Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 30, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | WYTEC INTERNATIONAL INC | ||
Entity Central Index Key | 1,560,143 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 3,977,310 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash | $ 3,496,516 | $ 2,766,775 |
Accounts receivable, net | 702 | 1,434 |
Prepaid expenses and other current assets | 13,999 | 14,318 |
Related party receivable, CCI, net of allowance of $415,952 | 0 | 0 |
Total current assets | 3,511,217 | 2,782,527 |
Property and equipment, net | 307,670 | 579,788 |
Other assets: | ||
Construction in process | 275,016 | 363,779 |
Total other assets | 275,016 | 363,779 |
Total Assets | 4,093,903 | 3,726,094 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 388,836 | 172,558 |
Deferred revenues, net of commissions | 1,755,000 | 1,930,000 |
Total current liabilities | 2,143,836 | 2,102,558 |
Total Liabilities | 2,143,836 | 2,102,558 |
Stockholders' Equity: | ||
Common stock, $0.001 par value, 495,000,000 shares authorized, 27,990,725 shares and 25,195,333 shares issued, 3,856,277 and 1,060,885 shares outstanding | 27,991 | 25,195 |
Additional paid-in capital | 21,651,837 | 17,160,543 |
Receivable for issuance of common stock | (233,624) | 0 |
Accumulated (deficit) | (14,143,665) | (10,469,000) |
Treasury stock, common stock at cost 24,134,448 shares | (5,100,218) | (5,100,218) |
Total stockholders' equity | 1,950,067 | 1,623,536 |
Total Liabilities and Stockholders' Equity | 4,093,903 | 3,726,094 |
Series A Preferred Stock [Member] | ||
Stockholders' Equity: | ||
Preferred stock 100,000,000 shares authorized: | 3,260 | 3,360 |
Treasury stock preferred | (179,368) | 0 |
Series B Preferred Stock [Member] | ||
Stockholders' Equity: | ||
Preferred stock 100,000,000 shares authorized: | 3,735 | 3,655 |
Treasury stock preferred | (79,882) | 0 |
Series C Preferred Stock [Member] | ||
Stockholders' Equity: | ||
Preferred stock 100,000,000 shares authorized: | $ 1 | $ 1 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 495,000,000 | 495,000,000 |
Common stock, shares issued | 27,990,725 | 25,195,333 |
Common stock, shares outstanding | 3,856,277 | 1,060,885 |
Treasury stock | 24,134,448 | 24,134,448 |
CCI [Member] | ||
Allowance for doubtful accounts | $ 415,952 | |
Series A Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 4,100,000 | 4,100,000 |
Preferred stock, shares issued | 3,260,000 | 3,360,000 |
Preferred stock, shares outstanding | 3,260,000 | 3,360,000 |
Treasury stock | 100,000 | 0 |
Series B Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 6,650,000 | 6,650,000 |
Preferred stock, shares issued | 3,735,784 | 3,655,784 |
Preferred stock, shares outstanding | 3,735,784 | 3,655,784 |
Treasury stock | 44,535 | 0 |
Series C Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000 | 1,000 |
Preferred stock, shares issued | 1,000 | 1,000 |
Preferred stock, shares outstanding | 1,000 | 1,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||
Revenue | $ 48,646 | $ 69,860 |
Cost of sales | 550 | 24,642 |
Gross profit | 48,096 | 45,218 |
Expenses: | ||
Selling, general and administrative | 3,319,620 | 2,926,628 |
Research and development | 10,859 | 6,097 |
Depreciation and amortization | 210,364 | 203,515 |
Operating expenses, net | 3,540,843 | 3,136,240 |
Net operating loss | (3,492,747) | (3,091,022) |
Other income (expense): | ||
Interest income | 190 | 577 |
Impairment of assets | (183,157) | 0 |
Interest expense | 0 | (11,541) |
Gain (loss) on sale of assets | 1,049 | (120) |
Total other income (expense) | (181,918) | (11,084) |
Net loss | $ (3,674,665) | $ (3,102,106) |
Weighted average number of common shares outstanding - basic and fully diluted | 2,052,752 | 476,136 |
Net loss per share - basic and fully diluted | $ (1.79) | $ (6.52) |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' (Deficit) (Unaudited) - USD ($) | Class A Preferred Stock | Class B Preferred Stock | Class C Preferred Stock | Common Stock | Common Treasury Stock | Class A Preferred Treasury Stock [Member] | Class B Preferred Treasury Stock [Member] | Additional Paid-In Capital | Receivable For Issuance of C/S | Accumulated (Deficit) | Total |
Beginning balance, shares at Dec. 31, 2015 | 3,360,000 | 831,161 | 0 | 25,005,000 | 24,529,389 | 0 | 0 | ||||
Beginning balance, value at Dec. 31, 2015 | $ 3,360 | $ 831 | $ 0 | $ 25,005 | $ (4,972,146) | $ 0 | $ 0 | $ 7,976,628 | $ 0 | $ (7,366,894) | $ (4,333,216) |
Purchase of Capaciti Networks, Inc., shares | (609,603) | ||||||||||
Purchase of Capaciti Networks, Inc., value | $ 128,624 | (128,824) | |||||||||
Stock issued new, shares | 1,609,623 | 1,000 | 190,333 | ||||||||
Stock issued new, value | $ 1,609 | $ 1 | $ 190 | 5,081,229 | 5,083,029 | ||||||
Issuance of series B preferred stock for link exchange, shares | 1,215,000 | ||||||||||
Issuance of series B preferred stock for link exchange, value | $ 1,215 | 4,228,785 | 4,230,000 | ||||||||
Warrants issued | 2,725 | 2,725 | |||||||||
Exchange of related party receivable for common stock, shares | 214,662 | ||||||||||
Exchange of related party receivable for common stock, value | $ (256,896) | (256,896) | |||||||||
Net loss | (3,102,106) | (3,102,106) | |||||||||
Ending balance, shares at Dec. 31, 2016 | 3,360,000 | 3,655,784 | 1,000 | 25,195,333 | 24,134,448 | 0 | 0 | ||||
Ending balance, value at Dec. 31, 2016 | $ 3,360 | $ 3,655 | $ 1 | $ 25,195 | $ (5,100,218) | $ 0 | $ 0 | 17,160,543 | 0 | (10,469,000) | 1,623,536 |
Stock issued new, shares | 40,000 | 2,685,392 | |||||||||
Stock issued new, value | $ 40 | $ 2,686 | 4,105,378 | (233,624) | 3,874,480 | ||||||
Issuance of series B preferred stock for link exchange, shares | 50,000 | ||||||||||
Issuance of series B preferred stock for link exchange, value | $ 50 | 174,950 | 195,000 | ||||||||
Conversion of preferred, shares converted | (100,000) | (10,000) | 110,000 | ||||||||
Conversion of preferred, common shares issued | (100) | (10) | 110 | ||||||||
Warrants issued | 210,966 | 210,966 | |||||||||
Purchase of treasury stock, shares | 100,000 | 44,535 | |||||||||
Purchase of treasury stock, value | $ (179,368) | $ (79,882) | (259,250) | ||||||||
Net loss | (3,674,665) | (3,674,665) | |||||||||
Ending balance, shares at Dec. 31, 2017 | 3,260,000 | 3,735,784 | 1,000 | 27,990,725 | 24,134,448 | 100,000 | 44,535 | ||||
Ending balance, value at Dec. 31, 2017 | $ 3,260 | $ 3,735 | $ 1 | $ 27,991 | $ (5,100,218) | $ (179,368) | $ (79,882) | $ 21,651,837 | $ (233,624) | $ (14,143,665) | $ 1,950,067 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unuadited) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities | ||
Net loss | $ (3,674,665) | $ (3,102,106) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Wytec warrants issued for services | 210,966 | 2,725 |
Depreciation | 210,364 | 203,515 |
Impairment of assets | 183,157 | 0 |
(Gain) loss on asset disposal | (1,049) | 120 |
Decrease (increase) in assets: | ||
Accounts receivable | 732 | (1,217) |
Related party receivables | 0 | (343,257) |
Prepaid expenses and other assets | 319 | (12,854) |
Increase (decrease) in liabilities: | ||
Accounts payable and accrued expenses | 216,278 | 11,545 |
Deferred revenues | 0 | 263,501 |
Net cash used in operating activities | (2,853,898) | (2,978,028) |
Cash flows from investing activities | ||
Purchase of construction in progress equipment | (31,591) | 0 |
Refund of link | 0 | (385,000) |
Net cash used in investing activities | (31,591) | (385,000) |
Cash flows from financing activities | ||
Principal payments on short term and convertible debts | 0 | 0 |
Proceeds from issuance of common stock | 3,754,480 | 253,642 |
Proceeds from issuance of preferred stock | 120,000 | 4,829,387 |
Purchase of treasury stock | (259,250) | 0 |
Net cash provided by financing activities | 3,615,230 | 5,083,029 |
Net increase in cash | 729,741 | 1,720,001 |
Cash - beginning | 2,766,775 | 1,046,774 |
Cash - ending | 3,496,516 | 2,766,775 |
Supplemental Disclosures | ||
Interest paid | 0 | 11,541 |
Income taxes paid | 0 | 0 |
Non-Cash Investing and Financing Activities | ||
Issuance of preferred stock in exchange for deferred revenue obligations | 175,000 | 4,160,000 |
Issuance of preferred stock in exchange for registered link and equipment | 0 | 70,000 |
Sale of peroperty and equipment in exchange for deferred revenue obligations | $ 0 | $ 35,000 |
A. Significant Accounting Polic
A. Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Description of Business and Principles of Consolidation: Wylink Inc., a Texas corporation and wholly owned subsidiary, has been engaged in the sale of Federal Communications Commission (“FCC”) registered links participating in the 70 and 80 gigahertz licensed frequency program (the “Program”). The Program allows qualified individuals to own a segment of the “backhaul” infrastructure of Wytec’s city-wide business deployment. Wytec, LLC, a Delaware limited liability company, formed September 7, 2012 and previously managed by General Patent Corporation (“GPC”), holds a partial ownership in patents focused on high capacity millimeter wave technology. On September 20, 2016, General Patent Corporation, the then Managing Partner of Wytec, LLC, assigned its partial ownership in the patents to Wytec, thereby terminating its role as Managing Partner. Capaciti Networks, Inc. (“Capaciti”), a Texas corporation, has been engaged in the sale of wired and wireless services, including products, wireless data cards, back office platform and rate plans to their commercial and enterprise clients. In November 2016, Capaciti was purchased by Wytec from Competitive Companies, Inc., a related party entity through common control. Wytec accounted for the acquisition as a common control transaction and change in reporting entity. The financial results for Wytec International, Inc. have been retrospectively adjusted to include the financial results of Capaciti in the current and prior periods as though the transaction occurred at the beginning of each period presented. The Capaciti transaction proceeds are reflected as an equity transaction during the period the transaction occurred, which was in the period ended December 31, 2016. Refer to Note G for additional detail of this transaction. Collectively, Wytec and its subsidiaries, are referred to as “the Company.” Basis of Accounting: Revenue Recognition: Cash and Cash Equivalents: Allowance for Doubtful Accounts: Construction in Process: Property and Equipment: Impairment of Assets: During the course of a strategic review of its assets, the Company assessed the recoverability of the carrying value of certain fixed assets and construction in process, this resulted in impairment losses of $183,157. These losses reflect the amounts by which the carrying values of these assets exceed their estimated fair values determined by their estimated future discounted cash flows. Deferred Revenue: Income Taxes: The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. As of December 31, 2017 and 2016, the Company has applied a full valuation allowance against its net tax assets. Fair Value of Financial Instruments: Concentrations of Credit Risk: Government Regulations: Subsequent Events: New Accounting Pronouncements: In February 2016, FASB issued ASU No. 2016-02, Leases, requiring entities that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. For leases which meet the criteria of short-term, lessees may elect an accounting policy to not recognize lease assets and liabilities and expense lease payments on a straight-line basis. A short-term lease is one in which the lease term is 12 months or less and there is not an option to purchase the underlying asset that the lessee is reasonably certain to exercise. Under current GAAP, lessees apply a classification test to determine the accounting for the lease arrangements as either capital leases, whereby the lease assets and liabilities would be recognized on the balance sheet, or operating leases, whereby the lessees would not recognize lease assets and liabilities. This ASU will be effective for the Company for the year ending December 31, 2019, and for interim periods therein. The effect of the new standard is not expected to materially influence the Company’s financial statements. Use of Estimates: |
B. Going Concern
B. Going Concern | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | The consolidated financial statements are prepared using U.S. generally accepted accounting principles applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred continuous losses from operations, has an accumulated deficit of $14,143,665 at December 31, 2017, and reported cash used by operations of $2,853,898 for the year ended December 31, 2017 . In addition, the Company expects to have ongoing requirements for capital investment to implement its business plan. Finally, the Company’s ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered by entrance into established markets and the competitive environment in which it operates. Since inception, operations have primarily been funded through private equity financing. Management expects to continue to seek additional funding through private or public equity sources and will seek debt financing. The Company’s ability to continue as a going concern is ultimately dependent on its ability to generate sufficient cash from operations to meet cash needs and/or to raise funds to finance ongoing operations and repay debt. There can be no assurance that the Company will be successful in these efforts. These factors, among others, indicate that the Company may be unable to continue as a going concern for a reasonable period of time. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or the amounts and classification of liabilities that might be necessary should it be unable to continue as a going concern. |
C. Property and Equipment
C. Property and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and equipment consist of the following: December 31, December 31, 2017 2016 Telecommunication equipment and computers $ 999,756 $ 1,062,677 Less: accumulated depreciation (692,086 ) (482,889 ) $ 307,670 $ 579,788 |
D. Warrants
D. Warrants | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Warrants | The Company has common stock purchase warrants outstanding at December 31, 2017 to purchase 1,850,246 shares of common stock exercisable on various dates through June 30, 2018. The warrants are exercisable at the following amounts and rates: 1,731,104 of which are exercisable at an exercise price of $5.00 per share, and 119,142 of which are exercisable at a price of $1.50. The following is a summary of activity and outstanding common stock warrants: # of Warrants Balance, December 31, 2015 2,805,672 Warrants granted 4,680,608 Warrants exercised (207,000 ) Warrants expired (170,000 ) Balance, December 31, 2016 7,109,280 Warrants granted 386,477 Warrants exercised (2,585,392 ) Warrants expired (3,060,119 ) Balance, December 31, 2017 1,850,246 Exercisable, December 31, 2017 1,850,246 During 2017, 296,477 warrants were issued for non-employee compensation expense and 1,850,246 warrants were modified to lengthen their expiration date. The total expense recognized related to these issuances was $103,941 and the total expense recognized related to the modifications was $107,025. These warrants were accounted for with the Black-Scholes option pricing model using a dividend yield of 0%, volatility of 40%, a risk-free rate of 2.00% and expected life ranging from one to eight months. Additionally, 90,000 warrants were issued in connection with Link exchanges. During 2016, 5,000 warrants were issued for non-employee compensation expense. The total expense recognized related to these issuances was $2,725. These warrants were accounted for with the Black-Scholes option pricing model using a dividend yield of 0%, volatility of 50%, a risk-free rate of 5.00% and expected life one year and nine months. |
E. Stockholders' Equity
E. Stockholders' Equity | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | Holders of common stock are entitled to one vote per share. The common stock does not have cumulative voting rights in the election of directors. Accordingly, the holders of a majority of the outstanding shares of common stock entitled to vote in any election of directors may elect all of the directors standing for election. Subject to preferential rights with respect to any series of preferred stock that may be issued, holders of the common stock are entitled to receive ratably such dividends as may be declared by the board of directors on the common stock out of funds legally available therefore and, in the event of liquidation, dissolution or winding-up of affairs, are entitled to share equally and ratably in all the remaining assets and funds. Series A preferred stock is nonvoting capital stock, but may be converted into voting common stock. Each share of series A preferred stock is convertible at the option of the holder at any time after the issuance into one share of common stock, subject to adjustment from time to time in the event (i) the Company subdivides or combines its outstanding common stock into a greater or smaller number of shares, including stock splits and stock dividends; or (ii) of a reorganization or reclassification of common stock, the consolidation or merger with or into another company, the sale, conveyance or other transfer of substantially all of the Company assets to another corporation or other similar event, whereby securities or other assets are issuable or distributable to the holders of the outstanding common stock upon the occurrence of any such event; or (iii) of the issuance to the holders of Company common stock of securities convertible into, or exchangeable for, such shares of common stock. Each outstanding share of series A preferred stock will automatically convert into one share of common stock (a) if the common stock commences public trading on the NASDAQ capital market or better, (b) if the series A preferred stockholder receives distributions from the net profits pool equal to the original purchase price paid for their registered links, or (c) five years after the date of issuance of the series A preferred stock. The Company does not have any other right to require a conversion of the series A preferred stock into common stock. The Company does not have the option to redeem outstanding shares of series A preferred stock. A holder of the series A preferred stock has no preemptive rights to subscribe for any additional shares of any class of stock or for any issue of bonds, notes or other securities convertible into any class of stock. In the event of a liquidation, dissolution or winding-up whether voluntary or otherwise, after payment of debts and other liabilities, the holders of the series A preferred stock will be entitled to receive from the remaining net assets, before any distribution to the holders of the common stock, the amount of $1.50 per share. After payment of the liquidation preference to the holders of series A preferred stock and payment of any other distributions that may be required with respect to any other series of preferred stock, the remaining assets, if any, will be distributed ratably to the holders of the common stock and the holders of the series A preferred stock on an as-if converted basis. The series B preferred stock is voting capital stock. The holders of the series B preferred stock will vote on an as-converted basis with the common stock on all matters submitted to a vote of the shareholders. The holders of the series B preferred stock are not entitled to any dividends unless and until the series B preferred stock is converted into common stock. Each share of series B preferred stock is convertible at the option of the holder at any time after issuance into one share of common stock, subject to adjustment from time to time in the event (i) the Company subdivides or combines into outstanding common stock into a greater or smaller number of shares, including stock splits and stock dividends; or (ii) of a reorganization or reclassification of common stock, the consolidation or merger with or into another company, the sale, conveyance or other transfer of substantially all of the Company assets to another corporation or other similar event, whereby securities or other assets are issuable or distributable to the holders of the outstanding common stock upon the occurrence of any such event; or (iii) of the issuance by us to the holders of common stock of securities convertible into, or exchangeable for, such shares of common stock. Each outstanding share of series B preferred stock will automatically convert into one share of common stock at a conversion rate equal to the lesser of $3.00 per share or 75% of the average closing price of the Company’s common stock as quoted on the public securities trading market on which our common stock is then traded with the highest volume, for ten (10) consecutive trading days immediately after the first day of public trading of common stock if common stock commences public trading on the NASDAQ capital market or better, but in any event no less than $2.50 per share or at $3.00 per share five years after the date of issuance of the series B preferred stock. In the event of a liquidation, dissolution or winding-up whether voluntary or otherwise, after payment of debts and other liabilities, the holders of the series B preferred stock will be entitled to receive from the remaining net assets, before any distribution to the holders of the common stock, and pari pasu with the payment of a liquidation preference of $1.50 per share to the holders of the series A preferred stock, the amount of $3.00 per share. After payment of the liquidation preference to the holders of the series A preferred stock and the series B preferred stock, and payment of any other distribution that may be required with respect to any other series of preferred stock, the remaining assets, if any, will be distributed ratably to the holders of the common stock, the holders of the series A preferred stock, and the holders of the series B preferred stock on an as-if converted basis. The series C preferred stock is voting capital stock. For so long as any shares of the series C preferred stock remain issued and outstanding, the holders thereof, voting separately as a class, shall have the right, on or after July 20, 2016, to vote in an amount equal to 51% of the total vote (representing a super majority voting power) with respect to all matters submitted to a vote of the shareholders of Wytec. Such vote shall be determined by the holder(s) of a majority of the then issued and outstanding shares of series C preferred stock. For example, if there are 10,000 shares of our common stock issued and outstanding at the time of such shareholder vote, the holders of the series C preferred stock, voting separately as a class, will have the right to vote an aggregate of 10,408 shares, out of a total number of 20,408 shares voting. Additionally, the Company is prohibited from adopting any amendments to the Company’s bylaws or articles of incorporation, as amended, making any changes to the certificate of designation establishing the series C preferred stock, or effecting any reclassification of the series C preferred stock, without the affirmative vote of at least 66-2/3% of the outstanding shares of series C preferred stock. The Company may, however, by any means authorized by law and without any vote of the holders of shares of series C preferred stock, make technical, corrective, administrative or similar changes to such certificate of designation that do not, individually or in the aggregate, adversely affect the rights or preferences of the holders of shares of series C preferred stock. The holders of the series C preferred stock are not entitled to any dividends. Holders of the series C preferred stock have no conversion rights. The shares of the series C preferred stock shall be automatically redeemed by us at their par value on the first to occur of the following: (i) on the date that Mr. Gray ceases, for any reason, to serve as officer, director or consultant of Wytec, or (ii) on the date that our shares of common stock first trade on any national securities exchange provided that the listing rules of any such exchange prohibit preferential voting rights of a class of securities of Wytec, or listing on any such national securities exchange is conditioned upon the elimination of the preferential voting rights of the series C preferred stock set forth in the certificate of designation. A holder of the series C preferred stock has no preemptive rights to subscribe for any additional shares of any class of stock of Wytec or for any issue of bonds, notes or other securities convertible into any class of stock of Wytec. The holders of the Series C Preferred Stock are not entitled to any liquidation preference. During 2014 through December 31, 2017, Wytec issued shares of its Series A Preferred Stock and Series B Preferred Stock, along with warrants to purchase Wytec common stock, to outside investors in consideration for the repurchase of registered links from third party owners who had previously purchased them from a subsidiary of Wytec. During year 2014, Wytec issued a total of 3,360,000 shares of its Series A Preferred Stock in exchange for a total of 168 registered links held by third party owners. Twenty-thousand (20,000) shares were issued for each of the 168 registered links exchanged, resulting in an effective value per share of approximately $1.41 since the registered links were originally sold for an average price of approximately $28,150 per link. Setting the exchange price at 20,000 shares was a discretionary decision which established the initial basis for capitalization. During 2016, Wytec issued 1,215,000 shares of its Series B Preferred Stock and 1,215,000 warrants to purchase Wytec common stock in exchange for a total of 121.5 registered links held by third party owners. During 2017, Wytec issued 50,000 shares of its Series B Preferred Stock and 50,000 warrants to purchase Wytec common stock in exchange for a total of 5 registered links held by third party owners. Ten-thousand (10,000) shares were issued for each of the 126.5 registered links exchanged. In each of these exchanges the Company issued preferred stock, and in some cases Wytec warrants, to the registered link holders in consideration for which the Company either acquired an installed and operational register link or satisfied a deferred revenue obligation associated with the registered Link. |
F. Income Taxes
F. Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows at December 31, 2017: December 31, December 31, 2017 2016 Deferred tax assets: Net operating loss carry forwards $ 2,700,000 $ 3,050,000 Less: Valuation allowance (2,700,000 ) (3,050,000 ) Net deferred tax assets $ – $ – On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was enacted. The Tax Act includes, among other items, a reduction of the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018. The Tax Act makes broad and complex changes to the U.S. tax code. Staff Accounting Bulletin No. 118 (SAB 118) provides guidance that allows registrants to provide a reasonable estimate of the Tax Act in their financial statements and adjust the reported impact in a measurement period not to exceed one year. At December 31, 2017, the Company made a reasonable estimate of the effects of the Tax Act on its existing deferred tax balances. As the Company records a full valuation allowance to offset deferred tax assets, no change in the net deferred tax assets occurred. The Company will continue to refine its calculations as additional analysis is completed. In addition, the Company’s estimates may also be affected as it gains a more thorough understanding of the tax law. The Company has net operating loss carryforwards for tax purposes of approximately $12.97 million that begin to expire in the year 2032. Management has reviewed its net deferred asset position, and due to the history of operating losses has determined that the application of a full valuation allowance against its net deferred tax asset at December 31, 2017 and December 31, 2016 is warranted. As of December 31, 2017, the Company had not accrued any interest or penalties related to uncertain tax positions. The Company does not have a liability for state taxes at either December 31, 2017 or December 31, 2016. The federal income tax benefit expected by the application of the corporate income tax rates to pre-tax net loss differs from the actual benefit recognized due to the valuation allowance recorded for 2017 and 2016. |
G. Related Party Transactions
G. Related Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Shared Services: Purchase of Capaciti: |
H. Treasury Stock
H. Treasury Stock | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Treasury Stock | The Company, through negotiations with CCI, entered into an agreement to purchase back shares of stock held by CCI in exchange for the amount of outstanding receivables from CCI. During 2016, the Company purchased 214,662 shares of its common stock to settle $256,895 of accounts receivable due from CCI. On November 17, 2016, the Company acquired 100% of the outstanding equity in Capaciti Networks, Inc. in consideration for the issuance of 609,603 shares of the Company’s common stock to CCI. |
I. Leases
I. Leases | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
Leases | The Company has entered into multiple rooftop lease agreements for the placement of equipment used in the build out of the Company’s millimeter wave network. The monthly lease payments range from $100 to $575 per month and the leases expire from 2018 to 2024. Rent expense for these leases totaled approximately $74,479 for the year ended December 31, 2017. Total rent expense for office space, equipment storage space and rooftop equipment placement was $139,337 and $137,850 for the years ended December 31, 2017 and 2016, respectively. As of December 31, 2017, the future minimum lease payments are as follows: Year Ended December 31, Amount 2018 $ 109,690 2019 33,100 2020 32,350 2021 32,800 2022 32,950 Thereafter 29,800 $ 270,690 |
J. Redemption Agreement
J. Redemption Agreement | 12 Months Ended |
Dec. 31, 2017 | |
J. Redemption Agreement | |
Redemption Agreement | On December 29, 2017, the Company entered into a redemption and mutual general release agreement with the Armel Family Trust. The agreement provided for a cash payment by the Company totaling $256,250 in exchange for the following equity securities in the Company, (a) 100,000 shares of Wytec International, Inc. Series A Preferred Stock, and (b) 44,535 shares of Wytec International, Inc. Series B Preferred Stock,. In connection with that transaction, the Company paid an additional $5,075 to the Armel Family Trust which was subsequently repaid to the Company by the Chief Executive Officer, and an additional $3,000 to purchase from it 390 shares of outstanding Wytec common stock, 780 outstanding Wytec Spin-Off Warrants, and 150,000 shares of outstanding CCI common stock. The transaction was completed in February 2018. At December 31, 2017, $259,250 has been recorded by the Company to accrued expenses. |
K. Subsequent Events
K. Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | In January 2018, the Company authorized the payment of a cash bonus of $ 26,912 to its chief executive officer. In January 2018, the Company re-hired Robert Merola as the Chief Technical Officer. In January 2018, the Company issued 119,142 shares of common stock to three investors pursuant to the exercise of warrants. In January 2018, the Company received $5,000 from one shareholder for the exercise of 1,000 spin-off warrants for the issuance of 1,000 common stock shares. In February 2018, the Company received $2,605 from one shareholder for the exercise of 521 spin-off warrants for the issuance of 521 common stock shares. In March 2018, the Company received $6,775 from one shareholder for the exercise of 1,355 spin-off warrants for the issuance of 1,355 common stock shares In March, the Company loaned $3,481 to Competitive Companies, Inc. under the LOC. |
A. Significant Accounting Pol18
A. Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Description of Business and Principles of Consolidation | Description of Business and Principles of Consolidation: Wylink Inc., a Texas corporation and wholly owned subsidiary, has been engaged in the sale of Federal Communications Commission (“FCC”) registered links participating in the 70 and 80 gigahertz licensed frequency program (the “Program”). The Program allows qualified individuals to own a segment of the “backhaul” infrastructure of Wytec’s city-wide business deployment. Wytec, LLC, a Delaware limited liability company, formed September 7, 2012 and previously managed by General Patent Corporation (“GPC”), holds a partial ownership in patents focused on high capacity millimeter wave technology. On September 20, 2016, General Patent Corporation, the then Managing Partner of Wytec, LLC, assigned its partial ownership in the patents to Wytec, thereby terminating its role as Managing Partner. Capaciti Networks, Inc. (“Capaciti”), a Texas corporation, has been engaged in the sale of wired and wireless services, including products, wireless data cards, back office platform and rate plans to their commercial and enterprise clients. In November 2016, Capaciti was purchased by Wytec from Competitive Companies, Inc., a related party entity through common control. Wytec accounted for the acquisition as a common control transaction and change in reporting entity. The financial results for Wytec International, Inc. have been retrospectively adjusted to include the financial results of Capaciti in the current and prior periods as though the transaction occurred at the beginning of each period presented. The Capaciti transaction proceeds are reflected as an equity transaction during the period the transaction occurred, which was in the period ended December 31, 2016. Refer to Note G for additional detail of this transaction. Collectively, Wytec and its subsidiaries, are referred to as “the Company.” |
Basis of Accounting | Basis of Accounting: |
Revenue Recognition | Revenue Recognition: |
Cash and Cash Equivalents | Cash and Cash Equivalents: |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts: |
Construction in Process | Construction in Process: |
Property and Equipment | Property and Equipment: |
Impairment of Assets | Impairment of Assets: During the course of a strategic review of its assets, the Company assessed the recoverability of the carrying value of certain fixed assets and construction in process, this resulted in impairment losses of $183,157. These losses reflect the amounts by which the carrying values of these assets exceed their estimated fair values determined by their estimated future discounted cash flows. |
Deferred Revenue | Deferred Revenue: |
Income Taxes | Income Taxes: The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. As of December 31, 2017 and 2016, the Company has applied a full valuation allowance against its net tax assets. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments: |
Concentrations of Credit Risk | Concentrations of Credit Risk: |
Government Regulations | Government Regulations: |
Subsequent Events | Subsequent Events: |
New Accounting Pronouncements | New Accounting Pronouncements: In February 2016, FASB issued ASU No. 2016-02, Leases, requiring entities that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. For leases which meet the criteria of short-term, lessees may elect an accounting policy to not recognize lease assets and liabilities and expense lease payments on a straight-line basis. A short-term lease is one in which the lease term is 12 months or less and there is not an option to purchase the underlying asset that the lessee is reasonably certain to exercise. Under current GAAP, lessees apply a classification test to determine the accounting for the lease arrangements as either capital leases, whereby the lease assets and liabilities would be recognized on the balance sheet, or operating leases, whereby the lessees would not recognize lease assets and liabilities. This ASU will be effective for the Company for the year ending December 31, 2019, and for interim periods therein. The effect of the new standard is not expected to materially influence the Company’s financial statements. |
Use of Estimates | Use of Estimates: |
C. Property and Equipment (Tabl
C. Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment Schedule | December 31, December 31, 2017 2016 Telecommunication equipment and computers $ 999,756 $ 1,062,677 Less: accumulated depreciation (692,086 ) (482,889 ) $ 307,670 $ 579,788 |
D. Warrants (Tables)
D. Warrants (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Schedule of warrant activity | # of Warrants Balance, December 31, 2015 2,805,672 Warrants granted 4,680,608 Warrants exercised (207,000 ) Warrants expired (170,000 ) Balance, December 31, 2016 7,109,280 Warrants granted 386,477 Warrants exercised (2,585,392 ) Warrants expired (3,060,119 ) Balance, December 31, 2017 1,850,246 Exercisable, December 31, 2017 1,850,246 |
F. Income Taxes (Tables)
F. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of deferred income taxes | December 31, December 31, 2017 2016 Deferred tax assets: Net operating loss carry forwards $ 2,700,000 $ 3,050,000 Less: Valuation allowance (2,700,000 ) (3,050,000 ) Net deferred tax assets $ – $ – |
I. Leases (Tables)
I. Leases (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
Leases | Year Ended December 31, Amount 2018 $ 109,690 2019 33,100 2020 32,350 2021 32,800 2022 32,950 Thereafter 29,800 $ 270,690 |
A. Significant Accounting Pol23
A. Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | ||
Allowance for doubtful accounts | $ 0 | $ 0 |
Asset impairment charges | $ 183,157 | $ 0 |
B. Going Concern (Details Narra
B. Going Concern (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated deficit | $ (14,143,665) | $ (10,469,000) |
Cash used in operations | $ (2,853,898) | $ (2,978,028) |
C. Property and Equipment (Deta
C. Property and Equipment (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Abstract] | ||
Telecommunication equipment and computers | $ 999,756 | $ 1,062,677 |
Less: accumulated depreciation | (692,086) | (482,889) |
Property and equipment, net | $ 307,670 | $ 579,788 |
D. Warrants (Details)
D. Warrants (Details) - Warrants [Member] - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number of warrants outstanding, beginning balance | 7,109,280 | 2,805,672 |
Number of warrants granted | 386,477 | 4,680,608 |
Number of warrants exercised | (2,585,392) | (207,000) |
Number of warrants expired | (3,060,119) | (170,000) |
Number of warrants outstanding, ending balance | 1,850,246 | 7,109,280 |
Number of warrants exercisable | 1,850,246 |
D. Warrants (Details Narrative)
D. Warrants (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Warrants [Member] | |||
Warrants outstanding | 1,850,246 | 7,109,280 | 2,805,672 |
Warrants exercisable | 1,850,246 | ||
Warrants issued | 386,477 | 4,680,608 | |
Dividend yield | 0.00% | 0.00% | |
Volatility | 40.00% | 50.00% | |
Risk-free interest rate | 2.00% | 5.00% | |
Expected life | 8 months | 1 year 8 months | |
Warrants [Member] | Link Exchanges [Member] | |||
Warrants issued | 90,000 | ||
Warrants [Member] | Modification of Expiration Date [Member] | |||
Warrant expense | $ 107,025 | ||
Warrants [Member] | Non-Employee Compensation [Member] | |||
Warrants issued | 296,477 | 5,000 | |
Warrant expense | $ 103,941 | $ 2,725 | |
Warrant 1 [Member] | |||
Warrants exercisable | 1,731,104 | ||
Exercise price | $ 5 | ||
Warrant 2 [Member] | |||
Warrants exercisable | 119,142 | ||
Exercise price | $ 1.50 |
E. Stockholders' Equity (Defici
E. Stockholders' Equity (Deficit) (Details Narrative) | 12 Months Ended | |
Dec. 31, 2017Decimalshares | Dec. 31, 2016Decimalshares | |
Series B Preferred Stock [Member] | ||
Stock issued | 50,000 | 1,215,000 |
Warrants [Member] | ||
Stock issued | 50,000 | 1,215,000 |
Registered Links [Member] | ||
Registered links received | Decimal | 5 | 121.5 |
F. Income Taxes (Details)
F. Income Taxes (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 2,700,000 | $ 3,050,000 |
Less: Valuation allowance | (2,700,000) | (3,050,000) |
Net deferred tax assets | $ 0 | $ 0 |
F. Income Taxes (Details Narrat
F. Income Taxes (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Income Tax Disclosure [Abstract] | |
Net operating loss carryforward | $ 12,970,000 |
Loss carryforward beginning expiration date | Dec. 31, 2032 |
Uncertain tax positions | $ 0 |
G. Related Party Transactions (
G. Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues | $ 48,646 | $ 69,860 |
Operating Loss | (3,492,747) | (3,091,022) |
Net Loss | (3,674,665) | $ (3,102,106) |
Capaciti [Member] | ||
Stock issued for acquisition, shares | 609,603 | |
Revenues | $ 48,716 | |
Operating Loss | 68,925 | |
Net Loss | 68,925 | |
CCI [Member] | ||
Gross receivable | 415,952 | 0 |
Allowance for doubtful accounts | 415,952 | |
CCI [Member] | Shared Services [Member] | ||
Administrative expense | $ 415,952 | $ 744,690 |
H. Treasury Stock (Details Narr
H. Treasury Stock (Details Narrative) - Capaciti [Member] | 12 Months Ended |
Dec. 31, 2016USD ($)shares | |
Treasury stock purchased, shares | 214,662 |
Treasury stock used to settle accounts receivable | $ | $ 256,895 |
Treausry stock used for purchase of equity | 609,603 |
I. Leases (Details)
I. Leases (Details) | Dec. 31, 2017USD ($) |
Leases [Abstract] | |
2,018 | $ 109,690 |
2,019 | 33,100 |
2,020 | 32,350 |
2,021 | 32,800 |
2,022 | 32,950 |
Thereafter | 29,800 |
Total | $ 270,690 |
I. Leases (Details Narrative)
I. Leases (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Rent expense | $ 139,337 | $ 137,850 |
Rooftop Lease Agreements [Member] | ||
Rent expense | $ 77,479 |
J. Redemption Agreement (Detail
J. Redemption Agreement (Details Narrative) | Dec. 31, 2017USD ($) |
J. Redemption Agreement | |
Redemption and mutual release agreement accrual | $ 259,250 |