Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2022 | May 13, 2022 | |
Cover [Abstract] | ||
Entity Registrant Name | NDIVISION INC. | |
Entity Central Index Key | 0001659183 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | true | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Mar. 31, 2022 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2022 | |
Entity Ex Transition Period | true | |
Entity Common Stock Shares Outstanding | 47,586,537 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 333-212446 | |
Entity Incorporation State Country Code | NV | |
Entity Tax Identification Number | 47-5133966 | |
Entity Interactive Data Current | Yes | |
Entity Address Address Line 1 | 7301 N. State Highway 161 | |
Entity Address Address Line 2 | Suite 100 | |
Entity Address City Or Town | Irving | |
Entity Address State Or Province | TX | |
Entity Address Postal Zip Code | 75039 | |
City Area Code | 214 | |
Local Phone Number | 785-6355 |
CONDENSED CONSOLDIATED BALANCE
CONDENSED CONSOLDIATED BALANCE SHEETS - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash | $ 249,302 | $ 521,039 |
Accounts receivable, net (allowance for doubtful accounts was $40,000 as of March 31, 2022 and December 31, 2021) | 471,623 | 571,994 |
Prepaid expenses | 158,631 | 163,087 |
Total current assets | 879,556 | 1,256,120 |
Equipment and software licenses - at cost, less accumulated depreciation and amortization | 379,051 | 418,635 |
Other assets | ||
Right-of-use asset | 310,162 | 337,179 |
Total other assets | 310,162 | 337,179 |
Total assets | 1,568,769 | 2,011,934 |
Current liabilities | ||
Accounts payable | 305,376 | 233,217 |
Accrued liabilities | 774,473 | 812,188 |
Derivative liability | 173,986 | 76,137 |
Deferred revenue | 74,657 | 229,327 |
Factoring credit facility | 199,958 | 213,606 |
Current portion of note payable | 577,783 | 118,277 |
Current portion of convertible notes payable, net of discount | 1,159,179 | 831,991 |
Current portion of operating lease payable | 130,065 | 129,392 |
Current portion of finance lease obligations | 134,207 | 136,220 |
Total current liabilities | 3,529,684 | 2,780,355 |
Convertible notes payable, net of discount | 163,931 | 358,770 |
Operating lease payable, net of current portion | 197,984 | 226,846 |
Finance lease obligations, net of current portion | 253,369 | 287,911 |
Total long-term liabilities | 615,284 | 873,527 |
Stockholders' Deficit | ||
Preferred stock, $0.001 par value, 20,000,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Common stock, $0.001 par value, 180,000,000 shares authorized, and 45,919,870 and 44,919,870 shares issued and outstanding, respectively | 45,920 | 44,920 |
Additional paid in capital | 9,913,058 | 9,492,125 |
Accumulated deficit | (12,535,177) | (11,178,993) |
Total stockholders' deficit | (2,576,199) | (1,641,948) |
Total liabilities and stockholders' deficit | $ 1,568,769 | $ 2,011,934 |
CONDENSED CONSOLDIATED BALANC_2
CONDENSED CONSOLDIATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
CONDENSED CONSOLDIATED BALANCE SHEETS | ||
Allowance for doubtful debts | $ 40,000 | $ 40,000 |
Preferred stock, shares par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 180,000,000 | 180,000,000 |
Common stock, shares issued | 45,919,870 | 44,919,870 |
Common stock, shares outstanding | 45,919,870 | 44,919,870 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||
Service revenue | $ 1,254,870 | $ 1,377,454 |
Service costs | 1,362,960 | 1,142,023 |
Gross profit | (108,090) | 235,431 |
Operating expenses | ||
Selling, general and administrative expenses | 783,490 | 1,370,594 |
total operation exp | 783,490 | 1,370,594 |
Loss from operations | (891,580) | (1,135,163) |
Other (expense) income | ||
Interest expense | (459,950) | (113,236) |
Gain on change in derivative liability | (4,654) | 0 |
Other income | 0 | 211 |
Other (expense) incomes | (464,604) | (113,025) |
Net loss before income tax | (1,356,184) | (1,248,188) |
Income tax expense | 0 | 0 |
Net loss | $ (1,356,184) | $ (1,248,188) |
Basic and diluted loss per share | $ (0.03) | $ (0.03) |
Weighted average shares outstanding | 45,297,648 | 42,519,640 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY (Unaudited) - USD ($) | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit |
Balance, shares at Dec. 31, 2020 | 42,499,783 | |||
Balance, amount at Dec. 31, 2020 | $ 89,592 | $ 42,500 | $ 7,160,175 | $ (7,113,083) |
Amortization of stock-based compensation and warrant expense | 297,417 | 0 | 297,417 | 0 |
Beneficial conversion feature | 620,375 | $ 0 | 620,375 | 0 |
Common stock issued for services, shares | 85,103 | |||
Common stock issued for services, amount | 0 | $ 85 | (85) | 0 |
Net loss | (1,248,188) | $ 0 | 0 | (1,248,188) |
Balance, shares at Mar. 31, 2021 | 42,584,886 | |||
Balance, amount at Mar. 31, 2021 | (240,804) | $ 42,585 | 8,077,882 | (8,361,271) |
Balance, shares at Dec. 31, 2021 | 44,919,870 | |||
Balance, amount at Dec. 31, 2021 | (1,641,948) | $ 44,920 | 9,492,125 | (11,178,993) |
Amortization of stock-based compensation and warrant expense | 211,283 | 0 | 211,283 | 0 |
Net loss | (1,356,184) | $ 0 | 0 | (1,356,184) |
Common stock issued for commitment fee, shares | 1,000,000 | |||
Common stock issued for commitment fee, amount | 169,900 | $ 1,000 | 168,900 | 0 |
Warrant issued with debt | 40,750 | $ 0 | 40,750 | 0 |
Balance, shares at Mar. 31, 2022 | 45,919,870 | |||
Balance, amount at Mar. 31, 2022 | $ (2,576,199) | $ 45,920 | $ 9,913,058 | $ (12,535,177) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash flows from operating activities | ||
Net loss | $ (1,356,184) | $ (1,248,188) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 39,584 | 100,463 |
Provision for doubtful accounts | 0 | (16,000) |
Amortization of beneficial conversion feature | 132,349 | 70,567 |
Amortization of debt discount | 247,852 | 0 |
Non-cash lease expense | 27,017 | 25,596 |
Stock based compensation | 211,283 | 297,417 |
Gain on the change in derivative liability | 4,654 | 0 |
Changes in assets and liabilities | ||
Accounts receivable | 100,371 | 49,024 |
Prepaid expenses | 4,456 | (154,677) |
Accounts payable | 72,158 | 104,103 |
Accrued liabilities | (37,715) | 141,131 |
Deferred revenue | (154,670) | (167,381) |
Operating lease payable | (28,189) | (26,094) |
Net cash used in operating activities | (737,034) | (824,039) |
Cash flows from investing activities | ||
Repayment of debt related to acquisition | 0 | (14,302) |
Net cash used in investing activities | 0 | (14,302) |
Cash flows from financing activities | ||
Proceeds from factor credit facility, net | (13,648) | 0 |
Proceeds from note, net | 515,500 | 0 |
Proceeds from convertible notes payable, net | 0 | 785,000 |
Repayment of finance lease obligations | (36,555) | (31,896) |
Net cash provided by financing activities | 465,297 | 753,104 |
Net decrease in cash | (271,737) | (85,237) |
Cash, beginning of period | 521,039 | 1,806,606 |
Cash, end of period | 249,302 | 1,721,369 |
Supplemental cash flow disclosures | ||
Interest paid | 47,278 | 10,332 |
Non-cash financing activities | ||
Cashless exercise of options | 0 | 85 |
Purchase of equipment under capital lease | 0 | 26,211 |
Beneficial conversion feature | 0 | 620,375 |
Debt discount issued in connection with debt | 93,195 | 0 |
Common stock issued for commitment fees | 169,900 | 0 |
Warrants issued with debt | $ 40,750 | $ 0 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 3 Months Ended |
Mar. 31, 2022 | |
DESCRIPTION OF BUSINESS | |
1. DESCRIPTION OF BUSINESS | 1. DESCRIPTION OF BUSINESS nDivision Inc. (“nDivision” or the “Company”) was incorporated under the laws of the state of Nevada. nDivision’s registered office is located at 7301 N. State Highway 161, Suite 100, Irving, TX, 75039. The Company provides managed IT services and project-based professional services in the information technology industry, selling its services directly to customers and through global service providers (GSP). The Company operates in most states of the United States of America. |
LIQUIDITY AND GOING CONCERN
LIQUIDITY AND GOING CONCERN | 3 Months Ended |
Mar. 31, 2022 | |
LIQUIDITY AND GOING CONCERN | |
2. LIQUIDITY AND GOING CONCERN | 2. GOING CONCERN AND LIQUIDITY The Company has, and is continuing to, experience significant losses and negative cash flows from operations. Management has secured new managed services contracts as well as continued its implementation of a strategic sales strategy, focusing on selling through and with channel partners in the industry to increase monthly recurring revenue to improve the overall profitability and cash flows of the Company. The Company continues to explore additional options for short-term and long-term financing until these new strategies have fully developed and are generating the necessary cash flow. During the three months ended March 31, 2022, the Company received net proceeds from the issuance of notes payable of approximately $515,500. Moreover, subsequent to the end of the first quarter of 2022, the Company closed another convertible debt issuance on May 4, 2022, in the net amount of $408,500. The Company had negative working capital of $2,650,128 on March 31, 2022. The Company exited some unprofitable contracts during the quarter which resulted in negative gross margin. With these contracts finalized, the Company does not anticipate the recurrence of such detrimental and dilutive arrangements in the future. The Company factored approximately $652,866 of its invoices and received approximately $638,132 during the period ended March 31, 2022 from receivables factored under the Company’s factoring credit facility agreement. Additionally, principal payments amounting to $651,780 as well as the remittance of interest and fees totaling $15,856 were tendered under the Company’s factoring arrangements for the quarterly period ended March 31, 2022. The Company receives 90% of the factored receivables for a fee of 2.4% of the factored invoice and has committed to a minimum balance of $150,000 of invoices factored for six months from the initial funding in November 2021. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the near future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months from the date of the issuance of these unaudited consolidated condensed financial statements with existing cash on hand, factoring of receivables, obtaining additional debt and/or the private placement of common stock. There is, however, no assurance that the Company will be able to raise any additional capital through any type of offering on terms acceptable to the Company, as existing cash on hand will be insufficient to finance operations over the next twelve months and at the same time pay back various convertible notes due during this same time period. Accordingly, the Company has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least 12 months from the date of issuance of these unaudited consolidated condensed financial statements. The accompanying unaudited consolidated condensed financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. In December 2019, a novel strain of coronavirus (COVID-19) surfaced. The spread of COVID-19 around the world caused significant volatility in U.S. and international markets. There continues to be significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. and international economies and, as such, the Company transitioned its operations to 100% work from home and there has been minimal impact to our internal operations from the transition. The Company remains unable to determine if there will be a material future impact to its customers’ operations and ultimately an impact to the Company’s overall revenues. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Form 10-K filed on April 14, 2022 from which the accompanying December 31, 2021 numbers are derived. Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts and transactions of the Company and its wholly owned subsidiary, nDivision Services Inc. (incorporated in the state of Texas). All significant inter-company accounts and transactions are eliminated in consolidation. Use of Estimates Management uses estimates and assumptions in preparing these unaudited condensed consolidated financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. Revenue Recognition For revenue recognition arrangements that we determine are within the scope of Topic ASC 606, we perform the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We only apply the five-step model to arrangements that meet the definition of a contract under Topic 606, including when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, we evaluate the goods or services promised within each contract related performance obligation and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company recognizes revenue upon completion of our performance obligations or expiration of the contractual time to use services such as managed services and professional service hours purchased in bulk for a given time period. Any early termination fees are recognized in the period the contract is terminated and the termination invoice is paid. The Company has elected the following practical expedients in applying ASC 606: Unsatisfied Performance Obligations - all performance obligations relate to contracts with a duration of less than one year, the Company has elected to apply the optional exemption provided in ASC 606 and therefore, is not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period. Contract Costs - all incremental customer contract acquisition costs are expensed as they are incurred as the amortization period of the asset that the Company otherwise would have recognized is one year or less in duration. Sales Tax Exclusion from the Transaction Price - the Company excludes from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from the customer. Cash For purposes of the unaudited condensed consolidated statements of cash flows, the Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Company’s cash balances are maintained at one bank. Balances are insured by the Federal Deposit Insurance Corporation subject to certain limitations. Accounts Receivable The balances of accounts receivable are stated at the amounts management expects to collect. An allowance for doubtful accounts is recorded, as a charge to bad debt expense, where collection is considered to be doubtful due to credit issues. These allowances together reflect the Company’s estimate of potential losses inherent in accounts receivable balances, based on historical loss and known factors impacting its customers. The Company recorded an allowance for doubtful accounts of $40,000 as of March 31, 2022 and December 31, 2021. The Company does not accrue interest on past due receivables. Intangible Assets Customer contracts acquired were recorded at their estimated fair value at the date of acquisition and are being amortized over their estimated useful life of five years using the straight-line method. Impairment of Long-lived Assets The Company records an impairment of long-lived assets used in operations, other than goodwill, when events or circumstances indicate that the asset might be impaired and the estimated undiscounted cash flows to be generated by those assets over their remaining lives are less than the carrying amount of those items. The net carrying value of assets not recoverable is reduced to fair value, which is typically calculated using the discounted cash flow method. The Company did not record any impairment during the three months ended March 31, 2022 and 2021. Concentration of Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, are cash and accounts receivable. See Note 13 for significant customer concentration disclosure. Cash is maintained with a major financial institution in the United States and may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand, and, therefore, bear minimal risk. As of December 31, 2021, deposits in excess of FDIC limits were $271,039, while the FDIC limit of $250,000 per depositor per bank was not exceeded on March 31, 2022. Equipment and Software Licenses Equipment and software licenses are stated at cost. Depreciation is calculated using the straight-line method over an estimated useful life of one to ten years. Convertible Debt and Securities The Company follows beneficial conversion feature guidance in ASC 470-20, which applies to convertible stock as well as convertible debt. A beneficial conversion feature is defined as a nondetachable conversion feature that is in the money at the commitment date. The beneficial conversion feature guidance requires recognition of the conversion option’s in-the-money portion, the intrinsic value of the option, in equity, with an offsetting reduction to the carrying amount of the instrument. The resulting discount is amortized as interest over the life of the instrument, if a stated maturity date exists, or to the earliest conversion date, if there is no stated maturity date. If the earliest conversion date is immediately upon issuance, the expense must be recognized at inception. When there is a subsequent change to the conversion ratio based on a future occurrence, the new conversion price may trigger the recognition of an additional beneficial conversion feature on occurrence. Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. Earnings and Loss per Share Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted loss per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options and warrants and the conversion of notes payable to common stock. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered anti-dilutive and thus are excluded from the calculation. There were approximately 15,624,000 of common stock equivalents excluded for the three months ended March 31, 2022 and 15,387,000 of common stock equivalents excluded for the three months ended March 31, 2021, respectively because their effect is anti-dilutive. Marketing Costs Marketing costs, which are expensed as incurred, totaled approximately $26,779 for the three months ended March 31, 2022 and $158,859 for the three months ended March 31, 2021, respectively and is included in selling, general and administrative expenses. Stock-Based Compensation Compensation expense related to share-based transactions, including employee stock options, is measured in the financial statements based on a determination of the fair value. The grant date fair value is determined using the Black-Scholes-Merton (“Black-Scholes”) pricing model. For all stock options, the Company recognizes expense over the requisite service period on a straight-line basis (generally the vesting period of the equity grant). The Company’s option pricing model requires the input of highly subjective assumptions, including the expected stock price volatility and expected term. Any changes in these highly subjective assumptions significantly impact stock-based compensation expense. See Note 11 for the assumptions used to calculate the fair value of stock-based employee and non-employee compensation. Leases The Company determines if an arrangement is a lease at the inception of a contract. Operating lease right-of-use (“ROU”) assets are included in right-of-use assets on the consolidated balance sheets. The current and long-term components of operating lease liabilities are included in the current portion of operating lease liabilities and operating lease liabilities, net of current portion, respectively on the consolidated balance sheets. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Certain leases may include options to extend or terminate the lease. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases of assets where the Company has assumed substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are recognized at the lower of the fair value of the leased assets and the present value of the minimum lease payments. The interest element of the finance leases is accounted for as finance costs and expensed over the lease term using the effective interest rate method. Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company has determined the deferred tax assets and liabilities on the basis of the differences between the financial statement and tax basis of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize our deferred tax assets in the future in excess of their net recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, it recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement operations. As of March 31, 2022 and December 31, 2021, no accrued interest or penalties are included on the related tax liability line in the balance sheet. Reclassification of Certain Prior Year Balances The account, “Derivative Liability,” has been reclassified in the balance sheet as of December 31, 2021, as reflected herein, from the line item entitled, “Accrued Liabilities,” as presented in the balance sheet as of December 31, 2021, as contained in the Company’s Form 10-K for the fiscal year then ended and presented as a separate line item herein. Similarly, the presentation of certain liability accounts differs between the balance sheets as of March 31, 2022 and December 31, 2021 as compared to March 31, 2021 balance sheet. As reflected on the balance sheets as contained herein, the balances of Accounts Payable and Accrued Liabilities are shown as separate item lines. As of the period ended March 31, 2021, as provided in the Company Form 10-Q for that quarter, these accounts were combined into a single item line. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Mar. 31, 2022 | |
RECENT ACCOUNTING PRONOUNCEMENTS | |
4. RECENT ACCOUNTING PRONOUNCEMENTS | 4. RECENT ACCOUNTING PRONOUNCEMENTS New Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (“ASC 326”), authoritative guidance amending how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance requires the application of a current expected credit loss model, which is a new impairment model based on expected losses. The new guidance is effective for interim and annual reporting periods beginning after December 15, 2022. The Company is currently evaluating the impact of the new guidance on its unaudited condensed consolidated financial statements and related disclosures. In August 2020, the FASB issued ASU 2020-06- Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity No other recent accounting pronouncements were issued by FASB and the SEC that are believed by management to have a material impact on the Company’s present or future unaudited condensed consolidated financial statements. |
EQUIPMENT AND SOFTWARE LICENSES
EQUIPMENT AND SOFTWARE LICENSES | 3 Months Ended |
Mar. 31, 2022 | |
EQUIPMENT AND SOFTWARE LICENSES | |
5. EQUIPMENT AND SOFTWARE LICENSES | 5. EQUIPMENT AND SOFTWARE LICENSES Equipment and software licenses consist of the following: March 31, December 31, 2022 2021 Equipment and software $ 656,073 $ 656,073 Software licenses 1,302,143 1,302,143 1,958,216 1,958,216 Less - Accumulated depreciation and amortization (1,579,165 ) (1,539,581 ) $ 379,051 $ 418,635 Depreciation and amortization expense related to assets for the three months ended March 31, 2022 and 2021 was approximately $39,584 and $49,825, respectively. Included in the above paragraph is depreciation and amortization expense related to leased assets for the three months ended March 31, 2022 and 2021 of approximately $37,880 and $40,622, respectively. |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 3 Months Ended |
Mar. 31, 2022 | |
ACCRUED LIABILITIES | |
6. ACCRUED LIABILITIES | 6. ACCRUED LIABILITIES March 31, December 31, 2022 2021 Accrued compensation $ 262,734 $ 187,534 Accrued interest 177,528 144,773 Accrued sales tax 2,163 5,810 Accrued franchise tax 17,637 14,862 Accrued payables 314,411 459,209 Total accrued liabilities $ 774,473 $ 812,188 |
FACTORING CREDIT FACILITY
FACTORING CREDIT FACILITY | 3 Months Ended |
Mar. 31, 2022 | |
FACTORING CREDIT FACILITY | |
7. FACTORING CREDIT FACILITY | 7. FACTORING CREDIT FACILITY On October 22, 2021, the Company entered into a new one-year purchase and security agreement to factor its accounts receivable, replacing the previously signed factoring agreement. The agreement provides for an advanced rate of 90% with a fee of 2.4% to be charged on the gross face amount of the invoices purchased for 30 days. The Company has retained late payment and credit risk related to the factored receivables and therefore continues to recognize the factored receivables in their entirety on its balance sheet. The Company factored approximately $652,866 of its invoices and received approximately $638,132 during the period ended March 31, 2022 from receivables factored under the Company’s factoring credit facility agreement. Additionally, principal payments amounting to $651,780 as well as the remittance of interest and fees totaling $15,856 were tendered under the Company’s factoring arrangements for the quarterly period ended March 31, 2022. The balance of the accounts receivable amount factored, and the related factor payable is $199,958 as of March 31, 2022, and $213,606 on December 31, 2021, respectively. The Company has recognized $15,856 and $0 in interest expense related to these arrangements for the three-months ended March 31, 2022 and 2021, respectively. |
NOTE PAYABLE
NOTE PAYABLE | 3 Months Ended |
Mar. 31, 2022 | |
NOTE PAYABLE | |
8. NOTE PAYABLE | 8. NOTES PAYABLE The balances of Notes Payable as reflected herein relate to two notes as more fully described below. AJB No. 1 Note On December 20, 2021, the Company entered into a Securities Purchase Agreement with AJB Capital Investments, LLC (“AJB No. 1 Note”) with respect to the sale and issuance of (i) a promissory note in the principal amount of $600,000; (ii) a common stock purchase warrant to purchase up to 500,000 shares of common stock with an exercise price of $0.40 per share; and (iii) a guaranteed commitment fee in the amount of $150,000 for six months and an additional $150,000 if the loan is extended an additional six months to be paid in stock or cash. The Company received the aggregate cash proceeds of $515,500, net of $60,000 original issue discount, $12,000 for broker fees and $12,500 in legal fees. The AJB No. 1 Note can be extended for six months at the sole discretion of the Company beyond its current maturity date pursuant to the note of June 20, 2022. The Company issued 1,200,000 shares of the Company’s common stock as partial consideration for the commitment fee. The stock price on December 20, 2021, was approximately $0.15 per common share and 1,000,000 or $150,000 was recorded as the six-month commitment fee and considered to be a derivative based on the Company’s guarantee of the stock value when AJB Capital Investments, LLC liquidates the stock. The Company recorded a derivative liability of $76,136 and $76,136 as a debt discount at the issuance of the debt related to 1,000,000 of the shares of the Company’s common stock. The Company recognized $27,600 as a reduction of the commitment fee accrual for the 200,000 shares issued of the Company’s common stock. As of March 31, 2022, the net debt balance and derivative liability for the AJB No. 1 Note was $292,775 and $86,835, respectively. Moreover, for the quarter ended March 31, 2022, the Company recorded a gain in the change of the derivative liability for AJB No. 1 Note of $10,698 and amortization of the discount to interest expense in the amount of $174,498. Pursuant to the terms of the AJB No.1 Note, the investor has the right, only following an event of default, to convert all amounts outstanding under this note into the shares of Common Stock (the “Conversion Shares”). The initial conversion price, following and during an event of default, for the principal and interest of the AJB No.1 note equals the lesser of 90% (representing a 10% discount) multiplied by the lowest trading price (i) during the previous twenty (20) trading day period ending on the date of issuance of the Conversion Shares, or (ii) during the previous twenty (20) trading day period ending on date of conversion of the AJB No.1 Note, subject to adjustment as provided said note. The AJB No.1 Note also contains certain negative covenants, including, among other things, prohibitions on incurrence of indebtedness, sales of assets, stock repurchases, and distributions. AJB No. 2 Note On February 25, 2022, the Company entered into a Securities Purchase Agreement (the “AJB No. 2 Note”) with AJB Capital Investments (the “Investor”), with respect to the sale and issuance of (i) a promissory note in the principal amount of $600,000; (ii) a common stock purchase warrant to purchase up to 500,000 shares of the Company’s common stock with an exercise price of $0.40 per share; (iii) a guaranteed commitment fee of $150,000 in the form of 1,000,000 shares of Common Stock, and (iv) an additional commitment fee of $150,000 in the form of 1,000,000 shares of the Common Stock to be issued upon the extension of the note’s maturity date. The AJB No. 2 Note can be extended for six months at the sole discretion of the Company beyond its current maturity date pursuant to the note of August 25, 2022. The Company received the aggregate net cash proceeds of $515,500 in the transactions due to reductions in the purchase price for $60,000 in original issue discount, $12,000 in broker fees, and $12,500 in legal fees and due diligence expenses of the Investor. The AJB No. 2 Note further provides for an adjustment mechanism with respect to the shares conveyed in connection with the commitment fees such that the Investor may recuperate any shortfall amount resulting from the sale of these shares if the net proceeds from such sale do not at least equal the commitment fees. The Company issued 1,000,000 shares of the Company’s common stock as partial consideration for the commitment fee. The stock price on February 25, 2022, was approximately $0.17 per common share and 1,000,000 or $169,900 was recorded as the six-month commitment fee and considered to be a derivative based on the Company’s guarantee of the stock value when the Investor liquidates the stock. The Company recorded a derivative liability of $93,196 and $206,446 as a discount at the issuance of the debt related to 1,000,000 of the shares of the Company’s common stock and the related warrants. As of March 31, 2022, the net debt balance and derivative liability for the AJB No. 2 Note was $285,008 and $87,152, respectively. Additionally, for the quarter ended March 31, 2022, the Company recorded a loss in the change of the derivative liability for AJB No. 2 Note of $6,044 and amortization of the discount to interest expense in the amount of $73,354. The AJB No. 2 Note also contains representations and warranties, other covenants, and other provisions similar to those contained in the AJB No. 1 Note. |
CONVERTIBLE NOTES PAYABLE
CONVERTIBLE NOTES PAYABLE | 3 Months Ended |
Mar. 31, 2022 | |
CONVERTIBLE NOTES PAYABLE | |
9. CONVERTIBLE NOTES PAYABLE | 9. CONVERTIBLE NOTES PAYABLE The Company entered into promissory notes (the “Notes”) with investors of the Company with a face value of $2,240,000 of which $200,000 is from a related party, with $1,190,000 raised during the year ended December 31, 2021, and $1,050,000 raised during the year ended December 31, 2020. The Notes had an initial beneficial conversion feature valued at $1,361,675, which is recorded as a discount. The total discount on the Notes will be amortized over the life of the Notes and recorded as interest expense. For the three-month periods ended March 31, 2022 and March 31, 2021, the amortization of the discount to interest expense amounted to $132,349 and $24,334, respectively. The Notes have an interest rate of 8%. The principal and interest of the Notes are due in full beginning September 2022 through April 2023 or can be converted into the Company’s common stock at a purchase price of the lesser of $0.40 per common share at any time after issuance or a 25% discount of the common stock price of a debt or equity offering that occurs subsequent to the date of the closing of the offering that results in gross offering proceeds of at least $5,000,000. March 31, December 31, 2022 2021 Convertible debt $ 1,790,000 $ 1,790,000 Debt discount 466,890 599,239 Convertible debt, net of debt discount 1,323,100 1,190,761 Short-term convertible debt, net of debt discount 1,159,179 831,991 Long-term convertible debt, net of debt discount $ 163,931 $ 358,770 |
LEASE OBLIGATIONS
LEASE OBLIGATIONS | 3 Months Ended |
Mar. 31, 2022 | |
LEASE OBLIGATIONS | |
10. LEASE OBLIGATIONS | 10. LEASE OBLIGATIONS Finance Leases The Company finances certain property and equipment using finance leases. These leases range from one to five years. The finance lease obligations represent the present value of the minimum lease payments, net of imputed interest. The finance lease obligations are secured by the underlying leased assets. Leases are payable in monthly installments ranging from $354 to $4,397 including interest, ranging from 6.99% to 12% per annum. Future minimum lease payments, including principal and interest, under the finance leases for subsequent years are as follows: Year Ended Remainder of 2022 $ 120,216 2023 145,383 2024 126,320 2025 43,970 Total 435,889 Less: interest (48,313 ) Present value of net minimum lease payments 387,576 Short term 134,207 Long term total $ 253,369 Lease payments for the three months ended March 31, 2022 and 2021 aggregated approximately $44,753 and $43,057, respectively. The finance lease obligations are secured by underlying leased assets with a net book value of approximately $368,478 and $406,358 as of March 31, 2022 and December 31, 2021, respectively. Operating Lease The Company determines if a contract contains a lease at inception. US GAAP requires that the Company’s leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option will result in an economic penalty. All of the Company’s real estate leases are classified as operating leases. Most real estate leases include one or more options to renew, with renewal terms that generally can extend the lease term for an additional four to five years. The exercise of lease renewal options is at the Company’s discretion. The Company evaluates renewal options at lease inception and on an ongoing basis and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. Lease agreements generally do not require material variable lease payments, residual value guarantees or restrictive covenants. The Company’s leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment. The Company used incremental borrowing rates as of January 1, 2019 for operating leases that commenced prior to that date. The Company’s weighted average remaining lease term and weighted average discount rate for operating leases as of March 31, 2022 are: Weighted average remaining lease term 32 Months Weighted average incremental borrowing rate 5.0 % The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable operating leases with terms of more than one year to the total operating lease liabilities recognized in the consolidated balance sheet as of March 31, 2022: Remainder of 2022 $ 97,100 2023 131,859 2024 120,871 Total undiscounted future minimum lease payments 349,830 Less: Imputed interest (21,781 ) Present value of operating lease obligation $ 328,049 The Company has one leased facility which involves office space. The Company is responsible for real estate taxes, utilities, and repairs under the terms of certain of the operating leases. Therefore, all lease and non-lease components are combined and accounted for as single lease component. For the three months ended March 31, 2022 and 2021, respectively, the components of lease expense, included in cost of services and general and administrative expenses and the related interest expense in the consolidated statements of operations income, are as follows: Three months ended March 31, 2022 Three months ended March 31, 2021 Operating lease cost: Operating lease cost $ 32,292 $ 31,617 Financing lease cost: Amortization of financed lease assets $ 36,557 $ 26,200 Interest expense 8,196 5,417 Total lease cost $ 44,753 $ 31,617 |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2022 | |
STOCK BASED COMPENSATION | |
11. STOCK BASED COMPENSATION | 11. STOCK BASED COMPENSATION Number of options outstanding: 2018 Equity Incentive Plan 8,826,544 Options granted not part of a shareholder approved plan 700,000 March 31, 2022 9,526,544 Effective on May 5, 2021, the Board of Directors of the Company (the “Board of Directors”) approved an amended and restated stock option plan that increases the available options from 8,000,000 shares to 18,000,000 shares, which was approved by majority written consent of the shareholders. The Board of Directors approved the Company’s 2018 Equity Incentive Plan (the “2018 Plan”). The purpose of the 2018 Plan is to provide additional incentives to select persons who can make, are making, and continue to make substantial contributions to the growth and success of the Company, to attract and retain the employment and services of such persons, and to encourage and reward such contributions, by providing these individuals with an opportunity to acquire or increase stock ownership in the Company through either the grant of options or restricted stock. The 2018 Plan is administered by the Compensation Committee or such other committee as is appointed by the Board of Directors pursuant to the 2018 Plan (the “Committee”). The Committee has full authority to administer and interpret the provisions of the 2018 Plan including, but not limited to, the authority to make all determinations with regard to the terms and conditions of an award made under the 2018 Plan. The maximum number of shares that may be granted under the 2018 Plan is 18,000,000. This number is subject to adjustment to reflect changes in the capital structure or organization of the Company. The following table reflects the stock options for the three months ended March 31, 2022: A summary of stock option activity is as follows: Number of options outstanding: Beginning of year 9,226,544 Granted 300,000 Exercised - Forfeited - March 31, 2022 9,526,544 Number of options exercisable at end of period 7,476,554 Number of options available for grant at end of period 9,173,456 Weighted average option prices per share: $ 0.41 Granted during the period 0.17 Exercised during the period - Forfeited during the period - Outstanding at end of the period 0.43 Exercisable at end of period $ 0.41 Stock-based compensation expense attributable to stock options, restricted stock awards, and warrants was $211,283 for the three-month period ended March 31, 2022 and $297,417 for the three-month period ended March 31, 2021. As of March 31, 2022, there was approximately $786,932 of unrecognized compensation expense related to unvested stock options outstanding and warrants, and the weighted average vesting period for those options was 5 years. During the three-month period ended March 31, 2022, the Company granted options to purchase 300,000 shares of common stock with an average vesting period of three years, an average expected life of 6.5 years and an average exercise price of $0.17 per common share. The total value of these options was $46,346 and was derived based upon the following parameters: 2022 2021 Expected option life (years) 6.5 6.5 Expected stock price volatility 130 % 117 % Expected dividend yield — % — % Risk-free interest rate 2.03 % 1.15 % During the three-month period ended March 31, 2021, the Company granted options to purchase 500,000 shares of common stock with an average vesting period of 3 years, an average expected life of 6.5 years and an average exercise price of $0.56 per common share. Total value was $243,964. In addition to options, the Company has issued warrants at various times. The Gamwell contract acquisition warrants remain outstanding. The warrant can be exercised for 122,752 of the Company’s common stock at an exercise price of $0.375 per share and expire April 23, 2028. Moreover, the Company issued a warrant to a related party consultant to purchase up to 750,000 shares of common stock at a per common share price of $0.625. The warrant vested immediately and remained outstanding as of March 31, 2022. This warrant expired subsequent to the end of the first quarter on May 8, 2022. During the quarter ended March 31, 2022, the Company granted a warrant to purchase 500,000 shares of common stock for $0.40 per share. The warrant vests immediately and has a three-year term. The value of the warrant was $39,295. This warrant, along with the warrants issued in December 2021, as discussed herein above, contain certain anti-dilution language such that while the warrant is outstanding, if the Company issues or sells, or if it is deemed to have issued or sold, any warrant or option to purchase the Company’s common stock and/or common stock equivalents with a purchase price per share less than the aforementioned per share exercise price of $0.625 or the exercise price at the time of the issuance or sale or deemed sale, with certain exceptions, the then exercise price is lowered to purchase price at which the applicable warrant or option was issued or sold. 2021 Number of warrants outstanding: Beginning of period 1,372,752 Granted 500,000 Exercised, converted - Forfeited / exchanged / modification - End of period 1,872,752 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2022 | |
RELATED PARTY TRANSACTIONS | |
12. RELATED PARTY TRANSACTIONS | 12. RELATED PARTY TRANSACTIONS The Company contracted with Norco Professional Services, LLC. (“Norco”) to provide consulting services. The Company incurred approximately $22,500 for the three-month period ended March 31, 2022. Norco is owned by Andrew J. Norstrud, who joined the Company in January of 2019, as the Company’s Chief Financial Officer. Mr. Norstrud resigned from his position as the Company’s Chief Financial Officer on April 29, 2022. The above related party transactions are not necessarily indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent parties. |
SIGNIFICANT CUSTOMERS
SIGNIFICANT CUSTOMERS | 3 Months Ended |
Mar. 31, 2022 | |
SIGNIFICANT CUSTOMERS | |
13. SIGNIFICANT CUSTOMERS | 13. SIGNIFICANT CUSTOMERS The Company had significant customers in each of the quarters presented. A significant customer is defined as one that makes up ten percent or more of total revenues in a particular quarter or ten percent of outstanding accounts receivable balance as of end of the period. Net revenues for the three months ended March 31, 2022 and 2021 include revenues from significant customers as follows: Three Month Ended March 31, 2022 2021 Customer A 53 % 54 % Customer B 12 % 11 % Accounts receivable balances as of March 31, 2022 and December 31, 2021 from significant customers are as follows: March 31, December 31, 2022 2021 Customer A 85 % 92 % |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2022 | |
SUBSEQUENT EVENTS | |
14. SUBSEQUENT EVENTS | 14. SUBSEQUENT EVENTS On May 4, 2022, the Company entered into a Securities Purchase Agreement with Mast Hill Fund, L.P. with respect to the sale and issuance of (i) a 10% promissory note in the principal amount of $500,000; (ii) a common stock purchase warrant to purchase up to 416,667 shares of common stock with an exercise price of $0.40 per share; and (iii) a commitment fee of 1,666,667 shares of the Company’s common stock. The Company received the aggregate cash proceeds of $408,500, net of $50,000 original issue discount, $31,500 for broker fees and $10,000 in legal fees. As mentioned previously, Mr. Norstrud resigned from his position as the Company’s Chief Financial Officer on April 29, 2022. On that date, the Company executed that certain Proposal and Master Service Agreement by and between the Company and Harris & Dickey, LLC (the “Agreement”), pursuant to which John Tittle, Jr., CPA/CFF/CGMA, CTP, CIRA, CDBV will serve as the Company’s fractional CFO to fulfill the typical duties, responsibilities, and obligations of a public company CFO. The Company will compensate Harris & Dickey, LLC for the services of Mr. Tittle at an hourly rate of $250, subject to the payment of certain monthly retainers and other arrangements as outlined in the Agreement. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Form 10-K filed on April 14, 2022 from which the accompanying December 31, 2021 numbers are derived. |
Principles of Consolidation | The unaudited condensed consolidated financial statements include the accounts and transactions of the Company and its wholly owned subsidiary, nDivision Services Inc. (incorporated in the state of Texas). All significant inter-company accounts and transactions are eliminated in consolidation. |
Use of Estimates | Management uses estimates and assumptions in preparing these unaudited condensed consolidated financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. |
Revenue Recognition | For revenue recognition arrangements that we determine are within the scope of Topic ASC 606, we perform the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We only apply the five-step model to arrangements that meet the definition of a contract under Topic 606, including when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, we evaluate the goods or services promised within each contract related performance obligation and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company recognizes revenue upon completion of our performance obligations or expiration of the contractual time to use services such as managed services and professional service hours purchased in bulk for a given time period. Any early termination fees are recognized in the period the contract is terminated and the termination invoice is paid. The Company has elected the following practical expedients in applying ASC 606: Unsatisfied Performance Obligations - all performance obligations relate to contracts with a duration of less than one year, the Company has elected to apply the optional exemption provided in ASC 606 and therefore, is not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period. Contract Costs - all incremental customer contract acquisition costs are expensed as they are incurred as the amortization period of the asset that the Company otherwise would have recognized is one year or less in duration. Sales Tax Exclusion from the Transaction Price - the Company excludes from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from the customer. |
Cash | For purposes of the unaudited condensed consolidated statements of cash flows, the Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Company’s cash balances are maintained at one bank. Balances are insured by the Federal Deposit Insurance Corporation subject to certain limitations. |
Accounts Receivable | The balances of accounts receivable are stated at the amounts management expects to collect. An allowance for doubtful accounts is recorded, as a charge to bad debt expense, where collection is considered to be doubtful due to credit issues. These allowances together reflect the Company’s estimate of potential losses inherent in accounts receivable balances, based on historical loss and known factors impacting its customers. The Company recorded an allowance for doubtful accounts of $40,000 as of March 31, 2022 and December 31, 2021. The Company does not accrue interest on past due receivables. |
Intangible Assets | Customer contracts acquired were recorded at their estimated fair value at the date of acquisition and are being amortized over their estimated useful life of five years using the straight-line method. |
Impairment of Long-lived Assets | The Company records an impairment of long-lived assets used in operations, other than goodwill, when events or circumstances indicate that the asset might be impaired and the estimated undiscounted cash flows to be generated by those assets over their remaining lives are less than the carrying amount of those items. The net carrying value of assets not recoverable is reduced to fair value, which is typically calculated using the discounted cash flow method. The Company did not record any impairment during the three months ended March 31, 2022 and 2021. |
Concentration of Risk | Financial instruments, which potentially subject the Company to concentrations of credit risk, are cash and accounts receivable. See Note 13 for significant customer concentration disclosure. Cash is maintained with a major financial institution in the United States and may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand, and, therefore, bear minimal risk. As of December 31, 2021, deposits in excess of FDIC limits were $271,039, while the FDIC limit of $250,000 per depositor per bank was not exceeded on March 31, 2022. |
Equipment and Software Licenses | Equipment and software licenses are stated at cost. Depreciation is calculated using the straight-line method over an estimated useful life of one to ten years. |
Convertible Debt and Securities | The Company follows beneficial conversion feature guidance in ASC 470-20, which applies to convertible stock as well as convertible debt. A beneficial conversion feature is defined as a nondetachable conversion feature that is in the money at the commitment date. The beneficial conversion feature guidance requires recognition of the conversion option’s in-the-money portion, the intrinsic value of the option, in equity, with an offsetting reduction to the carrying amount of the instrument. The resulting discount is amortized as interest over the life of the instrument, if a stated maturity date exists, or to the earliest conversion date, if there is no stated maturity date. If the earliest conversion date is immediately upon issuance, the expense must be recognized at inception. When there is a subsequent change to the conversion ratio based on a future occurrence, the new conversion price may trigger the recognition of an additional beneficial conversion feature on occurrence. |
Derivative Financial Instruments | The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. |
Earnings and Loss per Share | Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted loss per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options and warrants and the conversion of notes payable to common stock. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered anti-dilutive and thus are excluded from the calculation. There were approximately 15,624,000 of common stock equivalents excluded for the three months ended March 31, 2022 and 15,387,000 of common stock equivalents excluded for the three months ended March 31, 2021, respectively because their effect is anti-dilutive. |
Marketing Costs | Marketing costs, which are expensed as incurred, totaled approximately $26,779 for the three months ended March 31, 2022 and $158,859 for the three months ended March 31, 2021, respectively and is included in selling, general and administrative expenses. |
Stock-Based Compensation | Compensation expense related to share-based transactions, including employee stock options, is measured in the financial statements based on a determination of the fair value. The grant date fair value is determined using the Black-Scholes-Merton (“Black-Scholes”) pricing model. For all stock options, the Company recognizes expense over the requisite service period on a straight-line basis (generally the vesting period of the equity grant). The Company’s option pricing model requires the input of highly subjective assumptions, including the expected stock price volatility and expected term. Any changes in these highly subjective assumptions significantly impact stock-based compensation expense. See Note 11 for the assumptions used to calculate the fair value of stock-based employee and non-employee compensation. |
Leases | The Company determines if an arrangement is a lease at the inception of a contract. Operating lease right-of-use (“ROU”) assets are included in right-of-use assets on the consolidated balance sheets. The current and long-term components of operating lease liabilities are included in the current portion of operating lease liabilities and operating lease liabilities, net of current portion, respectively on the consolidated balance sheets. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Certain leases may include options to extend or terminate the lease. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases of assets where the Company has assumed substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are recognized at the lower of the fair value of the leased assets and the present value of the minimum lease payments. The interest element of the finance leases is accounted for as finance costs and expensed over the lease term using the effective interest rate method. |
Income Taxes | The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company has determined the deferred tax assets and liabilities on the basis of the differences between the financial statement and tax basis of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize our deferred tax assets in the future in excess of their net recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, it recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement operations. As of March 31, 2022 and December 31, 2021, no accrued interest or penalties are included on the related tax liability line in the balance sheet. |
Reclassification of Certain Prior Year Balances | The account, “Derivative Liability,” has been reclassified in the balance sheet as of December 31, 2021, as reflected herein, from the line item entitled, “Accrued Liabilities,” as presented in the balance sheet as of December 31, 2021, as contained in the Company’s Form 10-K for the fiscal year then ended and presented as a separate line item herein. Similarly, the presentation of certain liability accounts differs between the balance sheets as of March 31, 2022 and December 31, 2021 as compared to March 31, 2021 balance sheet. As reflected on the balance sheets as contained herein, the balances of Accounts Payable and Accrued Liabilities are shown as separate item lines. As of the period ended March 31, 2021, as provided in the Company Form 10-Q for that quarter, these accounts were combined into a single item line. |
EQUIPMENT AND SOFTWARE LICENS_2
EQUIPMENT AND SOFTWARE LICENSES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
EQUIPMENT AND SOFTWARE LICENSES | |
Schedule of equipment and software licenses | March 31, December 31, 2022 2021 Equipment and software $ 656,073 $ 656,073 Software licenses 1,302,143 1,302,143 1,958,216 1,958,216 Less - Accumulated depreciation and amortization (1,579,165 ) (1,539,581 ) $ 379,051 $ 418,635 |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
ACCRUED LIABILITIES | |
Schedule of accrued liabilities | March 31, December 31, 2022 2021 Accrued compensation $ 262,734 $ 187,534 Accrued interest 177,528 144,773 Accrued sales tax 2,163 5,810 Accrued franchise tax 17,637 14,862 Accrued payables 314,411 459,209 Total accrued liabilities $ 774,473 $ 812,188 |
CONVERTIBLE NOTES PAYABLE (Tabl
CONVERTIBLE NOTES PAYABLE (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
CONVERTIBLE NOTES PAYABLE (Tables) | |
Convertible Notes Payable | March 31, December 31, 2022 2021 Convertible debt $ 1,790,000 $ 1,790,000 Debt discount 466,890 599,239 Convertible debt, net of debt discount 1,323,100 1,190,761 Short-term convertible debt, net of debt discount 1,159,179 831,991 Long-term convertible debt, net of debt discount $ 163,931 $ 358,770 |
LEASE OBLIGATIONS (Tables)
LEASE OBLIGATIONS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
LEASE OBLIGATIONS (Tables) | |
Schedule of future minimum lease payments | Year Ended Remainder of 2022 $ 120,216 2023 145,383 2024 126,320 2025 43,970 Total 435,889 Less: interest (48,313 ) Present value of net minimum lease payments 387,576 Short term 134,207 Long term total $ 253,369 Lease payments for the three months ended March 31, 2022 and 2021 aggregated approximately $44,753 and $43,057, respectively. |
Schedule of weighted average remaining lease term and discount rate for operating leases | Weighted average remaining lease term 32 Months Weighted average incremental borrowing rate 5.0 % |
Schedule of minimum lease commitments | Remainder of 2022 $ 97,100 2023 131,859 2024 120,871 Total undiscounted future minimum lease payments 349,830 Less: Imputed interest (21,781 ) Present value of operating lease obligation $ 328,049 |
Schedule of consolidated statements of operations income | Three months ended March 31, 2022 Three months ended March 31, 2021 Operating lease cost: Operating lease cost $ 32,292 $ 31,617 Financing lease cost: Amortization of financed lease assets $ 36,557 $ 26,200 Interest expense 8,196 5,417 Total lease cost $ 44,753 $ 31,617 |
STOCK BASED COMPENSATION (Table
STOCK BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
STOCK BASED COMPENSATION | |
Schedule of stock based compensation | Number of options outstanding: 2018 Equity Incentive Plan 8,826,544 Options granted not part of a shareholder approved plan 700,000 March 31, 2022 9,526,544 |
Summary of Stock option activity | Number of options outstanding: Beginning of year 9,226,544 Granted 300,000 Exercised - Forfeited - March 31, 2022 9,526,544 Number of options exercisable at end of period 7,476,554 Number of options available for grant at end of period 9,173,456 Weighted average option prices per share: $ 0.41 Granted during the period 0.17 Exercised during the period - Forfeited during the period - Outstanding at end of the period 0.43 Exercisable at end of period $ 0.41 |
Schedule of granted options | 2022 2021 Expected option life (years) 6.5 6.5 Expected stock price volatility 130 % 117 % Expected dividend yield — % — % Risk-free interest rate 2.03 % 1.15 % |
warrant option | 2021 Number of warrants outstanding: Beginning of period 1,372,752 Granted 500,000 Exercised, converted - Forfeited / exchanged / modification - End of period 1,872,752 |
SIGNIFICANT CUSTOMERS (Tables)
SIGNIFICANT CUSTOMERS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Schedules of Concentration | Three Month Ended March 31, 2022 2021 Customer A 53 % 54 % Customer B 12 % 11 % |
Schedules of customer accounts receivable,concenteration | March 31, December 31, 2022 2021 Customer A 85 % 92 % |
GOING CONCERN (Details Narrativ
GOING CONCERN (Details Narrative) | 3 Months Ended |
Mar. 31, 2022USD ($) | |
LIQUIDITY AND GOING CONCERN | |
Proceeds from the issuance of notes payable | $ 515,500 |
Invoices | 652,866 |
Net amount | 408,500 |
Received advance | 638,132 |
Interest and fees | 15,856 |
Fee related factoring agreement | 651,780 |
Working capital | $ (2,650,128) |
Description of factored receivables | The Company receives 90% of the factored receivables for a fee of 2.4% of the factored invoice and has committed to a minimum balance of $150,000 of invoices factored for six months from the initial funding in November 2021 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Allowance for doubtful accounts | $ 40,000 | $ 40,000 | |
Marketing costs | 26,779 | $ 158,859 | |
Deposits in excess of FDIC limits | 271,039 | ||
FDIC limit per depositor | $ 250,000 | ||
Common Stock [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share | 15,624,000 | 15,387,000 |
EQUIPMENT AND SOFTWARE LICENS_3
EQUIPMENT AND SOFTWARE LICENSES (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment,Gross | $ 1,958,216 | $ 1,958,216 |
Less - accumulated depreciation and amortization | (1,579,165) | (1,539,581) |
Property, Plant and Equipment, Net | 379,051 | 418,635 |
Equipment and software [Member] | ||
Property, Plant and Equipment,Gross | 656,073 | 656,073 |
Software License [Member] | ||
Property, Plant and Equipment,Gross | $ 1,302,143 | $ 1,302,143 |
EQUIPMENT AND SOFTWARE LICENS_4
EQUIPMENT AND SOFTWARE LICENSES (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
EQUIPMENT AND SOFTWARE LICENSES | ||
Depreciation and amortization related to assets | $ 39,584 | $ 49,825 |
Depreciation and amortization expenses related to leased assets | $ 37,880 | $ 40,622 |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
NOTE PAYABLE | ||
Accrued compensation | $ 262,734 | $ 187,534 |
Accrued interest | 177,528 | 144,773 |
Accrued sales tax | 2,163 | 5,810 |
Accrued franchise tax | 17,637 | 14,862 |
Accrued payables | 314,411 | 459,209 |
Total accrued liabilities | $ 774,473 | $ 812,188 |
FACTORING CREDIT FACILITY (Deta
FACTORING CREDIT FACILITY (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Oct. 22, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Agreement description | The agreement provides for an advanced rate of 90% with a fee of 2.4% to be charged on the gross face amount of the invoices purchased for 30 days | |||
Invoices | $ 652,866 | |||
Received advance | 638,132 | |||
Fee related factoring agreement | $ 651,780 | |||
Factoring Credit Facility [Member] | ||||
Agreement description | The agreement provides for an advanced rate of 90% with a fee of 2.4% to be charged on the gross face amount of the invoices purchased for 30 days, and an additional 0.06% charge for each additional day until the invoice(s) are paid. | |||
Accounts receivable amount factored | $ 199,958 | $ 213,606 | ||
Invoices | 652,866 | |||
Interest expense | 15,856 | $ 0 | ||
Received advance | 638,132 | |||
Fee related factoring agreement | $ 651,780 |
NOTE PAYABLE (Details Narrative
NOTE PAYABLE (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Feb. 25, 2022 | Dec. 20, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Common stock Issued | 45,919,870 | 44,919,870 | |||
Derivative liability | $ 173,986 | $ 76,137 | |||
Amortization of discount to interest expense | 247,852 | $ 0 | |||
Securities Purchase Agreement AJB No. 1 Note [Member] | |||||
Derivative liability | 86,835 | ||||
Guaranteed commitment fee | $ 150,000 | ||||
Commitment fee additional | 150,000 | ||||
Aggregate cash proceeds | 515,500 | ||||
Broker fees | 12,000 | ||||
Original issue discount | 60,000 | ||||
Legal fees | 12,500 | ||||
commitment fee maximum | 1,000,000 | ||||
commitment fee minimum | $ 150,000 | ||||
Net debt balance | 292,775 | ||||
Amortization of discount to interest expense | 174,498 | ||||
Gain on the change in derivative liability | 10,698 | ||||
Securities Purchase Agreement AJB No. 2 Note [Member] | |||||
Derivative liability | 87,152 | ||||
Guaranteed commitment fee | $ 150,000 | ||||
Number of shares of Common Stock, shares | 1,000,000 | ||||
Commitment fee additional | $ 150,000 | ||||
Aggregate cash proceeds | 515,500 | ||||
Broker fees | 12,000 | ||||
Original issue discount | 60,000 | ||||
Legal fees | 12,500 | ||||
commitment fee maximum | 1,000,000 | ||||
commitment fee minimum | $ 169,900 | ||||
Net debt balance | 285,008 | ||||
Amortization of discount to interest expense | 73,354 | ||||
Gain on the change in derivative liability | $ 6,044 | ||||
Common Stock [Member] | Securities Purchase Agreement AJB No. 1 Note [Member] | |||||
Exercise price per share | $ 0.40 | ||||
Principal amount | $ 600,000 | ||||
Warrant to purchase shares | 500,000 | ||||
Common stock Issued | 1,200,000 | ||||
Stock price | $ 0.15 | ||||
Derivative liability | $ 76,136 | ||||
Debt discount | $ 76,136 | ||||
Common stock issuance related to debt | 1,000,000 | ||||
Reduction of the commitment fee accrual | $ 27,600 | ||||
Issued of common stock for reduction of commitment fee accrual | 200,000 | ||||
Discount Minimum | 10.00% | ||||
Discount Maximum | 90.00% | ||||
Common Stock [Member] | Securities Purchase Agreement AJB No. 2 Note [Member] | |||||
Exercise price per share | $ 0.40 | ||||
Principal amount | $ 600,000 | ||||
Warrant to purchase shares | 500,000 | ||||
Common stock Issued | 1,000,000 | ||||
Derivative liability | $ 93,196 | ||||
Debt discount | $ 206,446 | ||||
Common stock issuance related to debt | 1,000,000 | ||||
Issued shares of common stock as partial consideration for commitment fee | 1,000,000 | ||||
Per common share of common stock as partial consideration for commitment fee | $ 0.17 |
CONVERTIBLE NOTES PAYABLE (Deta
CONVERTIBLE NOTES PAYABLE (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
CONVERTIBLE NOTES PAYABLE | ||
ConvertibleDebt | $ 1,790,000 | $ 1,790,000 |
Debt discount | 466,890 | 599,239 |
Convertible debt, net of debt discount | 1,323,100 | 1,190,761 |
Short-term convertible debt, net of debt discount | 1,159,179 | 831,991 |
Long-term convertible debt, net of debt discount | $ 163,931 | $ 358,770 |
CONVERTIBLE NOTES PAYABLE (De_2
CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Gross offering proceeds | $ 5,000,000 | ||
A Related Party [Member] | |||
Convertible promissory note | 200,000 | $ 200,000 | |
Several Investors [Member] | |||
Convertible promissory note | 1,190,000 | $ 1,050,000 | |
Interest expense | 132,349 | $ 24,334 | |
Beneficial conversion feature | $ 1,361,675 | ||
Rate of interest | 8.00% | ||
Price per share | $ 0.40 | ||
Due to related party | $ 2,240,000 | ||
Discount rate | 25.00% |
LEASE OBLIGATIONS (Details)
LEASE OBLIGATIONS (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
LEASE OBLIGATIONS (Tables) | ||
Remainder of 2022 | $ 120,216 | |
2023 | 145,383 | |
2024 | 126,320 | |
2025 | 43,970 | |
Total | 435,889 | |
Less: interest | (48,313) | |
Present value of net minimum lease payments | 387,576 | |
Short term | 134,207 | $ 136,220 |
Long term total | $ 253,369 | $ 287,911 |
LEASE OBLIGATIONS (Details 1)
LEASE OBLIGATIONS (Details 1) | 3 Months Ended |
Mar. 31, 2022 | |
LEASE OBLIGATIONS (Tables) | |
Weighted average remaining lease term | 32 years |
Weighted average incremental borrowing rate | 5.00% |
LEASE OBLIGATIONS (Details 2)
LEASE OBLIGATIONS (Details 2) | Mar. 31, 2022USD ($) |
LEASE OBLIGATIONS (Tables) | |
Remainder of 2022 | $ 97,100 |
2023 | 131,859 |
2024 | 120,871 |
Total undiscounted future minimum lease payments | 349,830 |
Less: Imputed interest | (21,781) |
Present value of operating lease obligation | $ 328,049 |
LEASE OBLIGATIONS (Details 3)
LEASE OBLIGATIONS (Details 3) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Operating lease cost | ||
Operating lease cost | $ 32,292 | $ 31,617 |
Finance lease cost | ||
Amortization of leased assets | 36,557 | 26,200 |
Interest expense | 8,196 | 5,417 |
Total lease cost | $ 44,753 | $ 31,617 |
LEASE OBLIGATIONS (Details Narr
LEASE OBLIGATIONS (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Lease payments | $ 44,753 | $ 43,057 | |
Lessee, Finance Lease, Description | These leases range from one to five years. | ||
finance lease obligations secured by underlying leased assets | $ 368,478 | $ 406,358 | |
Minimum [Member] | |||
Leases Periodic payments | $ 354 | ||
Interest rate | 6.99% | ||
Maximum [Member] | |||
Leases Periodic payments | $ 4,397 | ||
Interest rate | 12.00% |
STOCK BASED COMPENSATION (Detai
STOCK BASED COMPENSATION (Details) | 3 Months Ended |
Mar. 31, 2022shares | |
Number of options outstanding | |
2018 Equity incentive plan | 8,826,544 |
Options granted not part of a shareholder approved plan | 700,000 |
March 31, 2022 | 9,526,544 |
STOCK BASED COMPENSATION (Det_2
STOCK BASED COMPENSATION (Details 1) | 3 Months Ended |
Mar. 31, 2022$ / sharesshares | |
Number of options outstanding | |
Number of options outstanding, begining balance | 9,226,544 |
Granted | 300,000 |
Exercised | 0 |
Forfeited / exchanged / modification | 0 |
Number of options outstanding, ending balance | 9,526,544 |
Number of options exercisable at end of period | 7,476,554 |
Number of options available for grant at end of period | 9,173,456 |
Weighted average option prices per share | |
Weighted average option prices per share, Outstanding at beginning of the period | $ / shares | $ 0.41 |
Granted during the period | $ / shares | 0.17 |
Exercised during the period | $ / shares | 0 |
Terminated during the period | $ / shares | 0 |
Weighted average option prices per share, Outstanding at end of the period | $ / shares | 0.43 |
Exercisable at end of period | $ / shares | $ 0.41 |
STOCK BASED COMPENSATION (Det_3
STOCK BASED COMPENSATION (Details 2) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2020 | |
STOCK BASED COMPENSATION | ||
Expected option life (years) | 6 years 6 months | 6 years 6 months |
Expected stock price volatility | 130.00% | 117.00% |
Expected dividend yield | 0.00% | 0.00% |
Risk-free interest rate | 2.03% | 1.15% |
STOCK BASED COMPENSATION (Det_4
STOCK BASED COMPENSATION (Details 3) | 3 Months Ended |
Mar. 31, 2022shares | |
Number of options outstanding, begining balance | 9,226,544 |
Granted | 300,000 |
Exercised, converted | 0 |
Forfeited / exchanged / modification | 0 |
Number of options outstanding, ending balance | 9,526,544 |
Warrants [Member] | |
Number of options outstanding, begining balance | 1,372,752 |
Granted | 500,000 |
Exercised, converted | 0 |
Forfeited / exchanged / modification | 0 |
Number of options outstanding, ending balance | 1,872,752 |
STOCK BASED COMPENSATION (Det_5
STOCK BASED COMPENSATION (Details Narrative) - USD ($) | May 05, 2021 | Mar. 31, 2022 | Mar. 31, 2021 |
Stock-based compensation expense | $ 211,283 | $ 297,417 | |
Description of stock option of shares | stock option plan that increases the available options from 8,000,000 shares to 18,000,000 shares, which was approved by majority written consent of the shareholders | ||
Unrecognized compensation expense | $ 786,932 | ||
Weighted average vesting period of options | 5 years | ||
2018 Equity Incentive Plan | |||
Maximum number of shares granted under plan | 18,000,000 | ||
Warrants [Member] | |||
Granted warrant to purchase shares of common stock | 500,000 | ||
Granted warrant to purchase common stock, per share | $ 0.40 | ||
Exercise price | $ 0.625 | ||
Total value of warrants granted | $ 39,295 | ||
Term of options/rights | three-year | ||
Warrants [Member] | Consultant [Member] | |||
Issued warrant to purchase up to shares of common stock | 750,000 | ||
Warrants [Member] | The Gamwell Contract [Member] | |||
Exercise price | $ 0.375 | ||
Common stock shares issuable upon exercise of options/rights | 122,752 | ||
Expiration date | Apr. 23, 2028 | ||
Per common share price | $ 0.625 | ||
Stock Options [Member] | |||
Weighted average vesting period of options | 3 years | 3 years | |
Exercise price | $ 0.17 | $ 0.56 | |
Average expected life | 6 years 6 months | 6 years 6 months | |
Common stock shares issuable upon exercise of options/rights | 300,000 | 500,000 | |
Total value of options/rights granted | $ 46,346 | $ 243,964 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) | 3 Months Ended |
Mar. 31, 2022USD ($) | |
RELATED PARTY TRANSACTIONS | |
Related party expenses | $ 22,500 |
SIGNIFICANT CUSTOMERS (Details)
SIGNIFICANT CUSTOMERS (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Net Revenue [Member] | Customer B [Member] | |||
Concentration percentage | 12.00% | 11.00% | |
Net Revenue [Member] | Customer A [Member] | |||
Concentration percentage | 53.00% | 54.00% | |
Accounts receivable [Member] | Customer A [Member] | |||
Concentration percentage | 85.00% | 92.00% |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] | May 04, 2022USD ($)$ / sharesshares |
Promissory note principal amount | $ 500,000 |
Common stock purchase warrant | shares | 416,667 |
Common stock, shares guaranteed commitment fee | shares | 1,666,667 |
Aggregate cash proceeds | $ 408,500 |
Original issue discount | 50,000 |
Broker fee | 31,500 |
Legal fee | $ 10,000 |
Exercise price | $ / shares | $ 0.40 |
Payment of monthly retainers, per hour rate | $ 250 |