Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Dec. 27, 2023 | |
Document Information Line Items | ||
Entity Registrant Name | SIGNING DAY SPORTS, INC. | |
Trading Symbol | SGN | |
Document Type | 10-Q/A | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 13,248,552 | |
Amendment Flag | true | |
Amendment Description | The sole purpose of this Amendment No. 1 to the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023 filed with the Securities and Exchange Commission on December 28, 2023 (the “Form 10-Q”) is to add inline XBRL tagging to the Form 10-Q in accordance with Rule 405 of Regulation S-T. Certain changes have been made to the Form 10-Q to address inline XBRL tagging requirements. This Amendment No. 1 to the Form 10-Q does not reflect any subsequent events that may have occurred after the original filing date of the Form 10-Q. | |
Entity Central Index Key | 0001898474 | |
Entity Current Reporting Status | No | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Sep. 30, 2023 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
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 | 001-41863 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 87-2792157 | |
Entity Address, Address Line One | 8355 East Hartford Rd | |
Entity Address, Address Line Two | Suite 100 | |
Entity Address, City or Town | Scottsdale | |
Entity Address, Country | AZ | |
Entity Address, Postal Zip Code | 85255 | |
City Area Code | (480) | |
Local Phone Number | 220-6814 | |
Title of 12(b) Security | Common Stock, $0.0001 par value per share | |
Security Exchange Name | NYSEAMER | |
Entity Interactive Data Current | Yes |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 22,517 | $ 254,409 |
Accounts receivable | 15,670 | |
Prepaid expense | 7,816 | 13,841 |
Current operating lease right of use asset | 82,353 | |
Other current assets | 17,412 | |
Total current assets | 112,686 | 301,332 |
Property and equipment, net | 14,102 | 10,302 |
Intangible assets | 16,501 | 22,000 |
Operating lease right of use asset | 145,214 | |
Internally developed software | 1,078,956 | 12,529 |
Deferred tax asset | 100,000 | 100,000 |
Deferred offering cost | 431,431 | |
Other assets | 24,000 | 8,000 |
Total assets | 1,922,890 | 454,163 |
Current liabilities | ||
Accounts payable | 1,696,840 | 614,158 |
Accrued liabilities | 1,025,380 | 512,688 |
Deferred revenue | 4,259 | 44,073 |
Deferred rent | 9,894 | |
Current operating lease right of use liability | 82,353 | 13,924 |
Tenant deposit | 9,894 | 9,894 |
Convertible notes - current maturities | 1,315,000 | |
Loans payable | 678,666 | 120,000 |
Total current liabilities | 3,497,392 | 2,639,631 |
Non-current liabilities | ||
Convertible and nonconvertible notes - net of current maturities, less unamortized debt issuance costs | 9,804,857 | 5,917,080 |
Noncurrent operating lease liability | 165,754 | |
Total liabilities | 13,468,003 | 8,556,711 |
Stockholders’ deficit | ||
Common stock: par value $0.0001 per share; 150,000,000 authorized shares, 7,737,652 and 8,086,152 shares issued and outstanding as of September 30, 2023, and December 31, 2022 respectively. | 760 | 809 |
Additional paid-in capital | 2,610,753 | 3,377,459 |
Subscription Receivable | (11) | |
Accumulated deficit | (14,156,615) | (11,480,816) |
Total stockholders' deficit | (11,545,113) | (8,102,548) |
Total liabilities and stockholders' deficit | $ 1,922,890 | $ 454,163 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Sep. 30, 2023 | Apr. 14, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | |||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | |
Common stock, shares authorized | 150,000,000 | 150,000,000 | |
Common stock, shares issued | 7,737,652 | 5 | 8,086,152 |
Common stock, shares outstanding | 7,737,652 | 5 | 8,086,152 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Revenues, net | $ 55,212 | $ 3,352 | $ 226,042 | $ 71,701 |
Cost of revenues | 10,238 | 162,050 | 36,273 | 680,557 |
Gross profit (loss) | 44,974 | (158,698) | 189,769 | (608,856) |
Operating cost and expenses | ||||
Advertising and marketing | 75,565 | 131,075 | 312,295 | 818,028 |
General and administrative | 567,522 | 733,191 | 1,838,026 | 3,329,038 |
Total operating expenses | 643,087 | 864,266 | 2,150,321 | 4,147,066 |
Net income (loss) from operations | (598,113) | (1,022,964) | (1,960,552) | (4,755,922) |
Other income (expense) | ||||
Interest expense | (309,271) | (764,719) | ||
Interest income | 5 | 1,100 | ||
Other expense | (2,347) | (53,640) | ||
Other Income | (9,894) | 29,682 | 49,470 | 85,724 |
Total other income (expense) | (321,512) | 29,687 | (715,249) | 33,184 |
Net loss | $ (919,625) | $ (993,277) | $ (2,675,801) | $ (4,722,738) |
Weighted average common shares outstanding - basic (in Shares) | 7,614,070 | 5,421,113 | 7,614,070 | 5,421,113 |
Net loss per common share - basic (in Dollars per share) | $ 0.12 | $ 0.18 | $ 0.35 | $ 0.87 |
Consolidated Statements of Op_2
Consolidated Statements of Operations (Unaudited) (Parentheticals) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Weighted average common shares outstanding - diluted | 7,614,070 | 5,421,113 | 7,614,070 | 5,421,113 |
Net loss per common share -diluted | $ 0.12 | $ 0.18 | $ 0.35 | $ 0.87 |
Consolidated Statements of Chan
Consolidated Statements of Changes In Stockholders’ Deficit (Unaudited) - USD ($) | Common Stock | Additional | Subscription Receivable | Accumulated Deficit | Total |
Balance at Dec. 31, 2021 | $ 750 | $ 1,245,267 | $ (4,807,002) | $ (3,560,985) | |
Balance (in Shares) at Dec. 31, 2021 | 7,495,104 | ||||
Net loss | (2,016,227) | (2,016,227) | |||
Balance at Mar. 31, 2022 | $ 750 | 1,245,267 | (6,823,229) | (5,577,212) | |
Balance (in Shares) at Mar. 31, 2022 | 7,495,104 | ||||
Net loss | (1,713,233) | (1,713,233) | |||
Balance at Jun. 30, 2022 | $ 750 | 1,245,267 | (8,536,462) | (7,290,445) | |
Balance (in Shares) at Jun. 30, 2022 | 7,495,104 | ||||
Balance at Dec. 31, 2022 | $ 809 | 3,377,459 | (11,480,816) | $ (8,102,548) | |
Balance (in Shares) at Dec. 31, 2022 | 8,086,152 | 8,086,152 | |||
Stock-based compensation expense adjustment | 178,333 | $ 178,333 | |||
Stock repurchase and retirement | $ (60) | (799,940) | (800,000) | ||
Stock repurchase and retirement (in Shares) | (600,000) | ||||
Net loss | (865,251) | (865,251) | |||
Balance at Mar. 31, 2023 | $ 749 | 2,755,852 | (12,346,067) | (9,589,466) | |
Balance (in Shares) at Mar. 31, 2023 | 7,486,152 | ||||
Balance at Dec. 31, 2022 | $ 809 | 3,377,459 | (11,480,816) | $ (8,102,548) | |
Balance (in Shares) at Dec. 31, 2022 | 8,086,152 | 8,086,152 | |||
Net loss | $ (2,675,801) | ||||
Balance at Sep. 30, 2023 | $ 760 | 2,610,753 | (11) | (14,156,615) | $ (11,545,113) |
Balance (in Shares) at Sep. 30, 2023 | 7,591,152 | 7,737,652 | |||
Balance at Mar. 31, 2023 | $ 749 | 2,755,852 | (12,346,067) | $ (9,589,466) | |
Balance (in Shares) at Mar. 31, 2023 | 7,486,152 | ||||
Stock-based compensation expense adjustment | (145,099) | (145,099) | |||
Issuance of common stock | $ 11 | (11) | |||
Issuance of common stock (in Shares) | 105,000 | ||||
Net loss | (890,923) | (890,923) | |||
Balance at Jun. 30, 2023 | $ 760 | 2,610,753 | (11) | (13,236,990) | (10,625,488) |
Balance (in Shares) at Jun. 30, 2023 | 7,591,152 | ||||
Net loss | (919,625) | (919,625) | |||
Balance at Sep. 30, 2023 | $ 760 | $ 2,610,753 | $ (11) | $ (14,156,615) | $ (11,545,113) |
Balance (in Shares) at Sep. 30, 2023 | 7,591,152 | 7,737,652 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities | ||
Net loss | $ (2,675,801) | $ (4,722,738) |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation | 1,842 | |
Stock-based compensation | 33,283 | |
(Increase) decrease in assets: | ||
Accounts receivable | 15,670 | 1,130 |
Prepaid and other assets | 7,437 | 185,027 |
Operating lease right of use asset | (227,567) | |
Deferred offering costs | (431,431) | |
Increase (decrease) in liabilities: | ||
Accounts payable and accrued liabilities | 1,595,376 | 77,780 |
Deferred revenue | (39,814) | (32,268) |
Deferred rent | (9,894) | (31,960) |
Lease liabilities | 234,183 | (22,312) |
Net cash used in operating activities | (1,496,716) | (4,545,340) |
Cash flows from investing activities | ||
Development of internal software | (1,066,427) | (648,791) |
Purchase of intellectual property | 5,499 | (22,000) |
Purchase of property and equipment | (5,642) | |
Net cash used in investing activities | (1,066,570) | (670,791) |
Cash flows from financing activities | ||
Proceeds from issuance of convertible notes | 2,572,777 | 700,000 |
Proceeds from loans | 558,666 | 120,000 |
Proceeds from issuance of common stock | (49) | |
Distribution to member | (800,000) | |
Net cash provided by financing activities | 2,331,394 | 820,000 |
Net decrease in cash and cash equivalents | (231,892) | (4,396,131) |
Cash and cash equivalents, beginning of period | 254,409 | 4,687,550 |
Cash and cash equivalents, end of period | 22,517 | 291,419 |
Supplemental cash flow information Cash paid for interest expense |
Principal Business Activity and
Principal Business Activity and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Principal Business Activity and Significant Accounting Policies [Abstract] | |
Principal Business Activity and Significant Accounting Policies | Note 1 - Principal Business Activity and Significant Accounting Policies Principal Business Activity Signing Day Sports, Inc. (formerly known as Signing Day Sports, LLC) (“Company”) was formed and began operations in January 2019 and provides a digital ecosystem to help high school athletes get discovered and recruited by college coaches across the United States of America. The Company’s website and mobile phone application provides an opportunity for athletes to create a personal profile by uploading measurables, videos of key drills, testing stats, academics and demographic information. Coaches can evaluate a prospect’s video, watch two separate prospects side by side simultaneously, and perform other actions with the video to visually evaluate talent. Intangible assets consist of development software, patented technology, customer lists, trademarks, software IP, and customer data in the form of verifiable video uploads, player statistics, and academic records. Principles of Consolidation The accompanying consolidated financial statements (sometimes referred to herein as “financial statements”) include the Going Concern Considerations Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. We sustained significant losses and negative cash flows from operations and are dependent on debt and equity financing to fund operations. We incurred a net loss of approximately $0.920 million and $2.676 million for the three and nine months ended September The Company is continuing its path to profitability through increased business development, marketing and sales of the Company’s multiple lines of subscriptions. Failure to successfully continue to grow operational revenues could harm our profitability and adversely affect our financial condition and results of operations. We face all of the risks inherent in a new business, including the need for significant additional capital, management’s potential underestimation of initial and ongoing costs, and potential delays and other problems in connection with establishing sales channels. We are continuing our plan to further grow and expand operations and seek sources of capital to pay our contractual obligations as they come due. Management believes that its current operating strategy will provide the opportunity for us to continue as a going concern as long as we are able to obtain additional financing; however, there is no assurance this will occur. The accompanying financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Basis of Presentation These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). Concentrations of Credit Risk The Company maintains its cash account in several deposit accounts, the balances of which are periodically more than federally insured limits. At September 30, 2023 and December 31, 2022, the Company had no amounts uninsured. Receivables and Credit Policy The Company estimates an allowance for doubtful accounts based upon an evaluation of the status of receivables, historical experience, and other factors as necessary. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change. There were $0 Payment Terms Users may access the Company’s website and application on either a free-trial or paid basis. During 2022 and 2021, certain organizations were also permitted to access the Company’s website and application under a separate free use arrangement. This free use arrangement was discontinued as of December 31, 2022. Users that are not eligible or no longer eligible for free-trial access are required to have subscriptions by making payment to the Company prior to access to the Company’s website and application, except that user organizations may have subscriptions by agreeing to make payment on a monthly installment basis. If a required payment is not made, access to the Company’s website and application is suspended until the required payment is received. Property and Equipment Property and equipment is recorded at cost. Expenditures for renewals and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are charged to expense. When equipment is retired or sold, the cost and related accumulated depreciation are eliminated from the accounts and the resultant gain or loss is reflected in income. Depreciation is provided using the straight-line method, based on useful lives of the assets which range from three to five years. The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors. Based on this assessment there was no impairment at September 30, 2023 and December 31, 2022. Internally Developed Software Software consists of an internally developed information system for use by the Company in matching athletes with qualified coaches. The Company has capitalized costs incurred with development and upgrades of the information systems in accordance with applicable accounting standards. Costs incurred up to and including the feasibility stage of development as well as maintenance costs are expensed as incurred. The Company amortizes these capitalized costs on a straight-line basis over the estimated useful life of the asset of five years. The Company periodically performs reviews of the recoverability of such capitalized technology costs. At the time a determination is made that capitalized amounts are not recoverable based on estimated cash flows to be generated from technology; any remaining capitalized amounts are written off. During the nine months ended September 30, 2023 and 2022, the Company did not have an impairment charge. Intangible Assets Intangible assets consist of development software, patented technology, customer lists, trademarks, software IP, and customer data in the form of verifiable video uploads, player statistics, and academic records. Intangible assets are stated at cost less accumulated amortization. For intangible assets that have finite lives, the assets are amortized using the straight-line method over the estimated useful lives of the related assets. For intangible assets with indefinite lives, the assets are tested periodically for impairment. Stock Subscription Revenue The Company records stock issuances at the effective date. If the subscription is not funded upon issuance, the Company records a stock subscription receivable as an asset on the balance sheet. When stock subscription receivables are not received prior to the issuance of financial statements at a reporting date in satisfaction of the requirements under Accounting Standards Codification (“ASC”), 505-10-45-2, the stock subscription receivable is reclassified as a contra account to stockholder’s equity (deficit) on the balance sheet. Fair Value Measurements The Company uses the fair value framework that prioritizes the inputs to valuation techniques for recognizing financial assets and liabilities measured on a recurring basis and for non-financial assets and liabilities when these items are re-measured. Fair value is considered to be the exchange price in an orderly transaction between market participants, to sell an asset or transfer a liability at the measurement date. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. The Company categorizes each of its fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are: Level 1 – This level consists of valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured. Level 2 – This level consists of valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques. Level 3 – This level consists of valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect assumptions about inputs that market participants would use in pricing an asset or liability. The Company’s financial instruments also include accounts and receivable, accounts payable, and accrued liabilities. Due to the short-term nature of these instruments, their fair values approximate their carrying values on the balance sheet. ASC 825-10, Financial Instruments, allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not identify any assets or liabilities that are required to be presented on the balance sheets at fair value in accordance with ASC 820, Fair Value Measurement. Due to the short-term nature of all financial assets and liabilities, their carrying value approximates their fair value as of the balance sheet dates. Income Taxes Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of internally developed software and net operating loss and research and development tax credit carry forwards for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. 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. The Company converted to a C corporation in August of 2021. As a limited liability company for the 2020 year and through the date of conversion in 2021, the Company’s taxable loss was allocated to members in accordance with their respective percentage of ownership. Therefore, no provision for income taxes has been included in the financial statements for the period prior to the Company’s conversion to a C corporation. The Company evaluates its tax positions that have been taken or are expected to be taken on income tax returns to determine if an accrual is necessary for uncertain tax positions. As of September 30, 2023 and December 31, 2022, the unrecognized tax benefits accrual was zero. The Company will recognize future accrued interest and penalties related to unrecognized tax benefits in income tax expense if incurred. As of September 30, 2023, the 2020 through 2022 tax years generally remain subject to examination by federal and state authorities. Deferred Revenue Deferred revenues are contract liabilities for collections on subscription agreements in excess of revenue recognized. Revenue Recognition The Company accounts for revenue under the guidance of ASC 606, Revenue from Contracts from Customers (“ASC 606”). ASC 606 prescribes a five-step model that focuses on transfer of control and entitlement to payment when determining the amount of revenue to be recognized. Under the ASC 606 guidance, an entity is required to perform the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. Revenue from performance obligations satisfied at a point in time consist of sales to individuals representing a one-month subscription and are recognized at the end of the subscription. Revenue from performance obligations satisfied over time consists of the sale of subscription agreements to individual organizations or customers that are more than one month in duration and are recognized on a monthly basis over the life of the subscription agreement. Debt Issuance Costs Debt issuance costs are amortized over the period the related obligation is outstanding using the straight-line method. The straight-line method is a reasonable estimate of the effective interest method due to the relatively short maturities of the related debt. Debt issuance costs are included within long-term debt on the balance sheet. Amortization of debt issuance costs is included in interest expense in the accompanying financial statements. As of September 30, 2023 and December 31, 2022, unamortized debt issuance costs are $315,143 and $387,920, respectively. Advertising Costs Advertising and marketing costs are expensed as incurred. Such costs amounted to $75,565 and $312,295 for the three and nine months ended September 30, 2023, respectively, and $131,075 and $818,028 for the three and nine months ended September 30, 2022, respectively. Advertising costs are included in advertising and marketing expenses in the statements of operations. Estimates The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Contract Costs Incremental costs of obtaining a contract are expensed as incurred as the amortization period of the asset that otherwise would have been recognized is estimated to be one year or less. Stock-Based Compensation The Company accounts for stock-based compensation costs under the provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense related to the fair value of stock-based compensation awards that are ultimately expected to vest. Stock-based compensation expense recognized includes the compensation cost for all stock-based payments granted to employees, officers, and directors based on the grant date fair value estimated in accordance with the provisions of ASC 718. ASC 718 is also applied to awards modified, repurchased, or cancelled during the periods reported. Stock-based compensation is recognized as expense over the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services. Treasury stock Treasury stock are shares the Company has acquired of the Company’s capital stock and have all been cancelled. The cost of the acquired shares is presented as a deduction from stockholders’ equity. Basic and Diluted Net Loss per Common Share Basic loss per common share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding for each period. Diluted loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding plus the dilutive effect of shares issuable through the common stock equivalents. The weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. As of September 30, 2023 and December 31, 2022, 386,650 and 253,000, respectively, stock options were excluded from dilutive earnings per share as their effects were anti-dilutive. Leases At the inception or modification of a contract, the Company determines whether a lease exists and classifies its leases as an operating or finance lease at commencement. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent their obligation to make lease payments arising from the lease. As most of the Company’s leases do not provide an implicit interest rate, the lease liability is calculated at lease commencement as the present value of unpaid lease payments using the Company’s estimated incremental borrowing rate. The incremental borrowing rate represents the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term and is determined using a portfolio approach based on information available at the commencement date of the lease. The lease asset also reflects any prepaid rent, initial direct costs incurred and lease incentives received. The Company’s lease terms may include optional extension periods when it is reasonably certain that those options will be exercised. Leases with an initial expected term of 12 months or less are not recorded in the Balance Sheet and the related lease expense is recognized on a straight-line basis over the lease term. For certain classes of underlying assets, the Company has elected to not separate fixed lease components from the fixed non-lease components. Adopted Accounting Pronouncements On January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”). This standard replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. CECL requires an estimate of credit losses for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts and generally applies to financial assets measured at amortized cost, such as accounts receivable. At September 30, 2023, the Company does not have financial assets measured at amortized cost and the allowance is currently zero. New Accounting Pronouncements The Company has reviewed recently issued accounting pronouncements and plans to adopt those that are applicable to it. The Company does not expect the adoption of any other pronouncements to have an impact on its results of operations or financial position. Correction to Prior Period Financial Statements During the three months ended September 30, 2023, the Company determined that the unaudited consolidated financial statements for the three months ended March 31, 2023 and June 30, 2023, contained an immaterial misstatement. Under capitalization of internally developed software costs resulted in an understatement of cost of revenues and general and administrative expenses for the three months ended March 31, 2023 and unrecognized expenses resulted in an understatement of general and administrative expenses for the three months June 30, 2023. Because correcting the error in the current period would materially misstate those financial statements, the prior period(s) financial statements should be corrected, even though such revision previously was and continues to be immaterial to the prior period(s) financial statements. However, correcting prior period(s) financial statements for immaterial errors would not require previous filings to be amended (e.g., no Form 10-K/A required). In accordance with SEC Staff Accounting Bulletin Nos. 99 and 108 (“SAB 99” and “SAB 108”), Signing Day Sports evaluated these errors and determined that they were immaterial to each of the reporting periods affected and, therefore, amendment of previously filed reports was not required. However, in order to provide consistency in the Consolidated Statement of Cash Flows and as permitted by SAB 108, revisions for these immaterial amounts to previously reported annual amounts are reflected in the financial information herein and will be reflected in future filings containing such financial information as permitted by SAB 108. The following table presents the effects of the immaterial prior period adjustment on the consolidated balance sheet (unaudited) of March 31, 2023: As of March 31, 2023 As Reported Correction of Error As Adjusted Software development & intangible assets $ 447,869 $ 86,972 $ 534,841 Accounts Payable 991,754 16,456 1,008,210 Accumulated deficit (12,416,583 ) 70,516 (12,346,067 ) The following table presents the effects of the immaterial prior period adjustment on the consolidated statement of operations (unaudited) for the three months ended March 31, 2023: For the Three Months Ended March 31, 2023 As Reported Correction of Error As Adjusted Cost of revenues $ 71,439 $ 66,898 $ 4,541 General and administrative expenses $ 676,685 $ 3,618 $ 673,067 Net loss (935,767 ) 70,516 (865,251 ) Net loss per common share – basic and diluted $ 0.12 $ 0.01 $ 0.11 The following table presents the effects of the immaterial prior period adjustment on the consolidated balance sheet (unaudited) of June 30, 2023: As of June 30, 2023 As Reported Correction of Error As Adjusted Unamortized Debt Issuance Costs $ 477,424 $ 83,219 $ 394,205 Accounts Payable 924,501 109,688 1,034,189 Accumulated deficit (13,134,383 ) 192,907 (13,326,990 ) The following table presents the effects of the immaterial prior period adjustment on the consolidated statement of operations (unaudited) for the three months ended June 30, 2023: For the Three Months Ended June 30, 2023 As Reported Correction of Error As Adjusted General and administrative expenses 586,716 $ 78,678 $ 667,540 Net loss (812,245 ) 78,678 (890,923 ) Net loss per common share – basic and diluted $ 0.11 $ 0.01 $ 0.12 |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2023 | |
Revenue [Abstract] | |
Revenue | Note 2 - Revenue The following table disaggregates the Company’s revenue based on the timing of satisfaction of performance obligations as of: Three Months Ended Nine Months Ended 2023 2022 2023 2022 Total revenue from contracts with customers recognized over time $ 10,317 $ 812 $ 93,487 $ 66,883 The following table presents our contract liabilities (deferred revenue) and certain information related to these balances as of: September 30, December 31, Contract liabilities (deferred revenue) $ 4,259 $ 44,073 Three Months Ended Nine Months Ended 2023 2022 2023 2022 Revenue recognized in the period from: Amounts included in contract liabilities at the beginning of the period $ 10,317 $ 812 $ 45,846 $ 63,800 |
Property, Plant and Equipment
Property, Plant and Equipment | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Note 3 - Property, Plant and Equipment The Company’s property, plant and equipment include the following: Accumulated Cost Basis Depreciation Net September 30, 2023 Office Furniture $ 18,021 $ 3,919 $ 14,102 December 31, 2022 Office Furniture $ 12,380 $ (2,078 ) $ 10,302 |
Internally Developed Software
Internally Developed Software | 9 Months Ended |
Sep. 30, 2023 | |
Internally Developed Software [Abstract] | |
Internally Developed Software | Note 4 - Internally Developed Software Internally developed software asset consists of the following: September 30, 2023 Accumulated Cost Amortization Impairment Net Internally developed software $ 1,178,616 $ 110,646 $ - $ 1,067,970 December 31, 2022 Accumulated Cost Amortization Impairment Net Internally developed software $ 820,951 $ - $ (820,951 ) $ - During Q4 2022, the Company recognized an impairment loss on its internally developed software amounting to $820,951 due to a decrease in projected revenues, writing down the asset to zero as of December 31, 2022. The Company did not have an impairment charge for the nine months ended September 30, 2023. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2023 | |
Intangible Assets [Abstract] | |
Intangible Assets | Note 5 - Intangible Assets The Company’s intangible assets include the following: Accumulated Cost Basis Amortization Net September 30, 2023 Intellectual property $ 22,000 $ (5,499 ) $ 16,501 Proprietary technology 18,700 (7,714 ) 10,986 Total $ 40,700 $ (13,213 ) $ 27,487 December 31, 2022 Intellectual property $ 22,000 $ - $ 22,000 Proprietary technology 18,700 (6,171 ) 12,529 Total $ 40,700 $ (6,171 ) $ 34,529 Intellectual property amortization expense for the three and nine months ended September 30, 2023 was $1,833 and $5,499, respectively. Proprietary technology amortization expense for the three and nine months ended September 30, 2022 was $514 and $1,543, respectively. |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2023 | |
Notes Payable [Abstract] | |
Notes Payable | Note 6 - Notes Payable Convertible and nonconvertible notes payable consists of: September 30, December 31, 9 convertible notes payable, bear interest at 6%, no monthly payments, unsecured, notes automatically convert at 50% of fair value (less any accrued interest) upon initial public offering (IPO) or other “sale of control” as defined in the agreement. If IPO or sale of control is not consummated by March 31, 2022, the Company has the option to repay notes at anytime prior to maturity date of October 15, 2024. $ 3,300,000 $ 3,300,000 12 convertible notes payable, bear interest at 6%, no monthly payments, unsecured, notes automatically convert at 50% of fair value (less any accrued interest) upon IPO or other “sale of control” as defined in the agreement. If IPO or sale of control is not consummated by March 31, 2022 the Company has the option to repay notes at anytime prior to maturity date of November 15, 2024. 1,205,000 1,205,000 6 convertible notes payable, bear interest at 6%, no monthly payments, unsecured, notes automatically convert at 50% of fair value (less any accrued interest) upon IPO or other “sale of control” as defined in the agreement. If IPO or sale of control is not consummated by March 31, 2022 the Company has the option to repay notes at anytime prior to maturity date of December 23, 2024. 1,800,000 1,800,000 15 convertible notes payable, bear interest at 8%, no monthly payments, unsecured, notes automatically convert at 50% of fair value (less any accrued interest) upon IPO or other “sale of control” as defined in the agreement. Notes may only be prepaid by the Company with the written consent of the holder prior to the maturity date of August 8, 2025. 1,465,000 - 11 nonconvertible notes payable, bear interest at 8%, no monthly payments, unsecured, notes have warrants that are payable upon IPO or other “sale of control” as defined in the agreement. Notes may be prepaid by the Company at any time in its sole discretion prior to the maturity on dates ranging from March 17, 2025 to May 2, 2025. 2,350,000 - $ 10,120,000 $ 7,620,000 Less unamortized debt issuance costs (315,143 ) (387,920 ) Debt, less unamortized debt issuance costs $ 9,804,857 $ 7,232,080 Future maturities of convertible notes payable are as follows: Amount Years ending December 31, Remainder of 2023 $ - 2024 6,305,000 2025 3,815,000 Total $ 10,120,000 On August 7, 2023, the fifteen 8% convertible notes payable with an outstanding balance of $1,465,000 as of June 30, 2023 and that were due to mature on August 8, 2023 (“August 2023 Notes Payable”), were amended. The maturity date of the August 2023 Notes Payable were amended to August 8, 2025. Pursuant to the agreement, if the August 2023 Notes Payable are not re-paid by the amended maturity date, the outstanding balance will increase to 120% of the original principal amount. In addition, if the August 2023 Notes Payable are not repaid by the amended maturity date, the amendment provides for the immediate conversion of the additional amount of the outstanding balance under the convertible notes into 146,500 shares of common stock at $2.00 per share instead of the applicable optional conversion price of approximately $3.29 per share at the time of the conversion, not including any accrued but unpaid interest, which was waived with respect to the converted outstanding balance. Offering of 15% OID Promissory Notes On August 2, 2023, August 18, 2023, September 11, 2023, and September 22, 2023 Boustead acted as placement agent in this private placement. Pursuant to our engagement letter agreement with Boustead, we agreed to pay a commission equal to 7% of the gross proceeds, a non-accountable expense allowance equal to 1% of the gross proceeds, and payment of certain other expenses. However, Boustead waived its fees and expenses for this private placement. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Leases | Note 7 - Leases The Company leases office space under a long-term operating lease from a third party through May 31, 2023. Monthly rent was $12,075. In December 2021, the Company entered into an agreement to sublease their office space to an unrelated party under an operating lease agreement. The sublease ended on May 31, 2023 and included fixed rent of $9,894 a month. As a result of the sublease, the Company incurred a loss on the transaction of $43,785 during the year ended December 31, 2021, which is included within accrued liabilities in the accompanying balance sheet. The lease liability will be amortized over the remainder of the lease. As of June 30, 2023 and December 31, 2022, the unamortized balance was $0 and $13,924, respectively. During 2021, the Company entered into a lease for office space with a related party with the lease commencing in January 2022. The office space was owned by John Dorsey. The lease agreement required monthly payments of approximately $20,800 plus tax, with an increase of three percent every year on each anniversary date until January 2026. In August 2022, the Company entered into a lease termination agreement whereby both parties agreed to terminate the lease and release each other from all future obligations. In November 2022, the company signed a 6-month short-term lease for office space which expired on April 30, 2023. Monthly rent was $7,491 per month plus rental tax. The Company amended and renewed this office space lease under a long-term operating lease which commenced on May 4, 2023. Monthly rent ranges from $7,359 to $8,042 per month plus tax. The lease contains escalating rental payments and one option to renew for up to three years. The exercise of the lease renewal option is at the Company’s sole discretion. The lease agreement does not include any material residual value guarantees or material restrictive covenants. Leases with an initial expected term of 12 months or less are not recorded in the Balance Sheet and the related lease expense is recognized on a straight-line basis over the lease term. For certain classes of underlying assets, the Company has elected to not separate fixed lease components from the fixed non-lease components. As of December 31, 2022 and 2021, there were no leases with an expected term greater than 12 months. The components of lease expense were as follows: Three Months Ended Nine Months Ended 2023 2022 2023 2022 Non-related party lease expense $ 21,155 $ 57,695 $ 141,867 $ 106,627 Related party lease expense $ - $ 21,268 $ - $ 148,876 Total operating lease expense $ 21,155 $ 78,963 $ 141,867 $ 255,503 Total lease assets and liabilities were as follows: September 30, December 31, 2023 2022 Operating lease right of use asset $ 259,121 $ - Less: operating asset lease accumulated depreciation (11,014 ) - Net operating lease right of use asset $ 248,107 - Current operating lease liability $ 82,353 $ - Noncurrent operating lease liability 165,754 - Total operating lease liability $ 248,107 $ - Future minimum lease payments under non-cancelable leases as of September 30, 2023 were as follows: Amount Years ending December 31, Remainder of 2023 $ 22,077 2024 90,076 2025 92,784 2026 55,358 Total future minimum lease payments $ 260,295 Less: interest (12,188 ) Total lease liability $ 248,107 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax [Abstract] | |
Income Taxes | Note 8 - Income Taxes Deferred tax assets consist of the following components as of September 30, 2023 and December 31, 2022: September 30, Dec. 31, Deferred Tax Asset (Liabilities) Net operating loss carryforwards $ 2,720,000 $ 1,860,000 Internally developed software 320,000 470,000 Furniture and fixtures (3,000 ) (3,000 ) R&D Tax Credit Carryforwards 125,000 160,000 AZ Refundable R&D Tax Credit 100,000 100,000 Net deferred tax assets before valuation allowance $ 3,262,000 $ 2,587,000 Less valuation allowance (3,162,000 ) (2,487,000 ) Net deferred tax assets $ 100,000 $ 100,000 The Company has a valuation allowance against most of the amount of its net deferred tax assets due to the uncertainty of realization of the deferred tax assets due to the operating loss history of the Company. The Company currently provides a valuation allowance against deferred taxes when it is more likely than not that some portion, or all of its deferred tax assets will not be realized. The valuation allowance could be reduced or eliminated based on future earnings and future estimates of taxable income. The Company’s effective income tax rate is lower than what would be expected if the federal statutory rate were applied to income from continuing operations primarily because of expenses deductible for financial reporting purposes that are not deductible for tax purposes and tax-exempt income. As of September 30, 2023 and December 31, 2022, the Company had approximately $10,500,000 and $7,900,000, respectively, of federal net operating loss carryforwards available to offset future taxable income. Under current tax law, the federal net operating losses generated do not expire and may be carried forward indefinitely. As of September 30, 2023 and December 31, 2022, the Company has approximately $155,000 and $260,000, respectively, of federal and state research and development credits. The 2022 Arizona credit of $100,000 is refundable, and the remaining federal credit from 2022 will expire in 2042, and the 2021 credits expire in 2041. |
Recapitalization
Recapitalization | 9 Months Ended |
Sep. 30, 2023 | |
Recapitalization [Abstract] | |
Recapitalization | Note 9 - Recapitalization At inception, the Company was organized as a limited liability company (LLC). During 2020, The LLC formed two wholly- owned subsidiaries, Signing Day Sports Football, LLC (SDSF LLC) and Signing Day Sports Baseball, LLC (SDSB LLC). Signing Day Sports, LLC, an Arizona limited liability company (“SDS LLC – AZ”), was formed on January 21, 2019. SDS LLC – AZ formed two wholly-owned subsidiaries, Signing Day Sports Football, LLC, an Arizona limited liability company (“SDSF LLC”), and Signing Day Sports Baseball, LLC, an Arizona limited liability company (“SDSB LLC”), on September 29, 2020 and November 25, 2020, respectively. On June 5, 2020, a process to change SDS LLC – AZ into a Delaware corporation was initiated. On that date, a certificate of formation for Signing Day Sports, LLC, a Delaware limited liability company (“SDS LLC – DE”), and a certificate of conversion of SDS LLC – AZ into SDS LLC – DE, were filed with the Delaware Secretary of State. On September 9, 2021, a certificate of incorporation for Signing Day Sports, Inc., a Delaware corporation (“SDS Inc. – DE” or the “Company”), and a certificate of conversion of SDS LLC – DE into SDS Inc. – DE were filed with the Delaware Secretary of State. From September 9, 2021 to July 11, 2022, SDS Inc. – DE operated as the successor entity to SDS LLC – AZ, and SDS LLC – AZ continued to be registered as an active entity with the Arizona Corporation Commission while its conversion into SDS LLC – DE pended. On July 11, 2022, an Agreement and Plan of Merger was entered into between SDS LLC – AZ, SDSF LLC, SDSB LLC, and SDS Inc. – DE (the “Merger Agreement”). On the same date, pursuant to the Merger Agreement, a certificate of merger was filed with the Delaware Secretary of State and a statement of merger was filed with the Arizona Secretary of State effecting the merger of SDS LLC – AZ, SDSF LLC, and SDSB LLC with and into SDS Inc. – DE, and SDS Inc. – DE succeeded to the rights, property, obligations, and liabilities of each of SDS LLC – AZ, SDSF LLC, and SDSB LLC. In anticipation of the Merger Agreement and its consummation, in April 2022 and May 2022, SDS LLC – AZ, SDS Inc. – DE, and each of the members or stockholders of SDS LLC – AZ, SDSF LLC, SDSB LLC, and SDS Inc. – DE, entered into Settlement Agreement and Releases (collectively, the “Settlement Agreements”), which provided, among other things, for the mutual general release of all claims by the parties against and relating to SDS LLC – AZ, SDSF LLC, SDSB LLC, and SDS Inc. – DE, and confirmed the owners and related amounts of all outstanding shares of common stock of SDS Inc. represented by the capitalization table exhibit to the Settlement Agreements. SDS Inc. – DE has 150,000,000 shares authorized. No shares were formally issued. On July 11, 2022, it was agreed that all previous members in SDS LLC -AZ owned 7,495,104 common shares of SDS Inc. – DE at the date of the merger. |
Stockholder's Deficit
Stockholder's Deficit | 9 Months Ended |
Sep. 30, 2023 | |
Stockholder's Deficit [Abstract] | |
Stockholder's Deficit | Note 10 - Stockholder’s Deficit Common Stock The Company is authorized to issue 150,000,000 shares of $0.0001 par value common stock as of September 30, 2023 and December 31, 2022, respectively. The Company has 7,737,652 and 8,086,152 shares issued and outstanding as of September 30, 2023 and December 31, 2022. Reverse Stock Split On April 14, 2023 (the “Effective Date”) , the Company filed a Certificate of Amendment with the Secretary of State of the State of Delaware. The Certificate of Amendment effected a 1-for-5 Reverse Stock Split on the Effective Date and was approved by shareholders on April 4, 2023, and the Board of Directors on April 11, 2023. Accordingly, all share and per share amounts for all periods presented in the accompanying financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this reverse stock split. Treasury Stock On March 31, 2023, under the terms of a Repurchase and Resignation Agreement, dated March 21, 2023, with Dennis Gile (the “Repurchase Agreement”), we paid an aggregate purchase price of $800,000 for the repurchase (the “Repurchase”) of 600,000 shares of common stock from Dennis Gile, our largest stockholder and a former Chief Executive Officer, President, Secretary, Chairman, and director of the Company, at approximately $1.33 per share. Pursuant to the Repurchase Agreement, $695,000 of the $800,000 payment was made to the attorneys for John Dorsey, a former officer and director of the Company (the “Dorsey/Gile Settlement Payment”), as part of the settlement of a private lawsuit under a settlement agreement between Mr. Gile and Mr. Dorsey (the “Dorsey/Gile Lawsuit”) between these individuals and Dorsey LLC (the “Dorsey/Gile Settlement Agreement”). Pursuant to the Repurchase Agreement, the balance of the aggregate purchase price was paid to the attorneys for Mr. Gile. Pursuant to the Repurchase Agreement, Mr. Gile agreed to resign his position as Chairman and every other director and officer position he held with the Company effective as of March 21, 2023. Prior to such date, on March 20, 2023, Mr. Gile delivered notice of resignation from such positions, which stated that it was effective March 19, 2023. Pursuant to the Repurchase Agreement, Mr. Gile will not receive any severance payments in connection with any other agreement with the Company as a result of his resignation. The Repurchase was also conditioned on the Company’s prior review of and consent to the Dorsey/Gile Settlement Agreement prior to its execution, and receipt of a certificate from the Chief Financial Officer of the Company that the Repurchase will not impair the Company’s capital within the meaning of Section 160 of the Delaware General Corporation Law (“DGCL”) or the Company’s ability to pay down its debts as they become due (the “CFO Certificate”). Under the Repurchase Agreement, the Dorsey/Gile Settlement Agreement was required to fully resolve, settle and dismiss the Gile/Dorsey Lawsuit and contain a general release of claims by all the plaintiffs in the Dorsey/Gile Lawsuit in favor of Mr. Gile, the Company, the Company’s affiliates, stockholders, and certain other Company releasees. Under the Repurchase Agreement, Mr. Gile agreed to indemnify the Company for claims arising out of or based upon the Repurchase Agreement. Pursuant to the Repurchase Agreement, a copy of the Dorsey/Gile Settlement Agreement was reviewed and consented to by the Company and entered into as of March 20, 2023. Under the Dorsey/Gile Settlement Agreement, between Mr. Gile, Mr. Dorsey, and Dorsey LLC, Mr. Gile agreed to pay the Dorsey/Gile Settlement Payment and transfer 40,000 shares of the Company to Mr. Dorsey. Mr. Gile, Mr. Dorsey and Dorsey LLC agreed to mutual releases of all claims relating to the Dorsey/Gile Lawsuit and to dismiss the Dorsey/Gile Lawsuit. Although the Dorsey/Gile Settlement Agreement did not contain a release of the Company and did not contain releases by the plaintiffs of Mr. Gile other than with respect to the Lawsuit, the Company waived any related requirements under the Repurchase Agreement in light of the expected execution of the Mutual Release Agreement (as defined below). The CFO Certificate was received as of March 21, 2023. The repurchased shares were cancelled as of March 31, 2023. The transfer of 40,000 shares by Mr. Gile to Mr. Dorsey occurred on April 4, 2023, after waiver of the board of directors of the repurchase rights and purchase rights provided for under the Shareholder Agreement by resolutions adopted on March 24, 2023. Equity Incentive Plan In August 2022, the Board of Directors adopted the Company’s 2022 Equity Incentive Plan (the “2022 Plan”), effective as of August 31, 2022. Awards that may be granted under the 2022 Plan include: (a) Incentive Stock Options, (b) Non-qualified Stock Options, (c) Stock Appreciation Rights, (d) Restricted Awards, (e) Performance Share Awards, and (f) Performance Compensation Awards. The persons eligible to receive Awards are the Employees, Consultants and Directors of the Company and its Affiliates and such other individuals designated by the Committee who are reasonably expected to become Employees, Consultants and Directors after the receipt of Awards. The purpose of the 2022 Plan is to attract and retain the types of Employees, Consultants and Directors who will contribute to the Company’s long-term success; (b) provide incentives that align the interests of Employees, Consultants and Directors with those of the stockholders of the Company; and (c) promote the success of the Company’s business. The 2022 Plan shall be administered by the Committee or, in the Board’s sole discretion, by the Board. Subject to the terms of the Plan and the provisions of Section 409A of the Code (if applicable), the Committee’s charter and Applicable Laws, and in addition to other express powers and authorization conferred by the Plan. The Board reserved 750,000 shares of common stock issuable upon the grant of awards. Stock options comprise all of the awards granted since the 2022 Plan’s inception. As of September 30, 2023, there were 273,350 shares available for grant under the 2022 Plan and the Company had granted 90,000 restricted stock awards and 386,650 stock options to purchase common stock. The stock options generally vest based on one to four years of continuous service and have ten-year contractual terms. The following table summarizes stock option activity for the nine months ended September 30, 2023: Weighted Average Intrinsic Options Exercise Price Value Outstanding at December 31, 2022 262,000 $ 3.10 Granted 296,800 1.91 Exercised - - Forfeited or expired (176,508 ) 1.61 Outstanding at September 30, 2023 386,650 $ 2.99 $ 4,020 Exercisable at September 30, 2023 159,449 $ 3.04 $ 4,020 Nine Months September 30, 2023 Weighted average grant-date fair value of options granted during the period $ 1.22 The following table summarizes restricted stock award activity for the nine months ended September 30, 2023: Restricted Stock Awards Weighted Outstanding, beginning of year - $ - Granted 90,000 1.72 Vested (45,000 ) 1.72 Cancelled - - Outstanding, end of period 45,000 $ 1.72 The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted: Nine Months September 30, 2023 Risk-free interest rate 3.52 % Expected term (in years) 5.42 Expected volatility 50 % Expected dividend yield $ - Private Placement In March 2023 and April 2023 we conducted one private placement, and in May 2023 we completed a subsequent private placement in which we entered into subscription agreements with a number of accredited investors, pursuant to which we issued 8% unsecured promissory notes in the aggregate principal amount of $2,350,000, which bear interest at the annual rate of 8%, and accompanying warrants to purchase an aggregate of 940,000 shares of common stock exercisable at $2.50 per share. The warrants may be voluntarily exercised for cash prior to the maturity date of the promissory notes or will be automatically exercised as described below. The amount outstanding under the 8% unsecured promissory notes must be repaid upon the earlier to occur of the consummation of a Liquidity Event or the second anniversary of the initial closing date of the respective private placement (March 17, 2025 as to $1,500,000 principal and May 2, 2025 as to $850,000 principal). If a Liquidity Event occurs before the second anniversary of the initial closing date of the applicable private placement, the warrants will be automatically exercised as to the unexercised portion of the warrants, the outstanding balance under the 8% unsecured promissory notes will be deemed repaid in the amount of the exercise price for the automatic exercise of the unexercised portion of the related warrants, with any remaining balance owed on the promissory notes to be repaid in cash. If a Liquidity Event does not occur before the second anniversary of the initial closing date of the applicable private placement, then both principal and interest outstanding under the notes must be repaid in cash. The Company agreed to register the resale all of the shares of common stock that such warrants may or shall be exercised to purchase with the shares being registered for sale in the registration statement of which this prospectus forms a part. The Company must generally keep the registration statement effective for a period as shall be required to permit the investors to complete the offer and sale of their shares. The Company and the investors also provided customary mutual indemnification relating to any damages arising from such registration. Boustead has acted as placement agent in these private placements. Pursuant to our engagement letter agreement with Boustead, in addition to a commission equal to 7% of the gross proceeds raised in the private placements, a non-accountable expense allowance equal to 1% of the gross proceeds raised in the private placements, and payment of certain other expenses, we agreed to issue Boustead five-year warrants to purchase a number of shares of common stock equal to 7% of the common stock underlying the warrants accompanying the 8% unsecured promissory notes at an exercise price equal to the exercise price as defined in such warrants. Under the engagement letter with Boustead, its placement agent’s warrants must be registered for resale with the Company’s initial public offering. However, Boustead has informally deferred these registration rights with respect to the registration statement for the initial public offering. Under the subscription agreements with the investors in the first of these two private placements, the Company was required to use the first $450,000 of the net proceeds from the private placement to expand its current operations, including its technology and intellectual property portfolio, and to fund the costs of its initial public offering. The Company was required to use the next $800,000 of the net proceeds from the private placement to repurchase up to 600,000 shares of common stock that were held by Dennis Gile, our largest stockholder and a former officer and director of the Company, at a price equal to approximately $1.35 per share. The repurchase was required to be consummated only to the extent that it does not impair the Company’s capital within the meaning of Section 160 of the DGCL or the Company’s ability to pay down its debts as they become due. The Company was required to enter into an agreement with Mr. Gile providing that Mr. Gile will use the proceeds of the repurchase to settle an existing lawsuit filed against Mr. Gile by John Dorsey, a former officer and director of the Company, subject to a full release of Mr. Gile and the Company, and that Mr. Gile will resign from the board of directors of the Company and from any officer position with the Company upon the repurchase. The Company was required to use any remaining net proceeds from the private placement, which consisted of $250,000 less placement agent fees and expenses, for working capital and other general corporate purposes. Subsequently, the Company used the net proceeds as required. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 11 - Commitments and Contingencies Legal The Company may be a party to various legal actions arising from the normal course of business. In management’s opinion, the Company has adequate legal defenses and/or insurance coverage and does not believe the outcome of such legal actions will materially affect the Company’s operation and/or financial position. Claim of John Dorsey On or about November 29, 2022, John Dorsey, a former Chief Executive Officer and director of the Company, through his counsel, sent the Company a letter demanding full payment on the Alleged Loan in connection with the Loan Dispute. Under the January 2023 Dorsey Settlement Agreement, Mr. Dorsey agreed to a discharge of the Alleged Loan and waiver and release of claims relating to the Alleged Loan and Loan Dispute and covenant not to sue on the basis of such claims or otherwise commence any action or proceeding that would be inconsistent with the release of such claims. The Company agreed to pay Mr. Dorsey $10,000 and issue a promissory note to Mr. Dorsey in the principal amount of $40,000 payable on the earlier of ten business days following the successful closing of an initial public offering of the Company’s common stock that generates at least $1 million in net proceeds to the Company or July 1, 2023. Collaborative Arrangements The company has entered into collaborative arrangements with various parties for the cross promotion of technologies and services within certain geographical areas. These arrangements do not commit the Company or the counterpart to any financial obligation. If these arrangements result in a formal project, the Company and the counterparties will receive certain equity consideration in the project or be given first right of refusal to provide their products or services to the projects, as defined by the respective agreements. To date, these arrangements have not resulted in any formal projects. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 12 - Related Party Transactions See Note 9 for related party lease disclosures. On April 10, 2023, the Company issued Richard Symington, our President and Chief Marketing Officer and a director, an 8% unsecured promissory note in the amount of $250,000 and a warrant to purchase 100,000 shares of common stock at an exercise price of $2.50 per share in a private placement. The promissory note bears interest at 8% annually and will mature on the earlier to occur of March 17, 2025 or a Liquidity Event. If a Liquidity Event occurs before March 17, 2025, the warrant will be automatically exercised as to the unexercised portion of the warrant, the outstanding balance due under the 8% unsecured promissory note will be deemed repaid in the amount of the unexercised portion of the warrant from the automatic exercise of the unexercised portion of the warrant, and any remaining balance outstanding under the promissory note must be repaid in cash. If a Liquidity Event does not occur before March 17, 2025, then both principal and interest outstanding under the note must be repaid in cash. The warrant may be voluntarily exercised for cash prior to the maturity date of the promissory note or, as indicated above, will be automatically exercised for shares of common stock upon the consummation of a Liquidity Event. The warrant has a five-year term. Mr. Symington also entered into a subscription agreement which provided certain registration rights with respect to the shares underlying the warrant. Under the Mutual Release Agreement, as of March 29, 2023, Mr. Dorsey agreed to a general release of claims against and covenant not to sue the Company, the Company’s affiliates, stockholders, and certain other Company releasees, and the Company agreed to a general release of claims against and covenant not to sue Mr. Dorsey, Mr. Dorsey’s affiliates, and certain other releasees, subject to payment of the Dorsey/Gile Settlement Payment, which, as indicated above, was made on March 31, 2023. The releases of claims and covenants not to sue under the Mutual Release Agreement do not apply to breach of the Dorsey/Gile Settlement Agreement or to the January 2023 Dorsey Settlement Agreement. Under our Settlement Agreement with Dennis Gile, our largest stockholder and a former Chief Executive Officer, President, Secretary, Chairman, and director of the Company, dated as of May 12, 2022, the parties agreed, among other things, to a general release and discharge of claims against us, our officers and directors, certain other affiliates and related parties, and our stockholders as listed on an exhibit to the agreement, including without limitation, claims relating to Mr. Gile’s direct or indirect ownership of shares of SDS Inc. – DE’s capital stock, or Mr. Gile’s direct or indirect ownership of membership interests of SDS LLC – AZ, SDS LLC – DE, SDSF LLC, or SDSB LLC, as applicable, provided, however, that nothing in the Settlement Agreement was intended to release any rights that any party or Mr. Gile may have under the terms of that certain Severance General Waiver and Release Agreement between Mr. Gile and the Company, dated March 22, 2022, including the releases of any and all claims against the Company and certain related parties as contained therein, Mr. Gile’s agreement to be terminated effective on January 1, 2022 and receive a severance payment of $53,500 pursuant to Section 1 of the Severance Agreement, paid in March 2022, all of which terms were to remain in force notwithstanding the provisions of the Settlement Agreement. Further, Mr. Gile irrevocably, unconditionally, voluntarily, knowingly, fully, finally, and completely forever released and waived their rights to any claim, distributions, payments, or other amounts that Mr. Gile believed should have been paid or were owed to Mr. Gile by SDS LLC – AZ, SDS LLC – DE, SDSF LLC, SDSB LLC, or SDS Inc. – DE. Each party also agreed, in order to make sure there was a clear understanding regarding the capitalization of SDS Inc. – DE, irrevocably, unconditionally, voluntarily, knowingly, fully, finally, and completely to forever release and waive any claims that they may have had with respect to ownership interests in SDS LLC – AZ, SDS LLC – DE, SDSF LLC, SDSB LLC, or SDS Inc. – DE, whether past, present, future, or contingent, and affirmed that he, she, or it did not own any interests in SDS Inc. – DE beyond that set forth on the capitalization table attached as an exhibit to the Settlement Agreement. The parties therefore agreed that Mr. Gile owned 2,816,377 shares of common stock pursuant to the Settlement Agreement. Mr. Gile also irrevocably covenanted that he would not sue the Company or the other released parties in respect of any of the matters released and discharged. Notwithstanding the Severance Agreement referenced above, Mr. Gile has not had a written employment agreement with the Company, has not been terminated, and has not received a salary since 2021, but has continued to receive standard employee benefits on a monthly basis. Under our Settlement Agreement with Dorsey LLC, John Dorsey, in his individual capacity, and who was formerly Chief Executive Officer and a director of the Company, and his spouse, Elena Dorsey, to the extent of such spouse’s community property interest, if any (together, “Dorsey”), dated as of April 25, 2022, the parties agreed, among other things, (1) that Dorsey had held 959,940 shares of SDS Inc. – DE’s common stock at that time, (2) that prior to the anticipated redomestication of SDS LLC – AZ to Delaware as a Delaware limited liability company and conversion to a Delaware corporation, Dorsey was a member of SDS LLC – AZ and was a party to SDS LLC – AZ’s Fourth Amended Limited Liability Company Operating Agreement dated July 16, 2021 (the “SDS LLC – AZ Operating Agreement”), (3) that the SDS LLC – AZ Operating Agreement provided Dorsey, among other things, certain anti-dilution protections whereby SDS LLC – AZ would have been required to issue additional equity to Dorsey if SDS LLC – AZ were to have issued additional equity which would have the effect of reducing Dorsey’s ownership below 11% of SDS LLC – AZ’s outstanding equity (the “Dorsey Anti-Dilution Provision”), (4) that on April 25, 2022, Dorsey LLC would receive a total of 350,000 shares of common stock of SDS Inc. – DE in exchange for Dorsey’s cancellation, waiver, and release of all of Dorsey’s rights under the Dorsey Anti-Dilution Provision in the SDS LLC – AZ Operating Agreement, (5) to a general release and discharge of claims against us, our officers and directors, certain other affiliates and related parties, and our stockholders as listed on an exhibit to the agreement, including without limitation, claims relating to the Dorsey Anti-Dilution Provision, Dorsey’s direct or indirect ownership of shares of SDS Inc. – DE’s capital stock, or Dorsey’s direct or indirect ownership of membership interests of SDS LLC – AZ, SDS LLC – DE, SDSF LLC, or SDSB LLC, as applicable, provided, however, that nothing in the Settlement Agreement was intended to release any rights that any party or Dorsey may have under the terms of that certain Offer of Employment between John Dorsey and SDS LLC – AZ, dated January 13, 2022, or that certain Simple Agreement for Future Equity and/or Convertible Note, as applicable. As of the date of this prospectus, the Company has no agreements with Dorsey otherwise relating to, and has not issued to Dorsey, any simple agreement for future equity or convertible note. Further, Dorsey irrevocably, unconditionally, voluntarily, knowingly, fully, finally, and completely forever released and waived their rights to any claim, distributions, payments, or other amounts that Dorsey believed should have been paid or were owed to Dorsey by SDS LLC – AZ, SDS LLC – DE, SDSF LLC, SDSB LLC, or SDS Inc. – DE. Each party also agreed, in order to make sure there was a clear understanding regarding the capitalization of SDS Inc. – DE, irrevocably, unconditionally, voluntarily, knowingly, fully, finally, and completely to forever release and waive any claims that they may have had with respect to ownership interests in SDS LLC – AZ, SDS LLC – DE, SDSF LLC, SDSB LLC, or SDS Inc. – DE, whether past, present, future, or contingent, and affirmed that he, she, or it did not own any interests in SDS Inc. – DE beyond that set forth on the capitalization table attached as an exhibit to the Settlement Agreement. The parties therefore agreed that Dorsey LLC owned 1,309,940 shares of common stock pursuant to the Settlement Agreement. Dorsey also irrevocably covenanted that they would not sue us or the other released parties in respect of any of the matters released and discharged. Mr. Dorsey is deemed to beneficially own the shares of common stock owned by Dorsey LLC and has sole voting and dispositive powers over its shares. Under a lease agreement dated as of October 7, 2021 and an addendum dated the same date, we leased our former corporate offices consisting of approximately 7,800 square feet for a term of five years beginning January 1, 2022 and ending December 31, 2026 for a monthly rent of $20,800 plus tax and certain operating expenses, with an increase of 3% at the beginning of every calendar year following the first year of the term of the lease agreement through January 2026. As of December 31, 2021, a security deposit was paid in the amount of $23,411. The office space was owned by John Dorsey, a former chief executive officer and director of the Company. On August 31, 2022, we entered into a Lease Termination Agreement in which both parties agreed to terminate the lease and release each other from all future obligations. The total approximate dollar value of this transaction was $420,992 plus tax and certain operating expenses. The approximate dollar value of the interest of Mr. Dorsey in this transaction was $420,992. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 13 - Subsequent Events Initial Public Offering and Underwriting Agreement On November 13, 2023, we entered into an Underwriting Agreement (the “Underwriting Agreement”), with Boustead Securities, LLC, a registered broker-dealer (“Boustead”), as representative of the underwriters named on Schedule 1 thereto, relating to the Company’s initial public offering of 1,200,000 shares of common stock (the “IPO Shares”). Pursuant to the Underwriting Agreement, in exchange for Boustead’s firm commitment to purchase the IPO Shares, the Company agreed to sell the IPO Shares to Boustead at a purchase price (the “IPO Price”) of $4.65 (93% of the public offering price per share of $5.00, after deducting underwriting discounts and commissions and before deducting a 1% non-accountable expense allowance), and one or more warrants to purchase 7% of the aggregate number of the IPO Shares, at an exercise price equal to $6.75, equal to 135% of the public offering price, subject to adjustment (“Representative’s Warrant(s)”). On November 14, 2023, the IPO Shares were listed and commenced trading on NYSE American LLC (“NYSE American”). The closing of the initial public offering took place on November 16, 2023. At the closing, the Company sold the IPO Shares for total gross proceeds of $6,000,000. After deducting the underwriting discounts, commissions, non-accountable expense allowance, and other expenses from the initial public offering, the Company received net proceeds of approximately $4.8 million. The Company also issued Boustead a Representative’s Warrant exercisable for the purchase of 84,000 shares of common stock at an exercise price of $6.75 per share, subject to adjustment. The Representative’s Warrant may be exercised by payment of cash or by a cashless exercise provision, and may be exercised at any time for five years following the date of issuance. The IPO Shares were offered and sold, and the Representative’s Warrant was issued, pursuant to the Company’s Registration Statement on Form S-1 (File No. 333-271951), as amended (the “IPO Registration Statement”), initially filed with the SEC on May 15, 2023, and declared effective by the SEC on November 13, 2023 Registration Statement on Form S-1 (File No. 333-275532), which was filed with the SEC pursuant to Rule 462(b) under the Securities Act, which was effective immediately upon filing on November (the “462(b) Registration Statement”); The IPO Registration Statement registered for sale shares of common stock with a maximum aggregate offering price of $10,350,000; Representative’s Warrants; and shares of common stock underlying Representative’s Warrants with a maximum aggregate offering price of $724,500. The 462(b) Registration Statement registered for sale The IPO Registration Statement included the registration for sale of an additional 180,000 shares of common stock at the assumed public offering price of $5.00 per share upon full exercise of the underwriters’ over-allotment option. The additional shares of common stock underlying the Representative’s Warrant registered for sale by the 462(b) Registration Statement included 12,600 shares of common stock that the underwriters would have had the option to purchase upon exercise of a second Representative’s Warrant which would be issuable upon full exercise of the underwriters’ over-allotment option. In addition, a maximum of 2,346,548 shares were registered for resale by the selling stockholders named in the IPO Registration Statement, of which a total of 2,214,548 shares of common stock were included for resale by means of the final prospectus relating to these shares, dated November 13, 2023 (the “Final Resale Prospectus”), which was filed with the SEC on November 15, 2023 pursuant to Rule 424(b)(3) of the Securities Act. As stated in the Final Resale Prospectus, any resales of these shares occurred at a fixed price of $5.00 per share until the listing of the common stock on NYSE American. Thereafter, these sales will occur at fixed prices, at market prices prevailing at the time of sale, at prices related to prevailing market prices, or at negotiated prices. The Company will not receive any proceeds from the resale of common stock by the selling stockholders. Settlement Notice to 6% Convertible Unsecured Promissory Note Holders The subscription agreements for the Company’s 6% convertible unsecured promissory notes provided that, in the event that within 12 months of the closing of the private placement of the 6% convertible unsecured promissory notes, the convertible notes had not been converted automatically in accordance with their terms, the Company may elect either (a) to repay all or part of each note, subject to the holder’s right to convert each note, or (b) if the Company does not repay each note, the unpaid principal amount of each note will automatically increase to 110% of the outstanding principal amount. As of the 12-month anniversary of the closing of this private placement, the Company had not consummated an initial public offering or Alternative Liquidity Event, and had not repaid any portion of the principal amounts under the convertible notes. However, the convertible notes themselves only provided that in the event that by the maturity date, the Company had not consummated an initial public offering of its common stock and the listing or trading of its common stock on a Qualified Exchange and had not consummated an Alternative Liquidity Event, the Company may elect either (a) upon 30 days prior written notice to the holder, to prepay all or a portion of the principal amount of the notes and accrued interest hereon, subject to the holder’s right to convert the note into common stock during such 30-day period, or (b) if the Company does not prepay the entire principal amount of the notes or the remaining principal amount of the notes, the notes will automatically increase to 110% of the original or unpaid portion of the outstanding principal amount. As the maturity date of these notes had not occurred, the outstanding principal amount under each note had been determined not to have increased to 110% of that amount. However, in accordance with a settlement notice issued to the holders of the 6% convertible unsecured promissory notes on November 13, 2023 undertaking to effect conversions of principal as if 110% of the principal being converted was being converted to address possible claims with respect to the increase of the outstanding principal under the convertible notes to 110% of the outstanding principal amount, the holders of the 6% convertible unsecured promissory notes were issued a number of shares of common stock upon conversion of the convertible notes upon the closing of the initial public offering in the amount that would be applicable as if the principal under the convertible notes had been increased to 110% of the outstanding principal. See “— Automatic Conversion of Convertible Promissory Notes and Automatic Repayment of Principal Under Certain Nonconvertible Promissory Notes Automatic Conversion of Convertible Promissory Notes and Automatic Repayment of Principal Under Certain Nonconvertible Promissory Notes In connection with the closing of the Company’s initial public offering on November 16, 2023, the Company’s 6% convertible unsecured promissory notes with aggregate outstanding principal of $6,305,000 automatically converted into an aggregate of 2,774,200 shares of common stock at a conversion price of $2.50 per share in accordance with the terms of these promissory notes and our settlement notice to the holders of these notes providing for the issuance of a number of shares that would be applicable as if the principal under the convertible notes had been increased to 110% of the outstanding principal (see “ —Settlement Notice to 6% Convertible Unsecured Promissory Note Holders Similarly, in connection with the closing of the Company’s initial public offering, the Company’s 8% convertible unsecured promissory notes with aggregate outstanding principal of $1,465,000 automatically converted into an aggregate of 586,000 shares of common stock at a conversion price of $2.50 per share in accordance with their terms. All accrued interest on the principal under the notes was waived in accordance with the terms of the notes. In addition, in connection with the closing of the Company’s initial public offering, warrants to purchase a total of 940,000 shares of common stock at an exercise price of $2.50 per share were automatically exercised. The proceeds were automatically used to repay the outstanding principal underlying 8% nonconvertible promissory notes consisting of $2,350,000. On the same date, a total of $113,304 in accrued interest under the promissory notes became due. Equity Line of Credit On November 16, 2023, the Company entered into a Term Sheet for an Equity Line of Credit with 3i Management (the “Term Sheet”). The Term Sheet is non-binding except as described below, and was subject to the preparation and execution of definitive documentation to effect the transactions contemplated under the Term Sheet. The Term Sheet provides that 3i LP (the “Investor”) will commit to invest up to $25,000,000 as an equity line of credit under which the Company may require the Investor to make purchases of its common stock for a 24-month term, as follows. The Company may send a purchase notice (the “Purchase Notice”) between 4:00 PM and 6:30 PM Eastern Time stating the number of shares that the Investor will be required to purchase, subject to a purchase limit (the “Purchase Limit”). The Company may raise additional capital three trading days after the date that the Purchase Notice is sent (the “Purchase Notice Date”). The purchase price for shares to be purchased pursuant to a Purchase Notice will be 95% of the lowest daily volume weighted average price during the three trading days following the Purchase Notice Date. The Purchase Limit will be equal to the lesser of (i) 100% of the average daily trading volume over the five days before the Purchase Notice Date, (ii) 30% of the daily trading volume on the Purchase Notice Date, or (iii) $2,000,000. The Term Sheet stated the Company will be required to file a registration statement with the SEC for the offering of any shares under the equity line of credit within 30 calendar days and to cause such registration statement to be effective within 60 calendar days. Any purchase pursuant to a Purchase Notice will be subject to a commitment fee equal to 2% of the amount purchased, paid in cash or shares of common stock, based on the price equal to the five-day average volume-weighted average price prior to the filing of the registration statement in accordance with the other terms described above (the “Commitment Fee”). The Investor will not be required to purchase or hold more than 4.99% of the outstanding common stock of the Company. The Term Sheet also contains the following binding terms: Upon the signing of the Term Sheet, the Company must pay $50,000 to the Investor’s legal counsel for payment of legal and due diligence fees. In addition, if the Company does not close the equity line of credit by February 15, 2024, the Company must issue the Investor a warrant to purchase 750,000 shares of common stock, with an exercise price of $0.01 per share, with full ratchet and anti-dilution protections and registration rights. The Term Sheet expired on November 24, 2023. As of the date of this report, the parties continued to be in discussions relating to preparation and execution of definitive documentation. There is no assurance that definitive documentation for this transaction will be executed. Repayment of Related-Party Promissory Notes The following promissory notes held by related parties were fully repaid subsequent to September 30, 2023, as follows: ● On October 10, 2023, the outstanding balance of $37,635.07 was fully repaid under a promissory note issued on July 11, 2022 with outstanding principal of $35,000, incurring interest at 6%, to Daniel Nelson, Chief Executive Officer, Chairman and director of the Company. ● On October 10, 2023, the outstanding balance of $97,670.41 was fully repaid under a promissory note issued on March 8, 2023 with outstanding principal of $95,000 to Nelson Financial Services Inc., whose sole owner is Daniel Nelson, Chief Executive Officer, Chairman and director of the Company. In connection with the closing of the Company’s initial public offering on November 16, 2023, the following promissory notes held by related parties became due, and were repaid as of November 27, 2023: ● A promissory note with an outstanding balance of $40,000 issued on January 12, 2023 to John Dorsey, a former Chief Executive Officer and director of the Company. ● A promissory note issued on July 23, 2023 with principal of $130,000, incurring interest at 6%, and with an outstanding balance of $130,000 held by Daniel Nelson, Chief Executive Officer, Chairman and director of the Company. Mr. Nelson waived all interest owed under the promissory note. ● A promissory note with an outstanding balance of $10,238.36 issued on March 17, 2023 with principal of $10,000, incurring interest at 6%, to Daniel Nelson, Chief Executive Officer, Chairman and director of the Company. Appointment of President and Chief Technology Officer On November 22, 2023, the board of directors of Signing Day Sports, Inc. (the “Company”) approved the appointment of Richard Symington as President and Chief Technology Officer of the Company. Mr. Symington will hold office until his successor has been duly appointed and qualified or his earlier removal or resignation. Mr. Symington, 44, previously served as the Company’s President and Chief Marketing Officer and a member of the Company’s board of directors from April 2023 to May 2023. From May 2015 to February 2020, Mr. Symington was the Manager of Blacklight Technologies LLC. From January 2015 to September 2019, Mr. Symington was also the founder, Chief Executive Officer, and Manager of Island Marketing Consultants LLC (formerly A20 Media LLC). From 2002 to 2014, Mr. Symington founded or managed a number of other businesses. Mr. Symington obtained a B.A. in International Relations from the University of San Diego in 2002 and a Diploma in Culinary Arts/Restaurant Management from Arizona Culinary Institute in 2003. Management believes that Mr. Symington is qualified to serve as a director due to his experience in technology and marketing-driven businesses. There are no family relationships among Mr. Symington and any of our executive officers or directors. President and Chief Technology Officer Employment Agreement On November 22, 2023, the Compensation Committee of the board of directors of the Company (the “Compensation Committee”) approved an Executive Employment Agreement with Richard Symington, which was dated and entered into by the Company and Mr. Symington on the same date (the “CTO Employment Agreement”). Under the CTO Employment Agreement, Mr. Symington will be employed in his current capacity as the Company’s President and Chief Technology Officer. The following is a summary of the terms of the CTO Employment Agreement. Mr. Symington’s annual base salary will be $375,000, subject to modification upon execution of an amendment or addendum to the CTO Employment Agreement. The Company will pay or reimburse Mr. Symington for all reasonable and necessary expenses actually incurred or paid by Mr. Symington during his employment in the performance of his duties under the CTO Employment Agreement. Mr. Symington will be eligible to participate in comprehensive benefits plans of the Company, including medical, dental and life insurance options, and will be entitled to paid time off and holiday pay in accordance with the Company’s policies in effect from time to time. Pursuant to the CTO Employment Agreement, on November 22, 2023, Mr. Symington was granted a stock option pursuant to the Plan and execution of a Plan Stock Option Agreement. The stock option provides Mr. Symington the right to purchase 50,000 shares of common stock of the Company at an exercise price of $2.25 per share, which was the closing price of the common stock on NYSE American on November 22, 2023. One-third of the option will vest and become exercisable on each of the six-month anniversary, the 18-month anniversary, and the 30-month anniversary of November 16, 2023, the date of the consummation of the Company’s initial public offering, provided that Mr. Symington remains in continuous service with the Company. Mr. Symington’s employment is at-will. If the Company terminates Mr. Symington without cause after one year of employment from November 22, 2023, Mr. Symington will be entitled to the following severance payments: (i) cash in the amount of base salary in effect on the date of such termination payable in 12 monthly installments; and (ii) all previously earned, accrued, and unpaid benefits from the Company and its employee benefit plans. The payment of severance may be conditioned on receiving a release of any and all claims that Mr. Symington may have against the Company. Mr. Symington was required to sign an Employee Confidential Information and Inventions Assignment Agreement, dated as of November 27, 2023 (the “Symington Confidentiality Agreement”), which prohibits unauthorized use or disclosure of the Company’s proprietary information, contains a general assignment of rights to inventions and intellectual property rights, non-competition provisions that apply during the term of employment, non-solicitation provisions that apply during the term of employment and for one year after the term of employment, and non-disparagement provisions that apply during and after the term of employment. Chief Executive Officer Employment Agreement On November 22, 2023, the Compensation Committee approved an Executive Employment Agreement with Daniel Nelson, the Company’s Chief Executive Officer, Chairman, and a director, which was dated and entered into by the Company and Mr. Nelson on the same date (the “CEO Employment Agreement”). Under the CEO Employment Agreement, Mr. Nelson will be employed in his current capacity as the Company’s Chief Executive Officer. The following is a summary of the terms of the CEO Employment Agreement. Mr. Nelson’s annual base salary will be $425,000, subject to modification upon execution of an amendment or addendum to the CEO Employment Agreement. The Company will pay or reimburse Mr. Nelson for all reasonable and necessary expenses actually incurred or paid by Mr. Nelson during his employment in the performance of his duties under the CEO Employment Agreement. Mr. Nelson will be eligible to participate in comprehensive benefits plans of the Company, including medical, dental and life insurance options, and will be entitled to paid time off and holiday pay in accordance with the Company’s policies in effect from time to time. Pursuant to the CEO Employment Agreement, on November 22, 2023, Mr. Nelson was granted a stock option pursuant to the Plan and execution of a Plan Stock Option Agreement. The stock option provides Mr. Nelson the right to purchase 100,000 shares of common stock of the Company at an exercise price of $2.25 per share, which was the closing price of the common stock on NYSE American on November 22, 2023. The option vests and becomes exercisable as to half the shares immediately upon the date of grant and as to the remaining half in six equal monthly portions after the grant date subject to continuous service. Mr. Nelson’s employment is at-will. If the Company terminates Mr. Nelson without cause, Mr. Nelson will be entitled to the following severance payments: (i) cash in the amount of base salary in effect on the date of such termination payable in 12 monthly installments; and (ii) all previously earned, accrued, and unpaid benefits from the Company and its employee benefit plans. The payment of severance may be conditioned on receiving a release of any and all claims that Mr. Nelson may have against the Company. Mr. Nelson was required to sign an Employee Confidential Information and Inventions Assignment Agreement, dated as of November 22, 2023 (the “Nelson Confidentiality Agreement”), which prohibits unauthorized use or disclosure of the Company’s proprietary information, contains a general assignment of rights to inventions and intellectual property rights, non-competition provisions that apply during the term of employment, non-solicitation provisions that apply during the term of employment and for one year after the term of employment, and non-disparagement provisions that apply during and after the term of employment. Chief Operating Officer Employment Agreement On November 22, 2023, the Compensation Committee approved an Executive Employment Agreement with David O’Hara, the Company’s Chief Operating Officer and Secretary, which was dated and entered into by the Company and Mr. O’Hara on the same date (the “COO Employment Agreement”). The COO Employment Agreement amends, restates and supersedes the Amended and Restated Employment Offer Letter, dated March 14, 2023, between Mr. O’Hara and the Company. Under the COO Employment Agreement, Mr. O’Hara will be employed in his current capacity as the Company’s Chief Operating Officer and Secretary. The following is a summary of the terms of the COO Employment Agreement. Mr. O’Hara’s annual base salary will be $275,000, subject to modification upon execution of an amendment or addendum to the COO Employment Agreement. Mr. O’Hara is also entitled to a one-time cash bonus payment on the date of the COO Employment Agreement. The Company will pay or reimburse Mr. O’Hara for all reasonable and necessary expenses actually incurred or paid by Mr. O’Hara during his employment in the performance of his duties under the COO Employment Agreement. Pursuant to the COO Employment Agreement, on November 22, 2023, Mr. O’Hara was granted a stock option pursuant to the Plan and execution of a Plan Stock Option Agreement. The stock option provides Mr. O’Hara the right to purchase 100,000 shares of common stock of the Company at an exercise price of $2.25 per share, which was the closing price of the common stock on NYSE American on November 22, 2023. The option vests and becomes exercisable as to half the shares immediately upon the date of grant and as to the remaining half in six equal monthly portions after the grant date subject to continuous service. Mr. O’Hara will be eligible to participate in comprehensive benefits plans of the Company, including medical, dental and life insurance options. The Company will cover 100% of the health insurance premium costs for Mr. O’Hara’s spouse and dependent children. Mr. O’Hara will also be entitled to paid time off and holiday pay in accordance with the Company’s policies in effect from time to time. Mr. O’Hara’s employment is at-will. If the Company terminates Mr. O’Hara without cause, Mr. O’Hara will be entitled to the following severance payments: (i) cash in the amount of base salary in effect on the date of such termination payable in 12 monthly installments; (ii) benefits under group health and life insurance plans in which Mr. O’Hara participated prior to termination for 12 months following the date of termination; and (iii) all previously earned, accrued, and unpaid benefits from the Company and its employee benefit plans, including any accrued but unused paid time off. There will be no waiting period for the commencement of these payments. The payment of severance may be conditioned on receiving a release of any and all claims that Mr. O’Hara may have against the Company. Mr. O’Hara was previously required to sign an Employee Confidential Information and Inventions Assignment Agreement, dated as of April 3, 2023 (the “O’Hara Confidentiality Agreement”), which prohibits unauthorized use or disclosure of the Company’s proprietary information, contains a general assignment of rights to inventions and intellectual property rights, non-competition provisions that apply during the term of employment, non-solicitation provisions that apply during the term of employment and for one year after the term of employment, and non-disparagement provisions that apply during and after the term of employment. Certificate of Deposit Secured Line of Credit On November 22, 2023 the Board held a discussion of the application for a 12-month certificate of deposit-secured $2,000,000 revolving line of credit at the CD market rate plus 2.00% with Commerce Bank of Arizona (“CBAZ”) in accordance with the general terms and conditions of the letter issued by Commerce Bank of Arizona, dated November 20, 2023 which was among the materials circulated to the Board prior to the meeting. After such discussion, having indicated no concerns with the foregoing proposal, and upon motion duly made and seconded, the Board unanimously approved the following resolutions: that it is deemed advisable and in the best interest of the Company and its stockholders to apply for the Credit Line with CBAZ. On December 11, 2023, the Company entered into a Promissory Note for a Line of Credit with Commerce Bank of Arizona for a 12-month certificate of deposit-secured $2,000,000 revolving line of credit at the CD market rate plus 2.00%. The Company paid loan origination and other fees totaling $5,500 and CBAZ immediately disbursed $334,624.85 of the funds in connection with this revolving line of credit for crediting the full prepayment of the balance in that amount outstanding in connection with a separate $350,000 revolving line of credit with CBAZ. The . The outstanding balance under this revolving line of credit was $859,875.15 as of December 22, 2023. Repayment of Certain Original Issue Discount Promissory Notes On November 20, 2023, the Company repaid the aggregate balance of $117,648 under two 15% Original Issue Discount (“15% OID”) promissory notes, and on November 29, 2023, the Company repaid the balance of $117,647 under one 15% OID promissory note. Settlement and Release Agreement Under a Settlement Agreement and Release, dated as of December 12, 2023 (the “Midwestern Release Date”), between the Company and Midwestern Interactive, LLC (“Midwestern Interactive”), a Missouri limited liability company (the “Midwestern Release Agreement”), the Company and Midwestern Interactive agreed to a mutual release of all claims that could have been asserted as of the Midwestern Release Date. The Company further agreed to pay Midwestern Interactive $600,000.00 by making a payment of $300,000.00 within three business days of the Midwestern Release Date and a payment of $300,000.00 on or before April 12, 2024 (the “Midwestern Release Amount”). In addition, the Company agreed to execute a confession of judgment and affidavit of confession of judgment in favor of Midwestern Interactive as to the obligations to pay the Midwestern Release Amount plus interest accruing on the Midwestern Release Amount at the rate of 9% per annum from April 12, 2024 plus any costs or expenses, including, but not limited to, attorney’s fees and costs expended to pursue the matter to judgment, and to enforce and collect the judgment, if necessary. The Company and Midwestern Interactive entered into the Release Agreement to resolve a dispute between them involving allegations, on the one hand, by Midwestern Interactive that it performed work on behalf of the Company for which Midwestern Interactive had not been paid pursuant to a Work for Hire – Acknowledgement and Assignment, dated December 21, 2022 (the “Work For Hire Agreement”) and, on the other hand, by the Company that Midwestern Interactive did not perform as required by the Work For Hire Agreement. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Principal Business Activity and Significant Accounting Policies [Abstract] | |
Principal Business Activity | Principal Business Activity Signing Day Sports, Inc. (formerly known as Signing Day Sports, LLC) (“Company”) was formed and began operations in January 2019 and provides a digital ecosystem to help high school athletes get discovered and recruited by college coaches across the United States of America. The Company’s website and mobile phone application provides an opportunity for athletes to create a personal profile by uploading measurables, videos of key drills, testing stats, academics and demographic information. Coaches can evaluate a prospect’s video, watch two separate prospects side by side simultaneously, and perform other actions with the video to visually evaluate talent. Intangible assets consist of development software, patented technology, customer lists, trademarks, software IP, and customer data in the form of verifiable video uploads, player statistics, and academic records. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements (sometimes referred to herein as “financial statements”) include the |
Going Concern Considerations | Going Concern Considerations Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. We sustained significant losses and negative cash flows from operations and are dependent on debt and equity financing to fund operations. We incurred a net loss of approximately $0.920 million and $2.676 million for the three and nine months ended September The Company is continuing its path to profitability through increased business development, marketing and sales of the Company’s multiple lines of subscriptions. Failure to successfully continue to grow operational revenues could harm our profitability and adversely affect our financial condition and results of operations. We face all of the risks inherent in a new business, including the need for significant additional capital, management’s potential underestimation of initial and ongoing costs, and potential delays and other problems in connection with establishing sales channels. We are continuing our plan to further grow and expand operations and seek sources of capital to pay our contractual obligations as they come due. Management believes that its current operating strategy will provide the opportunity for us to continue as a going concern as long as we are able to obtain additional financing; however, there is no assurance this will occur. The accompanying financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. |
Basis of Presentation | Basis of Presentation These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). |
Concentrations of Credit Risk | Concentrations of Credit Risk The Company maintains its cash account in several deposit accounts, the balances of which are periodically more than federally insured limits. At September 30, 2023 and December 31, 2022, the Company had no amounts uninsured. |
Receivables and Credit Policy | Receivables and Credit Policy The Company estimates an allowance for doubtful accounts based upon an evaluation of the status of receivables, historical experience, and other factors as necessary. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change. There were $0 |
Payment Terms | Payment Terms Users may access the Company’s website and application on either a free-trial or paid basis. During 2022 and 2021, certain organizations were also permitted to access the Company’s website and application under a separate free use arrangement. This free use arrangement was discontinued as of December 31, 2022. Users that are not eligible or no longer eligible for free-trial access are required to have subscriptions by making payment to the Company prior to access to the Company’s website and application, except that user organizations may have subscriptions by agreeing to make payment on a monthly installment basis. If a required payment is not made, access to the Company’s website and application is suspended until the required payment is received. |
Property and Equipment | Property and Equipment Property and equipment is recorded at cost. Expenditures for renewals and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are charged to expense. When equipment is retired or sold, the cost and related accumulated depreciation are eliminated from the accounts and the resultant gain or loss is reflected in income. Depreciation is provided using the straight-line method, based on useful lives of the assets which range from three to five years. The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors. Based on this assessment there was no impairment at September 30, 2023 and December 31, 2022. |
Internally Developed Software | Internally Developed Software Software consists of an internally developed information system for use by the Company in matching athletes with qualified coaches. The Company has capitalized costs incurred with development and upgrades of the information systems in accordance with applicable accounting standards. Costs incurred up to and including the feasibility stage of development as well as maintenance costs are expensed as incurred. The Company amortizes these capitalized costs on a straight-line basis over the estimated useful life of the asset of five years. The Company periodically performs reviews of the recoverability of such capitalized technology costs. At the time a determination is made that capitalized amounts are not recoverable based on estimated cash flows to be generated from technology; any remaining capitalized amounts are written off. During the nine months ended September 30, 2023 and 2022, the Company did not have an impairment charge. |
Intangible Assets | Intangible Assets Intangible assets consist of development software, patented technology, customer lists, trademarks, software IP, and customer data in the form of verifiable video uploads, player statistics, and academic records. Intangible assets are stated at cost less accumulated amortization. For intangible assets that have finite lives, the assets are amortized using the straight-line method over the estimated useful lives of the related assets. For intangible assets with indefinite lives, the assets are tested periodically for impairment. |
Stock Subscription Revenue | Stock Subscription Revenue The Company records stock issuances at the effective date. If the subscription is not funded upon issuance, the Company records a stock subscription receivable as an asset on the balance sheet. When stock subscription receivables are not received prior to the issuance of financial statements at a reporting date in satisfaction of the requirements under Accounting Standards Codification (“ASC”), 505-10-45-2, the stock subscription receivable is reclassified as a contra account to stockholder’s equity (deficit) on the balance sheet. |
Fair Value Measurements | Fair Value Measurements The Company uses the fair value framework that prioritizes the inputs to valuation techniques for recognizing financial assets and liabilities measured on a recurring basis and for non-financial assets and liabilities when these items are re-measured. Fair value is considered to be the exchange price in an orderly transaction between market participants, to sell an asset or transfer a liability at the measurement date. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. The Company categorizes each of its fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are: Level 1 – This level consists of valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured. Level 2 – This level consists of valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques. Level 3 – This level consists of valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect assumptions about inputs that market participants would use in pricing an asset or liability. The Company’s financial instruments also include accounts and receivable, accounts payable, and accrued liabilities. Due to the short-term nature of these instruments, their fair values approximate their carrying values on the balance sheet. ASC 825-10, Financial Instruments, allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not identify any assets or liabilities that are required to be presented on the balance sheets at fair value in accordance with ASC 820, Fair Value Measurement. Due to the short-term nature of all financial assets and liabilities, their carrying value approximates their fair value as of the balance sheet dates. |
Income Taxes | Income Taxes Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of internally developed software and net operating loss and research and development tax credit carry forwards for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. 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. The Company converted to a C corporation in August of 2021. As a limited liability company for the 2020 year and through the date of conversion in 2021, the Company’s taxable loss was allocated to members in accordance with their respective percentage of ownership. Therefore, no provision for income taxes has been included in the financial statements for the period prior to the Company’s conversion to a C corporation. The Company evaluates its tax positions that have been taken or are expected to be taken on income tax returns to determine if an accrual is necessary for uncertain tax positions. As of September 30, 2023 and December 31, 2022, the unrecognized tax benefits accrual was zero. The Company will recognize future accrued interest and penalties related to unrecognized tax benefits in income tax expense if incurred. As of September 30, 2023, the 2020 through 2022 tax years generally remain subject to examination by federal and state authorities. |
Deferred Revenue | Deferred Revenue Deferred revenues are contract liabilities for collections on subscription agreements in excess of revenue recognized. |
Revenue Recognition | Revenue Recognition The Company accounts for revenue under the guidance of ASC 606, Revenue from Contracts from Customers (“ASC 606”). ASC 606 prescribes a five-step model that focuses on transfer of control and entitlement to payment when determining the amount of revenue to be recognized. Under the ASC 606 guidance, an entity is required to perform the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. Revenue from performance obligations satisfied at a point in time consist of sales to individuals representing a one-month subscription and are recognized at the end of the subscription. Revenue from performance obligations satisfied over time consists of the sale of subscription agreements to individual organizations or customers that are more than one month in duration and are recognized on a monthly basis over the life of the subscription agreement. |
Debt Issuance Costs | Debt Issuance Costs Debt issuance costs are amortized over the period the related obligation is outstanding using the straight-line method. The straight-line method is a reasonable estimate of the effective interest method due to the relatively short maturities of the related debt. Debt issuance costs are included within long-term debt on the balance sheet. Amortization of debt issuance costs is included in interest expense in the accompanying financial statements. As of September 30, 2023 and December 31, 2022, unamortized debt issuance costs are $315,143 and $387,920, respectively. |
Advertising Costs | Advertising Costs Advertising and marketing costs are expensed as incurred. Such costs amounted to $75,565 and $312,295 for the three and nine months ended September 30, 2023, respectively, and $131,075 and $818,028 for the three and nine months ended September 30, 2022, respectively. Advertising costs are included in advertising and marketing expenses in the statements of operations. |
Estimates | Estimates The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Contract Costs | Contract Costs Incremental costs of obtaining a contract are expensed as incurred as the amortization period of the asset that otherwise would have been recognized is estimated to be one year or less. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation costs under the provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense related to the fair value of stock-based compensation awards that are ultimately expected to vest. Stock-based compensation expense recognized includes the compensation cost for all stock-based payments granted to employees, officers, and directors based on the grant date fair value estimated in accordance with the provisions of ASC 718. ASC 718 is also applied to awards modified, repurchased, or cancelled during the periods reported. Stock-based compensation is recognized as expense over the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services. |
Treasury stock | Treasury stockTreasury stock are shares the Company has acquired of the Company’s capital stock and have all been cancelled. The cost of the acquired shares is presented as a deduction from stockholders’ equity. |
Basic and Diluted Net Loss per Common Share | Basic and Diluted Net Loss per Common Share Basic loss per common share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding for each period. Diluted loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding plus the dilutive effect of shares issuable through the common stock equivalents. The weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. As of September 30, 2023 and December 31, 2022, 386,650 and 253,000, respectively, stock options were excluded from dilutive earnings per share as their effects were anti-dilutive. |
Leases | Leases At the inception or modification of a contract, the Company determines whether a lease exists and classifies its leases as an operating or finance lease at commencement. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent their obligation to make lease payments arising from the lease. As most of the Company’s leases do not provide an implicit interest rate, the lease liability is calculated at lease commencement as the present value of unpaid lease payments using the Company’s estimated incremental borrowing rate. The incremental borrowing rate represents the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term and is determined using a portfolio approach based on information available at the commencement date of the lease. The lease asset also reflects any prepaid rent, initial direct costs incurred and lease incentives received. The Company’s lease terms may include optional extension periods when it is reasonably certain that those options will be exercised. Leases with an initial expected term of 12 months or less are not recorded in the Balance Sheet and the related lease expense is recognized on a straight-line basis over the lease term. For certain classes of underlying assets, the Company has elected to not separate fixed lease components from the fixed non-lease components. |
Adopted Accounting Pronouncements | Adopted Accounting Pronouncements On January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”). This standard replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. CECL requires an estimate of credit losses for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts and generally applies to financial assets measured at amortized cost, such as accounts receivable. At September 30, 2023, the Company does not have financial assets measured at amortized cost and the allowance is currently zero. |
New Accounting Pronouncements | New Accounting Pronouncements The Company has reviewed recently issued accounting pronouncements and plans to adopt those that are applicable to it. The Company does not expect the adoption of any other pronouncements to have an impact on its results of operations or financial position. |
Correction to Prior Period Financial Statements | Correction to Prior Period Financial Statements During the three months ended September 30, 2023, the Company determined that the unaudited consolidated financial statements for the three months ended March 31, 2023 and June 30, 2023, contained an immaterial misstatement. Under capitalization of internally developed software costs resulted in an understatement of cost of revenues and general and administrative expenses for the three months ended March 31, 2023 and unrecognized expenses resulted in an understatement of general and administrative expenses for the three months June 30, 2023. Because correcting the error in the current period would materially misstate those financial statements, the prior period(s) financial statements should be corrected, even though such revision previously was and continues to be immaterial to the prior period(s) financial statements. However, correcting prior period(s) financial statements for immaterial errors would not require previous filings to be amended (e.g., no Form 10-K/A required). In accordance with SEC Staff Accounting Bulletin Nos. 99 and 108 (“SAB 99” and “SAB 108”), Signing Day Sports evaluated these errors and determined that they were immaterial to each of the reporting periods affected and, therefore, amendment of previously filed reports was not required. However, in order to provide consistency in the Consolidated Statement of Cash Flows and as permitted by SAB 108, revisions for these immaterial amounts to previously reported annual amounts are reflected in the financial information herein and will be reflected in future filings containing such financial information as permitted by SAB 108. The following table presents the effects of the immaterial prior period adjustment on the consolidated balance sheet (unaudited) of March 31, 2023: As of March 31, 2023 As Reported Correction of Error As Adjusted Software development & intangible assets $ 447,869 $ 86,972 $ 534,841 Accounts Payable 991,754 16,456 1,008,210 Accumulated deficit (12,416,583 ) 70,516 (12,346,067 ) The following table presents the effects of the immaterial prior period adjustment on the consolidated statement of operations (unaudited) for the three months ended March 31, 2023: For the Three Months Ended March 31, 2023 As Reported Correction of Error As Adjusted Cost of revenues $ 71,439 $ 66,898 $ 4,541 General and administrative expenses $ 676,685 $ 3,618 $ 673,067 Net loss (935,767 ) 70,516 (865,251 ) Net loss per common share – basic and diluted $ 0.12 $ 0.01 $ 0.11 The following table presents the effects of the immaterial prior period adjustment on the consolidated balance sheet (unaudited) of June 30, 2023: As of June 30, 2023 As Reported Correction of Error As Adjusted Unamortized Debt Issuance Costs $ 477,424 $ 83,219 $ 394,205 Accounts Payable 924,501 109,688 1,034,189 Accumulated deficit (13,134,383 ) 192,907 (13,326,990 ) The following table presents the effects of the immaterial prior period adjustment on the consolidated statement of operations (unaudited) for the three months ended June 30, 2023: For the Three Months Ended June 30, 2023 As Reported Correction of Error As Adjusted General and administrative expenses 586,716 $ 78,678 $ 667,540 Net loss (812,245 ) 78,678 (890,923 ) Net loss per common share – basic and diluted $ 0.11 $ 0.01 $ 0.12 |
Principal Business Activity a_2
Principal Business Activity and Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Principal Business Activity and Significant Accounting Policies [Abstract] | |
Schedule of Prior Period Adjustment on the Consolidated Balance Sheet | The following table presents the effects of the immaterial prior period adjustment on the consolidated balance sheet (unaudited) of March 31, 2023: As of March 31, 2023 As Reported Correction of Error As Adjusted Software development & intangible assets $ 447,869 $ 86,972 $ 534,841 Accounts Payable 991,754 16,456 1,008,210 Accumulated deficit (12,416,583 ) 70,516 (12,346,067 ) As of June 30, 2023 As Reported Correction of Error As Adjusted Unamortized Debt Issuance Costs $ 477,424 $ 83,219 $ 394,205 Accounts Payable 924,501 109,688 1,034,189 Accumulated deficit (13,134,383 ) 192,907 (13,326,990 ) |
Schedule of Prior Period Adjustment on the Consolidated Statement of Operations | The following table presents the effects of the immaterial prior period adjustment on the consolidated statement of operations (unaudited) for the three months ended March 31, 2023: For the Three Months Ended March 31, 2023 As Reported Correction of Error As Adjusted Cost of revenues $ 71,439 $ 66,898 $ 4,541 General and administrative expenses $ 676,685 $ 3,618 $ 673,067 Net loss (935,767 ) 70,516 (865,251 ) Net loss per common share – basic and diluted $ 0.12 $ 0.01 $ 0.11 For the Three Months Ended June 30, 2023 As Reported Correction of Error As Adjusted General and administrative expenses 586,716 $ 78,678 $ 667,540 Net loss (812,245 ) 78,678 (890,923 ) Net loss per common share – basic and diluted $ 0.11 $ 0.01 $ 0.12 |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue [Abstract] | |
Schedule of Table Disaggregates the Company’s Revenue | The following table disaggregates the Company’s revenue based on the timing of satisfaction of performance obligations as of: Three Months Ended Nine Months Ended 2023 2022 2023 2022 Total revenue from contracts with customers recognized over time $ 10,317 $ 812 $ 93,487 $ 66,883 |
Schedule of Contract Liabilities (Deferred Revenue) | The following table presents our contract liabilities (deferred revenue) and certain information related to these balances as of: September 30, December 31, Contract liabilities (deferred revenue) $ 4,259 $ 44,073 |
Schedule of Revenue Recognized | Three Months Ended Nine Months Ended 2023 2022 2023 2022 Revenue recognized in the period from: Amounts included in contract liabilities at the beginning of the period $ 10,317 $ 812 $ 45,846 $ 63,800 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | The Company’s property, plant and equipment include the following: Accumulated Cost Basis Depreciation Net September 30, 2023 Office Furniture $ 18,021 $ 3,919 $ 14,102 December 31, 2022 Office Furniture $ 12,380 $ (2,078 ) $ 10,302 |
Internally Developed Software (
Internally Developed Software (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Internally Developed Software [Abstract] | |
Schedule of Internally Developed Software Asset | Internally developed software asset consists of the following: September 30, 2023 Accumulated Cost Amortization Impairment Net Internally developed software $ 1,178,616 $ 110,646 $ - $ 1,067,970 December 31, 2022 Accumulated Cost Amortization Impairment Net Internally developed software $ 820,951 $ - $ (820,951 ) $ - |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Intangible Assets [Abstract] | |
Schedule of Intangible Assets | The Company’s intangible assets include the following: Accumulated Cost Basis Amortization Net September 30, 2023 Intellectual property $ 22,000 $ (5,499 ) $ 16,501 Proprietary technology 18,700 (7,714 ) 10,986 Total $ 40,700 $ (13,213 ) $ 27,487 December 31, 2022 Intellectual property $ 22,000 $ - $ 22,000 Proprietary technology 18,700 (6,171 ) 12,529 Total $ 40,700 $ (6,171 ) $ 34,529 |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Notes Payable [Abstract] | |
Schedule of Convertible and Nonconvertible Notes Payable | Convertible and nonconvertible notes payable consists of: September 30, December 31, 9 convertible notes payable, bear interest at 6%, no monthly payments, unsecured, notes automatically convert at 50% of fair value (less any accrued interest) upon initial public offering (IPO) or other “sale of control” as defined in the agreement. If IPO or sale of control is not consummated by March 31, 2022, the Company has the option to repay notes at anytime prior to maturity date of October 15, 2024. $ 3,300,000 $ 3,300,000 12 convertible notes payable, bear interest at 6%, no monthly payments, unsecured, notes automatically convert at 50% of fair value (less any accrued interest) upon IPO or other “sale of control” as defined in the agreement. If IPO or sale of control is not consummated by March 31, 2022 the Company has the option to repay notes at anytime prior to maturity date of November 15, 2024. 1,205,000 1,205,000 6 convertible notes payable, bear interest at 6%, no monthly payments, unsecured, notes automatically convert at 50% of fair value (less any accrued interest) upon IPO or other “sale of control” as defined in the agreement. If IPO or sale of control is not consummated by March 31, 2022 the Company has the option to repay notes at anytime prior to maturity date of December 23, 2024. 1,800,000 1,800,000 15 convertible notes payable, bear interest at 8%, no monthly payments, unsecured, notes automatically convert at 50% of fair value (less any accrued interest) upon IPO or other “sale of control” as defined in the agreement. Notes may only be prepaid by the Company with the written consent of the holder prior to the maturity date of August 8, 2025. 1,465,000 - 11 nonconvertible notes payable, bear interest at 8%, no monthly payments, unsecured, notes have warrants that are payable upon IPO or other “sale of control” as defined in the agreement. Notes may be prepaid by the Company at any time in its sole discretion prior to the maturity on dates ranging from March 17, 2025 to May 2, 2025. 2,350,000 - $ 10,120,000 $ 7,620,000 Less unamortized debt issuance costs (315,143 ) (387,920 ) Debt, less unamortized debt issuance costs $ 9,804,857 $ 7,232,080 |
Schedule of Future Maturities of Convertible Notes Payable | Future maturities of convertible notes payable are as follows: Amount Years ending December 31, Remainder of 2023 $ - 2024 6,305,000 2025 3,815,000 Total $ 10,120,000 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Schedule of Components of Lease Expense | The components of lease expense were as follows: Three Months Ended Nine Months Ended 2023 2022 2023 2022 Non-related party lease expense $ 21,155 $ 57,695 $ 141,867 $ 106,627 Related party lease expense $ - $ 21,268 $ - $ 148,876 Total operating lease expense $ 21,155 $ 78,963 $ 141,867 $ 255,503 |
Schedule of Total Lease Assets and Liabilities | Total lease assets and liabilities were as follows: September 30, December 31, 2023 2022 Operating lease right of use asset $ 259,121 $ - Less: operating asset lease accumulated depreciation (11,014 ) - Net operating lease right of use asset $ 248,107 - Current operating lease liability $ 82,353 $ - Noncurrent operating lease liability 165,754 - Total operating lease liability $ 248,107 $ - |
Schedule of Future Minimum Lease Payments Under Non-Cancelable Leases | Future minimum lease payments under non-cancelable leases as of September 30, 2023 were as follows: Amount Years ending December 31, Remainder of 2023 $ 22,077 2024 90,076 2025 92,784 2026 55,358 Total future minimum lease payments $ 260,295 Less: interest (12,188 ) Total lease liability $ 248,107 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax [Abstract] | |
Schedule of deferred tax assets | Deferred tax assets consist of the following components as of September 30, 2023 and December 31, 2022: September 30, Dec. 31, Deferred Tax Asset (Liabilities) Net operating loss carryforwards $ 2,720,000 $ 1,860,000 Internally developed software 320,000 470,000 Furniture and fixtures (3,000 ) (3,000 ) R&D Tax Credit Carryforwards 125,000 160,000 AZ Refundable R&D Tax Credit 100,000 100,000 Net deferred tax assets before valuation allowance $ 3,262,000 $ 2,587,000 Less valuation allowance (3,162,000 ) (2,487,000 ) Net deferred tax assets $ 100,000 $ 100,000 |
Stockholder's Deficit (Tables)
Stockholder's Deficit (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Stockholder's Deficit [Abstract] | |
Schedule of Fair Value of Stock Options Granted | The following table summarizes stock option activity for the nine months ended September 30, 2023: Weighted Average Intrinsic Options Exercise Price Value Outstanding at December 31, 2022 262,000 $ 3.10 Granted 296,800 1.91 Exercised - - Forfeited or expired (176,508 ) 1.61 Outstanding at September 30, 2023 386,650 $ 2.99 $ 4,020 Exercisable at September 30, 2023 159,449 $ 3.04 $ 4,020 |
Schedule of Weighted Average Basis, the Assumptions | Nine Months September 30, 2023 Weighted average grant-date fair value of options granted during the period $ 1.22 |
Schedule of Restricted Stock Award Activity | The following table summarizes restricted stock award activity for the nine months ended September 30, 2023: Restricted Stock Awards Weighted Outstanding, beginning of year - $ - Granted 90,000 1.72 Vested (45,000 ) 1.72 Cancelled - - Outstanding, end of period 45,000 $ 1.72 |
Schedule of Weighted Average Basis, the Assumptions | The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted: Nine Months September 30, 2023 Risk-free interest rate 3.52 % Expected term (in years) 5.42 Expected volatility 50 % Expected dividend yield $ - |
Principal Business Activity a_3
Principal Business Activity and Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Principal Business Activity and Significant Accounting Policies [Line Items] | |||||||||
Net loss | $ (919,625) | $ (890,923) | $ (865,251) | $ (993,277) | $ (1,713,233) | $ (2,016,227) | $ (2,675,801) | $ (4,722,738) | |
Cash used in operating activities | (1,496,716) | (4,545,340) | |||||||
Cumulative losses | 20,800,000 | 20,800,000 | $ 18,100,000 | ||||||
Receivables | 15,670 | ||||||||
Capitalized costs estimated useful life | 5 years | ||||||||
Unrecognized tax benefits accrual | 0 | $ 0 | 0 | ||||||
Unamortized debt issuance costs | 315,143 | 315,143 | $ 387,920 | ||||||
Advertising and marketing costs incurred | $ 75,565 | $ 131,075 | $ 312,295 | $ 818,028 | |||||
Effects on anti-dilutive (in Shares) | 386,650 | 253,000 | |||||||
Minimum [Member] | |||||||||
Principal Business Activity and Significant Accounting Policies [Line Items] | |||||||||
Depreciation useful lives | 3 years | 3 years | |||||||
Maximum [Member] | |||||||||
Principal Business Activity and Significant Accounting Policies [Line Items] | |||||||||
Depreciation useful lives | 5 years | 5 years |
Principal Business Activity a_4
Principal Business Activity and Significant Accounting Policies (Details) - Schedule of Prior Period Adjustment on the Consolidated Balance Sheet - USD ($) | Jun. 30, 2023 | Mar. 31, 2023 |
As Reported [Member] | ||
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Software development & intangible assets | $ 447,869 | |
Accounts Payable | $ 924,501 | 991,754 |
Accumulated deficit | (13,134,383) | (12,416,583) |
Unamortized Debt Issuance Costs | 477,424 | |
Correction of Error [Member] | ||
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Software development & intangible assets | 86,972 | |
Accounts Payable | 109,688 | 16,456 |
Accumulated deficit | 192,907 | 70,516 |
Unamortized Debt Issuance Costs | 83,219 | |
As Adjusted [Member] | ||
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Software development & intangible assets | 534,841 | |
Accounts Payable | 1,034,189 | 1,008,210 |
Accumulated deficit | (13,326,990) | $ (12,346,067) |
Unamortized Debt Issuance Costs | $ 394,205 |
Principal Business Activity a_5
Principal Business Activity and Significant Accounting Policies (Details) - Schedule of Prior Period Adjustment on the Consolidated Statement of Operations - USD ($) | 3 Months Ended | |
Jun. 30, 2023 | Mar. 31, 2023 | |
As Reported [Member] | ||
Condensed Income Statements, Captions [Line Items] | ||
Cost of revenues | $ 71,439 | |
General and administrative expenses | $ 586,716 | 676,685 |
Net loss | $ (812,245) | $ (935,767) |
Net loss per common share – basic (in Dollars per share) | $ 0.11 | $ 0.12 |
Correction of Error [Member] | ||
Condensed Income Statements, Captions [Line Items] | ||
Cost of revenues | $ 66,898 | |
General and administrative expenses | $ 78,678 | 3,618 |
Net loss | $ 78,678 | $ 70,516 |
Net loss per common share – basic (in Dollars per share) | $ 0.01 | $ 0.01 |
As Adjusted [Member] | ||
Condensed Income Statements, Captions [Line Items] | ||
Cost of revenues | $ 4,541 | |
General and administrative expenses | $ 667,540 | 673,067 |
Net loss | $ (890,923) | $ (865,251) |
Net loss per common share – basic (in Dollars per share) | $ 0.12 | $ 0.11 |
Principal Business Activity a_6
Principal Business Activity and Significant Accounting Policies (Details) - Schedule of Prior Period Adjustment on the Consolidated Statement of Operations (Parentheticals) - $ / shares | 3 Months Ended | |
Jun. 30, 2023 | Mar. 31, 2023 | |
As Reported [Member] | ||
Condensed Income Statements, Captions [Line Items] | ||
Net loss per common share diluted | $ 0.11 | $ 0.12 |
Correction of Error [Member] | ||
Condensed Income Statements, Captions [Line Items] | ||
Net loss per common share diluted | 0.01 | 0.01 |
As Adjusted [Member] | ||
Condensed Income Statements, Captions [Line Items] | ||
Net loss per common share diluted | $ 0.01 | $ 0.11 |
Revenue (Details) - Schedule of
Revenue (Details) - Schedule of Table Disaggregates the Company’s Revenue - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Schedule of Table Disaggregates the Company's Revenue [Abstract] | ||||
Total revenue from contracts with customers recognized over time | $ 10,317 | $ 812 | $ 93,487 | $ 66,883 |
Revenue (Details) - Schedule _2
Revenue (Details) - Schedule of Contract Liabilities (Deferred Revenue) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Schedule of Contract Liabilities Deferred Revenue [Abstract] | ||
Contract liabilities (deferred revenue) | $ 4,259 | $ 44,073 |
Revenue (Details) - Schedule _3
Revenue (Details) - Schedule of Revenue Recognized - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Schedule of Revenue Recognized [Abstract] | ||||
Amounts included in contract liabilities at the beginning of the period | $ 10,317 | $ 812 | $ 45,846 | $ 63,800 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) - Schedule of Property, Plant and Equipment - Office Furniture [Member] - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Cost Basis | $ 18,021 | |
Accumulated Depreciation | 3,919 | |
Net | $ 14,102 | |
Cost Basis | $ 12,380 | |
Accumulated Depreciation | (2,078) | |
Net | $ 10,302 |
Internally Developed Software_2
Internally Developed Software (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Internally Developed Software [Abstract] | |
Impairment loss | $ 820,951 |
Writing down asset | $ 0 |
Internally Developed Software_3
Internally Developed Software (Details) - Schedule of Internally Developed Software Asset - Software Development [Member] - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Internally Developed Software (Details) - Schedule of Internally Developed Software Asset [Line Items] | ||
Cost | $ 1,178,616 | $ 820,951 |
Accumulated Amortization | 110,646 | |
Impairment | (820,951) | |
Net | $ 1,067,970 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Intangible Assets [Abstract] | ||||
Amortization expense | $ 1,833 | $ 514 | $ 5,499 | $ 1,543 |
Intangible Assets (Details) - S
Intangible Assets (Details) - Schedule of Intangible Assets - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Cost Basis | $ 40,700 | $ 40,700 |
Accumulated Amortization | (13,213) | (6,171) |
Net | 27,487 | 34,529 |
Intellectual property [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost Basis | 22,000 | 22,000 |
Accumulated Amortization | (5,499) | |
Net | 16,501 | 22,000 |
Proprietary technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost Basis | 18,700 | 18,700 |
Accumulated Amortization | (7,714) | (6,171) |
Net | $ 10,986 | $ 12,529 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | 9 Months Ended | ||
Aug. 07, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | |
Notes Payable [Abstract] | |||
Bear interest | 8% | ||
Convertible notes payable (in Dollars) | $ 1,465,000 | $ 1,315,000 | |
Principal amount percentage | 120% | ||
Converted shares of common stock (in Shares) | 146,500 | ||
Per share (in Dollars per share) | $ 2 | ||
Conversion price per share (in Dollars per share) | $ 3.29 | $ 2.5 | |
Promissory notes, description | On August 2, 2023, August 18, 2023, September 11, 2023, and September 22, 2023, the Company issued 15% Original-Issue-Discount (“OID”) promissory notes having total principal of $352,942 to certain accredited investors in a private placement for gross proceeds of $300,000. The principal under the OID promissory notes accrue 5% interest annually, and principal and interest under the notes must be repaid by December 31, 2023. The promissory notes may be prepaid without a premium or penalty. As of September 30, 2023, accrued interest under these promissory notes totaled $52,942. | ||
Percentage of commission equal of gross proceeds | 7% | ||
Percentage of non-accountable expense allowance equal of gross proceeds | 1% |
Notes Payable (Details) - Sched
Notes Payable (Details) - Schedule of Convertible and Nonconvertible Notes Payable - USD ($) | Sep. 30, 2023 | Aug. 07, 2023 | Dec. 31, 2022 |
Notes Payable (Details) - Schedule of Convertible and Nonconvertible Notes Payable [Line Items] | |||
Convertible notes payable | $ 1,465,000 | $ 1,315,000 | |
Total convertible and nonconvertible | 10,120,000 | 7,620,000 | |
Less unamortized debt issuance costs | (315,143) | (387,920) | |
Debt, less unamortized debt issuance costs | 9,804,857 | 7,232,080 | |
Convertible Notes Payable [Member] | |||
Notes Payable (Details) - Schedule of Convertible and Nonconvertible Notes Payable [Line Items] | |||
Convertible notes payable | 3,300,000 | 3,300,000 | |
Convertible Notes Payable 1 [Member] | |||
Notes Payable (Details) - Schedule of Convertible and Nonconvertible Notes Payable [Line Items] | |||
Convertible notes payable | 1,205,000 | 1,205,000 | |
Convertible Notes Payable 2 [Member] | |||
Notes Payable (Details) - Schedule of Convertible and Nonconvertible Notes Payable [Line Items] | |||
Convertible notes payable | 1,800,000 | 1,800,000 | |
Convertible Notes Payable 3 [Member] | |||
Notes Payable (Details) - Schedule of Convertible and Nonconvertible Notes Payable [Line Items] | |||
Convertible notes payable | 1,465,000 | ||
Non Convertible Notes Payable [Member] | |||
Notes Payable (Details) - Schedule of Convertible and Nonconvertible Notes Payable [Line Items] | |||
Nonconvertible notes payable | $ 2,350,000 |
Notes Payable (Details) - Sch_2
Notes Payable (Details) - Schedule of Convertible and Nonconvertible Notes Payable (Parentheticals) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Convertible Notes Payable [Member] | ||
Notes Payable (Details) - Schedule of Convertible and Nonconvertible Notes Payable (Parentheticals) [Line Items] | ||
Notes payable (in Dollars) | $ 9 | $ 9 |
Bear interest | 6% | 6% |
Convert at fair value | 50% | 50% |
Maturity date | Oct. 15, 2024 | Oct. 15, 2024 |
Convertible Notes Payable 1 [Member] | ||
Notes Payable (Details) - Schedule of Convertible and Nonconvertible Notes Payable (Parentheticals) [Line Items] | ||
Notes payable (in Dollars) | $ 12 | $ 12 |
Bear interest | 6% | 6% |
Convert at fair value | 50% | 50% |
Maturity date | Nov. 15, 2024 | Nov. 15, 2024 |
Convertible Notes Payable 2 [Member] | ||
Notes Payable (Details) - Schedule of Convertible and Nonconvertible Notes Payable (Parentheticals) [Line Items] | ||
Notes payable (in Dollars) | $ 6 | $ 6 |
Bear interest | 6% | 6% |
Convert at fair value | 50% | 50% |
Maturity date | Dec. 23, 2024 | Dec. 23, 2024 |
Convertible Notes Payable 3 [Member] | ||
Notes Payable (Details) - Schedule of Convertible and Nonconvertible Notes Payable (Parentheticals) [Line Items] | ||
Notes payable (in Dollars) | $ 15 | $ 15 |
Bear interest | 8% | 8% |
Convert at fair value | 50% | 50% |
Maturity date | Aug. 08, 2023 | Aug. 08, 2023 |
Non Convertible Notes Payable [Member] | ||
Notes Payable (Details) - Schedule of Convertible and Nonconvertible Notes Payable (Parentheticals) [Line Items] | ||
Notes payable (in Dollars) | $ 11 | $ 11 |
Bear interest | 8% | 8% |
Maturity date | Mar. 17, 2025 | May 02, 2025 |
Notes Payable (Details) - Sch_3
Notes Payable (Details) - Schedule of Future Maturities of Convertible Notes Payable | Sep. 30, 2023 USD ($) |
Schedule Of Future Maturities Of Convertible Notes Payable Abstract | |
Remainder of 2023 | |
2024 | 6,305,000 |
2025 | 3,815,000 |
Total | $ 10,120,000 |
Leases (Details)
Leases (Details) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2023 | Nov. 30, 2022 | Sep. 30, 2023 | Dec. 31, 2021 | Jun. 30, 2023 | Dec. 31, 2022 | |
Leases (Details) [Line Items] | ||||||
Monthly rent | $ 7,491 | $ 12,075 | $ 20,800 | |||
Sublease rent expense | $ 9,894 | |||||
Incurred loss | $ 43,785 | |||||
Unamortized balance | $ 0 | $ 13,924 | ||||
Rental payments | 3 years | |||||
Leases expected term | 12 years | 12 years | 12 years | |||
Minimum [Member] | ||||||
Leases (Details) [Line Items] | ||||||
Monthly rent | 7,359 | |||||
Maximum [Member] | ||||||
Leases (Details) [Line Items] | ||||||
Monthly rent | $ 8,042 |
Leases (Details) - Schedule of
Leases (Details) - Schedule of Components of Lease Expense - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Schedule of Components of Lease Expense [Line Items] | ||||
Total operating lease expense | $ 21,155 | $ 78,963 | $ 141,867 | $ 255,503 |
Non-related party lease expense [Member] | ||||
Schedule of Components of Lease Expense [Line Items] | ||||
Total operating lease expense | $ 21,155 | 57,695 | $ 141,867 | 106,627 |
Related party lease expense [Member] | ||||
Schedule of Components of Lease Expense [Line Items] | ||||
Total operating lease expense | $ 21,268 | $ 148,876 |
Leases (Details) - Schedule o_2
Leases (Details) - Schedule of Total Lease Assets and Liabilities - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Schedule of Total Lease Assets and Liabilities [Abstract] | ||
Operating lease right of use asset | $ 259,121 | |
Less: operating asset lease accumulated depreciation | (11,014) | |
Net operating lease right of use asset | 248,107 | |
Current operating lease liability | 82,353 | |
Noncurrent operating lease liability | 165,754 | |
Total operating lease liability | $ 248,107 |
Leases (Details) - Schedule o_3
Leases (Details) - Schedule of Future Minimum Lease Payments Under Non-Cancelable Leases | Sep. 30, 2023 USD ($) |
Schedule of Future Minimum Lease Payments Under Non-Cancelable Leases [Line Items] | |
Remainder of 2023 | $ 22,077 |
2024 | 90,076 |
2025 | 92,784 |
2026 | 55,358 |
Total future minimum lease payments | 260,295 |
Less: interest | (12,188) |
Total lease liability | $ 248,107 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Income Tax [Abstract] | ||
Operating loss carryforwards | $ 10,500,000 | $ 7,900,000 |
Research and development credits | 155,000 | $ 260,000 |
Credit refundable | $ 100,000 |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of Deferred Tax Assets - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Deferred Tax Asset (Liabilities) | ||
Net deferred tax assets before valuation allowance | $ 3,262,000 | $ 2,587,000 |
Less valuation allowance | (3,162,000) | (2,487,000) |
Net deferred tax assets | 100,000 | 100,000 |
Net operating Loss Carryforwards [Member] | ||
Deferred Tax Asset (Liabilities) | ||
Net deferred tax assets before valuation allowance | 2,720,000 | 1,860,000 |
Internally Developed Software [Member] | ||
Deferred Tax Asset (Liabilities) | ||
Net deferred tax assets before valuation allowance | 320,000 | 470,000 |
Furnitures and Fixtures [Member] | ||
Deferred Tax Asset (Liabilities) | ||
Net deferred tax assets before valuation allowance | (3,000) | (3,000) |
R&D Tax Credit Carryforwards [Member] | ||
Deferred Tax Asset (Liabilities) | ||
Net deferred tax assets before valuation allowance | 125,000 | 160,000 |
AZ Refundable R&D Tax Credit [Member] | ||
Deferred Tax Asset (Liabilities) | ||
Net deferred tax assets before valuation allowance | $ 100,000 | $ 100,000 |
Recapitalization (Details)
Recapitalization (Details) - shares | Sep. 30, 2023 | Apr. 14, 2023 | Dec. 31, 2022 | Jul. 11, 2022 |
Recapitalization (Details) [Line Items] | ||||
Common shares authorized | 150,000,000 | 150,000,000 | ||
Common shares outstanding | 7,737,652 | 5 | 8,086,152 | |
SDS Inc [Member] | ||||
Recapitalization (Details) [Line Items] | ||||
Common shares outstanding | 7,495,104 |
Stockholder's Deficit (Details)
Stockholder's Deficit (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||||
Apr. 14, 2023 | Apr. 04, 2023 | Mar. 31, 2023 | Mar. 31, 2023 | Sep. 30, 2023 | May 02, 2025 | Mar. 17, 2025 | Nov. 22, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | Aug. 31, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | |
Stockholder's Deficit (Details) [Line Items] | ||||||||||||||
Common stock, shares authorized | 150,000,000 | 150,000,000 | ||||||||||||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | ||||||||||||
Common stock, shares, issued | 5 | 7,737,652 | 8,086,152 | |||||||||||
Common stock, shares, outstanding | 5 | 7,737,652 | 8,086,152 | |||||||||||
Converted shares | 1 | |||||||||||||
Aggregate purchase price amount (in Dollars) | $ 800,000 | |||||||||||||
Repurchase agreement amount (in Dollars) | $ (800,000) | |||||||||||||
Transfer shares | 40,000 | 40,000 | ||||||||||||
Annual rate | 8% | |||||||||||||
Price per share (in Dollars per share) | $ 2.5 | |||||||||||||
Gross proceeds percentage | 1% | |||||||||||||
Shares of common stock percentage | 7% | |||||||||||||
Net proceeds from the private placement (in Dollars) | $ 450,000 | |||||||||||||
Agent fees and expenses (in Dollars) | $ 250,000 | |||||||||||||
Treasury Stock, Common [Member] | ||||||||||||||
Stockholder's Deficit (Details) [Line Items] | ||||||||||||||
Repurchase shares | 600,000 | 600,000 | ||||||||||||
Per shares (in Dollars per share) | $ 1.33 | $ 1.33 | ||||||||||||
Warrant [Member] | ||||||||||||||
Stockholder's Deficit (Details) [Line Items] | ||||||||||||||
Unsecured promissory notes percentage | 8% | |||||||||||||
Common Stock [Member] | ||||||||||||||
Stockholder's Deficit (Details) [Line Items] | ||||||||||||||
Common stock, shares, outstanding | 7,486,152 | 7,486,152 | 7,591,152 | 7,591,152 | 8,086,152 | 7,495,104 | 7,495,104 | 7,495,104 | ||||||
Repurchase agreement amount (in Dollars) | $ (60) | |||||||||||||
Unsecured promissory notes percentage | 8% | |||||||||||||
Shares issued | 600,000 | |||||||||||||
Price per share (in Dollars per share) | $ 1.35 | |||||||||||||
Private Placement [Member] | ||||||||||||||
Stockholder's Deficit (Details) [Line Items] | ||||||||||||||
Unsecured promissory notes percentage | 8% | |||||||||||||
Aggregate principal amount (in Dollars) | $ 2,350,000 | |||||||||||||
Annual rate | 8% | |||||||||||||
Shares issued | 940,000 | |||||||||||||
Gross proceeds percentage | 7% | |||||||||||||
Net proceeds from the private placement (in Dollars) | $ 800,000 | |||||||||||||
Private Placement [Member] | Warrant [Member] | ||||||||||||||
Stockholder's Deficit (Details) [Line Items] | ||||||||||||||
Unsecured promissory notes percentage | 8% | |||||||||||||
Officer [Member] | ||||||||||||||
Stockholder's Deficit (Details) [Line Items] | ||||||||||||||
Repurchase agreement amount (in Dollars) | $ 695,000 | |||||||||||||
Director [Member] | ||||||||||||||
Stockholder's Deficit (Details) [Line Items] | ||||||||||||||
Repurchase agreement amount (in Dollars) | $ 800,000 | |||||||||||||
Forecast [Member] | ||||||||||||||
Stockholder's Deficit (Details) [Line Items] | ||||||||||||||
Common stock, shares, issued | 100,000 | |||||||||||||
Aggregate principal amount (in Dollars) | $ 850,000 | $ 1,500,000 | ||||||||||||
Equity Incentive Plan [Member] | ||||||||||||||
Stockholder's Deficit (Details) [Line Items] | ||||||||||||||
Granted shares | 90,000 | |||||||||||||
Stock option | 386,650 | |||||||||||||
Equity Incentive Plan [Member] | 2022 Plan [Member] | ||||||||||||||
Stockholder's Deficit (Details) [Line Items] | ||||||||||||||
Grant of awards | 273,350 | 750,000 | ||||||||||||
Equity Incentive Plan [Member] | Minimum [Member] | ||||||||||||||
Stockholder's Deficit (Details) [Line Items] | ||||||||||||||
Stock options vested period | 1 year | |||||||||||||
Equity Incentive Plan [Member] | Maximum [Member] | ||||||||||||||
Stockholder's Deficit (Details) [Line Items] | ||||||||||||||
Stock options vested period | 4 years |
Stockholder's Deficit (Detail_2
Stockholder's Deficit (Details) - Schedule of Stock Option Activity | 9 Months Ended |
Sep. 30, 2023 USD ($) $ / shares shares | |
Schedule Of Stock Option Activity Abstract | |
Options, Outstanding beginning balance | shares | 262,000 |
Weighted Average Exercise Price, Outstanding beginning balance | $ / shares | $ 3.1 |
Options, Granted | shares | 296,800 |
Weighted Average Exercise Price, Granted | $ / shares | $ 1.91 |
Options, Exercised | shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Options, Forfeited or expired | shares | (176,508) |
Weighted Average Exercise Price, Forfeited or expired | $ / shares | $ 1.61 |
Options, Outstanding ending balance | shares | 386,650 |
Weighted Average Exercise Price, Outstanding ending balance | $ / shares | $ 2.99 |
Intrinsic Value, Outstanding ending balance | $ | $ 4,020 |
Options, Exercisable | shares | 159,449 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 3.04 |
Intrinsic Value, Exercisable | $ | $ 4,020 |
Stockholder's Deficit (Detail_3
Stockholder's Deficit (Details) - Schedule of Fair Value of Stock Options Granted | 9 Months Ended |
Sep. 30, 2023 $ / shares | |
Schedule Of Fair Value Of Stock Options Granted Abstract | |
Weighted average grant-date fair value of options granted during the period | $ 1.22 |
Stockholder's Deficit (Detail_4
Stockholder's Deficit (Details) - Schedule of Restricted Stock Award Activity - Restricted Stock [Member] | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Stockholder's Deficit (Details) - Schedule of Restricted Stock Award Activity [Line Items] | |
Restricted Stock Awards Outstanding, beginning balance | shares | |
Weighted Average Grant Date Fair value Outstanding, beginning balance | $ / shares | |
Restricted Stock Awards Granted | shares | 90,000 |
Weighted Average Grant Date Fair value Granted | $ / shares | $ 1.72 |
Restricted Stock Awards Vested | shares | (45,000) |
Weighted Average Grant Date Fair value Vested | $ / shares | $ 1.72 |
Restricted Stock Awards Cancelled | shares | |
Weighted Average Grant Date Fair value Cancelled | $ / shares | |
Restricted Stock Awards Outstanding, ending balance | shares | 45,000 |
Weighted Average Grant Date Fair value Outstanding, ending balance | $ / shares | $ 1.72 |
Stockholder's Deficit (Detail_5
Stockholder's Deficit (Details) - Schedule of Weighted Average Basis, the Assumptions | 9 Months Ended |
Sep. 30, 2023 | |
Schedule Of Weighted Average Basis The Assumptions Abstract | |
Risk-free interest rate | 3.52% |
Expected term (in years) | 5 years 5 months 1 day |
Expected volatility | 50% |
Expected dividend yield |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Jul. 01, 2023 | Nov. 29, 2022 |
Common Stock [Member] | IPO [Member] | ||
Commitments and Contingencies (Details) [Line Items] | ||
Net proceeds | $ 1,000,000 | |
Mr. Dorsey [Member] | ||
Commitments and Contingencies (Details) [Line Items] | ||
Payment of company | $ 10,000 | |
Priincipal amount | $ 40,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Apr. 10, 2023 | Mar. 31, 2022 | Oct. 07, 2021 | Nov. 30, 2022 | Sep. 30, 2023 | Dec. 31, 2021 | Aug. 07, 2023 | Apr. 14, 2023 | Dec. 31, 2022 | |
Related Party Transaction [Line Items] | |||||||||
Percentage of unsecured promissory note | 8% | 8% | |||||||
Price per share (in Dollars per share) | $ 2 | ||||||||
Promissory note bear interest | 8% | ||||||||
Severance payment | $ 53,500 | ||||||||
Common stock shares (in Shares) | 7,737,652 | 5 | 8,086,152 | ||||||
Description of related parties agreed | (1) that Dorsey had held 959,940 shares of SDS Inc. – DE’s common stock at that time, (2) that prior to the anticipated redomestication of SDS LLC – AZ to Delaware as a Delaware limited liability company and conversion to a Delaware corporation, Dorsey was a member of SDS LLC – AZ and was a party to SDS LLC – AZ’s Fourth Amended Limited Liability Company Operating Agreement dated July 16, 2021 (the “SDS LLC – AZ Operating Agreement”), (3) that the SDS LLC – AZ Operating Agreement provided Dorsey, among other things, certain anti-dilution protections whereby SDS LLC – AZ would have been required to issue additional equity to Dorsey if SDS LLC – AZ were to have issued additional equity which would have the effect of reducing Dorsey’s ownership below 11% of SDS LLC – AZ’s outstanding equity (the “Dorsey Anti-Dilution Provision”), (4) that on April 25, 2022, Dorsey LLC would receive a total of 350,000 shares of common stock of SDS Inc. – DE in exchange for Dorsey’s cancellation, waiver, and release of all of Dorsey’s rights under the Dorsey Anti-Dilution Provision in the SDS LLC – AZ Operating Agreement, (5) to a general release and discharge of claims against us, our officers and directors, certain other affiliates and related parties, and our stockholders as listed on an exhibit to the agreement, including without limitation, claims relating to the Dorsey Anti-Dilution Provision, Dorsey’s direct or indirect ownership of shares of SDS Inc. – DE’s capital stock, or Dorsey’s direct or indirect ownership of membership interests of SDS LLC – AZ, SDS LLC – DE, SDSF LLC, or SDSB LLC, as applicable, provided, however, that nothing in the Settlement Agreement was intended to release any rights that any party or Dorsey may have under the terms of that certain Offer of Employment between John Dorsey and SDS LLC – AZ, dated January 13, 2022, or that certain Simple Agreement for Future Equity and/or Convertible Note, as applicable. | ||||||||
Lease term | 5 years | ||||||||
Rent amount | $ 7,491 | $ 12,075 | $ 20,800 | ||||||
Operating expenses increase | 3% | ||||||||
Security deposit | $ 23,411 | ||||||||
Transaction amount | $ 420,992 | ||||||||
Common Stock [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Purchase of warrant (in Shares) | 84,000 | ||||||||
Richard Symington [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Promissory note | $ 250,000 | ||||||||
Price per share (in Dollars per share) | $ 2.5 | ||||||||
Richard Symington [Member] | Warrant [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Purchase of warrant (in Shares) | 100,000 | ||||||||
Mr. Gile [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Common stock shares (in Shares) | 2,816,377 | ||||||||
Dorsey LLC [Member] | Common Stock [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Common stock shares (in Shares) | 1,309,940 | ||||||||
Related Party [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Rent amount | $ 20,800 | ||||||||
Mr. Dorsey [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Transaction amount | $ 420,992 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||||||||||
Dec. 11, 2023 | Nov. 29, 2023 | Nov. 22, 2023 | Nov. 20, 2023 | Nov. 16, 2023 | Nov. 13, 2023 | Oct. 10, 2023 | Aug. 07, 2023 | Jul. 23, 2023 | Jun. 30, 2023 | Mar. 17, 2023 | Jun. 30, 2023 | Sep. 30, 2023 | Dec. 22, 2023 | Apr. 14, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Subsequent Events (Details) [Line Items] | |||||||||||||||||
Issued initial public offering, shares | |||||||||||||||||
Gross proceeds | $ 6,000,000 | ||||||||||||||||
Net proceeds of Initial Public Offering | $ 4,800,000 | ||||||||||||||||
Issuance term | 5 years | ||||||||||||||||
offering price amount | $ 10,350,000 | ||||||||||||||||
Warrant exercise price (in Dollars per share) | $ 5 | ||||||||||||||||
Fixed price per share (in Dollars per share) | $ 5 | ||||||||||||||||
Outstanding principal amount rate | 110% | 110% | 110% | ||||||||||||||
Remaining principal amount rate | 110% | ||||||||||||||||
Principal amount | $ 1,465,000 | ||||||||||||||||
Aggregate shares (in Shares) | 586,000 | ||||||||||||||||
Conversion price, per share (in Dollars per share) | $ 3.29 | $ 2.5 | |||||||||||||||
Convertible unsecured promissory notes | 8% | ||||||||||||||||
Shares of common stock (in Shares) | 940,000 | ||||||||||||||||
Exercise price per share (in Dollars per share) | $ 1.91 | ||||||||||||||||
Nonconvertible promissory notes percentage | 8% | ||||||||||||||||
Nonconvertible promissory notes | $ 2,350,000 | ||||||||||||||||
Accrued interest | 113,304 | ||||||||||||||||
Equity line of credit | $ 25,000,000 | ||||||||||||||||
Share purchase price percentage | 95% | ||||||||||||||||
Trading value | $ 2,000,000 | ||||||||||||||||
Commitment fee percentage | 2% | ||||||||||||||||
Outstanding common stock percentage | 4.99% | ||||||||||||||||
Legal fees paid | $ 50,000 | ||||||||||||||||
Warrant issued (in Shares) | 750,000 | ||||||||||||||||
Exercise price per share (in Dollars per share) | $ 0.01 | ||||||||||||||||
Promissory note amount | $ 40,000 | $ 10,238.36 | |||||||||||||||
Outstanding principal amount | $ 95,000 | $ 130,000 | $ 10,000 | ||||||||||||||
Incurring interest | 6% | 6% | 6% | ||||||||||||||
Outstanding balance | $ 130,000 | ||||||||||||||||
Salary | $ 375,000 | ||||||||||||||||
Shares of common stock (in Shares) | 7,737,652 | 5 | 8,086,152 | ||||||||||||||
Exercise price per share (in Dollars per share) | $ 2.25 | ||||||||||||||||
Insurance premium costs percentage | 100% | ||||||||||||||||
Deposit-secured | $ 23,411 | ||||||||||||||||
Other fee | $ 250,000 | ||||||||||||||||
Line of credit | $ 334,624.85 | ||||||||||||||||
Interest rate percentage | 7.21% | ||||||||||||||||
Agreed amount | $ 600,000 | ||||||||||||||||
Payments | $ 300,000 | ||||||||||||||||
Rate interest percentage | 9% | ||||||||||||||||
Maximum [Member] | |||||||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||||||
Offerings percentage | 100% | ||||||||||||||||
Minimum [Member] | |||||||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||||||
Offerings percentage | 30% | ||||||||||||||||
Initial Public Offering [Member] | |||||||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||||||
Shares of common stock (in Shares) | 2,346,548 | ||||||||||||||||
Over-Allotment Option [Member] | |||||||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||||||
Shares of common stock (in Shares) | 12,600 | ||||||||||||||||
Common Stock [Member] | |||||||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||||||
Warrant exercisable shares (in Shares) | 84,000 | ||||||||||||||||
Warrant exercise price (in Dollars per share) | $ 6.75 | ||||||||||||||||
offering price amount | $ 253,575 | ||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Additional Shares Authorized (in Shares) | 180,000 | ||||||||||||||||
Shares of common stock (in Shares) | 2,214,548 | ||||||||||||||||
Exercise price per share (in Dollars per share) | $ 2.5 | ||||||||||||||||
Shares of common stock (in Shares) | 50,000 | ||||||||||||||||
Warrant [Member] | |||||||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||||||
offering price amount | $ 724,500 | ||||||||||||||||
Nelson [Member] | |||||||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||||||
Salary | 425,000 | ||||||||||||||||
O’Hara [Member] | |||||||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||||||
Salary | $ 275,000 | ||||||||||||||||
Subsequent Event [Member] | |||||||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||||||
Promissory note amount | $ 37,635.07 | ||||||||||||||||
Outstanding principal amount | 35,000 | ||||||||||||||||
Convertible Debt [Member] | |||||||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||||||
Outstanding principal amount rate | 110% | ||||||||||||||||
Nonconvertible Promissory Notes [Member] | |||||||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||||||
Outstanding principal amount rate | 110% | ||||||||||||||||
Forecast [Member] | |||||||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||||||
Offerings percentage | 93% | ||||||||||||||||
Non-accountable percentage | 1% | ||||||||||||||||
Aggregate purchase percentage of initial public offering | 7% | ||||||||||||||||
Exercise price per share (in Dollars per share) | $ 6.75 | ||||||||||||||||
Outstanding principal amount rate | 110% | ||||||||||||||||
Principal amount | $ 6,305,000 | ||||||||||||||||
Aggregate shares (in Shares) | 2,774,200 | ||||||||||||||||
Commitment fee percentage | 2% | 2% | |||||||||||||||
Shares of common stock (in Shares) | 100,000 | ||||||||||||||||
Exercise price per share (in Dollars per share) | $ 2.25 | ||||||||||||||||
Deposit-secured | $ 2,000,000 | $ 2,000,000 | |||||||||||||||
Line of credit | $ 859,875.15 | ||||||||||||||||
Repaid aggregate balance | $ 117,647 | $ 117,648 | |||||||||||||||
Discount percentage | 15% | 15% | |||||||||||||||
Forecast [Member] | Initial Public Offering [Member] | |||||||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||||||
Issued initial public offering, shares | $ 1,200,000 | ||||||||||||||||
Pric e per share (in Dollars per share) | $ 4.65 | ||||||||||||||||
Offerings percentage | 135% | ||||||||||||||||
Conversion price, per share (in Dollars per share) | $ 2.5 | ||||||||||||||||
Forecast [Member] | O’Hara [Member] | |||||||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||||||
Shares of common stock (in Shares) | 100,000 | ||||||||||||||||
Exercise price per share (in Dollars per share) | $ 2.25 | ||||||||||||||||
Forecast [Member] | Promissory Note [Member] | |||||||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||||||
Discount percentage | 15% | ||||||||||||||||
Forecast [Member] | Underwriting Agreement [Member] | |||||||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||||||
Price per share (in Dollars per share) | $ 5 | ||||||||||||||||
CBAZ [Member] | |||||||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||||||
Other fee | $ 5,500 | ||||||||||||||||
Line of credit | 350,000 | ||||||||||||||||
Midwestern Interactive, LLC [Member] | |||||||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||||||
Payments | $ 300,000 | ||||||||||||||||
John Dorsey [Member] | Subsequent Event [Member] | |||||||||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||||||||
Promissory note amount | $ 97,670.41 |