
Concentrations (Textual) | ||
Concentration risk, percentage | 77.50% | |
Number of customers | 1 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue | $ 252,940 | $ 171,383 | $ 356,770 | $ 416,178 |
C-Bond Secure multi-purpose and BRS ballistic resistant glass protection systems [Member] | ||||
Revenue | 116,388 | 300,501 | ||
C-Bond Nanoshield solution sales [Member] | ||||
Revenue | 90,028 | 89,381 | ||
Disinfection products | ||||
Revenue | 134,989 | |||
Installation and other services [Member] | ||||
Revenue | 4,892 | 10,409 | ||
Freight and delivery [Member] | ||||
Revenue | $ 10,473 | $ 15,887 |
Operating Lease Right-Of-Use _3
Operating Lease Right-Of-Use (ROU) Assets and Operating Lease Liabilities (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Notes to Financial Statements [Abstract] | ||
Office leases right of use assets | $ 74,296 | $ 74,296 |
Less: accumulated amortization | (39,979) | (4,488) |
Balance of ROU assets | $ 34,317 | $ 69,808 |
Operating Lease Right-Of-Use _4
Operating Lease Right-Of-Use (ROU) Assets and Operating Lease Liabilities (Details 1) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Notes to Financial Statements [Abstract] | ||
Lease liabilities related to office leases right of use assets | $ 34,762 | $ 69,852 |
Less: current portion of lease liabilities | (34,762) | (47,636) |
Lease liabilities - long-term | $ 22,216 |
Operating Lease Right-Of-Use _5
Operating Lease Right-Of-Use (ROU) Assets and Operating Lease Liabilities (Details 2) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Notes to Financial Statements [Abstract] | ||
2021 | $ 36,352 | |
Total minimum non-cancelable operating lease payments | 36,352 | |
Less: discount to fair value | (1,590) | |
Total lease liability at June 30, 2020 | $ 34,762 | $ 69,852 |
Operating Lease Right-Of-Use _6
Operating Lease Right-Of-Use (ROU) Assets and Operating Lease Liabilities (Details Textual) - USD ($) | 1 Months Ended | 9 Months Ended | |
Oct. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Notes to Financial Statements [Abstract] | |||
Rent expense | $ 69,260 | $ 75,434 | |
Lease agreement, description | The Company entered into an 18-month lease agreement for the lease of office and warehouse space under a non-cancelable operating lease through May 31, 2021. From the lease commencement date of December 1, 2019 until November 30, 2020, monthly rent shall be $4,444 and from December 1, 2020 to May 31, 2021, monthly rent shall be $4,577 per month. | ||
Operating lease liability discount rate | 12.00% |
Subsequent Event (Details)
Subsequent Event (Details) - USD ($) | Nov. 09, 2020 | Oct. 09, 2020 | Oct. 07, 2020 | Oct. 06, 2020 | Oct. 20, 2020 | Sep. 30, 2020 |
Series C Preferred Stock [Member] | ||||||
Subsequent Event (Textual) | ||||||
Cash proceeds | $ 120,000 | |||||
Subsequent Event [Member] | ||||||
Subsequent Event (Textual) | ||||||
Conversion of Stock, Shares Issued | 500,000 | 9,000,000 | 1,275,000 | |||
Restricted common shares, valued | $ 6,000 | $ 76,500 | $ 10,200 | |||
Common stock, Par value | $ 0.012 | $ 0.0085 | $ 0.008 | |||
Fees | $ 10,200 | |||||
Subsequent Event [Member] | Series C Preferred Stock [Member] | ||||||
Subsequent Event (Textual) | ||||||
Preferred stock redemption value | $ 2,500 | $ 2,000 | ||||
Preferred stock Shares Issued | 250,000 | 200,000 | ||||
Preferred stock Par value | $ 100 | $ 100 |