Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 15, 2017 | |
Document and Entity Information: | ||
Entity Registrant Name | GROTE MOLEN INC | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Trading Symbol | grote | |
Amendment Flag | false | |
Entity Central Index Key | 1,456,212 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 30,878,620 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Entity Incorporation, State Country Name | Delaware | |
Entity Incorporation, Date of Incorporation | Apr. 23, 2010 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Current Assets | ||
Cash | $ 2,098,340 | $ 57,033 |
Accounts Receivable | 3,540 | |
Prepaid Expenses | 156,254 | 100,954 |
Total Current assets | 2,258,134 | 157,987 |
Intangible assets, net | 6,118,508 | 5,923,543 |
Total Assets | 8,376,642 | 6,081,530 |
Current Liabilities | ||
Accounts payable and accrued expenses | 2,361,786 | 2,038,273 |
Accounts payable and accrued expenses - related party | 772,865 | 709,725 |
Accrued Interest | 60,678 | 52,888 |
Accrued Interest - Related Party | 1,403,455 | 1,241,911 |
Advances | 40,000 | |
Advances - related party | 160,000 | 110,000 |
Wages Payable | 11,062,132 | 10,696,311 |
Deferred Revenue | 19,737 | 19,988 |
Notes payable | 89,221 | 89,221 |
Current Portion of Long Term Debt | 400,000 | 400,000 |
Convertible notes, short term, net of discounts | 98,000 | |
Convertible Notes, Short Term - Related Party | 284,172 | 284,172 |
Short term portion of convertible notes, long term - related party | 3,712,638 | |
Total Current Liabilities | 20,464,684 | 15,642,489 |
Noncurrent Liabilities | ||
Contingent Liability | 37,500 | 37,500 |
Notes payable, Long Term | 677,771 | 800,000 |
Convertible notes payable, long term - related party | 3,712,638 | |
Total Liabilities | 21,179,955 | 20,192,627 |
Commitments and Contingencies | ||
Stockholders' Deficit | ||
Preferred Stock, Par Value $0.001, 5,000,000 shares authorized; 3,783,818 and 3,671,316 issued and outstanding as March 31, 2017 and December 31, 2016, respectively | 3,784 | 3,671 |
Common Stock, Par Value $0.001, 100,000,000 shares authorized; 27,960,843 and 13,325,681 issued and outstanding as of March 31, 2017 and December 31, 2016, respectively | 27,961 | 13,326 |
Additional Paid-In Capital | 23,948,925 | 20,287,638 |
Accumulated Deficit | (36,838,983) | (34,550,732) |
Subscription Payable | 55,000 | 135,000 |
Total Stockholders' Deficit | (12,803,313) | (14,111,097) |
Total Liabilities and Stockholders' Deficit | $ 8,376,642 | $ 6,081,530 |
CONSOLIDATED BALANCE SHEETS PAR
CONSOLIDATED BALANCE SHEETS PARENTHETICAL - $ / shares | Mar. 31, 2017 | Dec. 31, 2016 |
CONSOLIDATED BALANCE SHEETS PARENTHETICAL | ||
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock shares authorized | 5,000,000 | 5,000,000 |
Preferred stock shares issued | 3,783,818 | 3,671,316 |
Preferred stock shares outstanding | 3,783,818 | 3,671,316 |
Common stock par value | $ 0.001 | $ 0.001 |
Common stock shares authorized | 100,000,000 | 100,000,000 |
Common stock shares issued | 27,960,843 | 13,325,681 |
Common stock shares outstanding | 27,960,843 | 13,325,681 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Revenues | $ 28,741 | $ 2,543 |
Operating Expenses: | ||
Engineering | 40,239 | 18,320 |
Sales and Marketing | 9,604 | |
General and Administrative | 1,556,509 | 1,095,376 |
Total Operating Expenses | 1,596,748 | 1,123,300 |
Loss From Operations | (1,568,007) | (1,120,757) |
Other Income (Expense) | ||
Interest Income | 123 | |
Interest Expense | (65,742) | (445,457) |
Interest Expense - Related Party | (160,838) | (157,279) |
Total other income (expense) | (226,580) | (602,613) |
Net Loss Before Income Taxes | (1,794,587) | (1,723,370) |
Income Tax | ||
Net loss from continuing operations | (1,794,587) | (1,723,370) |
Discontinued Operations | ||
Loss on disposal of discontinued operations | (484,927) | |
Loss from discontinued operations | (8,737) | |
Loss on discontinued operations | (493,664) | |
Net Loss | $ (2,288,251) | $ (1,723,370) |
Loss From Continuing Operations per Common Share - Basic and Diluted | $ (0.11) | $ (0.13) |
Loss From Discontinued Operations per Common Share - Basic and Diluted | $ (0.02) | |
Weighted average shares outstanding - Weighted Average Shares Outstanding - Basic and Diluted | 17,046,510 | 13,325,681 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Subscriptions Payable | Accumulated Deficit | Total |
Balance at Dec. 31, 2015 | $ 10 | $ 13,326 | $ 3,110,821 | $ (27,334,912) | $ (24,210,755) | |
Balance - Shares at Dec. 31, 2015 | 9,804 | 13,325,681 | ||||
Issuance of Preferred Stock | $ 609 | 3,130,395 | $ 135,000 | 3,266,004 | ||
Issuance of Preferred Stock - shares | 608,922 | |||||
Note Conversions | $ 3,052 | 14,046,422 | 14,049,474 | |||
Note Conversions - shares | 3,052,590 | |||||
Net Loss | (7,215,820) | (7,215,820) | ||||
Balance at Dec. 31, 2016 | $ 3,671 | $ 13,326 | 20,287,638 | 135,000 | (34,550,732) | (14,111,097) |
Balance - Shares at Dec. 31, 2016 | 3,671,316 | 13,325,681 | ||||
Share Conversion | $ 50 | $ (500) | 450 | |||
Share Conversion - shares | 50,000 | (500,000) | ||||
Issuance of Preferred Stock | $ 63 | 374,937 | (100,000) | 275,000 | ||
Issuance of Preferred Stock - shares | 62,502 | |||||
Issuance of Common Stock | $ 6,170 | 2,741,402 | 20,000 | 2,767,572 | ||
Issuance of Common Stock - shares | 6,170,162 | |||||
Business acquisition - value | $ 8,965 | 485,551 | 494,516 | |||
Business acquisition - shares | 8,695,000 | |||||
Warrants issued in conjunction with debt agreements | 31,002 | 31,002 | ||||
Warrants issued and expensed in conjunction with advances | 27,945 | 27,945 | ||||
Net Loss | (2,288,251) | (2,288,251) | ||||
Balance at Mar. 31, 2017 | $ 3,784 | $ 27,961 | $ 23,948,925 | $ 55,000 | $ (36,838,983) | $ (12,803,313) |
Balance - Shares at Mar. 31, 2017 | 3,783,818 | 27,960,843 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | 12 Months Ended | 83 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Mar. 31, 2017 | |
Cash Flows From Operating Activities | ||||
Net Loss | $ (2,288,251) | $ (1,723,370) | $ (7,215,820) | $ (36,838,983) |
Net loss from discontinued operations | 493,664 | |||
Net loss from continuing operations | (1,794,587) | (1,723,370) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Depreciation and amortization | 75,193 | 76,202 | ||
Amortization of Debt Discounts | 29,002 | 10,424 | 10,424 | |
Warrants issued in conjunction with advances | 27,945 | |||
Changes in operating assets and liabilities: | ||||
Change in Accounts Receivable | (3,540) | 50,000 | ||
Change in Prepaid Expenses | (55,300) | 91,937 | ||
Change in Accounts Payable | 323,513 | 233,931 | ||
Change in Accounts Payable - Related Party | 63,140 | 38,189 | ||
Change in Accrued Interest | 7,790 | 435,033 | ||
Change in Accrued Interest - Related Party | 161,544 | 157,279 | ||
Change in Deferred Revenue | (251) | (2,542) | ||
Change in Wages Payable | 246,233 | 241,881 | ||
Net Cash Used in Operating Activities, Continuing Operations | (919,318) | (391,036) | ||
Net Cash Provided by Operating Activities, Discontinued Operations | 45,028 | |||
Net Cash Used in Operating Activities | (874,290) | (391,036) | ||
Cash Flows From Investing Activities | ||||
Proceeds from business acquisition | 10,559 | |||
Purchases of Intangible Assets | (150,570) | (90,670) | ||
Net Cash Used in Investing Activities, Continuing Operations | (140,011) | (90,670) | ||
Net Cash Used in Investing Activities | (140,011) | (90,670) | ||
Cash Flows From Financing Activities | ||||
Proceeds from sale of common stock | 2,747,572 | |||
Proceeds from sale of preferred stock | 275,000 | 483,000 | ||
Proceeds from Subscriptions Payable | 20,000 | |||
Proceeds from issuance of short term convertible notes | 100,000 | |||
Proceeds from advances | 40,000 | |||
Proceeds from advances - related party | 50,000 | |||
Repayments on long term debt | (122,229) | |||
Net Cash Provided by Financing Activities, Continuing Operations | 3,110,343 | 483,000 | ||
Net Cash Used in Financing Activities, Discontinued Operations | (54,735) | |||
Net Cash Provided by Financing Activities | 3,055,608 | 483,000 | ||
Net Increase In Cash | 2,041,307 | 1,294 | ||
Cash, Beginning of Period | 57,033 | 3,020 | 3,020 | |
Cash, End of Period | 2,098,340 | 4,314 | $ 57,033 | $ 2,098,340 |
NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||
Wages Payable Included in Capitalized Intangible Assets | 119,588 | 128,917 | ||
Common stock converted to preferred stock | 500 | |||
Business acquisition | 483,957 | |||
Warrants issued in conjunction with debt agreements | 31,002 | |||
Warrants issued and expensed in conjunction with advances | 27,945 | |||
Supplemental Disclosure of Cash Flow Information: | ||||
Cash paid for interest | 2,445 | |||
Cash paid for income taxes |
Note 1 - Summary of Signicant A
Note 1 - Summary of Signicant Accounting Policies | 3 Months Ended |
Mar. 31, 2017 | |
Notes | |
Note 1 - Summary of Signicant Accounting Policies | NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization On September 6, 2016, the Company entered into an agreement and plan of reorganization with Grote Molen, Inc., a Nevada corporation, and Grote Merger Co. (together Grote), a Delaware corporation providing for Grotes acquisition of the Company in exchange for a controlling number of shares of Grotes preferred and common stock pursuant to the merger of Grote Merger Co. with and into BlackRidge, with Blackridge continuing as the surviving corporation. This agreement was finalized on February 22, 2017. Principles of Consolidation Blackridge Technology Holdings, Inc. Blackridge Technology, Inc. Blackridge Technology Government, Inc. All intercompany balances have been eliminated in consolidation. Basis of Presentation Interim Financial Statements Use of Estimates - Concentrations - Significant customers are those which represent more than 10% of the Companys revenue for each period presented, or the Companys accounts receivable balance as of each respective balance sheet date. For each significant customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total net accounts receivable are as follows: Revenue Accounts Receivable Three Months Ended March 31, March 31, Customers 2017 2016 2017 2016 Customer A 90 % - - - Customer B 9 % 100 % - - Customer C - - 100 % - Earnings (Loss) Per Share Reclassification Recently Enacted Accounting Standards |
Note 2 - Going Concern
Note 2 - Going Concern | 3 Months Ended |
Mar. 31, 2017 | |
Notes | |
Note 2 - Going Concern | NOTE 2 GOING CONCERN The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, during the three months ended March 31, 2017 the Company incurred a net loss of $2,288,251 and inception to date losses are equal to $36,838,983. These factors raise substantial doubt about the ability of the Company to continue as a going concern. In this regard, management is proposing to raise any necessary additional funds not provided by operations through investment capital. There is no assurance that the Company will be successful in raising this additional capital or in achieving profitable operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. |
Note 3 - Intangible Assets
Note 3 - Intangible Assets | 3 Months Ended |
Mar. 31, 2017 | |
Notes | |
Note 3 - Intangible Assets | NOTE 3 INTANGIBLE ASSETS In accordance with ASC 350-40, ASC 350-50, and ASC 985-20, during the three months ended March 31, 2017 and 2016, the Company capitalized $119,588 and $128,917, respectively, towards the development of software, intellectual property, and patent expenses. The Company amortizes these costs over their related useful lives (approximately 7 to 20 years), using a straight-line basis. Fair value is determined through various valuation techniques, including market and income approaches as considered necessary. The Company recorded amortization of $75,193 and $76,202 related to intangible assets during the three months ended March 31, 2017 and 2016, respectively. |
Note 4 - Notes Payable
Note 4 - Notes Payable | 3 Months Ended |
Mar. 31, 2017 | |
Notes | |
Note 4 - Notes Payable | NOTE 4 NOTES PAYABLE Short term notes At March 31, 2017 and December 31, 2016, the Company had outstanding short term debt totaling $89,221, respectively. These notes bear interest at the rates of between 10% and 12% annually and have maturity dates ranging from January 1, 2012 through March 31, 2018. As some of these notes have exceeded their initial maturity dates, they are subject to the default interest rate of 18% per annum. The following table summarizes the Companys short term notes payable for the three months ended March 31, 2017 and the year Ended December 31, 2016 and: March 31, 2017 December 31, 2016 Beginning Balance $ 89,221 $ 89,221 Notes acquired in business acquisition 208,811 - Repayments (53,132) - Notes divested in disposal of discontinued operations (155,679) - Ending Balance $ 89,221 $ 89,221 Long term notes On November 2, 2016 the Company entered into settlement agreements with two holders of convertible debt and other payables in which the Company agreed to issue new long-term debt agreements as settlement of amounts due. Pursuant to these agreements, the Company issued two non-interest bearing $600,000 notes payable in 36 equal installments of 16,667 beginning on January 1, 2017 and Maturing on December 1, 2019. The following table summarizes the Companys long term notes payable for the three months ended March 31, 2017 and the year ended December 31, 2016: March 31, 2017 December 31, 2016 Beginning Balance $ 1,200,000 $ - Notes acquired in business acquisition 136,830 1,200,000 Repayments (123,832) - Notes divested in disposal of discontinued operations (135,227) - Ending Balance $ 1,077,771 $ 1,200,000 Short Term Portion of Long Term Debt $ 400,000 $ 400,000 Long Term Debt $ 677,771 $ 800,000 |
Note 5 - Convertible Notes
Note 5 - Convertible Notes | 3 Months Ended |
Mar. 31, 2017 | |
Notes | |
Note 5 - Convertible Notes | NOTE 5 CONVERTIBLE NOTES Short term convertible notes On February 2, 2017, the Company issued a $100,000 convertible note bearing interest at 10% per annum. The note matures on March 31, 2018 and is convertible at a price of $0.66 per share at the holders request. The noteholder was also granted a 5 year warrant to purchase 166,667 shares of the companys common stock at an exercise price of $0.60 per share. The warrants were valued at $31,002 using the Black-Scholes pricing model and were recorded as a discount to the debt agreement. The note was repaid in full on April 4, 2017 along with $1,785 in accrued interest. Short term convertible notes related party On October 31, 2013, the Company agreed to convert balances owed to the Companys Corporate Council in the amount of $183,172 into a 42 month convertible note bearing interest at 12% annually and convertible into 203,525 shares of convertible preferred stock at the rate of $0.90 per share. At March 31, 2017 and December 31, 2016, the principal balance was still outstanding, and the Company had accrued interest for this note in the amount of $96,203 and $84,172, respectively, which is included in accrued interest related party on the Companys consolidated balance sheets. The note carries a default rate of 18% for any principal not paid by the maturity date. On November 30, 2015, the Companys Chief Technology Officer and significant shareholder invested $101,000 via a one year convertible note bearing interest at 12% annually and convertible into 112,223 shares of convertible preferred stock at the rate of $0.90 per share. At March 31, 2017 and December 31, 2016, the Company has accrued interest for this note in the amount of $19,197 and $13,947, respectively, which is included in accrued interest related party on the Companys consolidated balance sheets. The note carries a default rate of 18% for any principal not paid by the maturity date. Long term convertible notes related party During 2011 to 2014, the Companys Chief Technology Officer and significant shareholder of the Company loaned a total of $2,673,200 to the Company. On October 1, 2014, all prior notes including accrued interest were combined into a single $3,712,637 convertible note bearing interest at 12% annually and convertible into 4,125,154 shares of preferred stock at the rate of $0.90 per share. At March 31, 2017 and December 31, 2016, the Company had accrued interest for this note in the amount of $1,288,055 and $1,413,791, respectively, which is included in accrued interest related party on the Companys consolidated balance sheets. The note matures on October 1, 2017 if the officer elects not to convert. The note carries a default rate of 18% for any principal not paid by the maturity date. Convertible debt holders are entitled, at their option, to convert all or part of the principal and accrued interest into shares of the Companys common stock at the conversion prices and terms discussed above. The Company has determined that any embedded conversion options do not possess a beneficial conversion feature, and therefore has not separately accounted for their value. The following table summarizes the Companys convertible notes payable for the three months ended March 31, 2017 and the year ended December 31, 2016: March 31, 2017 December 31, 2016 Beginning Balance $ 3,996,810 $ 13,815,094 Proceeds from issuance of convertible notes, net of issuance discounts 68,998 - Conversion of notes payable into preferred stock - (9,452,000) Conversion of related party notes payable into preferred stock - (230,763) Settlement agreements - (145,945) Amortization of discounts 29,002 10,424 Ending Balance $ 4,094,810 $ 3,996,810 Convertible notes, short term, net of issuance discounts $ 98,000 $ - Convertible notes, short term related party $ 284,172 $ 284,172 Short term portion of convertible notes, long term related party $ 3,712,638 $ - Convertible notes, long term related party $ - $ 3,712,638 |
Note 6 - Commitments and Contin
Note 6 - Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Notes | |
Note 6 - Commitments and Contingencies | NOTE 6 COMMITMENTS AND CONTINGENCIES Operating Leases The Company leases approximately 6,818 square feet of office space under a 64 month operating lease which expires during April 2020. The amounts reflected in the table below are for the aggregate future minimum lease payments under the non-cancelable facility operating leases. Under lease agreements that contain escalating rent provisions, lease expense is recorded on a straight-line basis over the lease term. The Company also leases approximately 202 square feet of office space under 12 month operating lease expiring in 2016. The lease is renewable at the Companys option annually at a flat monthly amount of $400. The amounts reflected in the table below are for the aggregate future minimum lease payments under the non-cancelable facility operating leases. Rent expense was $51,378 and $48,706 for the three months ended March 31, 2017 and 2016, respectively. As of March 31, 2017, future minimum lease payments are as follows: Year Ending December 31, 2017 (nine months) $ 130,887 2018 177,950 2019 183,609 2020 78,612 Total minimum lease payments $ 571,058 Restricted Stock Commitments The Company has committed to settling a significant portion of its current accounts payable and wages payable balances through the future issuance of restricted stock units. While the terms of these agreements have not yet been formalized with employees and outside contractors, they could have a potentially dilutive effect to current shareholders. Contingent Liability On October 15, 2011, the Company entered into an agreement with a consultant by which the consultants invoices for the previous four months would be accrued as a liability to be paid out upon (a) the Companys successful raising of $10,000,000 in capital funding, or (b) the Company reaching total revenues of $10,000,000. The Company has a balance due under this agreement of $37,500 at March 31, 2017 and December 31, 2016, respectively. Legal Proceedings On December 2, 2016, AltEnergy Cyber, LLC ("Plaintiff") instituted a legal action in Connecticut against the Company and Robert Zahm. The complaint alleged that (i) the Company improperly extended the maturity date of the Plaintiffs convertible note in the amount of $1,500,000 and (ii) improperly converted the loan into the Companys stock. The Complaint alleges that the Company is liable to the Plaintiff for the $4,500,000 plus interest. The Company believes this claim to be without merit, and intends to vigorously defend itself against it. |
Note 7 - Related Party Transact
Note 7 - Related Party Transactions | 3 Months Ended |
Mar. 31, 2017 | |
Notes | |
Note 7 - Related Party Transactions | NOTE 7 RELATED PARTY TRANSACTIONS During the three months ended March 31, 2017, the Company incurred interest expense on notes to related parties in the aggregate amount of $161,544. During three months ended March 31, 2017, the Company incurred professional expenses in the amount of $37,500 pursuant to a consulting contract with a business owned by Jay Wright, the Companys legal consultant. Unpaid amounts due under this contract are included in Jay Wrights payable balances in the chart below. Accounts payable related party At March 31, 2017 and December 31, 2016, the Company had a balance in related party accounts payable and of $772,865 and $709,725, respectively, which consisted of the following: March 31, December 31, Party Name: Relationship: Nature of transactions: 2017 2016 Jay Wright Legal Consultant Consulting fees $ 383,295 $ 355,795 John Hayes Chief Technology Officer Expense reimbursement 339,125 308,485 Robert Graham Chairman and Chief Executive Officer Expense reimbursement 41,445 45,445 Robert Graham Chairman and Chief Executive Officer Rent 9,000 - $ 772,865 $ 709,725 |
Note 8 - Stockholders' Equity
Note 8 - Stockholders' Equity | 3 Months Ended |
Mar. 31, 2017 | |
Notes | |
Note 8 - Stockholders' Equity | NOTE 8 STOCK HOLDERS EQUITY The Company has authorized 100 million 100,000,000 5,000,000 On February 22, 2017, we completed the actions contemplated by the Reorganization Agreement (see note 9 Business Acquisitions/Dispositions) and merged with and into BlackRidge with BlackRidge continuing as the surviving corporation. Upon completion of the reorganization, Grote Molen issued 3,783,791 shares of its newly designated Series A Preferred Stock and 12,825,683 shares of common stock to the stockholders of BlackRidge in exchange for all the issued and outstanding shares of Series A Preferred Stock and Common Stock of BlackRidge. Because BlackRidge continues as the surviving entity, the net effect from this transaction on the outstanding stock of the Company was the addition of 8,965,000 shares of common stock held by the investors of Grote Molen at the time of the acquisition. Between January 13, 2017 and February 27, 2017, the Company issued 62,502 shares of the Companys preferred stock along with 5 year warrants to purchase 625,000 shares of the Companys common stock at an exercise price per share of $0.70 to several investors for aggregate proceeds of $375,000, or $0.60 per share. The warrants were valued $104,765 using the Black-Scholes pricing model. Between February 27, 2017 and March 31, 2017, the Company issued 6,170,162 shares of the Companys common stock and 5 year warrants to purchase 2,541,112 shares of the Companys common stock at an average exercise price per share of $0.37 to several investors for aggregate proceeds of $2,776,572. The warrants were valued $467,566 using the Black-Scholes pricing model and were recorded to additional paid in capital. The Company paid finders fees of $29,000 related to these issuances. On February 2, 2017, the Company issued warrants to purchase 166,667 shares of the Companys common stock at an exercise price of $0.60 per share in conjunction with a debt agreement. The warrants were valued at $30,002 using the Black-Scholes pricing model and were recorded as a discount to the debt agreement. Between February 9, 2017 and March 6, 2017, the Company issued warrants to purchase 150,001 shares of the Companys common stock at an exercise price per share of $0.60 to several parties in conjunction with short term notes and advances. The warrants were valued at $27,945 using the Black-Scholes pricing model and were recorded to additional paid in capital. The significant assumptions used in the Black-Scholes valuation of the warrants are as follows: Stock price on the valuation date $ 0.45 Warrant exercise price $ 0.60 - 0.70 Dividend yield 0.00 % Years to maturity 5.0 Risk free rate 1.50 2.02 % Expected volatility 55.43 % |
Note 9 - Business Acquisition
Note 9 - Business Acquisition | 3 Months Ended |
Mar. 31, 2017 | |
Notes | |
Note 9 - Business Acquisition | NOTE 9 BUSINESS ACQUISITION On September 6, 2016, the Company and BlackRidge entered into the Reorganization Agreement originally dated as of September 6, 2016, and amended on February 22, 2017 to update the number of common shares, warrants, and options granted and outstanding as of the closing date. On February 22, 2017 (the Closing Date), we completed the reorganization contemplated by the Reorganization Agreement and merged with and into BlackRidge with BlackRidge continuing as the surviving corporation. Upon completion of the reorganization, we issued 3,783,791 shares of our newly designated Series A Preferred Stock and 12,825,683 shares of Common Stock to the stockholders of BlackRidge in exchange for all the issued and outstanding shares of Series A Preferred Stock and Common Stock of BlackRidge. Additionally, certain stockholders of BlackRidge returned for cancellation a total of 16,284,330 shares of our Common Stock. Upon the completion of the reorganization, BlackRidge became a wholly-owned subsidiary of the Company and the Company had a total of 3,783,791 shares of Series A Preferred Stock and 21,790,683 shares of Common Stock outstanding, with the former BlackRidge stockholders owning 3,783,791 shares or 100% of Series A Preferred Stock and 12,825,683 shares or approximately 58.9% of Common Stock. Upon completion of the Reorganization, we also had outstanding warrants entitling the holders to acquire a total of 18,541,579 shares of the Companys Common Stock at an average exercise price of $0.46 per share. The reorganization resulted in a change of control of the Company. For accounting purposes, BlackRidge was treated as the acquirer and the historical financial statements of BlackRidge became the Companys historical financial statements. The acquisition is intended to constitute a tax-free reorganization pursuant to the applicable provisions of the Internal Revenue Code of 1986, as amended. |
Note 10 - Discontinued Operatio
Note 10 - Discontinued Operations | 3 Months Ended |
Mar. 31, 2017 | |
Notes | |
Note 10 - Discontinued Operations | NOTE 10 DISCONTINUED OPERATIONS On March 31, 2017, the Company completed the sale of substantially all the assets, other than cash, used in or connection with the Company's home grain mill and kitchen mixer business to John Hofman and Bruce Crane, former officers and directors of the Company, in consideration for the assumption by such persons of substantially all the liabilities incurred by the Company in connection with such business. The assets divested consisted of the non-cybersecurity assets of the Company and included accounts receivable, inventory, deposits, property and equipment and intangible assets. The liabilities divested included the non-cybersecurity liabilities of the Company and included accounts payable and accrued expenses and long and short-term notes payable and accrued interest thereon. Upon completion of the divestiture, the Company recognized a $484,927 loss on disposal. Additionally, during the period from February 22, 2017 through March 31, 2017, the Company incurred a loss from discontinued operations of $8,737. The following table shows the value of assets and liabilities divested: Assets Accounts receivable $ 40,044 Deposits and prepaid expenses 90,559 Inventory 1,157,555 Property and equipment 117,254 Intangible assets 62,820 Total Assets 1,468,232 Liabilities Accounts payable and accrued expenses 692,399 Notes payable 290,906 Total Liabilities 983,305 Loss on disposal $ 484,927 |
Note 11 - Subsequent Events
Note 11 - Subsequent Events | 3 Months Ended |
Mar. 31, 2017 | |
Notes | |
Note 11 - Subsequent Events | NOTE 11 - SUBSEQUENT EVENTS We have evaluated all events that occurred after the balance sheet date through the date when our financial statements were issued to determine if they must be reported. Management has determined that other than as disclosed below, there were no additional reportable subsequent events to be disclosed. Between April 14, 2017 and April 17, 2017, the Company issued 2,917,777 shares of the Companys common stock and 5 year warrants to purchase the same number of shares of the Companys common stock at an exercise price per share of $0.60 to multiple investors for aggregate proceeds of $1,313,000. |
Note 1 - Summary of Signicant18
Note 1 - Summary of Signicant Accounting Policies: Principles of Consolidation (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Policies | |
Principles of Consolidation | Principles of Consolidation Blackridge Technology Holdings, Inc. Blackridge Technology, Inc. Blackridge Technology Government, Inc. All intercompany balances have been eliminated in consolidation. |
Note 1 - Summary of Signicant19
Note 1 - Summary of Signicant Accounting Policies: Use of Estimates (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Policies | |
Use of Estimates | Use of Estimates - |
Note 1 - Summary of Signicant20
Note 1 - Summary of Signicant Accounting Policies: Concentrations (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Policies | |
Concentrations | Concentrations - Significant customers are those which represent more than 10% of the Companys revenue for each period presented, or the Companys accounts receivable balance as of each respective balance sheet date. For each significant customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total net accounts receivable are as follows: Revenue Accounts Receivable Three Months Ended March 31, March 31, Customers 2017 2016 2017 2016 Customer A 90 % - - - Customer B 9 % 100 % - - Customer C - - 100 % - |
Note 1 - Summary of Signicant21
Note 1 - Summary of Signicant Accounting Policies: Earnings Per Share (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Policies | |
Earnings Per Share | Earnings (Loss) Per Share |
Note 1 - Summary of Signicant22
Note 1 - Summary of Signicant Accounting Policies: Reclassification (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Policies | |
Reclassification | Reclassification |
Note 1 - Summary of Signicant23
Note 1 - Summary of Signicant Accounting Policies: Recently Enacted Accounting Standards (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Policies | |
Recently Enacted Accounting Standards | Recently Enacted Accounting Standards |
Note 1 - Summary of Signicant24
Note 1 - Summary of Signicant Accounting Policies: Concentrations: Schedules of Concentration of Risk, by Risk Factor (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Tables/Schedules | |
Schedules of Concentration of Risk, by Risk Factor | Revenue Accounts Receivable Three Months Ended March 31, March 31, Customers 2017 2016 2017 2016 Customer A 90 % - - - Customer B 9 % 100 % - - Customer C - - 100 % - |
Note 4 - Notes Payable_ Schedul
Note 4 - Notes Payable: Schedule of Short-term Debt (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Tables/Schedules | |
Schedule of Short-term Debt | March 31, 2017 December 31, 2016 Beginning Balance $ 89,221 $ 89,221 Notes acquired in business acquisition 208,811 - Repayments (53,132) - Notes divested in disposal of discontinued operations (155,679) - Ending Balance $ 89,221 $ 89,221 |
Note 4 - Notes Payable_ Sched26
Note 4 - Notes Payable: Schedule of Long-term Debt Instruments (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Tables/Schedules | |
Schedule of Long-term Debt Instruments | March 31, 2017 December 31, 2016 Beginning Balance $ 1,200,000 $ - Notes acquired in business acquisition 136,830 1,200,000 Repayments (123,832) - Notes divested in disposal of discontinued operations (135,227) - Ending Balance $ 1,077,771 $ 1,200,000 Short Term Portion of Long Term Debt $ 400,000 $ 400,000 Long Term Debt $ 677,771 $ 800,000 |
Note 5 - Convertible Notes_ Sch
Note 5 - Convertible Notes: Schedule of Convertible Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Tables/Schedules | |
Schedule of Convertible Notes Payable | March 31, 2017 December 31, 2016 Beginning Balance $ 3,996,810 $ 13,815,094 Proceeds from issuance of convertible notes, net of issuance discounts 68,998 - Conversion of notes payable into preferred stock - (9,452,000) Conversion of related party notes payable into preferred stock - (230,763) Settlement agreements - (145,945) Amortization of discounts 29,002 10,424 Ending Balance $ 4,094,810 $ 3,996,810 Convertible notes, short term, net of issuance discounts $ 98,000 $ - Convertible notes, short term related party $ 284,172 $ 284,172 Short term portion of convertible notes, long term related party $ 3,712,638 $ - Convertible notes, long term related party $ - $ 3,712,638 |
Note 6 - Commitments and Cont28
Note 6 - Commitments and Contingencies: Schedule of Future Minimum Rental Payments for Operating Leases (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Tables/Schedules | |
Schedule of Future Minimum Rental Payments for Operating Leases | Year Ending December 31, 2017 (nine months) $ 130,887 2018 177,950 2019 183,609 2020 78,612 Total minimum lease payments $ 571,058 |
Note 7 - Related Party Transa29
Note 7 - Related Party Transactions: Schedule of Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Tables/Schedules | |
Schedule of Related Party Transactions | March 31, December 31, Party Name: Relationship: Nature of transactions: 2017 2016 Jay Wright Legal Consultant Consulting fees $ 383,295 $ 355,795 John Hayes Chief Technology Officer Expense reimbursement 339,125 308,485 Robert Graham Chairman and Chief Executive Officer Expense reimbursement 41,445 45,445 Robert Graham Chairman and Chief Executive Officer Rent 9,000 - $ 772,865 $ 709,725 |
Note 8 - Stockholders' Equity_
Note 8 - Stockholders' Equity: Schedule of Assumptions Used (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Tables/Schedules | |
Schedule of Assumptions Used | Stock price on the valuation date $ 0.45 Warrant exercise price $ 0.60 - 0.70 Dividend yield 0.00 % Years to maturity 5.0 Risk free rate 1.50 2.02 % Expected volatility 55.43 % |
Note 10 - Discontinued Operat31
Note 10 - Discontinued Operations: Disposal Groups, Including Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Tables/Schedules | |
Disposal Groups, Including Discontinued Operations | Assets Accounts receivable $ 40,044 Deposits and prepaid expenses 90,559 Inventory 1,157,555 Property and equipment 117,254 Intangible assets 62,820 Total Assets 1,468,232 Liabilities Accounts payable and accrued expenses 692,399 Notes payable 290,906 Total Liabilities 983,305 Loss on disposal $ 484,927 |
Note 1 - Summary of Signicant32
Note 1 - Summary of Signicant Accounting Policies (Details) | 3 Months Ended |
Mar. 31, 2017 | |
Details | |
Entity Incorporation, State Country Name | Delaware |
Entity Incorporation, Date of Incorporation | Apr. 23, 2010 |
Note 1 - Summary of Signicant33
Note 1 - Summary of Signicant Accounting Policies: Concentrations: Schedules of Concentration of Risk, by Risk Factor (Details) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Customer A | Revenue | ||
Concentration Risk, Percentage | 90.00% | |
Customer B | Revenue | ||
Concentration Risk, Percentage | 9.00% | 100.00% |
Customer C | Accounts Receivable | ||
Concentration Risk, Percentage | 100.00% |
Note 2 - Going Concern (Details
Note 2 - Going Concern (Details) - USD ($) | 3 Months Ended | 12 Months Ended | 83 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Mar. 31, 2017 | |
Details | ||||
Net (loss) | $ 2,288,251 | $ 1,723,370 | $ 7,215,820 | $ 36,838,983 |
Note 3 - Intangible Assets (Det
Note 3 - Intangible Assets (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Details | ||
Capitalized Intangible Assets | $ 119,588 | $ 128,917 |
Depreciation and amortization | $ 75,193 | $ 76,202 |
Note 4 - Notes Payable_ Sched36
Note 4 - Notes Payable: Schedule of Short-term Debt (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Notes payable | $ 89,221 | $ 89,221 | $ 89,221 |
Short term notes payable | |||
Notes acquired in business acquisition | 208,811 | ||
Principal Payments of Short Term Notes | (53,132) | ||
Notes divested in disposal of discontinued operations | $ (155,679) |
Note 4 - Notes Payable_ Sched37
Note 4 - Notes Payable: Schedule of Long-term Debt Instruments (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Long-term Debt | $ 1,077,771 | $ 1,200,000 |
Current Portion of Long Term Debt | 400,000 | 400,000 |
Notes payable, Long Term | 677,771 | 800,000 |
Long term notes payable | ||
Notes acquired in business acquisition | 136,830 | $ 1,200,000 |
Principal Payments of Short Term Notes | (123,832) | |
Notes divested in disposal of discontinued operations | $ (135,227) |
Note 5 - Convertible Notes_ S38
Note 5 - Convertible Notes: Schedule of Convertible Notes Payable (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Details | ||||
Short term portion of convertible notes, long term - related party | $ 4,094,810 | $ 3,996,810 | $ 13,815,094 | |
Proceeds from Issuance of Convertible Preferred Stock | 68,998 | |||
Preferred Stock Issued for Convertible Notes | (9,452,000) | |||
Preferred Stock Issued for Convertible Notes - related party | (230,763) | |||
Settlement Agreements | (145,945) | |||
Amortization of Debt Discounts | 29,002 | $ 10,424 | 10,424 | |
Convertible notes, short term, net of discounts | 98,000 | |||
Convertible Notes, Short Term - Related Party | 284,172 | 284,172 | ||
Short term portion of convertible notes, long term - related party | $ 3,712,638 | |||
Convertible notes payable, long term - related party | $ 3,712,638 |
Note 6 - Commitments and Cont39
Note 6 - Commitments and Contingencies (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Details | ||
Operating Leases, Rent Expense | $ 51,378 | $ 48,706 |
Note 6 - Commitments and Cont40
Note 6 - Commitments and Contingencies: Schedule of Future Minimum Rental Payments for Operating Leases (Details) | Mar. 31, 2017USD ($) |
Details | |
Operating Leases, Future Minimum Payments, Remainder of Fiscal Year | $ 130,887 |
Operating Leases, Future Minimum Payments, Due in Two Years | 177,950 |
Operating Leases, Future Minimum Payments, Due in Three Years | 183,609 |
Operating Leases, Future Minimum Payments, Due in Four Years | 78,612 |
Operating Leases, Future Minimum Payments Due | $ 571,058 |
Note 7 - Related Party Transa41
Note 7 - Related Party Transactions (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Change in Accrued Interest - Related Party | $ 161,544 | $ 157,279 |
Jay Wright | ||
Professional and Contract Services Expense | $ 37,500 |
Note 7 - Related Party Transa42
Note 7 - Related Party Transactions: Schedule of Related Party Transactions (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Accounts Payable - Related Party | $ 772,865 | $ 709,725 |
Jay Wright | ||
Accounts Payable - Related Party | 383,295 | 355,795 |
John Hayes | ||
Accounts Payable - Related Party | 339,125 | 308,485 |
Robert Graham | ||
Accounts Payable - Related Party | 41,445 | $ 45,445 |
Robert Graham (2) | ||
Accounts Payable - Related Party | $ 9,000 |
Note 8 - Stockholders' Equity (
Note 8 - Stockholders' Equity (Details) - $ / shares | Mar. 31, 2017 | Dec. 31, 2016 |
Details | ||
Common stock shares authorized | 100,000,000 | 100,000,000 |
Common stock par value | $ 0.001 | $ 0.001 |
Preferred stock shares authorized | 5,000,000 | 5,000,000 |
Preferred stock par value | $ 0.001 | $ 0.001 |
Common stock shares issued | 27,960,843 | 13,325,681 |
Common stock shares outstanding | 27,960,843 | 13,325,681 |
Preferred stock shares issued | 3,783,818 | 3,671,316 |
Preferred stock shares outstanding | 3,783,818 | 3,671,316 |
Note 8 - Stockholders' Equity44
Note 8 - Stockholders' Equity: Schedule of Assumptions Used (Details) | 3 Months Ended |
Mar. 31, 2017$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Exercise Price | $ 0.45 |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 5 years |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 55.43% |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Exercise Price | $ 0.60 |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 1.50% |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Exercise Price | $ 0.70 |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 2.02% |
Note 10 - Discontinued Operat45
Note 10 - Discontinued Operations: Disposal Groups, Including Discontinued Operations (Details) | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Details | |
Disposal Group, Including Discontinued Operation, Accounts, Notes and Loans Receivable, Net | $ 40,044 |
Disposal Group, Including Discontinued Operation, Prepaid and Other Assets | 90,559 |
Disposal Group, Including Discontinued Operation, Inventory, Current | 1,157,555 |
Disposal Group, Including Discontinued Operation, Property, Plant and Equipment | 117,254 |
Disposal Group, Including Discontinued Operation, Intangible Assets | 62,820 |
Disposal Group, Including Discontinued Operation, Assets | 1,468,232 |
Disposal Group, Including Discontinued Operation, Accounts Payable and Accrued Liabilities | 692,399 |
Disposal Group, Including Discontinued Operation, Other Liabilities | 290,906 |
Disposal Group, Including Discontinued Operation, Liabilities | 983,305 |
Loss on disposal of discontinued operations | $ 484,927 |