Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Jun. 26, 2020 | |
Document Information Line Items | ||
Entity Registrant Name | SCWorx Corp. | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 9,385,582 | |
Amendment Flag | false | |
Entity Central Index Key | 0001674227 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Mar. 31, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Shell Company | false | |
Entity Ex Transition Period | false | |
Entity File Number | 001-37899 | |
Entity Incorporation, State or Country Code | DE | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash | $ 201,092 | $ 487,953 |
Accounts receivable - net of allowance of $344,412 as of March 31, 2020 and December 31, 2019 | 606,215 | 799,246 |
Prepaid expenses and other assets | 378,155 | 11,160 |
Total current assets | 1,185,462 | 1,298,359 |
Fixed assets | 102,941 | 105,199 |
Goodwill | 8,366,467 | 8,366,467 |
Intangible assets | 195,733 | 205,219 |
Other assets | 17,561 | |
Total assets | 9,850,603 | 9,992,805 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 2,316,405 | 2,010,556 |
Contract liabilities | 1,390,637 | 1,056,637 |
Total current liabilities | 3,707,042 | 3,067,193 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Series A Convertible Preferred stock, $0.001 par value; 900,000 shares authorized; 511,067 and 578,567 shares issued and outstanding, respectively | 511 | 579 |
Common stock, $0.001 par value; 45,000,000 shares authorized; 7,634,561 and 7,390,261 shares issued and outstanding, respectively | 7,636 | 7,391 |
Additional paid-in capital | 20,079,538 | 19,712,115 |
Accumulated deficit | (13,944,124) | (12,794,473) |
Total stockholders' equity | 6,143,561 | 6,925,612 |
Total liabilities and stockholders’ equity | $ 9,850,603 | $ 9,992,805 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Accounts receivable net of allowance (in Dollars) | $ 344,412 | $ 344,412 |
Common stock par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 45,000,000 | 45,000,000 |
Common stock, shares issued | 7,634,561 | 7,390,261 |
Common stock, shares outstanding | 7,634,561 | 7,390,261 |
Series A Preferred Stock | ||
Preferred stock par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 900,000 | 900,000 |
Preferred stock, shares issued | 511,067 | 578,567 |
Preferred stock, shares outstanding | 511,067 | 578,567 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Revenue | $ 1,123,827 | $ 1,248,104 |
Operating expenses: | ||
Cost of revenues | 833,200 | 971,209 |
General and administrative | 1,440,278 | 6,627,939 |
Total operating expenses | 2,273,478 | 7,599,148 |
Loss from operations | (1,149,651) | (6,351,044) |
Other income (expenses): | ||
Interest expense | (23,720) | |
Other income | 465,055 | |
Total other income (expense) | 441,335 | |
Net loss before income taxes | (1,149,651) | (5,909,709) |
Provision for (benefit from) income taxes | (195,000) | |
Net loss | $ (1,149,651) | $ (5,714,709) |
Net loss per share, basic and diluted (in Dollars per share) | $ (0.15) | $ (1.27) |
Weighted average common shares outstanding, basic and diluted (in Shares) | 7,568,491 | 4,492,919 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Changes In Stockholders’ Equity (Unaudited) - USD ($) | Preferred Stock | Common stock | Additional paid-in capital | Accumulated deficit | Total |
Balances at Dec. 31, 2018 | $ 5,838 | $ 1,244,273 | $ (1,481,973) | $ (231,862) | |
Balances (in Shares) at Dec. 31, 2018 | 5,838,149 | ||||
Surrender of common stock in settlement of due from stockholder balance | $ (575) | (1,608,258) | (1,608,833) | ||
Surrender of common stock in settlement of due from stockholder balance (in Shares) | (574,991) | ||||
Series A Convertible Preferred Stock issuance (Alliance MMA) | $ 619 | 5,980,326 | 5,980,945 | ||
Series A Convertible Preferred Stock issuance (Alliance MMA) (in Shares) | 619,138 | ||||
Issuance of common stock | $ 1,283 | 5,883,078 | 5,884,361 | ||
Issuance of common stock (in Shares) | 1,283,124 | ||||
Series A Preferred Stock issuance | $ 8 | 74,992 | 75,000 | ||
Series A Preferred Stock issuance (in Shares) | 7,500 | ||||
Conversion of notes payable - related party into Series A Convertible Preferred Stock | $ 190 | 1,899,810 | 1,900,000 | ||
Conversion of notes payable - related party into Series A Convertible Preferred Stock (in Shares) | 190,000 | ||||
Exercise of warrants | $ 10 | 61,013 | 61,023 | ||
Exercise of warrants (in Shares) | 9,891 | ||||
Issuance of warrants in settlement of lease dispute | 66,275 | 66,275 | |||
Shares issued in cashless exercise of warrants | $ 4 | (4) | |||
Shares issued in cashless exercise of warrants (in Shares) | 3,732 | ||||
Stock-based compensation related to founder’s transfers of common stock to contractors | 5,322,930 | 5,322,930 | |||
Stock-based compensation related to employee and contractor equity awards | $ 3 | 306,900 | 306,903 | ||
Stock-based compensation related to employee and contractor equity awards (in Shares) | 3,290 | ||||
Stock and warrant dividend | (1,705,722) | (1,705,722) | |||
Net loss | (5,714,709) | (5,714,709) | |||
Ending balance at Mar. 31, 2019 | $ 817 | $ 6,563 | 17,525,613 | (7,196,682) | 10,336,311 |
Ending balance (in Shares) at Mar. 31, 2019 | 816,638 | 6,563,195 | |||
Balances at Dec. 31, 2019 | $ 579 | $ 7,391 | 19,712,115 | (12,794,473) | 6,925,612 |
Balances (in Shares) at Dec. 31, 2019 | 578,567 | 7,390,261 | |||
Conversion of Series A preferred stock into common stock | $ (68) | $ 178 | (110) | ||
Conversion of Series A preferred stock into common stock (in Shares) | (67,500) | 177,633 | |||
Shares issued to a current and former employee | $ 67 | 367,533 | 367,600 | ||
Shares issued to a current and former employee (in Shares) | 66,667 | ||||
Net loss | (1,149,651) | (1,149,651) | |||
Ending balance at Mar. 31, 2020 | $ 511 | $ 7,636 | $ 20,079,538 | $ (13,944,124) | $ 6,143,561 |
Ending balance (in Shares) at Mar. 31, 2020 | 511,067 | 7,634,561 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Cash Flows [Abstract] | ||
Net loss | $ (1,149,651) | $ (5,714,709) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 2,259 | 451 |
Amortization of intangibles | 9,486 | 6,324 |
Gain (loss) on change in fair value of warrant assets | (55,000) | |
Gain (loss) on change in fair value of convertible notes receivable | (531,405) | |
Stock-based compensation | 367,600 | 5,629,833 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 193,031 | (248,338) |
Prepaid expenses and other assets | (349,434) | (252,907) |
Accounts payable and accrued liabilities | 305,848 | (1,395,154) |
Contract liabilities | 334,000 | (4,792) |
Net cash used in operating activities | (286,861) | (2,565,697) |
Cash flows from investing activities: | ||
Cash acquired in reverse acquisition | 5,441,437 | |
Advances to shareholder | (199,549) | |
Purchase of convertible notes receivable - Alliance MMA | (215,000) | |
Purchase of fixed assets | (28,383) | |
Net cash provided by investing activities | 4,998,505 | |
Cash flows from financing activities: | ||
Proceeds from notes payable - related party | 120,000 | |
Proceeds from exercise of warrants | 61,023 | |
Proceeds from preferred stock placement | 75,000 | |
Net cash provided by financing activities | 256,023 | |
Net (decrease) increase in cash | (286,861) | 2,688,831 |
Cash, beginning of period | 487,953 | 76,459 |
Cash, end of period | 201,092 | 2,765,290 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | ||
Cash paid for income taxes | ||
Non-cash investing and financing activities: | ||
Shares issued to a current and former employee | $ 67 | |
Issuance of warrant in settlement of vendor liability | 66,275 | |
Cashless exercise of warrant | 4 | |
Surrender of common stock in settlement of due from shareholder balance | 1,608,833 | |
Stock and warrant dividend | 1,705,722 | |
Warrants issued to company | 19,000 | |
Conversion of notes payable-related party and interest into Series A Convertible Preferred Stock | 1,900,000 | |
Issuance of preferred and common stock in connection with acquisition of Alliance MMA, net of cash | $ 6,424,054 |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Description of Business | Note 1. Description of Business Nature of Business SCWorx, LLC (n/k/a SCW FL Corp.) (“SCW LLC”) was a privately held limited liability company which was organized in Florida on November 17, 2016. On December 31, 2017, SCW LLC acquired Primrose Solutions, LLC (“Primrose”), a Delaware limited liability company, which became its wholly-owned subsidiary and focused on developing functionality for the software now used and sold by SCWorx Corp. (the “Company” or “SCWorx”). The majority interest holders of Primrose were interest holders of SCW LLC and based upon Staff Accounting Bulletin Topic 5G, the technology acquired has been accounted for at predecessor cost of $0. To facilitate the planned acquisition by Alliance MMA, Inc., a Delaware corporation (“Alliance”), on June 27, 2018, SCW LLC merged with and into a newly-formed entity, SCWorx Acquisition Corp., a Delaware corporation (“SCW Acquisition”), with SCW Acquisition being the surviving entity. Subsequently, on August 17, 2018, SCW Acquisition changed its name to SCWorx Corp. On November 30, 2018, the Company and certain of its stockholders agreed to cancel 6,510 shares of common stock. In June 2018, the Company began to collect subscriptions for common stock. From June to November 2018, the Company collected $1,250,000 in subscriptions and issued 3,125 shares of common stock to new third-party investors. In addition, on February 1, 2019, (i) SCWorx Corp. (f/k/a SCWorx Acquisition Corp.) changed its name to SCW FL Corp. (to allow Alliance to change its name to SCWorx Corp.) and (ii) Alliance acquired SCWorx Corp. (n/k/a SCW FL Corp.) in a stock-for-stock exchange transaction and changed Alliance’s name to SCWorx Corp., which is the Company’s current name, with SCW FL Corp. becoming the Company’s subsidiary. On March 16, 2020, in response to the COVID-19 pandemic, SCWorx established a wholly-owned subsidiary, Direct-Worx, LLC. Business Combination and Related Transactions On February 1, 2019, Alliance MMA completed the acquisition of SCWorx, changed its name to SCWorx Corp., changed its ticker symbol to “WORX”, and effected a one-for-nineteen reverse stock split of its common stock [bracketed amounts represent post-split adjusted shares or per share amounts], which combined the 100,000,000 Alliance shares of common stock issued to the Company’s shareholders into 5,263,158 shares of common stock of the newly combined company. From a legal perspective, Alliance MMA acquired SCWorx FL Corp, and as a result, historical equity awards including stock options and warrants are carried forward at their historical basis. From an accounting perspective, Alliance MMA was acquired by SCWorx FL Corp in a reverse merger and as a result, the Company has completed preliminary purchase accounting for the transaction. Operations of the Business SCWorx is a leading provider of data content and services related to the repair, normalization and interoperability of information for healthcare providers and big data analytics for the healthcare industry. SCWorx has developed and markets health information technology solutions and associated services that improve healthcare processes and information flow within hospitals. SCWorx’s software platform enables healthcare providers to simplify, repair, and organize its data (“data normalization”), allows the data to be utilized across multiple internal software applications (“interoperability”) and provides the basis for sophisticated data analytics (“big data”). SCWorx’s solutions are designed to improve the flow of information quickly and accurately between the existing supply chain, electronic medical records, clinical systems, and patient billing functions. The software is designed to achieve multiple operational benefits such as supply chain cost reductions, decreased accounts receivables aging, accelerated and more accurate billing, contract optimization, increased supply chain management and cost visibility, synchronous Charge Description Master (“CDM”) and control of vendor rebates and contract administration fees. SCWorx empowers healthcare providers to maintain comprehensive access and visibility to an advanced business intelligence that enables better decision-making and reductions in product costs and utilization, ultimately leading to accelerated and accurate patient billing. SCWorx’s software modules perform separate functions as follows: ● virtualized Item Master File repair, expansion and automation; ● CDM management; ● contract management; ● request for proposal automation; ● rebate management; ● big data analytics modeling; and ● data integration and warehousing. SCWorx continues to provide transformational data-driven solutions to some of the finest, most well-respected healthcare providers in the United States. Clients are geographically dispersed throughout the country. The Company’s focus is to assist healthcare providers with issues they have pertaining to data interoperability. SCWorx provides these solutions through a combination of direct sales and relationships with strategic partners. SCWorx’s software solutions are delivered to clients within a fixed term period, typically a three-to-five-year contracted term, where such software is hosted in SCWorx data centers (Amazon Web Service’s “AWS” or RackSpace) and accessed by the client through a secure connection in a software as a service (“SaaS”) delivery method. SCWorx currently sells its solutions and services in the United States to hospitals and health systems through its direct sales force and its distribution and reseller partnerships. SCWorx, as part of the acquisition of Alliance MMA, operates an online event ticketing platform focused on serving regional MMA (“mixed martial arts”) promotions. The Company currently hosts its solutions, serves its customers, and supports its operations in the United States through an agreement with a third party hosting and infrastructure provider, Rackspace. The Company incorporates standard IT security measures, including but not limited to; firewalls, disaster recovery, backup, etc. The Company’s operations are dependent upon the integrity, security and consistent operation of various information technology systems and data centers that process transactions, communication systems and various other software applications used throughout its operations. Disruptions in these systems could have an adverse impact on the Company’s operations. The Company could encounter difficulties in developing new systems or maintaining and upgrading existing systems. Such difficulties could lead to significant expenses or to losses due to disruption in the Company’s business operations. In addition, the Company’s information technology systems are subject to the risk of infiltration or data theft. The techniques used to obtain unauthorized access, disable or degrade service, or sabotage information technology systems change frequently and may be difficult to detect or prevent over long periods of time. Moreover, the hardware, software or applications the Company develops or procures from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise the security of the Company’s information systems. Unauthorized parties may also attempt to gain access to the Company’s systems or facilities through fraud or deception aimed at its employees, contractors or temporary staff. In the event that the security of the Company’s information systems is compromised, confidential information could be misappropriated, and system disruptions could occur. Any such misappropriation or disruption could cause significant harm to the Company’s reputation, lead to a loss of sales or profits or cause the Company to incur significant costs to reimburse third parties for damages. Impact of the COVID-19 Pandemic The Company’s operations and business have experienced disruption due to the unprecedented conditions surrounding the COVID-19 pandemic spreading throughout the United States and the world. The New York and New Jersey area, where the Company is headquartered, was at one of the early epicenters of the coronavirus outbreak in the United States. The outbreak has since spread to the rest of the country and is impacting new customer acquisition. The Company has been following the recommendations of local health authorities to minimize exposure risk for its team members since the outbreak. In addition, the Company’s customers (hospitals) have also experienced extraordinary disruptions to their businesses and supply chains, while experiencing unprecedented demand for health care services related to COVID-19. As a result of these extraordinary disruptions to the Company’s customers’ business, the Company’s customers are currently focused on meeting the nation’s health care needs in response to the COVID-19 pandemic. As a result, there is a significant risk that the Company’s customers will not be able to focus any resources on expanding the utilization of the Company’s services, which could adversely impact its future growth prospects, at least until the adverse effects of the pandemic subside. In addition, the financial impact of COVID-19 on the Company’s hospital customers could cause the hospitals to delay payments due to the Company for services, which could negatively impact the Company’s cash flows. The Company is endeavoring to mitigate these risks through the sale of personal protective equipment (“PPE”) and COVID-19 rapid test kits to the health care industry, including many of the Company’s hospital customers. On March 16, 2020, in response to the COVID-19 pandemic, SCWorx established a wholly-owned subsidiary, Direct-Worx, LLC, which will utilize the SCWorx database to identify trends within the purchasing supply chain and use this information to source and provide critical, difficult-to-find items for the healthcare industry. Items may become difficult to source due to unexpected disruptions within the supply chain, such as the COVID-19 pandemic. These products currently include: ● Test Kits — the Company has identified multiple potential sources for Rapid Test Kits for COVID-19. ● PPE — Personal Protective Equipment (PPE) includes items such as masks, gloves, gowns, shields, etc. The Company’s Chief Executive Officer and employees have extensive experience in the healthcare industry and industry contacts, and a database of items specifically designated to assist the healthcare industry in fulfilling its inventory demands. The sale of PPE and rapid test kits for COVID-19 represent a new business for the Company and is subject to the myriad risks associated with any new venture. The Company has for example encountered great difficulty in attempting to secure reliable sources of supply for both COVID-19 Rapid Test Kits and PPE including, 3M N95 masks, which are the preferred medical grade mask of US healthcare companies. Further, the Company has encountered shipping delays with regard to masks and other PPE, and significant quality related issues regarding N95 masks. In addition, regarding the Company’s sourcing of COVID-19 Rapid Test Kits, the Company has encountered significant shipping delays, as well as reduced quantities. Consequently, there is no assurance as to the timing or quantities of any future deliveries of COVID-19 Test Kits. For the three months ended March 31, 2020, the Company did not complete the sale of any COVID-19 rapid test kits or PPE, and had no test kits or PPE in inventory as of March 31, 2020. In addition, changes in FDA processes governing the sale of COVID-19 serology tests could have the effect of rendering the COVID-19 serology tests to be sold by the Company not saleable in the United States, which could have a material adverse effect on the Company. There can be no assurance that the Company will be able to generate any significant revenue from the sale of PPE products or rapid test kits. As of the date of this report, the Company has not generated any material revenue from the sale of PPE. |
Liquidity and Going Concern
Liquidity and Going Concern | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Liquidity and Going Concern | Note 2. Liquidity and Going Concern The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), which contemplates continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustment that might become necessary should the Company be unable to continue as a going concern. The Company’s primary need for liquidity is to fund the working capital needs of the business and general corporate purposes. The Company has historically incurred losses and has relied on borrowings and equity capital to fund the operations and growth of the business. The Company has suffered recurring losses from operations and incurred a net loss of $1,149,651 for the three months ended March 31, 2020. As of March 31, 2020, the Company had cash of $201,092, a working deficit of $2,521,580, and an accumulated deficit of $13,944,124. The Company has not yet achieved profitability and expects to continue to incur cash outflows from operations. It is expected that its operating expenses will continue to increase and, as a result, the Company will eventually need to generate significant increases in product revenues to achieve profitability. These conditions indicate that there is substantial doubt about the Company’s ability to continue as a going concern within one year after the condensed consolidated financial statement issuance date. On May 5, 2020, the Nasdaq Stock Market informed the Company that it had initiated a “T12 trading halt,” which means the halt will remain in place until the Company has fully satisfied Nasdaq’s request for additional information. This trading halt could impact the Company’s ability to raise additional capital. The Company is evaluating various alternatives, including reducing operating expenses, securing additional financing through debt or equity securities to fund future business activities and other strategic alternatives. There can be no assurance that the Company will be able to generate the level of operating revenues in its business plan, or if additional sources of financing will be available on acceptable terms, if at all. If no additional sources of financing are available, the Company’s future operating prospects may be adversely affected. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 3. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The accompanying consolidated financial statements include the accounts of SCWorx and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. These interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information. They do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited financial statements and notes thereto contained in its report on Form 10-K for the year ended December 31, 2019. The consolidated financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company's financial position at March 31, 2020, and the results of its operations and cash flows for the three months ended March 31, 2020. The results of operations for the period ended March 31, 2020 are not necessarily indicative of the results to be expected for future quarters or the full year. Reclassifications A reclassification has been made to the consolidated balance sheet and consolidated statement of changes in stockholders’ equity to break out the total Series A Convertible Preferred Stock par value of $819 and additional paid in capital of $7,980,126. Previously, for the quarter ended March 31, 2019, the entire balance was disclosed as Series A Convertible Preferred Stock. This change in classification does not affect the previously reported total stockholders’ equity balance. In addition, the authorized common stock has been restated to reflect the correct amount of 45,000,000 authorized shares of common stock. In addition, certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on reported results of operations or cash flows. Cash Cash is maintained with various financial institutions. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. There were no amounts in excess of the FDIC insured limit as of March 31, 2020 and December 31, 2019. Fair Value of Financial Instruments Management applies fair value accounting for significant financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis. Management defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, management considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. Concentration of Credit and Other Risks Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, accounts receivable and warrants. The Company believes that any concentration of credit risk in its accounts receivable is substantially mitigated by the Company’s evaluation process, relatively short collection terms and the high level of credit worthiness of its customers. The Company performs ongoing internal credit evaluations of its customers’ financial condition, obtains deposits and limits the amount of credit extended when deemed necessary but generally requires no collateral. For the quarter ended March 31, 2020, the Company had one customer representing 21% of aggregate revenues. For the quarter ended March 31, 2019, the Company had two customers representing 24% and 11% of aggregate revenues. At March 31, 2020, the Company had five customers representing 22%, 16%, 12%, 11% and 11% of aggregate accounts receivable. At March 31, 2019, the Company had three customers representing 32%, 18%, and 12% of aggregate accounts receivable. Allowance for Doubtful Accounts The Company continually monitors customer payments and maintains a reserve for estimated losses resulting from its customers’ inability to make required payments. In determining the reserve, the Company evaluates the collectability of its accounts receivable based upon a variety of factors. In cases where the Company becomes aware of circumstances that may impair a specific customer’s ability to meet its financial obligations, the Company records a specific allowance against amounts due. For all other customers, the Company recognizes allowances for doubtful accounts based on its historical write-off experience in conjunction with the length of time the receivables are past due, customer creditworthiness, geographic risk and the current business environment. Actual future losses from uncollectible accounts may differ from the Company’s estimates. The Company’s allowance for doubtful accounts as of March 31, 2020 and December 31, 2019 was $344,412. Business Combinations The Company includes the results of operations of a business it acquires in its consolidated results as of the date of acquisition. The Company allocates the fair value of the purchase consideration of its acquisition to the tangible assets, liabilities and intangible assets acquired, based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. The primary items that generate goodwill include the value of the synergies between the acquired businesses and the Company. Intangible assets are amortized over their estimated useful lives. The fair value of contingent consideration (earn out) associated with acquisitions is remeasured each reporting period and adjusted accordingly. Acquisition and integration related costs are recognized separately from the business combination and are expensed as incurred. Goodwill and Purchased Identified Intangible Assets Goodwill Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible and identified intangible assets acquired under a business combination. Goodwill also includes acquired assembled workforce, which does not qualify as an identifiable intangible asset. The Company reviews impairment of goodwill annually in the third quarter, or more frequently if events or circumstances indicate that the goodwill might be impaired. The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. If, after assessing the totality of events or circumstances, the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the quantitative goodwill impairment test is unnecessary. Identified intangible assets Identified finite-lived intangible assets consist of ticketing software and promoter relationships resulting from the February 1, 2019 business combination. The Company’s identified intangible assets are amortized on a straight-line basis over their estimated useful lives, ranging from 5 to 7 years. The Company makes judgments about the recoverability of finite-lived intangible assets whenever facts and circumstances indicate that the useful life is shorter than originally estimated or that the carrying amount of assets may not be recoverable. If such facts and circumstances exist, the Company assesses recoverability by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets. If the useful life is shorter than originally estimated, the Company would accelerate the rate of amortization and amortize the remaining carrying value over the new shorter useful life. For further discussion of identified intangible assets, refer to Note 4, Intangible Assets. Property and Equipment Property and equipment are recorded at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the related assets’ estimated useful lives. Equipment, furniture and fixtures are being amortized over a period of three years. Expenditures that materially increase asset life are capitalized, while ordinary maintenance and repairs are expensed as incurred. Depreciation expense for the three months ended March 31, 2020 and 2019 was $2,259 and $451, respectively. Revenue Recognition The Company recognizes revenue in accordance with Topic 606 to depict the transfer of promised goods or services in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of Topic 606 the Company performs the following steps: ● Step 1: Identify the contract(s) with a customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation The Company follows the accounting revenue guidance under Topic 606 to determine whether contracts contain more than one performance obligation. Performance obligations are the unit of accounting for revenue recognition and generally represent the distinct goods or services that are promised to the customer. The Company has identified the following performance obligations in its contracts with customers: 1) Data Normalization: which includes data preparation, product and vendor mapping, product categorization, data enrichment and other data related services, 2) Software-as-a-service (“SaaS”): which is generated from clients’ access of and usage of the Company’s hosted software solutions on a subscription basis for a specified contract term, which is usually annually. In SaaS arrangements, the client cannot take possession of the software during the term of the contract and generally has the right to access and use the software and receive any software upgrades published during the subscription period, 3) Maintenance: which includes ongoing data cleansing and normalization, content enrichment, and optimization, and 4) Professional Services: mainly related to specific customer projects to manage and/or analyze data and review for cost reduction opportunities. A contract will typically include Data Normalization, SaaS and Maintenance, which are distinct performance obligations and are accounted for separately. The transaction price is allocated to each separate performance obligation on a relative stand-alone selling price basis. Significant judgement is required to determine the stand-alone selling price for each distinct performance obligation and is typically estimated based on observable transactions when these services are sold on a stand-alone basis. At contract inception, an assessment of the goods and services promised in the contracts with customers is performed and a performance obligation is identified for each distinct promise to transfer to the customer a good or service (or bundle of goods or services). To identify the performance obligations, the Company considers all the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. Revenue is recognized when the performance obligation has been met. The Company considers control to have transferred upon delivery because the Company has a present right to payment at that time, the Company has transferred use of the good or service, and the customer is able to direct the use of, and obtain substantially all the remaining benefits from, the good or service. The Company’s SaaS and Maintenance contracts typically have termination for convenience without penalty clauses and accordingly, are generally accounted for as month-to-month agreements. If it is determined that the Company has not satisfied a performance obligation, revenue recognition will be deferred until the performance obligation is deemed to be satisfied. Revenue recognition for the Company’s performance obligations are as follows: Data Normalization and Professional Services The Company’s Data Normalization and Professional Services are typically fixed fee. When these services are not combined with SaaS or Maintenance revenues as a single unit of accounting, these revenues are recognized as the services are rendered and when contractual milestones are achieved and accepted by the customer. SaaS and Maintenance SaaS and Maintenance revenues are recognized ratably over the contract terms beginning on the commencement date of each contract, which is the date on which the Company’s service is made available to customers. The Company does have some contracts that have payment terms that differ from the timing of revenue recognition, which requires the Company to assess whether the transaction price for those contracts includes a significant financing component. The Company has elected the practical expedient that permits an entity to not adjust for the effects of a significant financing component if it expects that at the contract inception, the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. The Company does not maintain contracts in which the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service exceeds the one-year threshold. The Company has one revenue stream, from the SaaS business, and believes it has presented all varying factors that affect the nature, timing and uncertainty of revenues and cash flows. As of March 31, 2020 and December 31, 2019, the Company had $1,390,637 and $1,056,637, respectively, of remaining performance obligations recorded as contract liabilities. The Company expects to recognize sales relating to these existing performance obligations of $1,390,637 during the remainder of 2020. Costs to Obtain and Fulfill a Contract Costs to fulfill a contract typically include costs related to satisfying performance obligations as well as general and administrative costs that are not explicitly chargeable to customer contracts. These expenses are recognized and expensed when incurred in accordance with ASC 340-40. Cost of Revenues Cost of revenues primarily represent data center hosting costs, consulting services and maintenance of the Company’s large data array that were incurred in delivering professional services and maintenance of the Company’s large data array during the periods presented. Contract Balances Contract assets arise when the associated revenue was earned prior to the Company’s unconditional right to receive a payment under a contract with a customer (unbilled revenue) and are derecognized when either it becomes a receivable or the cash is received. There were no contract assets as of March 31, 2020 and December 31, 2019. Contract liabilities arise when customers remit contractual cash payments in advance of the Company satisfying its performance obligations under the contract and are derecognized when the revenue associated with the contract is recognized when the performance obligation is satisfied. Contract liabilities were $1,390,637 and $1,056,637 as of March 31, 2020 and December 31, 2019, respectively. Income Taxes The Company uses the asset and liability method of accounting for income taxes in accordance with Accounting Standard Codification (“ASC”) Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of March 31, 2020 and December 31, 2019, the Company has evaluated available evidence and concluded that the Company may not realize all the benefits of its deferred tax assets; therefore, a valuation allowance has been established for its deferred tax assets. ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has no material uncertain tax positions for any of the reporting periods presented. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company continues to examine the impact that the CARES Act may have on its business but does not expect the impact to be material. The income tax benefit for the quarters ended March 31, 2020 and 2019 was $0 and $195,000, respectively. Stock-Based Compensation The Company accounts for stock-based compensation expense in accordance with the authoritative guidance on share-based payments. Under the provisions of the guidance, stock-based compensation expense is measured at the grant date based on the fair value of the option or warrant using a Black-Scholes option pricing model and is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period. The authoritative guidance also requires that the Company measures and recognizes stock-based compensation expense upon modification of the term of stock award. The stock-based compensation expense for such modification is accounted for as a repurchase of the original award and the issuance of a new award. Calculating stock-based compensation expense requires the input of highly subjective assumptions, including the expected term of the stock-based awards, stock price volatility, and the pre-vesting option forfeiture rate. The Company estimates the expected life of options granted based on historical exercise patterns, which are believed to be representative of future behavior. The Company estimates the volatility of the Company’s common stock on the date of grant based on historical volatility. The assumptions used in calculating the fair value of stock-based awards represent the Company’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, its stock-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. The Company estimates the forfeiture rate based on historical experience of its stock-based awards that are granted, exercised and cancelled. If the actual forfeiture rate is materially different from the estimate, stock-based compensation expense could be significantly different from what was recorded in the current period. The Company also grants performance based restricted stock awards to employees and consultants. These awards will vest if certain employee\consultant-specific or company-designated performance targets are achieved. If minimum performance thresholds are achieved, each award will convert into a designated number of the Company’s common stock. If minimum performance thresholds are not achieved, then no shares will be issued. Based upon the expected levels of achievement, stock-based compensation is recognized on a straight-line basis over the requisite service period. The expected levels of achievement are reassessed over the requisite service periods and, to the extent that the expected levels of achievement change, stock-based compensation is adjusted in the period of change and recorded on the statements of operations and the remaining unrecognized stock-based compensation is recorded over the remaining requisite service period. Refer to Note 7, Stockholders’ Equity, for additional detail. Loss Per Share The Company computes earnings (loss) per share in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted earnings (loss) per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing the loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of March 31, 2020 and 2019, the Company had 1,650,511 and 384,647, respectively, of common stock equivalents outstanding. Indemnification The Company provides indemnification of varying scope to certain customers against claims of intellectual property infringement made by third parties arising from the use of the Company’s software. In accordance with authoritative guidance for accounting for guarantees, the Company evaluates estimated losses for such indemnification. The Company considers such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. To date, no such claims have been filed against the Company and no liability has been recorded in its condensed consolidated financial statements. As permitted under Delaware law, the Company has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. In addition, the Company has directors’ and officers’ liability insurance coverage that is intended to reduce its financial exposure and may enable it to recover any payments above the applicable policy retention, should they occur. Contingencies The Company records a liability when the Company believes that it is both probable that a loss has been incurred and the amount can be reasonably estimated. If the Company determines that a loss is reasonably possible, and the loss or range of loss can be estimated, the Company discloses the possible loss in the notes to the consolidated financial statements. The Company reviews the developments in its contingencies that could affect the amount of the provisions that has been previously recorded, and the matters and related possible losses disclosed. The Company adjusts provisions and changes to its disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Significant judgment is required to determine both the probability and the estimated amount. Legal costs associated with loss contingencies are accrued based upon legal expenses incurred by the end of the reporting period. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. The Company regularly evaluates estimates and assumptions related to the allowance for doubtful accounts, the estimated useful lives and recoverability of long-lived assets, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Actual results could differ materially from those estimates. Recently Issued Accounting Pronouncements In October 2018, the FASB issued ASU No. 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities (“ASU 2018-17”). ASU 2018-17 provides that indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. ASU 2018-17 is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. We adopted this new standard on January 1, 2020, and the adoption of the standard did not have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective in the first quarter of fiscal 2020, and earlier adoption is permitted. We adopted this new standard on January 1, 2020, and the adoption of the standard did not have a material impact on our consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which eliminates step two from the goodwill impairment test. Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. We adopted this new standard on January 1, 2020, and the adoption of the standard did not have a material impact on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326),” which was subsequently amended in February 2020 by ASU 2020-02 “Financial Instruments - Credit Losses (Topic 326) and Leases (Topic 842).” Topic 326 introduces an impairment model that is based on expected credit losses, rather than incurred losses, to estimate credit losses on certain types of financial instruments (e.g. accounts receivable, loans and held-to-maturity securities), including certain off-balance sheet financial instruments (e.g., loan commitments). The expected credit losses should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments, over the contractual term. Financial instruments with similar risk characteristics may be grouped together when estimating expected credit losses. Topic 326 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the impact the new guidance will have on its consolidated financial statements. |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 4. Intangible Assets Intangible assets as of March 31, 2020 and December 31, 2019 consisted of the following: March 31, 2020 December 31, 2019 Intangible assets Useful life Gross assets Accumulated amortization Net Gross assets Accumulated amortization Net Ticketing software 5 years $ 64,000 $ (14,934 ) $ 49,066 $ 64,000 $ (11,733 ) $ 52,267 Promoter relationships 7 years 176,000 (29,333 ) 146,667 176,000 (23,048 ) 152,952 Total intangible assets $ 240,000 $ (44,267 ) $ 195,733 $ 240,000 $ (34,781 ) $ 205,219 Amortization expense for the three months ended March 31, 2020 and 2019, was $9,486 and $6,324, respectively. As of March 31, 2020, the estimated future amortization expense of amortizable intangible assets is as follows: Year ending December 31, 2020 (remaining 9 months of 2020) $ 28,457 2021 37,943 2022 37,943 2023 37,943 2024 26,209 Thereafter 27,238 Total $ 195,733 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Leases | Note 5. Leases Operating Leases The Company’s principal executive office in New York City is under a month to month arrangement. The Company also had a lease in Greenwich, CT which was set to expire in March 2020 and is now month-to-month. The Company has operating leases for corporate, business and technician offices. Leases with a probable term of 12 months or less, including month-to-month agreements, are not recorded on the condensed consolidated balance sheet, unless the arrangement includes an option to purchase the underlying asset, or an option to renew the arrangement, that the Company is reasonably certain to exercise (short-term leases). The Company recognizes lease expense for these leases on a straight-line bases over the lease term. The Company’s only remaining lease is month-to-month. As a practical expedient, the Company elected, for all office and facility leases, not to separate non-lease components (common-area maintenance costs) from lease components (fixed payments including rent) and instead to account for each separate lease component and its associated non-lease components as a single lease component. The Company uses its incremental borrowing rate for purposes of discounting lease payments. The Company adopted FASB Accounting Standards Codification, Topic 842, Leases (“ASC 842”) electing the practical expedient that allows the Company not to restate its comparative periods prior to the adoption of the standard on January 1, 2019. As such, the disclosures required under ASC 842 are not presented for periods before the date of adoption. For the comparative periods prior to adoption, the Company presented the disclosures which were required under ASC 840. The Company elected the optional transition method and adopted the new guidance on January 1, 2019 on a modified retrospective basis with no restatement of prior period amounts. As allowed under the new accounting standard, the Company elected to apply practical expedients to carry forward the original lease determinations, lease classifications and accounting of initial direct costs for all asset classes at the time of adoption. The Company also elected not to separate lease components from non-lease components and to exclude short-term leases from its condensed consolidated balance sheet. The Company’s adoption of the new standard as of January 1, 2019 resulted in the recognition of right-of-use assets of approximately $53,000 and liabilities of approximately $53,000. There was no impact to the accumulated deficit upon adoption of Topic 842. As of March 31, 2020, assets recorded under operating leases were $0. Operating lease right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The discount rate used to determine the commencement date present value of lease payment is the Company’s incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received. For the three months ended March 31, 2020 and 2019, the components of lease expense were as follows: For the three months ended March 31, 2020 2019 Operating lease cost $ 9,425 $ 11,250 Total lease cost $ 9,425 $ 11,250 Other information related to leases was as follows: For the three months ended March 31, 2020 2019 Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows for operating leases $ 9,425 $ 11,250 Weighted average remaining lease term (months) – operating leases - 12 Weighted average discount rate– operating leases N/A 10 % As of March 31, 2020, the Company has no additional operating leases, other than that noted above, and no financing leases. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 6. Commitments and Contingencies In conducting its business, the Company may become involved in legal proceedings. The Company will accrue a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal fees and other directly related costs expected to be incurred. On April 29, 2020, a securities class action case was filed in the United States District Court for the Southern District of New York against the Company and its CEO. The action is captioned Daniel Yannes, individually and on behalf of all others similarly situated, Plaintiff vs. SCWorx Corp. and Marc S. Schessel, Defendants. On May 27, 2020, a second securities class was filed in the United States District Court for the Southern District of New York against the Company and its CEO. The action is captioned Caitlin Leeburn, individually and on behalf of all others similarly situated, Plaintiff v. SCWorx Corp. and Marc S. Schessel, Defendants. On June 23, 2020, a third securities class was filed in the United States District Court for the Southern District of New York against us and our CEO. The action is captioned Jonathan Charles Leonard, individually and on behalf of all others similarly situated, Plaintiff v. SCWorx Corp. and Marc S. Schessel, Defendants. All three lawsuits allege that our company and our CEO mislead investors in connection with our April 13, 2020 press release with respect to the sale of COVID-19 rapid test kits. The plaintiffs in these actions are seeking unspecified monetary damages. We intend to vigorously defend against these proceedings. On June 15, 2020, a shareholder derivative claim was filed in the United States District Court for the Southern District of New York against Marc S. Schessel, Charles K. Miller, Steven Wallitt (all of whom are current directors), and Robert Christie (a former director) (“Director Defendants”). The action is captioned Javier Lozano, derivatively on behalf of SCWorx Corp., Plaintiff, v. Marc S. Schessel, Charles K. Miller, Steven Wallitt, Defendants, and SCWorx Corp., Nominal Defendant. This lawsuit alleges that the Director Defendants breached their fiduciary duties to us, including by misleading investors in connection with our April 13, 2020 press release with respect to the sale of COVID-19 rapid test kits, failing to correct false and misleading statements and failing to implement proper disclosure and internal controls. The Plaintiff, on our behalf, is seeking an award of monetary damages to us, improvements in our disclosure and internal controls, and legal fees. The Director Defendants intend to vigorously defend against these proceedings. In connection with these actions, the Company may be obligated to indemnify its CEO and any of its officers or directors who incur any liability or expense incurred as a result of serving at the Company’s request in such capacity. In addition, following the April 13, 2020 press release and related disclosures (related to COVID-19 rapid test kits), the Securities and Exchange Commission made an inquiry regarding the disclosures the Company made in relation to the transaction involving COVID-19 test kits. On April 22, 2020, the Securities and Exchange Commission ordered that trading in the securities of the Company be suspended because of “questions and concerns regarding the adequacy and accuracy of publicly available information in the marketplace” (the “SEC Trading Halt”). The SEC Trading Halt expired May 5, 2020, at 11:59 PM EDT. The Company is fully cooperating with the SEC’s investigation and is providing documents and other requested information. In April 2020, the Company received related inquiries from The Nasdaq Stock Market and the Financial Industry Regulatory Authority (FINRA). The Company has been fully cooperating with these agencies and providing information and documents, as requested. On May 5, 2020, the Nasdaq Stock Market informed the Company that it had initiated a “T12 trading halt,” which means the halt will remain in place until the Company has fully satisfied Nasdaq’s request for additional information. The Company continues to fully cooperate with Nasdaq and respond to Nasdaq’s information requests as they are issued. The T12 trading halt remains in effect as of the filing of this Form 10-Q. Also in April 2020, the Company was contacted by the U.S. Attorney’s Office for the District of New Jersey, which is seeking information and documents from the Company’s officers and directors relating primarily to the April 13, 2020 press release concerning COVID-19 rapid test kits. The Company is fully cooperating with the U.S. Attorney’s Office in its investigation. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Note 7. Stockholders’ Equity Authorized Shares The Company has 45,000,000 common shares authorized with a par value of $0.001 per share. Common Stock On January 8, 2020, the Company issued 50,000 shares of common stock to a former employee per the terms of a settlement agreement. On January 17, 2020, the Company issued 5,264 shares of common stock to a holder of its Series A Convertible Preferred Stock upon the conversion of 2,000 of such shares of Series A Convertible Preferred Stock. On February 5, 2020, the Company issued 13,158 shares of common stock to a holder of its Series A Convertible Preferred Stock upon the conversion of 5,000 of such shares of Series A Convertible Preferred Stock. On February 21, 2020, the Company issued an aggregate of 100,000 shares of common stock to a holder of its Series A Convertible Preferred Stock upon the conversion of 38,000 of such shares of Series A Convertible Preferred Stock. On February 22, 2020, the Company issued an aggregate of 39,474 shares of common stock to two holders of its Series A Convertible Preferred Stock upon the conversion of 15,000 of such shares of Series A Convertible Preferred Stock. On February 26, 2020, the Company issued 19,737 shares of common stock to a holder of its Series A Convertible Preferred Stock upon the conversion of 7,500 of such shares of Series A Convertible Preferred Stock. On March 12, 2020, the Company issued 16,667 shares of common stock to an employee pursuant to a vesting schedule. Stock Incentive Plan The number of shares of the Company’s common stock that are issuable pursuant to warrant and stock option grants with time-based vesting as of and for the three months ended March 31, 2020 were: Warrant Grants Stock Option Grants Restricted Stock Units Number of shares subject to warrants Weighted-average exercise price per share Number of shares subject to options Weighted-average exercise price per share Number of shares subject to restricted stock units Weighted-average exercise price per share Balance at December 31, 2019 1,311,916 $ 9.35 338,595 $ 5.96 630,303 $ - Granted - - - - 395,000 - Exercised - - - - - - Cancelled/Forfeited - - - - (250,000 ) - Balance at March 31, 2020 1,311,916 $ 9.35 338,595 $ 5.96 775,303 $ - Exercisable at March 31, 2020 1,311,916 $ 9.35 338,595 $ 5.96 41,667 $ - As of March 31, 2020 and December 31, 2019, the total unrecognized expense for unvested stock options and restricted stock awards, net of actual forfeitures, was approximately $1.9 million and $3.2 million, respectively, to be recognized over a one-year period for restricted stock awards and one year for option grants from the date of grant. Stock-based compensation expense for the three months ended March 31, 2020 and 2019 was as follows: For the three months ended March 31, 2020 2019 Stock-based compensation expense $ 367,600 $ 5,629,833 Stock-based compensation expense categorized by the equity components for the three months ended March 31, 2020 and 2019 was as follows: For the three months ended March 31, 2020 2019 Common stock $ 367,600 $ 257,885 Stock option awards - 49,018 Transfer of common stock by founders to contractors - 5,322,930 Total $ 367,600 $ 5,629,833 |
Net Loss Per Share
Net Loss Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Note 8. Net Loss per Share Basic net loss per share is computed by dividing net loss for the period by the weighted average shares of common stock outstanding during each period. Diluted net loss per share is computed by dividing net loss for the period by the weighted average shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. The Company uses the treasury stock method to determine whether there is a dilutive effect of outstanding option grants. The following securities were excluded from the computation of diluted net loss per share for the periods presented because including them would have been anti-dilutive: For the three months ended March 31, 2020 2019 Stock options 338,595 188,595 Warrants 1,311,916 196,052 Total common stock equivalents 1,650,511 384,647 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 9. Subsequent Events Issuance of Shares Pursuant to Conversion of Series A Preferred Stock During April 2020, fifteen Series A Preferred stockholders converted an aggregate of 396,695 shares of Series A Preferred Stock into 1,043,935 shares of common stock. During May 2020, three Series A Preferred stockholders converted an aggregate of 19,500 shares of Series A Preferred Stock into 51,316 shares of common stock. Issuance of Shares Pursuant to Cashless Exercises of Common Stock Warrants During April 2020, thirteen holders of common stock warrants exercised an aggregate of 520,925 warrants using a cashless exercise into 352,488 shares of common stock. During May 2020, four holders of common stock warrants exercised an aggregate of 56,982 warrants using a cashless exercise into 26,034 shares of common stock. Issuance of Shares Pursuant to Exercises of Common Stock Warrants On April 14, 2020, a holder of common stock warrants exercised 7,000 warrants for a cash payment of $38,570. Issuance of Shares Pursuant to Cashless Exercises of Stock Options During April 2020, five holders of common stock options exercised an aggregate of 108,978 options using a cashless exercise into 26,361 shares of common stock. Issuance of Shares Pursuant to Settlement of Accounts Payable On April 16, 2020, the Company issued 100,000 shares of common stock in full settlement of $640,517 of accounts payable. On May 12, 2020, the Company issued 104,567 shares of common stock in full settlement of $93,150 of accounts payable. Issuance of Shares Pursuant to Stock Compensation On April 15, 2020, the Company issued 3,913 shares of common stock to a consultant of the Company as stock compensation. On April 16, 2020, the Company issued 5,264 shares of common stock to a consultant of the Company as stock compensation. On April 21, 2020, the Company issued 30,303 shares of common stock to an employee pursuant to a vesting schedule. Issuance of Restricted Stock Units On April 7, 2020, the Company granted 1,569,000 restricted stock units to 36 individuals for services rendered. Such shares vest in between six months and two years from the date of grant. On April 7, 2020, the Company granted 329,000 restricted stock units to its Chief Executive Officer. 50% of such shares vested upon the Company filing its 2019 Form 10-K and the remaining 50% vest upon the Company filing its 2020 Form 10-K. On May 15, 2020, the Company granted 20,000 restricted stock units to three of the four members of the Board of Directors. The fourth member, in connection with his appointment to the board on May 15, 2020, was granted 100,000 restricted stock units. The total amount of 160,000 restricted stock units granted by the Company vest fully on September 17, 2020. Supply Agreement for COVID-19 Rapid Test Kits On April 29, 2020, the Company entered into a Supply Agreement (“Supply Agreement”) pursuant to which the Company agreed to purchase an aggregate of 500,000 COVID-19 IGG/IGM Rapid Testing Units (“COVID-19 Test Kits”). The Supply Agreement requires the Company to pay 50% of the total of each order at the time of order placement, with the remaining 50% due upon completion of production (goods ready for shipment). To date, the Company has received approximately 46,500 COVID-19 Test Kits. On June 30, 2020, the supplier notified the Company that it was terminating the Supply Agreement. Securities Class Action and Investigations On April 29, 2020, a securities class action case was filed in the United States District Court for the Southern District of New York against the Company and its CEO. The action is captioned Daniel Yannes, individually and on behalf of all others similarly situated, Plaintiff vs. SCWorx Corp. and Marc S. Schessel, Defendants. On May 27, 2020, a second securities class was filed in the United States District Court for the Southern District of New York against the Company and its CEO. The action is captioned Caitlin Leeburn, individually and on behalf of all others similarly situated, Plaintiff v. SCWorx Corp. and Marc S. Schessel, Defendants. On June 23, 2020, a third securities class was filed in the United States District Court for the Southern District of New York against us and our CEO. The action is captioned Jonathan Charles Leonard, individually and on behalf of all others similarly situated, Plaintiff v. SCWorx Corp. and Marc S. Schessel, Defendants. All three lawsuits allege that our company and our CEO mislead investors in connection with our April 13, 2020 press release with respect to the sale of COVID-19 rapid test kits. The plaintiffs in these actions are seeking unspecified monetary damages. We intend to vigorously defend against these proceedings. On June 15, 2020, a shareholder derivative claim was filed in the United States District Court for the Southern District of New York against Marc S. Schessel, Charles K. Miller, Steven Wallitt (all of whom are current directors), and Robert Christie (a former director) (“Director Defendants”). The action is captioned Javier Lozano, derivatively on behalf of SCWorx Corp., Plaintiff, v. Marc S. Schessel, Charles K. Miller, Steven Wallitt, Defendants, and SCWorx Corp., Nominal Defendant. This lawsuit alleges that the Director Defendants breached their fiduciary duties to us, including by misleading investors in connection with our April 13, 2020 press release with respect to the sale of COVID-19 rapid test kits, failing to correct false and misleading statements and failing to implement proper disclosure and internal controls. The Plaintiff, on our behalf, is seeking an award of monetary damages to us, improvements in our disclosure and internal controls, and legal fees. The Director Defendants intend to vigorously defend against these proceedings. In connection with these actions, the Company may be obligated to indemnify its CEO and any of its officers or directors who incur any liability or expense incurred as a result of serving at the Company’s request in such capacity. In addition, following the April 13, 2020 press release and related disclosures (related to COVID-19 rapid test kits), the Securities and Exchange Commission made an inquiry regarding the disclosures the Company made in relation to the transaction involving COVID-19 test kits. On April 22, 2020, the Securities and Exchange Commission ordered that trading in the securities of the Company be suspended because of “questions and concerns regarding the adequacy and accuracy of publicly available information in the marketplace” (the “SEC Trading Halt”). The SEC Trading Halt expired May 5, 2020, at 11:59 PM EDT. The Company is fully cooperating with the SEC’s investigation and is providing documents and other requested information. In April 2020, the Company received related inquiries from The Nasdaq Stock Market and the Financial Industry Regulatory Authority (FINRA). The Company has been fully cooperating with these agencies and providing information and documents, as requested. On May 5, 2020, the Nasdaq Stock Market informed the Company that it had initiated a “T12 trading halt,” which means the halt will remain in place until the Company has fully satisfied Nasdaq’s request for additional information. The Company continues to fully cooperate with Nasdaq and respond to Nasdaq’s information requests as they are issued. The T12 trading halt remains in effect as of the filing of this Form 10-Q. Also in April 2020, the Company was contacted by the U.S. Attorney’s Office for the District of New Jersey, which is seeking information and documents from the Company’s officers and directors relating primarily to the April 13, 2020 press release concerning COVID-19 rapid test kits. The Company is fully cooperating with the U.S. Attorney’s Office in its investigation. Equity Offering During May 2020, the Company received $515,000 in connection with an equity financing. This transaction is subject to execution of definitive documents. Receipt of CARES funding On May 5, 2020, the Company obtained a $293,972 unsecured loan payable through the Paycheck Protection Program (“PPP”), which was enacted as part of the Coronavirus Aid, Relief and Economic Security Act (the “CARES ACT”). The funds were received from Bank of America through a loan agreement pursuant to the CARES Act. The CARES Act was established in order to enable small businesses to pay employees during the economic slowdown caused by COVID-19 by providing forgivable loans to qualifying businesses for up to 2.5 times their average monthly payroll costs. The amount borrowed under the CARES Act and used for payroll costs, rent, mortgage interest, and utility costs during the 24 week period after the date of loan disbursement is eligible to be forgiven provided that (a) the Company uses the PPP Funds during the eight week period after receipt thereof, and (b) the PPP Funds are only used to cover payroll costs (including benefits), rent, mortgage interest, and utility costs. While the full loan amount may be forgiven, the amount of loan forgiveness will be reduced if, among other reasons, the Company does not maintain staffing or payroll levels or less than 60% of the loan proceeds are used for payroll costs. Principal and interest payments on any unforgiven portion of the PPP Funds (the “PPP Loan”) will be deferred to the date the SBA remits the borrower’s loan forgiveness amount to the lender or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness period for six months and will accrue interest at a fixed annual rate of 1.0% and carry a two year maturity date. There is no prepayment penalty on the CARES Act Loan. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The accompanying consolidated financial statements include the accounts of SCWorx and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. These interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information. They do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited financial statements and notes thereto contained in its report on Form 10-K for the year ended December 31, 2019. The consolidated financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company's financial position at March 31, 2020, and the results of its operations and cash flows for the three months ended March 31, 2020. The results of operations for the period ended March 31, 2020 are not necessarily indicative of the results to be expected for future quarters or the full year. |
Reclassifications | Reclassifications A reclassification has been made to the consolidated balance sheet and consolidated statement of changes in stockholders’ equity to break out the total Series A Convertible Preferred Stock par value of $819 and additional paid in capital of $7,980,126. Previously, for the quarter ended March 31, 2019, the entire balance was disclosed as Series A Convertible Preferred Stock. This change in classification does not affect the previously reported total stockholders’ equity balance. In addition, the authorized common stock has been restated to reflect the correct amount of 45,000,000 authorized shares of common stock. In addition, certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on reported results of operations or cash flows. |
Cash | Cash Cash is maintained with various financial institutions. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. There were no amounts in excess of the FDIC insured limit as of March 31, 2020 and December 31, 2019. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Management applies fair value accounting for significant financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis. Management defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, management considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. |
Concentration of Credit and Other Risks | Concentration of Credit and Other Risks Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, accounts receivable and warrants. The Company believes that any concentration of credit risk in its accounts receivable is substantially mitigated by the Company’s evaluation process, relatively short collection terms and the high level of credit worthiness of its customers. The Company performs ongoing internal credit evaluations of its customers’ financial condition, obtains deposits and limits the amount of credit extended when deemed necessary but generally requires no collateral. For the quarter ended March 31, 2020, the Company had one customer representing 21% of aggregate revenues. For the quarter ended March 31, 2019, the Company had two customers representing 24% and 11% of aggregate revenues. At March 31, 2020, the Company had five customers representing 22%, 16%, 12%, 11% and 11% of aggregate accounts receivable. At March 31, 2019, the Company had three customers representing 32%, 18%, and 12% of aggregate accounts receivable. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company continually monitors customer payments and maintains a reserve for estimated losses resulting from its customers’ inability to make required payments. In determining the reserve, the Company evaluates the collectability of its accounts receivable based upon a variety of factors. In cases where the Company becomes aware of circumstances that may impair a specific customer’s ability to meet its financial obligations, the Company records a specific allowance against amounts due. For all other customers, the Company recognizes allowances for doubtful accounts based on its historical write-off experience in conjunction with the length of time the receivables are past due, customer creditworthiness, geographic risk and the current business environment. Actual future losses from uncollectible accounts may differ from the Company’s estimates. The Company’s allowance for doubtful accounts as of March 31, 2020 and December 31, 2019 was $344,412. |
Business Combinations | Business Combinations The Company includes the results of operations of a business it acquires in its consolidated results as of the date of acquisition. The Company allocates the fair value of the purchase consideration of its acquisition to the tangible assets, liabilities and intangible assets acquired, based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. The primary items that generate goodwill include the value of the synergies between the acquired businesses and the Company. Intangible assets are amortized over their estimated useful lives. The fair value of contingent consideration (earn out) associated with acquisitions is remeasured each reporting period and adjusted accordingly. Acquisition and integration related costs are recognized separately from the business combination and are expensed as incurred. |
Goodwill and Purchased Identified Intangible Assets | Goodwill and Purchased Identified Intangible Assets Goodwill Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible and identified intangible assets acquired under a business combination. Goodwill also includes acquired assembled workforce, which does not qualify as an identifiable intangible asset. The Company reviews impairment of goodwill annually in the third quarter, or more frequently if events or circumstances indicate that the goodwill might be impaired. The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. If, after assessing the totality of events or circumstances, the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the quantitative goodwill impairment test is unnecessary. Identified intangible assets Identified finite-lived intangible assets consist of ticketing software and promoter relationships resulting from the February 1, 2019 business combination. The Company’s identified intangible assets are amortized on a straight-line basis over their estimated useful lives, ranging from 5 to 7 years. The Company makes judgments about the recoverability of finite-lived intangible assets whenever facts and circumstances indicate that the useful life is shorter than originally estimated or that the carrying amount of assets may not be recoverable. If such facts and circumstances exist, the Company assesses recoverability by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets. If the useful life is shorter than originally estimated, the Company would accelerate the rate of amortization and amortize the remaining carrying value over the new shorter useful life. For further discussion of identified intangible assets, refer to Note 4, Intangible Assets. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the related assets’ estimated useful lives. Equipment, furniture and fixtures are being amortized over a period of three years. Expenditures that materially increase asset life are capitalized, while ordinary maintenance and repairs are expensed as incurred. Depreciation expense for the three months ended March 31, 2020 and 2019 was $2,259 and $451, respectively. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with Topic 606 to depict the transfer of promised goods or services in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of Topic 606 the Company performs the following steps: ● Step 1: Identify the contract(s) with a customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation The Company follows the accounting revenue guidance under Topic 606 to determine whether contracts contain more than one performance obligation. Performance obligations are the unit of accounting for revenue recognition and generally represent the distinct goods or services that are promised to the customer. The Company has identified the following performance obligations in its contracts with customers: 1) Data Normalization: which includes data preparation, product and vendor mapping, product categorization, data enrichment and other data related services, 2) Software-as-a-service (“SaaS”): which is generated from clients’ access of and usage of the Company’s hosted software solutions on a subscription basis for a specified contract term, which is usually annually. In SaaS arrangements, the client cannot take possession of the software during the term of the contract and generally has the right to access and use the software and receive any software upgrades published during the subscription period, 3) Maintenance: which includes ongoing data cleansing and normalization, content enrichment, and optimization, and 4) Professional Services: mainly related to specific customer projects to manage and/or analyze data and review for cost reduction opportunities. A contract will typically include Data Normalization, SaaS and Maintenance, which are distinct performance obligations and are accounted for separately. The transaction price is allocated to each separate performance obligation on a relative stand-alone selling price basis. Significant judgement is required to determine the stand-alone selling price for each distinct performance obligation and is typically estimated based on observable transactions when these services are sold on a stand-alone basis. At contract inception, an assessment of the goods and services promised in the contracts with customers is performed and a performance obligation is identified for each distinct promise to transfer to the customer a good or service (or bundle of goods or services). To identify the performance obligations, the Company considers all the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. Revenue is recognized when the performance obligation has been met. The Company considers control to have transferred upon delivery because the Company has a present right to payment at that time, the Company has transferred use of the good or service, and the customer is able to direct the use of, and obtain substantially all the remaining benefits from, the good or service. The Company’s SaaS and Maintenance contracts typically have termination for convenience without penalty clauses and accordingly, are generally accounted for as month-to-month agreements. If it is determined that the Company has not satisfied a performance obligation, revenue recognition will be deferred until the performance obligation is deemed to be satisfied. Revenue recognition for the Company’s performance obligations are as follows: Data Normalization and Professional Services The Company’s Data Normalization and Professional Services are typically fixed fee. When these services are not combined with SaaS or Maintenance revenues as a single unit of accounting, these revenues are recognized as the services are rendered and when contractual milestones are achieved and accepted by the customer. SaaS and Maintenance SaaS and Maintenance revenues are recognized ratably over the contract terms beginning on the commencement date of each contract, which is the date on which the Company’s service is made available to customers. The Company does have some contracts that have payment terms that differ from the timing of revenue recognition, which requires the Company to assess whether the transaction price for those contracts includes a significant financing component. The Company has elected the practical expedient that permits an entity to not adjust for the effects of a significant financing component if it expects that at the contract inception, the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. The Company does not maintain contracts in which the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service exceeds the one-year threshold. The Company has one revenue stream, from the SaaS business, and believes it has presented all varying factors that affect the nature, timing and uncertainty of revenues and cash flows. As of March 31, 2020 and December 31, 2019, the Company had $1,390,637 and $1,056,637, respectively, of remaining performance obligations recorded as contract liabilities. The Company expects to recognize sales relating to these existing performance obligations of $1,390,637 during the remainder of 2020. Costs to Obtain and Fulfill a Contract Costs to fulfill a contract typically include costs related to satisfying performance obligations as well as general and administrative costs that are not explicitly chargeable to customer contracts. These expenses are recognized and expensed when incurred in accordance with ASC 340-40. |
Cost of Revenues | Cost of Revenues Cost of revenues primarily represent data center hosting costs, consulting services and maintenance of the Company’s large data array that were incurred in delivering professional services and maintenance of the Company’s large data array during the periods presented. |
Contract Balances | Contract Balances Contract assets arise when the associated revenue was earned prior to the Company’s unconditional right to receive a payment under a contract with a customer (unbilled revenue) and are derecognized when either it becomes a receivable or the cash is received. There were no contract assets as of March 31, 2020 and December 31, 2019. Contract liabilities arise when customers remit contractual cash payments in advance of the Company satisfying its performance obligations under the contract and are derecognized when the revenue associated with the contract is recognized when the performance obligation is satisfied. Contract liabilities were $1,390,637 and $1,056,637 as of March 31, 2020 and December 31, 2019, respectively. |
Income Taxes | Income Taxes The Company uses the asset and liability method of accounting for income taxes in accordance with Accounting Standard Codification (“ASC”) Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of March 31, 2020 and December 31, 2019, the Company has evaluated available evidence and concluded that the Company may not realize all the benefits of its deferred tax assets; therefore, a valuation allowance has been established for its deferred tax assets. ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has no material uncertain tax positions for any of the reporting periods presented. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company continues to examine the impact that the CARES Act may have on its business but does not expect the impact to be material. The income tax benefit for the quarters ended March 31, 2020 and 2019 was $0 and $195,000, respectively. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation expense in accordance with the authoritative guidance on share-based payments. Under the provisions of the guidance, stock-based compensation expense is measured at the grant date based on the fair value of the option or warrant using a Black-Scholes option pricing model and is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period. The authoritative guidance also requires that the Company measures and recognizes stock-based compensation expense upon modification of the term of stock award. The stock-based compensation expense for such modification is accounted for as a repurchase of the original award and the issuance of a new award. Calculating stock-based compensation expense requires the input of highly subjective assumptions, including the expected term of the stock-based awards, stock price volatility, and the pre-vesting option forfeiture rate. The Company estimates the expected life of options granted based on historical exercise patterns, which are believed to be representative of future behavior. The Company estimates the volatility of the Company’s common stock on the date of grant based on historical volatility. The assumptions used in calculating the fair value of stock-based awards represent the Company’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, its stock-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. The Company estimates the forfeiture rate based on historical experience of its stock-based awards that are granted, exercised and cancelled. If the actual forfeiture rate is materially different from the estimate, stock-based compensation expense could be significantly different from what was recorded in the current period. The Company also grants performance based restricted stock awards to employees and consultants. These awards will vest if certain employee\consultant-specific or company-designated performance targets are achieved. If minimum performance thresholds are achieved, each award will convert into a designated number of the Company’s common stock. If minimum performance thresholds are not achieved, then no shares will be issued. Based upon the expected levels of achievement, stock-based compensation is recognized on a straight-line basis over the requisite service period. The expected levels of achievement are reassessed over the requisite service periods and, to the extent that the expected levels of achievement change, stock-based compensation is adjusted in the period of change and recorded on the statements of operations and the remaining unrecognized stock-based compensation is recorded over the remaining requisite service period. Refer to Note 7, Stockholders’ Equity, for additional detail. |
Loss Per Share | Loss Per Share The Company computes earnings (loss) per share in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted earnings (loss) per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing the loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of March 31, 2020 and 2019, the Company had 1,650,511 and 384,647, respectively, of common stock equivalents outstanding. |
Indemnification | Indemnification The Company provides indemnification of varying scope to certain customers against claims of intellectual property infringement made by third parties arising from the use of the Company’s software. In accordance with authoritative guidance for accounting for guarantees, the Company evaluates estimated losses for such indemnification. The Company considers such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. To date, no such claims have been filed against the Company and no liability has been recorded in its condensed consolidated financial statements. As permitted under Delaware law, the Company has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. In addition, the Company has directors’ and officers’ liability insurance coverage that is intended to reduce its financial exposure and may enable it to recover any payments above the applicable policy retention, should they occur. |
Contingencies | Contingencies The Company records a liability when the Company believes that it is both probable that a loss has been incurred and the amount can be reasonably estimated. If the Company determines that a loss is reasonably possible, and the loss or range of loss can be estimated, the Company discloses the possible loss in the notes to the consolidated financial statements. The Company reviews the developments in its contingencies that could affect the amount of the provisions that has been previously recorded, and the matters and related possible losses disclosed. The Company adjusts provisions and changes to its disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Significant judgment is required to determine both the probability and the estimated amount. Legal costs associated with loss contingencies are accrued based upon legal expenses incurred by the end of the reporting period. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. The Company regularly evaluates estimates and assumptions related to the allowance for doubtful accounts, the estimated useful lives and recoverability of long-lived assets, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Actual results could differ materially from those estimates. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In October 2018, the FASB issued ASU No. 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities (“ASU 2018-17”). ASU 2018-17 provides that indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. ASU 2018-17 is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. We adopted this new standard on January 1, 2020, and the adoption of the standard did not have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective in the first quarter of fiscal 2020, and earlier adoption is permitted. We adopted this new standard on January 1, 2020, and the adoption of the standard did not have a material impact on our consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which eliminates step two from the goodwill impairment test. Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. We adopted this new standard on January 1, 2020, and the adoption of the standard did not have a material impact on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326),” which was subsequently amended in February 2020 by ASU 2020-02 “Financial Instruments - Credit Losses (Topic 326) and Leases (Topic 842).” Topic 326 introduces an impairment model that is based on expected credit losses, rather than incurred losses, to estimate credit losses on certain types of financial instruments (e.g. accounts receivable, loans and held-to-maturity securities), including certain off-balance sheet financial instruments (e.g., loan commitments). The expected credit losses should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments, over the contractual term. Financial instruments with similar risk characteristics may be grouped together when estimating expected credit losses. Topic 326 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the impact the new guidance will have on its consolidated financial statements. |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | March 31, 2020 December 31, 2019 Intangible assets Useful life Gross assets Accumulated amortization Net Gross assets Accumulated amortization Net Ticketing software 5 years $ 64,000 $ (14,934 ) $ 49,066 $ 64,000 $ (11,733 ) $ 52,267 Promoter relationships 7 years 176,000 (29,333 ) 146,667 176,000 (23,048 ) 152,952 Total intangible assets $ 240,000 $ (44,267 ) $ 195,733 $ 240,000 $ (34,781 ) $ 205,219 |
Schedule of estimated future amortization expense amortizable intangible assets | Year ending December 31, 2020 (remaining 9 months of 2020) $ 28,457 2021 37,943 2022 37,943 2023 37,943 2024 26,209 Thereafter 27,238 Total $ 195,733 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Schedule of components of lease expense | For the three months ended March 31, 2020 2019 Operating lease cost $ 9,425 $ 11,250 Total lease cost $ 9,425 $ 11,250 |
Schedule of other information related to leases | For the three months ended March 31, 2020 2019 Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows for operating leases $ 9,425 $ 11,250 Weighted average remaining lease term (months) – operating leases - 12 Weighted average discount rate– operating leases N/A 10 % |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders' Equity (Tables) [Line Items] | |
Schedule of warrant and stock option grants | Warrant Grants Stock Option Grants Restricted Stock Units Number of shares subject to warrants Weighted-average exercise price per share Number of shares subject to options Weighted-average exercise price per share Number of shares subject to restricted stock units Weighted-average exercise price per share Balance at December 31, 2019 1,311,916 $ 9.35 338,595 $ 5.96 630,303 $ - Granted - - - - 395,000 - Exercised - - - - - - Cancelled/Forfeited - - - - (250,000 ) - Balance at March 31, 2020 1,311,916 $ 9.35 338,595 $ 5.96 775,303 $ - Exercisable at March 31, 2020 1,311,916 $ 9.35 338,595 $ 5.96 41,667 $ - |
Schedule of stock-based compensation expense categorized of equity components | For the three months ended March 31, 2020 2019 Common stock $ 367,600 $ 257,885 Stock option awards - 49,018 Transfer of common stock by founders to contractors - 5,322,930 Total $ 367,600 $ 5,629,833 |
Stock Options [Member] | |
Stockholders' Equity (Tables) [Line Items] | |
Schedule of stock-based compensation expense | For the three months ended March 31, 2020 2019 Stock-based compensation expense $ 367,600 $ 5,629,833 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of diluted net loss per share | For the three months ended March 31, 2020 2019 Stock options 338,595 188,595 Warrants 1,311,916 196,052 Total common stock equivalents 1,650,511 384,647 |
Description of Business (Detail
Description of Business (Details) - USD ($) | Feb. 01, 2019 | Nov. 30, 2018 | Dec. 31, 2017 |
Description of Business (Details) [Line Items] | |||
Acquired technology predecessor cost (in Dollars) | $ 0 | ||
Alliance MMA [Member] | |||
Description of Business (Details) [Line Items] | |||
Number of shares issued | 100,000,000 | ||
Conversion of common stock | 5,263,158 | ||
SCWorx [Member] | |||
Description of Business (Details) [Line Items] | |||
Common stock cancel shares | 6,510 | ||
Proceeds from subscription of shares (in Dollars) | $ 1,250,000 | ||
Number of shares issued | 3,125 |
Liquidity and Going Concern (De
Liquidity and Going Concern (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Net income loss | $ (1,149,651) | $ (5,714,709) | |
Cash | 201,092 | ||
Working capital | 2,521,580 | ||
Accumulated deficit | $ (13,944,124) | $ (12,794,473) |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Summary of Significant Accounting Policies (Details) [Line Items] | |||
Common stock shares authorized (in Shares) | 45,000,000 | 45,000,000 | |
FDIC insured amount | $ 250,000 | ||
Allowance for doubtful accounts | 344,412 | $ 344,412 | |
Depreciation expense | 2,259 | $ 451 | |
Remaining performance obligations recorded as contract liabilities | 1,390,637 | 1,056,637 | |
Existing performance obligations | 1,390,637 | ||
Contract liabilities | 1,390,637 | $ 1,056,637 | |
Income tax benefit | $ (195,000) | ||
Common stock equivalents outstanding shares (in Shares) | 1,650,511 | 384,647 | |
Restatement Adjustment [Member] | |||
Summary of Significant Accounting Policies (Details) [Line Items] | |||
Common stock shares authorized (in Shares) | 45,000,000 | ||
Minimum [Member] | |||
Summary of Significant Accounting Policies (Details) [Line Items] | |||
Finite-Lived intangible asset, useful life | 5 years | ||
Maximum [Member] | |||
Summary of Significant Accounting Policies (Details) [Line Items] | |||
Finite-Lived intangible asset, useful life | 7 years | ||
Additional Paid-in Capital [Member] | |||
Summary of Significant Accounting Policies (Details) [Line Items] | |||
Adjustments to additional paid in capital | $ 7,980,126 | ||
Customer One [Member] | Revenue Benchmark [Member] | |||
Summary of Significant Accounting Policies (Details) [Line Items] | |||
Concentration risk, percentage | 21.00% | 24.00% | |
Customer One [Member] | Accounts Receivable [Member] | |||
Summary of Significant Accounting Policies (Details) [Line Items] | |||
Concentration risk, percentage | 22.00% | 32.00% | |
Customer Two [Member] | Revenue Benchmark [Member] | |||
Summary of Significant Accounting Policies (Details) [Line Items] | |||
Concentration risk, percentage | 11.00% | ||
Customer Two [Member] | Accounts Receivable [Member] | |||
Summary of Significant Accounting Policies (Details) [Line Items] | |||
Concentration risk, percentage | 16.00% | 18.00% | |
Customer Three [Member] | Accounts Receivable [Member] | |||
Summary of Significant Accounting Policies (Details) [Line Items] | |||
Concentration risk, percentage | 12.00% | 12.00% | |
Customer Four [Member] | Accounts Receivable [Member] | |||
Summary of Significant Accounting Policies (Details) [Line Items] | |||
Concentration risk, percentage | 11.00% | ||
Customer Five [Member] | Accounts Receivable [Member] | |||
Summary of Significant Accounting Policies (Details) [Line Items] | |||
Concentration risk, percentage | 11.00% | ||
Series A Preferred Stock [Member] | |||
Summary of Significant Accounting Policies (Details) [Line Items] | |||
Common stock, value outstanding | $ 819 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 9,486 | $ 6,324 |
Intangible Assets (Details) - S
Intangible Assets (Details) - Schedule of intangible assets - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross assets | $ 240,000 | $ 240,000 |
Accumulated amortization | (44,267) | (34,781) |
Net | $ 195,733 | 205,219 |
Ticketing Software [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, Useful life | 5 years | |
Gross assets | $ 64,000 | 64,000 |
Accumulated amortization | (14,934) | (11,733) |
Net | $ 49,066 | 52,267 |
Promoter Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, Useful life | 7 years | |
Gross assets | $ 176,000 | 176,000 |
Accumulated amortization | (29,333) | (23,048) |
Net | $ 146,667 | $ 152,952 |
Intangible Assets (Details) -_2
Intangible Assets (Details) - Schedule of estimated future amortization expense amortizable intangible assets - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Schedule of estimated future amortization expense amortizable intangible assets [Abstract] | ||
2020 (remaining 9 months of 2020) | $ 28,457 | |
2021 | 37,943 | |
2022 | 37,943 | |
2023 | 37,943 | |
2024 | 26,209 | |
Thereafter | 27,238 | |
Total | $ 195,733 | $ 205,219 |
Leases (Details)
Leases (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2018 | |
Leases (Details) [Line Items] | ||
Operating lease term, description | The Company also had a lease in Greenwich, CT which was set to expire in March 2020 and is now month-to-month. | |
Recognition of right-of-use assets | $ 53,000 | |
Right-of-Use liability | $ 53,000 | |
Prepaid Expenses and Other Current Assets [Member] | ||
Leases (Details) [Line Items] | ||
Operating lease, liability | $ 0 |
Leases (Details) - Schedule of
Leases (Details) - Schedule of components of lease expense - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Schedule of components of lease expense [Abstract] | ||
Operating lease cost | $ 9,425 | $ 11,250 |
Total lease cost | $ 9,425 | $ 11,250 |
Leases (Details) - Schedule o_2
Leases (Details) - Schedule of other information related to leases - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash paid for amounts included in the measurement of operating lease liabilities: | ||
Operating cash flows for operating leases | $ 9,425 | $ 11,250 |
Weighted average remaining lease term (months) – operating leases | 12 months | |
Weighted average discount rate– operating leases | 10.00% |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | Mar. 12, 2020 | Feb. 05, 2020 | Jan. 08, 2020 | Feb. 26, 2020 | Feb. 22, 2020 | Feb. 21, 2020 | Jan. 17, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Stockholders' Equity (Details) [Line Items] | |||||||||
Common stock, shares authorized | 45,000,000 | 45,000,000 | |||||||
Common stock per share (in Dollars per share) | $ 0.001 | $ 0.001 | |||||||
Unrecognized expense (in Dollars) | $ 1.9 | $ 3.2 | |||||||
Series A Convertible Preferred Stock [Member] | |||||||||
Stockholders' Equity (Details) [Line Items] | |||||||||
Shares issued | 13,158 | 19,737 | 39,474 | 100,000 | 5,264 | ||||
Conversion of shares | 5,000 | 7,500 | 15,000 | 38,000 | 2,000 | ||||
Former Employee [Member] | |||||||||
Stockholders' Equity (Details) [Line Items] | |||||||||
Shares issued | 50,000 | ||||||||
Employee [Member] | |||||||||
Stockholders' Equity (Details) [Line Items] | |||||||||
Shares issued to employee | 16,667 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Schedule of warrant and stock option grants | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Warrant Grants [Member] | |
Stockholders' Equity (Details) - Schedule of warrant and stock option grants [Line Items] | |
Balance at beginning | shares | 1,311,916 |
Balance at beginning | $ / shares | $ 9.35 |
Number of shares subject to warrants, Granted | shares | |
Weighted- average exercise price per share, Granted | $ / shares | |
Number of shares subject to warrants, Exercised | shares | |
Weighted- average exercise price per share, Exercised | $ / shares | |
Number of shares subject to warrants, Cancelled/Forfeited | shares | |
Weighted- average exercise price per share, Cancelled/Forfeited | $ / shares | |
Balance at ending | shares | 1,311,916 |
Balance at ending | $ / shares | $ 9.35 |
Number of shares subject to warrants, Exercisable | shares | 1,311,916 |
Weighted- average exercise price per share, Exercisable | $ / shares | $ 9.35 |
Stock Option Grants [Member] | |
Stockholders' Equity (Details) - Schedule of warrant and stock option grants [Line Items] | |
Balance at beginning | $ / shares | $ 5.96 |
Balance at beginning | shares | 338,595 |
Weighted- average exercise price per share, Granted | $ / shares | |
Number of shares subject to options, Granted | shares | |
Weighted- average exercise price per share, Exercised | $ / shares | |
Number of shares subject to options, Exercised | shares | |
Weighted- average exercise price per share, Cancelled/Forfeited | $ / shares | |
Number of shares subject to options, Cancelled/Forfeited | shares | |
Balance at ending | $ / shares | $ 5.96 |
Balance at ending | shares | 338,595 |
Weighted- average exercise price per share, Exercisable | $ / shares | $ 5.96 |
Number of shares subject to options, Exercisable | shares | 338,595 |
Restricted Stock Units [Member] | |
Stockholders' Equity (Details) - Schedule of warrant and stock option grants [Line Items] | |
Balance at beginning | $ / shares | |
Balance at beginning | shares | 630,303 |
Weighted- average exercise price per share, Granted | $ / shares | |
Number of shares subject to restricted stock units, Granted | shares | 395,000 |
Weighted- average exercise price per share, Exercised | $ / shares | |
Number of shares subject to restricted stock units, Exercised | shares | |
Weighted- average exercise price per share, Cancelled/Forfeited | $ / shares | |
Number of shares subject to restricted stock units, Cancelled/Forfeited | shares | (250,000) |
Balance at ending | $ / shares | |
Balance at ending | shares | 775,303 |
Weighted- average exercise price per share, Exercisable | $ / shares | |
Number of shares subject to restricted stock units, Exercisable | shares | 41,667 |
Stockholders' Equity (Details_2
Stockholders' Equity (Details) - Schedule of stock-based compensation expense - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Schedule of stock-based compensation expense [Abstract] | ||
Stock-based compensation expense | $ 367,600 | $ 5,629,833 |
Stockholders' Equity (Details_3
Stockholders' Equity (Details) - Schedule of stock-based compensation expense categorized of equity components - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Schedule of stock-based compensation expense categorized of equity components [Abstract] | ||
Common stock | $ 367,600 | $ 257,885 |
Stock option awards | 49,018 | |
Transfer of common stock by founders to contractors | 5,322,930 | |
Total | $ 367,600 | $ 5,629,833 |
Net Loss Per Share (Details) -
Net Loss Per Share (Details) - Schedule of diluted net loss per share - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total common stock equivalents | 1,650,511 | 384,647 |
Stock Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total common stock equivalents | 338,595 | 188,595 |
Warrant [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total common stock equivalents | 1,311,916 | 196,052 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | May 15, 2020 | May 15, 2020 | May 12, 2020 | May 05, 2020 | Apr. 14, 2020 | Apr. 07, 2020 | Sep. 17, 2020 | May 31, 2020 | Apr. 30, 2020 | Apr. 29, 2020 | Apr. 21, 2020 | Apr. 16, 2020 | Apr. 15, 2020 |
Subsequent Event [Member] | |||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||
Issuance of shares pursuant to settlement of accounts payable | 104,567 | 100,000 | |||||||||||
Issuance of value pursuant to settlement of accounts payable (in Dollars) | $ 93,150 | $ 640,517 | |||||||||||
Vesting period, description | Such shares vest in between six months and two years from the date of grant. | ||||||||||||
Percentage of vest shares | 50.00% | ||||||||||||
Restricted stock units, shares | 100,000 | ||||||||||||
Supply Agreement, Description | the Company entered into a Supply Agreement (“Supply Agreement”) pursuant to which the Company agreed to purchase an aggregate of 500,000 COVID-19 IGG/IGM Rapid Testing Units (“COVID-19 Test Kits”). The Supply Agreement requires the Company to pay 50% of the total of each order at the time of order placement, with the remaining 50% due upon completion of production (goods ready for shipment). To date, the Company has received approximately 46,500 COVID-19 Test Kits. | ||||||||||||
Cares fund amount (in Dollars) | $ 293,972 | ||||||||||||
Subsequent, description | (a) the Company uses the PPP Funds during the eight week period after receipt thereof, and (b) the PPP Funds are only used to cover payroll costs (including benefits), rent, mortgage interest, and utility costs. While the full loan amount may be forgiven, the amount of loan forgiveness will be reduced if, among other reasons, the Company does not maintain staffing or payroll levels or less than 60% of the loan proceeds are used for payroll costs. Principal and interest payments on any unforgiven portion of the PPP Funds (the “PPP Loan”) will be deferred to the date the SBA remits the borrower’s loan forgiveness amount to the lender or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness period for six months and will accrue interest at a fixed annual rate of 1.0% and carry a two year maturity date. There is no prepayment penalty on the CARES Act Loan. | ||||||||||||
Subsequent Event [Member] | Restricted Stock Units (RSUs) [Member] | |||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||
Restricted stock units, shares | 20,000 | ||||||||||||
Forecast [Member] | |||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||
Shares granted in restricted stock units | 160,000 | ||||||||||||
Proceeds from equity financing (in Dollars) | $ 515,000 | ||||||||||||
Fifteen Series A Preferred stockholders [Member] | Subsequent Event [Member] | |||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||
Converted shares of Series A preferred stock | 396,695 | ||||||||||||
Conversion of Series A Convertible Preferred Stock into common stock | 1,043,935 | ||||||||||||
Three Series A Preferred stockholder [Member] | Forecast [Member] | |||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||
Converted shares of Series A preferred stock | 19,500 | ||||||||||||
Conversion of Series A Convertible Preferred Stock into common stock | 51,316 | ||||||||||||
Thirteen holders [Member] | Subsequent Event [Member] | |||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||
Common stock warrants exercised | 520,925 | ||||||||||||
Warrants using a cashless exercise into shares of common stock | 352,488 | ||||||||||||
Four holders [Member] | Forecast [Member] | |||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||
Common stock warrants exercised | 56,982 | ||||||||||||
Warrants using a cashless exercise into shares of common stock | 26,034 | ||||||||||||
Holder [Member] | Subsequent Event [Member] | |||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||
Common stock warrants exercised | 7,000 | ||||||||||||
Cash payments (in Dollars) | $ 38,570 | ||||||||||||
Five holders [Member] | Subsequent Event [Member] | |||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||
Common stock options exercised | 108,978 | ||||||||||||
Options using a cashless exercise into shares of common stock | 26,361 | ||||||||||||
Consultant [Member] | Subsequent Event [Member] | |||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||
Issuance of shares pursuant to stock compensation | 5,264 | 3,913 | |||||||||||
Employee [Member] | Subsequent Event [Member] | |||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||
Issuance of shares pursuant to stock compensation | 30,303 | ||||||||||||
36 individuals [Member] | Subsequent Event [Member] | |||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||
Shares granted in restricted stock units | 1,569,000 | ||||||||||||
Chief Executive Officer [Member] | Subsequent Event [Member] | |||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||
Shares granted in restricted stock units | 329,000 | ||||||||||||
Percentage of vest shares | 50.00% |