Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 11, 2018 | |
Document and Entity Information: | ||
Entity Registrant Name | BlackRidge Technology International, Inc. | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Trading Symbol | brti | |
Amendment Flag | false | |
Entity Central Index Key | 1,456,212 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 83,396,165 | |
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 | 2,018 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Current Assets | ||
Cash | $ 25,333 | $ 421,869 |
Accounts Receivable | 207,948 | 217,380 |
Inventory | 56,003 | 40,408 |
Prepaid Expenses | 425,852 | 361,642 |
Total Current assets | 715,136 | 1,041,299 |
Property and equipment, net | 83,224 | 87,628 |
Intangible assets, net | 7,995,791 | 7,043,644 |
Total Assets | 8,794,151 | 8,172,571 |
Current Liabilities | ||
Accounts payable and accrued expenses | 2,774,017 | 2,633,610 |
Accounts payable and accrued expenses - related party | 50,846 | 68,060 |
Accrued Interest | 193,478 | 59,545 |
Accrued Interest - Related Party | 262,030 | 180,066 |
Advances - related party | 115,000 | 65,000 |
Wages Payable | 2,450,068 | 2,133,210 |
Deferred Revenue | 3,070 | 8,760 |
Short-term notes payable | 45,232 | 50,232 |
Short term notes payable - related party | 389,685 | |
Current Portion of Long Term Debt | 400,000 | 400,000 |
Convertible notes, short term | 20,392 | |
Convertible Notes, Short Term - Related Party | 521,172 | 521,172 |
Total Current Liabilities | 7,224,990 | 6,119,655 |
Noncurrent Liabilities | ||
Contingent Liability | 37,500 | 37,500 |
Notes payable | 166,658 | 366,658 |
Convertible notes, long term, net of discounts | 20,338 | 80,404 |
Total Liabilities | 7,449,486 | 6,604,217 |
Stockholders' Equity | ||
Preferred Stock, Par Value $0.001, 10,000,000 shares authorized; 3,594,610 and 3,639,783 issued and outstanding at June 30, 2018 and December 31, 2017, respectively | 3,595 | 3,640 |
Common Stock, Par Value $0.001, 200,000,000 shares authorized; 83,396,165 and 77,063,171 issued and outstanding at June 30, 2018 and December 31, 2017, respectively | 83,396 | 77,063 |
Additional Paid-In Capital | 58,027,102 | 51,384,027 |
Accumulated Deficit | (56,769,428) | (49,896,376) |
Total Stockholders' Equity | 1,344,665 | 1,568,354 |
Total Liabilities and Stockholders' Equity | $ 8,794,151 | $ 8,172,571 |
CONSOLIDATED BALANCE SHEETS PAR
CONSOLIDATED BALANCE SHEETS PARENTHETICAL - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
CONSOLIDATED BALANCE SHEETS PARENTHETICAL | ||
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock shares authorized | 10,000,000 | 10,000,000 |
Preferred stock shares issued | 3,594,610 | 3,639,783 |
Preferred stock shares outstanding | 3,594,610 | 3,639,783 |
Common stock par value | $ 0.001 | $ 0.001 |
Common stock shares authorized | 200,000,000 | 200,000,000 |
Common stock shares issued | 83,396,165 | 77,063,171 |
Common stock shares outstanding | 83,396,165 | 77,063,171 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Revenues | $ 66,826 | $ 8,961 | $ 70,014 | $ 37,702 |
Cost of Goods Sold | 258 | 50 | 258 | |
Gross profit | 66,826 | 8,703 | 69,964 | 37,444 |
Operating Expenses: | ||||
Engineering | 5,593 | 25,884 | 35,344 | 66,123 |
Sales and Marketing | 154 | 42,127 | 154 | 42,127 |
General and Administrative | 3,361,620 | 3,499,788 | 6,430,306 | 5,056,297 |
Total Operating Expenses | 3,367,367 | 3,567,799 | 6,465,804 | 5,164,547 |
Loss From Operations | (3,300,541) | (3,559,096) | (6,395,840) | (5,127,103) |
Other Income (Expense) | ||||
Interest Income | 1 | 1 | ||
Loss on extinguishment of debt | (95,804) | (95,804) | ||
Interest Expense | (198,463) | (6,866) | (299,445) | (72,608) |
Interest Expense - Related Party | (43,467) | (173,653) | (81,964) | (334,491) |
Total other income (expense) | (337,733) | (180,519) | (477,212) | (407,099) |
Net Loss Before Income Taxes | (3,638,274) | (3,739,615) | (6,873,052) | (5,534,202) |
Income Tax | ||||
Net Loss From Continuing Operations | (3,638,274) | (3,739,615) | (6,873,052) | (5,534,202) |
Discontinued Operations | ||||
Loss on disposal of discontinued operations | (484,927) | |||
Loss from discontinued operations | (8,737) | |||
Loss on discontinued operations | (493,664) | |||
Net Loss | $ (3,638,274) | $ (3,739,615) | $ (6,873,052) | $ (6,027,866) |
Loss From Continuing Operations per Common Share - Basic and Diluted | $ (0.04) | $ (0.12) | $ (0.09) | $ (0.23) |
Loss From Discontinued Operations per Common Share - Basic and Diluted | $ (0.02) | |||
Weighted average shares outstanding - Weighted Average Shares Outstanding - Basic and Diluted | 81,032,234 | 31,035,764 | 79,570,701 | 24,079,781 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | 98 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Jun. 30, 2018 | |
Cash Flows From Operating Activities | ||||||
Net Loss | $ (3,638,274) | $ (3,739,615) | $ (6,873,052) | $ (6,027,866) | $ (56,769,428) | |
Net loss from discontinued operations | 493,664 | |||||
Net Loss From Continuing Operations | (3,638,274) | (3,739,615) | (6,873,052) | (5,534,202) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
Depreciation and amortization | 258,358 | 163,196 | ||||
Amortization of Debt Discounts | 128,503 | 31,002 | ||||
Warrants issued in conjunction with advances | 27,945 | |||||
Common stock issued in conjunction with contracts | 413,669 | |||||
Share based compensation | 208,124 | |||||
Loss on extinguishment of debt | 95,804 | 95,804 | ||||
Changes in operating assets and liabilities: | ||||||
Change in Accounts Receivable | 9,432 | |||||
Change in Inventory | (15,595) | (14,731) | ||||
Change in Prepaid Expenses | (64,210) | (96,675) | ||||
Change in Accounts Payable | 140,407 | 72,260 | ||||
Change in Accounts Payable - Related Party | (17,214) | (231,181) | ||||
Change in Accrued Interest | 162,207 | 1,210 | ||||
Change in Accrued Interest - Related Party | 81,964 | 334,491 | ||||
Change in Deferred Revenue | (5,690) | (4,893) | ||||
Change in Wages Payable | 293,520 | 2,156,317 | ||||
Net Cash Used in Operating Activities, Continuing Operations | (5,183,773) | (3,095,261) | ||||
Net Cash Provided by Operating Activities, Discontinued Operations | 45,028 | |||||
Net Cash Used in Operating Activities | (5,183,773) | (3,050,233) | ||||
Cash Flows From Investing Activities | ||||||
Proceeds from business acquisition | 10,559 | |||||
Purchases of Intangible Assets | (1,182,763) | (417,004) | ||||
Net Cash Used in Investing Activities, Continuing Operations | (1,182,763) | (406,445) | ||||
Net Cash Used in Investing Activities | (1,182,763) | (406,445) | ||||
Cash Flows From Financing Activities | ||||||
Proceeds from sale of common stock | 4,532,452 | |||||
Proceeds from sale of preferred stock | 275,000 | |||||
Proceeds from short term notes - related party | 500,000 | |||||
Proceeds from Subscriptions Payable | 20,000 | |||||
Proceeds from issuance of short term convertible notes | 5,600,000 | 100,000 | ||||
Proceeds from advances - related party | 75,000 | 115,000 | ||||
Repayments of short term debt | (5,000) | (36,489) | ||||
Repayments on short term convertible notes | (100,000) | $ (100,000) | ||||
Repayments on long term debt | (200,000) | (233,342) | ||||
Net Cash Provided by Financing Activities, Continuing Operations | 5,970,000 | 4,672,621 | ||||
Net Cash Used in Financing Activities, Discontinued Operations | (54,735) | |||||
Net Cash Provided by Financing Activities | 5,970,000 | 4,617,886 | ||||
Net Increase (Decrease) In Cash | (396,536) | 1,161,208 | ||||
Cash, Beginning of Period | 421,869 | 57,033 | 57,033 | |||
Cash, End of Period | $ 25,333 | $ 1,218,241 | 25,333 | 1,218,241 | $ 421,869 | $ 25,333 |
NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||
Wages Payable Included in Capitalized Intangible Assets | 23,338 | 225,105 | ||||
Common stock converted to preferred stock | 500 | |||||
Preferred stock converted to common stock | 536 | |||||
Business acquisition | 483,957 | |||||
Warrants issued in conjunction with debt agreements | 3,039,654 | 31,002 | ||||
Warrants issued and expensed in conjunction with advances | 27,945 | |||||
Beneficial conversion features | 2,867,112 | |||||
Supplemental Disclosure of Cash Flow Information: | ||||||
Cash paid for interest | 8,735 | 14,597 | ||||
Cash paid for income taxes |
Note 1 - Summary of Significant
Note 1 - Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 1 - Summary of Significant 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 BlackRidge Technology International, Inc., a Delaware corporation, and Grote Merger Co., a Delaware corporation providing for the Companys acquisition of BlackRidge in exchange for a controlling number of shares of the Companys preferred and common stock pursuant to the merger of Grote Merger Co. with and into BlackRidge, with BlackRidge continuing as the surviving corporation. The transaction contemplated in the agreement closed on February 22, 2017. On July 2, 2017, the Company filed a Certificate to Accompany Restated Articles or Amended and Restated Articles with the Secretary of State of Nevada to, among other things, change the Companys name to BlackRidge Technology International, Inc. On September 22, 2017, the Company formed a new business subsidiary called BlackRidge Secure Blockchain to pursue new market opportunities for securing blockchain applications. On October 13, 2017, the Company formed a new business subsidiary called BlackRidge Secure Services to work with partners on Secure Supervisory Control and Data Acquisition Systems (SCADA) infrastructure and to design and deliver secure systems using BlackRidge Technology products for use by the utilities industry. Principles of Consolidation BlackRidge Technology International, Inc. BlackRidge Technology Holding, Inc. BlackRidge Technology, Inc. BlackRidge Technology Government, Inc. BlackRidge Secure Blockchain, Inc BlackRidge Secure Services, 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 Six Months Ended June 30, June 30, Customers 2018 2017 2018 2017 Customer A 13 % 78 % 3 % - % Customer B 84 % - % 28 % - % Customer C - % 13 % - % - % Revenue Three Months Ended June 30, Customers 2018 2017 Customer A 11 % 38 % Customer B 88 % - % Customer C - % 33 % Customer D - % 28 % Inventory As of June 30, 2018 As of December 31, 2017 Inventory $ 391,658 $ 376,063 Less: allowance for obsolescence (335,655) (335,655) $ 56,003 $ 40,408 Revenue Recognition · · · · · Revenue generally is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities. Revenue recognition for multiple-element arrangements requires judgment to determine if multiple elements exist, whether elements can be accounted for as separate units of accounting, and if so, the fair value for each of the elements. The Company may enter into arrangements that can include various combinations of software, services, and hardware. Where elements are delivered over different periods of time, and when allowed under U.S. GAAP, revenue is allocated to the respective elements based on their relative selling prices at the inception of the arrangement, and revenue is recognized as each element is delivered. We use a hierarchy to determine the fair value to be used for allocating revenue to elements: (i) vendor-specific objective evidence of fair value ("VSOE"), (ii) third-party evidence, and (iii) best estimate of selling price ("ESP"). For software elements, we follow the industry specific software guidance which only allows for the use of VSOE in establishing fair value. Generally, VSOE is the price charged when the deliverable is sold separately, or the price established by management for a product that is not yet sold if it is probable that the price will not change before introduction into the marketplace. ESPs are established as best estimates of what the selling prices would be if the deliverables were sold regularly on a stand-alone basis. Our process for determining ESPs requires judgment and considers multiple factors that may vary over time depending upon the unique facts and circumstances related to each deliverable. Any revenue received that does not yet meet the above recognition standards is recorded to unearned revenue and held as a liability until recognition occurs. Earnings (Loss) Per Share Share-Based Payments and Stock-Based Compensation Property and Equipment - The estimated useful lives of the property and equipment are as follows: Property and Equipment Estimated Useful Life Building improvements 15 years Furniture, fixtures and equipment 7 years Computer equipment 5 years Recently Issued Accounting Standards In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Leases |
Note 2 - Going Concern
Note 2 - Going Concern | 6 Months Ended |
Jun. 30, 2018 | |
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 six months ended June 30, 2018, the Company incurred a net loss of $6,873,052 and inception to date losses are equal to $56,769,428. 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 | 6 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 3 - Intangible Assets | NOTE 3 INTANGIBLE ASSETS During the six months ended June 30, 2018 and 2017, the Company capitalized $1,206,101 and $642,109, 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 $253,954 and $163,196 related to intangible assets during the six months ended June 30, 2018 and 2017, respectively. |
Note 4 - Notes Payable
Note 4 - Notes Payable | 6 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 4 - Notes Payable | NOTE 4 NOTES PAYABLE Short term notes At June 30, 2018 and December 31, 2017, the Company had outstanding short-term debt totaling $45,232 and $50,232, respectively. These notes bear interest at the rates of between 10% and 12% annually and have maturity dates ranging from January 1, 2012 through December 31, 2014. As some of these notes have exceeded their initial maturity dates, they are subject to the default interest rate of 15% per annum. The following table summarizes the Companys short-term notes payable for the six months ended June 30, 2018 and the year ended December 31, 2017: June 30, 2018 December 31, 2017 Beginning Balance $ 50,232 $ 89,221 Notes acquired in business acquisition - 208,811 Repayments continuing operations (5,000) (38,989) Repayments discontinued operations - (53,132) Notes divested in disposal of discontinued operations - (155,679) Ending Balance $ 45,232 $ 50,232 Short term notes related party On January 31, 2018, the Companys Chief Technology Officer and significant shareholder invested $500,000 via a one year note bearing interest at 8% annually. In conjunction with this note, the Company issued 5 year detachable warrants to purchase 1,562,500 shares of the Companys common stock at $0.50 per share. These warrants were valued at $172,542 using the Black-Scholes pricing model and were recorded as a discount to the note. At June 30, 2018, the Company has accrued interest for this note in the amount of $16,438 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 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 monthly 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 six months ended June 30, 2018 and the year ended December 31, 2017: June 30, 2018 December 31, 2017 Beginning Balance $ 766,658 $ 1,200,000 Notes acquired in business acquisition - 136,830 Repayments continuing operations (200,000) (433,342) Repayments discontinued operations - (1,603) Notes divested in disposal of discontinued operations - (135,227) Ending Balance $ 566,658 $ 766,658 Short Term Portion of Long Term Debt $ 400,000 $ 400,000 Long Term Debt $ 166,658 $ 366,658 |
Note 5 - Convertible Notes
Note 5 - Convertible Notes | 6 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 5 - Convertible Notes | NOTE 5 CONVERTIBLE NOTES Short term convertible notes On January 31, 2018, the Company issued a $100,000 convertible note bearing interest at 9% per annum. The note matures on February 28, 2019 and is convertible into the Companys Series B Preferred Stock at a price of $0.32 per share at the holders request. The Company has determined the note to contain a beneficial conversion feature valued at $46,991 based on the intrinsic per share value of the conversion feature. This beneficial conversion feature is recorded as a discount to the debt agreement. The noteholder was also granted detachable 5 year warrants to purchase an aggregate of 312,500 shares of the Companys common stock at an exercise price of $0.32 per share. The warrants were valued at $46,991 using the Black-Scholes pricing model and were recorded as a discount to the note. At June 30, 2018, the principal balance was still outstanding and is included on the Companys consolidated balance sheets net of discounts at $19,131. The Company had accrued interest for this note in the amount of $3,288, which is included in accrued interest on the Companys consolidated balance sheets. On February 23, 2018, the Company issued a $1,000,000 convertible note bearing interest at 9% per annum. The note matures on February 29, 2019 and is convertible into the Companys Series B Preferred Stock at a price of $0.32 per share at the holders request. The Company has determined the note to contain a beneficial conversion feature valued at $459,447 based on the intrinsic per share value of the conversion feature. This beneficial conversion feature is recorded as a discount to the debt agreement. The noteholder was also granted detachable 5 year warrants to purchase an aggregate of 3,125,000 shares of the companys common stock at an exercise price of $0.32 per share. The warrants were valued at $540,553 using the Black-Scholes pricing model and were recorded as a discount to the debt agreement. At June 30, 2018, the principal balance was still outstanding and is included on the Companys consolidated balance sheets net of discounts at $544. The Company had accrued interest for this note in the amount of $27,836, which is included in accrued interest on the Companys consolidated balance sheets. On February 27, 2018, the Company issued a $1,000,000 convertible note bearing interest at 9% per annum. The note matures on February 29, 2019 and is convertible into the Companys Series B Preferred Stock at a price of $0.32 per share at the holders request. The Company has determined the note to contain a beneficial conversion feature valued at $458,756 based on the intrinsic per share value of the conversion feature. This beneficial conversion feature is recorded as a discount to the debt agreement. The noteholder was also granted detachable 5 year warrants to purchase an aggregate of 3,125,000 shares of the companys common stock at an exercise price of $0.32 per share. The warrants were valued at $541,244 using the Black-Scholes pricing model and were recorded as a discount to the note. At June 30, 2018, the principal balance was still outstanding and is included on the Companys consolidated balance sheets net of discounts at $484. The Company had accrued interest for this note in the amount of $26,959, which is included in accrued interest on the Companys consolidated balance sheets. On April 18, 2018, the Company issued a $2,000,000 convertible note bearing interest at 9% per annum. The note matures on April 30, 2019 and is convertible into the Companys Series B Preferred Stock at a price of $0.32 per share at the holders request. The Company has determined the note to contain a beneficial conversion feature valued at $915,856 based on the intrinsic per share value of the conversion feature. This beneficial conversion feature is recorded as a discount to the debt agreement. The noteholder was also granted detachable 5 year warrants to purchase an aggregate of 6,250,000 shares of the companys common stock at an exercise price of $0.25 per share. The warrants were valued at $1,084,144 using the Black-Scholes pricing model and were recorded as a discount to the note. As additional consideration for this note, the Company issued an aggregate 4,670,138 shares of the Companys common stock. Because the value of this stock exceeded the net value after the above discounts, the Company recorded the value of the consideration to additional paid in capital. At June 30, 2018, the principal balance was still outstanding and is included on the Companys consolidated balance sheets net of discounts at $124. The Company had accrued interest for this note in the amount of $36,000, which is included in accrued interest on the Companys consolidated balance sheets. On May 4, 2018, the Company issued an aggregate $1,500,000 in convertible notes bearing interest at 9% per annum. These notes mature on May 31, 2019 and is convertible into the Companys Series B Preferred Stock at a price of $0.32 per share at the holders request. The Company has determined the notes to contain a beneficial conversion feature valued at $685,856 based on the intrinsic per share value of the conversion feature. This beneficial conversion feature is recorded as a discount to the note. The noteholders were also granted detachable 5 year warrants to purchase an aggregate of 4,687,500 shares of the companys common stock at an exercise price of $0.25 per share. The warrants were valued at $814,144 using the Black-Scholes pricing model and were recorded as a discount to the debt agreements. At June 30, 2018, the principal balances were still outstanding and is included on the Companys consolidated balance sheets net of discounts at an aggregate $59. The Company had accrued interest for these notes in the amount of $21,082, which is included in accrued interest on the Companys consolidated balance sheets. On May 9, 2018, the Company issued a $1,028,274 convertible note bearing interest at 9% per annum as replacement for a $1,000,000 note plus accrued interest of $28,274 (see long term convertible notes section of this note). The note matures on May 31, 2019 and is convertible into the Companys Series B Preferred Stock at a price of $0.32 per share at the holders request. The Company has determined the note to contain a beneficial conversion feature valued at $484,684 based on the intrinsic per share value of the conversion feature. This beneficial conversion feature is recorded as a discount to the debt agreement. The noteholder was also granted detachable 5 year warrants to purchase an aggregate of 3,213,356 shares of the companys common stock at an exercise price of $0.25 per share. The warrants were valued at $543,590 using the Black-Scholes pricing model and were recorded as a discount to the note. At June 30, 2018, the principal balance was still outstanding and is included on the Companys consolidated balance sheets net of discounts at $50. The Company had accrued interest for this note in the amount of $13,184, which is included in accrued interest on the Companys consolidated balance sheets. Short term convertible notes related party On October 31, 2013, the Company agreed to convert balances owed to the Companys corporate counsel 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 June 30, 2018 and December 31, 2017, the principal balance was still outstanding, and the Company had accrued interest for this note in the amount of $166,338 and $136,469, 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 Series A convertible preferred stock at the rate of $0.90 per share. At June 30, 2018 and December 31, 2017, the Company had accrued interest for this note in the amount of $79,254 and $43,579, respectively, which is included in accrued interest related party on the Companys consolidated balance sheets. The note carries a default rate of 18% for the principal not paid by the maturity date. Long term convertible notes On December 21, 2017, the Company issued a $150,000 convertible note bearing interest at 8% per annum. The note matures on December 31, 2019 and is convertible into the Companys Series B Preferred Stock at a price of $0.32 per share at the holders request. The Company has determined the note to contain a beneficial conversion feature valued at $69,935 based on the intrinsic per share value of the conversion feature. This beneficial conversion feature is recorded as a discount to the debt agreement. The noteholder was also granted detachable 5 year warrants to purchase an aggregate of 468,750 shares of the companys common stock at an exercise price of $0.32 per share. The warrants were valued at $69,935 using the Black-Scholes pricing model and were recorded as a discount to the note. At June 30, 2018 and December 31, 2017, the principal balance was still outstanding and is included on the Companys consolidated balance sheets net of discounts at $20,338 and $10,521, respectively. The Company had accrued interest for this note in the amount of $6,279 and $329, respectively, which is included in accrued interest on the Companys consolidated balance sheets. On December 22, 2017, the Company issued a $1,000,000 convertible note bearing interest at 8% per annum. The note matures on December 31, 2019 and is convertible into the Companys Series B Preferred Stock at a price of $0.32 per share at the holders request. The Company has determined the note to contain a beneficial conversion feature valued at $466,230 based on the intrinsic per share value of the conversion feature. This beneficial conversion feature is recorded as a discount to the debt agreement. The noteholder was also granted detachable 5 year warrants to purchase an aggregate of 3,125,000 shares of the companys common stock at an exercise price of $0.32 per share. The warrants were valued at $466,230 using the Black-Scholes pricing model and were recorded as a discount to the note. On May 9, 2018, this note along with $28,274 was renegotiated into a new short term convertible note and the warrants associated with the original note were cancelled. The newly negotiated note included an additional warrant benefit valued at $95,803 which was recorded as a loss on extinguishment of debt. 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 Series A preferred stock at the rate of $0.90 per share. On November 9, 2017, the Company converted the note and accrued interest of $1,665,991 into 10,757,254 shares of the Company's common stock at a conversion rate of $0.50 per share. The Company also issued a 5 year warrant to purchase an additional 5,378,627 shares of the Company s common stock at a purchase price of $0.50 per share as further consideration for this conversion. The Company recognized a loss on extinguishment of debt related to this transaction of $913,238. 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 six months ended June 30, 2018 and the year ended December 31, 2017: June 30, 2018 December 31, 2017 Beginning Balance $ 601,576 $ 3,996,810 Proceeds from issuance of convertible notes, net of issuance discounts 6,067 146,669 Proceeds from issuance of convertible notes related party - 237,000 Repayments - (100,000) Restructuring of debt (112,017) - Conversion of notes payable into common stock - (3,712,638) Amortization of discounts 66,276 33,735 Ending Balance $ 561,902 $ 601,576 Convertible notes, short term $ 6,628,274 $ - Convertible notes, long term $ 150,000 $ 1,150,000 Convertible notes, short term related party $ 521,172 $ 521,172 Debt discounts $ 6,737,544 $ 1,069,596 |
Note 6 - Commitments and Contin
Note 6 - Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 6 - Commitments and Contingencies | NOTE 6 COMMITMENTS AND CONTINGENCIES Operating Leases The Company leases approximately 7,579 square feet of office space under a 62 month operating lease which expires during April 2023. 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 office space under a 23 month operating lease which expires during August 2019. 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 a 12 month operating lease which originally expired in 2016. The lease was renewed to May 2019, and 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 $155,474 and $93,756 for the six months ended June 30, 2018 and 2017, respectively. As of June 30, 2018, future minimum lease payments are as follows: Year Ending December 31, 2018 (six months) $ 131,676 2019 259,851 2021 209,559 2021 214,107 2022 218,654 2023 and thereafter 18,569 Total minimum lease payments $ 1,052,416 On August 1, 2017, the Company entered into a 36 month lease of computer equipment. The lease carries a monthly payment of $2,871 with the option to purchase the equipment at its fair market value at the end of the lease. Restricted Stock Commitments The Company has committed to settling a significant portion of its current accounts 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 June 30, 2018 and December 31, 2017, 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 $4,500,000 plus interest. This litigation is still ongoing. During the year ended December 31, 2017, Robert Zahm was dismissed from the proceedings for lack of personal jurisdiction. On March 29, 2018, the AltEnergy Cyber, LLCs legal action was dismissed through a motion for summary judgement. As of the date of this filing, the appeal period has expired and it is the Companys belief that this matter is fully resolved through the dismissal. |
Note 7 - Related Party Transact
Note 7 - Related Party Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 7 - Related Party Transactions | NOTE 7 RELATED PARTY TRANSACTIONS During the six months ended June 30, 2018, the Company incurred interest expense on notes to related parties in the aggregate amount of $81,964 (see Note 4 Short term notes related party & Note 5 Convertible Notes). Accounts payable related party At June 30, 2018 and December 31, 2017, the Company had a balance in related party accounts payable of $50,846 and $68,060, respectively, which consisted of the following: June 30, December 31, Party Name: Relationship: Nature of transactions: 2018 2017 John Hayes Chief Technology Officer Expense reimbursement $ 50,124 $ 55,254 Robert Graham Chairman and Chief Executive Officer Expense reimbursement 722 6,806 Robert Graham Chairman and Chief Executive Officer Rent - 6,000 $ 50,846 $ 68,060 Advances related party During the six months ended June 30, 2018, the Company received advances of $50,000 from Mag Ventures, a company controlled by Tom Bruderman, a director and shareholder. These advances are included in Advances related party on the Companys balance sheet. During the six months ended June 30, 2018, the Company received advances of $25,000 from J. Allen Kosowsky, a director and shareholder. These advances were converted into 78,125 shares of the Companys common stock at a price of $0.32 per share on June 13, 2018. At June 30, 2018 and December 31, 2017, the Company had a balance in related party advances of $115,000 and $65,000, respectively, which consisted of the following: June 30, December 31, Party Name: Relationship: 2018 2017 J Allen Kosowsky Director $ - $ - Thomas Bruderman Director and significant shareholder 115,000 65,000 $ 115,000 $ 65,000 |
Note 8 - Stockholders' Equity
Note 8 - Stockholders' Equity | 6 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 8 - Stockholders' Equity | NOTE 8 STOCK HOLDERS EQUITY The Company is authorized to issue 200 million shares of common stock, par value $0.001 per share, and 10 million shares of preferred stock, par value $0.0001 per share. Each share of the Companys preferred stock was originally convertible into 10 shares of common stock, subject to adjustment, has voting rights equal to its common stock equivalent, 7% cumulative dividend rights, and has liquidation rights that entitle the recipient to the receipt of net assets on a pro-rata basis. The Company has 83,396,165 and 77,063,171 common shares issued and outstanding and 3,594,610 and 3,639,783 Series A preferred shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively. During the six months ended June 30, 2018, the Company issued an aggregate 1,049,166 shares of the Companys common stock pursuant to consulting contracts valued at $533,670, or an average of $0.51 per share. During the six months ended June 30, 2018, the Company converted an aggregate 45,173 shares of the Companys Series A preferred stock into 535,565 shares of the Companys common stock after receiving conversion exercises from multiple preferred stockholders. On March 30, 2018, a contractor rescinded a provision in its contract for common stock payments, and returned 300,000 shares previously issued to it during 2017. The Company retired the returned shares and recaptured the original $240,000 expensed when the shares were issued. On June 11, 2018, the Company issued 300,000 shares of the Companys common stock valued at $120,000 as a signing bonus to an employee. On June 13, 2018, the Company converted a $25,000 advance from related party and Director J Allen Kosowsky into 78,125, shares of the Companys common stock at a price of $0.32 per share (see Note 7 Related Party Transactions). |
Note 9 - Share Based Compensati
Note 9 - Share Based Compensation | 6 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 9 - Share Based Compensation | NOTE 9 SHARE BASED COMPENSATION During the year ended December 31, 2017, the Company issued 5-year options to purchase 5,570,000 shares of common stock to employees and directors under the 2017 Stock Incentive Plan. The options were valued at $1,557,089 using the Black-Scholes pricing model. During the six months ended June 30, 2018, the Company issued 5-year options to purchase 1,090,880 shares of common stock to an employee under the 2017 Stock Incentive Plan, and cancelled 277,173 unvested options. The issued options were valued at $104,828 using the Black-Scholes pricing model. As of June 30, 2018, the total unrecognized expense for unvested share based compensation was $1,265,783 . The 2017 Stock Incentive Plan allows for a maximum 25,000,000 shares to be issued, of which 18,616,293 shares remain available for issuance as of June 30, 2018. The activity of options granted to during the six months ended June 30, 2018 is as follows: Employee and Director Options Outstanding Weighted Average Exercise Price Weighted Average Remaining Life Weighted Average Grant Date Fair Value Intrinsic Value Beginning Balance December 31, 2017 5,570,000 $ 0.60 5 years $ 0.28 Granted 1,090,880 $ 0.60 5 years $ 0.10 Exercised - Cancelled (277,173) $ 0.60 4.33 years $ 0.28 Ending Balance June 30, 2018 6,383,707 $ 0.60 4.18 years $ 0.25 $ - Exercisable options 1,137,369 $ 0.60 4.07 years $ 0.28 $ - The weighted average fair value per option issued during the six months ended June 30, 2018 and the year ended December 31, 2017 was $0.10 and $0.28, respectively. The following table summarizes non-vested option activity during the six months ended June 30, 2018: Non-Vested Options Weighted Average Grant Date Fair Value Beginning Balance December 31, 2017 5,177,042 $ 0.28 Granted 1,090,880 $ 0.10 Vested (744,411) Forfeited (277,173) Ending Balance June 30, 2018 5,246,338 $ 0.25 |
Note 10 - Business Acquisition
Note 10 - Business Acquisition | 6 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 10 - Business Acquisition | NOTE 10 BUSINESS ACQUISITION On September 6, 2016, the Company and BlackRidge Technology International, Inc., a Delaware corporation entered into an Agreement and Plan of Reorganization (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, we, through our wholly-owned subsidiary, completed the actions contemplated by the Reorganization Agreement pursuant to which our wholly-owned subsidiary merged with and into BlackRidge Technology International, Inc. (BlackRidge-DE) with BlackRidge-DE continuing as the surviving corporation (Reorganization). 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-DE 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-DE 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-DE 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-DE was treated as the acquirer and the historical financial statements of BlackRidge-DE 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 11 - Discontinued Operatio
Note 11 - Discontinued Operations | 6 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 11 - Discontinued Operations | NOTE 11 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 short term 64,000 Notes payable short term, related party 91,679 Line of credit 135,227 Total Liabilities 983,305 Loss on disposal $ 484,927 |
Note 12 - Subsequent Events
Note 12 - Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Notes | |
Note 12 - Subsequent Events | NOTE 12 - 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. Notes Payable In July 2018, the Company issued convertible notes to several investors payable in the aggregate amount of $432,000. These notes bear interest in the amount of 9% per annum and are convertible into shares of Series B preferred stock at a price per share of $0.32. In addition, the Company issued an aggregate 1,728,000 warrants to purchase shares of the Companys common stock at a price per share of $0.25 in conjunction with these notes. |
Note 1 - Summary of Significa18
Note 1 - Summary of Significant Accounting Policies: Principles of Consolidation (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Policies | |
Principles of Consolidation | Principles of Consolidation BlackRidge Technology International, Inc. BlackRidge Technology Holding, Inc. BlackRidge Technology, Inc. BlackRidge Technology Government, Inc. BlackRidge Secure Blockchain, Inc BlackRidge Secure Services, Inc. All intercompany balances have been eliminated in consolidation. |
Note 1 - Summary of Significa19
Note 1 - Summary of Significant Accounting Policies: Use of Estimates (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Policies | |
Use of Estimates | Use of Estimates - |
Note 1 - Summary of Significa20
Note 1 - Summary of Significant Accounting Policies: Concentrations (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
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 Six Months Ended June 30, June 30, Customers 2018 2017 2018 2017 Customer A 13 % 78 % 3 % - % Customer B 84 % - % 28 % - % Customer C - % 13 % - % - % Revenue Three Months Ended June 30, Customers 2018 2017 Customer A 11 % 38 % Customer B 88 % - % Customer C - % 33 % Customer D - % 28 % |
Note 1 - Summary of Significa21
Note 1 - Summary of Significant Accounting Policies: Inventory, Policy (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Policies | |
Inventory, Policy | Inventory As of June 30, 2018 As of December 31, 2017 Inventory $ 391,658 $ 376,063 Less: allowance for obsolescence (335,655) (335,655) $ 56,003 $ 40,408 |
Note 1 - Summary of Significa22
Note 1 - Summary of Significant Accounting Policies: Revenue Recognition (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Policies | |
Revenue Recognition | Revenue Recognition · · · · · Revenue generally is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities. Revenue recognition for multiple-element arrangements requires judgment to determine if multiple elements exist, whether elements can be accounted for as separate units of accounting, and if so, the fair value for each of the elements. The Company may enter into arrangements that can include various combinations of software, services, and hardware. Where elements are delivered over different periods of time, and when allowed under U.S. GAAP, revenue is allocated to the respective elements based on their relative selling prices at the inception of the arrangement, and revenue is recognized as each element is delivered. We use a hierarchy to determine the fair value to be used for allocating revenue to elements: (i) vendor-specific objective evidence of fair value ("VSOE"), (ii) third-party evidence, and (iii) best estimate of selling price ("ESP"). For software elements, we follow the industry specific software guidance which only allows for the use of VSOE in establishing fair value. Generally, VSOE is the price charged when the deliverable is sold separately, or the price established by management for a product that is not yet sold if it is probable that the price will not change before introduction into the marketplace. ESPs are established as best estimates of what the selling prices would be if the deliverables were sold regularly on a stand-alone basis. Our process for determining ESPs requires judgment and considers multiple factors that may vary over time depending upon the unique facts and circumstances related to each deliverable. Any revenue received that does not yet meet the above recognition standards is recorded to unearned revenue and held as a liability until recognition occurs. |
Note 1 - Summary of Significa23
Note 1 - Summary of Significant Accounting Policies: Earnings Per Share (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Policies | |
Earnings Per Share | Earnings (Loss) Per Share |
Note 1 - Summary of Significa24
Note 1 - Summary of Significant Accounting Policies: Share-Based Payment and Stock-Based Compensation, Policy (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Policies | |
Share-Based Payment and Stock-Based Compensation, Policy | Share-Based Payments and Stock-Based Compensation |
Note 1 - Summary of Significa25
Note 1 - Summary of Significant Accounting Policies: Property, Plant and Equipment, Policy (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Policies | |
Property, Plant and Equipment, Policy | Property and Equipment - The estimated useful lives of the property and equipment are as follows: Property and Equipment Estimated Useful Life Building improvements 15 years Furniture, fixtures and equipment 7 years Computer equipment 5 years |
Note 1 - Summary of Significa26
Note 1 - Summary of Significant Accounting Policies: Recently Issued Accounting Standards (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Policies | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Leases |
Note 1 - Summary of Significa27
Note 1 - Summary of Significant Accounting Policies: Concentrations: Schedules of Concentration of Risk, by Risk Factor (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Tables/Schedules | |
Schedules of Concentration of Risk, by Risk Factor | Revenue Accounts Receivable Six Months Ended June 30, June 30, Customers 2018 2017 2018 2017 Customer A 13 % 78 % 3 % - % Customer B 84 % - % 28 % - % Customer C - % 13 % - % - % Revenue Three Months Ended June 30, Customers 2018 2017 Customer A 11 % 38 % Customer B 88 % - % Customer C - % 33 % Customer D - % 28 % |
Note 1 - Summary of Significa28
Note 1 - Summary of Significant Accounting Policies: Inventory, Policy: Schedule of Inventory, Current (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Tables/Schedules | |
Schedule of Inventory, Current | As of June 30, 2018 As of December 31, 2017 Inventory $ 391,658 $ 376,063 Less: allowance for obsolescence (335,655) (335,655) $ 56,003 $ 40,408 |
Note 1 - Summary of Significa29
Note 1 - Summary of Significant Accounting Policies: Property, Plant and Equipment, Policy: Property, Plant and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Tables/Schedules | |
Property, Plant and Equipment | Property and Equipment Estimated Useful Life Building improvements 15 years Furniture, fixtures and equipment 7 years Computer equipment 5 years |
Note 4 - Notes Payable_ Schedul
Note 4 - Notes Payable: Schedule of Short-term Debt (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Tables/Schedules | |
Schedule of Short-term Debt | June 30, 2018 December 31, 2017 Beginning Balance $ 50,232 $ 89,221 Notes acquired in business acquisition - 208,811 Repayments continuing operations (5,000) (38,989) Repayments discontinued operations - (53,132) Notes divested in disposal of discontinued operations - (155,679) Ending Balance $ 45,232 $ 50,232 |
Note 4 - Notes Payable_ Sched31
Note 4 - Notes Payable: Schedule of Long-term Debt Instruments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Tables/Schedules | |
Schedule of Long-term Debt Instruments | June 30, 2018 December 31, 2017 Beginning Balance $ 766,658 $ 1,200,000 Notes acquired in business acquisition - 136,830 Repayments continuing operations (200,000) (433,342) Repayments discontinued operations - (1,603) Notes divested in disposal of discontinued operations - (135,227) Ending Balance $ 566,658 $ 766,658 Short Term Portion of Long Term Debt $ 400,000 $ 400,000 Long Term Debt $ 166,658 $ 366,658 |
Note 5 - Convertible Notes_ Sch
Note 5 - Convertible Notes: Schedule of Convertible Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Tables/Schedules | |
Schedule of Convertible Notes Payable | June 30, 2018 December 31, 2017 Beginning Balance $ 601,576 $ 3,996,810 Proceeds from issuance of convertible notes, net of issuance discounts 6,067 146,669 Proceeds from issuance of convertible notes related party - 237,000 Repayments - (100,000) Restructuring of debt (112,017) - Conversion of notes payable into common stock - (3,712,638) Amortization of discounts 66,276 33,735 Ending Balance $ 561,902 $ 601,576 Convertible notes, short term $ 6,628,274 $ - Convertible notes, long term $ 150,000 $ 1,150,000 Convertible notes, short term related party $ 521,172 $ 521,172 Debt discounts $ 6,737,544 $ 1,069,596 |
Note 6 - Commitments and Cont33
Note 6 - Commitments and Contingencies: Schedule of Future Minimum Rental Payments for Operating Leases (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Tables/Schedules | |
Schedule of Future Minimum Rental Payments for Operating Leases | Year Ending December 31, 2018 (six months) $ 131,676 2019 259,851 2021 209,559 2021 214,107 2022 218,654 2023 and thereafter 18,569 Total minimum lease payments $ 1,052,416 |
Note 7 - Related Party Transa34
Note 7 - Related Party Transactions: Schedule of Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Tables/Schedules | |
Schedule of Related Party Transactions | June 30, December 31, Party Name: Relationship: Nature of transactions: 2018 2017 John Hayes Chief Technology Officer Expense reimbursement $ 50,124 $ 55,254 Robert Graham Chairman and Chief Executive Officer Expense reimbursement 722 6,806 Robert Graham Chairman and Chief Executive Officer Rent - 6,000 $ 50,846 $ 68,060 Advances related party During the six months ended June 30, 2018, the Company received advances of $50,000 from Mag Ventures, a company controlled by Tom Bruderman, a director and shareholder. These advances are included in Advances related party on the Companys balance sheet. During the six months ended June 30, 2018, the Company received advances of $25,000 from J. Allen Kosowsky, a director and shareholder. These advances were converted into 78,125 shares of the Companys common stock at a price of $0.32 per share on June 13, 2018. At June 30, 2018 and December 31, 2017, the Company had a balance in related party advances of $115,000 and $65,000, respectively, which consisted of the following: June 30, December 31, Party Name: Relationship: 2018 2017 J Allen Kosowsky Director $ - $ - Thomas Bruderman Director and significant shareholder 115,000 65,000 $ 115,000 $ 65,000 |
Note 9 - Share Based Compensa35
Note 9 - Share Based Compensation: Share-based Compensation, Activity (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Tables/Schedules | |
Share-based Compensation, Activity | Employee and Director Options Outstanding Weighted Average Exercise Price Weighted Average Remaining Life Weighted Average Grant Date Fair Value Intrinsic Value Beginning Balance December 31, 2017 5,570,000 $ 0.60 5 years $ 0.28 Granted 1,090,880 $ 0.60 5 years $ 0.10 Exercised - Cancelled (277,173) $ 0.60 4.33 years $ 0.28 Ending Balance June 30, 2018 6,383,707 $ 0.60 4.18 years $ 0.25 $ - Exercisable options 1,137,369 $ 0.60 4.07 years $ 0.28 $ - |
Note 9 - Share Based Compensa36
Note 9 - Share Based Compensation: Share-based Compensation, Performance Shares Award Nonvested Activity (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Tables/Schedules | |
Share-based Compensation, Performance Shares Award Nonvested Activity | Non-Vested Options Weighted Average Grant Date Fair Value Beginning Balance December 31, 2017 5,177,042 $ 0.28 Granted 1,090,880 $ 0.10 Vested (744,411) Forfeited (277,173) Ending Balance June 30, 2018 5,246,338 $ 0.25 |
Note 11 - Discontinued Operat37
Note 11 - Discontinued Operations: Disposal Groups, Including Discontinued Operations (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 short term 64,000 Notes payable short term, related party 91,679 Line of credit 135,227 Total Liabilities 983,305 Loss on disposal $ 484,927 |
Note 1 - Summary of Significa38
Note 1 - Summary of Significant Accounting Policies: Concentrations (Details) | Jun. 30, 2018USD ($) |
Details | |
Cash, FDIC Insured Amount | $ 169,751 |
Note 1 - Summary of Significa39
Note 1 - Summary of Significant Accounting Policies: Concentrations: Schedules of Concentration of Risk, by Risk Factor (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Customer A | Revenue | ||||
Concentration Risk, Percentage | 11.00% | 38.00% | 13.00% | 78.00% |
Customer A | Accounts receivable | ||||
Concentration Risk, Percentage | 3.00% | |||
Customer B | Revenue | ||||
Concentration Risk, Percentage | 88.00% | 84.00% | ||
Customer B | Accounts receivable | ||||
Concentration Risk, Percentage | 28.00% | |||
Customer C | Revenue | ||||
Concentration Risk, Percentage | 33.00% | 13.00% | ||
Customer D | Revenue | ||||
Concentration Risk, Percentage | 28.00% |
Note 1 - Summary of Significa40
Note 1 - Summary of Significant Accounting Policies: Inventory, Policy: Schedule of Inventory, Current (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Details | ||
Inventory, Gross | $ 391,658 | $ 376,063 |
Allowance for obsolescence | (335,655) | (335,655) |
Inventory | $ 56,003 | $ 40,408 |
Note 1 - Summary of Significa41
Note 1 - Summary of Significant Accounting Policies: Property, Plant and Equipment, Policy: Property, Plant and Equipment (Details) | 6 Months Ended |
Jun. 30, 2018 | |
Building Improvements | |
Property, Plant and Equipment, Useful Life | 15 years |
Furniture and Fixtures | |
Property, Plant and Equipment, Useful Life | 7 years |
Computer Equipment | |
Property, Plant and Equipment, Useful Life | 5 years |
Note 2 - Going Concern (Details
Note 2 - Going Concern (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 95 Months Ended | 98 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Mar. 31, 2018 | Jun. 30, 2018 | |
Details | ||||||
Net Loss | $ 3,638,274 | $ 3,739,615 | $ 6,873,052 | $ 6,027,866 | $ 56,769,428 | $ 56,769,428 |
Note 3 - Intangible Assets (Det
Note 3 - Intangible Assets (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Capitalized Intangible Assets | $ 1,206,101 | $ 642,109 |
Depreciation and amortization | (258,358) | (163,196) |
Intangible assets | ||
Depreciation and amortization | $ 253,954 | $ 163,196 |
Note 4 - Notes Payable_ Sched44
Note 4 - Notes Payable: Schedule of Short-term Debt (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Short-term notes payable | $ 45,232 | $ 50,232 | $ 89,221 |
Short term notes payable | |||
Notes acquired in business acquisition | 208,811 | ||
Repayments - continuing operations | $ (5,000) | (38,989) | |
Repayments - discontinued operations | (53,132) | ||
Notes divested in disposal of discontinued operations | $ (155,679) |
Note 4 - Notes Payable_ Sched45
Note 4 - Notes Payable: Schedule of Long-term Debt Instruments (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Long-term Debt | $ 566,658 | $ 766,658 | $ 1,200,000 |
Current Portion of Long Term Debt | 400,000 | 400,000 | |
Notes payable | 166,658 | 366,658 | |
Long term notes payable | |||
Notes acquired in business acquisition | 136,830 | ||
Repayments - continuing operations | $ (200,000) | (433,342) | |
Repayments - discontinued operations | (1,603) | ||
Notes divested in disposal of discontinued operations | $ (135,227) |
Note 5 - Convertible Notes_ S46
Note 5 - Convertible Notes: Schedule of Convertible Notes Payable (Details) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Details | ||||
Convertible Notes, Long Term | $ 561,902 | $ 601,576 | $ 3,996,810 | |
Proceeds from Issuance of Convertible Preferred Stock | 6,067 | 146,669 | ||
Proceeds from issuance of convertible notes - related party | 237,000 | |||
Repayments on short term convertible notes | $ (100,000) | (100,000) | ||
Restructuring of Debt | (112,017) | |||
Conversion of notes payable into common stock | (3,712,638) | |||
Amortization of discounts | 66,276 | 33,735 | ||
Convertible notes, short term | 6,628,274 | |||
Convertible notes, long term | 150,000 | 1,150,000 | ||
Convertible Notes, Short Term - Related Party | 521,172 | 521,172 | ||
Debt discounts | $ 6,737,544 | $ 1,069,596 |
Note 6 - Commitments and Cont47
Note 6 - Commitments and Contingencies (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Details | ||
Operating Leases, Rent Expense | $ 155,474 | $ 93,756 |
Payments to Acquire Equipment on Lease | $ 2,871 |
Note 6 - Commitments and Cont48
Note 6 - Commitments and Contingencies: Schedule of Future Minimum Rental Payments for Operating Leases (Details) | Jun. 30, 2018USD ($) |
Details | |
Operating Leases, Future Minimum Payments, Remainder of Fiscal Year | $ 131,676 |
Operating Leases, Future Minimum Payments, Due in Two Years | 259,851 |
Operating Leases, Future Minimum Payments, Due in Three Years | 209,559 |
Operating Leases, Future Minimum Payments, Due in Four Years | 214,107 |
Operating Leases, Future Minimum Payments, Due in Five Years | 218,654 |
Operating Leases, Future Minimum Payments, Due Thereafter | 18,569 |
Operating Leases, Future Minimum Payments Due | $ 1,052,416 |
Note 7 - Related Party Transa49
Note 7 - Related Party Transactions (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Details | ||
Change in Accrued Interest - Related Party | $ 81,964 | $ 334,491 |
Note 7 - Related Party Transa50
Note 7 - Related Party Transactions: Schedule of Related Party Transactions (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Accounts Payable, Related Parties, Current | $ 50,846 | $ 68,060 |
Advances - related party | 115,000 | 65,000 |
John Hayes | ||
Accounts Payable, Related Parties, Current | 50,124 | 55,254 |
Advances - related party | 115,000 | 65,000 |
Robert Graham | ||
Accounts Payable, Related Parties, Current | $ 722 | 6,806 |
Robert Graham (2) | ||
Accounts Payable, Related Parties, Current | $ 6,000 |
Note 8 - Stockholders' Equity (
Note 8 - Stockholders' Equity (Details) - shares | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Common stock shares authorized | 200,000,000 | 200,000,000 |
Preferred stock shares authorized | 10,000,000 | 10,000,000 |
Common stock shares issued | 83,396,165 | 77,063,171 |
Common stock shares outstanding | 83,396,165 | 77,063,171 |
Preferred stock shares issued | 3,594,610 | 3,639,783 |
Preferred stock shares outstanding | 3,594,610 | 3,639,783 |
Stock Issuance 9 | ||
Stock Issued During Period, Shares, New Issues | 1,049,166 |
Note 9 - Share Based Compensa52
Note 9 - Share Based Compensation (Details) | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Details | |
Stock Granted, Value, Share-based Compensation, Net of Forfeitures | $ 1,557,089 |
Unrecognized Expense for Unvested Share-based Compensation | $ 1,265,783 |
Note 9 - Share Based Compensa53
Note 9 - Share Based Compensation: Share-based Compensation, Activity (Details) - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Details | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 6,383,707 | 5,570,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $ 0.60 | $ 0.60 |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Remaining Contractual Term | 4 years 2 months 5 days | 5 years |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Weighted Average Grant Date Fair Value | $ 0.25 | $ 0.28 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 1,090,880 | |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 0.60 | |
Share-based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range, Options Granted In Period, Weighted Average Remaining Contractual Term | 5 years | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 0.10 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period | (277,173) | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price | $ 0.60 | |
Share-based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range, Options Forfeitures In Period, Weighted Average Remaining Contractual Term | 4 years 3 months 29 days | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited, Weighted Average Grant Date Fair Value | $ 0.28 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 1,137,369 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ 0.60 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Exercisable Options, Weighted Average Remaining Contractual Term | 4 years 25 days |
Note 9 - Share Based Compensa54
Note 9 - Share Based Compensation: Share-based Compensation, Performance Shares Award Nonvested Activity (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Details | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares | 5,246,338 | 5,177,042 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value | $ 0.25 | $ 0.28 |
Share-Based Compensation Arrangement By Share-Based Payment Award Options, Grants In Period, Nonvested | 1,090,880 | |
Share-based Compensation Arrangement By Share-based Payment Award, Options Nonvested, Weighted Average Grant Date Fair Value, Grants In Period | $ 0.10 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares | (744,411) | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited, Number of Shares | (277,173) |
Note 11 - Discontinued Operat55
Note 11 - Discontinued Operations: Disposal Groups, Including Discontinued Operations (Details) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Disposal Group, Including Discontinued Operation, Assets | $ 1,468,232 |
Disposal Group, Including Discontinued Operation, Liabilities | 983,305 |
Loss on disposal of discontinued operations | 484,927 |
Accounts receivable | |
Disposal Group, Including Discontinued Operation, Assets | 40,044 |
Deposits and prepaid expenses | |
Disposal Group, Including Discontinued Operation, Assets | 90,559 |
Inventory | |
Disposal Group, Including Discontinued Operation, Assets | 1,157,555 |
Property and equipment | |
Disposal Group, Including Discontinued Operation, Assets | 117,254 |
Intangible assets | |
Disposal Group, Including Discontinued Operation, Assets | 62,820 |
Accounts payable and accrued expenses | |
Disposal Group, Including Discontinued Operation, Liabilities | 692,399 |
Notes payable - short term | |
Disposal Group, Including Discontinued Operation, Liabilities | 64,000 |
Notes payable - short term, related party | |
Disposal Group, Including Discontinued Operation, Liabilities | 91,679 |
Line of credit | |
Disposal Group, Including Discontinued Operation, Liabilities | $ 135,227 |