Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jun. 30, 2018 | Aug. 15, 2018 | |
Registrant Name | IronClad Encryption Corp | |
Registrant CIK | 1,455,926 | |
SEC Form | 10-Q | |
Period End date | Jun. 30, 2018 | |
Fiscal Year End | --03-31 | |
Trading Symbol | irnc | |
Tax Identification Number (TIN) | 810,409,475 | |
Filer Category | Smaller Reporting Company | |
Current with reporting | Yes | |
Voluntary filer | No | |
Well-known Seasoned Issuer | No | |
Emerging Growth Company | false | |
Ex Transition Period | false | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,019 | |
Document Fiscal Period Focus | Q1 | |
Entity File Number | 000-53662 | |
Entity Incorporation, State Country Name | Delaware | |
Entity Address, Address Line One | One Riverway | |
Entity Address, Address Line Two | 777 South Post Oak Lane, Suite 1700 | |
Entity Address, City or Town | Houston | |
Entity Address, State or Province | Texas | |
Entity Address, Postal Zip Code | 77,056 | |
City Area Code | 888 | |
Local Phone Number | 362 - 7972 | |
Common Class A | ||
Number of common stock shares outstanding | 66,998,672 | |
Common Class B | ||
Number of common stock shares outstanding | 1,538,872 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2018 | Mar. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 427,129 | $ 448,061 |
Accounts receivable | 371,239 | 301,978 |
Prepaid expense and deposits | 42,563 | 55,719 |
Total current assets | 840,931 | 805,758 |
Other assets | ||
Patents, net | 367,911 | 170,976 |
Total assets | 1,208,842 | 976,734 |
Current liabilities | ||
Accounts payable | 670,385 | 637,367 |
Accounts payable, legal fees | 395,165 | 362,598 |
Accounts payable, related parties | 56,457 | 79,542 |
Accrued liabilities | 87,417 | 219,057 |
Accrued liabilities, payroll | 896,433 | 700,521 |
Accrued interest | 72,819 | 39,761 |
Total current liabilities | 3,091,238 | 2,505,668 |
Note payable, 8.5% | 464,598 | 490,000 |
Total other liabilities | 464,598 | 490,000 |
Commitments and contingencies | 0 | 0 |
Total liabilities | 3,555,836 | 2,995,668 |
Stockholders' Equity (Deficit) | ||
Preferred Stock, Value | 0 | 0 |
Additional paid-in capital | 14,253,104 | 11,514,917 |
Common shares of Class A stock to be issued | 0 | 101,750 |
Accumulated deficit | (16,668,491) | (13,703,597) |
Total stockholders' equity (deficit) | (2,346,994) | (2,018,934) |
Total liabilities and stockholders' equity | 1,208,842 | 976,734 |
Common Class A | ||
Stockholders' Equity (Deficit) | ||
Common Stock, Value | 66,854 | 66,457 |
Common Class B | ||
Stockholders' Equity (Deficit) | ||
Common Stock, Value | 1,539 | 1,539 |
Convertible note payable, 10%, net #2 | ||
Current liabilities | ||
Convertible Notes Payable, Current | 82,500 | 3,362 |
Convertible note payable, 10%, net #3 | ||
Current liabilities | ||
Convertible Notes Payable, Current | 135,000 | 0 |
Convertible note payable, 12%, derivative liability #4 | ||
Current liabilities | ||
Convertible Notes Payable, Current | 552,149 | 234,138 |
Convertible note payable, 10%, net #5 | ||
Current liabilities | ||
Convertible Notes Payable, Current | 48,919 | 61,585 |
Convertible note payable, 12%, net #6 | ||
Current liabilities | ||
Convertible Notes Payable, Current | 28,734 | 85,698 |
Convertible note payable, 12%, net #7 | ||
Current liabilities | ||
Convertible Notes Payable, Current | 8,699 | 50,415 |
Convertible note payable, 10%, net #8 | ||
Current liabilities | ||
Convertible Notes Payable, Current | 41,303 | 6,168 |
Note payable 6% | ||
Current liabilities | ||
Notes Payable, Current | $ 15,258 | $ 25,456 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets - Parenthetical - $ / shares | Jun. 30, 2018 | Mar. 31, 2018 | Mar. 31, 2017 |
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 20,000,000 | 20,000,000 | 20,000,000 |
Preferred Stock, Shares Issued | 0 | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 | 0 |
Common Class A | |||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 150,000,000 | ||
Common Stock, Shares, Issued | 66,854,674 | 65,258,532 | |
Common Stock, Shares, Outstanding | 66,854,674 | 65,258,532 | |
Common Class B | |||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 1,707,093 | ||
Common Stock, Shares, Issued | 1,538,872 | 0 | |
Common Stock, Shares, Outstanding | 1,538,872 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Details | ||
Revenues | $ 579,236 | $ 0 |
Operating expenses | ||
Product development costs | 587,073 | 327,749 |
Services | 389,281 | 0 |
General and administrative | 607,389 | 294,856 |
Officer and directors fees | 1,307,855 | 901,684 |
Investor relations | 49,450 | 519,409 |
Professional fees | 94,015 | 79,573 |
Amortization | 7 | 7 |
Total operating Expenses | 3,035,070 | 2,123,278 |
Loss from operations | (2,455,834) | (2,123,278) |
Other income (expense) | ||
Interest income | 1 | 232 |
Interest expense | (351,113) | 0 |
Financing expense | (162,869) | 0 |
Gain (loss) on valuation of derivative liability | 4,921 | 0 |
Total other income (expense) | (509,060) | 232 |
Loss before taxes | (2,964,894) | (2,123,046) |
Income taxes | ||
Income tax benefit | 0 | 0 |
Income tax expense | 0 | 0 |
Total income taxes | 0 | 0 |
Net loss | $ (2,964,894) | $ (2,123,046) |
Net loss per common share, basic and diluted | $ (0.04) | $ (0.03) |
Weighted average number of basic and diluted common stock shares | 68,118,349 | 66,739,071 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (2,964,894) | $ (2,123,046) |
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: | ||
Amortization expense | 7 | 7 |
Amortization of notes discount amounts | 13,261 | 0 |
Amortization of loan discount costs, BCF | 46,887 | 0 |
Amortization of loan discount costs, Derivatives | 257,579 | 0 |
Financing fees | 162,869 | 0 |
(Gain) loss on valuation of derivative liability | (4,922) | 0 |
Common stock issued for services, general and administrative | 84,500 | 0 |
Common stock issued for services, professional fees | 23,000 | 0 |
Common stock issued for services, investor relations | 0 | 217,500 |
Stock options issued for services, general and administrative | 548,077 | 8,083 |
Stock options issued for services, development | 559,510 | 10,092 |
Stock options issued for services, officers and directors | 1,168,606 | 836,684 |
Stock options issued for services, investor relations | 0 | 390,170 |
Changes in assets and liabilities: | ||
Decrease (increase) in accounts receivable | (69,261) | 0 |
Decrease (increase) in prepaids | 13,156 | (25,000) |
Increase (decrease) in accounts payable | 42,500 | 46,845 |
Increase (decrease) in accrued expense | 64,272 | 176,731 |
Increase (decrease) in accrued interest | 33,058 | (6,263) |
Net cash used by operating activities | (21,795) | (468,196) |
Cash flows from investing activities: | ||
Patent applications | (196,942) | (79,733) |
Net cash used by investing activities | (196,942) | (79,733) |
Cash flows from financing activities: | ||
Proceeds from issuing convertible note payable, common stock | 250,000 | 71,325 |
Less transaction costs | (15,000) | |
Repayments of amended note payable | (125,000) | |
Proceeds from issuing amended note payable | 100,000 | |
Less transaction costs | (2,000) | |
Reayment on 6.5%, insurance | (10,195) | 0 |
Conversion of options, proceeds from issuing common stock | 0 | 12,820 |
Net cash provided by financing activities | 197,805 | 84,145 |
Increase (decrease) in cash and cash equivalents | (20,932) | (463,784) |
Cash and Cash Equivalents, at Carrying Value, Beginning Balance | 448,061 | 713,784 |
Cash and Cash Equivalents, at Carrying Value, Ending Balance | 427,129 | 250,000 |
Supplemental Cash Flow: | ||
Interest paid | 327 | 0 |
Income taxes paid | 0 | 0 |
Common stock issued for convertible debt | 20,000 | 0 |
Beneficial conversion and derivative liability feature | $ 24,155 | $ 0 |
Note 1. Organization, Recent Hi
Note 1. Organization, Recent History, and Description of Businesses-Present and Past | 3 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 1. Organization, Recent History, and Description of Businesses-Present and Past | Note 1 Organization, Recent History, and Description of Businesses-Past and Present Description of Businesses: Present and Past IronClad Encryption Corporation (formerly Butte Highlands Mining Corporation) is a company developing and licensing cyber software technology to secure data files (stored and at rest) and electronic communications (in motion from electronic transmission over the internet or through telephone systems). Data at rest and in motion are both safeguarded from unauthorized access through the use of dynamic encryption and perpetual authentication. InterLok Key Management, Inc. (formerly InterLok Key Management, LLC) is the company that initially developed and maintained the patents and was formed in Texas on June 12, 2006 and incorporated ten years later on June 16, 2016. On January 6, 2017 InterLok entered into a Share Exchange Agreement ("Share Exchange") with Butte Highlands Mining Company. Under the terms of the agreement, the shareholders of InterLok Key Management, Inc. exchanged all 56,655,891 outstanding shares of InterLoks common stock for 56,655,891 shares of Class A common stock of Butte Highlands Mining Company. The Share Exchange was treated as a reverse merger with InterLok Key Management, Inc. which is deemedfor accounting recognition purposesas the accounting acquirer and Butte Highlands Mining Company deemed the accounting acquiree under the acquisition method of accounting. The reverse merger is deemed a recapitalization and the consolidated financial statements represent the substantive continuation of the operations and thus the prior year financial statements of operations are the operating results of its subsidiary InterLok Key Management, Inc., while the capital structure (in terms of authorized preferred and common stock) of its parent Butte Highlands Mining Company remains intact. Subsequently, the company was renamed IronClad Encryption Corporation to better identify with IronClads products and services. IronClad Encryption Corporation is a next-generation cyber defense company that secures digital assets and communications across a wide range of industries and technologies. IronClad Encryption-powered solutions use our patented Dynamic Encryption and Perpetual Authentication technologies to make all known key-based encryption technologies virtually impossible to compromise. Dynamic Encryption Technology eliminates vulnerabilities caused by exposure of any single encryption key by continuously changing encryption keys and keeping the keys synchronized in a fault-tolerant manner. Perpetual Authentication Technology uses multiple virtual channels for encryption so that in the event one channel is compromised, the other channels maintain encryption integrity. Together, these technologies not only eliminate the single point of failure problem created by having keys exposed through brute force, side channel, or other types of attack, but do so with very low latency and system performance overhead. Developers, MSPs, MSSPs and IT organizations can now easily and effectively integrate ultra-secure authentication and encryption measures across essentially all mediums. This includes the latest processors and operating systems, legacy hardware and software, within or between networks, and on compartmentalized data or entire databases. History and Recent Transaction The Company is the term used in these statements and notes to refer to the entity originally incorporated in the State of Delaware in 1929. The registered name of the Company until early in 2017 was Butte Highlands Mining Company (Butte). Butte was formed to explore and mine primarily for gold in the Butte Highlands Only Chance mine, south of Butte, Montana. Butte ceased operating as a mining company in 1942. The Company was reorganized in October 1996 for the purpose of acquiring and developing additional mineral properties. At the time of the 1996 reorganization, stockholders representing approximately 76% of the outstanding capital stock could not be located. In order to obtain the quorum necessary for the special meetings of shareholders to authorize the reorganization, Butte obtained an order from the Superior Court of Spokane County, Washington appointing a trustee for the benefit of those stockholders who could not be located. By May 17, 2007, eleven years after the reorganization and very limited results from its mining activities, the Company had disposed of all of its historical mineral properties or mining claims and eventually became a shell company under the rules of the Securities and Exchange Commission (SEC). In 2009, Butte registered under the Securities Exchange Act of 1934, as amended, for the purpose of becoming a reporting company. The Companys common stock then became listed on the OTCBB, but in time the Company also listed its common stock to trade on the OTC QB electronic market, one of the OTC Markets Group over-the-counter markets, where the Companys common stock is now listed. Then, following ten years of being a shell company with only nominal activity and limited cash or other assets, the business focus of Butte changed early in 2017. Most notably the Company raised significant capital to implement its new business and financial plans to further develop the licensing and commercial use of its patented encryption software. The change caused Butte to lose its previous shell company status. The Company also changed its state of incorporation to Nevada and its name to IronClad Encryption Corporation (IronClad) and changed the stock symbol from BTHI to IRNC to more appropriately reflect the fundamental change of its business to developing cyber encryption technology and away from its historical mining activities. On October 16, 2017, the Company redomiciled in Delaware from Nevada and adopted a certificate of incorporation and bylaws as a Delaware corporation. The terms Company, IronClad and Butte all refer to the same individual corporate entity, but the uses of the IronClad and Butte names are used to refer to different eras of the Companys long history. The historical eras generally coincide with the changes in business focus before and after the first weeks of 2017. The business changes are a result of a common stock exchange transaction, accounted for as a reverse merger, between Butte and the owners of InterLok Key Management, Inc. (InterLok; at the time an independent and privately-held Texas corporation) whereby InterLok became a wholly-owned subsidiary of Butte. Butte issued shares of its common stock in exchange for acquiring all of the common stock of InterLok. Through December 31, 2017, InterLok was the only subsidiary of the Company and InterLoks patents and line of business now are the main basis of the business of the Company on a consolidated basis. During the transition three month period ended March 31, 2018; the Company incorporated a new wholly owned subsidiary IronClad Pipeline IC, Inc. (Pipeline). Principles of consolidation The accompanying consolidated financial statements include the accounts of IronClad and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The above unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information Accordingly, these unaudited interim consolidated financial statements do not include all of the disclosures required by generally accepted accounting principles in the United States of America for complete financial statements and the rules of the SEC. These unaudited interim consolidated financial statements should be read in conjunction with the Companys audited financial statements for the year ended March 31, 2018. In the opinion of management, the unaudited interim consolidated financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim periods presented. Operating results for the three month period ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending March 31, 2019. |
Note 2. Summary of Significant
Note 2. Summary of Significant Accounting Policies | 3 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 2. Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies This summary of significant accounting policies is presented to assist in understanding the Companys consolidated financial statements. The financial statements and notes are representations of the Companys management which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States and have been consistently applied in the preparation of the financial statements. Going Concern As shown in the accompanying financial statements, the Company has incurred cumulative operating losses since inception. As of June 30, 2018, the Company has limited financial resources with which to achieve its objectives and attain profitability and positive cash flows from operations. As shown in the accompanying balance sheets and statements of operations, the Company has an accumulated deficit of $16,668,491. The Company's working capital deficit is $2,250,307 (current assets minus current liabilities; current liabilities in this case being greater than current assets). Achievement of the Company's objectives will depend on its ability to obtain additional financing, to generate revenue from current and planned business operations, and to effectively manage product and software development, operating and capital costs. The Company is in a development stage and has generated no operating revenue, profits or positive cash flows from operations. The Company plans to fund its future operations by potential sales of its common stock or by issuing debt securities. However, there is no assurance that IronClad will be able to achieve these objectives, therefore substantial doubt about its ability to continue as a going concern exists. The financial statements do not include adjustments relating to the recoverability of recorded assets nor the implication of associated bankruptcy costs should IronClad be unable to continue as a going concern. Revenue Recognition and Trade Accounts Receivable The Company recognizes revenue in accordance with ASC 606 Revenue From Contracts With Customers . We recognize revenue when we have identified a contract with a customer, identify the performance obligations in the contract, determine the transaction prices, when we allocate the transaction prices to the performance obligation in the contract and we recognize revenue when or as the Company satisfies the performance in the contract. We record trade accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts, if any, to reflect any loss anticipated on the trade accounts receivable balances and charged to the provision for doubtful accounts. While the Company does have an exposure to a concentration of credit risk (of one customer at this point) we view the risk is limited due the financial strength and liquidity of the multi-billion dollar energy customer that has operated profitably for over a century. Fair Value Measures The Company's financial instruments, as defined by the Financial Accounting Standards Boards Accounting Standards Codification (ASC) 825-10-50 Financial InstrumentsOverall (and subtopics) The standards under ASC 820 Fair Value Measurement · · · At June 30, 2018 and March 31, 2018, the Company did not have any assets measured at fair value other than cash and deposits, the Company had conversion features embedded in its convertible notes payable. The fair value measurement of that feature, using a Binomial options pricing valuation model at June 30, 2018, $552,149, using a term of six months; stock value between $0.59 and $1.25; volatility between 114% and 187.6% and a risk free interest rate of 2.11% the value at March 31, 2018 using a Black Scholes valuation model was $234,138. The amounts are reported as a derivative liability on the balance sheet. . Provision for Income Taxes Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10- 25 Income Taxes Recognition Capitalization of Patent and Trademark Costs The Company capitalizes its legal, patent agent and related filing fees and costs associated with the patents it holds and is developing. The amounts are carried as an intangible asset in the financial statements. The costs of the patents or trademarks are amortized ratably (expensed) over the expected useful technological or economic life of the individual assets. The legal life of a patent is typically about 17 years. See Note 4. Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified to provide greater line item detail for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. This change in classification has no effect on previously reported cash flows in the Condensed Consolidated Statement of Cash Flows and had no effect on the previously reported Condensed Consolidated Statements of Operations for any period New Accounting Requirements and Disclosures 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. FASB issued standard ASU 2018-07 CompensationStock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting related to changes in stock compensation. Use of Estimates The preparation of the 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, liabilities and expenses at the balance sheet date and for the period then ended. We believe our estimates and assumptions are reasonable; however, such estimates and assumptions are subject to a number of risks and uncertainties that may cause actual results to differ materially from such estimates. Significant estimates and assumptions underlying these financial statements include: · · · · We are subject to claims and liabilities that arise in the ordinary course of business. We accrue for losses when such losses are considered probable and the amounts can be reasonably estimated. |
Note 3. Accounts Receivable and
Note 3. Accounts Receivable and Revenue | 3 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 3. Accounts Receivable and Revenue | Note 3. Accounts Receivable and Revenue Customer Service During the three month transition period ended March 31, 2018, IronClad formed a new wholly-owned subsidiary, Ironclad Pipeline IC, Inc. which began generating a modest level of revenue through a moderately profitable service contract with a major energy company in the eastern United States. The services are to provide an array of services in support of an infrastructure project. The $371,239 and $301,978 of receivables at June 30, 2018 and March 31, 2018 respectively is for $254,715 and $229,745, respectively, of services rendered and the balance is for reimbursable costs incurred, approved by the customer, billed (and paid promptly subsequent to June 30, 2018). Payment terms are for payment to be made within 30 days; the receivables were collected well within that period. All billings subsequent June 30, 2018 and to date have been approved promptly and fully paid according to the payment terms. In mid-July 2018 our customer notified the Company of its intent to exercise an option in its contract to end our services under the contract. Consequently, our services were discontinued effective July 28, 2018. Revenue earned and invoiced through that point in time was approximately $170,000. The customer also elected to retain the services of the individuals previously employed by IronClad Pipeline, Inc. on a going forward basis. All invoice amounts that were billed for services under the contract through the end-date of the contract were submitted, approved and, as of the filing date of this report, have been paid promptly and in full by the customer. |
Note 4. Patents
Note 4. Patents | 3 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 4. Patents | Note 4. Patents Patents and trademarks are as follows: June 30, 2018 March 31, 2018 Patents and trademarks under development $ 367,888 $ 170,946 Patents issued 398 398 Less accumulated amortization (375) (368) 23 30 Patents, net $ 367,911 $ 170,976 Amortization expense for intangible assets during the period ended June 30, 2018 and the three month period ended June 30, 2018 was $8 and $8, respectively. Costs totaling $367,888 for new patents and trademarks under development (but as yet not awarded) are capitalized at June 30, 2018. The patents and trademarks under development will not be amortized until formally issued. To the extent that a patent or trademark is not ultimately awarded the associated costs will be expensed accordingly at the time such an outcome is apparent. In addition to its three original patents IronClad has also filed fourteen patent applications during the period ended June 30, 2018 (both in the US and internationally). These pending patents expand upon the initial scope of the original seminal patents and provide up to twenty additional years of enforceable intellectual property rights regarding authentication, validation, and encryption for all electronic transmissions associated devices. IronClads current and original patent portfolio includes three issued and granted US patents. Of the three original granted patents, one patent expired in September 2017, another expired in March 2018 and the third of the original patents expired in June 2018. IronClad expects to apply for a related set of about fourteen additional patents (seven in the US and a matching set internationally) in the quarer to end September 30, 2018. |
Note 5. Concentration of Credit
Note 5. Concentration of Credit Risk | 3 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 5. Concentration of Credit Risk | Note 5. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At June 30, 2018 and March 31, 2018, the Company had $0 and $29,908 on deposit in excess of the FDIC insured limit. The Company does have a nominal exposure to a concentration of credit risk: all of our revenue is from one customer at this point. However, we view the risk is limited because of the financial strength and liquidity of the multi-billion dollar energy customer that has operated profitably for more than a century. All invoice amounts that were billed for services under the contract through the end date of the end date of our contract with its customer were submitted, approved and, as of the filing date of this report, have been paid promptly and in full by the customer. |
Note 6 - Related Party Transact
Note 6 - Related Party Transactions | 3 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 6 - Related Party Transactions | Note 6 Related Party Transactions At June 30, 2018 and March 31, 2018 the Company owed approximately $96,831 and $79,542 in accounts payable to management and related parties. Of the $ 137,422 and $219,057 of accrued liabilities at June 30, 2018 and March 31, 2018, approximately $75,003 of that amount relates to the president of the Company; the costs primarily relate to travel costs incurred in raising funds for the Company. The Company paid $15,249 in consulting fees during 2016 to Eagle Mountain 21, LLC, an entity owned by an officer of the Company. At December 31, 2016 the Company owed an additional $10,662 amount to that same officer for operating costs incurred and submitted for reimbursement during 2016. Reimbursement to the officer was made at the start of the quarter ended June 30, 2017. During the three month transition period ended March 31, 2018, IronClad entered into a loan agreement to borrow up to $500,000 shares at 8.5% interest. The Company has borrowed the full amount of the loan. The Company has pledged 500,000 of its common stock as collateral under the terms of the Agreement. In the event of default by the Company, the lender is entitled to receive one share of Company common stock for every one dollar in principle, interest, penalties, and fees that are owed and outstanding by the Company to the lender. The Agreement is also supported by a personal $500,000 guarantee from the President of the Company. See also Note 13 regarding stock option awards to management of the Company. |
Note 7. Notes Payable
Note 7. Notes Payable | 3 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 7. Notes Payable | Note 7. Notes Payable Securities Purchase Agreement, Convertible Note 12% On June 26, 2017 IronClad entered into a Securities Purchase Agreement to issue a 12% convertible note payable for an aggregate principal amount of $78,500 with the intent of meeting certain conditions precedent to closing and funding on or before July 7, 2017. The closing conditions were met prior to that date and the convertible note payable was closed and funded on July 6, 2017. The Company received cash proceeds of $75,000 net of transaction costs of $3,500. The $3,500 is recorded as a discount amount on the note payable and will be amortized as interest expenses over the life of the note. $1,226 was amortized in the three month transition period ended March 31, 2018; accrued interest payable at March 31, 2018 was zero. The note matures on March 30, 2018 and interest costs accrue on the unpaid principal balance at 12% annually until March 30, 2018, and after that if not paid at maturity interest accrues annually at 22% until the principal amount and all interest accrued and unpaid are paid. The holder of the note, at its sole election, could convert the note into shares of common stock of the Company at any time during the period beginning on the date which is one hundred and eighty days following the date of the note (dated June 26, 2017) and ending on the later of i) the maturity date, or ii) the date of payment of a default amount, if any. The shares to be issued are a function of a variable conversion price which is 65% of a market price defined to be the lowest one day closing bid price for the Companys common stock during the fifteen-day trading period ending on the last trading day prior to exercising the conversion right. The Company will keep available authorized shares reserved, initially 289,846 shares, but in any event authorized shares equal to six times the number of shares that would be issuable upon full conversion of the note from time to time. The conversion feature of the note represents an embedded derivative. The derivative value at December 23, 2017 was determined using a Black-Scholes valuation model. Accounting recognition of $126,578 for the fair value of the derivative liability, $73,272 (net of $4,116 of amortization) was recorded as a contra liability to the original $78,500 recorded liability of the underlying convertible note, and a $49,190 loss was recognized as a fair valuation adjustment to earnings. Between January 10, 2018 and January 28, 2018, the note holder exercised its rights under the conversion provisions and through operation of the five conversion elections was issued, in total, 50,322 shares of stock which effectively repaid the loan balance. The dates, shares issued and principal amounts repaid at each conversion event are as follows: Conversion Date Principal Outstanding Principal Reduction Shares Issued Exercise Price 12/31/2017 $78,500 1/10/2018 $63,500 ($15,000) 8,242 $1.82 1/12/2018 $43,500 ($20,000) 10,989 $1.82 1/18/2018 $28,500 ($15,000) 8,242 $1.82 1/23/2018 $13,500 ($15,000) 9,819 $1.53 1/25/2018 $ ($13,500) 13,030 $1.40 Total 50,322 Commitment Note and Convertible Note On August 24, 2017, IronClad entered into an Investment Agreement to establish an equity line of funding for the potential future issuance and purchase of IronClads shares of Class A common stock. See Note 8. As consideration for its commitment to purchase shares of IronClads Class A common stock pursuant to the Investment Agreement, IronClad issued to the counterparty of the agreement a seven-month 10% convertible promissory note (the Commitment Note) in the principal amount of $100,000. The Commitment Note matures on March 24, 2018. The Commitment Note is convertible into shares of IronClads Class A common stock at the fixed price of $3.25 per share; provided, however, that at any time and from time to time after a default (as of September 30, 2017, and to the date of the filing of this report, no events of default have occurred) occurs solely due to the fact the Commitment Note is not retired on or before the maturity date, all or any part of the Commitment Note is convertible into shares of Class A common stock of the Company at a per share price equal to the lower of: (a) $3.25 or (b) 65% of the average of the two lowest per share trading prices of the Class A common stock during the twenty consecutive trading days prior to the conversion date. The Commitment Note is included as a financing fee expense at the date of the transaction. The Commitment Note was to finance the $100,000 cost of the commitment fee to the counterparty of the Investment Agreement and is accordingly included in the financing fee expenses for the period ended September 30, 2017. The amount of the commitment fee could be reduced by $35,000 or $17,500 if a registration statement registering the shares that would be issued under the equity line becomes effective within 90 or 135 days, respectively, of August 24, 2017. The registration statement was declared effective on December 18, 2017 a period less than 135 days (but more than 90 days) after August 24, 2017. Consequently, the principal balance of the commitment fee was reduced by $17,500 and $100,000 of financing fee expenses originally recognized in the three-month period ended September 30, 2017 were adjusted to reflect a lower $82,500 financing fee expense. On August 24, 2017, in connection with the entry into the Investment Agreement, IronClad also issued a 10% convertible note (the Convertible Note) in an aggregate principal amount of $330,000 with a 10% original issue discount (OID). The initial consideration in the amount of $165,000 was funded on August 24, 2017. The Company received net proceeds of $150,000 (which represents the deduction of the 10% original issue discount for the note holders due diligence and legal fees). The Company may make additional borrowings in such amounts and at such dates as the note holder may choose in its sole discretion. The balance of an individual borrowings matures seven months from its funding date. The Convertible Note also has an embedded beneficial conversion feature (BCF) based on a stated conversion price of $1.00 per share. The market price of a share of IronClads common stock at the time of the first borrowing under the note was $3.50 thus establishing an intrinsic value of $2.50 on that date. The Company received the first borrowing for $165,000 under the Convertible Note on August 24, 2017 and net cash proceeds of $150,000 were received after deducting for the original issue discount and lender transaction costs of $15,000. An additional $12,000 of costs was incurred by IronClad directly relating to the note. Both the $15,000 and the $12,000 are recorded as discount amounts on the $165,000 note payable and are amortized as interest expenses over the life of the borrowing. The maturity date of this borrowing under the note is seven months from its funding date which is March 24, 2018. On March 26, 2018 the Convertible Note holder elected to convert $10,000 of principal balance to 9,958 shares of Class A common stock. On June 1, 2018 the Convertible Note holder elected to convert an additional $20,000 of principal balance into 32,219 shares of Class A common stock. The valuation of the BCF related to the $165,000 borrowing on the Convertible Note and with an intrinsic value of $2.50 per share (based on a $3.50 closing price less the $1.00 per share conversion price) is approximately $424,407 using a Black-Scholes valuation model. That amount is recorded as a contra-note payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. The amount of the beneficial conversion feature formally recorded is $138,000 ($165,000 net of $27,000) and will be amortized as interest expense over the life of the loan. On October 23, 2017, a second borrowing of $82,500 under the Convertible Note for $330,000 was closed and funded. The Company received net proceeds of $75,000 after deducting for original issue discount and lender transaction costs of $7,500. An additional $6,000 of costs was incurred by IronClad relating to the Convertible Note. Both the $7,500 and the $6,000 were recorded as discount amounts on the $82,500 note payable and amortized as interest expenses over the life of the borrowing. The maturity date of this borrowing under the Convertible Note is also defined to be seven months from its borrowing date which is May 24, 2018. The market price of a share of IronClads common stock at the time of funding was $4.40 making the intrinsic value of the derivative $3.40. The valuation of the BCF is estimated to be approximately $289,000 and is capped at $69,000, the otherwise undiscounted amount of the note payable. On March 15, 2018, a third and final borrowing of $82,500 under the Convertible Note for $330,000 was closed and funded. The Company received net proceeds of $75,000 after deducting for original issue discount and lender transaction costs of $7,500 and an additional $6,000 of loan closing costs incurred by IronClad. The maturity date of this borrowing under the Convertible Note is also defined to be seven months from its borrowing date which is October 24, 2018. The market price of a share of IronClad's common stock at the time of funding was $1.85 making the intrinsic value of the derivative $0.85. The valuation of the BCF related to the $82,500 borrowing on the Convertible Note and with an intrinsic value of $0.85 per share (based on a $1.85 closing price less the $1.00 per share conversion price) is approximately $109,861 using a Black-Scholes valuation model. That amount is recorded as a contra-note payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. The amount of the beneficial conversion feature formally recorded is $69,000 ($82,500 net of $13,500) and will be amortized as interest expense over the life of the loan. On March 24, 2018 both the Commitment Note ($100,000 contractually reduced to $82,500 in 2017) and the first tranche of the 10% Convertible Note for $165,000 (less the $10,000 conversion in late March) reached their maturity dates and, except for a $10,000 conversion by Tangiers on the Convertible Note, were not repaid in cash. Consequently both notes were in maturity date default and, pursuant to the terms of the loans, were convertible at the lesser of $3.25 for the Commitment Note, and $1.00 for $165,000 note or 65% of the average lowest two trades for the prior 20 days, resulting in an initial recognition for derivative treatments for both notes. The valuation of the derivative liability related to the $82,500 borrowing on the Convertible Note and with an intrinsic value of $0.70 per share (based on a $1.67 closing price less the $0.97 per share present value of the conversion price) is approximately $79,138 using a Black-Scholes valuation model. That amount is recorded as a new contra-note payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. This results in a net liability value of $3,362. The amount will be amortized as interest expense over an estimated remaining three month life of the already matured loan. At June 30, 2018, the $79,138 was fully amortized. The valuation of the derivative liability related to the $165,000 (reduced to $155,000) borrowing on the Convertible Note and with an intrinsic value of $0.70 per share (based on a $1.67 closing price less the $0.97 per share present value of the conversion price) is approximately $158,276 using a Black-Scholes valuation model. That amount is recorded as a new contra-note payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Since the undiscounted (and unconverted) amount of the note is $155,000 the derivative valuation is recorded as $155,000. The amount will be amortized as interest expense over an estimated remaining three month life of the already matured loan. On June 1, 2018 $20,000 of note was converted, reducing the outstanding balance to $135,000. At May 23, 2018 the second tranche of the 10% Convertible Note for $82,500 reached its maturity date and was not repaid in cash. Consequently the note was in maturity date default and pursuant to the terms of the loan was convertible at the lesser of $1.00 or 65% of the average lowest two trades for the prior 20days, resulting in initial recognition for derivative treatment. The valuation of the derivative liability related to the $82,500 borrowing on the Convertible Note and with an intrinsic value of $0.6912 per share is approximately $57,024 using a Binomial pricing model. That amount is recorded as a new contra-note payable amount (similar to the recorded OID and transaction costs). The amount will be amortized as interest expense over an estimated "remaining" three month life of the already matured loan. At June 30, 2018 the prior periods derivative liabilities were remeasured, as the notes were still outstanding, the derivative liability was revalued using a binomial pricing model. At period end the total valuation of new derivative liabilities related to three loans was approximately $262,086 for individual valuation amounts of $67,531, $120,993 and $73,561. Convertible Notes, 12% On January 25, 2018 IronClad entered into a Securities Purchase Agreement to issue a new 12% convertible note payable for an aggregate principal amount of $88,000. The Company received cash proceeds of $85,000 net of transaction costs of $3,000. The $3,000 is recorded as a discount amount on the note payable and will be amortized as interest expenses over the life of the note. The general terms of the note, except for the principal amount borrowed, are identical to the initial 12% Convertible note entered into in 2017 and converted earlier in January 2018. The note matures on October 30, 2018 and interest costs accrue on the unpaid principal balance at 12% annually until October 30, 2018, and after that if not paid at maturity interest accrues annually at 22% until the principal amount and all interest accrued and unpaid are paid. The holder of the note, at its sole election, could convert the note into shares of common stock of the Company at any time during the period beginning on the date which is one hundred and eighty days following the date of the note (dated January 25, 2018) and ending on the later of i) the maturity date, or ii) the date of payment of a default amount, if any. The shares to be issued are a function of a variable conversion price which is 65% of a market price defined to be the lowest one day closing bid price for the Companys common stock during the fifteen-day trading period ending on the last trading day prior to exercising the conversion right. The Company would keep available authorized shares reserved, initially 289,846 shares, but in any event authorized shares equal to six times the number of shares that would be issuable upon full conversion of the note from time to time. At June 30, 2018 a derivative liability with an intrinsic value of $..2404 was $57,990 using a binomial pricing model and was recorded as a discount to the note. On July 14, 2018 the loan principal was repaid plus accrued interest, both totaling $124,268, and the note was fully retired. On February 27, 2018 IronClad entered into a Securities Purchase Agreement to issue a 12% convertible note payable for an aggregate principal amount of $53,000. The Company received cash proceeds of $50,000 net of transaction costs of $3,000. The $3,000 is recorded as a discount amount on the note payable and will be amortized as interest expenses over the life of the note. The general terms of the note, except for the principal amount borrowed, are identical to the initial 12% Convertible note entered into in 2017 and converted earlier in January 2018. The note matures on November 03, 2018 and interest costs accrue on the unpaid principal balance at 12% annually until November 30, 2018, and after that if not paid at maturity interest accrues annually at 22% until the principal amount and all interest accrued and unpaid are paid. The holder of the note, at its sole election, may convert the note into shares of common stock of the Company at any time during the period beginning on the date which is one hundred and eighty days following the date of the note (dated February 27, 2018) and ending on the later of i) the maturity date, or ii) the date of payment of a default amount, if any. The shares to be issued are a function of a variable conversion price which is 65% of a market price defined to be the lowest one day closing bid price for the Companys common stock during the fifteen-day trading period ending on the last trading day prior to exercising the conversion right. The Company will keep available authorized shares reserved, initially 289,846 shares, but in any event authorized shares equal to six times the number of shares that would be issuable upon full conversion of the note from time to time. The conversion feature of the note represents an embedded derivative. The derivative liability with an intrinsic value of $0.2981 was $42,862 using a binomial pricing model and was recorded as a discount to the note. New Convertible Note, 10% On June 26, 2018 IronClad entered into a Securities Purchase Agreement to issue a 10% convertible note payable for an aggregate principal amount of $250,000. The Company received cash proceeds of $235,000 net of transaction costs of $15,000. The $15,000 is recorded as a discount amount on the note payable and will be amortized as interest expenses over the life of the note. The general terms of the note, except for the principal amount borrowed, are nearly identical to the initial 10% Convertible note entered into in 2017. The note matures on December 26, 2018 and interest costs accrue on the unpaid principal balance at 10% annually until December 26, 2018, and after that if not paid at maturity interest accrues annually at 24% until the principal amount and all interest accrued and unpaid are paid. The holder of the note, at its sole election, may convert the note into shares of common stock of the Company at any time on or following the date of the Note from the and ending on the later of i) the maturity date, or ii) the date of payment of a default amount, if any. The shares to be issued are a function of a fixed conversion price of $1.00 per share, or an alternate variable conversion price, triggered by events such as stock splits, stock dividends or rights offerings which is 70% of a market price defined to be the lowest five day closing bid price for the Companys common stock during the twenty-day trading period ending on the last trading day prior to exercising the conversion right. The Company will keep available authorized shares reserved, initially 3,081,854 shares, but in any event authorized shares equal to five times the number of shares that would be issuable upon full conversion of the note from time to time. The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.03281 was $189,211 using a binomial pricing model and was calculated as a discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded OID and transaction costs and amounts discussed immediately below), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Since the undiscounted (and unconverted) amount of the note is $28,342 the derivative valuation is recorded as $26,342. As a commitment fee for the Note, the Company issued the holder 240,384 shares of common stock to be held in escrow until the Note is repaid. The holder will keep the shares, if the Note is not retired prior to its maturity date. The shares were valued at $165,865 and were recorded as a discount on the note. Included in the share purchase agreement was a common stock purchase warrant issued by the Company to the holder to purchase 62,500 shares of common stock at $3.00 per share, exercisable for four years. The warrants were valued at $43,121 using a Black Scholes option pricing model and were recorded as a discount on the note. The sum of the $14,672 unamortized original issue discount ($15,000 at the outset of the loan) plus the $43,121 recorded value of the warrants, plus the $165,865 valuation of the commitment fee related to the 240,384 shares plus the $189,211 valuation of the derivative related to the conversion feature total $412,869 which is in excess of the $250,000 value of the loan principal. Total amounts to be recorded as contra loan amounts cannot exceed the $250,000 nominal amount of the loan. Because of the derivative nature of the $189,211 valuation of the conversion feature, $162,869 of the total $412,869 amount is recorded as an expense in the current period and reported as a financing expense. Working Capital Loan for Services to New Customer by IronClad Pipeline IC, Inc. On February 27, 2018, IronClad borrowed $255,000 gross proceeds as an initial advance on a Credit Agreement (the Agreement) with a lending party. The Agreement, agreed to by both parties on February 1, 2018, enabled the Company, at its sole election, to borrow up to an aggregate amount of $500,000. The outstanding balance of any advances accrues interest at the annual rate of 8.5%. There is a transaction financing fee of 2% for any amount drawn under the facility. Proceeds received net of the transaction fee were $250,000. On March 21, 2018, IronClad borrowed and additional $245,000 gross proceeds as a second advance under the Agreement. Proceeds received net of the transaction fee were $240,000. During the period ended June 30, 2018, the Company repaid $100,000 of the principal, and then redrew another $100,000. On June 30, 2018, the Company repaid $25,000. The outstanding balance of this loan at June 30, 2018 is $475,000 Interest is to be paid annually in cash on March 1, 2019 and 2020. There is no penalty for any early principal repayments. The Company has pledged 500,000 of its common stock as collateral under the terms of the Agreement. In the event of default by the Company, the lender is entitled to receive one share of Company common stock for every one dollar in principle, interest, penalties, and fees that are owed and outstanding by the Company to Layer 3 Communications. The Agreement is also supported by a personal $500,000 guarantee from an officer of the Company. Terms of the Agreement specify the use of funds to be limited to only supporting the operations of its new service contract. The terms of the Agreement were amended, effective June 11, 2018, to also permit the use of funds for certain new patent application filings of IronClad. On March 16, 2018, IronClad purchased several lines of corporate insurance coverage for a set of annual premiums that totaled $30,719. To pay for the coverage, IronClad paid $2,631 down on the coverages and entered into a financing agreement to borrow the $28,087 balance owed for the coverage. Interest on the loan is approximately 6% and the loan is repaid by eleven monthly principal and interest installment payments of $2,631 each. The cost of the insurance is recorded as a prepaid asset and is being amortized monthly over the annual period of the coverages. |
Note 8. Common Stock
Note 8. Common Stock | 3 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 8. Common Stock | Note 8. Common Stock During the three-month period ended June 30, 2017, the Company issued i) 240,333 shares of Class A common stock at $0.15 per share for cash in the amount of $36,050 pursuant to a Section 4(a)2 private placement offering, ii) 25,000 shares at $0.15 per share for the conversion of stock options (see Note 12), and iii) 75,000 shares at $2.90 per share for investment banking services valued at $217,500. During the three-month period ended September 30, 2017, the Company issued i) 100,000 shares of Class A common stock at $3.49 per share for consulting services in the amount of $349,000 and ii) 37,500 shares at $3.50 per share for investment banking services valued at $131,250. During the three-month period ended December 31, 2017, the Company issued 157,500 shares of Class A common stock at $4.10 per share to seven parties for consulting services in the amount of $660,750. On August 24, 2017 IronClad entered into an Investment Agreement for the potential future issuance and purchase of shares of its Class A common stock to establish an equity line of funding to IronClad. The agreement enables IronClad to issue stock to the counterparty of the agreement in exchange for cash amounts under certain defined conditions for the purchase of IronClads stock. In addition to the equity line, the agreement also included IronClad entering into the Commitment Note in the principal amount of $100,000 to finance the commitment fee of the Investment Agreement and the Convertible Note to borrow up to $330,000 (of which $165,000 was borrowed on August 24, 2017 and a subsequent $82,500 was borrowed on October 23, 2017). See Notes 5 and 14. On January 24, 2018 IronClad issued, under the terms of the Investment Agreement, 14,331 shares of its Class A stock in exchange for receipts totaling $25,823 ($1.80 per share) from the counterparty of the Investment Agreement. Similarly, on February 16, 2018 24,265 shares were issued in exchange for proceeds of $38,824 ($1.60 per share). On March 26, 2018 9,958 shares of Class A common stock were issued for the conversion of $10,000 of the $165,000 referred to above. On January 23, 2018, the Company issued 10,000 shares of its Class A common stock at $2.25 per share to two advisors for services in the amount of about $22,500. During the period ended June 30, 2018, the Company approved for issuance 50,000 shares of Class A common stock priced at $1.69 for accounts payable of $84,500; 20,000 shares of Class A common stock priced at $1.15 for accounts payable of $16,791 and services of $6,209; 32,219 shares of Class A common stock priced at $0.62 for conversion of $20,000 of convertible debt; 240,384 shares of Class A common stock priced at $0.69 in relation to the June 26, 2018 Convertible Note, the shares were valued at $166,105 and have been recorded on the balance sheet as a contra account to the Note. At the close of March 31, 2018 there were 55,000 shares valued at $101,750 that were recorded and reported as "to be issued". Those shares were issued during the three month period ended June 30, 2018. |
Note 9. General and Administrat
Note 9. General and Administrative Expenses | 3 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 9. General and Administrative Expenses | Note 9. General and Administrative Expenses General and administrative expenses recognized for the three-month period ended June 30, 2018 and June 30, 2017 were $607,389 and $294,856, respectively of which $548,078 and $135,613 were recognized as compensation expenses in connection with the issuance of stock options or warrants. General and administrative expenses recognized for the transition three-month period ended March 31, 2018 were $774,400 of which $410,225 were recognized as compensation expenses in connection with the issuance of stock options or warrants; an additional $20,500 of expense was recognized as a result of issuing stock for consulting services. |
Note 10. Income Taxes
Note 10. Income Taxes | 3 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 10. Income Taxes | Note 10. Income Taxes Federal and state income taxes are not currently due since IronClad has had losses since inception. Since the Company provides services to a customer in Virginia, IronClad is also subject to Virginia state income tax reporting. Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25 Income Taxes Recognition. Deferred income tax amounts reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes. Significant components of the deferred tax asset amounts at an anticipated tax rate of 21% for the period ended June 30, 2018 and March 31, 2018 are as follows: June 30, 2018 March 31, 2018 Net operating losses carryforwards $ 5,642,194 $ 5,173,092 Deferred tax asset 1,184,861 1,074,851 Valuation allowance for deferred asset (1,184,861) (1,074,851) Net deferred tax asset $ - $ - At June, 2018, the Company has net operating loss carryforwards of approximately $5,5,642,194 which will begin to expire in the year 2033. The increase in the allowance account amount (and also in the deferred tax asset amount) from March 31, 2018 to June 30, 2018 was $110,010. |
Note 11. Share Exchange Agreeme
Note 11. Share Exchange Agreement | 3 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 11. Share Exchange Agreement | Note 11. Share Exchange Agreement On January 6, 2017, the Company entered into a Share Exchange Agreement with InterLok Key Management, Inc. wherein Butte agreed to issue 56,655,891 restricted shares of Buttes common stock in exchange for 100% of the outstanding shares of InterLok Key Management, Inc. common stock. InterLok Key Management, Inc. is engaged in the business of developing and licensing its patented key-based encryption methods. On January 6, 2017, Butte completed its Share Exchange Agreement with the owners of InterLok and issued 56,655,891 restricted shares of Buttes common stock to 29 persons and entities in exchange for all of the outstanding shares of InterLok Key Management, Inc.s common stock. Immediately following completion of the share exchange agreement, the Companys new board of directors elected, through a series of board resolutions and regulatory filings, to change the Companys name to IronClad Encryption Corporation from Butte, to move the Company to Nevada from Delaware, and to change its stock trading symbol to IRNC from BTHI. The Share Exchange was treated as a reverse merger with InterLok Key Management, Inc. deemed, for accounting recognition purposes, the accounting acquirer and Butte Highlands Mining Company deemed the accounting acquiree under the acquisition method of accounting. The reverse merger is deemed a recapitalization and the unaudited pro forma consolidated financial statements of operations represent the substantive continuation of the operations and thus the financial statements of InterLok Key Management, Inc., while the capital structure (with respect to authorized, issued and outstanding shares of preferred and common stock) of Butte Highlands Mining Company--now using the name IronClad--remains intact. |
Note 12. Share Based Compensati
Note 12. Share Based Compensation | 3 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 12. Share Based Compensation | Note 12. Share Based Compensation Equity Incentive Plan The Board of Directors adopted, and the Companys stockholders subsequently approved, the IronClad Encryption Corporation 2017 Equity Incentive Plan (the Plan) effective as of January 6, 2017. The purpose of the Plan is to foster and promote the long-term financial success of the Company and thereby increase stockholder value. The Plan provides for the award of equity incentives to certain employees, directors, or officers of, or key advisers or consultants to, the Company and its subsidiaries who are responsible for or contribute to the management, growth or success of the Company or any of its subsidiaries. The maximum number of shares available for issuance under the Plan is thirty million (30,000,000) shares of Class A common stock. On October 17, 2017, in connection with the change of the Companys jurisdiction of incorporation from the State of Nevada to the State of Delaware, the Board of Directors adopted the Amended and Restated IronClad Encryption Corporation 2017 Equity Incentive Plan (the Amended Plan). Additionally, from time to time, we issue non-compensatory warrants, such as warrants issued to investors. Restricted Stock The fair value of restricted stock awards classified as equity awards is based on the Companys stock price as of the date of grant. Such awards do not grant any rights as a shareholder of the company until a certificate for the vested shares of common stock has been issued. During the year ended December 31, 2017, 287,500 shares were granted for services, none were forfeited (none were issued prior to 2017). Expenses of approximately $709,000 were recorded in connection with the stock issued as grants for services; $349,000 for business development and $360,000 for investor relations. Other stock grants were awarded for services, but the underlying stock was issued as unrestricted stock because it was otherwise registered under our S-8 and effective on November 28, 2017 and our S-1 as amended and effective on December 19, 2017. |
Note 13. Stock Options and Warr
Note 13. Stock Options and Warrants | 3 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 13. Stock Options and Warrants | Note 13. Stock Options and Warrants During the three-month period ended March 31, 2017, the Company awarded 1,045,000 stock options and warrants for services and conversions of convertible notes valued at $1,305,565 and 9,000,000 stock options to officers of IronClad valued at $622,045. Of the total 10,145,000 options and warrants awarded, 1,045,000 vested immediately and received full expense recognition in the three-month period ended March 31, 2017. The remaining 9,883,470 options vest periodically over the subsequent three years and will be expensed on a straight line basis. In addition, 25,000 stock options that were awarded during the three-month period ending March 31, 2017 were exercised for cash in the amount of $3,750. During the three-month period ended June 30, 2017, the Company awarded 2,945,000 stock options for services valued at $4,657,850 (using the Black-Scholes option pricing model) and 500,000 stock options to an officer of IronClad valued at $731,659 (using the Black-Scholes option pricing model). Of the total 3,445,000 options recorded as awarded during the period 85,000 vested immediately and received full expense recognition during the three-month period ended June 30, 2017. The remaining 3,360,000 options vest periodically over the next two to four years and will be expensed on a straight line basis. During the three-month period ended September 30, 2017, the Company recorded the award of 372,500 stock options for services valued at $261,991 (using the Black-Scholes option pricing model) and 82,500 stock warrants for financing fees valued at $287,629 (using the Black-Scholes option pricing model). Of the total 455,000 options and warrants awarded during the period 155,000 vested immediately and received full expense recognition during the three-month period ended September 30, 2017. The remaining 300,000 options vest periodically over the next four years and will be expensed on a straight line basis. During the three-month period ended December 31, 2017, the Company recorded the award of 37,500 stock options for services valued at $161,921 (using the Black-Scholes option pricing model). All of the options vested immediately and received full expense recognition during the three-month period ended December 31, 2017. During the three-month period ended March 31, 2018, the Company awarded 2,700,000 stock options for services valued at $4,873,048 (using the Black-Scholes option pricing model) and 1,500,000 stock options to officers of IronClad valued at $2,700,000 (using the Black-Scholes option pricing model). Of the total 4,200,000 options recorded as awarded during the period 50,000 vested immediately and received full expense recognition during the three-month period ended March 31, 2018. The remaining 4,150,000 options vest periodically over the next three to seven years and will be expensed on a straight line basis. During the three-month period ended June 30, 2018 the Company awarded 122,500 stock options and warrants for services valued at $123,719. Of the total 122,500 options and warrants awarded, 102,500 vested during the period and received full recognition in the three-month period ended June 30, 2018. The remaining 20,000 options vest during the subsequent quarter and will be expensed at that time. The fair value of stock options and warrants is estimated on the date of each award using the Black-Scholes option pricing model to value the stock option or warrant based on its terms and conditions. There was one exercise of 25,000 options during 2017. The tables below summarize the assumptions used to estimate the fair values of the options and warrants at June 30, 2018: Number of Options* Date Issued Exercise Price Risk-free Interest Rate Volatility Life of Options in Years Vested Options* 75,000 01/16/17 $0.75 1.54% 226.01% 3.00 75,000 6,000,000 01/20/17 $0.15 1.54% 220.00% 3.00 1,500,000 3,000,000 01/20/17 $0.15 1.54% 220.00% 4.00 1,000,000 350,000 01/31/17 $0.15 1.19% 132.84% 1.93 350,000 100,000 02/01/17 $0.15 1.22% 134.90% 2.00 100,000 100,000 03/13/17 $0.15 1.40% 144.84% 2.00 25,000 20,000 03/21/17 $0.15 1.54% 233.07% 3.00 20,000 5,000 04/30/17 $0.75 1.45% 219.35% 3.00 5,000 1,700,000 05/05/17 $1.47 1.71% 565.34% 4.00 425,000 1,000,000 05/05/17 $1.47 1.32% 202.99% 2.00 500,000 80,000 05/31/17 $0.75 1.44% 196.06% 3.00 80,000 660,000 06/12/17 $2.50 1.64% 589.85% 4.00 165,000 5,000 06/30/17 $3.49 1.55% 197.13% 3.00 5,000 300,000 07/26/17 $3.16 1.63% 296.38% 4.00 37,500 5,000 07/31/17 $3.50 1.51% 170.61% 3.00 25,000 37,500 08/25/17 $2.50 1.62% 170.38% 3.00 37,500 25,000 08/31/17 $3.75 1.44% 170.57% 3.00 25,000 37,500 10/26/17 $4.50 1.76% 220.28% 3.00 37,500 25,000 01/25/18 $2.70 2.20% 247.35% 3.00 25,000 25,000 03/02/18 $1.80 2.52% 297.39% 3.84 25,000 400,000 03/02/18 $1.80 2.71% 369.15% 5.84 3,400,000 03/02/18 $1.80 2.79% 369.05% 6.84 350,000 03/02/18 $1.80 2.79% 395.11% 7.84 20,000 04/02/18 $2.70 2.55% 372.73% 4.75 20,000 20,000 05/01/18 $1.80 2.82% 365.73% 4.67 20,000 20,000 06/06/18 $1.80 2.81% 312.26% 4.57 - 17,735,000 Issued Vested 4,545,000 (25,000) Exercised Exercised (25,000) 17,710,000 Unexercised Unexercised 4,520,000 Number of Warrants Date Issued Exercise Price Risk-free Interest Rate Volatility Life of Warrants in Years Vested Warrants 500,000 03/15/17 $0.15 1.02% 114.94% 1.40 500,000 82,500 08/24/17 $3.00 1.63% 285.16% 4.00 82,500 62,500 06/26/18 $3.00 2.69% 311.00% 4.00 62,500 645,000 Issued 645,000 Options* and Warrants Options and Warrants 18,355,000 Issued Vested 5,165,000 (25,000) Exercised Exercised (25,000) 18,330,000 Unexercised Unexercised 5,140,000 * The number of outstanding options above does not include an option awarded to the Companys President to purchase 10,000,000 shares of Class A common stock at an exercise price of $1.00 per share. The option is only exercisable under certain limited circumstances, one of which is that the market price of the Class A common stock reaches a price of $15.00 per share. Once vested, these additional options must be exercised within two years of vesting. The number of options and warrants including these 10,000,000 options totals 24,045,000. On April 11, 2017 an independent company advisor exercised options for 25,000 shares of Class A common stock for $3,750 in cash. |
Note 14. Commitments and Contin
Note 14. Commitments and Contingencies | 3 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 14. Commitments and Contingencies | Note 14. Commitments and Contingencies We are not engaged in any litigation and, to our knowledge, are not aware of any matters that would give rise to possible litigation. We lease office space on a month-to-month basis. The annual cost is less than $17,000. We have no other leases or rental agreements. |
Note 15. Subsequent Events
Note 15. Subsequent Events | 3 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 15. Subsequent Events | Note 15. Subsequent Events Customer Service In mid-July 2018 our customer notified the Company of its intent to exercise an option in its contract to end our services under the contract. Consequently, our services were discontinued effective July 28, 2018. Revenue earned and invoiced through that point in time was approximately $170,000. The customer also elected to retain the services of most of the individuals previously employed by IronClad Pipeline, Inc. on a going forward basis. All invoice amounts that were billed for services under the contract through the end-date of the contract were submitted, approved and, as of the filing date of this report, have been paid promptly by the customer and collected in full by IronClad. During the course of the contract through July 29, 2018 IronClad billed approximately $1,375,000 of which approximately $975,000 was for services rendered and earned since the inception of the contract in late February 2018. Amounts invoiced in excess of the amounts recognized as services revenue were for certain project costs incurred under the terms of contract that were reimbursed by the customer. New Loan Agreement including Convertible Note, 9% On July 11, 2018 IronClad entered into a Securities Purchase Agreement to issue a 10% convertible note payable for an aggregate principal amount of $270,000 comprised of the first note (First Note) being in the amount of $135,000.00, and the remaining note in the amount of $135,000.00, (a Back End Note). The Company received cash proceeds of $126,500 net of transaction costs of $8,500. The $8,500 is recorded as a discount amount on the note payable and will be amortized as interest expenses over the life of the note. The First Note matures on July 11, 2019 and interest costs accrue on the unpaid principal balance at 9% annually until July 11, 2019, and after that if not paid at maturity interest accrues annually at 24% until the principal amount and all interest accrued and unpaid are paid. The Back End Note carries the same terms as the First Note, except it may not be repaid, but only converted. The Company is under no obligation to accept the Back End Note, but may do so at its sole discretion, following 180 days from the date of the note (dated July 11, 2018). As part of the SPA, the Holder issued the Company a collateralized secured promissory note in the amount of $131,500 that may be exchanged for cash against the Back End Note. The holder of the note, at its sole election, may convert the note into shares of common stock of the Company at any time during the period beginning on the date which is 180 days following the date of the note (dated July 11, 2018) and ending on the later of i) the maturity date, or ii) the date of payment of a default amount, if any. The shares to be issued are a function of a fixed conversion price of $1.00 per share for six months, and thereafter until maturity at a variable conversion price which is 65% of a market price defined to be the lowest trading price for the Companys common stock during the fifteen-day trading period ending on the last trading day prior to exercising the conversion right. The Company will keep available authorized shares reserved, initially 1,730,000 shares, but in any event the number of reserved shares at least equals 400% of the number of shares of Company common stock issuable upon conversion of the Note. The conversion feature of the note represents an embedded derivative. Once definitive pricing facts and circumstances are known later in the year regarding the market value of IronClads common stock at that time, the cost of that derivative will be determined using a Black-Scholes valuation model. At the close of accounting periods subsequent to the initial valuation a redetermination of the derivative valuation will be made using an updated Black-Scholes valuation model. Any gain or loss in the liability value will be recognized as a fair valuation adjustment to earnings. On July 17, 2018 (transaction documents were originally dated June 29, but amended for action taken on July 17), IronClad issued a 12% convertible note (the Convertible Note) to a lender (the Holder) in an aggregate principal amount of $115,500. The Company received cash proceeds of $101,500 net of transaction costs of $14,000 that included $3,500 for attorneys fees. The note matures on July 18, 2019. Interest costs accrue on the unpaid principal balance at 12% annually until maturity, and after that if not paid, interest accrues annually at 18% until any unpaid principal amount and unpaid interest accrued are paid. The Holder of the note, at its sole election, may convert the note into shares of common stock of the Company at any time during the period beginning on the date which is one hundred and eighty days following the date of the note (dated July 18, 2018) and ending on the later of i) the maturity date, or ii) the date of payment of a default amount, if any. The shares to be issued upon conversion are a function of a variable conversion price which is 65% of a market price defined to be the lowest one (1) trading price for the Companys common stock during the fifteen (15) day trading period ending on the last trading day prior to the conversion date. The Company will keep available authorized shares reserved, initially 1,500,000 shares. On July 19, 2018 IronClad entered into a Securities Purchase Agreement (SPA) to issue a 9% convertible note payable for an aggregate principal amount of $315,000 comprised of the first note (First Note) being in the amount of $157,500.00, and the remaining note in the amount of $157,500.00, (a Back End Note). The Company received cash proceeds of $142,500 from the First Note net of transaction costs of $15,000 that included $7,500 for attorneys fees. The First Note matures on July 19, 2019 and interest costs accrue on the unpaid principal balance at 9% annually until July 19, 2019, and after that if not paid at maturity interest accrues annually at up to 24% until the principal amount and all interest accrued and unpaid are paid. The Back End Note carries the same terms as the First Note, except it may not be repaid in cash, but only converted. The Company is under no obligation to accept the Back End Note, but may do so at its sole discretion following 180 days from the date of the note (dated July 19, 2018). As part of the SPA, the Holder issued the Company a collateralized secured promissory note in the amount of $150,000 that may be exchanged for cash against the Back End Note. The holder of the note, at its sole election, may convert the note into shares of common stock of the Company at any time during the period beginning on the date which is 180 days following the date of the note (dated July 19, 2018) and ending on the later of i) the maturity date, or ii) the date of payment of a default amount, if any. The shares to be issued are a function of a fixed conversion price of $1.00 per share for six months, and thereafter until maturity at a variable conversion price which is 65% of a market price defined to be the lowest trading price for the Companys common stock during the fifteen-day trading period ending on the last trading day prior to exercising the conversion right. Additional Stock Issuances On August 6, 2018 a private investor paid $21,000 to exercise options to purchase 140,000 shares of common stock at a price of $0.15 per share. On August 13, 2018 an individual company advisor was awarded 2,000 shares of common stock. |
Note 1. Organization, Recent 21
Note 1. Organization, Recent History, and Description of Businesses-Present and Past: Description of Businesses: Present and Past (Policies) | 3 Months Ended |
Jun. 30, 2018 | |
Policies | |
Description of Businesses: Present and Past | Description of Businesses: Present and Past IronClad Encryption Corporation (formerly Butte Highlands Mining Corporation) is a company developing and licensing cyber software technology to secure data files (stored and at rest) and electronic communications (in motion from electronic transmission over the internet or through telephone systems). Data at rest and in motion are both safeguarded from unauthorized access through the use of dynamic encryption and perpetual authentication. InterLok Key Management, Inc. (formerly InterLok Key Management, LLC) is the company that initially developed and maintained the patents and was formed in Texas on June 12, 2006 and incorporated ten years later on June 16, 2016. On January 6, 2017 InterLok entered into a Share Exchange Agreement ("Share Exchange") with Butte Highlands Mining Company. Under the terms of the agreement, the shareholders of InterLok Key Management, Inc. exchanged all 56,655,891 outstanding shares of InterLoks common stock for 56,655,891 shares of Class A common stock of Butte Highlands Mining Company. The Share Exchange was treated as a reverse merger with InterLok Key Management, Inc. which is deemedfor accounting recognition purposesas the accounting acquirer and Butte Highlands Mining Company deemed the accounting acquiree under the acquisition method of accounting. The reverse merger is deemed a recapitalization and the consolidated financial statements represent the substantive continuation of the operations and thus the prior year financial statements of operations are the operating results of its subsidiary InterLok Key Management, Inc., while the capital structure (in terms of authorized preferred and common stock) of its parent Butte Highlands Mining Company remains intact. Subsequently, the company was renamed IronClad Encryption Corporation to better identify with IronClads products and services. IronClad Encryption Corporation is a next-generation cyber defense company that secures digital assets and communications across a wide range of industries and technologies. IronClad Encryption-powered solutions use our patented Dynamic Encryption and Perpetual Authentication technologies to make all known key-based encryption technologies virtually impossible to compromise. Dynamic Encryption Technology eliminates vulnerabilities caused by exposure of any single encryption key by continuously changing encryption keys and keeping the keys synchronized in a fault-tolerant manner. Perpetual Authentication Technology uses multiple virtual channels for encryption so that in the event one channel is compromised, the other channels maintain encryption integrity. Together, these technologies not only eliminate the single point of failure problem created by having keys exposed through brute force, side channel, or other types of attack, but do so with very low latency and system performance overhead. Developers, MSPs, MSSPs and IT organizations can now easily and effectively integrate ultra-secure authentication and encryption measures across essentially all mediums. This includes the latest processors and operating systems, legacy hardware and software, within or between networks, and on compartmentalized data or entire databases. |
Note 1. Organization, Recent 22
Note 1. Organization, Recent History, and Description of Businesses-Present and Past: History and Recent Transaction (Policies) | 3 Months Ended |
Jun. 30, 2018 | |
Policies | |
History and Recent Transaction | History and Recent Transaction The Company is the term used in these statements and notes to refer to the entity originally incorporated in the State of Delaware in 1929. The registered name of the Company until early in 2017 was Butte Highlands Mining Company (Butte). Butte was formed to explore and mine primarily for gold in the Butte Highlands Only Chance mine, south of Butte, Montana. Butte ceased operating as a mining company in 1942. The Company was reorganized in October 1996 for the purpose of acquiring and developing additional mineral properties. At the time of the 1996 reorganization, stockholders representing approximately 76% of the outstanding capital stock could not be located. In order to obtain the quorum necessary for the special meetings of shareholders to authorize the reorganization, Butte obtained an order from the Superior Court of Spokane County, Washington appointing a trustee for the benefit of those stockholders who could not be located. By May 17, 2007, eleven years after the reorganization and very limited results from its mining activities, the Company had disposed of all of its historical mineral properties or mining claims and eventually became a shell company under the rules of the Securities and Exchange Commission (SEC). In 2009, Butte registered under the Securities Exchange Act of 1934, as amended, for the purpose of becoming a reporting company. The Companys common stock then became listed on the OTCBB, but in time the Company also listed its common stock to trade on the OTC QB electronic market, one of the OTC Markets Group over-the-counter markets, where the Companys common stock is now listed. Then, following ten years of being a shell company with only nominal activity and limited cash or other assets, the business focus of Butte changed early in 2017. Most notably the Company raised significant capital to implement its new business and financial plans to further develop the licensing and commercial use of its patented encryption software. The change caused Butte to lose its previous shell company status. The Company also changed its state of incorporation to Nevada and its name to IronClad Encryption Corporation (IronClad) and changed the stock symbol from BTHI to IRNC to more appropriately reflect the fundamental change of its business to developing cyber encryption technology and away from its historical mining activities. On October 16, 2017, the Company redomiciled in Delaware from Nevada and adopted a certificate of incorporation and bylaws as a Delaware corporation. The terms Company, IronClad and Butte all refer to the same individual corporate entity, but the uses of the IronClad and Butte names are used to refer to different eras of the Companys long history. The historical eras generally coincide with the changes in business focus before and after the first weeks of 2017. The business changes are a result of a common stock exchange transaction, accounted for as a reverse merger, between Butte and the owners of InterLok Key Management, Inc. (InterLok; at the time an independent and privately-held Texas corporation) whereby InterLok became a wholly-owned subsidiary of Butte. Butte issued shares of its common stock in exchange for acquiring all of the common stock of InterLok. Through December 31, 2017, InterLok was the only subsidiary of the Company and InterLoks patents and line of business now are the main basis of the business of the Company on a consolidated basis. During the transition three month period ended March 31, 2018; the Company incorporated a new wholly owned subsidiary IronClad Pipeline IC, Inc. (Pipeline). |
Note 1. Organization, Recent 23
Note 1. Organization, Recent History, and Description of Businesses-Present and Past: Principles of consolidation (Policies) | 3 Months Ended |
Jun. 30, 2018 | |
Policies | |
Principles of consolidation | Principles of consolidation The accompanying consolidated financial statements include the accounts of IronClad and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The above unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information Accordingly, these unaudited interim consolidated financial statements do not include all of the disclosures required by generally accepted accounting principles in the United States of America for complete financial statements and the rules of the SEC. These unaudited interim consolidated financial statements should be read in conjunction with the Companys audited financial statements for the year ended March 31, 2018. In the opinion of management, the unaudited interim consolidated financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim periods presented. Operating results for the three month period ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending March 31, 2019. |
Note 2. Summary of Significan24
Note 2. Summary of Significant Accounting Policies: Going Concern (Policies) | 3 Months Ended |
Jun. 30, 2018 | |
Policies | |
Going Concern | Going Concern As shown in the accompanying financial statements, the Company has incurred cumulative operating losses since inception. As of June 30, 2018, the Company has limited financial resources with which to achieve its objectives and attain profitability and positive cash flows from operations. As shown in the accompanying balance sheets and statements of operations, the Company has an accumulated deficit of $16,668,491. The Company's working capital deficit is $2,250,307 (current assets minus current liabilities; current liabilities in this case being greater than current assets). Achievement of the Company's objectives will depend on its ability to obtain additional financing, to generate revenue from current and planned business operations, and to effectively manage product and software development, operating and capital costs. The Company is in a development stage and has generated no operating revenue, profits or positive cash flows from operations. The Company plans to fund its future operations by potential sales of its common stock or by issuing debt securities. However, there is no assurance that IronClad will be able to achieve these objectives, therefore substantial doubt about its ability to continue as a going concern exists. The financial statements do not include adjustments relating to the recoverability of recorded assets nor the implication of associated bankruptcy costs should IronClad be unable to continue as a going concern. |
Note 2. Summary of Significan25
Note 2. Summary of Significant Accounting Policies: Revenue Recognition and Trade Accounts Receivable (Policies) | 3 Months Ended |
Jun. 30, 2018 | |
Policies | |
Revenue Recognition and Trade Accounts Receivable | Revenue Recognition and Trade Accounts Receivable The Company recognizes revenue in accordance with ASC 606 Revenue From Contracts With Customers . We recognize revenue when we have identified a contract with a customer, identify the performance obligations in the contract, determine the transaction prices, when we allocate the transaction prices to the performance obligation in the contract and we recognize revenue when or as the Company satisfies the performance in the contract. We record trade accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts, if any, to reflect any loss anticipated on the trade accounts receivable balances and charged to the provision for doubtful accounts. While the Company does have an exposure to a concentration of credit risk (of one customer at this point) we view the risk is limited due the financial strength and liquidity of the multi-billion dollar energy customer that has operated profitably for over a century. |
Note 2. Summary of Significan26
Note 2. Summary of Significant Accounting Policies: Fair Value Measures (Policies) | 3 Months Ended |
Jun. 30, 2018 | |
Policies | |
Fair Value Measures | Fair Value Measures The Company's financial instruments, as defined by the Financial Accounting Standards Boards Accounting Standards Codification (ASC) 825-10-50 Financial InstrumentsOverall (and subtopics) The standards under ASC 820 Fair Value Measurement · · · At June 30, 2018 and March 31, 2018, the Company did not have any assets measured at fair value other than cash and deposits, the Company had conversion features embedded in its convertible notes payable. The fair value measurement of that feature, using a Binomial options pricing valuation model at June 30, 2018, $552,149, using a term of six months; stock value between $0.59 and $1.25; volatility between 114% and 187.6% and a risk free interest rate of 2.11% the value at March 31, 2018 using a Black Scholes valuation model was $234,138. The amounts are reported as a derivative liability on the balance sheet. . |
Note 2. Summary of Significan27
Note 2. Summary of Significant Accounting Policies: Provision for Income Taxes (Policies) | 3 Months Ended |
Jun. 30, 2018 | |
Policies | |
Provision for Income Taxes | Provision for Income Taxes Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10- 25 Income Taxes Recognition |
Note 2. Summary of Significan28
Note 2. Summary of Significant Accounting Policies: Capitalization of Patent and Trademark Costs (Policies) | 3 Months Ended |
Jun. 30, 2018 | |
Policies | |
Capitalization of Patent and Trademark Costs | Capitalization of Patent and Trademark Costs The Company capitalizes its legal, patent agent and related filing fees and costs associated with the patents it holds and is developing. The amounts are carried as an intangible asset in the financial statements. The costs of the patents or trademarks are amortized ratably (expensed) over the expected useful technological or economic life of the individual assets. The legal life of a patent is typically about 17 years. See Note 4. |
Note 2. Summary of Significan29
Note 2. Summary of Significant Accounting Policies: Reclassification of Prior Year Presentation (Policies) | 3 Months Ended |
Jun. 30, 2018 | |
Policies | |
Reclassification of Prior Year Presentation | Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified to provide greater line item detail for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. This change in classification has no effect on previously reported cash flows in the Condensed Consolidated Statement of Cash Flows and had no effect on the previously reported Condensed Consolidated Statements of Operations for any period |
Note 2. Summary of Significan30
Note 2. Summary of Significant Accounting Policies: New Accounting Requirements and Disclosures (Policies) | 3 Months Ended |
Jun. 30, 2018 | |
Policies | |
New Accounting Requirements and Disclosures | New Accounting Requirements and Disclosures 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. FASB issued standard ASU 2018-07 CompensationStock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting related to changes in stock compensation. |
Note 2. Summary of Significan31
Note 2. Summary of Significant Accounting Policies: Use of Estimates (Policies) | 3 Months Ended |
Jun. 30, 2018 | |
Policies | |
Use of Estimates | Use of Estimates The preparation of the 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, liabilities and expenses at the balance sheet date and for the period then ended. We believe our estimates and assumptions are reasonable; however, such estimates and assumptions are subject to a number of risks and uncertainties that may cause actual results to differ materially from such estimates. Significant estimates and assumptions underlying these financial statements include: · · · · We are subject to claims and liabilities that arise in the ordinary course of business. We accrue for losses when such losses are considered probable and the amounts can be reasonably estimated. |
Note 4. Patents_ Schedule of Pa
Note 4. Patents: Schedule of Patents and Trademarks (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
Tables/Schedules | |
Schedule of Patents and Trademarks | June 30, 2018 March 31, 2018 Patents and trademarks under development $ 367,888 $ 170,946 Patents issued 398 398 Less accumulated amortization (375) (368) 23 30 Patents, net $ 367,911 $ 170,976 |
Note 7. Notes Payable_ Schedule
Note 7. Notes Payable: Schedule of dates, shares issued and principal amounts repaid (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
Tables/Schedules | |
Schedule of dates, shares issued and principal amounts repaid | Conversion Date Principal Outstanding Principal Reduction Shares Issued Exercise Price 12/31/2017 $78,500 1/10/2018 $63,500 ($15,000) 8,242 $1.82 1/12/2018 $43,500 ($20,000) 10,989 $1.82 1/18/2018 $28,500 ($15,000) 8,242 $1.82 1/23/2018 $13,500 ($15,000) 9,819 $1.53 1/25/2018 $ ($13,500) 13,030 $1.40 Total 50,322 |
Note 10. Income Taxes_ Schedule
Note 10. Income Taxes: Schedule of Significant components of the deferred tax asset amounts (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
Tables/Schedules | |
Schedule of Significant components of the deferred tax asset amounts | June 30, 2018 March 31, 2018 Net operating losses carryforwards $ 5,642,194 $ 5,173,092 Deferred tax asset 1,184,861 1,074,851 Valuation allowance for deferred asset (1,184,861) (1,074,851) Net deferred tax asset $ - $ - |
Note 13. Stock Options and Wa35
Note 13. Stock Options and Warrants: Schedule of assumptions used to estimate the fair values of the options and warrants (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
Tables/Schedules | |
Schedule of assumptions used to estimate the fair values of the options and warrants | Number of Options* Date Issued Exercise Price Risk-free Interest Rate Volatility Life of Options in Years Vested Options* 75,000 01/16/17 $0.75 1.54% 226.01% 3.00 75,000 6,000,000 01/20/17 $0.15 1.54% 220.00% 3.00 1,500,000 3,000,000 01/20/17 $0.15 1.54% 220.00% 4.00 1,000,000 350,000 01/31/17 $0.15 1.19% 132.84% 1.93 350,000 100,000 02/01/17 $0.15 1.22% 134.90% 2.00 100,000 100,000 03/13/17 $0.15 1.40% 144.84% 2.00 25,000 20,000 03/21/17 $0.15 1.54% 233.07% 3.00 20,000 5,000 04/30/17 $0.75 1.45% 219.35% 3.00 5,000 1,700,000 05/05/17 $1.47 1.71% 565.34% 4.00 425,000 1,000,000 05/05/17 $1.47 1.32% 202.99% 2.00 500,000 80,000 05/31/17 $0.75 1.44% 196.06% 3.00 80,000 660,000 06/12/17 $2.50 1.64% 589.85% 4.00 165,000 5,000 06/30/17 $3.49 1.55% 197.13% 3.00 5,000 300,000 07/26/17 $3.16 1.63% 296.38% 4.00 37,500 5,000 07/31/17 $3.50 1.51% 170.61% 3.00 25,000 37,500 08/25/17 $2.50 1.62% 170.38% 3.00 37,500 25,000 08/31/17 $3.75 1.44% 170.57% 3.00 25,000 37,500 10/26/17 $4.50 1.76% 220.28% 3.00 37,500 25,000 01/25/18 $2.70 2.20% 247.35% 3.00 25,000 25,000 03/02/18 $1.80 2.52% 297.39% 3.84 25,000 400,000 03/02/18 $1.80 2.71% 369.15% 5.84 3,400,000 03/02/18 $1.80 2.79% 369.05% 6.84 350,000 03/02/18 $1.80 2.79% 395.11% 7.84 20,000 04/02/18 $2.70 2.55% 372.73% 4.75 20,000 20,000 05/01/18 $1.80 2.82% 365.73% 4.67 20,000 20,000 06/06/18 $1.80 2.81% 312.26% 4.57 - 17,735,000 Issued Vested 4,545,000 (25,000) Exercised Exercised (25,000) 17,710,000 Unexercised Unexercised 4,520,000 Number of Warrants Date Issued Exercise Price Risk-free Interest Rate Volatility Life of Warrants in Years Vested Warrants 500,000 03/15/17 $0.15 1.02% 114.94% 1.40 500,000 82,500 08/24/17 $3.00 1.63% 285.16% 4.00 82,500 62,500 06/26/18 $3.00 2.69% 311.00% 4.00 62,500 645,000 Issued 645,000 Options* and Warrants Options and Warrants 18,355,000 Issued Vested 5,165,000 (25,000) Exercised Exercised (25,000) 18,330,000 Unexercised Unexercised 5,140,000 * The number of outstanding options above does not include an option awarded to the Companys President to purchase 10,000,000 shares of Class A common stock at an exercise price of $1.00 per share. The option is only exercisable under certain limited circumstances, one of which is that the market price of the Class A common stock reaches a price of $15.00 per share. Once vested, these additional options must be exercised within two years of vesting. The number of options and warrants including these 10,000,000 options totals 24,045,000. On April 11, 2017 an independent company advisor exercised options for 25,000 shares of Class A common stock for $3,750 in cash. |
Note 1. Organization, Recent 36
Note 1. Organization, Recent History, and Description of Businesses-Present and Past: Description of Businesses: Present and Past (Details) | 3 Months Ended |
Jun. 30, 2018 | |
Details | |
Entity Information, Former Legal or Registered Name | Butte Highlands Mining Corporation |
Entity Incorporation, Date of Incorporation | Jun. 16, 2016 |
Note 2. Summary of Significan37
Note 2. Summary of Significant Accounting Policies: Going Concern (Details) - USD ($) | Jun. 30, 2018 | Mar. 31, 2018 |
Details | ||
Accumulated deficit | $ (16,668,491) | $ (13,703,597) |
Working capital deficit | $ 2,250,307 |
Note 2. Summary of Significan38
Note 2. Summary of Significant Accounting Policies: Fair Value Measures (Details) - Conversion features embedded in convertible notes payable - USD ($) | 3 Months Ended | |
Jun. 30, 2018 | Mar. 31, 2018 | |
Convertible Notes Payable, Current | $ 552,149 | $ 234,138 |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 6 months | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate, Minimum | 114.00% | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate, Maximum | 187.60% | |
Risk-free Interest Rate | 2.11% | |
Minimum | ||
Share Price | $ 0.59 | |
Maximum | ||
Share Price | $ 1.25 | |
End of period | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Method Used | Binomial options pricing valuation model | |
Start of period | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Method Used | Black Scholes valuation model |
Note 3. Accounts Receivable a39
Note 3. Accounts Receivable and Revenue (Details) - USD ($) | 3 Months Ended | |
Jun. 30, 2018 | Mar. 31, 2018 | |
Details | ||
Accounts receivable | $ 371,239 | $ 301,978 |
Revenue from Services Rendered | $ 254,715 | $ 229,745 |
Note 4. Patents_ Schedule of 40
Note 4. Patents: Schedule of Patents and Trademarks (Details) - USD ($) | Jun. 30, 2018 | Mar. 31, 2018 |
Details | ||
Patents and trademarks under development | $ 367,888 | $ 170,946 |
Patents issued | 398 | 398 |
Less accumulated amortization | (375) | (368) |
Patents, net | $ 367,911 | $ 170,976 |
Note 4. Patents (Details)
Note 4. Patents (Details) | 3 Months Ended |
Jun. 30, 2018USD ($) | |
Details | |
Amortization of Intangible Assets | $ 8 |
Note 5. Concentration of Cred42
Note 5. Concentration of Credit Risk (Details) - USD ($) | Jun. 30, 2018 | Mar. 31, 2018 |
Details | ||
Time Deposits, at or Above FDIC Insurance Limit | $ 0 | $ 29,908 |
Note 6 - Related Party Transa43
Note 6 - Related Party Transactions (Details) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Details | |
Consulting fees paid | $ 15,249 |
Due to related party | $ 10,662 |
Note 7. Notes Payable_ Securiti
Note 7. Notes Payable: Securities Purchase Agreement, Convertible Note 12% (Details) - USD ($) | 3 Months Ended | ||
Jun. 30, 2018 | Mar. 31, 2018 | Dec. 23, 2017 | |
Payments of Debt Issuance Costs | $ 15,000 | ||
Accrued interest | $ 72,819 | $ 39,761 | |
Derivative Liability, Fair Value, Gross Asset | $ 126,578 | ||
Securities Purchase Agreement, Convertible Note 12% | |||
Debt Instrument, Issuance Date | Jun. 26, 2017 | ||
Debt Instrument, Interest Rate, Stated Percentage | 12.00% | ||
Debt Instrument, Description | convertible note payable | ||
Debt Instrument, Face Amount | $ 78,500 | ||
Proceeds from Loans | 75,000 | ||
Payments of Debt Issuance Costs | 3,500 | ||
Debt Instrument, Unamortized Discount, Current | $ 3,500 | ||
Amortization of Debt Issuance Costs | 1,226 | ||
Accrued interest | $ 0 | ||
Debt Instrument, Maturity Date | Mar. 30, 2018 | ||
Debt Instrument, Convertible, Terms of Conversion Feature | convert the note into shares of common stock of the Company at any time during the period beginning on the date which is one hundred and eighty days following the date of the note (dated June 26, 2017) and ending on the later of i) the maturity date, or ii) the date of payment of a default amount, if any |
Note 7. Notes Payable_ Schedu45
Note 7. Notes Payable: Schedule of dates, shares issued and principal amounts repaid (Details) | 3 Months Ended |
Jun. 30, 2018USD ($)$ / sharesshares | |
Conversion Event 1 | |
Conversion Date | Dec. 31, 2017 |
Principal Outstanding | $ 78,500 |
Conversion Event 2 | |
Conversion Date | Jan. 10, 2018 |
Principal Outstanding | $ 63,500 |
Principal Reduction | $ (15,000) |
Shares Issued | shares | 8,242 |
Exercise Price | $ / shares | $ 1.82 |
Conversion Event 3 | |
Conversion Date | Jan. 12, 2018 |
Principal Outstanding | $ 43,500 |
Principal Reduction | $ (20,000) |
Shares Issued | shares | 10,989 |
Exercise Price | $ / shares | $ 1.82 |
Conversion Event 4 | |
Conversion Date | Jan. 18, 2018 |
Principal Outstanding | $ 28,500 |
Principal Reduction | $ (15,000) |
Shares Issued | shares | 8,242 |
Exercise Price | $ / shares | $ 1.82 |
Conversion Event 5 | |
Conversion Date | Jan. 23, 2018 |
Principal Outstanding | $ 13,500 |
Principal Reduction | $ (15,000) |
Shares Issued | shares | 9,819 |
Exercise Price | $ / shares | $ 1.53 |
Conversion Event 6 | |
Conversion Date | Jan. 25, 2018 |
Principal Outstanding | $ 0 |
Principal Reduction | $ (13,500) |
Shares Issued | shares | 13,030 |
Exercise Price | $ / shares | $ 1.40 |
Shares Issued | shares | 50,322 |
Note 7. Notes Payable_ Commitme
Note 7. Notes Payable: Commitment Note and Convertible Note (Details) | 3 Months Ended |
Jun. 30, 2018USD ($) | |
Debt Instrument, Convertible, Beneficial Conversion Feature | $ 138,000 |
$82,500 borrowing on the Convertible note with an intrinsic value of $.0932 | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Method Used | binomial pricing model |
Commitment Note and Convertible Note #1 | |
Debt Instrument, Interest Rate, Stated Percentage | 10.00% |
Debt Instrument, Description | convertible promissory note |
Debt Instrument, Face Amount | $ 100,000 |
Debt Instrument, Maturity Date | Mar. 24, 2018 |
Debt Instrument, Convertible, Terms of Conversion Feature | convertible into shares of IronClad’s Class A common stock at the fixed price of $3.25 per share |
Commitment Note and Convertible Note #2a | |
Debt Instrument, Interest Rate, Stated Percentage | 10.00% |
Debt Instrument, Description | convertible note |
Debt Instrument, Face Amount | $ 165,000 |
Debt Instrument, Convertible, Terms of Conversion Feature | embedded beneficial conversion feature (“BCF”) based on a stated conversion price of $1.00 per share |
Debt Instrument, Issuance Date | Aug. 24, 2017 |
Proceeds from Loans | $ 150,000 |
Debt Instrument, Convertible, Beneficial Conversion Feature | 69,000 |
Derivative, Net Liability Position, Aggregate Fair Value | $ 3,362 |
Commitment Note and Convertible Note #2b | |
Debt Instrument, Description | Convertible Note |
Debt Instrument, Face Amount | $ 82,500 |
Debt Instrument, Issuance Date | Oct. 23, 2017 |
Proceeds from Loans | $ 75,000 |
Debt Instrument, Convertible, Beneficial Conversion Feature | $ 69,000 |
Commitment Note and Convertible Note #2c | |
Debt Instrument, Description | Convertible Note |
Debt Instrument, Face Amount | $ 82,500 |
Debt Instrument, Issuance Date | Mar. 15, 2018 |
Proceeds from Loans | $ 75,000 |
Derivative, Net Liability Position, Aggregate Fair Value | 155,000 |
Long-term Debt | $ 135,000 |
Note 7. Notes Payable_ Converti
Note 7. Notes Payable: Convertible Notes, 12% (Details) | 3 Months Ended |
Jun. 30, 2018USD ($) | |
Payments of Debt Issuance Costs | $ 15,000 |
Intrinsic value of $.2981 | |
Derivative Liability | $ 42,862 |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Method Used | binomial pricing model |
Convertible Notes, 12% - #1 | |
Debt Instrument, Issuance Date | Jan. 25, 2018 |
Debt Instrument, Interest Rate, Stated Percentage | 12.00% |
Debt Instrument, Description | convertible note |
Debt Instrument, Face Amount | $ 88,000 |
Proceeds from Loans | 85,000 |
Payments of Debt Issuance Costs | $ 3,000 |
Debt Instrument, Maturity Date | Oct. 30, 2018 |
Debt Instrument, Convertible, Terms of Conversion Feature | convert the note into shares of common stock of the Company at any time during the period beginning on the date which is one hundred and eighty days following the date of the note (dated January 25, 2018) and ending on the later of i) the maturity date, or ii) the date of payment of a default amount, if any |
Convertible Notes, 12% - #2 | |
Debt Instrument, Issuance Date | Feb. 27, 2018 |
Debt Instrument, Interest Rate, Stated Percentage | 12.00% |
Debt Instrument, Description | convertible note |
Debt Instrument, Face Amount | $ 53,000 |
Proceeds from Loans | 50,000 |
Payments of Debt Issuance Costs | $ 3,000 |
Debt Instrument, Maturity Date | Nov. 3, 2018 |
Debt Instrument, Convertible, Terms of Conversion Feature | convert the note into shares of common stock of the Company at any time during the period beginning on the date which is one hundred and eighty days following the date of the note (dated February 27, 2018) and ending on the later of i) the maturity date, or ii) the date of payment of a default amount, if any. |
Note 7. Notes Payable_ New Conv
Note 7. Notes Payable: New Convertible Note, 10% (Details) - USD ($) | 3 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Financing fees | $ 162,869 | $ 0 |
Intrinsic value of $.03281 | ||
Derivative Liability | $ 189,211 | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Method Used | binomial pricing model | |
New Convertible Note, 10% | ||
Debt Instrument, Issuer | IronClad | |
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | |
Debt Instrument, Description | convertible note payable | |
Debt Instrument, Face Amount | $ 250,000 | |
Long-term Debt, Fair Value | 235,000 | |
Debt Instrument, Unamortized Discount, Current | $ 15,000 | |
Debt Instrument, Maturity Date | Dec. 26, 2018 | |
Debt Instrument, Convertible, Terms of Conversion Feature | may convert the note into shares of common stock of the Company at any time on or following the date of the Note from the and ending on the later of i) the maturity date, or ii) the date of payment of a default amount, if any |
Note 7. Notes Payable_ Working
Note 7. Notes Payable: Working Capital Loan for Services to New Customer by IronClad Pipeline IC, Inc (Details) | 3 Months Ended |
Jun. 30, 2018USD ($) | |
Working Capital Loan #1 | |
Debt Instrument, Issuance Date | Feb. 27, 2018 |
Debt Instrument, Face Amount | $ 255,000 |
Debt Instrument, Interest Rate, Stated Percentage | 8.50% |
Proceeds from Loans | $ 250,000 |
Working Capital Loan #2 | |
Debt Instrument, Issuance Date | Mar. 21, 2018 |
Debt Instrument, Face Amount | $ 245,000 |
Proceeds from Loans | 240,000 |
Long-term Debt | $ 475,000 |
Note 8. Common Stock (Details)
Note 8. Common Stock (Details) | 3 Months Ended |
Jun. 30, 2018USD ($) | |
Three-month period ended June 30, 2017 | |
Sale of Stock, Description of Transaction | Company issued i) 240,333 shares of Class A common stock at $0.15 per share for cash in the amount of $36,050 pursuant to a Section 4(a)2 private placement offering, ii) 25,000 shares at $0.15 per share for the conversion of stock options (see Note 12), and iii) 75,000 shares at $2.90 per share for investment banking services valued at $217,500 |
Three-month period ended September 30, 2017 | |
Sale of Stock, Description of Transaction | Company issued i) 100,000 shares of Class A common stock at $3.49 per share for consulting services in the amount of $349,000 and ii) 37,500 shares at $3.50 per share for investment banking services valued at $131,250 |
Three-month period ended December 31, 2017 | |
Sale of Stock, Description of Transaction | Company issued 157,500 shares of Class A common stock at $4.10 per share to seven parties for consulting services in the amount of $660,750 |
On January 24, 2018 | |
Sale of Stock, Description of Transaction | IronClad issued, under the terms of the Investment Agreement, 14,331 shares of its Class A stock |
On January 23, 2018 | |
Sale of Stock, Description of Transaction | Company issued 10,000 shares of its Class A common stock |
During the period ended June 30, 2018 | |
Stock Issued During Period, Value, New Issues | $ 166,105 |
Note 9. General and Administr51
Note 9. General and Administrative Expenses (Details) - USD ($) | 3 Months Ended | ||
Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | |
Details | |||
General and Administrative Expense | $ 607,389 | $ 294,856 | |
Compensation expenses in connection with the issuance of stock options or warrants | 548,078 | 135,613 | |
General and administrative | 607,389 | $ 774,400 | 294,856 |
Stock options issued for services, general and administrative | $ 548,077 | 410,225 | $ 8,083 |
Common stock issued for consulting services | $ 20,500 |
Note 10. Income Taxes_ Schedu52
Note 10. Income Taxes: Schedule of Significant components of the deferred tax asset amounts (Details) - USD ($) | Jun. 30, 2018 | Mar. 31, 2018 |
Details | ||
Net operating losses carryforwards | $ 5,642,194 | $ 5,173,092 |
Deferred tax asset | 1,184,861 | 1,074,851 |
Valuation allowance for deferred asset | (1,184,861) | (1,074,851) |
Net deferred tax asset | $ 0 | $ 0 |
Note 11. Share Exchange Agree53
Note 11. Share Exchange Agreement (Details) | Jan. 06, 2017USD ($) |
Details | |
Restricted shares issued | $ 56,655,891 |
Note 12. Share Based Compensa54
Note 12. Share Based Compensation (Details) | 12 Months Ended |
Dec. 31, 2017shares | |
Details | |
Restricted stock awards, shares granted for services | 287,500 |
Restricted stock awards, shares forfeited | 0 |
Restricted stock awards, expenses for services | 709,000 |
Restricted stock awards, expenses for business development | 349,000 |
Restricted stock awards, expenses for investor relations | 360,000 |
Note 13. Stock Options and Wa55
Note 13. Stock Options and Warrants (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Mar. 31, 2018 | |
Stock Options and Warrants #1 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 1,045,000 | |||||
Stock Granted, Value, Share-based Compensation, Gross | $ 1,305,565 | |||||
Stock Options and Warrants #2 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 9,000,000 | |||||
Stock Granted, Value, Share-based Compensation, Gross | $ 622,045 | |||||
Stock Options and Warrants #3 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 2,945,000 | |||||
Stock Granted, Value, Share-based Compensation, Gross | $ 4,657,850 | |||||
Fair Value Measurements, Valuation Processes, Description | Black-Scholes option pricing model | |||||
Stock Options and Warrants #4 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 500,000 | |||||
Stock Granted, Value, Share-based Compensation, Gross | $ 731,659 | |||||
Fair Value Measurements, Valuation Processes, Description | Black-Scholes option pricing model | |||||
Stock Options and Warrants #5 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 372,500 | |||||
Stock Granted, Value, Share-based Compensation, Gross | $ 261,991 | |||||
Fair Value Measurements, Valuation Processes, Description | Black-Scholes option pricing model | |||||
Stock Options and Warrants #6 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 82,500 | |||||
Stock Granted, Value, Share-based Compensation, Gross | $ 287,629 | |||||
Fair Value Measurements, Valuation Processes, Description | Black-Scholes option pricing model | |||||
Stock Options and Warrants #7 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 37,500 | |||||
Stock Granted, Value, Share-based Compensation, Gross | $ 161,921 | |||||
Fair Value Measurements, Valuation Processes, Description | Black-Scholes option pricing model | |||||
Stock Options and Warrants #8 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 122,500 | 2,700,000 | ||||
Stock Granted, Value, Share-based Compensation, Gross | $ 123,719 | $ 4,873,048 | ||||
Fair Value Measurements, Valuation Processes, Description | Black-Scholes option pricing model | |||||
Stock Options and Warrants #9 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 1,500,000 | |||||
Stock Granted, Value, Share-based Compensation, Gross | $ 2,700,000 | |||||
Fair Value Measurements, Valuation Processes, Description | Black-Scholes option pricing model |
Note 13. Stock Options and Wa56
Note 13. Stock Options and Warrants: Schedule of assumptions used to estimate the fair values of the options and warrants (Details) | 3 Months Ended | |
Jun. 30, 2018$ / sharesshares | ||
Number of Options Issued | 17,735,000 | [1] |
Vested Options, Vested | 4,545,000 | [1] |
Number of Options Exercised | (25,000) | [2] |
Vested Options, Exercised | (25,000) | [2] |
Number of Options Unexercised | 17,710,000 | [1] |
Vested Options, Unexercised | 4,520,000 | [1] |
Number of Warrants | 645,000 | |
Vested Warrants | 645,000 | |
Options and Warrants, Issued | 18,355,000 | [1] |
Options and Warrants, Vested | 5,165,000 | |
Options and Warrants, Exercised | (25,000) | [1],[2] |
Options and Warrants, Exercised | (25,000) | [2] |
Options and Warrants, Unexercised | 18,330,000 | [1] |
Options and Warrants, Unexercised | 5,140,000 | |
Option #1 | ||
Number of Options* | 75,000 | [1] |
Date Issued | Jan. 16, 2017 | |
Exercise Price | $ / shares | $ 0.75 | |
Risk-free Interest Rate | 1.54% | |
Volatility | 226.01% | |
Life of Options in Years | 3 | |
Vested Options* | 75,000 | [1] |
Option #2 | ||
Number of Options* | 6,000,000 | [1] |
Date Issued | Jan. 20, 2017 | |
Exercise Price | $ / shares | $ 0.15 | |
Risk-free Interest Rate | 1.54% | |
Volatility | 220.00% | |
Life of Options in Years | 3 | |
Vested Options* | 1,500,000 | [1] |
Option #3 | ||
Number of Options* | 3,000,000 | [1] |
Date Issued | Jan. 20, 2017 | |
Exercise Price | $ / shares | $ 0.15 | |
Risk-free Interest Rate | 1.54% | |
Volatility | 220.00% | |
Life of Options in Years | 4 | |
Vested Options* | 1,000,000 | [1] |
Option #4 | ||
Number of Options* | 350,000 | [1] |
Date Issued | Jan. 31, 2017 | |
Exercise Price | $ / shares | $ 0.15 | |
Risk-free Interest Rate | 1.19% | |
Volatility | 132.84% | |
Life of Options in Years | 1.93 | |
Vested Options* | 350,000 | [1] |
Option #5 | ||
Number of Options* | 100,000 | [1] |
Date Issued | Feb. 1, 2017 | |
Exercise Price | $ / shares | $ 0.15 | |
Risk-free Interest Rate | 1.22% | |
Volatility | 134.90% | |
Life of Options in Years | 2 | |
Vested Options* | 100,000 | [1] |
Option #6 | ||
Number of Options* | 100,000 | [2] |
Date Issued | Mar. 13, 2017 | |
Exercise Price | $ / shares | $ 0.15 | |
Risk-free Interest Rate | 1.40% | |
Volatility | 144.84% | |
Life of Options in Years | 2 | |
Vested Options* | 25,000 | [2] |
Option #7 | ||
Number of Options* | 20,000 | [1] |
Date Issued | Mar. 21, 2017 | |
Exercise Price | $ / shares | $ 0.15 | |
Risk-free Interest Rate | 1.54% | |
Volatility | 233.07% | |
Life of Options in Years | 3 | |
Vested Options* | 20,000 | [1] |
Option #8 | ||
Number of Options* | 5,000 | [1] |
Date Issued | Apr. 30, 2017 | |
Exercise Price | $ / shares | $ 0.75 | |
Risk-free Interest Rate | 1.45% | |
Volatility | 219.35% | |
Life of Options in Years | 3 | |
Vested Options* | 5,000 | [1] |
Option #9 | ||
Number of Options* | 1,700,000 | [1] |
Date Issued | May 5, 2017 | |
Exercise Price | $ / shares | $ 1.47 | |
Risk-free Interest Rate | 1.71% | |
Volatility | 565.34% | |
Life of Options in Years | 4 | |
Vested Options* | 425,000 | [1] |
Option #10 | ||
Number of Options* | 1,000,000 | [1] |
Date Issued | May 5, 2017 | |
Exercise Price | $ / shares | $ 1.47 | |
Risk-free Interest Rate | 1.32% | |
Volatility | 202.99% | |
Life of Options in Years | 2 | |
Vested Options* | 500,000 | [1] |
Option #11 | ||
Number of Options* | 80,000 | [1] |
Date Issued | May 31, 2017 | |
Exercise Price | $ / shares | $ 0.75 | |
Risk-free Interest Rate | 1.44% | |
Volatility | 196.06% | |
Life of Options in Years | 3 | |
Vested Options* | 80,000 | [1] |
Option #12 | ||
Number of Options* | 660,000 | [1] |
Date Issued | Jun. 12, 2017 | |
Exercise Price | $ / shares | $ 2.50 | |
Risk-free Interest Rate | 1.64% | |
Volatility | 589.85% | |
Life of Options in Years | 4 | |
Vested Options* | 165,000 | [1] |
Option #13 | ||
Number of Options* | 5,000 | [1] |
Date Issued | Jun. 30, 2017 | |
Exercise Price | $ / shares | $ 3.49 | |
Risk-free Interest Rate | 1.55% | |
Volatility | 197.13% | |
Life of Options in Years | 3 | |
Vested Options* | 5,000 | [1] |
Option #14 | ||
Number of Options* | 300,000 | [1] |
Date Issued | Jul. 26, 2017 | |
Exercise Price | $ / shares | $ 3.16 | |
Risk-free Interest Rate | 1.63% | |
Volatility | 296.38% | |
Life of Options in Years | 4 | |
Vested Options* | 37,500 | [1] |
Option #15 | ||
Number of Options* | 5,000 | [1] |
Date Issued | Jul. 31, 2017 | |
Exercise Price | $ / shares | $ 3.50 | |
Risk-free Interest Rate | 1.51% | |
Volatility | 170.61% | |
Life of Options in Years | 3 | |
Vested Options* | 25,000 | [1] |
Option #16 | ||
Number of Options* | 37,500 | [1] |
Date Issued | Aug. 25, 2017 | |
Exercise Price | $ / shares | $ 2.50 | |
Risk-free Interest Rate | 1.62% | |
Volatility | 170.38% | |
Life of Options in Years | 3 | |
Vested Options* | 37,500 | [1] |
Option #17 | ||
Number of Options* | 25,000 | [1] |
Date Issued | Aug. 31, 2017 | |
Exercise Price | $ / shares | $ 3.75 | |
Risk-free Interest Rate | 1.44% | |
Volatility | 170.57% | |
Life of Options in Years | 3 | |
Vested Options* | 25,000 | [1] |
Option #18 | ||
Number of Options* | 37,500 | [1] |
Date Issued | Oct. 26, 2017 | |
Exercise Price | $ / shares | $ 4.50 | |
Risk-free Interest Rate | 1.76% | |
Volatility | 220.28% | |
Life of Options in Years | 3 | |
Vested Options* | 37,500 | [1] |
Option #19 | ||
Number of Options* | 25,000 | [1] |
Date Issued | Jan. 25, 2018 | |
Exercise Price | $ / shares | $ 2.70 | |
Risk-free Interest Rate | 2.20% | |
Volatility | 247.35% | |
Life of Options in Years | 3 | |
Vested Options* | 25,000 | [1] |
Option #20 | ||
Number of Options* | 25,000 | [1] |
Date Issued | Mar. 2, 2018 | |
Exercise Price | $ / shares | $ 1.80 | |
Risk-free Interest Rate | 2.52% | |
Volatility | 297.39% | |
Life of Options in Years | 3.84 | |
Vested Options* | 25,000 | [1] |
Option #21 | ||
Number of Options* | 400,000 | [1] |
Date Issued | Mar. 2, 2018 | |
Exercise Price | $ / shares | $ 1.80 | |
Risk-free Interest Rate | 2.71% | |
Volatility | 369.15% | |
Life of Options in Years | 5.84 | |
Vested Options* | 0 | [1] |
Option #22 | ||
Number of Options* | 3,400,000 | [1] |
Date Issued | Mar. 2, 2018 | |
Exercise Price | $ / shares | $ 1.80 | |
Risk-free Interest Rate | 2.79% | |
Volatility | 369.05% | |
Life of Options in Years | 6.84 | |
Vested Options* | 0 | [1] |
Option #23 | ||
Number of Options* | 350,000 | [1] |
Date Issued | Mar. 2, 2018 | |
Exercise Price | $ / shares | $ 1.80 | |
Risk-free Interest Rate | 2.79% | |
Volatility | 395.11% | |
Life of Options in Years | 7.84 | |
Vested Options* | 0 | [1] |
Option #24 | ||
Number of Options* | 20,000 | [1] |
Date Issued | Apr. 2, 2018 | |
Exercise Price | $ / shares | $ 2.70 | |
Risk-free Interest Rate | 2.55% | |
Volatility | 372.73% | |
Life of Options in Years | 4.75 | |
Vested Options* | 20,000 | [1] |
Option #25 | ||
Number of Options* | 20,000 | [1] |
Date Issued | May 1, 2018 | |
Exercise Price | $ / shares | $ 1.80 | |
Risk-free Interest Rate | 2.82% | |
Volatility | 365.73% | |
Life of Options in Years | 4.67 | |
Vested Options* | 20,000 | [1] |
Option #26 | ||
Number of Options* | 20,000 | [1] |
Date Issued | Jun. 6, 2018 | |
Exercise Price | $ / shares | $ 1.80 | |
Risk-free Interest Rate | 2.81% | |
Volatility | 312.26% | |
Life of Options in Years | 4.57 | |
Vested Options* | 0 | [1] |
Warrant #1 | ||
Date Issued | Mar. 15, 2017 | |
Exercise Price | $ / shares | $ 0.15 | |
Risk-free Interest Rate | 1.02% | |
Volatility | 114.94% | |
Number of Warrants | 500,000 | |
Life of Warrants in Years | 1.40 | |
Vested Warrants | 500,000 | |
Warrant #2 | ||
Date Issued | Aug. 24, 2017 | |
Exercise Price | $ / shares | $ 3 | |
Risk-free Interest Rate | 1.63% | |
Volatility | 285.16% | |
Number of Warrants | 82,500 | |
Life of Warrants in Years | 4 | |
Vested Warrants | 82,500 | |
Warrant #3 | ||
Date Issued | Jun. 26, 2018 | |
Exercise Price | $ / shares | $ 3 | |
Risk-free Interest Rate | 2.69% | |
Volatility | 311.00% | |
Number of Warrants | 62,500 | |
Life of Warrants in Years | 4 | |
Vested Warrants | 62,500 | |
[1] | The number of outstanding options above does not include an option awarded to the Companys President to purchase 10,000,000 shares of Class A common stock at an exercise price of $1.00 per share. The option is only exercisable under certain limited circumstances, one of which is that the market price of the Class A common stock reaches a price of $15.00 per share. Once vested, these additional options must be exercised within two years of vesting. The number of options and warrants including these 10,000,000 options totals 24,045,000. | |
[2] | On April 11, 2017 an independent company advisor exercised options for 25,000 shares of Class A common stock for $3,750 in cash. |
Note 15. Subsequent Events_ Cus
Note 15. Subsequent Events: Customer Service (Details) | 3 Months Ended |
Jun. 30, 2018 | |
Event #1 | |
Subsequent Event, Description | our customer notified the Company of its intent to exercise an option in its contract to end our services under the contract |
Note 15. Subsequent Events_ New
Note 15. Subsequent Events: New Loan Agreement including Convertible Note, 9% (Details) | 3 Months Ended |
Jun. 30, 2018USD ($) | |
Payments of Debt Issuance Costs | $ 15,000 |
Event #2 | |
Subsequent Event, Date | Jul. 11, 2018 |
Subsequent Event, Description | IronClad entered into a Securities Purchase Agreement to issue a 10% convertible note payable for an aggregate principal amount of $270,000 |
Debt Instrument, Interest Rate, Stated Percentage | 10.00% |
Debt Instrument, Description | convertible note |
Debt Instrument, Face Amount | $ 270,000 |
Proceeds from Loans | 126,500 |
Payments of Debt Issuance Costs | $ 8,500 |
Debt Instrument, Maturity Date | Jul. 11, 2019 |
Debt Instrument, Collateral | convert the note into shares of common stock of the Company at any time during the period beginning on the date which is 180 days following the date of the note (dated July 11, 2018) and ending on the later of i) the maturity date, or ii) the date of payment of a default amount, if any |
Event #3 | |
Subsequent Event, Date | Jul. 17, 2018 |
Subsequent Event, Description | IronClad issued a 12% convertible note |
Debt Instrument, Interest Rate, Stated Percentage | 12.00% |
Debt Instrument, Description | convertible note |
Debt Instrument, Face Amount | $ 115,500 |
Debt Instrument, Maturity Date | Jul. 18, 2019 |
Long-term Debt, Fair Value | $ 101,500 |
Debt Instrument, Convertible, Terms of Conversion Feature | may convert the note into shares of common stock of the Company at any time during the period beginning on the date which is one hundred and eighty days following the date of the note (dated July 18, 2018) and ending on the later of i) the maturity date, or ii) the date of payment of a default amount, if any |
Event #4 | |
Subsequent Event, Date | Jul. 19, 2018 |
Subsequent Event, Description | IronClad entered into a Securities Purchase Agreement (SPA) to issue a 9% convertible note |
Debt Instrument, Interest Rate, Stated Percentage | 9.00% |
Debt Instrument, Description | convertible note |
Debt Instrument, Face Amount | $ 315,000 |
Debt Instrument, Maturity Date | Jul. 19, 2019 |
Long-term Debt, Fair Value | $ 142,500 |
Debt Instrument, Convertible, Terms of Conversion Feature | may convert the note into shares of common stock of the Company at any time during the period beginning on the date which is 180 days following the date of the note (dated July 19, 2018) and ending on the later of i) the maturity date, or ii) the date of payment of a default amount, if any |
Note 15. Subsequent Events_ Add
Note 15. Subsequent Events: Additional Stock Issuances (Details) | 3 Months Ended |
Jun. 30, 2018USD ($)$ / sharesshares | |
Event #5 | |
Subsequent Event, Date | Aug. 6, 2018 |
Subsequent Event, Description | a private investor paid $21,000 to exercise options |
Stock Issued During Period, Value, New Issues | $ | $ 21,000 |
Stock Issued During Period, Shares, New Issues | 140,000 |
Sale of Stock, Price Per Share | $ / shares | $ 0.15 |
Event #6 | |
Subsequent Event, Date | Aug. 13, 2018 |
Subsequent Event, Description | an individual company advisor was awarded 2,000 shares of common stock |
Stock Issued During Period, Shares, New Issues | 2,000 |