Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | Jun. 03, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | CIRTRAN CORP | |
Entity Central Index Key | 0000813716 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2021 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Reporting Status Current | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 4,945,417 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash | $ 29,778 | $ 108,147 |
Inventory | 476,735 | 325,252 |
Deposits on inventory | 11,639 | 53,900 |
Deposits on inventory - related party | 333,007 | 319,333 |
Accounts receivable | 8,110 | 16,966 |
Other current assets | 228,645 | 118,844 |
Assets from discontinued operations | ||
Total current assets | 1,087,914 | 942,442 |
Investment in securities at cost | 300,000 | 300,000 |
Right-of-use asset | 43,511 | 50,409 |
Property and equipment, net of accumulated depreciation | 19,492 | 18,299 |
Total assets | 1,450,917 | 1,311,150 |
Current liabilities | ||
Accounts payable | 1,405,254 | 1,347,870 |
Lease liability, current | 28,471 | 28,118 |
Related-party payable | 13,740 | 13,740 |
Short-term advances payable | 94,904 | 109,904 |
Short-term advances payable - related parties | 200,151 | 287,776 |
Accrued liabilities | 1,446,985 | 1,354,539 |
Accrued payroll and compensation expense | 4,228,243 | 4,133,346 |
Accrued interest, current portion | 2,937,004 | 2,824,948 |
Convertible debenture, current portion, net of discounts | 264,284 | 264,284 |
Note payable, current portion | 90,000 | 90,000 |
Note payable to stockholders and members | 521,194 | 521,194 |
Derivative liability | 1,050,445 | 922,654 |
Liabilities from discontinued operations | 26,191,661 | 26,153,820 |
Total current liabilities | 38,472,336 | 38,052,193 |
Lease liability, long term | 15,040 | 22,291 |
Accrued interest, net of current portion | 1,516,023 | 1,490,951 |
Note payable, net of current portion | 656,000 | 656,000 |
Convertible debenture, net of current portion, net of discount | 1,810,424 | 1,787,816 |
Total liabilities | 42,469,823 | 42,009,251 |
Commitments and contingencies | ||
Stockholders' deficit | ||
Common stock, par value $0.001; 100,000,000 shares authorized; 4,945,417 and 4,720,417 shares issued and outstanding at March 31, 2021, and December 31, 2020, respectively | 4,945 | 4,720 |
Additional paid-in capital | 37,233,376 | 37,226,851 |
Accumulated deficit | (78,257,227) | (77,929,672) |
Total stockholders' deficit | (41,018,906) | (40,698,101) |
Total liabilities and stockholders' deficit | $ 1,450,917 | $ 1,311,150 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 4,945,417 | 4,720,417 |
Common stock, shares outstanding | 4,945,417 | 4,720,417 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement [Abstract] | ||
Net sales | $ 619,399 | $ 2,082 |
Cost of sales | 306,648 | 1,481 |
Gross profit | 312,751 | 601 |
Operating expenses | ||
Employee costs | 133,888 | 21,271 |
Selling, general and administrative expenses | 174,298 | 61,389 |
Total operating expenses | 308,186 | 82,660 |
Income (loss) from operations | 4,565 | (82,059) |
Other income (expense) | ||
Interest expense | (166,488) | (156,067) |
Loss on disposal of equipment | (9,771) | |
Loss on derivative valuation | (127,791) | (69,214) |
Other income | 40,000 | |
Total other income (expense) | (294,279) | (195,052) |
Net loss from continuing operations | (289,714) | (277,111) |
Loss from discontinued operations | (37,841) | (38,261) |
Net loss | $ (327,555) | $ (315,372) |
Net loss from continuing operations per common share, basic and diluted | $ (0.06) | $ (0.06) |
Net loss from discontinued operations per common share, basic and diluted | (0.01) | (0.01) |
Net loss per common share, basic and diluted | $ (0.07) | $ (0.07) |
Basic and diluted weighted average common shares outstanding | 4,727,917 | 4,500,417 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2019 | $ 4,500 | $ 37,222,615 | $ (78,461,806) | $ (41,234,691) |
Balance, shares at Dec. 31, 2019 | 4,500,417 | |||
Stock option expense | 56 | 56 | ||
Net income | (315,372) | (315,372) | ||
Balance at Mar. 31, 2020 | $ 4,500 | 37,222,671 | (78,777,178) | (41,550,007) |
Balance, shares at Mar. 31, 2020 | 4,500,417 | |||
Balance at Dec. 31, 2020 | $ 4,720 | 37,226,851 | (77,929,672) | (40,698,101) |
Balance, shares at Dec. 31, 2020 | 4,720,417 | |||
Common stock issued for conversion of accrued interest | $ 225 | 6,525 | 6,750 | |
Common stock issued for conversion of accrued interest, shares | 225,000 | |||
Net income | (327,555) | (327,555) | ||
Balance at Mar. 31, 2021 | $ 4,945 | $ 37,233,376 | $ (78,257,227) | $ (41,018,906) |
Balance, shares at Mar. 31, 2021 | 4,945,417 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities | ||
Net income (loss) from continuing operations | $ (289,714) | $ (277,111) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation expense | 431 | |
Loss on derivative valuation | 127,791 | 69,214 |
Debt discount amortization | 22,608 | 30,358 |
Loss on disposal of equipment | 9,771 | |
Stock option expense | 56 | |
Amortization of right-of-use asset to rent expense | 6,898 | |
Expenses paid on our behalf by a related party | (87,625) | 4,000 |
Changes in operating assets and liabilities: | ||
Inventory | (151,483) | (81,773) |
Deposits on inventory | 42,261 | (65,294) |
Deposits on inventory - related party | (13,674) | (125,000) |
Accounts receivable | 8,856 | |
Other current assets | (109,801) | (1,256) |
Accounts payable | 57,384 | (3,800) |
Accrued liabilities | 92,446 | 449,755 |
Payments for lease liability | (6,898) | |
Accrued payroll and compensation | 94,897 | 7,131 |
Accrued interest | 143,878 | 125,658 |
Net cash (used in) provided by continuing operating activities | (61,745) | 141,709 |
Net cash provided by (used in) discontinued operations | ||
Net cash (used in) provided by operating activities | (61,745) | 141,709 |
Cash flows from investing activities | ||
Purchase of equipment | (1,624) | |
Net cash used in investing activities | (1,624) | |
Cash flows from financing activities | ||
Proceeds from bank overdraft | (1,611) | |
Proceeds from convertible loans payable | 15,000 | |
Proceeds from related-party loans | 10,700 | |
Repayments of related-party loans | (15,000) | (146,203) |
Repayments of loans payable | (10,000) | |
Cash used in financing activities | (15,000) | (132,114) |
Cash used in discontinued financing activities | ||
Net cash used in financing activities | (15,000) | (132,114) |
Net change in cash | (78,369) | 9,595 |
Cash, beginning of period | 108,147 | |
Cash, end of period | 29,778 | 9,595 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | ||
Cash paid for income taxes | ||
Supplemental disclosure of noncash investing activities | ||
Initial measurement of derivative liability | 5,753 | |
Common stock issued for conversion of accrued interest | $ 6,750 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | NOTE 1—BASIS OF PRESENTATION The consolidated financial statements of CirTran Corporation for the three-month periods ended March 31, 2021 and 2020, are not audited. Our consolidated financial statements are prepared in accordance with the requirements for unaudited interim periods and, consequently, do not include all disclosures required to be made in conformity with accounting principles generally accepted in the United States of America. In the opinion of our management, the accompanying consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of our financial position as of March 31, 2021, and December 31, 2020, and our results of operations and cash flows for the periods ended March 31, 2021 and 2020. The results of operations for the three months ended March 31, 2021 and 2020, are not necessarily indicative of the results for a full-year period. These interim consolidated financial statements should be read in conjunction with the financial statements included in our annual report on Form 10-K for the year ended December 31, 2020. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation We consolidate all of our majority-owned subsidiaries, companies over which we exercise control through majority voting rights, and companies in which we have a variable interest and we are the primary beneficiary. We account for our investments in common stock of other companies that we do not control, but over which we can exert significant influence, using the cost method. The consolidated financial statements as of and for the periods ended March 31, 2021 and 2020, include the accounts of CirTran Corporation and our wholly owned subsidiaries: CirTran Products Corp., LBC Products, Inc., and CirTran - Asia, Inc. All intercompany balances and transactions have been eliminated. Use of Estimates In preparing the financial statements in accordance with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. Revenue Recognition We follow Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers During the three months ended March 31, 2021, we recognized revenue of $15,000 related to the performance obligations under product development service agreements with customers. These contracts are long term in nature and revenue is recognized at certain milestone intervals upon our delivery and customer acceptances of work product related to those milestones, namely product design, packaging, branding display, and prototypes. There were no costs to obtain the contracts identified and, as such, no asset has been recorded for customer acquisition costs. Additionally, we have not recognized impairment losses related to the receivables from these contracts during the three months ended March 31, 2021. Additionally, we recognized revenues of $604,399 during the three months ended March 31, 2021, related to the delivery of product to our customers. Each delivery is based on a unique customer purchase order which is considered to be a stand-alone contract that we retain the right to accept or reject. Upon acceptance, we oblige delivery of such product to the customer at an agreed-upon place, time, and price. We recognize revenue under the unique purchase order contract upon fulfillment of our performance obligations therein, typically limited to the delivery of product. Cash and Cash Equivalents We consider all highly liquid, short-term investments with an original maturity of three months or less to be cash equivalents. We did not hold any cash equivalents as of March 31, 2021, or December 31, 2020. Leases In February 2016, the FASB issued Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842), Leases, The adoption of the standard resulted in recording right-of-use (“ROU”) assets and operating lease liabilities of $43,511 as of March 31, 2021. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As the lease does not provide an implicit rate, we use our incremental borrowing rate based on information available at the commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Lease terms may include options to extend or terminate the lease when it is reasonably certain we will exercise that option. Although considered, we determined it was appropriate to exclude future renewal terms from the capitalization of our operating lease. We have one lease in effect requiring minimum monthly payments of $2,500 through October 2022. We have determined the appropriate discount rate to be 5% based on our other borrowings secured by assets. A summary of future payments due under the terms of the lease as of March 31, 2021, is as follows: Total future payments $ 45,000 Implied interest (1,489 ) Operating lease liability as of December 31, 2021 $ 43,511 Investment in Securities Our cost-method investment consists of an investment in a private digital multi-media technology company that totaled $300,000 at March 31, 2021, and December 31, 2020. As we owned less than 20% of that company’s stock as of each date, and no significant influence or control exists, the investment is accounted for using the cost method. We evaluated the investment for impairment and determined there was none during the periods presented. Property and Equipment We incur certain costs associated with the design and development of molds and dies for our contract-manufacturing segment. These costs are held as deposits on the balance sheet until the molds or dies are finished and ready for use. At that point, the costs are included as part of production equipment in property and equipment and are amortized over their useful lives. We hold title to all molds and dies used in the manufacture of products. The capitalized cost, net of accumulated depreciation, associated with molds and dies included in property and equipment at March 31, 2021, and December 31, 2020, was $19,492 and $18,299, respectively. Depreciation expense is recognized in amounts equal to the cost of depreciable assets over estimated service lives. Leasehold improvements are amortized over the shorter of the life of the lease or the service life of the improvements. The straight-line method of depreciation and amortization is followed for financial reporting purposes. Maintenance, repairs, and renewals that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. Gains or losses on dispositions of property and equipment are included in operating results. Impairment of Long-Lived Assets We review our long-lived assets, including intangibles, for impairment when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. At each balance sheet date, we evaluate whether events and circumstances have occurred that indicate possible impairment. We use an estimate of future undiscounted net cash flows from the related asset or group of assets over their remaining life in measuring whether the assets are recoverable. We did not record expenses for the impairment of long-lived assets during the periods ended March 31, 2021 or 2020. Financial Instruments with Derivative Features We do not hold or issue derivative instruments for trading purposes. However, we have financial instruments that are considered derivatives or contain embedded features subject to derivative accounting. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in our balance sheet. We measure these instruments at their estimated fair value and recognize changes in their estimated fair value in results of operations during the period of change. We have estimated the fair value of these embedded derivatives using a Monte Carlo simulation. The fair values of the derivative instruments are measured each reporting period. Inventories Inventories are stated at the lower of average cost or net realizable value. Cost on manufactured inventories includes labor, material, and overhead. Overhead cost is based on indirect costs allocated to cost of sales, work-in-process inventory, and finished goods inventory. Indirect overhead costs have been charged to cost of sales or capitalized as inventory, based on management’s estimate of the benefit of indirect manufacturing costs to the manufacturing process. Inventories consist of finished goods as we do not carry raw materials for manufacturing products. When there is evidence that the inventory’s value is less than original cost, the inventory is reduced to market value. We determine market value on current resale amounts and whether technological obsolescence exists. We will seek agreements with manufacturing customers that require them to purchase their inventory items in the event they cancel their business with us. From time to time, we will place deposits on inventory to be delivered in the future. These deposits are carried as a separate balance sheet component and totaled $11,639 (non-related-party) and $333,007 (related-party) as of March 31, 2021, and $53,900 (non-related-party) and $319,333 (related-party) as of December 31, 2020. Inventory balances consisted of the following: March 31, 2021 December 31, 2020 Finished goods $ 673,418 $ 526,372 Raw materials 45,240 40,803 (241,923 ) (241,923 ) Total $ 476,735 $ 325,252 Stock-Based Compensation We have outstanding stock options to directors and employees, which are described more fully in Note 12 Stock Options and Warrants Accounting for Stock Issued to Employees Improvements to Nonemployee Share-Based Payment Accounting Stock-based employee compensation was $0and $56 for the three months ended March 31, 2021 and 2020, respectively. Fair Value of Financial Instruments The carrying amounts reported in the accompanying consolidated financial statements for cash, notes payable, and accounts payable approximate fair value because of the immediate or short-term maturities of these financial instruments. ASC 820-10-15, Fair Value Measurement-Overall-Scope and Scope Exceptions Level 1—Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2—Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3—Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. Accounts payable and related-party payables have fair values that approximate the carrying value due to the short-term nature of these instruments. Derivative liabilities are measured using level 3 inputs. Total Fair Quoted Significant Significant Derivative liabilities $ 1,050,445 $ - $ - $ 1,050,445 Total Fair Quoted Significant Significant Derivative liabilities $ 922,654 $ - $ - $ 922,654 Loss per Share Basic loss per share (EPS) is calculated by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding during each period. Diluted EPS is similarly calculated, except that the weighted-average number of common shares outstanding would include common shares that may be issued subject to existing rights with dilutive potential when applicable. There were 140,896,716 potentially issuable shares from the conversions of convertible debentures outstanding that were excluded in dilutive outstanding shares for the three months ended March 31, 2021, due to the anti-dilutive effect these would have on net loss per share. There were 254,654,532 Short-term Advances We have short-term advances with various individuals. These advances are due upon demand, carry no interest, and are not collateralized. These advances are classified as short-term liabilities. Recently Issued Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options, |
Going Concern and Realization o
Going Concern and Realization of Assets | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern and Realization of Assets | NOTE 3—GOING CONCERN AND REALIZATION OF ASSETS In October 2016, we lost our ability to continue energy drink distribution, our principal source of revenue, after receiving an unfavorable ruling in our suit against Playboy Enterprises, Inc. The accompanying unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate our continuation as a going concern. We had a working capital deficiency of $37,384,422 and $37,109,751 as of March 31, 2021, and December 31, 2020, respectively, and a net loss from continuing operations of $289,714 and $277,111 during the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, and December 31, 2020, we had an accumulated deficit of $78,257,227 and $77,929,672, respectively. These conditions raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to successfully accomplish our business plan described in the following paragraphs and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if we are unable to continue as a going concern. In the coming year, our foreseeable cash requirements will relate to development of business operations and associated expenses. We may experience a cash shortfall and be required to raise additional capital. Historically, we have mostly relied upon shareholder loans and advances to finance operations and growth. Management may raise additional capital by retaining net earnings, if any, or through future public or private offerings of our stock or loans from private investors, although we cannot assure that we will be able to obtain such financing. Our failure to do so could have a material and adverse effect upon us and our shareholders. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 4—PROPERTY AND EQUIPMENT Property and equipment and estimated service lives consist of the following: March 31, 2021 December 31, 2020 Useful Life (years) Furniture and office equipment $ 1,624 $ - 5-10 Vehicles 18,672 18,672 3-7 Total 20,296 18,672 Less: accumulated depreciation (804 ) (373 ) Property and equipment, net $ 19,492 $ 18,299 We recorded $431 and $0 of depreciation expense during the three months ended March 31, 2021 and 2020, respectively. |
Related-Party Transactions
Related-Party Transactions | 3 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | NOTE 5—RELATED-PARTY TRANSACTIONS Transactions Involving Officers, Directors, and Stockholders In 2007, we issued a 10% promissory note to a family member of our president in exchange for $300,000. The note was due on demand after May 2008. There were no repayments made during the periods presented. At March 31, 2021, and December 31, 2020, the principal amount owing on the note was $151,833 and $151,833, respectively. On March 31, 2008, we issued to this same family member, along with two other company shareholders, promissory notes totaling $315,000 ($105,000 each). Under the terms of these three $105,000 notes, we received total proceeds of $300,000 and agreed to repay the amount received plus a 5% borrowing fee. The notes were due April 30, 2008, after which they were due on demand, with interest accruing at 12% per annum. We made no payments towards the outstanding notes during the periods presented. The principal balance owing on the notes as of March 31, 2021, and December 31, 2020, was $72,466 and $72,466, respectively. During the three months ended March 31, 2021, we made repayments to related parties of $15,000 and had other noncash reductions of $87,625. There were $200,151 and $287,776 of short-term advances due to related parties as of March 31, 2021, and December 31, 2020, respectively. The advances are due on demand and as such included in current liabilities. We have agreed to issue stock options to Iehab Hawatmeh, our president, as compensation for services provided as our chief executive officer. The terms of this employment agreement require us to grant options to purchase 6,000 shares of our stock each year, with an exercise price equal to the fair market price of our common stock as of the grant date. There were no options issued under this agreement during the three months ended March 31, 2021. There were options to purchase 6,000 shares of common stock that expired during the three months ended March 31, 2021. There were outstanding options to purchase 24,000 and 30,000 shares of common stock held by Iehab Hawatmeh as of March 31, 2021, and December 31, 2020, respectively. See Note 6 – Other Accrued Liabilities Note 12 – Stock Options and Warrants As of March 31, 2021, and December 31, 2020, we owed our president a total of $780,903 and $868,528, respectively, in unsecured advances. The advances and short-term bridge loans were approved by our board of directors under a 5% borrowing fee. The borrowing fees were waived by our president on these loans. These amounts are included in our liabilities from discontinued operations. As of March 31, 2021, and December 31, 2020, we owed a total of $13,740 to a related party through trade payables incurred in the normal course of business. These amounts are shown as a separate related-party payable on the balance sheet as of each reporting date. During the three months ended March 31, 2021, we had a net increase in deposits with a related-party inventory supplier totaling $13,674. The related party is an entity controlled by our chief executive officer. All transactions were at a 2% markup over the related-party’s cost paid for inventory in arm’s-length transactions. Total inventory purchases from the related party were $277,275 during the three months ended March 31, 2021. |
Other Accrued Liabilities
Other Accrued Liabilities | 3 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
Other Accrued Liabilities | NOTE 6—OTHER ACCRUED LIABILITIES Accrued tax liabilities consist of delinquent payroll taxes, interest, and penalties owed by us to the Internal Revenue Service (“IRS”) and other tax entities. Accrued liabilities consist of the following: March 31, 2021 December 31, 2020 Tax liabilities $ 555,169 $ 557,894 Other 891,816 796,645 Total $ 1,446,985 $ 1,354,539 Other accrued liabilities as of March 31, 2021, and December 31, 2020, include a non-interest-bearing payable totaling $45,000 that is due on demand. Additionally, other accrued liabilities as of March 31, 2021, and December 31, 2020, include customer deposits totaling $840,816 and $751,645, respectively. Accrued payroll and compensation liabilities consist of the following: March 31, 2021 December 31, 2020 Stock option expenses $ - $ - Director fees 135,000 135,000 Bonus expenses 121,858 121,858 Commissions 2,148 2,148 Administrative payroll 3,969,237 3,874,340 Total $ 4,228,243 $ 4,133,346 Stock option expenses consist of employee stock option expenses. A total of $86,250 was accrued during the three ended March 31, 2021as wages for our chief executive officer. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 7—COMMITMENTS AND CONTINGENCIES Litigation and Claims Various vendors, service providers, and others have asserted legal claims in previous years. These creditors generally are not actively seeking collection of amounts due them, and we have determined that the probability of realizing any loss on these claims is remote and will seek to compromise and settle at a deep discount any of such claims that are asserted for collection. These amounts are included in our current liabilities. We have not accrued any liability for claims or judgments that we have determined to be barred by the applicable statute of limitations, which generally is eight years for judgments in Utah. Playboy Enterprises, Inc. Our affiliate, Play Beverages, LLC, filed suit against Playboy Enterprises, Inc., in Cook County, Illinois, Circuit Court in October 2012 asserting numerous claims, including breach of contract and tortious interference. Playboy responded with a counterclaim of breach of contract and trademark infringement. After proceedings in October 2016, the court awarded a judgment to Playboy of $6.6 million against Play Beverages and CirTran Beverage Corp., our subsidiary. The court denied our motion for a new trial and awarded Playboy treble patent infringement damages and attorney’s fees. We filed a notice of appeal in July 2017 and again in March 2018. Playboy has initiated collection efforts but has recovered no funds. In September 2018, the appellate court affirmed the judgment of the circuit court. We have accrued $17,205,599 as of March 31, 2021, and December 31, 2020, related to this judgment, which is included in liabilities in discontinued operations. Delinquent Payroll Taxes, Interest, and Penalties In November 2004, the IRS accepted our amended offer in compromise (the “Offer”) to settle delinquent payroll taxes, interest, and penalties, which requires us to pay $500,000, remain current in our payment of taxes for five years, and forego claiming any net operating losses for the years 2001 through 2015 or until we pay taxes on future profits in an amount equal to the taxes of $1,455,767 waived by the Offer. In June 2013, we entered into a partial installment agreement to pay $768,526 in unpaid 2009 payroll taxes, which requires us to pay the IRS 5% of cash deposits. The monthly payments are to continue until the account balances are paid in full or until the collection statute of limitation expired on October 6, 2020. We are currently in communication with the IRS regarding the statute of limitations on this settlement and appropriate next steps. There were $673,645 and $673,645 due as of March 31, 2021, and December 31, 2020, respectively. Employment Agreements We engage Iehab Hawatmeh, our president and chief executive officer, through an employment agreement entered in August 2009 and amended in September 2017. In July 2017, Mr. Hawatmeh had resigned all positions with us to pursue other business activities, thereby effectively terminating the agreement. However, the amendment to his employment agreement in September 2017 reinstated Mr. Hawatmeh to his previous positions, with a salary in an amount to be determined. Among other things, the reinstated employment agreement: (a) grants options to purchase a minimum of 6,000 shares of our stock each year, with an exercise price equal to the market price of our common stock as of the grant date, for the maximum term allowed under our stock option plan; (b) provides for health insurance coverage, cell phone, car allowance, life insurance, and director and officer liability insurance, as well as any other bonus approved by our board; and (c) includes additional incentive compensation as follows: (i) a quarterly bonus equal to 5% of our earnings before interest, taxes, depreciation and amortization for the applicable quarter; (ii) bonuses equal to 1% of the net purchase price of any acquisitions we complete that are directly generated and arranged by Mr. Hawatmeh; and (iii) an annual bonus (payable quarterly) equal to 1% of our gross sales of all products, net of returns and allowances. On January 1, 2020, we resumed accruing wages for our CEO. A total of $86,250 was accrued during the three months ended March 31, 2021. We also have an oral agreement with our other director that requires us to issue options to purchase 2,000 shares of our common stock each year. During the three months ended March 31, 2021 and 2020, we granted options to purchase 0 and 8,000 shares of common stock to Mr. Hawatmeh and Ms. Hollinger, respectively. We recorded expenses totaling $0 and $56 during the three months ended March 31, 2021 and 2020, respectively, for these options. We have no other agreements requiring the grant of options. License Agreements We have entered into agreements whereby we are required to pay certain royalties for the manufacture and distribution of licensed products. Fees are based on a percentage of sales and remitted quarterly. Such costs are included in cost of sales for financial reporting purposes. |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2021 | |
Notes Payable [Abstract] | |
Notes Payable | NOTE 8—NOTES PAYABLE Notes payable consisted of the following: March 31, 2021 December 31, 2020 Note payable to former service provider for past due account payable (current) $ 90,000 $ 90,000 Note payable for settlement of debt (long term) 500,000 500,000 Small Business Administration loan 156,000 156,000 Total $ 746,000 $ 746,000 There was $221,113 and $208,078 of accrued interest due on these notes as of March 31, 2021, and December 31, 2020, respectively. |
Convertible Debentures
Convertible Debentures | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Convertible Debentures | NOTE 9—CONVERTIBLE DEBENTURES Convertible debentures consisted of the following: March 31, 2021 December 31, 2020 Convertible debenture, 5% stated interest rate, secured by all of our assets, due on May 30, 2021 $ 200,000 $ 200,000 Convertible debenture, 5% stated interest rate, secured by all of our assets, due on December 8, 2021 25,000 25,000 Convertible debenture, 5% stated interest rate, secured by all of our assets, due on February 8, 2021 25,000 25,000 Convertible debenture, 5% stated interest rate, secured by all of our assets, due on December 8, 2021 25,000 25,000 Convertible debenture, 5% stated interest rate, secured by all of our assets, due on April 30, 2027 2,390,528 2,390,528 Subtotal $ 2,665,528 $ 2,665,528 Less: discounts (590,820 ) (613,428 ) Total $ 2,074,708 $ 2,052,100 Less: current portion (264,284 ) (264,284 ) Long term portion $ 1,810,424 $ 1,787,816 The convertible debentures and accrued interest are convertible into shares of our common stock at the lower of $100 or the lowest bid price for the 20 trading days prior to conversion. During the three months ended March 31, 2021, the convertible debenture holder converted $6,750 of accrued but unpaid interest into 225,000 shares of our common stock. As of March 31, 2021, and December 31, 2020, we had accrued interest on the convertible debentures totaling $1,561,373 and $1,528,511, respectively, of which $43,350 and $41,960 was current and $1,516,213 and $1,486,551 was long term, respectively. As of March 31, 2021, and December 31, 2020, the debentures, including accrued but unpaid interest, were convertible into 140,896,716 and 167,761,552 shares of our common stock. |
Derivative Liabilities
Derivative Liabilities | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liabilities | NOTE 10—DERIVATIVE LIABILITIES As discussed in Note 9 - Convertible Debentures Volatility 107.8% - 110.6% Risk-free rates 0.08% - 0.86% Stock price $ 0.0598 Remaining life 0.00- 6.08 years The fair values of the derivative instruments are measured each quarter, which resulted in a loss of $127,791 and$69,214 during the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, and December 31, 2020, the fair market value of the derivatives aggregated $1,050,445 and $922,654, respectively. |
Stockholders' Deficit
Stockholders' Deficit | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Stockholders' Deficit | NOTE 11—STOCKHOLDERS’ DEFICIT We are authorized to issue up to 100,000,000 shares of $0.001 par value common stock. During the three months ended March 31, 2021, we issued a total of 225,000 shares of common stock for the conversion of $6,750 of accrued interest. We had a total of 4,945,417and 4,720,417 common shares issued and outstanding as of March 31, 2021, and December 31, 2020, respectively. |
Stock Options and Warrants
Stock Options and Warrants | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Stock Options and Warrants | NOTE 12—STOCK OPTIONS AND WARRANTS Stock Incentive Plans During the three months ended March 31, 2021 and 2020, we granted to employees 0 and 8,000 options, respectively, to purchase shares of common stock. The 8,000 options granted during the three months ended March 31, 2020, were valued using the following assumptions: estimated five-year term, estimated volatility of 91%, and a risk-free rate of 1.61%. As of March 31, 2021, and December 31, 2020, we had no unrecognized compensation related to outstanding options that have not yet vested at year-end that would be recognized in subsequent periods. See Note 6 – Other Accrued Liabilities During the three months ended March 31, 2021, we did not issue options to purchase common stock, and a total of 8,000 options expired unexercised. As of March 31, 2021, there were 32,000 options issued and vested with a weighted average exercise price of $0.08 and a weighted average remaining life of 2.35 years. Outstanding options as of March 31, 2021, consisted of: Exercise Price Count Average Exercise Remaining Life Exercisable $ 0.01 8,000 $ 0.01 3.77 8,000 $ 0.10 24,000 $ 0.10 1.87 24,000 Total 32,000 $ 0.08 2.35 32,000 |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | NOTE 13—DISCONTINUED OPERATIONS At October 21, 2016, we exited the beverage licensing and distribution business. The assets and liabilities associated with this business are displayed as assets and liabilities from discontinued operations as of March 31, 2021, ad December 31, 2020, as a result. Additionally, the revenues and costs associated with this business are displayed as losses from discontinued operations for the three months ended March 31, 2021 and 2020. Total assets and liabilities included in discontinued operations were as follows: March 31, 2021 December 31, 2020 Assets from Discontinued Operations: Cash $ - - Total assets from discontinued operations $ - $ - Liabilities from Discontinued Operations: Accounts payable $ 19,456,998 $ 19,456,998 Accrued liabilities 589,380 589,380 Accrued interest 1,214,067 1,176,226 Accrued payroll and compensation expense 131,108 131,108 Current maturities of long-term debt 239,085 239,085 Related-party payable 1,776,250 1,776,250 Short-term advances payable 2,784,773 2,784,773 Total liabilities from discontinued operations $ 26,191,661 $ 26,153,820 Net loss from discontinued operations for the three months ended March 31, 2021 and 2020, were comprised of the following components: Three months ended March 31, 2021 2020 Net sales $ - $ - Cost of sales - - Gross profit - - Operating expenses Selling, general and administrative expenses - - Total operating expenses - - Other income (expense) Other income - - Interest expense (37,841 ) (38,261 ) Total other expense (37,841 ) (38,261 ) Net loss from discontinued operations $ (37,841 ) $ (38,261 ) |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 14—SUBSEQUENT EVENTS We have evaluated all events occurring subsequent to the financial statements and determined there are no additional items to disclose. On March 11, 2020, the World Health Organization characterized COVID-19 as a global pandemic. This situation is ongoing, and we are monitoring it closely. Although our response to the COVID-19 pandemic continues to evolve, we have taken measures to mitigate the impact on our business operations and overall financial performance. We are also constantly evaluating and responding to the impact of the pandemic on our supply chain as compared to product demand. In addition, we actively monitor COVID-19-related developments and may take further actions that alter our business operations as may be required by federal, state, or local authorities or that we determine are in the best interests of our employees, customers, vendors, and stockholders. The effects of these operational modifications will be reflected in current and future reporting periods. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation We consolidate all of our majority-owned subsidiaries, companies over which we exercise control through majority voting rights, and companies in which we have a variable interest and we are the primary beneficiary. We account for our investments in common stock of other companies that we do not control, but over which we can exert significant influence, using the cost method. The consolidated financial statements as of and for the periods ended March 31, 2021 and 2020, include the accounts of CirTran Corporation and our wholly owned subsidiaries: CirTran Products Corp., LBC Products, Inc., and CirTran - Asia, Inc. All intercompany balances and transactions have been eliminated. |
Use of Estimates | Use of Estimates In preparing the financial statements in accordance with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. |
Revenue Recognition | Revenue Recognition We follow Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers During the three months ended March 31, 2021, we recognized revenue of $15,000 related to the performance obligations under product development service agreements with customers. These contracts are long term in nature and revenue is recognized at certain milestone intervals upon our delivery and customer acceptances of work product related to those milestones, namely product design, packaging, branding display, and prototypes. There were no costs to obtain the contracts identified and, as such, no asset has been recorded for customer acquisition costs. Additionally, we have not recognized impairment losses related to the receivables from these contracts during the three months ended March 31, 2021. Additionally, we recognized revenues of $604,399 during the three months ended March 31, 2021, related to the delivery of product to our customers. Each delivery is based on a unique customer purchase order which is considered to be a stand-alone contract that we retain the right to accept or reject. Upon acceptance, we oblige delivery of such product to the customer at an agreed-upon place, time, and price. We recognize revenue under the unique purchase order contract upon fulfillment of our performance obligations therein, typically limited to the delivery of product. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid, short-term investments with an original maturity of three months or less to be cash equivalents. We did not hold any cash equivalents as of March 31, 2021, or December 31, 2020. |
Leases | Leases In February 2016, the FASB issued Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842), Leases, The adoption of the standard resulted in recording right-of-use (“ROU”) assets and operating lease liabilities of $43,511 as of March 31, 2021. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As the lease does not provide an implicit rate, we use our incremental borrowing rate based on information available at the commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Lease terms may include options to extend or terminate the lease when it is reasonably certain we will exercise that option. Although considered, we determined it was appropriate to exclude future renewal terms from the capitalization of our operating lease. We have one lease in effect requiring minimum monthly payments of $2,500 through October 2022. We have determined the appropriate discount rate to be 5% based on our other borrowings secured by assets. A summary of future payments due under the terms of the lease as of March 31, 2021, is as follows: Total future payments $ 45,000 Implied interest (1,489 ) Operating lease liability as of December 31, 2021 $ 43,511 |
Investment in Securities | Investment in Securities Our cost-method investment consists of an investment in a private digital multi-media technology company that totaled $300,000 at March 31, 2021, and December 31, 2020. As we owned less than 20% of that company’s stock as of each date, and no significant influence or control exists, the investment is accounted for using the cost method. We evaluated the investment for impairment and determined there was none during the periods presented. |
Property and Equipment | Property and Equipment We incur certain costs associated with the design and development of molds and dies for our contract-manufacturing segment. These costs are held as deposits on the balance sheet until the molds or dies are finished and ready for use. At that point, the costs are included as part of production equipment in property and equipment and are amortized over their useful lives. We hold title to all molds and dies used in the manufacture of products. The capitalized cost, net of accumulated depreciation, associated with molds and dies included in property and equipment at March 31, 2021, and December 31, 2020, was $19,492 and $18,299, respectively. Depreciation expense is recognized in amounts equal to the cost of depreciable assets over estimated service lives. Leasehold improvements are amortized over the shorter of the life of the lease or the service life of the improvements. The straight-line method of depreciation and amortization is followed for financial reporting purposes. Maintenance, repairs, and renewals that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. Gains or losses on dispositions of property and equipment are included in operating results. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets We review our long-lived assets, including intangibles, for impairment when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. At each balance sheet date, we evaluate whether events and circumstances have occurred that indicate possible impairment. We use an estimate of future undiscounted net cash flows from the related asset or group of assets over their remaining life in measuring whether the assets are recoverable. We did not record expenses for the impairment of long-lived assets during the periods ended March 31, 2021 or 2020. |
Financial Instruments with Derivative Features | Financial Instruments with Derivative Features We do not hold or issue derivative instruments for trading purposes. However, we have financial instruments that are considered derivatives or contain embedded features subject to derivative accounting. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in our balance sheet. We measure these instruments at their estimated fair value and recognize changes in their estimated fair value in results of operations during the period of change. We have estimated the fair value of these embedded derivatives using a Monte Carlo simulation. The fair values of the derivative instruments are measured each reporting period. |
Inventories | Inventories Inventories are stated at the lower of average cost or net realizable value. Cost on manufactured inventories includes labor, material, and overhead. Overhead cost is based on indirect costs allocated to cost of sales, work-in-process inventory, and finished goods inventory. Indirect overhead costs have been charged to cost of sales or capitalized as inventory, based on management’s estimate of the benefit of indirect manufacturing costs to the manufacturing process. Inventories consist of finished goods as we do not carry raw materials for manufacturing products. When there is evidence that the inventory’s value is less than original cost, the inventory is reduced to market value. We determine market value on current resale amounts and whether technological obsolescence exists. We will seek agreements with manufacturing customers that require them to purchase their inventory items in the event they cancel their business with us. From time to time, we will place deposits on inventory to be delivered in the future. These deposits are carried as a separate balance sheet component and totaled $11,639 (non-related-party) and $333,007 (related-party) as of March 31, 2021, and $53,900 (non-related-party) and $319,333 (related-party) as of December 31, 2020. Inventory balances consisted of the following: March 31, 2021 December 31, 2020 Finished goods $ 673,418 $ 526,372 Raw materials 45,240 40,803 (241,923 ) (241,923 ) Total $ 476,735 $ 325,252 |
Stock-Based Compensation | Stock-Based Compensation We have outstanding stock options to directors and employees, which are described more fully in Note 12 Stock Options and Warrants Accounting for Stock Issued to Employees Improvements to Nonemployee Share-Based Payment Accounting Stock-based employee compensation was $0and $56 for the three months ended March 31, 2021 and 2020, respectively. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts reported in the accompanying consolidated financial statements for cash, notes payable, and accounts payable approximate fair value because of the immediate or short-term maturities of these financial instruments. ASC 820-10-15, Fair Value Measurement-Overall-Scope and Scope Exceptions Level 1—Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2—Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3—Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. Accounts payable and related-party payables have fair values that approximate the carrying value due to the short-term nature of these instruments. Derivative liabilities are measured using level 3 inputs. Total Fair Quoted Significant Significant Derivative liabilities $ 1,050,445 $ - $ - $ 1,050,445 Total Fair Quoted Significant Significant Derivative liabilities $ 922,654 $ - $ - $ 922,654 |
Loss Per Share | Loss per Share Basic loss per share (EPS) is calculated by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding during each period. Diluted EPS is similarly calculated, except that the weighted-average number of common shares outstanding would include common shares that may be issued subject to existing rights with dilutive potential when applicable. There were 140,896,716 potentially issuable shares from the conversions of convertible debentures outstanding that were excluded in dilutive outstanding shares for the three months ended March 31, 2021, due to the anti-dilutive effect these would have on net loss per share. There were 254,654,532 |
Short-Term Advances | Short-term Advances We have short-term advances with various individuals. These advances are due upon demand, carry no interest, and are not collateralized. These advances are classified as short-term liabilities. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options, |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Future Minimum Lease Payments Due | A summary of future payments due under the terms of the lease as of March 31, 2021 is as follows: Total future payments $ 45,000 Implied interest (1,489 ) Operating lease liability as of December 31, 2021 $ 43,511 |
Schedule of Inventory | Inventory balances consisted of the following: March 31, 2021 December 31, 2020 Finished goods $ 673,418 $ 526,372 Raw materials 45,240 40,803 (241,923 ) (241,923 ) Total $ 476,735 $ 325,252 |
Schedule of Financial Assets and Liabilities Carried at Fair Valued Measured on Recurring Basis | Derivative liabilities are measured using level 3 inputs. Total Fair Quoted Significant Significant Derivative liabilities $ 1,050,445 $ - $ - $ 1,050,445 Total Fair Quoted Significant Significant Derivative liabilities $ 922,654 $ - $ - $ 922,654 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment and Estimated Service Lives | Property and equipment and estimated service lives consist of the following: March 31, 2021 December 31, 2020 Useful Life (years) Furniture and office equipment $ 1,624 $ - 5-10 Vehicles 18,672 18,672 3-7 Total 20,296 18,672 Less: accumulated depreciation (804 ) (373 ) Property and equipment, net $ 19,492 $ 18,299 |
Other Accrued Liabilities (Tabl
Other Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities | Accrued liabilities consist of the following: March 31, 2021 December 31, 2020 Tax liabilities $ 555,169 $ 557,894 Other 891,816 796,645 Total $ 1,446,985 $ 1,354,539 |
Schedule of Accrued Payroll and Compensation Liabilities | Accrued payroll and compensation liabilities consist of the following: March 31, 2021 December 31, 2020 Stock option expenses $ - $ - Director fees 135,000 135,000 Bonus expenses 121,858 121,858 Commissions 2,148 2,148 Administrative payroll 3,969,237 3,874,340 Total $ 4,228,243 $ 4,133,346 |
Notes Payable (Tables)
Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | Notes payable consisted of the following: March 31, 2021 December 31, 2020 Note payable to former service provider for past due account payable (current) $ 90,000 $ 90,000 Note payable for settlement of debt (long term) 500,000 500,000 Small Business Administration loan 156,000 156,000 Total $ 746,000 $ 746,000 |
Convertible Debentures (Tables)
Convertible Debentures (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Convertible Debentures | Convertible debentures consisted of the following: March 31, 2021 December 31, 2020 Convertible debenture, 5% stated interest rate, secured by all of our assets, due on May 30, 2021 $ 200,000 $ 200,000 Convertible debenture, 5% stated interest rate, secured by all of our assets, due on December 8, 2021 25,000 25,000 Convertible debenture, 5% stated interest rate, secured by all of our assets, due on February 8, 2021 25,000 25,000 Convertible debenture, 5% stated interest rate, secured by all of our assets, due on December 8, 2021 25,000 25,000 Convertible debenture, 5% stated interest rate, secured by all of our assets, due on April 30, 2027 2,390,528 2,390,528 Subtotal $ 2,665,528 $ 2,665,528 Less: discounts (590,820 ) (613,428 ) Total $ 2,074,708 $ 2,052,100 Less: current portion (264,284 ) (264,284 ) Long term portion $ 1,810,424 $ 1,787,816 |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Liabilities at Fair Value | We have estimated the fair value of these embedded derivatives for convertible debentures and associated warrants using a Monte Carlo simulation as of March 31, 2021, using the following assumptions: Volatility 107.8% - 110.6% Risk-free rates 0.08% - 0.86% Stock price $ 0.0598 Remaining life 0.00- 6.08 years |
Stock Options and Warrants (Tab
Stock Options and Warrants (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Schedule of Stock Options Outstanding | Outstanding options as of March 31, 2021, consisted of: Exercise Price Count Average Exercise Remaining Life Exercisable $ 0.01 8,000 $ 0.01 3.77 8,000 $ 0.10 24,000 $ 0.10 1.87 24,000 Total 32,000 $ 0.08 2.35 32,000 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Discontinued Operations | Total assets and liabilities included in discontinued operations were as follows: March 31, 2021 December 31, 2020 Assets from Discontinued Operations: Cash $ - - Total assets from discontinued operations $ - $ - Liabilities from Discontinued Operations: Accounts payable $ 19,456,998 $ 19,456,998 Accrued liabilities 589,380 589,380 Accrued interest 1,214,067 1,176,226 Accrued payroll and compensation expense 131,108 131,108 Current maturities of long-term debt 239,085 239,085 Related-party payable 1,776,250 1,776,250 Short-term advances payable 2,784,773 2,784,773 Total liabilities from discontinued operations $ 26,191,661 $ 26,153,820 Net loss from discontinued operations for the three months ended March 31, 2021 and 2020, were comprised of the following components: Three months ended March 31, 2021 2020 Net sales $ - $ - Cost of sales - - Gross profit - - Operating expenses Selling, general and administrative expenses - - Total operating expenses - - Other income (expense) Other income - - Interest expense (37,841 ) (38,261 ) Total other expense (37,841 ) (38,261 ) Net loss from discontinued operations $ (37,841 ) $ (38,261 ) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Cash equivalents | |||
Right-of-use asset | 43,511 | 50,409 | |
Operating lease liabilities | 43,511 | ||
Lease monthly payments | $ 2,500 | ||
Operating lease discount rate | 5.00% | ||
Investment in securities at cost | $ 300,000 | 300,000 | |
Property and equipment, net of accumulated depreciation | $ 19,492 | 18,299 | |
Depreciation method | The straight-line method of depreciation and amortization is followed for financial reporting purposes. | ||
Impairment of long-lived assets | |||
Deposits on inventory | 11,639 | 53,900 | |
Deposits on inventory - related party | 333,007 | $ 319,333 | |
Stock-based employee compensation | $ 0 | $ 56 | |
Potentially issuable common shares | 140,896,716 | 254,654,532 | |
Maximum [Member] | |||
Equity ownership percentage | 20.00% | ||
Product Development Service [Member] | |||
Revenue recognized | $ 15,000 | ||
Product Delivery to Customers [Member] | |||
Revenue recognized | $ 604,399 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Summary of Future Minimum Lease Payments Due (Details) | Mar. 31, 2021USD ($) |
Accounting Policies [Abstract] | |
Total future payments | $ 45,000 |
Implied interest | (1,489) |
Operating lease liability as of December 31, 2021 | $ 43,511 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Inventory (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Accounting Policies [Abstract] | ||
Finished goods | $ 673,418 | $ 526,372 |
Raw materials | 45,240 | 40,803 |
Reserves for obsolescence | (241,923) | (241,923) |
Total | $ 476,735 | $ 325,252 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Schedule of Financial Assets and Liabilities Carried at Fair Valued Measured on Recurring Basis (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Derivative liabilities | $ 1,050,445 | $ 922,654 |
Quoted Prices in Active Markets Level 1 [Member] | ||
Derivative liabilities | ||
Significant Other Observable Inputs Level 2 [Member] | ||
Derivative liabilities | ||
Significant Unobservable Inputs Level 3 [Member] | ||
Derivative liabilities | $ 1,050,445 | $ 922,654 |
Going Concern and Realization_2
Going Concern and Realization of Assets (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Working capital deficiency | $ 37,384,422 | $ 37,109,751 | |
Net loss from continuing operations | (289,714) | $ (277,111) | |
Accumulated deficit | $ (78,257,227) | $ (77,929,672) |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 431 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment and Estimated Service Lives (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 20,296 | $ 18,672 |
Less: accumulated depreciation | (804) | (373) |
Property and equipment, net | 19,492 | 18,299 |
Furniture and Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 1,624 | |
Furniture and Office Equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life (years) | 5 years | |
Furniture and Office Equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life (years) | 10 years | |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 18,672 | $ 18,672 |
Vehicles [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life (years) | 3 years | |
Vehicles [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life (years) | 7 years |
Related-Party Transactions (Det
Related-Party Transactions (Details Narrative) - USD ($) | Mar. 31, 2008 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2007 | Dec. 31, 2020 |
Related Party Transaction [Line Items] | |||||
Promissory notes payable | $ 746,000 | $ 746,000 | |||
Repayments to related parties | 15,000 | $ 146,203 | |||
Related party, expenses paid | (87,625) | 4,000 | |||
Short-term advances payable - related parties | 200,151 | 287,776 | |||
Related-party payable | 13,740 | $ 13,740 | |||
Increase in deposits on inventory - related party | $ 13,674 | $ 125,000 | |||
Iehab Hawatmeh [Member] | |||||
Related Party Transaction [Line Items] | |||||
Number of stock options held | 24,000 | 30,000 | |||
Unsecured advances payable to related party | $ 780,903 | $ 868,528 | |||
Iehab Hawatmeh [Member] | Employee Agreement [Member] | |||||
Related Party Transaction [Line Items] | |||||
Number of shares purchased to grant options | 6,000 | ||||
Number of options expired during period | 6,000 | ||||
Number of stock options held | |||||
CEO [Member] | |||||
Related Party Transaction [Line Items] | |||||
Inventory percentage | 2.00% | ||||
Inventory purchase related party | $ 277,275 | ||||
Promissory Notes Payable [Member] | |||||
Related Party Transaction [Line Items] | |||||
Promissory note percentage | 12.00% | ||||
Debt instrument, face amount | 72,466 | 72,466 | |||
Promissory notes payable | $ 315,000 | ||||
Proceeds from promissory notes | $ 300,000 | ||||
Borrowing fee, percentage | 5.00% | ||||
Debt instrument, maturity date | Apr. 30, 2008 | ||||
Promissory Notes Payable [Member] | Shareholder One [Member] | |||||
Related Party Transaction [Line Items] | |||||
Promissory notes payable | $ 105,000 | ||||
Promissory Notes Payable [Member] | Shareholder Two [Member] | |||||
Related Party Transaction [Line Items] | |||||
Promissory notes payable | 105,000 | ||||
Promissory Notes Payable [Member] | Shareholders Three [Member] | |||||
Related Party Transaction [Line Items] | |||||
Promissory notes payable | $ 105,000 | ||||
President [Member] | |||||
Related Party Transaction [Line Items] | |||||
Promissory note percentage | 10.00% | ||||
Debt conversion of amount | $ 300,000 | ||||
Debt instrument, due date description | The note was due on demand after May 2008 | ||||
Debt instrument, face amount | $ 151,833 | $ 151,833 |
Other Accrued Liabilities (Deta
Other Accrued Liabilities (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Other accrued liabilities | $ 45,000 | $ 45,000 |
Advance customer deposits | 840,816 | $ 751,645 |
CEO [Member] | ||
Accrued wages | $ 86,250 |
Other Accrued Liabilities - Sch
Other Accrued Liabilities - Schedule of Accrued Liabilities (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Tax liabilities | $ 555,169 | $ 557,894 |
Other | 891,816 | 796,645 |
Total | $ 1,446,985 | $ 1,354,539 |
Other Accrued Liabilities - S_2
Other Accrued Liabilities - Schedule of Accrued Payroll and Compensation Liabilities (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Stock option expenses | ||
Director fees | 135,000 | 135,000 |
Bonus expenses | 121,858 | 121,858 |
Commissions | 2,148 | 2,148 |
Administrative payroll | 3,969,237 | 3,874,340 |
Total | $ 4,228,243 | $ 4,133,346 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||||
Sep. 30, 2017 | Jun. 30, 2013 | Nov. 30, 2004 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Commitments and Contingencies [Line Items] | ||||||
Stock option expense | $ 0 | $ 56 | ||||
CEO [Member] | ||||||
Commitments and Contingencies [Line Items] | ||||||
Accrued wages | $ 86,250 | |||||
Employment Agreement [Member] | President [Member] | ||||||
Commitments and Contingencies [Line Items] | ||||||
Options to purchase shares | 6,000 | |||||
Quarterly bonus as stated percentage of earnings before interest, taxes, depreciation and amortization for the applicable quarter | 5.00% | |||||
Bonus percentage of net purchase price of acquisitions completed | 1.00% | |||||
Annual bonus percentage of gross sales, net of returns and allowances | 1.00% | |||||
Employment Agreement [Member] | Mr. Hawatmeh and Ms. Hollinger [Member] | ||||||
Commitments and Contingencies [Line Items] | ||||||
Options to purchase shares | 0 | 8,000 | ||||
Oral Agreement [Member] | ||||||
Commitments and Contingencies [Line Items] | ||||||
Options to purchase shares | 2,000 | |||||
Delinquent Payroll Taxes Interest and Penalties [Member] | ||||||
Commitments and Contingencies [Line Items] | ||||||
Payment for acceptance of delinquent payroll taxes, interest and penalties offer | $ 500,000 | |||||
Period of required offer to remain current in payment of taxes | 5 years | |||||
Amount of taxes waived | $ 1,455,767 | |||||
Unpaid 2009 payroll taxes | $ 768,526 | |||||
IRS of cash deposits | 5.00% | |||||
Due to related party | $ 673,645 | $ 673,645 | ||||
Playboy Enterprises, Inc. [Member] | ||||||
Commitments and Contingencies [Line Items] | ||||||
Ligation settlement amount awarded | 6,600,000 | |||||
Accrued claim amount | $ 17,205,599 | $ 17,205,599 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Notes Payable [Member] | ||
Short-term Debt [Line Items] | ||
Accrued interest on notes payable | $ 221,113 | $ 208,078 |
Notes Payable - Schedule of Not
Notes Payable - Schedule of Notes Payable (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Debt Disclosure [Abstract] | ||
Note payable to former service provider for past due account payable (current) | $ 90,000 | $ 90,000 |
Note payable for settlement of debt (long term) | 500,000 | 500,000 |
Small Business Administration loan | 156,000 | 156,000 |
Total | $ 746,000 | $ 746,000 |
Convertible Debentures (Details
Convertible Debentures (Details Narrative) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021USD ($)Integer$ / sharesshares | Dec. 31, 2020USD ($)shares | |
Short-term Debt [Line Items] | ||
Lowest bid price | $ / shares | $ 100 | |
Debt convertible, threshold trading days | Integer | 20 | |
Accrued interest on convertible debentures, current | $ 2,937,004 | $ 2,824,948 |
Convertible Debentures [Member] | ||
Short-term Debt [Line Items] | ||
Accrued interest on convertible debentures | $ 1,561,373 | $ 1,528,511 |
Debentures were convertible into common shares | shares | 140,896,716 | 167,761,552 |
Accrued interest on convertible debentures, current | $ 43,350 | $ 41,960 |
Accrued interest on convertible debentures, noncurrent | 1,516,213 | $ 1,486,551 |
Convertible Debenture Holder [Member] | ||
Short-term Debt [Line Items] | ||
Accrued interest on convertible debentures | $ 6,750 | |
Debentures were convertible into common shares | shares | 225,000 |
Convertible Debentures - Schedu
Convertible Debentures - Schedule of Convertible Debentures (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Short-term Debt [Line Items] | ||
Subtotal | $ 2,665,528 | $ 2,665,528 |
Less: discounts | (590,820) | (613,428) |
Total | 2,074,708 | 2,052,100 |
Less: current portion | (264,284) | (264,284) |
Long term portion | 1,810,424 | 1,787,816 |
Convertible Debenture One [Member] | ||
Short-term Debt [Line Items] | ||
Subtotal | 200,000 | 200,000 |
Convertible Debenture Two [Member] | ||
Short-term Debt [Line Items] | ||
Subtotal | 25,000 | 25,000 |
Convertible Debenture Three [Member] | ||
Short-term Debt [Line Items] | ||
Subtotal | 25,000 | 25,000 |
Convertible Debenture Four [Member] | ||
Short-term Debt [Line Items] | ||
Subtotal | 25,000 | 25,000 |
Convertible Debenture Five [Member] | ||
Short-term Debt [Line Items] | ||
Subtotal | $ 2,390,528 | $ 2,390,528 |
Convertible Debentures - Sche_2
Convertible Debentures - Schedule of Convertible Debentures (Details) (Parenthetical) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Convertible Debenture One [Member] | ||
Convertible debenture, stated interest rate | 5.00% | 5.00% |
Convertible debenture, maturity date | May 30, 2021 | May 30, 2021 |
Convertible Debenture Two [Member] | ||
Convertible debenture, stated interest rate | 5.00% | 5.00% |
Convertible debenture, maturity date | Dec. 8, 2021 | Dec. 8, 2021 |
Convertible Debenture Three [Member] | ||
Convertible debenture, stated interest rate | 5.00% | 5.00% |
Convertible debenture, maturity date | Feb. 8, 2021 | Feb. 8, 2021 |
Convertible Debenture Four [Member] | ||
Convertible debenture, stated interest rate | 5.00% | 5.00% |
Convertible debenture, maturity date | Dec. 8, 2021 | Dec. 8, 2021 |
Convertible Debenture Five [Member] | ||
Convertible debenture, stated interest rate | 5.00% | 5.00% |
Convertible debenture, maturity date | Apr. 30, 2027 | Apr. 30, 2027 |
Derivative Liabilities (Details
Derivative Liabilities (Details Narrative) | 3 Months Ended | ||
Mar. 31, 2021USD ($)Integer$ / shares | Mar. 31, 2020USD ($) | Dec. 31, 2020USD ($) | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Convertible debentures | $ 2,665,528 | $ 2,665,528 | |
Terms of conversion feature | Convertible at the holder's option into common stock of the company at the lesser of $100 (notes one through four) or $0.10 (note five) or the lowest closing bid price in the prior 20 trading days. | ||
Lowest bid price | $ / shares | $ 100 | ||
Debt convertible, threshold trading days | Integer | 20 | ||
Gain (loss) on derivative valuation | $ (127,791) | $ (69,214) | |
Derivative liability | $ 1,050,445 | $ 922,654 |
Derivative Liabilities - Schedu
Derivative Liabilities - Schedule of Derivative Liabilities at Fair Value (Details) | 3 Months Ended |
Mar. 31, 2021$ / shares | |
Derivative liability, stock price per share | $ 0.0598 |
Volatility [Member] | Minimum [Member] | |
Derivative liability, measurement input percentage | 107.8 |
Volatility [Member] | Maximum [Member] | |
Derivative liability, measurement input percentage | 110.6 |
Risk-free Rates [Member] | Minimum [Member] | |
Derivative liability, measurement input percentage | 0.08 |
Risk-free Rates [Member] | Maximum [Member] | |
Derivative liability, measurement input percentage | 0.86 |
Remaining Life [Member] | Minimum [Member] | |
Derivative liability, remaining life | 0 years |
Remaining Life [Member] | Maximum [Member] | |
Derivative liability, remaining life | 6 years 29 days |
Stockholders' Deficit (Details
Stockholders' Deficit (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock issued for conversion of accrued interest | $ 6,750 | |
Common stock, shares issued | 4,945,417 | 4,720,417 |
Common stock, shares outstanding | 4,945,417 | 4,720,417 |
Common Stock [Member] | ||
Common stock issued for conversion of accrued interest, shares | 225,000 | |
Common stock issued for conversion of accrued interest | $ 225 |
Stock Options and Warrants (Det
Stock Options and Warrants (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized compensation | |||
Options to purchase common stock | |||
Options expired unexercised | 8,000 | ||
Options issued | 32,000 | ||
Vested weighted average exercise price | $ 0.08 | ||
Weighted average remaining life | 2 years 4 months 6 days | ||
Stock Incentive Plans [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Fair market value assumptions estimated term | 5 years | ||
Fair market value assumptions estimated volatility | 91.00% | ||
Fair market value assumptions risk-free rate | 1.61% | ||
Stock Incentive Plans [Member] | Employees [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of stock options, granted during period | 0 | 8,000 |
Stock Options and Warrants - S
Stock Options and Warrants - Schedule of Stock Options Outstanding (Details) | 3 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Number of Shares Outstanding | 32,000 |
Average Exercise Price | $ / shares | $ 0.08 |
Remaining Life | 2 years 4 months 6 days |
Exercisable | 32,000 |
Exercise Price Range One [Member] | |
Exercise Price | $ / shares | $ 0.01 |
Number of Shares Outstanding | 8,000 |
Average Exercise Price | $ / shares | $ 0.01 |
Remaining Life | 3 years 9 months 7 days |
Exercisable | 8,000 |
Exercise Price Range Two [Member] | |
Exercise Price | $ / shares | $ 0.10 |
Number of Shares Outstanding | 24,000 |
Average Exercise Price | $ / shares | $ 0.10 |
Remaining Life | 1 year 10 months 14 days |
Exercisable | 24,000 |
Discontinued Operations - Sched
Discontinued Operations - Schedule of Discontinued Operations (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |||
Cash | |||
Total assets from discontinued operations | |||
Accounts payable | 19,456,998 | 19,456,998 | |
Accrued liabilities | 589,380 | 589,380 | |
Accrued interest | 1,214,067 | 1,176,226 | |
Accrued payroll and compensation expense | 131,108 | 131,108 | |
Current maturities of long-term debt | 239,085 | 239,085 | |
Related-party payable | 1,776,250 | 1,776,250 | |
Short-term advances payable | 2,784,773 | 2,784,773 | |
Total liabilities from discontinued operations | 26,191,661 | $ 26,153,820 | |
Net sales | |||
Cost of sales | |||
Gross profit | |||
Selling, general and administrative expenses | |||
Total operating expenses | |||
Other income | |||
Interest expense | (37,841) | (38,261) | |
Total other expense | (37,841) | (38,261) | |
Net loss from discontinued operations | $ (37,841) | $ (38,261) |