Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Jun. 30, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | LGBTQ Loyalty Holdings, Inc. | |
Entity Central Index Key | 0001510247 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 214,614,749 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash | $ 2,258 | $ 13,188 |
Other receivables | 100,000 | 100,000 |
Other current assets | 9,220 | 9,220 |
Total current assets | 111,478 | 122,408 |
Property and equipment, net | 1,800 | 1,800 |
Intangible assets, net | 97,628 | 73,076 |
Total assets | 210,906 | 197,284 |
Current liabilities: | ||
Accounts payable | 784,113 | 772,065 |
Accrued salaries and consulting fees | 484,442 | 650,133 |
Accrued interest and dividends | 99,021 | 71,212 |
Notes payable | 130,986 | 82,986 |
Notes payable to related party | 17,885 | 17,885 |
Convertible notes payable, net of debt discount | 566,008 | 363,769 |
Derivative liability on convertible notes payable | 1,490,271 | 1,111,879 |
Total liabilities | 3,572,726 | 3,069,929 |
Commitments and contingencies | ||
Stockholders' equity (deficit): | ||
Common stock, $0.001 par value, 1,000,000,000 shares authorized, 181,344,766 and 169,217,460 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively | 181,344 | 169,217 |
Additional paid-in capital | 6,511,211 | 6,035,547 |
Accumulated deficit | (10,054,580) | (9,077,614) |
Total stockholders' equity (deficit) | (3,361,820) | (2,872,645) |
Total liabilities and stockholders' equity (deficit) | 210,906 | 197,284 |
Series A Preferred Stock [Member] | ||
Stockholders' equity (deficit): | ||
Preferred stock | ||
Total stockholders' equity (deficit) | ||
Series B Preferred Stock [Member] | ||
Stockholders' equity (deficit): | ||
Preferred stock | 75 | 75 |
Total stockholders' equity (deficit) | 75 | 75 |
Series C Preferred Stock [Member] | ||
Stockholders' equity (deficit): | ||
Preferred stock | 130 | 130 |
Total stockholders' equity (deficit) | $ 130 | $ 130 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 181,344,766 | 169,217,460 |
Common stock, shares outstanding | 181,344,766 | 169,217,460 |
Series A Preferred Stock [Member] | ||
Preferred stock, shares authorized | 1 | 1 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Series B Preferred Stock [Member] | ||
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, shares issued | 75,000 | |
Preferred stock, shares outstanding | 75,000 | |
Series C Preferred Stock [Member] | ||
Preferred stock, shares authorized | 129,559 | 129,559 |
Preferred stock, shares issued | 129,559 | |
Preferred stock, shares outstanding | 129,559 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Revenue | $ 560 | $ 2,064 |
Cost of net revenue | ||
Gross profit | 560 | 2,064 |
Operating expenses: | ||
Personnel costs | 214,955 | 431,663 |
Consulting fees | 74,500 | |
Legal and professional fees | 126,995 | 167,008 |
Merger costs | 388,675 | |
Sales and marketing | 7,545 | |
General and administrative | 49,992 | 45,716 |
Depreciation and amortization | 6,448 | |
Total operating expenses | 480,435 | 1,033,062 |
Loss from operations | (479,875) | (1,030,998) |
Other income (expense): | ||
Interest (expense) income | (360,839) | 10,549 |
Change in derivative liability | (117,754) | (695,719) |
Total other (expense), net | (478,593) | (685,170) |
Provision for income taxes | ||
Net loss | $ (958,468) | $ (1,716,168) |
Weighted average common shares outstanding - basic and diluted | 171,097,582 | 227,190,467 |
Net loss per common share - basic and diluted | $ (0.01) | $ (0.01) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (958,468) | $ (1,716,168) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization of debt discount and original issue discount | 202,239 | |
Change in fair value of derivative liability | 117,754 | 695,719 |
Financing related costs - debt | 125,879 | 373,050 |
Merger expenses | 388,675 | |
Stock-based compensation expense | 17,800 | 321,100 |
Officer deferred compensation | 66,018 | |
Depreciation and amortization | 6,448 | |
Changes in operating assets and liabilities: | ||
Accounts payable | 12,048 | 135,805 |
Accrued salaries and consulting fees | 152,719 | (274,530) |
Accrued interest and dividends | 27,809 | |
Net cash provided by (used in) operating activities | (295,772) | (10,331) |
Cash flows from investing activities: | ||
Investment in intangible assets | (31,000) | |
Net cash used in investing activities | (31,000) | |
Cash flows from financing activities: | ||
Proceeds from issuance of convertible debenture agreements | 175,000 | 32,000 |
Net proceeds (repayments) from promissory note agreements | 47,500 | (514) |
Shareholder advances | 2,770 | |
Proceeds from exercise of warrants | 93,342 | |
Net cash provided by (used in) financing activities | 315,842 | 34,256 |
Net increase (decrease) in cash | (10,930) | 23,925 |
Cash at beginning of year | 13,188 | 1,084 |
Cash at end of year | 2,258 | 25,009 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes | ||
Cash paid for interest | 2,500 | |
Supplemental disclosure of non-cash financing activities: | ||
Conversion of accrued consulting fees into common shares | 318,000 | |
Exercise of common stock warrants - derivative liability | 32,742 | |
Stock issued for services | 44,100 | |
Amortization of preferred stock discount | $ 15,910 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited) - USD ($) | Series A Preferred Stock [Member] | Series B Preferred Stock [Member] | Series C Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Deferred Compensation [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2018 | $ 121,984 | $ 3,242,449 | $ (195,054) | $ (3,880,234) | $ (710,855) | |||
Balance, shares at Dec. 31, 2018 | 121,984,192 | |||||||
Merger with Maxim Partners | $ 129,559 | 259,116 | 388,675 | |||||
Merger with Maxim Partners, shares | 1 | 129,558,574 | ||||||
Common shares issued for related party debt conversions | $ 8,600 | 339,712 | 348,312 | |||||
Common shares issued for related party debt conversions, shares | 8,600,298 | |||||||
Common shares issued pursuant to note conversions | $ 26,399 | 735,961 | 762,360 | |||||
Common shares issued pursuant to note conversions, shares | 26,398,704 | |||||||
Common shares issued for services performed | $ 3,250 | 317,850 | 321,100 | |||||
Common shares issued for services performed, shares | 3,250,000 | |||||||
Exercise of stock options | $ 500 | 4,500 | 5,000 | |||||
Exercise of stock options, shares | 500,000 | |||||||
Amortization of deferred compensation | 66,018 | 66,018 | ||||||
Net loss | (1,716,168) | (1,716,168) | ||||||
Balance at Mar. 31, 2019 | $ 290,292 | 4,899,587 | (129,036) | (5,596,402) | (535,560) | |||
Balance, shares at Mar. 31, 2019 | 1 | 290,291,768 | ||||||
Balance at Dec. 31, 2019 | $ 75 | $ 130 | $ 169,217 | 6,035,547 | (9,077,614) | (2,872,645) | ||
Balance, shares at Dec. 31, 2019 | 75,000 | 129,559 | 169,217,460 | |||||
Common shares issued in connection with notes payable | $ 295 | 9,705 | 10,000 | |||||
Common shares issued in connection with notes payable, shares | 294,994 | |||||||
Common shares issued for accrued services | $ 6,662 | 311,338 | 318,000 | |||||
Common shares issued for accrued services, shares | 6,662,312 | |||||||
Common shares issued to board of directors | $ 1,000 | 16,800 | 17,800 | |||||
Common shares issued to board of directors, shares | 1,000,000 | |||||||
Exercise of common stock warrants | $ 4,170 | 121,914 | 126,084 | |||||
Exercise of common stock warrants, shares | 4,170,000 | |||||||
Amortization of preferred stock discount | 15,910 | (15,910) | ||||||
Dividends on preferred stock | (2,588) | (2,588) | ||||||
Net loss | (958,468) | (958,468) | ||||||
Balance at Mar. 31, 2020 | $ 75 | $ 130 | $ 181,344 | $ 6,511,211 | $ (10,054,580) | $ (3,361,820) | ||
Balance, shares at Mar. 31, 2020 | 75,000 | 129,559 | 181,344,766 |
Nature of Business
Nature of Business | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | Note 1. Nature of Business Throughout this report, the terms “our,” “we,” “us,” and the “Company” refer to LGBTQ Loyalty Holdings, Inc. (formerly LifeApps Brands Inc.), including its subsidiaries. On January 25, 2019, we acquired LGBT Loyalty LLC, a New York limited liability company, with the goal of creating the first LGBTQ Loyalty Preference Index ETF (the “Index ETF”) to provide the LGBTQ community with the power to influence the allocation of capital within a financial Index ETF based upon LGBTQ consumer preferences. The Index ETF is intended to link the growing economic influence of the LGBTQ community and their allies with many of the top Fortune 500 companies that support and implement diversity, inclusion and equality policies within their organizations. The incorporation of diversity and inclusion in a company’s recruitment and human resource policies is becoming a key concern to investors as part of their growing focus on ESG allocations. Our data and analytics unequivocally reinforce that corporations that have embraced diversity and inclusion policies within their corporate culture perform at a higher level financially than their peers. This includes advancing a more invigorated workforce that attracts and retains the best talent. Innovation and agility have been identified as great benefits of diversity, and there is an increasing awareness of what has come to be known as ‘the power of difference’. On October 30, 2019, through our wholly-owned subsidiary Loyalty Preference Index, Inc. (“LPI”) and our strategically aligned partnerships with crowd sourced data and analytic providers, we launched the LGBTQ100 ESG Index which integrates LGBTQ community survey data into the methodology for a benchmark listing of the nation’s highest financially performing large-cap publicly listed corporations that our respondents believe are most committed to advancing equality. LPI is the index provider for the LGBTQ + ESG100 ETF; LGBTQ Loyalty was the Sponsor for the prospectus that was filed by the licensed Fund Adviser ProcureAM, and was approved by the Securities and Exchange Commission (“SEC”) in early January 2020. The LGBTQ + ESG100 ETF (the “Fund”) seeks to track the investment results (before fees and expenses) of the LGBTQ100 ESG Index. The Fund earns management fees based on assets under management (“AUM”) and is expected to launch in the third quarter of 2020 on the NASDAQ. Through our wholly owned subsidiary LifeApps, Inc., we are a licensed developer and publisher of apps for the Apple Apps Store for iPhone, iPod touch, iPad and iPad mini. We are also a licensed developer on both Google Play and Amazon Appstore for Android. We have distributed apps on all three platforms. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Going Concern The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with principles generally accepted in the United States (“US GAAP”), which contemplates our continuation as a going concern. We have incurred losses to date of $10,054,580 and have negative working capital of $3,461,248 as of March 31, 2020. To date we have funded our operations through advances from a related party, issuance of convertible debt, and the sale of our common stock. We intend to raise additional funding through third party equity or debt financing. There is no certainty that funding will be available as needed. These factors raise substantial doubt about our ability to continue operating as a going concern. Our ability to continue our operations as a going concern, realize the carrying value of our assets, and discharge our liabilities in the normal course of business is dependent upon our ability to raise capital sufficient to fund our commitments and ongoing losses, and ultimately generate profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Basis of Presentation We have prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These condensed consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our balance sheets, operating results, and cash flows for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for fiscal year 2020. Certain information and footnote disclosures normally included in condensed consolidated financial statements prepared in accordance with US GAAP have been omitted in accordance with the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes. Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of LGBTQ Loyalty Holdings, Inc. and our wholly owned subsidiaries, LGBTQ Loyalty, LLC, LifeApps Inc., Sports One Group Inc. and Loyalty Preference Index, Inc. (“LPI”), which was formed on July 24, 2019. All material inter-company transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may differ from these estimates. Reclassifications The Company has reclassified certain previously reported amounts in its consolidated financial statements. Accordingly, prior year amounts were reclassified to conform to the current year presentation. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company generally maintains balances in various operating accounts at financial institutions that management believes to be of high credit quality, in amounts that may exceed federally insured limits. The Company has not experienced any losses related to its cash and cash equivalents and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. At March 31, 2020 and December 31, 2019, all of the Company’s cash and cash equivalents were held at one accredited financial institution. Fair Value Measurements ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows: Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange. Level 2 – Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs. Level 3 – Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights and derivative liabilities. Our financial instruments consist of cash, other current assets, accounts payables, accruals, and notes payable. The carrying values of these instruments approximate fair value because of the short-term maturities. The fair value of the Company’s convertible debentures and promissory notes approximates their carrying values as the underlying imputed interest rates approximates the estimated current market rate for similar instruments. The derivative is measured as a Level 3 instrument due to the various inputs which requires significant management judgment. Refer to Note 6 for detail. The following table is a summary of our financial instruments measured at fair value: Fair Value Measurements as of March 31, 2020: Level 1 Level 2 Level 3 Total Liabilities: Derivative liability on convertible notes payable $ - $ - $ 1,490,271 $ 1,490,271 $ - $ - $ 1,490,271 $ 1,490,271 Fair Value Measurements as of December 31, 2019: Level 1 Level 2 Level 3 Total Liabilities: Derivative liability on convertible notes payable $ - $ - $ 1,111,879 $ 1,111,879 $ - $ - $ 1,111,879 $ 1,111,879 Other Receivables – Related Party Other receivables represent amounts held in escrow at the Fund’s custodian. The Company expects to retrieve the funds upon commencement of the Fund’s operations. Intangibles Intangibles, which include website development costs, databases acquired, internet domain name costs, and customer lists, are being amortized over the expected useful lives which we estimate to be three to five years. In accordance with Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) Topic 350 Intangibles – Goodwill and Other Website and Software Development Costs Website and software costs are eligible for capitalization under ASC 350-50 and ASC 985-20, Software-Costs of Software to be Sold, Leased or Marketed. These amounts are included in the consolidated balance sheets. Amortization of these costs will begin when the website becomes active. Property and Equipment Property and equipment consist of furniture and equipment and are stated at cost less accumulated depreciation and accumulated impairment loss, if any. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. The estimated useful lives used for financial statement purposes are 3 years. Derivative Financial Instruments The Company has financial instruments that are considered derivatives or contain embedded features subject to derivative accounting. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company’s balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated fair value in results of operations during the period of change. The Company has a sequencing policy regarding share settlement wherein instruments with a fixed conversion price or floor would be settled first, and interest payable in shares settle next. Thereafter, share settlement order is based on instrument issuance date – earlier dated instruments settling before later dated. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares. The policy includes all shares issuable pursuant to debenture and preferred stock instruments as well as shares issuable under service and employment contracts and interest on short term loans. Revenue Recognition ASC Topic 606, “ Revenue from Contracts with Customers” Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: ● identify the contract with a customer; ● identify the performance obligations in the contract; ● determine the transaction price; ● allocate the transaction price to performance obligations in the contract; and ● recognize revenue as the performance obligation is satisfied. Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation - Stock Compensation The Company measures compensation expense for its non-employee stock-based compensation under ASC 505, Equity Income Taxes The provision for income taxes is determined in accordance with the provisions of ASC Topic 740, Accounting for Income Taxes ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements, uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. For the three months ended March 31, 2020 and 2019 we did not have any interest, penalties or any significant unrecognized uncertain tax positions. Earnings per Share We calculate earnings per share in accordance with ASC Topic 260 Earnings Per Share Three Months Ended March 31, 2020 2019 Stock options outstanding 5,800,000 5,800,000 Warrants 7,000,000 - Shares to be issued upon conversion of notes 190,488,453 - 203,288,453 5,800,000 Recent Pronouncements Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption. |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 3. Intangible Assets During the year ended December 31, 2019, the Company capitalized costs pertaining to the development of the LGBTQ100 ESG Index website. The Company began amortizing upon the launch of the index, and will amortize the costs over a three-year useful life. At March 31, 2020 and December 31, 2019, intangible assets, net was $97,628 and $73,076. Amortization expense was $6,448 for the three months ended March 31, 2020. |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Notes Payable | Note 4. Notes Payable As of March 31, 2020 and December 31, 2019, the Company has a note payable outstanding in the amount of $5,986 and $7,986, respectively. The note is past due at March 31, 2020 and is therefore in default. The note accrues interest at a rate of 2% per annum. In January 2020, the Company issued a note payable to a lender for a principal amount of $50,000. The Company received proceeds of $47,500 and the note matured on February 5, 2020. As of March 31, 2020, the note is past due and in default. In December 2019, the Company issued a promissory note to Pride Partners LLC (“Pride”) for $75,000. The note is secured, accrues interest at a rate of 10% per annum, and matures on June 20, 2020. As of March 31, 2020, the full principal amount was outstanding. |
Convertible Notes Payable
Convertible Notes Payable | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Convertible Notes Payable | Note 5. Convertible Notes Payable Convertible Note In February 2019, the holder of a March 2018 convertible promissory note in the original principal amount of $35,000 converted $26,920 in principal and $4,255 in interest into an aggregate of 26,398,704 shares of our common stock at a conversion price of $0.0015 per share. As the result of such conversions, this note has been repaid in full and terminated. Convertible Debenture On February 12, 2020, the Company entered into a Securities Purchase Agreement with Cavalry Fund I LP (the “Calvary Note”). Pursuant to the terms of the Calvary Note, the lender agreed to purchase from the Company, for a purchase price of $100,000, a 10% convertible note in the principal amount of $115,500. The Cavalry Note matures and becomes due and payable on November 11, 2020 and accrues interest at a rate of 10% per annum. The Calvary Note, plus all accrued but unpaid interest, may be prepaid at any time prior to the maturity date. The Calvary Note is convertible into shares of the Company’s common stock at any time at a conversion price (the “Conversion Price”) equal to the lower of: (i) the lowest closing price of the common stock during the preceding twenty (20) trading day period ending on the latest complete trading day prior to the issuance date of the Note (the “Closing Price”), (ii) $0.04, or (iii) 60% of the lowest traded price for the Common Stock on the principal market on which the Common Stock is then trading during the twenty (20) consecutive trading days on which at least 100 shares of Common Stock were traded including and immediately preceding the date of conversion. Upon an event of default, the holder may elect to convert at an alternate conversion price which is the lower of: (i) the closing price of the Common Stock on the Principal Market on the Trading Day immediately preceding the issue date of the Calvary Note or (ii) 60% of either the lowest traded price or the closing bid price, whichever is lower for the common stock on the principal market during any trading day in which the event of default has not been cured. The conversion price of the Note will be further adjusted by another 15% reduction, regardless of whether there is an event of default, if (A) the Common stock is no longer a reporting company pursuant to the Securities Exchange Act of 1934, as amended, (B) the Note cannot be converted into free trading shares after 181 days from the issuance date of the Note, (C) the Common Stock is chilled for deposit at DTC or becomes chilled at any point while the Note remains outstanding, (D) deposit or other additional fees are payable due to a Yield Sign, Stop Sign or other trading restrictions, or (E) if the closing price at any time falls below $0.015. The conversion price is subject to customary adjustments. The conversion price is not subject to a floor. On March 10, 2020, the Company entered into a Securities Purchase Agreement with Power Up Lending Group Ltd (“Power Up Note”. Pursuant to the terms of the Power Up Note, the lender agreed to purchase from the Company, for a purchase price of $75,000, a 10% convertible note in the principal amount of $85,800. The Power Up Note matures and becomes due and payable on March 10, 2021 and accrues interest at a rate of 10% per annum. The Power Up Note, plus all accrued but unpaid interest, may be prepaid at any time prior to the maturity date. The Power Up Note is convertible into shares of the Company’s common stock at any time at a conversion price (the “Conversion Price”), which shall equal the Variable Conversion Price. The “Variable Conversion Price” shall mean 60% multiplied by the Market Price, which is the lowest Trading Price for the common stock during the twenty (20) trading day period ending on the latest complete trading day prior to the conversion date. The conversion price is subject to customary adjustments. The conversion price is not subject to a floor. During the three months ended March 31, 2020, the Company recorded amortization of debt discount and original discount of $202,239 for all convertible debentures. This amount is included in interest expense in our consolidated statements of operations. The following is a summary of the activity of the convertible notes payable and convertible debenture for the three months ended March 31, 2020: Total Balance as of December 31, 2019 $ 363,769 Issuance of convertible debenture - principal amount 201,300 Issuance of convertible debenture - debt discount and original issue discount (201,300 ) Amortization of debt discount and original issue discount 202,239 Balance as of March 31, 2020 $ 566,008 The following comprises the balance of the convertible debenture outstanding at March 31, 2020 and December 31, 2019: March 31, 2020 December 31, 2019 Principal amount outstanding $ 1,279,390 $ 1,078,090 Less: Unamortized original issue discount (62,571 ) (62,779 ) Less: Unamortized debt discount (650,811 ) (651,542 ) $ 566,008 $ 363,769 |
Derivative Liability
Derivative Liability | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liability | Note 6. Derivative Liability We evaluated the terms of the conversion features of the debentures in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity’s Own Stock To determine the fair value of our embedded derivatives, management evaluates assumptions regarding the probability of certain future events. Other factors used to determine fair value include our period end stock price, historical stock volatility, risk free interest rate and derivative term. The fair value recorded for the derivative liability varies from period to period. This variability may result in the actual derivative liability for a period either above or below the estimates recorded on our consolidated financial statements, resulting in significant fluctuations in other income (expense) because of the corresponding non-cash gain or loss recorded. We value the conversion feature at origination of the notes using the Black-Scholes valuation model. We value the derivative liability at the end of each accounting period, and upon conversion of the underlying note or warrant, with the difference in value recognized as gain or loss included in other income (expense) in our consolidated statements of operations. The original debentures had conversion features that resulted in derivative liabilities. We valued the conversion features at each origination date with the following assumptions, on a weighted-average basis: Three Months Ended March 31, 2020 Risk-free interest rate 1.04 % Expected term (in years) 0.86 Expected volatility 154.3 % Expected dividend yield 0 % Exercise price of underlying common shares $ 0.02 Year Ended December 31, 2019 Tranche 1 Tranche 2 Tranche 3 Warrants Risk-free interest rate 2.11 % 1.75 % 1.67 % 2.11 % Expected term (in years) 1.25 1.03 0.89 1.25 Expected volatility 312.4 % 303.70 % 326.88 % 312.4 % Expected dividend yield 0 % 0 % 0 % 0 % Exercise price of underlying common shares $ 0.09 $ 0.04 $ 0.04 $ 0.08 During the three months ended March 31, 2020, the entire value of the principal of the debentures were assigned to the derivative liability and recognized as a debt discount on the convertible debentures. The debt discount is recorded as reduction (contra-liability) to the debentures and are being amortized over the initial term. The balance of $118,191 was recognized as origination interest on the derivative liability and expensed on origination. The following is a summary of the activity of the derivative liability for the three months ended March 31, 2020: Debenture Warrants Total Balance as of December 31, 2019 $ 1,047,977 $ 63,902 $ 1,111,879 Initial fair value on issuance of convertible debenture 293,192 - 293,192 New warrant issuances - 39,690 39,690 Common stock warrant exercises - (72,431 ) (72,431 ) Change in fair value of derivative liability 149,102 (31,348 ) 117,754 Balance as of March 31, 2020 $ 1,490,271 $ - $ 1,490,271 |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | Note 7. Stockholders’ Equity Common Stock 2020 Transactions In January 2020, we issued 294,994 shares of common stock to a bridge noteholder in connection with promissory notes received. In January 2020, we issued 6,662,312 shares to a consultant for 2019 services which were accrued at a fair value of $318,000. In March 2020, we issued 1,000,000 shares to Orlando Reece pursuant to his appointment to the Board of Directors. During the three months ended March 31, 2020, we issued an aggregate of 4,170,000 shares of common stock to Pride Partners pursuant to warrant exercises. Refer to Note 8. 2019 Transactions In January 2019, we entered into and closed a securities exchange under a Securities Exchange Agreement (the “Securities Exchange Agreement”) with LGBT Loyalty LLC (“LGBT Loyalty”) and Maxim Partners, LLC (“Maxim”), pursuant to which we acquired all of the membership interests of LGBT Loyalty, making LGBT Loyalty a wholly owned subsidiary of ours, in exchange for 120,959,996 shares (the “Shares”) of our restricted common stock and one share of our newly created Series A Convertible Preferred Stock (the “Series A Preferred Stock”). The Shares issued to Maxim represented, upon issuance, 49.99% of our then issued and outstanding shares of common stock. On March 29, 2019 an additional 8,598,578 shares were issued to Maxim for the conversion of the Series A Convertible Preferred Stock. LGBT Loyalty has no assets, liabilities nor operations at the exchange date, therefore, the value ascribed to the issued stock ($388,675) has been charged to operations as expenses of the merger. In February 2019, we issued an aggregate of 750,000 shares of common stock to a consultant in accordance with a service contract that provided for a 250,000 share stock grant for services performed of $7,500, as well as the exercise of 500,000 stock options in exchange for the cancellation of $5,000 then outstanding accounts payable due to the consultant for prior services. In March 2019, we issued an aggregate of 8,600,298 shares of our common stock pursuant to the automatic exercise of warrants issued to two current and prior company officers. In March 2019, we issued an aggregate of 3,000,000 shares of common stock to three unrelated individuals in accordance with their appointment as directors of the Company. During the three months ended March 31, 2019, we issued 26,398,704 shares of our common stock to a lender pursuant to note conversions. Series B Convertible Preferred Stock As of March 31, 2020, we had $10,350 in remaining accrued Series B dividends. |
Options and Warrants
Options and Warrants | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Options and Warrants | Note 8. Options and Warrants Options As of March 31, 2020 and December 31, 2019, we had 5,800,000 options remaining outstanding pursuant to the 2012 Equity Incentive Plan. There was no stock based compensation expense for options for the three months ended March 31, 2020 and 2019. There will be no additional compensation expense recognized in future periods. Warrants During the three months ended March 31, 2020, Pride exercised an aggregate of 4,170,000 shares of common stock pursuant to the exercise provisions of the warrant, including a simultaneous grant and exercise of 2,285,000 warrants. As of March 31, 2020, Pride had no outstanding warrants remaining. The Company received total proceeds of $93,342 a result of the warrant exercises. On January 25, 2019 we issued warrants to two Company executives in exchange for the cancellation of an aggregate of $348,312 of salary and interest accruals through December 31, 2018. The warrants were fully exercised as described in Note 7 above. The following is a summary of the warrant activity for the three months ended March 31, 2020: Warrants Weighted Average Exercise Price Outstanding as of December 31, 2019 8,885,000 $ 0.04 Granted 2,285,000 0.08 Exercised (4,170,000 ) 0.08 Forfeited - - Outstanding as of March 31, 2020 7,000,000 $ 0.03 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 9. Related Party Transactions Parties, which can be a corporation or an individual, are considered to be related if we have the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence. Notes Payable to Related Party Notes payable to related parties at March 31, 2020 and December 31, 2019 totaled $17,885 with a 2% annual interest rate. Currently the Company has defaulted on all of their related party loan obligations. Forbearance has been granted by the related parties on all loans. Accrued Salaries In March 2019, we issued an aggregate of 8,600,298 shares of our common stock pursuant to the automatic exercise of warrants issued to two current and prior company officers. The warrants were issued in exchange for the cancellation of an aggregate of $348,312 of salary and interest accruals through December 31, 2018. As of March 31, 2020 and December 31, 2019, accrued salaries to our company officers and executive director totaled $171,352 and $91,352, respectively, and is included in accrued salaries and consulting fees in our consolidated balance sheets. Board of Directors In March 2020, the Company issued 1,000,000 shares to Orlando Reece pursuant to his appointment to the board, and recognized $17,800 in compensation expense. In March 2019, we issued an aggregate of 3,000,000 shares of common stock to three unrelated individuals in accordance with their appointment as directors of the Company, and recognized $313,600 in compensation expense. Total accrued directors’ compensation of $123,750 and $80,000 at March 31, 2020 and December 31, 2019, respectively, is included in accrued salaries and consulting fees on our consolidated balance sheets. As of March 31, 2020 there is an aggregate of 7,000,000 warrants outstanding to the board of directors. A board member is the co-founder and president of ProcureAM, LLC, the fund advisor for the Fund. As of March 31, 2020 and December 31, 2019, we have $100,000 included as other receivables of on our consolidated balance sheet, which represents amounts held in escrow at the Fund’s custodian. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 10. Subsequent Events Management has evaluated all activity up to July 6, 2020 and concluded that no subsequent events have occurred that would require recognition in these financial statements or disclosure in the notes to these financial statements other than the following: In April 2020, a Series B investor converted 25,000 shares of Series B Preferred Stock for 958,333 shares of common stock. In May 2020, the Company cancelled the outstanding warrants and issued an aggregate of 8,000,000 shares of common stock to the board members. On May 26, 2020, we entered into a Securities Purchase Agreement (the “SPA”) with an unrelated entity. Pursuant to the terms of the SPA, the Purchaser agreed to purchase from the Company, for a purchase price of $75,000, a 10% Convertible Note (the “Note”) in the principal amount of $85,800. The Note matures and becomes due and payable on May 26, 2021 and accrues interest at a rate of 10% per annum (increasing to 22% upon an event of default) while the Note remains outstanding. The Note, plus all accrued but unpaid interest and other amounts due on the Note, may be prepaid, at varying amounts, at any time prior to the maturity date. The Note is convertible into shares of the Company’s common stock at any time at a conversion price (the “Conversion Price”), which shall equal the Variable Conversion Price (as defined herein) (subject to equitable adjustments by the Company relating to the Company’ securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The “Variable Conversion Price” shall mean 60% multiplied by the Market Price (as defined herein) (representing a discount rate of 40%). “Market Price” means the lowest Trading Price (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. The conversion price is subject to customary adjustments. The conversion price is not subject to a floor. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Going Concern | Going Concern The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with principles generally accepted in the United States (“US GAAP”), which contemplates our continuation as a going concern. We have incurred losses to date of $10,054,580 and have negative working capital of $3,461,248 as of March 31, 2020. To date we have funded our operations through advances from a related party, issuance of convertible debt, and the sale of our common stock. We intend to raise additional funding through third party equity or debt financing. There is no certainty that funding will be available as needed. These factors raise substantial doubt about our ability to continue operating as a going concern. Our ability to continue our operations as a going concern, realize the carrying value of our assets, and discharge our liabilities in the normal course of business is dependent upon our ability to raise capital sufficient to fund our commitments and ongoing losses, and ultimately generate profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Basis of Presentation | Basis of Presentation We have prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These condensed consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our balance sheets, operating results, and cash flows for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for fiscal year 2020. Certain information and footnote disclosures normally included in condensed consolidated financial statements prepared in accordance with US GAAP have been omitted in accordance with the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes. |
Principles of Consolidation | Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of LGBTQ Loyalty Holdings, Inc. and our wholly owned subsidiaries, LGBTQ Loyalty, LLC, LifeApps Inc., Sports One Group Inc. and Loyalty Preference Index, Inc. (“LPI”), which was formed on July 24, 2019. All material inter-company transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may differ from these estimates. |
Reclassifications | Reclassifications The Company has reclassified certain previously reported amounts in its consolidated financial statements. Accordingly, prior year amounts were reclassified to conform to the current year presentation. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company generally maintains balances in various operating accounts at financial institutions that management believes to be of high credit quality, in amounts that may exceed federally insured limits. The Company has not experienced any losses related to its cash and cash equivalents and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. At March 31, 2020 and December 31, 2019, all of the Company’s cash and cash equivalents were held at one accredited financial institution. |
Fair Value Measurements | Fair Value Measurements ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows: Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange. Level 2 – Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs. Level 3 – Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights and derivative liabilities. Our financial instruments consist of cash, other current assets, accounts payables, accruals, and notes payable. The carrying values of these instruments approximate fair value because of the short-term maturities. The fair value of the Company’s convertible debentures and promissory notes approximates their carrying values as the underlying imputed interest rates approximates the estimated current market rate for similar instruments. The derivative is measured as a Level 3 instrument due to the various inputs which requires significant management judgment. Refer to Note 6 for detail. The following table is a summary of our financial instruments measured at fair value: Fair Value Measurements as of March 31, 2020: Level 1 Level 2 Level 3 Total Liabilities: Derivative liability on convertible notes payable $ - $ - $ 1,490,271 $ 1,490,271 $ - $ - $ 1,490,271 $ 1,490,271 Fair Value Measurements as of December 31, 2019: Level 1 Level 2 Level 3 Total Liabilities: Derivative liability on convertible notes payable $ - $ - $ 1,111,879 $ 1,111,879 $ - $ - $ 1,111,879 $ 1,111,879 |
Other Receivables - Related Party | Other Receivables – Related Party Other receivables represent amounts held in escrow at the Fund’s custodian. The Company expects to retrieve the funds upon commencement of the Fund’s operations. |
Intangibles | Intangibles Intangibles, which include website development costs, databases acquired, internet domain name costs, and customer lists, are being amortized over the expected useful lives which we estimate to be three to five years. In accordance with Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) Topic 350 Intangibles – Goodwill and Other |
Website and Software Development Costs | Website and Software Development Costs Website and software costs are eligible for capitalization under ASC 350-50 and ASC 985-20, Software-Costs of Software to be Sold, Leased or Marketed. These amounts are included in the consolidated balance sheets. Amortization of these costs will begin when the website becomes active. |
Property and Equipment | Property and Equipment Property and equipment consist of furniture and equipment and are stated at cost less accumulated depreciation and accumulated impairment loss, if any. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. The estimated useful lives used for financial statement purposes are 3 years. |
Derivative Financial Instruments | Derivative Financial Instruments The Company has financial instruments that are considered derivatives or contain embedded features subject to derivative accounting. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company’s balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated fair value in results of operations during the period of change. The Company has a sequencing policy regarding share settlement wherein instruments with a fixed conversion price or floor would be settled first, and interest payable in shares settle next. Thereafter, share settlement order is based on instrument issuance date – earlier dated instruments settling before later dated. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares. The policy includes all shares issuable pursuant to debenture and preferred stock instruments as well as shares issuable under service and employment contracts and interest on short term loans. |
Revenue Recognition | Revenue Recognition ASC Topic 606, “ Revenue from Contracts with Customers” Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: ● identify the contract with a customer; ● identify the performance obligations in the contract; ● determine the transaction price; ● allocate the transaction price to performance obligations in the contract; and ● recognize revenue as the performance obligation is satisfied. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation - Stock Compensation The Company measures compensation expense for its non-employee stock-based compensation under ASC 505, Equity |
Income Taxes | Income Taxes The provision for income taxes is determined in accordance with the provisions of ASC Topic 740, Accounting for Income Taxes ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements, uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. For the three months ended March 31, 2020 and 2019 we did not have any interest, penalties or any significant unrecognized uncertain tax positions. |
Earnings Per Share | Earnings per Share We calculate earnings per share in accordance with ASC Topic 260 Earnings Per Share Three Months Ended March 31, 2020 2019 Stock options outstanding 5,800,000 5,800,000 Warrants 7,000,000 - Shares to be issued upon conversion of notes 190,488,453 - 203,288,453 5,800,000 |
Recent Pronouncements | Recent Pronouncements Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Financial Instruments at Fair Value | The following table is a summary of our financial instruments measured at fair value: Fair Value Measurements as of March 31, 2020: Level 1 Level 2 Level 3 Total Liabilities: Derivative liability on convertible notes payable $ - $ - $ 1,490,271 $ 1,490,271 $ - $ - $ 1,490,271 $ 1,490,271 Fair Value Measurements as of December 31, 2019: Level 1 Level 2 Level 3 Total Liabilities: Derivative liability on convertible notes payable $ - $ - $ 1,111,879 $ 1,111,879 $ - $ - $ 1,111,879 $ 1,111,879 |
Schedule of Antidilutive Securities Excluded from Diluted Net Loss | For the three months ended March 31, 2020 and 2019, the following number of potentially dilutive shares have been excluded from diluted net loss since such inclusion would be anti-dilutive: Three Months Ended March 31, 2020 2019 Stock options outstanding 5,800,000 5,800,000 Warrants 7,000,000 - Shares to be issued upon conversion of notes 190,488,453 - 203,288,453 5,800,000 |
Convertible Notes Payable (Tabl
Convertible Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Summary of Activity of Convertible Notes Payable and Convertible Debenture | The following is a summary of the activity of the convertible notes payable and convertible debenture for the three months ended March 31, 2020: Total Balance as of December 31, 2019 $ 363,769 Issuance of convertible debenture - principal amount 201,300 Issuance of convertible debenture - debt discount and original issue discount (201,300 ) Amortization of debt discount and original issue discount 202,239 Balance as of March 31, 2020 $ 566,008 |
Schedule of Balance Convertible Debenture Outstanding | The following comprises the balance of the convertible debenture outstanding at March 31, 2020 and December 31, 2019: March 31, 2020 December 31, 2019 Principal amount outstanding $ 1,279,390 $ 1,078,090 Less: Unamortized original issue discount (62,571 ) (62,779 ) Less: Unamortized debt discount (650,811 ) (651,542 ) $ 566,008 $ 363,769 |
Derivative Liability (Tables)
Derivative Liability (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Conversion Feature of Derivative Liability | The original debentures had conversion features that resulted in derivative liabilities. We valued the conversion features at each origination date with the following assumptions, on a weighted-average basis: Three Months Ended March 31, 2020 Risk-free interest rate 1.04 % Expected term (in years) 0.86 Expected volatility 154.3 % Expected dividend yield 0 % Exercise price of underlying common shares $ 0.02 Year Ended December 31, 2019 Tranche 1 Tranche 2 Tranche 3 Warrants Risk-free interest rate 2.11 % 1.75 % 1.67 % 2.11 % Expected term (in years) 1.25 1.03 0.89 1.25 Expected volatility 312.4 % 303.70 % 326.88 % 312.4 % Expected dividend yield 0 % 0 % 0 % 0 % Exercise price of underlying common shares $ 0.09 $ 0.04 $ 0.04 $ 0.08 |
Schedule of Derivative Liability Activity | The following is a summary of the activity of the derivative liability for the three months ended March 31, 2020: Debenture Warrants Total Balance as of December 31, 2019 $ 1,047,977 $ 63,902 $ 1,111,879 Initial fair value on issuance of convertible debenture 293,192 - 293,192 New warrant issuances - 39,690 39,690 Common stock warrant exercises - (72,431 ) (72,431 ) Change in fair value of derivative liability 149,102 (31,348 ) 117,754 Balance as of March 31, 2020 $ 1,490,271 $ - $ 1,490,271 |
Options and Warrants (Tables)
Options and Warrants (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Warrant Activity | The following is a summary of the warrant activity for the three months ended March 31, 2020: Warrants Weighted Average Exercise Price Outstanding as of December 31, 2019 8,885,000 $ 0.04 Granted 2,285,000 0.08 Exercised (4,170,000 ) 0.08 Forfeited - - Outstanding as of March 31, 2020 7,000,000 $ 0.03 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Incurred losses | $ 10,054,580 | |
Working capital | $ (3,461,248) | |
Fixed assets, estimated useful life | 3 years | |
Income tax examination likelihood description | Greater than 50% likelihood | |
Interest, penalties or unrecognized uncertain tax positions | ||
Minimum [Member] | ||
Intangible assets, expected useful life | 3 years | |
Maximum [Member] | ||
Intangible assets, expected useful life | 5 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Financial Instruments at Fair Value (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Derivative liability on convertible notes payable | $ 1,490,271 | $ 1,111,879 |
Derivative instruments at fair value | 1,490,271 | 1,111,879 |
Level 1 [Member] | ||
Derivative liability on convertible notes payable | ||
Derivative instruments at fair value | ||
Level 2 [Member] | ||
Derivative liability on convertible notes payable | ||
Derivative instruments at fair value | ||
Level 3 [Member] | ||
Derivative liability on convertible notes payable | 1,490,271 | 1,111,879 |
Derivative instruments at fair value | $ 1,490,271 | $ 1,111,879 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Diluted Net Loss (Details) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Total | 203,288,453 | 5,800,000 |
Stock Options Outstanding [Member] | ||
Total | 5,800,000 | 5,800,000 |
Warrants [Member] | ||
Total | 7,000,000 | |
Shares to be Issued Upon Conversion of Notes [Member] | ||
Total | 190,488,453 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Intangible assets, net | $ 97,628 | $ 73,076 |
Amortization expense | $ 6,448 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | Jan. 31, 2020 | |
Debt instrument interest rate | 2.00% | 2.00% | |
Debt principal amount | $ 1,279,390 | $ 1,078,090 | |
Note Payable [Member] | |||
Note payable outstanding | $ 5,986 | $ 7,986 | |
Debt instrument interest rate | 2.00% | 2.00% | |
Note Payable [Member] | Lender [Member] | |||
Debt principal amount | $ 50,000 | ||
Proceeds from issuance of debt | $ 47,500 | ||
Debt maturity date | Feb. 5, 2020 | ||
Promissory Note [Member] | Pride Partners LLC [Member] | |||
Note payable outstanding | $ 75,000 | ||
Debt instrument interest rate | 10.00% | ||
Debt maturity date | Jun. 20, 2020 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details Narrative) | Mar. 10, 2020USD ($)Trading | Feb. 12, 2020USD ($)Trading$ / sharesshares | Mar. 31, 2019shares | Feb. 28, 2019USD ($)$ / sharesshares | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) |
Convertible notes payable | $ 566,008 | $ 363,769 | |||||
Debt principal amount | $ 1,279,390 | $ 1,078,090 | |||||
Debt interest rate | 2.00% | 2.00% | |||||
Number of shares of common stock | shares | 8,600,298 | ||||||
Amortization of debt discount and original discount | $ 202,239 | ||||||
Securities Purchase Agreement [Member] | Cavalry Fund I LP [Member] | |||||||
Debt principal amount | $ 115,500 | ||||||
Purchase price | $ 100,000 | ||||||
Debt interest rate | 10.00% | ||||||
Debt maturity date | Nov. 11, 2020 | ||||||
Trading days | Trading | 20 | ||||||
Debt description | The lowest closing price of the common stock during the preceding twenty (20) trading day period ending on the latest complete trading day prior to the issuance date of the Note (the "Closing Price"), (ii) $0.04, or (iii) 60% of the lowest traded price for the Common Stock on the principal market on which the Common Stock is then trading during the twenty (20) consecutive trading days on which at least 100 shares of Common Stock were traded including and immediately preceding the date of conversion. Upon an event of default, the holder may elect to convert at an alternate conversion price which is the lower of: (i) the closing price of the Common Stock on the Principal Market on the Trading Day immediately preceding the issue date of the Calvary Note or (ii) 60% of either the lowest traded price or the closing bid price, whichever is lower for the common stock on the principal market during any trading day in which the event of default has not been cured. The conversion price of the Note will be further adjusted by another 15% reduction, regardless of whether there is an event of default | ||||||
Consecutive trading days | Trading | 20 | ||||||
Number of shares of common stock | shares | 100 | ||||||
Reduction percentage | 15.00% | ||||||
Closing price | $ / shares | $ 0.015 | ||||||
Securities Purchase Agreement [Member] | Power Up Lending Group Ltd [Member] | |||||||
Debt principal amount | $ 85,800 | ||||||
Purchase price | $ 75,000 | ||||||
Debt interest rate | 10.00% | ||||||
Debt maturity date | Mar. 10, 2021 | ||||||
Trading days | Trading | 20 | ||||||
Debt description | The "Variable Conversion Price" shall mean 60% multiplied by the Market Price, which is the lowest Trading Price for the common stock during the twenty (20) trading day period ending on the latest complete trading day prior to the conversion date. | ||||||
2018 Convertible Promissory Note [Member] | |||||||
Convertible notes payable | $ 35,000 | ||||||
Debt principal amount | 26,920 | ||||||
Accrued interest | $ 4,255 | ||||||
Debt converted into shares | shares | 26,398,704 | ||||||
Conversion price per share | $ / shares | $ 0.0015 |
Convertible Notes Payable - Sum
Convertible Notes Payable - Summary of Activity of Convertible Notes Payable and Convertible Debenture (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Debt Disclosure [Abstract] | ||
Balance as of December 31, 2019 | $ 363,769 | |
Issuance of convertible debenture - principal amount | 201,300 | |
Issuance of convertible debenture - debt discount and original issue discount | (201,300) | |
Amortization of debt discount and original issue discount | 202,239 | |
Balance as of March 31, 2020 | $ 566,008 |
Convertible Notes Payable - Sch
Convertible Notes Payable - Schedule of Balance Convertible Debenture Outstanding (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Disclosure [Abstract] | ||
Principal amount outstanding | $ 1,279,390 | $ 1,078,090 |
Less: Unamortized original issue discount | (62,571) | (62,779) |
Less: Unamortized debt discount | (650,811) | (651,542) |
Convertible note payable, net of debt discount | $ 566,008 | $ 363,769 |
Derivative Liability (Details N
Derivative Liability (Details Narrative) | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Origination interest on derivative liability and expensed on origination | $ 118,191 |
Derivative Liability - Schedule
Derivative Liability - Schedule of Conversion Feature of Derivative Liability (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Risk-Free Interest Rate [Member] | ||
Debt measurement input percentage | 1.04 | |
Risk-Free Interest Rate [Member] | Warrants [Member] | ||
Debt measurement input percentage | 2.11 | |
Risk-Free Interest Rate [Member] | Tranche 1 [Member] | ||
Debt measurement input percentage | 2.11 | |
Risk-Free Interest Rate [Member] | Tranche 2 [Member] | ||
Debt measurement input percentage | 1.75 | |
Risk-Free Interest Rate [Member] | Tranche 3 [Member] | ||
Debt measurement input percentage | 1.67 | |
Expected Term [Member] | ||
Debt measurement input term | 10 months 10 days | |
Expected Term [Member] | Warrants [Member] | ||
Debt measurement input term | 1 year 2 months 30 days | |
Expected Term [Member] | Tranche 1 [Member] | ||
Debt measurement input term | 1 year 2 months 30 days | |
Expected Term [Member] | Tranche 2 [Member] | ||
Debt measurement input term | 1 year 11 days | |
Expected Term [Member] | Tranche 3 [Member] | ||
Debt measurement input term | 10 months 21 days | |
Expected Volatility [Member] | ||
Debt measurement input percentage | 154.3 | |
Expected Volatility [Member] | Warrants [Member] | ||
Debt measurement input percentage | 312.4 | |
Expected Volatility [Member] | Tranche 1 [Member] | ||
Debt measurement input percentage | 312.4 | |
Expected Volatility [Member] | Tranche 2 [Member] | ||
Debt measurement input percentage | 303.70 | |
Expected Volatility [Member] | Tranche 3 [Member] | ||
Debt measurement input percentage | 326.88 | |
Expected Dividend Yield [Member] | ||
Debt measurement input percentage | 0 | |
Expected Dividend Yield [Member] | Warrants [Member] | ||
Debt measurement input percentage | 0 | |
Expected Dividend Yield [Member] | Tranche 1 [Member] | ||
Debt measurement input percentage | 0 | |
Expected Dividend Yield [Member] | Tranche 2 [Member] | ||
Debt measurement input percentage | 0 | |
Expected Dividend Yield [Member] | Tranche 3 [Member] | ||
Debt measurement input percentage | 0 | |
Exercise Price of Underlying Common Shares [Member] | ||
Debt measurement input percentage | 0.02 | |
Exercise Price of Underlying Common Shares [Member] | Warrants [Member] | ||
Debt measurement input percentage | 0.08 | |
Exercise Price of Underlying Common Shares [Member] | Tranche 1 [Member] | ||
Debt measurement input percentage | 0.09 | |
Exercise Price of Underlying Common Shares [Member] | Tranche 2 [Member] | ||
Debt measurement input percentage | 0.04 | |
Exercise Price of Underlying Common Shares [Member] | Tranche 3 [Member] | ||
Debt measurement input percentage | 0.04 |
Derivative Liability - Schedu_2
Derivative Liability - Schedule of Derivative Liability Activity (Details) | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Balance as of December 31, 2019 | $ 1,111,879 |
Initial fair value on issuance of convertible debenture | 293,192 |
New warrant issuances | 39,690 |
Common stock warrant exercises | (72,431) |
Change in fair value of derivative liability | 117,754 |
Balance as of March 31, 2020 | 1,490,271 |
Debenture [Member] | |
Balance as of December 31, 2019 | 1,047,977 |
Initial fair value on issuance of convertible debenture | 293,192 |
New warrant issuances | |
Common stock warrant exercises | |
Change in fair value of derivative liability | 149,102 |
Balance as of March 31, 2020 | 1,490,271 |
Warrants [Member] | |
Balance as of December 31, 2019 | 63,902 |
Initial fair value on issuance of convertible debenture | |
New warrant issuances | 39,690 |
Common stock warrant exercises | (72,431) |
Change in fair value of derivative liability | (31,348) |
Balance as of March 31, 2020 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Mar. 29, 2019 | Mar. 31, 2020 | Jan. 31, 2020 | Mar. 31, 2019 | Feb. 28, 2019 | Jan. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 |
Number of shares issued | 8,600,298 | |||||||
Number of shares warrant exercise | 4,170,000 | |||||||
Share issued for services, value | $ 321,100 | |||||||
Preferred stock dividend | $ 2,588 | |||||||
Series B Convertible Preferred Stock [Member] | ||||||||
Preferred stock dividend | 10,350 | |||||||
Common Stock [Member] | ||||||||
Number of shares issued | 8,600,298 | |||||||
Number of shares issued for services | 3,250,000 | |||||||
Share issued for services, value | $ 3,250 | |||||||
Number of options exercised | 500,000 | |||||||
Preferred stock dividend | ||||||||
Bridge Noteholder [Member] | ||||||||
Number of shares issued | 294,994 | |||||||
Consultant [Member] | ||||||||
Number of shares issued | 250,000 | |||||||
Number of shares issued for services | 6,662,312 | |||||||
Share issued for services, value | $ 7,500 | |||||||
Number of options exercised | 500,000 | |||||||
Accounts payable | $ 5,000 | |||||||
Consultant [Member] | Restricted Common Stock [Member] | ||||||||
Number of shares issued for services | 750,000 | |||||||
Durwood Orlando Reece [Member] | ||||||||
Number of shares issued | 1,000,000 | |||||||
Three Unrelated Individuals [Member] | ||||||||
Number of shares issued | 3,000,000 | |||||||
Lender [Member] | ||||||||
Number of shares issued | 26,398,704 | |||||||
Securities Exchange Agreement [Member] | LGBT Loyalty LLC [Member] | ||||||||
Number of restricted common stock, shares | 120,959,996 | |||||||
Common stock, issued and outstanding percentage | 49.99% | |||||||
Securities Exchange Agreement [Member] | Maxim Partners, LLC [Member] | ||||||||
Number of stock issued upon conversion | 8,598,578 | |||||||
Number of stock issued upon conversion, value | $ 388,675 |
Options and Warrants (Details N
Options and Warrants (Details Narrative) - USD ($) | Jan. 25, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 |
Stock based compensation expense | ||||
Number of warrants exercised | 4,170,000 | |||
Grant and exercise of warrants | 2,285,000 | |||
Proceeds from warrant exercises | $ 93,342 | |||
Two Company Executives [Member] | ||||
Warrants issued in exchange for cancellation of salary and interest accruals | $ 348,312 | |||
2012 Equity Incentive Plan [Member] | ||||
Options outstanding | 5,800,000 | 5,800,000 |
Options and Warrants - Summary
Options and Warrants - Summary of Warrant Activity (Details) | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Warrants Outstanding beginning balance | shares | 8,885,000 |
Warrants, Granted | shares | 2,285,000 |
Warrants, Exercised | shares | (4,170,000) |
Warrants, Forfeited | shares | |
Warrants Outstanding ending balance | shares | 7,000,000 |
Weighted Average Exercise Price beginning balance | $ / shares | $ 0.04 |
Weighted Average Exercise Price, Granted | $ / shares | 0.08 |
Weighted Average Exercise Price, Exercised | $ / shares | 0.08 |
Weighted Average Exercise Price, Forfeited | $ / shares | |
Weighted Average Exercise Price ending balance | $ / shares | $ 0.03 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Notes payable to related party | $ 17,885 | $ 17,885 | $ 17,885 | |||
Debt instrument interest rate | 2.00% | 2.00% | 2.00% | |||
Common shares issued for cash, shares | 8,600,298 | |||||
Accrued salaries | $ 348,312 | |||||
Stock-based compensation expense | $ 17,800 | $ 321,100 | ||||
Accrued directors' compensation | $ 123,750 | 123,750 | $ 80,000 | |||
Other receivables related parties | 100,000 | 100,000 | 100,000 | |||
Officers and Executive Director [Member] | ||||||
Accrued salaries | 171,352 | 171,352 | $ 91,352 | |||
Board of Directors [Member] | Warrants [Member] | ||||||
Warrants outstanding | $ 7,000,000 | $ 7,000,000 | ||||
Board of Directors [Member] | Orlando Reece [Member] | ||||||
Common shares issued to board of directors, shares | 1,000,000 | |||||
Stock-based compensation expense | $ 17,800 | |||||
Three Unrelated Individuals [Member] | ||||||
Common shares issued for cash, shares | 3,000,000 | |||||
Common shares issued to board of directors, shares | 3,000,000 | |||||
Stock-based compensation expense | $ 313,600 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | May 26, 2020USD ($)Trading | May 30, 2020shares | Apr. 30, 2020shares | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Debt instrument percentage | 2.00% | 2.00% | |||
Debt principal amount | $ | $ 1,279,390 | $ 1,078,090 | |||
Subsequent Event [Member] | Securities Purchase Agreement [Member] | |||||
Debt instrument purchase price | $ | $ 75,000 | ||||
Debt instrument percentage | 10.00% | ||||
Debt principal amount | $ | $ 85,800 | ||||
Debt instrument maturity date | May 26, 2021 | ||||
Original issue discount rate | 10.00% | ||||
Debt instrument description | The "Variable Conversion Price" shall mean 60% multiplied by the Market Price (as defined herein) (representing a discount rate of 40%). | ||||
Debt instrument trading days | Trading | 20 | ||||
Subsequent Event [Member] | Series B Investor [Member] | |||||
Conversion of preferred stock into common stock | shares | 25,000 | ||||
Subsequent Event [Member] | Series B Preferred Stock [Member] | |||||
Conversion of preferred stock into common stock | shares | 958,333 | ||||
Subsequent Event [Member] | Common Stock Board Members [Member] | |||||
Warrant issued outstanding aggregate | shares | 8,000,000 |