Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Apr. 05, 2019 | Jun. 30, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | WYTEC INTERNATIONAL INC | ||
Entity Central Index Key | 0001560143 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
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 | Non-accelerated Filer | ||
Entity Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 4,993,789 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 | ||
Entity Small Business | true | ||
Entity Emerging Growth | false | ||
Entity Shell Company | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash | $ 1,721,135 | $ 3,496,516 |
Accounts receivable, net | 23,461 | 702 |
Prepaid expenses and other current assets | 10,425 | 13,999 |
Related party receivable, CCI, net of allowance of $419,433 | 0 | 0 |
Total current assets | 1,755,021 | 3,511,217 |
Property and equipment, net | 191,454 | 307,670 |
Other assets: | ||
Construction in process, net | 144,994 | 275,016 |
Total other assets | 144,994 | 275,016 |
Total Assets | 2,091,469 | 4,093,903 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 228,458 | 388,836 |
Deferred revenues, net of commissions | 1,320,000 | 1,755,000 |
Total current liabilities | 1,548,458 | 2,143,836 |
Total Liabilities | 1,548,458 | 2,143,836 |
Stockholders' Equity: | ||
Common stock, $0.001 par value, 495,000,000 shares authorized, 29,106,998 shares and 27,990,725 shares issued, 4,972,550 and 3,856,277 shares outstanding | 29,107 | 27,991 |
Additional paid-in capital | 23,131,864 | 21,651,837 |
Receivable for issuance of common stock | 0 | (233,624) |
Accumulated (deficit) | (17,264,788) | (14,143,665) |
Treasury stock: Common stock, at cost, 24,134,448 shares and 24,134,448 shares | (5,100,218) | (5,100,218) |
Total stockholders' equity | 543,011 | 1,950,067 |
Total Liabilities and Stockholders' Equity | 2,091,469 | 4,093,903 |
Series A Preferred Stock [Member] | ||
Stockholders' Equity: | ||
Preferred stock, $0.001 par value 20,000,000 shares authorized: | 2,560 | 3,360 |
Treasury stock preferred | (179,368) | (179,368) |
Series B Preferred Stock [Member] | ||
Stockholders' Equity: | ||
Preferred stock, $0.001 par value 20,000,000 shares authorized: | 3,735 | 3,735 |
Treasury stock preferred | (79,882) | (79,882) |
Series C Preferred Stock [Member] | ||
Stockholders' Equity: | ||
Preferred stock, $0.001 par value 20,000,000 shares authorized: | $ 1 | $ 1 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 495,000,000 | 495,000,000 |
Common stock, shares issued | 26,106,998 | 27,990,725 |
Common stock, shares outstanding | 4,972,550 | 3,856,277 |
Treasury stock | 24,134,448 | 24,134,448 |
CCI [Member] | ||
Allowance for doubtful accounts | $ 419,433 | $ 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 | 2,560,000 | 3,260,000 |
Preferred stock, shares outstanding | 2,460,000 | 3,160,000 |
Treasury stock | 100,000 | 100,000 |
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 | 3,691,249 |
Preferred stock, shares outstanding | 3,735,784 | 3,691,249 |
Treasury stock | 44,535 | 44,535 |
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, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
Revenue | $ 305,712 | $ 48,646 |
Cost of sales | 201,279 | 550 |
Gross profit | 104,433 | 48,096 |
Expenses: | ||
Selling, general and administrative | 2,885,039 | 3,319,620 |
Research and development | 23,741 | 10,859 |
Depreciation and amortization | 184,360 | 210,364 |
Operating expenses, net | 3,093,140 | 3,540,843 |
Net operating loss | (2,988,707) | (3,492,747) |
Other income (expense): | ||
Interest income | 192 | 190 |
Impairment of assets | (132,608) | (183,157) |
Gain loss on sale of assets | 0 | 1,049 |
Total other income (expense) | (132,416) | (181,918) |
Net loss | $ (3,121,123) | $ (3,674,665) |
Weighted average number of common shares outstanding - basic and fully diluted | 4,190,204 | 2,052,752 |
Net loss per share - basic and fully diluted | $ (0.74) | $ (1.79) |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' (Deficit) (Unaudited) - USD ($) | Series A Preferred Stock [Member] | Series B Preferred Stock [Member] | Series C Preferred Stock [Member] | 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, 2016 | 3,360,000 | 3,655,784 | 1,000 | 25,195,333 | 24,134,448 | 0 | 0 | ||||
Beginning 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 based payments for services | 210,966 | 210,966 | |||||||||
Issuance of series B preferred stock, shares | 40,000 | ||||||||||
Issuance of series B preferred stock, value | $ 40 | 119,960 | 120,000 | ||||||||
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 | 175,000 | ||||||||
Conversion of preferred, shares converted | (100,000) | (10,000) | |||||||||
Conversion of preferred, amount converted | $ (100) | $ (10) | |||||||||
Conversion of preferred, common shares issued | 110,000 | ||||||||||
Conversion of preferred, amount issued | $ 110 | ||||||||||
Stock issued new, shares | 2,685,392 | ||||||||||
Stock issued new, value | $ 2,686 | 3,985,418 | (233,624) | 3,754,480 | |||||||
Purchase of treasury stock, shares | 100,000 | 44,535 | |||||||||
Purchase of treasury stock, value | $ (179,368) | $ (79,882) | (259,250) | ||||||||
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 |
Stock based payments for services | 16,075 | 16,075 | |||||||||
Conversion of preferred, shares converted | (700,000) | ||||||||||
Conversion of preferred, amount converted | $ (700) | ||||||||||
Conversion of preferred, common shares issued | 700,000 | ||||||||||
Conversion of preferred, amount issued | $ 700 | ||||||||||
Stock issued new, shares | 416,143 | ||||||||||
Stock issued new, value | $ 416 | 1,463,952 | 233,624 | 1,697,992 | |||||||
Ending balance, shares at Dec. 31, 2018 | 2,560,000 | 3,735,784 | 1,000 | 29,106,868 | 24,134,448 | 100,000 | 44,535 | ||||
Ending balance, value at Dec. 31, 2018 | $ 2,560 | $ 3,735 | $ 1 | $ 29,107 | $ (5,100,218) | $ (179,368) | $ (79,882) | $ 23,131,864 | $ 0 | $ (17,264,788) | $ 543,011 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unuadited) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities | ||
Net loss | $ (3,121,123) | $ (3,674,665) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 184,360 | 210,364 |
Impairment of assets | 132,608 | 183,157 |
(Gain) on asset disposal | 0 | (1,049) |
Stock based payments | 16,075 | 210,966 |
Decrease (increase) in assets: | ||
Accounts receivable | (22,759) | 732 |
Related party receivables | 0 | 0 |
Prepaid expenses and other assets | 3,574 | 319 |
Increase (decrease) in liabilities: | ||
Accounts payable and accrued expenses | (160,378) | 216,278 |
Deferred revenues | (35,000) | 0 |
Net cash used in operating activities | (3,002,643) | (2,853,898) |
Cash flows from investing activities | ||
Purchase of construction in progress equipment | (2,586) | (31,591) |
Purchase of equipment | (68,144) | 0 |
Net cash used in investing activities | (70,730) | (31,591) |
Cash flows from financing activities | ||
Proceeds from issuance of common stock | 1,297,992 | 3,754,480 |
Proceeds from issuance of preferred stock | 0 | 120,000 |
Purchase of treasury stock | 0 | (259,250) |
Net cash provided by financing activities | 1,297,992 | 3,615,230 |
Net increase in cash | (1,775,381) | 729,741 |
Cash - beginning | 3,496,516 | 2,766,775 |
Cash - ending | 1,721,135 | 3,496,516 |
Supplemental Disclosures | ||
Interest paid | 0 | 0 |
Income taxes paid | 0 | 0 |
Non-Cash Investing and Financing Activities | ||
Issuance of preferred stock in exchange for deferred revenue obligations | $ 40,000 | $ 175,000 |
A. Significant Accounting Polic
A. Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | NOTE A – 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. Collectively, Wytec and its subsidiaries, are referred to as “the Company.” Basis of Accounting: Revenue and Cost Recognition. Revenues from the sale and installation of Cel-fi systems totaled $261,186 in 2018 and $0 in 2017. Our contracts for the sale of Cel-Fi systems generally include three identified performance obligations: (i) sales of equipment, (ii) sales of installation services, and (iii) sales of testing, commissioning and integration services. The performance obligation for the sale of equipment is deemed to be satisfied on the date the customer takes physical possession of the equipment and has control of the equipment. For installation, testing, commissioning and integration services, the Company measures progress toward complete satisfaction of the performance obligations ratably as the services are performed. Revenues from network and other services including fixed wireless services totaled $44,526 in 2018 and $48,646 in 2017. Network service revenues are recognized each month as services are rendered. Revenue on sales of FCC registered links is recognized once the link has been registered on behalf of the customer and the necessary equipment has been installed and is ready for use. Revenue is not recognized on the link sales until the link construction is completed and the link has been placed in service. Amounts collected prior to completion of all obligations to the customer are recorded as deferred revenue. No revenues for the sale of FCC registered links was recorded in 2018 or 2017. Any deposits received from a customer prior to delivery of the purchased product or monies paid to us prior to the period for which a service is provided are accounted for as deferred revenue on the balance sheet. Sales tax is recorded on a net basis and excluded from revenue. The Company generally provides a one-year warranty on its products for materials and workmanship but may provide multiple year warranties as negotiated, and will pass on the warranties from its vendors, if any, which generally covers this one year period. In accordance with ASC 450-20-25, the Company accrues for product warranties when the loss is probable and can be reasonably estimated. At December 31, 2018, the Company has no product warranty accrual given the Company’s de minimis historical financial warranty experience. 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 $132,608 and $183,157 as of December 31, 2018 and 2017, respectively. 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. Fair Value of Financial Instruments: Concentrations of Credit Risk: Government Regulations: Subsequent Events: New Accounting Pronouncements: Use of Estimates: |
B. Going Concern
B. Going Concern | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | NOTE B – 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 $17,264,788 at December 31, 2018, and reported cash used by operations of $3,002,643 for the year ended December 31, 2018. 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, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE C – PROPERTY AND EQUIPMENT Property and equipment consist of the following: December 31, December 31, 2018 2017 Telecommunication equipment and computers $ 1,067,900 $ 999,756 Less: accumulated depreciation (876,446 ) (692,086 ) $ 191,454 $ 307,670 |
D. Warrants
D. Warrants | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Warrants | NOTE D – WARRANTS The Company has common stock purchase warrants outstanding at December 31, 2018 to purchase 5,219,103 shares of common stock exercisable on various dates through June 30, 2019. The warrants are exercisable at the following amounts and rates: 2,000,000 of which are exercisable at an exercise price of $1.00 per share and 3,219,103 of which are exercisable at an exercise price of $5.00 per share. The following is a summary of activity and outstanding common stock warrants: # of Warrants 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 Warrants granted 3,665,000 Warrants exercised (296,143 ) Warrants expired – Balance, December 31, 2018 5,219,103 Exercisable, December 31, 2018 5,219,103 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 2018, 1,425,000 warrants were issued for non-employee compensation expense and 2,000,000 warrants were issued for executive compensation. The total expense recognized related to the issuances was $16,075 and 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 twenty-four months. Additionally, 240,000 warrants were issued in connection with Link exchanges. |
E. Stockholders' Equity
E. Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE E – 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, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE F – 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, December 31, 2018 2017 Deferred tax assets: Net operating loss carry forwards $ 3,338,314 $ 2,703,907 Less: Valuation allowance (3,338,314 ) (2,703,907 ) 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 made broad and complex changes to the U.S. tax code. As the Company records a full valuation allowance to offset deferred tax assets, no income statement impact occurred. The Company has net operating loss carryforwards for tax purposes of approximately $16 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, 2018 and December 31, 2017 is warranted. As of December 31, 2018, 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, 2018 or December 31, 2017. 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 2018 and 2017. |
G. Related Party Transactions
G. Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE G – RELATED PARTY TRANSACTIONS Shared Services: |
H. Leases
H. Leases | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
Leases | NOTE H – 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 $77,588 for the year ended December 31, 2018. Total rent expense for office space, equipment storage space and rooftop equipment placement were $155,288 and $139,337 for the years ended December 31, 2018 and 2017, respectively. As of December 31, 2018, the future minimum lease payments are as follows: Year Ended December 31, Amount 2019 $ 151,100 2020 152,950 2021 135,800 2022 32,950 2023 28,000 Thereafter 1,800 $ 502,600 |
I. Redemption Agreement
I. Redemption Agreement | 12 Months Ended |
Dec. 31, 2018 | |
I. Redemption Agreement | |
Redemption Agreement | NOTE I – 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. At December 31, 2017, $259,250 was accrued related to this transaction with payment in full made in February 2018. |
J. Subsequent Events
J. Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE J – SUBSEQUENT EVENTS · In January 2019, the company received $4,345 from 4 shareholders for the exercise of 869 Spin-Off warrants for the issuance of 869 common stock shares. · In January 2019, the company received $50,000 from 1 shareholder for the exercise of 10,000 warrants for the issuance of 10,000 common stock shares. · In January 2019, the company issued 10,000 shares of common stock to 1 shareholder for the Link Exchange Offering. · In February 2019, the company received $10,000 from 1 shareholder for the exercise of 2,000 warrants for the issuance of 2,000 common stock shares. · In March 2019, the company received $25,000 from 3 shareholders for the exercise of 5,000 warrants for the issuance of 5,000 common stock shares. · In March 2019, the company received $1,355 from 2 shareholders for the exercise of 271 Spin-Off warrants for the issuance of 271 common stock shares. |
A. Significant Accounting Pol_2
A. Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
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. Collectively, Wytec and its subsidiaries, are referred to as “the Company.” |
Basis of Accounting | Basis of Accounting: |
Revenue and Cost Recognition | Revenue and Cost Recognition. Revenues from the sale and installation of Cel-fi systems totaled $261,186 in 2018 and $0 in 2017. Our contracts for the sale of Cel-Fi systems generally include three identified performance obligations: (i) sales of equipment, (ii) sales of installation services, and (iii) sales of testing, commissioning and integration services. The performance obligation for the sale of equipment is deemed to be satisfied on the date the customer takes physical possession of the equipment and has control of the equipment. For installation, testing, commissioning and integration services, the Company measures progress toward complete satisfaction of the performance obligations ratably as the services are performed. Revenues from network and other services including fixed wireless services totaled $44,526 in 2018 and $48,646 in 2017. Network service revenues are recognized each month as services are rendered. Revenue on sales of FCC registered links is recognized once the link has been registered on behalf of the customer and the necessary equipment has been installed and is ready for use. Revenue is not recognized on the link sales until the link construction is completed and the link has been placed in service. Amounts collected prior to completion of all obligations to the customer are recorded as deferred revenue. No revenues for the sale of FCC registered links was recorded in 2018 or 2017. Any deposits received from a customer prior to delivery of the purchased product or monies paid to us prior to the period for which a service is provided are accounted for as deferred revenue on the balance sheet. Sales tax is recorded on a net basis and excluded from revenue. The Company generally provides a one-year warranty on its products for materials and workmanship but may provide multiple year warranties as negotiated, and will pass on the warranties from its vendors, if any, which generally covers this one year period. In accordance with ASC 450-20-25, the Company accrues for product warranties when the loss is probable and can be reasonably estimated. At December 31, 2018, the Company has no product warranty accrual given the Company’s de minimis historical financial warranty experience. |
Cost of Revenues | Cost of Revenues. |
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 $132,608 and $183,157 as of December 31, 2018 and 2017, respectively. 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. |
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: |
Use of Estimates | Use of Estimates: |
C. Property and Equipment (Tabl
C. Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment Schedule | December 31, December 31, 2018 2017 Telecommunication equipment and computers $ 1,067,900 $ 999,756 Less: accumulated depreciation (876,446 ) (692,086 ) $ 191,454 $ 307,670 |
D. Warrants (Tables)
D. Warrants (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Schedule of warrant activity | # of Warrants 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 Warrants granted 3,665,000 Warrants exercised (296,143 ) Warrants expired – Balance, December 31, 2018 5,219,103 Exercisable, December 31, 2018 5,219,103 |
F. Income Taxes (Tables)
F. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of deferred income taxes | December 31, December 31, 2018 2017 Deferred tax assets: Net operating loss carry forwards $ 3,338,314 $ 2,703,907 Less: Valuation allowance (3,338,314 ) (2,703,907 ) Net deferred tax assets $ – $ – |
G. Leases (Tables)
G. Leases (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
Leases | Year Ended December 31, Amount 2019 $ 151,100 2020 152,950 2021 135,800 2022 32,950 2023 28,000 Thereafter 1,800 $ 502,600 |
A. Significant Accounting Pol_3
A. Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Allowance for doubtful accounts | $ 0 | $ 0 |
Asset impairment charges | 132,608 | 183,157 |
Revenues | 305,712 | 48,646 |
Product warranty accrual | $ 0 | 0 |
Property and Equipment [Member] | ||
Property useful lives | 5-10 years | |
Land Improvements [Member] | ||
Property useful lives | Remaing term of the lease | |
Cel-fi systems [Member] | ||
Revenues | $ 261,186 | 0 |
Network and Other Services [Member] | ||
Revenues | 44,526 | 48,646 |
Registered Links [Member] | ||
Revenues | $ 0 | $ 0 |
B. Going Concern (Details Narra
B. Going Concern (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated deficit | $ (17,264,788) | $ (14,143,665) |
Cash used in operations | $ (3,002,643) | $ (2,853,898) |
C. Property and Equipment (Deta
C. Property and Equipment (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Abstract] | ||
Telecommunication equipment and computers | $ 1,067,900 | $ 999,756 |
Less: accumulated depreciation | (876,446) | (692,086) |
Property and equipment, net | $ 191,454 | $ 307,670 |
D. Warrants (Details)
D. Warrants (Details) - Warrants [Member] - shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Number of warrants outstanding, beginning balance | 1,850,246 | 7,109,280 |
Number of warrants granted | 3,665,000 | 386,477 |
Number of warrants exercised | (296,143) | (2,585,392) |
Number of warrants expired | 0 | (3,060,119) |
Number of warrants outstanding, ending balance | 5,219,103 | 1,850,246 |
Number of warrants exercisable | 5,219,103 |
D. Warrants (Details Narrative)
D. Warrants (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Warrant 1 [Member] | |||
Warrants exercisable | 3,219,103 | ||
Exercise price | $ 5 | ||
Warrant 2 [Member] | |||
Warrants exercisable | 2,000,000 | ||
Exercise price | $ 1 | ||
Warrants [Member] | |||
Warrants outstanding | 5,219,103 | 1,850,246 | 7,109,280 |
Warrants exercisable | 5,219,103 | ||
Warrants issued | 3,665,000 | 386,477 | |
Share-based compensation expense | $ 16,075 | ||
Dividend yield | 0.00% | 0.00% | |
Volatility | 40.00% | 40.00% | |
Risk-free interest rate | 2.00% | 2.00% | |
Expected life | 24 months | 8 months | |
Warrants [Member] | Link Exchanges [Member] | |||
Warrants issued | 240,000 | 90,000 | |
Warrants [Member] | Modification of Expiration Date [Member] | |||
Warrant expense | $ 107,025 | ||
Warrants [Member] | Non-Employee Compensation [Member] | |||
Warrants issued | 1,425,000 | 296,477 | |
Warrant expense | $ 103,941 | ||
Warrants [Member] | Executives [Member] | |||
Warrants issued | 2,000,000 |
E. Stockholders' Equity (Detail
E. Stockholders' Equity (Details Narrative) | 12 Months Ended |
Dec. 31, 2017shares | |
Series B Preferred Stock [Member] | |
Links exchanged, preferred stock issued | 50,000 |
Warrants [Member] | |
Links exchanged, warrants issued | 50,000 |
Preferred Series B and Warrants [Member] | |
Links exchanged, links returned | 5 |
Common Stock | |
Links exchanged, common stock issued | 10,000 |
Links exchanged, links returned | 126.5 |
F. Income Taxes (Details)
F. Income Taxes (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 3,338,314 | $ 2,703,907 |
Less: Valuation allowance | (3,338,314) | (2,703,907) |
Net deferred tax assets | $ 0 | $ 0 |
F. Income Taxes (Details Narrat
F. Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Net operating loss carryforward | $ 16,000,000 | |
Loss carryforward beginning expiration date | Dec. 31, 2032 | |
Uncertain tax positions | $ 0 | |
State [Member] | ||
State tax Liability | $ 0 | $ 0 |
G. Related Party Transactions (
G. Related Party Transactions (Details Narrative) - CCI [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Accounts receivable, related party | $ 419,433 | $ 415,952 |
Allowance for doubtful accounts | 419,433 | 415,952 |
Shared Services [Member] | ||
Costs from related party | $ 3,481 | $ 419,952 |
H. Leases (Details)
H. Leases (Details) | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 151,100 |
2020 | 152,950 |
2021 | 135,800 |
2022 | 32,950 |
2023 | 28,000 |
Thereafter | 1,800 |
Total | $ 502,600 |
H. Leases (Details Narrative)
H. Leases (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Rooftop Lease Agreements [Member] | ||
Rent expense | $ 77,588 | |
Monthly lease payment range | $100 to $575 per month | |
Lease expiration dates | 2018 to 2024 | |
Office space, equipment storage space and rooftop equipment placement [Member] | ||
Rent expense | $ 155,288 | $ 139,337 |
I. Redemption Agreement (Detail
I. Redemption Agreement (Details Narrative) | Dec. 31, 2017USD ($) |
I. Redemption Agreement | |
Redemption and mutual release agreement accrual | $ 259,250 |