Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | Jun. 30, 2023 | |
Document Information Line Items | ||
Entity Registrant Name | NYIAX, INC. | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 18,556,349 | |
Amendment Flag | false | |
Entity Central Index Key | 0001679379 | |
Entity Current Reporting Status | No | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Mar. 31, 2023 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Shell Company | false | |
Entity Ex Transition Period | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 333-265357 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 46-0547534 | |
Entity Address, Address Line One | 180 Maiden Lane | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10005 | |
City Area Code | (917) | |
Local Phone Number | 444-9259 | |
Entity Interactive Data Current | No |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash | $ 452,164 | $ 792,337 |
Accounts receivable, net | 743,932 | 1,972,034 |
Prepaid expenses and other current assets | 5,000 | 92,497 |
Total current assets | 1,201,096 | 2,856,868 |
Capitalized software development costs, net | 344,012 | 393,157 |
Property, plant and equipment, net | 3,115 | 3,519 |
Operating lease right-of-use asset | 358,558 | 395,470 |
Deferred Offering Costs | 848,531 | |
Security deposit | 74,068 | 74,068 |
Total assets | 1,980,849 | 4,571,613 |
Current liabilities | ||
Accounts payable and accrued expenses | 4,811,486 | 4,841,046 |
Convertible notes payable, net of deferred debt discounts of $214,265 as of December 31, 2022 | 2,355,735 | |
Accrued Payment-In-Kind Interest | 71,614 | |
Operating lease obligations, current portion | 165,699 | 162,503 |
Total current liabilities | 4,977,185 | 7,430,897 |
Long-term liabilities | ||
Operating lease obligations, net of current maturities | 225,708 | 268,385 |
Note payable – stockholder | 100,500 | 100,500 |
Total long-term liabilities | 326,208 | 368,885 |
Total liabilities | 5,303,394 | 7,799,782 |
Common stock $0.0001 par value, 125,000,000 common shares authorized; 13,561,499 and 12,370,002 common shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively. | 1,356 | 1,237 |
Preferred shares: 10,000,000 authorized, none outstanding, par value $0.0001 per share | ||
Additional Paid in Capital | 52,916,936 | 50,023,446 |
Accumulated deficit | (56,240,837) | (53,252,852) |
Total shareholders’ (deficit) equity | (3,322,545) | (3,228,169) |
Total liabilities and shareholders’ (deficit) equity | $ 1,980,849 | $ 4,571,613 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parentheticals) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Net of deferred debt discounts (in Dollars) | $ 214,265 | |
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 125,000,000 | 125,000,000 |
Common stock, shares issued | 13,561,499 | 12,370,002 |
Common stock, shares outstanding | 13,561,499 | 12,370,002 |
Preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Condensed Statements of Operati
Condensed Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
Revenue, Net | $ 138,037 | $ 485,065 |
Cost of Sales | 222,421 | 288,281 |
Gross Margin | (84,384) | 196,784 |
Operating expenses | ||
Technology and development | 398,851 | 358,298 |
Selling, general and administrative | 1,547,831 | 2,931,060 |
Deferred offering cost write-off | 848,531 | |
Depreciation and amortization | 405 | 1,235 |
Total operating expenses | 2,795,618 | 3,290,593 |
Loss from operations | (2,880,002) | (3,093,809) |
Other (income) expenses | ||
Interest expense | 107,983 | 695,834 |
Total other (income) expenses | 107,983 | 695,834 |
Loss before provision for income taxes | (2,987,985) | (3,789,643) |
Net loss | $ (2,987,985) | $ (3,789,643) |
Net loss per share – basic and diluted (in Dollars per share) | $ (0.23) | $ (0.37) |
Weighted average number of common shares outstanding – basic and diluted (in Shares) | 13,157,111 | 10,359,385 |
Condensed Statements of Opera_2
Condensed Statements of Operations (Unaudited) (Parentheticals) - $ / shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
Net loss per share - Diluted | $ (0.23) | $ (0.37) |
Weighted average number of common shares outstanding – Diluted | 13,157,111 | 10,359,385 |
Condensed Statements of Shareho
Condensed Statements of Shareholders’ Equity (Deficit) (Unaudited) - USD ($) | Common Stock | Additional Paid in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2021 | $ 1,024 | $ 38,089,295 | $ (42,110,073) | $ (4,019,754) |
Balance (in Shares) at Dec. 31, 2021 | 10,243,442 | |||
Share-based compensation | 969,511 | 969,511 | ||
Deemed Dividend from Inducement to Exercise Warrants | 28,600 | (28,600) | ||
Issuance of common stock pursuant to exercise of warrants | $ 22 | 1,225,788 | 1,225,810 | |
Issuance of common stock pursuant to exercise of warrants (in Shares) | 224,693 | |||
Net Loss | (3,789,643) | (3,789,643) | ||
Balance at Mar. 31, 2022 | $ 1,046 | 40,313,194 | (45,928,316) | (5,614,076) |
Balance (in Shares) at Mar. 31, 2022 | 10,468,135 | |||
Balance at Dec. 31, 2022 | $ 1,237 | 50,023,446 | (53,252,852) | (3,228,169) |
Balance (in Shares) at Dec. 31, 2022 | 12,370,002 | |||
Share-based compensation | 125,635 | 125,635 | ||
Expense of issuing common stock pursuant to restricted stock awards (share-based compensation), net of forfeiture | $ (25) | 32,657 | 32,632 | |
Expense of issuing common stock pursuant to restricted stock awards (share-based compensation), net of forfeiture (in Shares) | (250,000) | |||
Conversion of Convertible Notes | $ 144 | 2,719,198 | 2,719,342 | |
Conversion of Convertible Notes (in Shares) | 1,441,497 | |||
Deferred debt discount on 2023 convertible notes payable | 16,000 | 16,000 | ||
Net Loss | (2,987,985) | (2,987,985) | ||
Balance at Mar. 31, 2023 | $ 1,356 | $ 52,916,936 | $ (56,240,837) | $ (3,322,545) |
Balance (in Shares) at Mar. 31, 2023 | 13,561,499 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities | ||
Net loss | $ (2,987,985) | $ (3,789,643) |
Adjustments to reconcile net loss to net cash | ||
Depreciation and amortization | 49,551 | 63,514 |
Operating lease right-of-use asset | (2,569) | |
Accrued PIK Interest | 99,287 | 179,409 |
Debt discount amortization | 8,706 | 516,425 |
Share based compensation | 158,267 | 969,511 |
(Increase) decrease in: | ||
Accounts receivable | 1,228,102 | 994,228 |
Prepaid expense | 87,497 | (340,187) |
Increase (decrease) in: | ||
Accounts payable and accrued expenses | (29,560) | (1,164,183) |
Total adjustments | 1,599,281 | 1,218,717 |
Net cash used in operating activities | (1,388,704) | (2,570,926) |
Cash flows from financing activities | ||
Proceeds from convertible notes payable | 200,000 | |
Deferred offering cost write-off, net | 848,531 | |
Proceeds from issuance of common stock pursuant to exercise of warrants | 1,225,810 | |
Net cash (used) provided by financing activities | (1,048,531) | 1,225,810 |
Net increase (decrease) in cash and cash equivalents | (340,173) | (1,345,116) |
Cash and cash equivalents - Beginning of period | 792,337 | 3,387,200 |
Cash and cash equivalents - End of period | 452,164 | 2,042,084 |
Supplemental disclosures of non-cash flow investing and financing activities: | ||
Conversion of convertible note payable and accrued interest to common shares | $ 2,719,342 | |
Deemed Dividend from Inducement to Exercise Warrants | $ 28,600 |
Nature of Operations
Nature of Operations | 3 Months Ended |
Mar. 31, 2023 | |
Organization and Nature of Business [Abstract] | |
Nature of Operations | Note 1 — Nature of Operations Brief Overview: NYIAX, Inc. (the “Company” or “NYIAX”) was incorporated on July 12, 2012, in the State of Delaware. NYIAX connects Media Buyers (brands, advertisers or agencies) and Media Sellers (publishers or media) to execute media advertising sales contracts. NYIAX receives a commission or fee upon completion of the media advertising contract. NYIAX does not take ownership or positions of the media at any time during the process. Going Concern, Liquidity and Capital Resources The Company believes it does not have sufficient cash to meet working capital and capital requirements for at least twelve months from the issuance of these financial statements. Historically, the Company’s liquidity needs have been met by the sale of common shares, the issuance of common shares through the exercise of warrants, and issuance of convertible note payable. Without a new loan or other equity support, the Company would not be able to support the current operating plans through twelve months from the issuance of these financial statements. No assurance can be given at this time, however, as to whether we will be able to raise new equity or loan support. For the three months ended March,31 2023, the Company’s operations lost approximately $3.0 million of which approximately $1.2 million were non-cash expenses, including approximately $313,000 of non-cash operating expenses and approximately $848,000 related to the write-off of deferred offering costs. The Company generated negative cash flows from operations of approximately $1.4 million for the three months ended March 31, 2023. Historically, the Company’s liquidity needs have been met by the sale of common shares, the issuance of common shares through the exercise of warrants, and sale convertible note payable. As of March 31, 2023, NYIAX had total current assets of approximately $1.2 million, of which approximately $452,000 was cash and total current liabilities of approximately $5.0 million. To enable the Company to meet immediate capital requirements until longer term requirements can be met, during the first quarter of fiscal year 2023, the Company sold $200,000 convertible notes from two convertible notes offerings. 2023A Convertible Note Payable converted to common shares on February 7, 2023. 2023B Convertible Note Payable will convert upon when shares of common stock are sold to the public in the financing event. $1,970,000 of 2023B Convertible Note Payable were sold as of June 28,2023. The Company is also subject to certain business risks, including dependence on key employees, competition, market acceptance of the Company’s platform, ability to source demand from buyers of advertising inventory and dependence on growth to achieve its business plan. The Company has been and could in the future be adversely affected by health epidemics, such as the global COVID-19 pandemic. While the COVID-19 pandemic has generally accelerated a move from traditional media to digital media, many marketers have decreased or paused their advertising spending as a response to the economic uncertainty, decline in business activity, and other COVID-related impacts, which have negatively impacted, and may continue to negatively impact, our revenue and results of operations, the extent and duration of which we may not be able to accurately predict. As a result, our financial condition and results of operations may be adversely impacted. |
Restatement
Restatement | 3 Months Ended |
Mar. 31, 2023 | |
Restatements [Abstract] | |
Restatement | Note 2 — Restatement For the three months ended March 31, 2022, the Company restated its results due to the following correction of errors. A. For the three months ended March 31, 2022, it was determined that the Company did not properly account for its agreement with its advisor. The advisor agreement, as discussed in note 4, Commitments and Licensing Fee, required the Company to compensate its advisor for financing transactions, including initial public offering and pre-initial public offering financings in the form of a cash commission and warrants and for various out-of-pocket costs. As previously reported, the Company did not record these expenses. For the period ending March 31, 2022, the effects of recording the advisor agreement in 2021 were as follows: a) Interest expense increased by $ 139,439 due to the amortization of the deferred debt discounts relating to the Company’s 2021 convertible notes offerings. b) Selling Agent and Advisor warrants issuable to advisor has increased for the estimated number of warrants, 78,292. c) The impact on EPS loss was to increase the EPS loss from $(0.35) to $(0.37), or by $(0.02). B. For the three months ended March 31, 2022, the Company re-evaluated the classifications of the statement of operation and restated the expenses on the statement of operations in accordance with Rule 5-03(b) of Regulation S-X. As a result of this re-evaluation: ● Employee expenses, including share-based compensation were allocated to a. cost of sales, b. technology and development, and c. sales, general and administrative, and ● Amortization of the capitalized software development costs was allocated to cost of sales. ● There was no effect on loss from operations, other (income) expenses, net loss or net loss per share. C. The table below summarizes the effects of the restatement on the financial statements for all periods being restated: As Previously Adjustments, Restated Statements of Shareholders’ Equity (Deficit) as of March 31, 2022 Additional Paid in Capital 39,170,551 1,114,043 40,284,594 Retained earnings (44,513,616 ) (1,386,102 ) (45,899,718 ) Total shareholders’ (deficit) (5,342,019 ) (272,059 ) (5,614,078 ) Amount of selling agent and advisor warrants 260,361 191,169 69,192 Statement of Operations for the period March 31, 2022 Net revenues 485,065 485,065 Cost of Sales - - - Cost of Sales - (288,281 ) (288,281 ) Gross Margin 485,065 773,346 Operating expenses Technology and development 230,865 127,433 358,298 Selling, general and administrative 2,328,120 602,940 2,931,060 Depreciation and amortization 50,380 (49,145 ) 1,235 Share-based compensation 969,510 (969,511 ) Total operating expenses 3,578,875 (288,282 ) 3,290,594 Interest expense 556,395 139,439 695,834 Loss before provision for income taxes (3,650,205 ) (139,440 ) (3,789,643 ) - - - Provision for income taxes - - - - - - Net loss (3,650,205 ) (139,440 ) (3,789,643 ) Net loss per share – basic and diluted (0.35 ) (0.02 ) (0.37 ) Statements of Cash Flows for three month period ended March 31, 2022 Cash flows from operating activities Net loss (3,650,204 ) (139,441 ) (3,789,643 ) Adjustments to reconcile net income to net cash provided by operating activities: Debt discount amortization 376,986 139,439 516,425 A. For period ended March, 31, 2022, it was determined that the Company did not properly account for its agreement with its advisor. The advisor agreement, as discussed in note 4, Commitments and Licensing Fee, required the Company to compensate its advisor for financing transactions, including initial public offering and pre-initial public offering financings in the form of a cash commission and warrants and for various out-of-pocket costs. As previously reported, the Company did not record these expenses. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Note 3 — Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by US GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the period presented. Operating results for the period from December 31, 2022 through March 31, 2023 are not necessarily indicative of the results that may be expected through December 31, 2023. The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from these estimates. On an on-going basis, management evaluates its estimates, primarily those related to: (1) revenue recognition criteria, including the determination of revenue reporting as net versus gross in the Company’s revenue arrangements, (2) allowances for doubtful accounts, (3) the useful lives of property and equipment and capitalized software development costs, (4) income taxes, (5) the valuation of share-based compensation, (6) assumptions used in the Black-Scholes option pricing model to determine the fair value of stock options and warrants and (7) the recognition and disclosure of contingent liabilities. These estimates are based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Estimates relating to the valuation of share-based compensation, options and warrants, require the selection of appropriate valuation methodologies and models, and significant judgment in evaluating ranges of assumptions and financial inputs. Actual results may differ materially from those estimates under different assumptions or circumstances. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents in the financial statements. Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash, and accounts receivable. The Company maintains its cash with financial institutions which exceed the Federal Deposit Insurance Corporation (“FDIC”) federally insured limits. The Company considers all highly liquid investments with an original maturity of three Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Fair value measurements are based on a fair value hierarchy, based on three levels of inputs, of which the first two are considered observable and the last unobservable, which are the following: Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted market prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. Level 3 — Unobservable inputs. Observable inputs are based on market data obtained from independent sources. The carrying amounts of cash, accounts receivable, and accounts payable approximate fair value due to the short-term nature of these instruments. Concentrations of Risk As of March 31, 2023 two Media Buyers represented 54% and 12% of accounts receivable. For the three months ended March 31, 2023, two customers represented 44% and 16% of revenue, net. As of March 31, 2023, two Media Sellers represented 76% and 11% of accounts payable. For the three months ended March 31, 2022 one customers represented for 93% of revenue, net. As of December 31, 2022, two Media Sellers represented of 61% and 8% of accounts payable. As of December 31, 2021, two Media Buyer represented for 45% and 41% of accounts receivable. As of December 31, 2021, four Media Sellers represented 39%, 14%, 10% and 9% of accounts payable. Accounts Receivable, Net Accounts receivable consists of amounts billed to Media Buyers. Accounts receivable, net are carried at their contractual amounts, less an estimate for uncollectible amounts. Management estimates the allowance for bad debts based on existing economic conditions, historical experience, the financial conditions of the customers, and the amount and age of past due accounts. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are generally written off against the allowance for bad debts only after all collection attempts have been exhausted. The Company performs ongoing credit evaluations of Media Buyers. The allowance for doubtful accounts is based on the best estimate of the amount of probable credit losses in existing accounts receivable. The allowance for doubtful accounts is determined based on historical collection experience and the review in each period of the status of the then-outstanding accounts receivable, while taking into consideration current client information, subsequent collection history and other relevant data. The Company reviews the allowance for doubtful accounts on a quarterly basis. For the periods ended years ended March 31, 2023 and December 31, 2022, the Company had no allowance for doubtful accounts and no write-offs of accounts receivable. Property and Equipment, Net Property and equipment are stated at cost, net of accumulated depreciation and amortization, which is recorded commencing at the in-service date using the straight-line method over the estimated useful lives of the assets, as follows: 3 to 5 years for office equipment and software. Repair and maintenance costs are expensed as incurred and major improvements are capitalized. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the Company’s operating results. Capitalized Software Development Costs The Company capitalizes or expenses costs associated with creating internally developed software related to the Company’s technology infrastructure in accordance with ASC 350 – 40, Intangibles — Goodwill and Other — Internal Use Software, that generally relate to software that the Company does not intend to sell or market. All costs incurred during the preliminary project stages are expensed as incurred. Once the projects have been committed to and it is probable that the projects will meet functional requirements, costs are capitalized in accordance with guidance. Amortization commences when the software is available for its intended use. The estimated useful life of the capitalized software development costs is five years. The Company commenced amortizing the capitalized software development costs related to its platform in January 2020. Certain long-lived assets including capitalized software development costs are also subject to measurement at fair value on a nonrecurring basis if they are deemed to be impaired as a result of an impairment review. For the three-month period ended March 31, 2023 and the year ended December 31, 2022, no impairments were recorded on those assets. Revenue Recognition NYIAX brings together Media Buyers (brands, advertisers or agencies) and Media Sellers (publishers or media) to execute media sales contracts. NYIAX receives a fee upon completion of the media contract. NYIAX does not take ownership of or positions in the media at any time during the process. Generally, the Company bills Media Buyers the gross amount of advertising, including the Company’s commissions or fees in a single invoice and pays the Media Seller upon receipt. The Company’s accounts receivable are recorded at the amount of gross billings for the amounts it is responsible to collect, and accounts payable are recorded at the amount payable to Media Seller. Substantially all of the Company’s revenues are recognized at the point in time that the (i) contract reconciliations are completed, (ii) accepted by the Media Buyer and Media Seller, and (iii) NYIAX’s performance obligations are completed. The Company maintains agreements with each Media Buyer and Media Seller which set out the terms of the relationship. Revenue is recognized based on the five-step process outlined in the Accounting Standards Codification (“ASC”) 606: Step 1 — Identify the Contract with the Customer — A contract exists when (a) the parties to the contract have approved the contract and are committed to perform their respective obligations, (b) the entity can identify each party’s rights regarding the goods or services to be transferred, (c) the entity can identify the payment terms for the goods or services to be transferred, (d) the contract has commercial substance and it is probably that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. Step 2 — Identify Performance Obligations in the Contract — Upon execution of a contract, the Company identifies as performance obligations each promise to transfer to the customer either (a) goods or services that are distinct, or (b) a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgement to determine whether the goods or services are capable of being distinct within the context of the contract. If these criteria are not met, the goods or services are accounted for as a combined performance obligation. Step 3 — Determine the Transaction Price — When (or as) a performance obligation is satisfied, the Company shall recognize as revenue the amount of the transaction price that is allocated to the performance obligation. The contract terms are used to determine the transaction price. Generally, all contracts include fixed consideration. If a contract did include variable consideration, the Company would determine the amount of variable consideration that should be included in the transaction price based on expected value method. Variable consideration would be included in the transaction price, if in the Company’s judgement, it is probable that a significant future reversal of cumulative revenue under the contract would not occur. Step 4 — Allocate the Transaction Price — After the transaction price has been determined, the next step is to allocate the transaction price to each performance obligation in the contract. If the contract only has one performance obligation, the entire transaction price will be applied to that obligation. If the contract has multiple performance obligations, the transaction price is allocated to the performance obligations based on the relative standalone selling price at contract inception. Step 5 — Satisfaction of the Performance Obligations (and Recognize Revenue) — Revenue is recognized when (or as) goods or services are transferred to a customer. The Company satisfies each of its performance obligations by transferring control of the promised good or service underlying that performance obligation to the customer. Control is the ability to direct the use of and obtain substantially all of the remaining benefits from an asset. It includes the ability to prevent other entities from directing the use of and obtaining the benefits from an asset. Indicators that control has passed to the customer include: a present obligation to pay; physical possession of the asset; legal title; risks and rewards of ownership; and acceptance of the asset(s). Performance obligations can be satisfied at a point in time or over time. Substantially all of the Company’s revenues are recognized when the contract reconciliations are completed and accepted by the Media Buyer and Media Seller. The Company maintains agreements with each Media Buyer and Media Seller which set out the terms of the relationship. The Company has determined that it is acting as an agent for the Media Seller as (i) NYIAX does not obtain control of the Seller’s media (goods & services) before transferring control to the Buyer. The Seller has control of the media. Specifically, NYIAX does not control the specified media before transferring the media to the Media Buyer, the Company is not primarily responsible for the performance of the Media Seller, nor can the Company redirect those services to fulfill any other contracts. (ii) NYIAX does not have inventory or credit risk for the media, and (iii) the Media Seller establishes the pricing in the Smart-Contracts (self-executing contracts with the terms of the agreement between buyer and seller standardized. and the Media Buyers and Media Sellers agree the pricing. Share-Based Compensation The share-based compensation expense related to stock options and restricted stock awards which are referred to collectively as options and awards granted under the Company’s employee option plans, is measured and recognized in the financial statements based on the fair value of the awards granted. The fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model. We use the Black-Scholes model to calculate the fair value for all options granted, based on the inputs relevant on the date granted, such as the fair value. of our shares, prevailing risk-free interest rate, etc. The value of the portion of the award, after considering potential forfeitures, that is ultimately expected to vest is recognized as expense in our statements of operations over the requisite service periods. Awards are subject to forfeiture until vesting conditions have been satisfied under the terms of the award. Determining the fair value of stock options awards requires judgement. The Company’s use of the Black-Scholes option pricing model requires the input of subjective assumptions. Deferred Offering Cost Write-off On February 14, 2023, the Registration Statement on Form S-1 filed by the Company with the Securities and Exchange Commission was declared effective by the SEC. In March, 2023, the Company’s financial advisor, representative and lead underwriter for the offering, Boustead Securities LLC (“Boustead”), informed the Company of its decision not to proceed with pricing of the Company’s Offering. Pursuant to the Codification of Staff Accounting Bulletins / Topic 5: Miscellaneous Accounting A. Expenses of Offering, the Company had been deferring these expenses until the offering. As of December 31, 2022, $848,531 of deferred offering costs were recorded on the balance sheet. In accordance with the Codification of Staff Accounting Bulletins / Topic 5: Miscellaneous Accounting, the Company has written these costs off during the three month period ended March 31, 2023. Income Taxes The Company records income tax expense in accordance with ASC – 740 Income Taxes, as amended mandating how uncertain tax positions should be recognized, measured, presented, and disclosed in the financial statements. The standards require the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are more-likely-than-not of being sustained upon examination by the applicable tax authority, based on the technical merits of the tax position, and then recognizing the tax benefit that is more-likely-than-not to be realized. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current reporting period. The Company has analyzed its tax positions and has concluded that as of March 31, 2023 and December 31, 2022, no uncertain positions are taken or are expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Company’s policy is to record interest expense and penalties pertaining to income taxes in operating expenses. For the periods ended March 31, 2023 and December 31, 2022, there were no interest and penalties expenses recorded and no accrued interest and penalties. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including net operating loss carryforwards (“NOL’s”), 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 income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Realization of the deferred income tax asset is dependent on generating sufficient taxable income in future years. The amount of the deferred income tax asset considered realizable, if any, could be reduced in the near term if estimates of future taxable income are met. Earnings Per Share In accordance with ASC – 260 Earnings Per Share, basic earnings per share (EPS) is calculated by dividing the net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding. Diluted net income per share per share is computed by dividing net income by the weighted average number vested of common shares, plus the net impact of common shares (computed using the treasury stock method), if dilutive, resulting from the exercise of dilutive securities. In periods when losses are reported, the weighted-average number of common shares outstanding exclude common stock equivalents because their inclusion would be anti-dilutive. The Company has issued employee incentive options and warrants. These employee incentive options and warrants are excluded from the calculation as the employee incentive options and warrants are anti-dilutive. As of March 31, 2022, the Company excluded the common stock equivalents summarized below, which entitle the holders thereof to ultimately acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive. As of Equity Incentive Plans 3,086,626 Selling Agent and Advisor Warrants 23,538 Warrants Issued with Common Stock Offerings 889,500 Warrants Issued with Convertible Notes Offerings 967,150 Common Stock Issuable Upon Conversion of Convertible Notes, including PIK Interest 135,807 Total Common Stock Equivalents 5,102,621 Recently Issued Accounting Pronouncements In August 2020, the FASB issued No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendments are effective for fiscal years beginning after December 15, 2023. The Company evaluated any potential impact from ASU 2021-07 and believes it will have no material impact on our financial results. |
Shareholders_ Equity
Shareholders’ Equity | 3 Months Ended |
Mar. 31, 2023 | |
Shareholders’ Equity [Abstract] | |
Shareholders’ Equity | Note 4 — Shareholders’ Equity On March 31, 2023 and December 31, 2022 the authorized capital stock of 135,000,000 shares consisting of 125,000,000 shares of common stock and 10,000,000 shares of preferred stock each with a par value of $0.0001 with 13,811,499 and 12,370,002 common shares issued and outstanding, respectively. No preferred stock has been issued. |
Convertible Notes Payable
Convertible Notes Payable | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Convertible Notes Payable | Note 5 — Convertible Notes Payable Issuance of 2023A Convertible Note Payable On January 10, 2023, the Company commenced a Convertible Notes Offering (“2023A Convertible Note Payable”) pursuant to which it offered up to $500,000 of convertible notes. A total of approximately $200,000 of the 2023A Convertible Notes were sold. The 2023A Convertible Notes convert at two dollars ($2.00) per share concurrently when shares of common stock are sold to the public in the Financing Event (defined as declaring the registration statement effective), or in the event the Financing Event is not completed within eighteen (18) months from the date of the individually issued notes, the Conversion Price shall be the reduced price of two dollars ($2.00) per share and the conversion amount shall automatically be converted into common stock of the Company at $2.00 per share on the Maturity Date. The annual rate of return is twelve percent (12.0%) per annum, which was paid as a Payment-in-Kind in the Company’s common stock valued at two dollars ($2.00) per share. Concurrently with the sales of the 2023A Convertible Note Payable, warrants (the “Warrants”) were issued at a rate of one (1) Warrant for every ten dollars ($10) principal amount of notes purchased. Each Warrant shall be exercisable for a period of five (5) years at a price of $5.50 per share. The outstanding principal balance of the 2023A Convertible Notes and all accrued interest automatically converted into common stock of the Company on February 7, 2023, immediately prior to the Company’s receipt of an effective order from the SEC declaring the registration statement of its initial public offering effective. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 6 — Related Party Transactions Related Party Transactions For the three months period ended March 31, 2022, the Company recorded $10,000 of general and administrative expenses related to GoldStreet for office space which was included in accounts payable and accrued expenses as of March 31, 2022. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 7 — Subsequent Events Management has evaluated events that have occurred subsequent to the date of these condensed financial statements and has determined that, other than those listed below, no such reportable subsequent events exist through July 20, 2023Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statement other than noted above and below: Convertible Note Offerings 2023B Convertible Note Payable On April 3, 2023, the Company commenced a Convertible Notes Offering (“2023B Convertible Note Payable”) pursuant to which it will offer up to $2,000,000 of convertible notes. The 2023B Convertible Notes convert at two dollars ($2.00) per share concurrently when shares of common stock are sold to the public in the Financing Event, or in the event the Financing Event is not completed within eighteen (18) months from the date of the individually issued notes, the Conversion Price shall be the reduced price of two dollars ($2.00) per share and the conversion amount shall automatically be converted into common stock of the Company at $2.00 per share on the Maturity Date. The annual rate of return is twelve percent (12.0%) per annum, which shall be paid as a Payment-in-Kind in the Company’s common stock valued at two dollars ($2.00) per share. Concurrently with the issuance of the 2023B Convertible Notes Payable, the company issued warrants (the “Warrants”) The Warrants were issued at a rate of one half warrant issued for every $10 of notes purchased with an exercise price of four dollars ($4.00) and one half warrant issued for every $10 of notes purchased with an exercise price of two dollars ($2.00). Each Warrant shall be exercisable for a period of five (5) years. $ 1.970,000 Threatened Litigation On March 23, 2021, the company entered into an engagement letter (the “Engagement Letter”) with Boustead Securities, an advisor to the Company for certain corporate financing transactions. The Engagement Letter provides for Initial Public Offering (“IPO”), Pre-IPO and corporate finance transaction advice and the advisor expressed its intent to enter into an underwriting agreement with the Company to act as the lead underwriter for the proposed IPO on a firm commitment basis. For financing transactions, including IPO and pre-IPO financings, the advisor would charge the Company (i) seven percent (7%) of the gross amount to be disbursed to the Company from each such investment transaction closing plus, (ii) a non-accountable expense allowance equal to one percent (1%) of the gross amount to the disbursed to the Company from each such investment transaction closing, plus (iii) warrants equal to seven percent (7%) of the gross amount to be received by to the Company from each such investment transaction closing. The warrant exercise price is defined as the lower of: (1) the fair market value price per share of the Company’s common stock as of each such financing closing date, (2) the price per share paid by investors in each respective financing, (3) in the event that securities convertible are sold in the financing, the conversion price of such securities, or (4) in the event that warrants or other rights are issued in the financing, the exercise price of such warrants or other rights. Notwithstanding the foregoing, whatever the Company raises up to the maximum note offering of $12 million during its in-process private placement from March 24, 2021 until April 22, 2021, the fees will be reduced to 33% of the amounts indicated in this paragraph during this time period. The engagement letter established accountable expenses up to an aggregate of $230,000. The Engagement Letter terminated on the later of (i) eighteen (18) months from the date executed (March 23, 2021) or (ii) twelve months from the completion date of the IPO and the term may be extended pursuant to the engagement letter. Also, the Company agreed that the advisor shall have the right of first refusal (ROFR) for two (2) years from the consummation of a transaction or termination or expiration of the Engagement Letter to act as advisor or as joint financial advisor under at least equal economic terms to the Engagement Letter. On February 14, 2023, the Registration Statement on Form S-1 filed by the Company with the Securities and Exchange Commission (the “SEC”) was declared effective by the SEC. The Company’s financial advisor, representative and lead underwriter for the Offering was Boustead Securities LLC (“Boustead”). Boustead informed the Company of its decision not to price and consequently the Company was unable to complete the initial public offering at such time. NYIAX requested the SEC declare the offering effective. Upon the SEC approval NYIAX became a 1934 Securities Act reporting company with all the related responsibilities and costs. The Company has determined to continue to pursue an initial public offering (“IPO”) and NASDAQ listing of its securities. On April 12, 2023, the Company engaged Spartan Capital Securities, LLC, as lead underwriter, deal manager and investment banker for the Company’s IPO. However, there can be no assurance that we will be able to complete an IPO in the near future, if at all. On April 7, 2023, the Company received a demand letter from Boustead. Boustead claims that the Company owes or will owe Boustead approximately $1 million for commissions on funds privately raised by the Company during its engagement with Boustead and approximately $1,230,000 if the Company completes an IPO with another underwriter. The Company disputes the amounts owed that have been claimed by Boustead and further is of the belief that if any commissions are due to Boustead, they would be significantly less than the amounts claimed by Boustead. There can be no assurance that Boustead will not initiate a lawsuit to recover the amounts it claims are owed and any such litigation could impede our ability to complete an IPO and could negatively affect our financial condition. In addition, there can be no assurance that the Company would prevail in any lawsuit it commences against Boustead. Purchase of Intellectual Property Portfolio On July 8, 2023, NYIAX, Inc. (the “Company”) completed the purchase of a portfolio of patents and trade secrets (the “Portfolio”) from Network Foundation Technologies, LLC (“NIFTY”). The Company issued 2,000,000 shares of its common stock to NIFTY as consideration for the Portfolio. The transaction was approved by the Company’s board of directors and by NIFTY’s board of directors. A purchase price of approximately $4 million (plus certain capitalized costs for legal and other costs) will be recorded. The 2 million shares of common stock of NYIAX have various registration restrictions and provisions for the clawback of shares by the Company in certain events as set forth in the Asset Purchase Agreement (the “Agreement”). |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by US GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the period presented. Operating results for the period from December 31, 2022 through March 31, 2023 are not necessarily indicative of the results that may be expected through December 31, 2023. The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from these estimates. On an on-going basis, management evaluates its estimates, primarily those related to: (1) revenue recognition criteria, including the determination of revenue reporting as net versus gross in the Company’s revenue arrangements, (2) allowances for doubtful accounts, (3) the useful lives of property and equipment and capitalized software development costs, (4) income taxes, (5) the valuation of share-based compensation, (6) assumptions used in the Black-Scholes option pricing model to determine the fair value of stock options and warrants and (7) the recognition and disclosure of contingent liabilities. These estimates are based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Estimates relating to the valuation of share-based compensation, options and warrants, require the selection of appropriate valuation methodologies and models, and significant judgment in evaluating ranges of assumptions and financial inputs. Actual results may differ materially from those estimates under different assumptions or circumstances. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents in the financial statements. Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash, and accounts receivable. The Company maintains its cash with financial institutions which exceed the Federal Deposit Insurance Corporation (“FDIC”) federally insured limits. The Company considers all highly liquid investments with an original maturity of three |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Fair value measurements are based on a fair value hierarchy, based on three levels of inputs, of which the first two are considered observable and the last unobservable, which are the following: Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted market prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. Level 3 — Unobservable inputs. Observable inputs are based on market data obtained from independent sources. The carrying amounts of cash, accounts receivable, and accounts payable approximate fair value due to the short-term nature of these instruments. |
Concentrations of Risk | Concentrations of Risk As of March 31, 2023 two Media Buyers represented 54% and 12% of accounts receivable. For the three months ended March 31, 2023, two customers represented 44% and 16% of revenue, net. As of March 31, 2023, two Media Sellers represented 76% and 11% of accounts payable. For the three months ended March 31, 2022 one customers represented for 93% of revenue, net. As of December 31, 2022, two Media Sellers represented of 61% and 8% of accounts payable. As of December 31, 2021, two Media Buyer represented for 45% and 41% of accounts receivable. As of December 31, 2021, four Media Sellers represented 39%, 14%, 10% and 9% of accounts payable. |
Accounts Receivable, Net | Accounts Receivable, Net Accounts receivable consists of amounts billed to Media Buyers. Accounts receivable, net are carried at their contractual amounts, less an estimate for uncollectible amounts. Management estimates the allowance for bad debts based on existing economic conditions, historical experience, the financial conditions of the customers, and the amount and age of past due accounts. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are generally written off against the allowance for bad debts only after all collection attempts have been exhausted. The Company performs ongoing credit evaluations of Media Buyers. The allowance for doubtful accounts is based on the best estimate of the amount of probable credit losses in existing accounts receivable. The allowance for doubtful accounts is determined based on historical collection experience and the review in each period of the status of the then-outstanding accounts receivable, while taking into consideration current client information, subsequent collection history and other relevant data. The Company reviews the allowance for doubtful accounts on a quarterly basis. For the periods ended years ended March 31, 2023 and December 31, 2022, the Company had no allowance for doubtful accounts and no write-offs of accounts receivable. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment are stated at cost, net of accumulated depreciation and amortization, which is recorded commencing at the in-service date using the straight-line method over the estimated useful lives of the assets, as follows: 3 to 5 years for office equipment and software. Repair and maintenance costs are expensed as incurred and major improvements are capitalized. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the Company’s operating results. |
Capitalized Software Development Costs | Capitalized Software Development Costs The Company capitalizes or expenses costs associated with creating internally developed software related to the Company’s technology infrastructure in accordance with ASC 350 – 40, Intangibles — Goodwill and Other — Internal Use Software, that generally relate to software that the Company does not intend to sell or market. All costs incurred during the preliminary project stages are expensed as incurred. Once the projects have been committed to and it is probable that the projects will meet functional requirements, costs are capitalized in accordance with guidance. Amortization commences when the software is available for its intended use. The estimated useful life of the capitalized software development costs is five years. The Company commenced amortizing the capitalized software development costs related to its platform in January 2020. Certain long-lived assets including capitalized software development costs are also subject to measurement at fair value on a nonrecurring basis if they are deemed to be impaired as a result of an impairment review. For the three-month period ended March 31, 2023 and the year ended December 31, 2022, no impairments were recorded on those assets. |
Revenue Recognition | Revenue Recognition NYIAX brings together Media Buyers (brands, advertisers or agencies) and Media Sellers (publishers or media) to execute media sales contracts. NYIAX receives a fee upon completion of the media contract. NYIAX does not take ownership of or positions in the media at any time during the process. Generally, the Company bills Media Buyers the gross amount of advertising, including the Company’s commissions or fees in a single invoice and pays the Media Seller upon receipt. The Company’s accounts receivable are recorded at the amount of gross billings for the amounts it is responsible to collect, and accounts payable are recorded at the amount payable to Media Seller. Substantially all of the Company’s revenues are recognized at the point in time that the (i) contract reconciliations are completed, (ii) accepted by the Media Buyer and Media Seller, and (iii) NYIAX’s performance obligations are completed. The Company maintains agreements with each Media Buyer and Media Seller which set out the terms of the relationship. Revenue is recognized based on the five-step process outlined in the Accounting Standards Codification (“ASC”) 606: Step 1 — Identify the Contract with the Customer — A contract exists when (a) the parties to the contract have approved the contract and are committed to perform their respective obligations, (b) the entity can identify each party’s rights regarding the goods or services to be transferred, (c) the entity can identify the payment terms for the goods or services to be transferred, (d) the contract has commercial substance and it is probably that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. Step 2 — Identify Performance Obligations in the Contract — Upon execution of a contract, the Company identifies as performance obligations each promise to transfer to the customer either (a) goods or services that are distinct, or (b) a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgement to determine whether the goods or services are capable of being distinct within the context of the contract. If these criteria are not met, the goods or services are accounted for as a combined performance obligation. Step 3 — Determine the Transaction Price — When (or as) a performance obligation is satisfied, the Company shall recognize as revenue the amount of the transaction price that is allocated to the performance obligation. The contract terms are used to determine the transaction price. Generally, all contracts include fixed consideration. If a contract did include variable consideration, the Company would determine the amount of variable consideration that should be included in the transaction price based on expected value method. Variable consideration would be included in the transaction price, if in the Company’s judgement, it is probable that a significant future reversal of cumulative revenue under the contract would not occur. Step 4 — Allocate the Transaction Price — After the transaction price has been determined, the next step is to allocate the transaction price to each performance obligation in the contract. If the contract only has one performance obligation, the entire transaction price will be applied to that obligation. If the contract has multiple performance obligations, the transaction price is allocated to the performance obligations based on the relative standalone selling price at contract inception. Step 5 — Satisfaction of the Performance Obligations (and Recognize Revenue) — Revenue is recognized when (or as) goods or services are transferred to a customer. The Company satisfies each of its performance obligations by transferring control of the promised good or service underlying that performance obligation to the customer. Control is the ability to direct the use of and obtain substantially all of the remaining benefits from an asset. It includes the ability to prevent other entities from directing the use of and obtaining the benefits from an asset. Indicators that control has passed to the customer include: a present obligation to pay; physical possession of the asset; legal title; risks and rewards of ownership; and acceptance of the asset(s). Performance obligations can be satisfied at a point in time or over time. Substantially all of the Company’s revenues are recognized when the contract reconciliations are completed and accepted by the Media Buyer and Media Seller. The Company maintains agreements with each Media Buyer and Media Seller which set out the terms of the relationship. The Company has determined that it is acting as an agent for the Media Seller as (i) NYIAX does not obtain control of the Seller’s media (goods & services) before transferring control to the Buyer. The Seller has control of the media. Specifically, NYIAX does not control the specified media before transferring the media to the Media Buyer, the Company is not primarily responsible for the performance of the Media Seller, nor can the Company redirect those services to fulfill any other contracts. (ii) NYIAX does not have inventory or credit risk for the media, and (iii) the Media Seller establishes the pricing in the Smart-Contracts (self-executing contracts with the terms of the agreement between buyer and seller standardized. and the Media Buyers and Media Sellers agree the pricing. |
Share-Based Compensation | Share-Based Compensation The share-based compensation expense related to stock options and restricted stock awards which are referred to collectively as options and awards granted under the Company’s employee option plans, is measured and recognized in the financial statements based on the fair value of the awards granted. The fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model. We use the Black-Scholes model to calculate the fair value for all options granted, based on the inputs relevant on the date granted, such as the fair value. of our shares, prevailing risk-free interest rate, etc. The value of the portion of the award, after considering potential forfeitures, that is ultimately expected to vest is recognized as expense in our statements of operations over the requisite service periods. Awards are subject to forfeiture until vesting conditions have been satisfied under the terms of the award. Determining the fair value of stock options awards requires judgement. The Company’s use of the Black-Scholes option pricing model requires the input of subjective assumptions. |
Deferred Offering Cost Write-off | Deferred Offering Cost Write-off On February 14, 2023, the Registration Statement on Form S-1 filed by the Company with the Securities and Exchange Commission was declared effective by the SEC. In March, 2023, the Company’s financial advisor, representative and lead underwriter for the offering, Boustead Securities LLC (“Boustead”), informed the Company of its decision not to proceed with pricing of the Company’s Offering. Pursuant to the Codification of Staff Accounting Bulletins / Topic 5: Miscellaneous Accounting A. Expenses of Offering, the Company had been deferring these expenses until the offering. As of December 31, 2022, $848,531 of deferred offering costs were recorded on the balance sheet. In accordance with the Codification of Staff Accounting Bulletins / Topic 5: Miscellaneous Accounting, the Company has written these costs off during the three month period ended March 31, 2023. |
Income Taxes | Income Taxes The Company records income tax expense in accordance with ASC – 740 Income Taxes, as amended mandating how uncertain tax positions should be recognized, measured, presented, and disclosed in the financial statements. The standards require the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are more-likely-than-not of being sustained upon examination by the applicable tax authority, based on the technical merits of the tax position, and then recognizing the tax benefit that is more-likely-than-not to be realized. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current reporting period. The Company has analyzed its tax positions and has concluded that as of March 31, 2023 and December 31, 2022, no uncertain positions are taken or are expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Company’s policy is to record interest expense and penalties pertaining to income taxes in operating expenses. For the periods ended March 31, 2023 and December 31, 2022, there were no interest and penalties expenses recorded and no accrued interest and penalties. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including net operating loss carryforwards (“NOL’s”), 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 income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Realization of the deferred income tax asset is dependent on generating sufficient taxable income in future years. The amount of the deferred income tax asset considered realizable, if any, could be reduced in the near term if estimates of future taxable income are met. |
Earnings Per Share | Earnings Per Share In accordance with ASC – 260 Earnings Per Share, basic earnings per share (EPS) is calculated by dividing the net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding. Diluted net income per share per share is computed by dividing net income by the weighted average number vested of common shares, plus the net impact of common shares (computed using the treasury stock method), if dilutive, resulting from the exercise of dilutive securities. In periods when losses are reported, the weighted-average number of common shares outstanding exclude common stock equivalents because their inclusion would be anti-dilutive. The Company has issued employee incentive options and warrants. These employee incentive options and warrants are excluded from the calculation as the employee incentive options and warrants are anti-dilutive. As of March 31, 2022, the Company excluded the common stock equivalents summarized below, which entitle the holders thereof to ultimately acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive. As of Equity Incentive Plans 3,086,626 Selling Agent and Advisor Warrants 23,538 Warrants Issued with Common Stock Offerings 889,500 Warrants Issued with Convertible Notes Offerings 967,150 Common Stock Issuable Upon Conversion of Convertible Notes, including PIK Interest 135,807 Total Common Stock Equivalents 5,102,621 |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In August 2020, the FASB issued No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendments are effective for fiscal years beginning after December 15, 2023. The Company evaluated any potential impact from ASU 2021-07 and believes it will have no material impact on our financial results. |
Restatement (Tables)
Restatement (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Restatements [Abstract] | |
Schedule of the effects of the restatement on the financial statements | As Previously Adjustments, Restated Statements of Shareholders’ Equity (Deficit) as of March 31, 2022 Additional Paid in Capital 39,170,551 1,114,043 40,284,594 Retained earnings (44,513,616 ) (1,386,102 ) (45,899,718 ) Total shareholders’ (deficit) (5,342,019 ) (272,059 ) (5,614,078 ) Amount of selling agent and advisor warrants 260,361 191,169 69,192 Statement of Operations for the period March 31, 2022 Net revenues 485,065 485,065 Cost of Sales - - - Cost of Sales - (288,281 ) (288,281 ) Gross Margin 485,065 773,346 Operating expenses Technology and development 230,865 127,433 358,298 Selling, general and administrative 2,328,120 602,940 2,931,060 Depreciation and amortization 50,380 (49,145 ) 1,235 Share-based compensation 969,510 (969,511 ) Total operating expenses 3,578,875 (288,282 ) 3,290,594 Interest expense 556,395 139,439 695,834 Loss before provision for income taxes (3,650,205 ) (139,440 ) (3,789,643 ) - - - Provision for income taxes - - - - - - Net loss (3,650,205 ) (139,440 ) (3,789,643 ) Net loss per share – basic and diluted (0.35 ) (0.02 ) (0.37 ) Statements of Cash Flows for three month period ended March 31, 2022 Cash flows from operating activities Net loss (3,650,204 ) (139,441 ) (3,789,643 ) Adjustments to reconcile net income to net cash provided by operating activities: Debt discount amortization 376,986 139,439 516,425 |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Schedule of common stock equivalents | As of Equity Incentive Plans 3,086,626 Selling Agent and Advisor Warrants 23,538 Warrants Issued with Common Stock Offerings 889,500 Warrants Issued with Convertible Notes Offerings 967,150 Common Stock Issuable Upon Conversion of Convertible Notes, including PIK Interest 135,807 Total Common Stock Equivalents 5,102,621 |
Nature of Operations (Details)
Nature of Operations (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2023 | Jun. 28, 2023 | Dec. 31, 2022 | |
Organization and Nature of Business [Abstract] | ||||
Operations lost | $ 3,000,000 | |||
Non-cash expenses | 1,200,000 | |||
Non-cash operating expenses | 313,000 | |||
Write off of deferred offering costs | 848,000 | |||
Total current assets | $ 1,201,096 | 1,201,096 | $ 2,856,868 | |
Total current liabilities | 4,977,185 | 4,977,185 | $ 7,430,897 | |
Proceeds from sales of convertible notes | 200,000 | |||
NYIAX [Member] | ||||
Organization and Nature of Business [Abstract] | ||||
Total current assets | 1,200,000 | 1,200,000 | ||
Cash | 452,000 | 452,000 | ||
Total current liabilities | $ 5,000,000 | 5,000,000 | ||
Convertible Notes Payable [Member] | ||||
Organization and Nature of Business [Abstract] | ||||
Operating activities | $ 1,400,000 | |||
2023B Convertible Note Payable [Member] | Forecast [Member] | ||||
Organization and Nature of Business [Abstract] | ||||
Sales of convertible notes | $ 1,970,000 |
Restatement (Details)
Restatement (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
Restatement (Details) [Line Items] | |
Interest expense (in Dollars) | $ | $ 139,439 |
Number of warrants (in Shares) | shares | 78,292 |
Increase to loss per share | $ 0.02 |
Minimum [Member] | |
Restatement (Details) [Line Items] | |
Increase to loss per share | 0.35 |
Maximum [Member] | |
Restatement (Details) [Line Items] | |
Increase to loss per share | $ 0.37 |
Restatement (Details) - Schedul
Restatement (Details) - Schedule of the effects of the restatement on the financial statements | 3 Months Ended |
Mar. 31, 2022 USD ($) $ / shares | |
As Previously reported [Member] | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |
Additional Paid in Capital | $ 39,170,551 |
Retained earnings | (44,513,616) |
Total shareholders’ (deficit) | (5,342,019) |
Amount of selling agent and advisor warrants | 260,361 |
Net revenues | 485,065 |
Cost of Sales | |
Gross Margin | 485,065 |
Operating expenses | |
Technology and development | 230,865 |
Selling, general and administrative | 2,328,120 |
Depreciation and amortization | 50,380 |
Share-based compensation | 969,510 |
Total operating expenses | 3,578,875 |
Interest expense | 556,395 |
Loss before provision for income taxes | (3,650,205) |
Provision for income taxes | |
Net loss | $ (3,650,205) |
Net loss per share – basic and diluted (in Dollars per share) | $ / shares | $ (0.35) |
Net loss | $ (3,650,204) |
Debt discount amortization | 376,986 |
Adjustments, Net [Member] | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |
Additional Paid in Capital | 1,114,043 |
Retained earnings | (1,386,102) |
Total shareholders’ (deficit) | (272,059) |
Amount of selling agent and advisor warrants | 191,169 |
Cost of Sales | (288,281) |
Operating expenses | |
Technology and development | 127,433 |
Selling, general and administrative | 602,940 |
Depreciation and amortization | (49,145) |
Share-based compensation | (969,511) |
Total operating expenses | (288,282) |
Interest expense | 139,439 |
Loss before provision for income taxes | (139,440) |
Provision for income taxes | |
Net loss | $ (139,440) |
Net loss per share – basic and diluted (in Dollars per share) | $ / shares | $ (0.02) |
Net loss | $ (139,441) |
Debt discount amortization | 139,439 |
Restated Amounts [Member] | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |
Additional Paid in Capital | 40,284,594 |
Retained earnings | (45,899,718) |
Total shareholders’ (deficit) | (5,614,078) |
Amount of selling agent and advisor warrants | 69,192 |
Net revenues | 485,065 |
Cost of Sales | (288,281) |
Gross Margin | 773,346 |
Operating expenses | |
Technology and development | 358,298 |
Selling, general and administrative | 2,931,060 |
Depreciation and amortization | 1,235 |
Total operating expenses | 3,290,594 |
Interest expense | 695,834 |
Loss before provision for income taxes | (3,789,643) |
Provision for income taxes | |
Net loss | $ (3,789,643) |
Net loss per share – basic and diluted (in Dollars per share) | $ / shares | $ (0.37) |
Net loss | $ (3,789,643) |
Debt discount amortization | $ 516,425 |
Restatement (Details) - Sched_2
Restatement (Details) - Schedule of the effects of the restatement on the financial statements (Parentheticals) | 3 Months Ended |
Mar. 31, 2022 $ / shares | |
As Previously reported [Member] | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |
Net loss per share – diluted | $ (0.35) |
Adjustments, Net [Member] | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |
Net loss per share – diluted | (0.02) |
Restated Amounts [Member] | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |
Net loss per share – diluted | $ (0.37) |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Investments maturity period | 3 months | ||
Revenue rate | 93% | ||
Deferred offering costs (in Dollars) | $ 848,531 | ||
One Media Sellers [Member] | |||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Accounts receivable rate | 54% | 45% | |
Accounts payable rate | 76% | 61% | 39% |
Two Media Sellers [Member] | |||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Accounts receivable rate | 12% | 41% | |
Accounts payable rate | 11% | 8% | 14% |
Three Media Sellers [Member] | |||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Accounts payable rate | 10% | ||
Four Media Sellers [Member] | |||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Accounts payable rate | 9% | ||
Minimum [Member] | |||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Office equipment and software | 3 years | ||
Maximum [Member] | |||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Office equipment and software | 5 years | ||
Customer One [Member] | |||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Revenue rate | 44% | ||
Customer Two [Member] | |||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Revenue rate | 16% |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of common stock equivalents | Mar. 31, 2023 shares |
Schedule of common stock equivalents [Abstract] | |
Equity Incentive Plans | 3,086,626 |
Selling Agent and Advisor Warrants | 23,538 |
Warrants Issued with Common Stock Offerings | 889,500 |
Warrants Issued with Convertible Notes Offerings | 967,150 |
Common Stock Issuable Upon Conversion of Convertible Notes, including PIK Interest | 135,807 |
Total Common Stock Equivalents | 5,102,621 |
Shareholders_ Equity (Details)
Shareholders’ Equity (Details) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 |
Shareholders’ Equity (Details) [Line Items] | ||
Common stock, shares issued | 12,370,002 | 13,811,499 |
Preferred Stock, Par or Stated Value Per Share (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares outstanding | 12,370,002 | 13,811,499 |
Common Stock [Member] | ||
Shareholders’ Equity (Details) [Line Items] | ||
Common stock, shares authorized | 135,000,000 | 135,000,000 |
Common stock, shares issued | 125,000,000 | 125,000,000 |
Preferred Stock [Member] | ||
Shareholders’ Equity (Details) [Line Items] | ||
Preferred stock, shares issued | 10,000,000 | 10,000,000 |
Preferred Stock, Par or Stated Value Per Share (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Jan. 10, 2023 | |
Convertible Notes Payable (Details) [Line Items] | ||
Convert per shares | $ (2) | |
Conversion reduced price | (2) | |
Converted into common stock per shares | $ 2 | |
Annual rate percentage | 12% | |
Common stock valued per shares | $ (2) | |
Warrantes issued (in Shares) | (1) | |
Principal amount (in Dollars) | $ (10) | |
Warrant exercisable year | 5 years | |
Price per share | $ 5.5 | |
2023A Convertible Note Payable [Membar] | ||
Convertible Notes Payable (Details) [Line Items] | ||
Convertible note payable (in Dollars) | $ 500,000 | |
Total convertible notes sold (in Dollars) | $ 200,000 |
Related Party Transactions (Det
Related Party Transactions (Details) | 3 Months Ended |
Mar. 31, 2022 USD ($) | |
Related Party Transactions [Abstract] | |
General and administrative expenses | $ 10,000 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 1 Months Ended | |||||
Jul. 08, 2023 | Apr. 03, 2023 | Apr. 22, 2021 | Mar. 23, 2021 | Jun. 28, 2023 | Apr. 07, 2023 | |
Subsequent Events (Details) [Line Items] | ||||||
Threatened litigation, description | the advisor would charge the Company (i) seven percent (7%) of the gross amount to be disbursed to the Company from each such investment transaction closing plus, (ii) a non-accountable expense allowance equal to one percent (1%) of the gross amount to the disbursed to the Company from each such investment transaction closing, plus (iii) warrants equal to seven percent (7%) of the gross amount to be received by to the Company from each such investment transaction closing. | |||||
Note offering | $ 12,000,000 | |||||
Fees reduced percentage | 33% | |||||
Aggregate of accountable expenses | $ 230,000 | |||||
Subsequent Event [Member] | ||||||
Subsequent Events (Details) [Line Items] | ||||||
Convertible notes | $ 2,000,000 | |||||
Forecast [Member] | ||||||
Subsequent Events (Details) [Line Items] | ||||||
Commission fund | $ 1,000,000 | |||||
Shares issued (in Shares) | 2,000,000 | |||||
Purchase price | $ 4,000,000 | |||||
Forecast [Member] | Common Stock [Member] | ||||||
Subsequent Events (Details) [Line Items] | ||||||
Shares issued (in Shares) | 2,000,000 | |||||
Forecast [Member] | IPO [Member] | ||||||
Subsequent Events (Details) [Line Items] | ||||||
Issued amount | $ 1,230,000 | |||||
2023A Convertible Note Payable [Member] | Subsequent Event [Member] | ||||||
Subsequent Events (Details) [Line Items] | ||||||
Common stock price (in Dollars per share) | $ 2 | |||||
Reduced price (in Dollars per share) | $ 2 | |||||
Percentage of annual rate | 12% | |||||
2023A Convertible Note Payable [Member] | Subsequent Event [Member] | Common Stock [Member] | ||||||
Subsequent Events (Details) [Line Items] | ||||||
Common stock price (in Dollars per share) | $ 2 | |||||
2023B Convertible Note Payable [Member] | Subsequent Event [Member] | ||||||
Subsequent Events (Details) [Line Items] | ||||||
Convert per share (in Dollars per share) | $ 2 | |||||
2023B Convertible Note Payable [Member] | Forecast [Member] | ||||||
Subsequent Events (Details) [Line Items] | ||||||
Warrant term | 5 years | |||||
Convertible note payable | $ 1.970000 | |||||
2023B Convertible Note Payable [Member] | Forecast [Member] | Four Dollars [Member] | ||||||
Subsequent Events (Details) [Line Items] | ||||||
Warrant purchase amount | $ 10 | |||||
2023B Convertible Note Payable [Member] | Forecast [Member] | Two Dollars [Member] | ||||||
Subsequent Events (Details) [Line Items] | ||||||
Exercise price (in Dollars per share) | $ 2 | |||||
Two Dollars [Member] | Forecast [Member] | 2023B Convertible Note Payable [Member] | ||||||
Subsequent Events (Details) [Line Items] | ||||||
Exercise price (in Dollars per share) | $ 4 |