Cover
Cover | 9 Months Ended |
Sep. 30, 2021 | |
Cover [Abstract] | |
Entity Registrant Name | INFINITE GROUP, INC. |
Entity Central Index Key | 0000884650 |
Document Type | S-1 |
Amendment Flag | false |
Entity Small Business | true |
Entity Emerging Growth Company | false |
Entity Filer Category | Non-accelerated Filer |
Entity Incorporation State Country Code | DE |
Entity Tax Identification Number | 52-1490422 |
Entity Address Address Line 1 | 175 Sully’s Trail |
Entity Address Address Line 2 | Suite 202 |
Entity Address City Or Town | Pittsford |
Entity Address State Or Province | NY |
Entity Address Postal Zip Code | 14534 |
City Area Code | 585 |
Local Phone Number | 385-0610 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets: | |||
Cash | $ 56,076 | $ 32,313 | $ 6,398 |
Accounts receivable, | |||
net of allowance of $10,089 each period | 732,420 | 953,826 | 432,289 |
Prepaid expenses and other current assets | 148,601 | 96,483 | 65,285 |
Total current assets | 937,097 | 1,082,622 | 503,972 |
Right of use asset - lease, net | 61,765 | 120,777 | 195,441 |
Property and equipment, net | 45,562 | 48,199 | 5,915 |
Software, net | 418,194 | 354,905 | 184,676 |
Deposit | 6,937 | 6,937 | 6,937 |
Total assets | 1,469,555 | 1,613,440 | 896,941 |
Current liabilities: | |||
Accounts payable | 515,248 | 343,073 | 217,777 |
Accrued payroll | 483,353 | 353,268 | 218,352 |
Accrued interest payable | 545,432 | 531,409 | 939,440 |
Accrued retirement | 272,695 | 264,675 | 254,348 |
Deferred revenue | 264,772 | 320,042 | 178,824 |
Accrued expenses - other and other current liabilities | 116,073 | 74,579 | 64,207 |
Operating lease liability - short-term | 63,050 | 80,258 | 74,373 |
Current maturities of long-term obligations-other | 763,361 | 1,004,445 | 950,000 |
Current maturities of long-term obligations-related parties | 190,000 | 0 | 512,935 |
Notes payable - other | 162,500 | 162,500 | 332,500 |
Notes payable - related parties, | 155,000 | 0 | 58,000 |
Total current liabilities | 3,531,484 | 3,134,249 | 3,800,756 |
Notes payable: | |||
Other, | 458,173 | 457,769 | 495,890 |
Related parties, | 1,082,760 | 1,015,820 | 385,000 |
Accrued payroll taxes | 69,025 | 69,025 | 0 |
Operating lease liability - long-term | 0 | 42,347 | 122,605 |
Total liabilities | 5,141,442 | 4,719,210 | 4,804,251 |
Stockholders' deficiency: | |||
Common stock, $.001 par value, 60,000,000 shares authorized; 31,630,883 and 29,061,883 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively | 31,630 | 29,061 | 29,061 |
Additional paid-in capital | 31,033,567 | 30,763,717 | 30,638,173 |
Accumulated deficit | (34,737,084) | (33,898,548) | (34,574,544) |
Total stockholders' deficiency | (3,671,887) | (3,105,770) | (3,907,310) |
Total liabilities and stockholders' deficiency | $ 1,469,555 | $ 1,613,440 | $ 896,941 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
BALANCE SHEETS | |||
Allowances for accounts receivable | $ 10,089 | $ 10,089 | $ 17,455 |
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 60,000,000 | 60,000,000 | 60,000,000 |
Common stock, shares issued | 31,630,883 | 29,061,883 | 29,061,883 |
Common stock, shares outstanding | 31,630,883 | 29,061,883 | 29,061,883 |
STATEMENTS OF OPERATIONS (Unaud
STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
STATEMENTS OF OPERATIONS (Unaudited) | ||||||
Revenue | $ 1,836,740 | $ 1,844,549 | $ 5,458,586 | $ 5,447,505 | $ 7,219,446 | $ 7,094,279 |
Cost of revenue | 1,136,931 | 1,058,450 | 3,319,069 | 3,206,291 | 4,177,268 | 4,422,533 |
Gross profit | 699,809 | 786,099 | 2,139,517 | 2,241,214 | 3,042,178 | 2,671,746 |
Costs and expenses: | ||||||
General and administrative | 528,424 | 462,265 | 1,534,527 | 1,239,021 | 1,696,415 | 1,334,051 |
Selling | 502,389 | 327,109 | 1,397,156 | 973,034 | 1,344,472 | 1,008,558 |
Total costs and expenses | 1,030,813 | 789,374 | 2,931,683 | 2,212,055 | 3,040,887 | 2,342,609 |
Operating income (loss) | (331,004) | (3,275) | (792,166) | 29,159 | 1,291 | 329,137 |
Other income (expense) | ||||||
Interest income | 0 | 268 | 3 | 701 | 786 | 0 |
Interest expense: | ||||||
Related parties | (19,293) | (13,737) | (50,348) | (46,383) | (62,789) | (89,079) |
Other | (40,014) | (93,192) | (116,530) | (175,212) | (230,299) | (192,081) |
Total interest expense | (59,307) | (106,929) | (166,878) | (221,595) | (293,088) | (281,160) |
Other income | 120,505 | 1,088 | 120,505 | 4,000 | 967,007 | 0 |
Total other income (expense) | 61,198 | (105,573) | (46,370) | (216,894) | 674,705 | (281,160) |
Net loss | $ (269,806) | $ (108,848) | $ (838,536) | $ (187,735) | $ 675,996 | $ 47,977 |
Net loss per share - basic and diluted | $ (0.01) | $ 0 | $ (0.03) | $ (0.01) | $ 0.02 | $ 0 |
Weighted average shares outstanding - basic | 29,978,872 | 29,061,883 | 29,421,641 | 29,061,883 | 29,061,883 | 29,061,883 |
Weighted average shares outstanding - diluted | 29,978,872 | 29,061,883 | 29,421,641 | 29,061,883 | 43,450,086 | 29,811,883 |
STATEMENTS OF CHANGES IN STOCKH
STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (Unaudited) - USD ($) | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit |
Balance, amount at Dec. 31, 2018 | $ (4,000,094) | $ 29,061 | $ 30,593,366 | $ (34,622,521) |
Balance, shares at Dec. 31, 2018 | 29,061,883 | |||
Net Income (Loss) | 47,977 | 47,977 | ||
Stock based compensation | 44,807 | 44,807 | ||
Balance, shares at Dec. 31, 2019 | 29,061,883 | |||
Balance, amount at Dec. 31, 2019 | (3,907,310) | $ 29,061 | 30,638,173 | (34,574,544) |
Stock based compensation, shares | 0 | |||
Stock based compensation, amount | 2,130 | $ 0 | 2,130 | 0 |
Net loss, shares | 0 | |||
Net loss, amount | (6,062) | $ 0 | 0 | (6,062) |
Balance, shares at Mar. 31, 2020 | 29,061,883 | |||
Balance, amount at Mar. 31, 2020 | (3,911,242) | $ 29,061 | 30,640,303 | (34,580,606) |
Balance, amount at Dec. 31, 2019 | (3,907,310) | $ 29,061 | 30,638,173 | (34,574,544) |
Balance, shares at Dec. 31, 2019 | 29,061,883 | |||
Net Income (Loss) | (187,735) | |||
Balance, shares at Sep. 30, 2020 | 29,061,883 | |||
Balance, amount at Sep. 30, 2020 | 3,988,824 | $ 29,061 | 30,744,394 | (34,762,279) |
Balance, amount at Dec. 31, 2019 | (3,907,310) | $ 29,061 | 30,638,173 | (34,574,544) |
Balance, shares at Dec. 31, 2019 | 29,061,883 | |||
Net Income (Loss) | 675,996 | |||
Balance, shares at Dec. 31, 2020 | 29,061,883 | |||
Balance, amount at Dec. 31, 2020 | (3,105,770) | $ 29,061 | 30,763,717 | (33,898,548) |
Balance, amount at Mar. 31, 2020 | (3,911,242) | $ 29,061 | 30,640,303 | (34,580,606) |
Balance, shares at Mar. 31, 2020 | 29,061,883 | |||
Stock based compensation, shares | 0 | |||
Stock based compensation, amount | 16,850 | $ 0 | 16,850 | 0 |
Net loss, shares | 0 | |||
Net loss, amount | (72,825) | $ 0 | 0 | (72,825) |
Balance, shares at Jun. 30, 2020 | 29,061,883 | |||
Balance, amount at Jun. 30, 2020 | (3,967,217) | $ 29,061 | 30,657,153 | (34,653,431) |
Net Income (Loss) | (108,848) | |||
Stock based compensation, shares | 0 | |||
Stock based compensation, amount | 87,241 | $ 0 | 87,241 | 0 |
Net loss, shares | 0 | |||
Net loss, amount | (108,848) | $ 0 | 0 | (108,848) |
Balance, shares at Sep. 30, 2020 | 29,061,883 | |||
Balance, amount at Sep. 30, 2020 | 3,988,824 | $ 29,061 | 30,744,394 | (34,762,279) |
Stock based compensation | 125,544 | 125,544 | ||
Balance, shares at Dec. 31, 2020 | 29,061,883 | |||
Balance, amount at Dec. 31, 2020 | (3,105,770) | $ 29,061 | 30,763,717 | (33,898,548) |
Stock based compensation, shares | 0 | |||
Stock based compensation, amount | 28,248 | $ 0 | 28,248 | 0 |
Net loss, shares | 0 | |||
Net loss, amount | (152,227) | $ 0 | 0 | (152,227) |
Balance, shares at Mar. 31, 2021 | 29,061,883 | |||
Balance, amount at Mar. 31, 2021 | (3,229,749) | $ 29,061 | 30,791,965 | (34,050,775) |
Balance, amount at Dec. 31, 2020 | (3,105,770) | $ 29,061 | 30,763,717 | (33,898,548) |
Balance, shares at Dec. 31, 2020 | 29,061,883 | |||
Net Income (Loss) | (838,536) | |||
Balance, shares at Sep. 30, 2021 | 31,630,883 | |||
Balance, amount at Sep. 30, 2021 | (3,671,887) | $ 31,630 | 31,033,567 | (34,737,084) |
Balance, amount at Mar. 31, 2021 | (3,229,749) | $ 29,061 | 30,791,965 | (34,050,775) |
Balance, shares at Mar. 31, 2021 | 29,061,883 | |||
Stock based compensation, shares | 0 | |||
Stock based compensation, amount | 81,920 | $ 0 | 81,920 | 0 |
Net loss, shares | 0 | |||
Net loss, amount | (416,503) | $ 0 | 0 | (416,503) |
Issuance of common stock, shares | 250,000 | |||
Issuance of common stock, amount | 58,125 | $ 250 | 57,875 | 0 |
Exercise of stock options, shares | 284,000 | |||
Exercise of stock options, amount | 14,930 | $ 284 | 14,646 | 0 |
Balance, shares at Jun. 30, 2021 | 29,595,883 | |||
Balance, amount at Jun. 30, 2021 | (3,491,277) | $ 29,595 | 30,946,406 | (34,467,278) |
Net Income (Loss) | (269,806) | |||
Stock based compensation, shares | 0 | |||
Stock based compensation, amount | 7,296 | $ 0 | 7,296 | 0 |
Net loss, shares | 0 | |||
Net loss, amount | (269,806) | $ 0 | 0 | (269,806) |
Exercise of stock options, shares | 2,035,000 | |||
Exercise of stock options, amount | 81,900 | $ 2,035 | 79,865 | 0 |
Balance, shares at Sep. 30, 2021 | 31,630,883 | |||
Balance, amount at Sep. 30, 2021 | $ (3,671,887) | $ 31,630 | $ 31,033,567 | $ (34,737,084) |
STATEMENTS OF CASH FLOWS (Unaud
STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | ||||
Net loss | $ (838,536) | $ (187,735) | $ 675,996 | $ 47,977 |
Adjustments to reconcile net loss to net cash used by operating activities: | ||||
Stock based compensation | 117,464 | 106,221 | 125,544 | 44,807 |
Depreciation and amortization | 136,533 | 63,792 | 97,874 | 29,648 |
Bad debt expense | 0 | 5,000 | 7,000 | 0 |
Forgiveness of Indebtedness | (120,505) | 0 | (963,516) | 0 |
(Increase) decrease in assets: | ||||
Accounts receivables | 221,406 | (503,181) | (528,537) | (146,102) |
Prepaid expenses and other assets | 6,007 | (38,318) | (31,198) | (62,649) |
Increase (decrease) in liabilities: | ||||
Accounts payables | 172,175 | 51,015 | 125,296 | (149,759) |
Deferred revenue' | (55,270) | 161,228 | ||
Accrued expenses | 268,450 | (7,403) | 77,786 | 265,650 |
Accrued retirement, | 8,020 | 7,707 | ||
Net cash used by operating activities | (84,256) | (341,674) | (413,755) | 29,572 |
Cash flows from investing activities: | ||||
Purchase of property and equipment | (12,437) | (7,966) | (48,310) | (1,945) |
Capitalization of software development costs | (180,374) | (193,190) | (255,230) | (194,215) |
Net cash used by investing activities | (192,811) | (201,156) | (303,540) | (196,160) |
Cash flows from financing activities: | ||||
Proceeds from issuance of notes payable - related parties | 404,000 | 0 | (957,372) | 0 |
Proceeds from note payable | 0 | 957,372 | 50,000 | 200,000 |
Proceeds from the exercise of common stock options | 96,830 | 0 | ||
Repayment of long-term obligations | (200,000) | 0 | ||
Repayments of notes payable - short term | 0 | (167,526) | (167,527) | 0 |
Repayments of notes payable - related party | 0 | (46,710) | (96,635) | (56,730) |
Net cash provided by financing activities | 300,830 | 743,136 | 743,210 | 143,270 |
Net increase in cash | 23,763 | 200,306 | 25,915 | (23,318) |
Cash - beginning of period | 32,313 | 6,398 | 6,398 | 29,716 |
Cash - end of period | 56,076 | 206,704 | 32,313 | 6,398 |
Supplemental Disclosures of Cash Flow Information: | ||||
Cash payments for interest | $ 66,908 | $ 314,513 | 346,328 | 152,908 |
Income taxes | $ 0 | $ 0 |
Basis of Presentation
Basis of Presentation | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Basis of Presentation | ||
Note 1. Basis of Presentation | Note 1. Basis of Presentation The accompanying unaudited financial statements of Infinite Group, Inc. (“Infinite Group, Inc.” or the “Company”) included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (U.S.) (“GAAP”) for interim financial information and with instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. The December 31, 2020 balance sheet has been derived from the audited financial statements at that date but does not include all disclosures required by GAAP. The accompanying unaudited financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the U.S. Securities and Exchange Commission (SEC). Results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2021. | NOTE 1. - BASIS OF PRESENTATION & BUSINESS The accompanying financial statements consist of the financial statements of Infinite Group, Inc. (the Company). The Company operates in one segment, the field of information technology (IT) consulting services, with all operations based in the United States. The primary consulting services are in the cybersecurity industry. There were no significant sales from customers in foreign countries during 2020 and 2019. All assets are located in the United States. Nodeware - Nodeware creates an opportunity for resellers, including managed service providers, managed security service providers, distributors, and value-added resellers. The Company sells Nodeware in the commercial sector through its channel partners and agents. Technology and Product Development - Cybersecurity Services - |
Management Plans - Capital Reso
Management Plans - Capital Resources | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Management Plans - Capital Resources | ||
Note 2. Management Plans - Capital Resources | Note 2. Management Plans - Capital Resources The Company reported net losses of $838,536 and $187,735 for the nine months ended September 30, 2021 and 2020, respectively, and stockholders’ deficiencies of $3,671,887 and $3,105,770 at September 30, 2021 and December 31, 2020, respectively. The Company has a working capital deficit of approximately $2.5 million at September 30, 2021. These factors raise doubt about the ability to continue as a going concern. The Company has previously modified a significant amount of the short-term liabilities and plans to restructure certain remaining short-term debt. Subsequent to the quarter ended September 30, 2021, the Company entered into three demand notes of $12,000 each with three related parties. On October 28, 2021, the Company entered into a promissory note of $150,000 with its Vice President of Business Development. Additionally, on November 3, 2021, the Company entered into a loan agreement with an unrelated third party, resulting in net proceeds to the Company of $403,200. The Company is exploring additional sources of financing, including debt and equity, and anticipates significant growth of business. These plans, in management’s opinion, will allow the Company to meet its obligations for at least the twelve-month period from the date the financial statements are available to be issued and alleviate the substantial doubt. The Company’s goal is to increase sales and generate cash flow from operations on a consistent basis. The Company uses a formal financial review and budgeting process as a tool for improvement that has aided expense reduction and internal performance. The Company’s business plans require improving the results of its operations in future periods. We continue to see cybersecurity growth across our businesses in the fourth quarter. Additionally, we expect the investment in IGI CyberLabs, LLC, (“CyberLabs”) to accelerate the revenue growth of the Nodeware product line in the fourth quarter of 2021. Adding recurring, higher margin software revenue to our product mix will have a greater impact on improving cash flow than relying on our traditional service offerings alone. The Company believes the capital resources available under its factoring line of credit, cash from additional related party and third-party loans and cash generated by improving the results of its operations provide sources to fund its ongoing operations and to support the internal growth of the Company. Although the Company has no assurances, the Company believes that related parties, who have previously provided working capital, and third parties will continue to provide working capital loans on similar terms, as in the past, as may be necessary to fund its on-going operations for at least the next 12 months. If the Company experiences significant growth in its sales, the Company believes that this may require it to increase its financing line, finance additional accounts receivable, or obtain additional working capital from other sources to support its sales growth. | NOTE 2. - MANAGEMENT PLANS The Company reported operating income of $1,291 in 2020 and $329,137 in 2019, net income of $675,996 in 2020 and $47,977 in 2019, and stockholders’ deficiencies of $3,105,770 and $3,907,310 at December 31, 2020 and 2019, respectively. The Company has a working capital deficit of approximately $ 2.1 million at December 31, 2020. These factors raise initial doubt about the ability to continue as a going concern. The Company has modified a significant amount of the existing short-term liabilities, plans to restructure certain remaining short term debt, is exploring additional sources of financing, including debt and equity, and anticipates significant growth of business. These plans, in management’s opinion, will allow the Company to meet its obligations for the twelve-month period from the date the financial statements are available to be issued and alleviate the initial substantial doubt. Continue to Improve Operations and Capital Resources The Company expects to increase revenue and cash flow from operations on a consistent basis based on recent demand for services and products. The Company has renegotiated the terms of some of the notes, using operational cash flow to pay down balances and extending terms and expects to continue to renegotiate additional obligations. These includes transactions during the first quarter of 2021, where the Company has renegotiated the due dates of approximately $446,000 of notes payable into 2023 and 2024. These obligations have been reclassified as long-term in the accompanying balance sheet. During 2017, the Company originated lines of credit with related parties totaling $175,000 and borrowed $140,000. During 2018, the Company borrowed an additional $20,000. At December 31, 2020, the Company had approximately $15,000 available under these financing agreements. During 2019, the Company borrowed $200,000 from a related party under the terms of a note payable. In 2020, the Company borrowed $50,000 more from this note payable. At December 31, 2020, the Company had $250,000 available under this financing agreement. The Company believes the capital resources generated by the improving results of its operations as well as cash available under its factoring line of credit and from additional related parties and third-party loans, if needed, provide sources to fund its ongoing operations and to support the internal growth of the Company. If the Company experiences significant growth in its sales, the Company believes that this may require it to increase its financing line, finance additional accounts receivable, or obtain additional working capital from other sources to support its sales growth. The Company plans to continue to evaluate alternatives which may include continuing to renegotiate the terms of other notes, seeking conversion of the notes to shares of common stock and seeking funds to repay the notes. The Company continues to evaluate repayment of our remaining notes payable based on its cash flow. These plans, in management’s opinion, will allow the Company to meet its obligations for a reasonable period of time from the date the financial statements are available to be issued. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Summary of Significant Accounting Policies | ||
Note 3. Summary of Significant Accounting Policies | Note 3. Summary of Significant Accounting Policies There are several accounting policies that the Company believes are significant to the presentation of its financial statements. These policies require management to make complex or subjective judgments about matters that are inherently uncertain. Note 3 to the Company’s audited financial statements for the year ended December 31, 2020 presents a summary of significant accounting policies as included in the Company’s Annual Report on Form 10-K as filed with the SEC. Reclassifications Fair Value of Financial Instruments Revenue The Company’s total revenue recognized from contracts from customers was comprised of three major services: Managed support services, Cybersecurity projects and software and Other IT consulting services. The categories depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. There were no material unsatisfied performance obligations at September 30, 2021 or 2020 for contracts with an expected original duration of more than one year. The following table summarizes the revenue recognized by the major services: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Managed support services $ 1,114,851 $ 1,192,469 $ 3,243,183 $ 3,533,777 Cybersecurity projects and software 704,889 601,080 2,096,403 1,700,728 Other IT consulting services 17,000 51,000 119,000 213,000 Total sales $ 1,836,740 $ 1,844,549 $ 5,458,586 $ 5,447,505 Managed support services Managed support services consist of revenue primarily from our subcontracts with Peraton (which purchased Perspecta in May 2021) for services to its end clients, principally a major establishment of the U.S. Government for which we manage one of the nation’s largest physical and virtual Microsoft Windows environments. · We generate revenue primarily from these subcontracts through fixed price service and support agreements. Revenues are earned and billed weekly and are generally paid within 45 days. The revenues are recognized at time of service. Cybersecurity projects and software Cybersecurity projects and software revenue includes the selling of licenses of Nodeware® and third-party software, principally Webroot™ as well as performing cybersecurity assessments and testing. · Nodeware® and Webroot™ software offerings consist of fees generated from the use of the respective software by our customers. Revenue is recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Substantially all customers are billed in the month of the service and is cancellable upon notice per the respective agreements. Substantially all payments are electronically billed, and the billed amounts are paid to the Company instantaneously via an online payment platform. If payments are made in advance, revenues related to the term associated with our software licenses is recognized ratably over the contractual period. · Some of our customers have the option to purchase additional subscription and support services at a stated price. These options generally do not provide a material right as they are priced at our standalone selling price. · Cybersecurity assessments and testing services are considered distinct performance obligations when sold stand alone or with other products. These contracts generally have terms of one year or less. For substantially all these contracts, revenue is recognized when the specific performance obligation is satisfied. If the contract has multiple performance obligations, the revenue is recognized when the performance obligations are satisfied. Depending on the nature of the service, the amounts recognized are based on an allocation of the transaction price to each performance obligation based on a relative standalone selling price of the products sold. · In substantially all agreements, a 50% to 75% down payment is required before work is initiated. Down payments received are deferred until revenue is earned. Upon completion of performance obligation of service, payment terms are 30 days. Other IT consulting services Other IT consulting services consists of services such as project management and general IT consulting services. · We generate revenue via fixed price service agreements. These are based on periodic billings of a fixed dollar amount for recurring services of a similar nature performed according to the contractual arrangements with clients. The revenues are recognized at time of service. Based on historical experience, the Company believes that collection is reasonably assured. During the three and nine months ended September 30, 2021, sales to one client, including sales under subcontracts for services to several entities, accounted for 60.7% and 59.0%, respectively, of total sales (60.4% and 61.5%, respectively, in 2020) and 22.6% of accounts receivable at September 30, 2021 (38.8% - December 31, 2020). Capitalization of Software for Resale Leases - | NOTE 3. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounts Receivable - Concentration of Credit Risk Loan Origination Fees Sale of Certain Accounts Receivable - These transactions qualify for a sale of assets since (1) the Company has transferred all of its right, title and interest in the selected accounts receivable invoices to the financial institution, (2) the Purchaser may pledge, sell or transfer the selected accounts receivable invoices, and (3) the Company has no effective control over the selected accounts receivable invoices since it is not entitled to or obligated to repurchase or redeem the invoices before their maturity and it does not have the ability to unilaterally cause the Purchaser to return the invoices. Under FASB ASC 860, after a transfer of financial assets, an entity recognizes the financial and servicing assets it controls and the liabilities it has incurred, derecognizes financial assets when control has been surrendered, and derecognizes liabilities when extinguished. Pursuant to the provisions of FASB ASC 860, the Company reflects the transactions as a sale of assets and establishes an accounts receivable from the Purchaser for the retained amount less the costs of the transaction and less any anticipated future loss in the value of the retained asset. The retained amount is equal to 10% of the total accounts receivable invoice sold to the Purchaser. The fee is charged at prime plus 3.6% (effective rate of 6.85% at December 31, 2020) against the average daily outstanding balance of funds advanced. The estimated future loss reserve for each receivable included in the estimated value of the retained asset is based on the payment history of the accounts receivable customer and is included in the allowance for doubtful accounts, if any. As collateral, the Company granted the Purchaser a first priority interest in accounts receivable and a blanket lien, which may be junior to other creditors, on all other assets. The financing line provides the Company the ability to finance up to $2,000,000 of selected accounts receivable invoices, which includes a sublimit for one of the Company’s customers of $1,500,000. During the year ended December 31, 2020, the Company sold approximately $1,749,697 ($4,742,933 - 2019) of its accounts receivable to the Purchaser. As of December 31, 2020, $0 ($324,125 - 2019) of these receivables remained outstanding. Additionally, as of December 31, 2020, the Company had $362,000 available under the financing line with the financial institution ($67,000 - 2019). After deducting estimated fees and advances from the Purchaser, the net receivable from the Purchaser amounted to $0 at December 31, 2020 ($32,412 - 2019) and is included in accounts receivable in the accompanying balance sheets as of that date. There were no gains or losses on the sale of the accounts receivable because all were collected. The cost associated with the financing line was approximately $21,100 for the year ended December 31, 2020 ($53,600 - 2019). These financing line fees are classified on the statements of operations as interest expense. Property and Equipment - Capitalization of Software for Resale - Accounting for the Impairment or Disposal of Long-Lived Assets - Revenue Recognition - The Company’s revenues are generated under both time and material and fixed price agreements. Managed Support services revenue is recognized when the associated costs are incurred, which coincides with the consulting services being provided. Time and materials service agreements are based on hours worked and are billed at agreed upon hourly rates for the respective position plus other billable direct costs. Fixed price service agreements are based on a fixed amount of periodic billings for recurring services of a similar nature performed according to the contractual arrangements with clients. These agreements are arrangements for monthly or weekly support services. Under both types of agreements, the delivery of services occurs when an employee works on a specific project or assignment as stated in the contract or purchase order. Based on historical experience, the Company believes that collection is reasonably assured. The Company sells licenses of Nodeware and third-party software, principally Webroot. Substantially all customers are invoiced monthly at fixed rates for license fees and revenue is recognized over time. The Company sold VMware software and service credits in 2019. Sales were recorded upon receipt of the software or credits by the customer. The Company did not take title to the software or credits. Accordingly, the Company accounted for these as agent sales and reduced its sales amount by the related cost of sales. The Company’s total revenue recognized from contracts from customers was comprised of three major services: Managed support services, Cybersecurity projects and software and Other IT consulting services. The categories depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. There were no material unsatisfied performance obligations at December 31, 2020 or 2019 for contracts with an expected original duration of more than one year. The following table summarizes the revenue recognized by the major services: Years Ended December 31, 2020 2019 Managed support services $ 4,669,570 $ 4,986,217 Cybersecurity projects and software 2,285,876 1,569,972 Other IT consulting services 264,000 538,090 Total revenue $ 7,219,446 $ 7,094,279 Managed support services Managed support services consist of revenue primarily from our subcontracts for services to its end clients, principally a major establishment of the U.S. Government for which we manage one of the nation’s largest physical and virtual Microsoft Windows environments. · We generate revenue primarily from these subcontracts through fixed price service and support agreements. Revenues are earned and billed weekly and are generally paid within 45 days. The revenues are recognized at time of service. Cyber security projects and software Cyber security projects and software revenue includes the selling of licenses of Nodeware™ and third-party software, principally Webroot™ as well as performing cybersecurity assessments, testing and consulting as a CISO (Chief Information Security Officer). · Nodeware™ and Webroot™ software offerings consist of fees generated from the use of the respective software by our customers. Revenue is recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Substantially all customers are billed in the month of the service and is cancellable upon notice per the respective agreements. Substantially all payments are electronically billed, and the billed amounts are paid to the Company instantaneously via an online payment platform. If payments are made in advance, revenues related to the term associated with our software licenses is recognized ratably over the contractual period. · Some of our customers have the option to purchase additional subscription and support services at a stated price. These options generally do not provide a material right as they are priced at our standalone selling price. · Cybersecurity assessments, testing and Chief Information Security Officer (CISO) services are considered distinct performance obligations when sold stand alone or with other products. These contracts generally have terms of one year or less. For substantially all these contracts, revenue is recognized when the specific performance obligation is satisfied. If the contract has multiple performance obligations, the revenue is recognized when the performance obligations are satisfied. Depending on the nature of the service, the amounts recognized are either based on an allocation of the transaction price to each performance obligation based on a relative standalone selling price of the products sold. · In substantially all agreements, a 50% to 75% down payment is required before work is initiated. Down payments received are deferred until revenue is earned. For the year ended December 31, 2020, we recognized revenue of approximately $169,000 that was included in the deferred revenue balance at the beginning of the period presented. Deferred revenue that will be realized during the succeeding 12-month period is approximately $311,000, and the remaining deferred revenue of $10,000 is scheduled to be realized in 2022. Other IT consulting services Other IT consulting services consists of services such as project management and general IT consulting services. · We generate revenue via fixed price service agreements. These are based on periodic billings of a fixed dollar amount for recurring services of a similar nature performed according to the contractual arrangements with clients. The revenues are recognized at time of service. Based on historical experience, the Company believes that collection is reasonably assured. During 2020, sales to one client, including sales under subcontracts for services to several entities, accounted for 61.2% of total sales (62.6% - 2019) and 38.8% of accounts receivable at December 31, 2020 (22.1% - 2019). Revenue and Cost of Revenue - Stock Options - Income Taxes - The Company periodically reviews tax positions taken to determine if it is more likely than not that the position would be sustained upon examination. The Company did not have any material unrecognized tax benefit at December 31, 2020 or 2019. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2020 and 2019, the Company recognized no interest and penalties. The Company files U.S. federal tax returns and tax returns in various states. The tax years 2017 through 2020 remain open to examination by the taxing jurisdictions to which the Company is subject. Fair Value of Financial Instruments - · Level 1 uses observable inputs such as quoted prices in active markets; · Level 2 uses inputs other than quoted prices in active markets that are either directly or indirectly observable; and · Level 3 is defined as unobservable inputs in which little or no market data exist and requires the Company to develop its own assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The carrying amounts of cash, accounts receivable and accounts payable and accrued expenses are reasonable estimates of their fair value due to their short maturity. Based on the borrowing rates currently available to the Company for loans similar to its term debt and notes payable, the fair value approximates the carrying amounts. Earnings Per Share - The following table sets forth the computation of basic and diluted loss per share as of December 31, 2020 and 2019: Years ended December 31, 2020 2019 Numerator for basic and diluted net income per share: Basic net income $ 675,996 $ 47,977 Plus: Interest expense saved on converted debt 27,068 0 Diluted net income $ 703,064 $ 47,977 Basic and diluted net income per share $ .02 $ .00 Weighted average common shares outstanding Basic shares 29,061,883 29,061,883 Plus: Stock options 6,215,883 750,000 Plus: Convertible debt 9,422,320 0 Diluted shares 44,700,086 29,811,883 Anti-dilutive shares excluded from net income per share 2,715,000 29,195,736 Certain common shares issuable under stock options and convertible notes payable have been omitted from the diluted net income (loss) per share calculation because their inclusion is considered anti-dilutive because the exercise or conversion prices were greater than the average market price of the common shares or their inclusion would have been anti-dilutive. Reclassifications - Use of Estimates - Leases - |
Sale of Certain Accounts Receiv
Sale of Certain Accounts Receivable | 9 Months Ended |
Sep. 30, 2021 | |
Sale of Certain Accounts Receivable | |
Note 4. Sale of Certain Accounts Receivable | Note 4. Sale of Certain Accounts Receivable The Company has available a financing line with a financial institution (the Purchaser), which enables the Company to sell accounts receivable to the Purchaser with full recourse against the Company. Pursuant to the provisions of FASB ASC 860, the Company reflects the transactions as a sale of assets and establishes an accounts receivable from the Purchaser for the retained amount less the costs and fees of the transaction and less any anticipated future loss in the value of the retained asset. The retained amount is 10% of the total accounts receivable invoice sold to the Purchaser. The fee is charged at prime plus 3.6% (effective rate of 6.85% at September 30, 2021) against the average daily outstanding balance of funds advanced. The estimated future loss reserve for each receivable included in the estimated value of the retained asset is based on the payment history of the accounts receivable customer and is included in the allowance for doubtful accounts, if any. As collateral, the Company granted the Purchaser a first priority interest in accounts receivable and a blanket lien, which may be junior to other creditors, on all other assets. The financing line provides the Company the ability to finance up to $2,000,000 of selected accounts receivable invoices, which includes a sublimit for one of the Company’s customers of $1,500,000. During the nine months ended September 30, 2021, the Company sold approximately $2,471,000 ($1,437,000 – September 30, 2020) of its accounts receivable to the Purchaser. As of September 30, 2021, approximately $222,000 ($0 - December 31, 2020) of these receivables remained outstanding. Additionally, as of September 30, 2021, the Company had $71,000 available under the financing line with the financial institution ($362,000 - December 31, 2020). After deducting estimated fees, allowance for bad debts and advances from the Purchaser, the net receivable from the Purchaser amounted to $22,000 at September 30, 2021 ($0 - December 31, 2020), and is included in accounts receivable in the accompanying balance sheets. There were no gains or losses on the sale of the accounts receivable because all were collected. The cost associated with the financing line totaled $24,247 for the nine months ended September 30, 2021 ($17,363 – September 30, 2020). These financing line fees are classified on the statements of operations as interest expense. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2020 | |
PROPERTY AND EQUIPMENT | |
NOTE 4. - PROPERTY AND EQUIPMENT | NOTE 4. - PROPERTY AND EQUIPMENT Property and equipment consists of: December 31, Depreciable Lives 2020 2019 Software 3 years $ 72,834 $ 34,934 Equipment 3 to 10 years 142,129 131,719 Furniture and fixtures 5 to 7 years 17,735 17,735 232,698 184,388 Accumulated depreciation (184,499 ) (178,473 ) $ 48,199 $ 5,915 Depreciation expense was $6,026 and $4,567 for the years ended December 31, 2020 and 2019, respectively. |
Capitalization of Software for
Capitalization of Software for Resale | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Capitalization of Software for Resale | ||
Note 5. Capitalization of Software for Resale | Note 5 Capitalization of Software for Resale As of September 30, 2021, there was $629,820 of costs capitalized ($449,445 as of December 31, 2020) and $211,626 of accumulated amortization ($94,540 as of December 31, 2020). During the three and nine months ended September 30, 2021, there was $42,291 and $117,085, respectively, of amortization expense recorded ($24,914 and $55,430, respectively, in 2020). Costs incurred prior to reaching technological feasibility are expensed as incurred. During the three and nine months ended September 30, 2021, there was $43,800 and $131,500, respectively, of labor amounts expensed related to these development costs ($38,500 and $115,900, respectively, in 2020). | NOTE 5. – CAPITALIZATION OF SOFTWARE FOR RESALE As of December 31, 2020, there was $449,445 ($194,215 in 2019) of costs capitalized and $94,541 of accumulated amortization ($9,539 in 2019). During the year ended December 31, 2020 there was $85,002 of amortization expense recorded ($9,539 in 2019). Future amortization is expected to be $354,905 at a rate of $148,146, $140,276, $64,813 and $1,670 for the years 2021, 2022, 2023 and 2024 respectively. Costs incurred prior to reaching technological feasibility are expensed as incurred. Labor amounts expensed related to these development costs amounted to approximately $159,700 and $58,000 during the year ended December 31, 2020 and 2019, respectively. |
Deferred Revenue and Performanc
Deferred Revenue and Performance Obligations | 9 Months Ended |
Sep. 30, 2021 | |
Deferred Revenue and Performance Obligations | |
Note 6. Deferred Revenue and Performance Obligations | Note 6. Deferred Revenue and Performance Obligations Deferred Revenue Deferred revenue, which is a contract liability, consists primarily of payments received and accounts receivable recorded in advance of revenue recognition under the Company’s contracts with customers and is recognized as the revenue recognition criteria are met. Revenue recognized during the three months ended September 30, 2021 and 2020, that was included in the deferred revenue balances at the beginning of the respective periods, was approximately $233,400 and $67,200, respectively. Revenue recognized during the nine months ended September 30, 2021 and 2020 that was included in the deferred revenue balances at the beginning of the respective periods was approximately $323,800 and $149,900, respectively. Transaction Price Allocated to the Remaining Performance Obligations Transaction price allocated to the remaining performance obligations represents all future, non-cancelable contracted revenue that has not yet been recognized, inclusive of deferred revenue that has been invoiced and non-cancelable amounts that will be invoiced and recognized as revenue in future periods. As of September 30, 2021, total remaining non-cancelable performance obligations under the Company’s contracts with customers was approximately $430,000. The Company expects to recognize all of this revenue over the next 12 months. |
NOTES PAYABLE CURRENT
NOTES PAYABLE CURRENT | 12 Months Ended |
Dec. 31, 2020 | |
NOTES PAYABLE CURRENT | |
NOTE 6. - NOTES PAYABLE - CURRENT | NOTE 6. - NOTES PAYABLE - CURRENT Notes payable consist of: December 31, 2020 2019 Demand note payable, 10%, secured by Software (A) $ 12,500 $ 12,500 Demand note payable to former director, 10%, unsecured (B) 0 30,000 Convertible demand note payable to former director, 12%, unsecured (B) 0 40,000 Convertible notes payable, 6% (C) 150,000 150,000 Convertible term note payable, 7%, secured (D) 0 100,000 $ 162,500 $ 332,500 (A) Demand Note payable, 10%, secured by Software (B) Demand note payable to former director, 10%, unsecured and Convertible demand note payable to former director, 12%, unsecured (C) Convertible notes payable, 6%, maturity date of December 31, 2016 (D) Convertible term note payable, 7%, secured, maturity date of October 4, 2016 Notes payable - related parties consist of: December 31, 2020 2019 Demand notes payable to officer and director, 6%, unsecured $ 0 $ 38,000 Demand note payable to director, 6%, unsecured 0 20,000 $ 0 $ 58,000 Both Notes payable – related parties were paid off in 2020. |
Debt Obligations
Debt Obligations | 9 Months Ended |
Sep. 30, 2021 | |
Debt Obligations | |
Note 7. Debt Obligations | Note 7. Debt Obligations During the three months ended June 30, 2021, the Company settled the long-term debt agreement with the Pension Benefit Guaranty Corporation (“PBGC”) for $200,000 on the outstanding principal of $246,000 and accrued interest of approximately $74,500. During the three months ending September 30, 2021, the PBGC released the remaining principal and accrued interest owed. The Company recorded a gain of approximately $120,500. During the nine months ended September 30, 2021, the Company received proceeds of $404,000 from related parties. The Company issued a short-term note payable to a board member for $100,000. The note bears a 6% interest rate and is due on December 15, 2021. The Company also issued two demand notes payable to two board members for $55,000 in total. The demand notes bear a 6% interest rate. The Company also borrowed $249,000 on the previously disclosed note payable agreement for up to $500,000 with a related party. The note has an interest rate of 7.5% and is due on August 31, 2026. The balance is $499,000 at September 30, 2021. |
Stock Transactions
Stock Transactions | 9 Months Ended |
Sep. 30, 2021 | |
Stock Transactions | |
Note 8. Stock Transactions | Note 8. Stock Transactions During the nine months ended September 30, 2021, the Company issued 200,000 shares at a price of $0.2325 per share to a consultant for services to be rendered from March 1, 2021 to February 28, 2023, as well as issued 50,000 shares at a price of $0.2325 per share to another consultant for services from April 1, 2021 to September 30, 2021. The aggregate expenses associated with the issuances of $58,125 was recorded as prepaid expenses and will be recognized over the term of the respective agreements. The Company expensed approximately $11,600 and $25,200 during the three and nine months ended September 30, 2021, respectively. This is a non-cash financing activity. See Note 10 regarding issuances pursuant to exercises of options. |
LONGTERM OBLIGATIONS
LONGTERM OBLIGATIONS | 12 Months Ended |
Dec. 31, 2020 | |
LONGTERM OBLIGATIONS | |
NOTE 7. - LONG-TERM OBLIGATIONS | NOTE 7. - LONG-TERM OBLIGATIONS Notes Payable – Other consist of: December 31 2020 2019 2016 note payable, 6%, unsecured, due December 31, 2021 (A) $ 500,000 $ 500,000 Convertible note payable, 6%, due January 1, 2020 (B) 0 264,000 Note payable, 10%, secured, due January 1, 2018 (C) 265,000 265,000 Convertible term note payable, 12%, secured, due August 31, 2018 (D) 175,000 175,000 Term note payable - PBGC, 6%, secured (E) 246,000 246,000 2020 note payable, 6%, unsecured, due August 24, 2024 (F) 166,473 0 Convertible term note payable, 7%, secured (G) 100,000 0 Convertible notes payable, 6%, due January 1, 2024 (H) 9,000 9,000 Accrued interest due after 2021(I) 7,296 0 1,468,769 1,459,000 Less: deferred financing costs 6,555 13,110 1,462,214 1,445,890 Less: current maturities 1,004,445 950,000 $ 457,769 $ 495,890 (A) 2016 note payable, 6%, unsecured, due December 31, 2021 (B) Convertible note payable, 6%, due January 1, 2020 (C) Note payable, 10%, secured, due January 1, 2018 (D) Convertible term note payable, 12%, secured, due August 31, 2018 (E) Term note payable - PBGC, 6%, secured (F) 2020 note payable, 6%, unsecured, due August 24, 2024 (G) Convertible term note payable, 7%, secured, due January 1, 2024 (H) Convertible notes payable, 6%, due January 1, 2024 (I) Accrued interest due after 2021 Notes Payable - Related Parties Notes payable - related parties consist of: December 31, 2020 2019 Note payable, up to $500,000, 7.5%, due August 31, 2026 (A) $ 250,000 $ 200,000 2020 Note payable, 6%, due January 1, 2024 (B) 328,000 0 Convertible notes payable, 6% (C) 146,300 146,300 Note payable, $400,000 line of credit, 8.35%, unsecured (D) 0 366,635 Convertible note payable, 7%, due June 30, 2023 (E) 25,000 25,000 Note payable, $100,000 line of credit, 6%, unsecured (F) 90,000 90,000 Note payable, $75,000 line of credit, 6%, unsecured (G) 70,000 70,000 Accrued interest due after 2021(H) 106,520 0 1,015,820 897,935 Less current maturities 0 512,935 $ 1,015,820 $ 385,000 (A) Note payable of up to $500,000, 7.5%, due August 31, 2026 (B) Note payable, 6%, due January 1, 2024 (C) Convertible notes payable, 6% The Company executed collateral security agreements with the note holders providing for a subordinate security interest in all the Company’s assets. Generally, upon notice, prior to the note maturity date, the Company can prepay all or a portion of the outstanding notes. (D) Note payable, $400,000 line of credit, 8.35%, unsecured (E) Convertible note payable, 7%, due June 30, 2023 (F) Note payable, $100,000 line of credit, 6%, unsecured (G) Note payable, $75,000 line of credit, 6%, unsecured (H) Accrued interest due after 2021 Long-Term Obligations As of December 31, 2020, minimum future annual payments of long-term obligations and amortization of deferred financing costs are as follows: Annual Annual Payments Amortization Net Due Prior to 2021 $ 673,500 $ 0 $ 673,500 2021 500,000 6,555 493,445 2022 190,000 0 190,000 2023 205,500 0 205,500 2024 828,089 0 828,089 2025 0 0 0 2026 250,000 0 250,000 Total long-term obligations $ 2,647,089 $ 6,555 $ 2,640,534 |
Earnings per Share
Earnings per Share | 9 Months Ended |
Sep. 30, 2021 | |
Earnings per Share | |
Note 9. Earnings per Share | Note 9. Earnings per Share Basic earnings per share is based on the weighted average number of common shares outstanding during the periods presented. Diluted earnings per share is based on the weighted average number of common shares outstanding, as well as dilutive potential common shares which, in the Company’s case, comprise shares issuable under convertible notes payable and stock options. The treasury stock method is used to calculate dilutive shares, which reduces the gross number of dilutive shares by the number of shares purchasable from the proceeds of the options and warrants assumed to be exercised. In a loss period, the calculation for basic and diluted earnings per share is considered to be the same, as the impact of potential common shares is anti-dilutive. The following table sets forth the computation of basic and diluted net loss per share for the three and nine months ended: Three Months Ended Sept 30, Nine Months Ended Sept 30, 2021 2020 2021 2020 Numerator for basic and diluted net loss per share: Net loss $ (269,806 ) $ (108,848 ) $ (838,536 ) $ (187,735 ) Basic and diluted net loss per share $ (.01 ) $ .00 $ (.03 ) $ .01 Weighted average common shares outstanding Basic and diluted shares 29,978,872 29,061,883 29,421,641 29,061,883 Anti-dilutive shares excluded from net loss per share calculation 21,185,207 22,180,976 21,185,207 22,180,976 Certain common shares issuable under stock options and convertible notes payable have been omitted from the diluted net loss per share calculation because their inclusion is considered anti-dilutive because the exercise prices were greater than the average market price of the common shares or their inclusion would have been anti-dilutive. |
CARES ACT
CARES ACT | 12 Months Ended |
Dec. 31, 2020 | |
Stock Transactions | |
NOTE 8. - CARES ACT | NOTE 8. – CARES ACT Paycheck Protection Program (“PPP”) Loan - Deferral of employment tax deposits and payments – · On December 31, 2021, 50 percent of the eligible deferred amount ($69,025); and · On December 31, 2022, the remaining amount. |
Stock Option Plans and Agreemen
Stock Option Plans and Agreements | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Stock Transactions | ||
Note 10. Stock Option Plans and Agreements | Note 10. Stock Option Plans and Agreements The Company has approved stock options plans and agreements covering up to an aggregate of 11,863,000 shares of common stock. Such options may be designated at the time of grant as either incentive stock options or nonqualified stock options. Stock based compensation consists of charges for stock option awards to employees, directors and consultants. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. 1,755,000 options were granted for the nine months ended September 30, 2021. 1,555,000 options were granted for the nine months ended September 30, 2020. The following assumptions were used for the nine months ended September 30, 2021. Risk-free interest rate 0.16% - 0.43 % Expected dividend yield 0 % Expected stock price volatility 100-140 % Expected life of options 2.75 – 5.25 years The Company recorded expense for options issued to employees and independent service providers of $7,296 and $117,464 for the three and nine months ended September 30, 2021, respectively ($34,341 and $53,318 in 2020). The Company issued 750,000 performance-based stock options during the nine months ended September 30, 2021 at $0.245 per share to an executive of the Company. Certain revenue targets must be made to grant the options in three tranches of 250,000 shares each. The unrecognized compensation expense for these options is approximately $135,800 at September 30, 2021. 1,440,000 options vested during the nine months ended September 30, 2021. A summary of all stock option activity for the nine months ended September 30, 2021 follows: Number of Options Outstanding Weighted Average Exercise Price Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2020 12,430,500 $ .05 Granted 1,755,000 .21 Exercised (2,319,000 ) .04 Forfeited (898,000 ) .08 Expired (45,000 ) .10 Outstanding at September 30, 2021 10,923,500 $ .08 3.6 years $ 1,466,000 At September 30, 2021 - vested or expected to vest 10,173,500 $ .08 3.6 years $ 1,150,000 Exercisable 10,088,500 $ .07 3.5 years $ 1,149,700 | NOTE 10. - STOCK OPTION AGREEMENTS AND TRANSACTIONS The Company grants stock options to its key employees and independent service providers as it deems appropriate. Options expire from five to ten years after the grant date. Option Agreements - Loan Fees - On August 24, 2020, the Company entered into a note payable agreement for $166,473 with a third party. The note has an interest rate of 6% and is due on August 24, 2024. As consideration for providing this financing, the Company granted a stock option to purchase a total of 500,000 common shares at an exercise price of $.05 and recorded interest expense of $52,900 using the Black-Scholes option pricing model to determine the estimated fair value of the option. On November 17, 2020, the Company extended a note payable agreement of $146,300 with a related party. The note has an interest rate of 6% and is due on January 1, 2022. As consideration for providing this extension of the financing, the Company granted a stock option to purchase a total of 250,000 common shares at an exercise price of $.12 and recorded interest expense of $15,450 using the Black-Scholes option pricing model to determine the estimated fair value of the option. On December 31, 2020, the Company extended a note payable agreement of $9,000 with a third party. The note has an interest rate of 6% and is due on January 1, 2024. As consideration for providing this extension of the financing, the Company granted a stock option to purchase a total of 25,000 common shares at an exercise price of $.10 and recorded interest expense of $958 using the Black-Scholes option pricing model to determine the estimated fair value of the option. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model based on the following assumptions. Volatility is based on the Company’s historical volatility. The expected life of the options was determined using the simplified method for plain vanilla options as stated in FASB ASC 718 to improve the accuracy of this assumption while simplifying record keeping requirements until more detailed information about the Company’s exercise behavior is available. The risk-free rate for the life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The following assumptions were used for the years ended December 31, 2020 and 2019. 2020 2019 Risk free interest rate 0.17% to 1.40 % 1.38% to 2.55 % Expected dividend yield 0 % 0 % Expected stock price volatility 100 % 100 % Expected life of options 1.75 to 3.01 years 2.75 to 3.90 years The following is a summary of stock option activity, including qualified and non-qualified options for the years ended December 31, 2020 and 2019: Number of Options Outstanding Weighted Average Exercise Price Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2018 7,920,000 $ .09 Granted 4,203,500 $ .03 Expired (275,000 ) $ .07 Forfeited (938,000 ) $ .23 Outstanding at December 31, 2019 10,910,500 $ .05 Granted 1,880,000 $ .07 Expired (335,000 ) $ .15 Forfeited (25,000 ) $ .05 Outstanding at December 31, 2020 12,430,500 $ .05 3.3 years $ 480,400 Vested or expected to vest at December 31, 2020 12,430,500 $ .05 3.3 years $ 480,400 Exercisable at December 31, 2020 11,885,500 $ .05 3.3 years $ 467,800 At December 31, 2020, there was $0 of total unrecognized compensation cost related to outstanding non-vested options. The weighted average fair value of options granted was $.07 and $.03 per share for the years ended December 31, 2020 and 2019, respectively. The exercise price for all options granted equaled or exceeded the market value of the Company’s common stock on the date of grant with the exception of the 500,000 options granted in consideration for providing the financing on August 24, 2020. |
STOCK AND STOCK OPTION PLANS
STOCK AND STOCK OPTION PLANS | 12 Months Ended |
Dec. 31, 2020 | |
STOCK AND STOCK OPTION PLANS | |
NOTE 9. - STOCK AND STOCK OPTION PLANS | NOTE 9. - STOCK AND STOCK OPTION PLANS Preferred Stock - 2005 Plan - 2009 Plan - 2019 Plan - 2020 Plan - |
Lease
Lease | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Lease | ||
Note 11. Lease | Note 11. Lease Beginning on August 1, 2016, the Company leases its headquarters facility under an operating lease agreement that expires on June 30, 2022. The Company has the right to terminate the lease upon six months prior notice after three years of occupancy. Rent expense is $80,000 annually during the first year of the lease term and increases by 1.5% annually thereafter. Supplemental balance sheet information related to the lease on September 30, 2021 and December 31, 2020 is as follows: Description Classification September 30, 2021 December 31, 2020 Right of Use Asset – Lease, net Other assets (non-current) $61,765 $120,777 Operating Lease liability – Short-term Accrued liabilities 63,050 80,258 Operating Lease liability – Long-term Other long-term liabilities 0 42,347 Total operating lease liability $63,050 $122,605 Discount rate – operating lease 6.0% | NOTE 13. - LEASE Beginning on August 1, 2016, the Company leases its headquarters facility under an operating lease agreement that expires on June 30, 2022. The Company has the right to terminate the lease upon six months prior notice after three years of occupancy. Rent expense is $80,000 annually during the first year of the lease term and increases by 1.5% annually thereafter. Supplemental balance sheet information related to the operating lease was as follows: December 31, 2020 Right of use asset – lease, net $ 120,777 Operating lease liability - short-term $ 80,258 Operating lease liability - long-term 42,347 Total operating lease liability $ 122,605 Discount rate - operating lease 6.0 % |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2020 | |
INCOME TAXES | |
NOTE 11. - INCOME TAXES | NOTE 11. - INCOME TAXES The components of income tax expense (benefit) consists of the following: December 31, 2020 2019 Deferred: Federal $ 39,000 $ 49,000 State (10,000 ) 6,000 29,000 55,000 Change in valuation allowance (29,000 ) (55,000 ) $ 0 $ 0 At December 31, 2020, the Company had federal net operating loss carryforwards of approximately $6,900,000 ($7,300,000 - 2019) and various state net operating loss carryforwards of approximately $3,200,000 ($3,200,000 - 2019) which expire from 2021 through 2040. These carryforwards exclude federal net operating loss carryforwards from inactive subsidiaries and net operating loss carryforwards from states that the Company does not presently operate in. Utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. The annual limitation may result in the expiration of the net operating loss carryforwards before utilization. At December 31, 2020, a net deferred tax asset, representing the future benefit attributed primarily to the available net operating loss carryforwards and defined benefit plan expenses in the amount of approximately $1,914,000 ($1,943,000 - 2019), had been fully offset by a valuation allowance because management believes that the statutory limitations on utilization of the operating losses and concerns over achieving profitable operations diminish the Company’s ability to demonstrate that it is more likely than not that these future benefits will be realized before they expire. The following is a summary of the Company's temporary differences and carryforwards which give rise to deferred tax assets and liabilities. December 31, 2020 2019 Deferred tax assets (liabilities): Net operating loss carryforwards $ 1,550,000 $ 1,650,000 Defined benefit pension liability 60,000 60,000 Operating Lease ROU (30,000 ) (48,000 ) Operating Lease Liability 30,000 48,000 Deferred Revenue 11,000 0 Reserves and accrued expenses payable 293,000 233,000 Gross deferred tax asset 1,914,000 1,943,000 Deferred tax asset valuation allowance (1,914,000 ) (1,943,000 ) Net deferred tax asset $ 0 $ 0 The differences between the U.S. statutory federal income tax rate and the effective income tax rate in the accompanying statements of operations are as follows: December 31, 2020 2019 Statutory U.S. federal tax rate 21.0 % 21.0 % Change in valuation allowance (4.2 ) (115.6 ) Net operating loss carryforward expiration 13.4 71.5 State taxes (1.5 ) 12.8 Expired stock-based compensation 1.0 3.1 Forgiveness of PPP loan (29.9 ) 0.0 Other permanent non-deductible items .2 7.2 Effective income tax rate 0.0 % 0.0 % |
Related Party Accounts Receivab
Related Party Accounts Receivable and Accrued Interest Payable | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Related Party Accounts Receivable and Accrued Interest Payable | ||
Note 12. Related Party Accounts Receivable and Accrued Interest Payable | Note 12. Related Party Accrued Interest Payable Included in accrued interest payable is amounts due to related parties of $86,344, at September 30, 2021 ($62,114 at December 31, 2020). An additional $114,460 of accrued interest to related parties is due to be paid after September 30, 2022. | NOTE 14. - RELATED PARTY ACCRUED INTEREST PAYABLE Accrued Interest Payable - |
EMPLOYEE RETIREMENT PLANS
EMPLOYEE RETIREMENT PLANS | 12 Months Ended |
Dec. 31, 2020 | |
Management Plans - Capital Resources | |
NOTE 12. - EMPLOYEE RETIREMENT PLANS | NOTE 12. - EMPLOYEE RETIREMENT PLANS Simple IRA Plan 401(k) Plan - |
Subsequent Events
Subsequent Events | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Subsequent Events | ||
Note 13. Subsequent Events | Note 13. Subsequent Events Subsequent to September 30, 2021, the Company entered into three demand notes of $12,000 each with three related parties. The interest rate for each of these notes was 6%. On October 28, 2021, the Company entered into a demand note of $150,000 with its Vice President of Business Development, Richard Popper (the “Popper Note”). The interest rate for this note was 6%. On November 2, 2021, the Company entered into a subscription agreement (the “Subscription Agreement”) with its Vice President of Business Development, Richard Popper. Pursuant to the Subscription Agreement, Mr. Popper agreed to purchase an aggregate amount of 1,000,000 shares of the Company’s common stock, par value $0.001 per share, at $0.10 per share, in exchange for the conversion and cancellation of an aggregate of $100,000 principal amount of the Popper Note. The closing of the Subscription Agreement occurred concurrently with the execution of the Subscription Agreement. The closing price of the Company common stock on November 2 was $0.17 per share. On November 3, 2021, the Company, as borrower, entered into a financing arrangement (the “Loan”) with Mast Hill Fund, L.P. (the “Lender”), a Delaware limited partnership. In exchange for a promissory note, Lender agreed to lend the Company $448,000, which bears interest at a rate of eight percent (8%) per annum, less $44,800 original issue discount. Under the terms of the Loan, amortization payments are due beginning March 3, 2022, and each month thereafter with the final payment due on November 3, 2022. Additionally, in the event of a default under the Loan or if the Company elects to pre-pay the Loan, the Lender has the right to convert any portion or all of the outstanding and unpaid principal and interest into fully paid and non-assessable shares of the Company’s common stock at a conversion price of $0.10 per share. The conversion price is subject to adjustment under certain circumstances, including issuances of Company common stock below the conversion price. The Company is not required to issue additional shares to Mast Hill in the event an adjustment to the conversion price occurs. Except for the option to convert the note in the event of a pre-payment, there is no pre-payment penalty associated with the promissory note. The Loan is subject to customary events of default, including cross-defaults on the Loan agreements and on other indebtedness of the Company, violations of securities laws (including Regulation FD), and failure to issue shares upon a conversion of the note. Amounts due under the Loan are subject to a 15% penalty in the event of a default. As additional consideration for the financing, the Company issued Lender a 5-year warrant to purchase 1,400,000 shares of Company common stock at a fixed price of $0.16 per share, subject to price adjustments for certain actions, including dilutive issuances, representing 50% warrant coverage on the principal amount of the Loan. The closing price of the Company common stock on November 3 was $0.17 per share. The Company has granted the Mast Hill customary “piggy-back” registration rights with respect to the shares issuable upon conversion of the promissory note and exercise of the warrant. No material relationship exists between the Company or its affiliates and Mast Hill, other than in respect of the Loan. J.H. Darbie & Co., Inc. ( “J.H Darbie”), a registered broker-dealer, acted as a finder in connection with the Loan, and was paid a cash fee of $20,160 (5% of the gross proceeds of the Loan) and issued a 5-year warrant to purchase 160,125 shares of Company common stock at a fixed price of $0.192 per share (120% of the exercise price of the warrant issued in connection with the Loan), subject to price adjustments for certain actions, including dilutive issuances, representing 7% warrant coverage on the gross proceeds of the Loan. The Company has granted J.H Darbie customary “piggy-back” registration rights with respect to the shares issuable upon exercise of the warrant. | NOTE 15. - SUBSEQUENT EVENTS To date, the COVID-19 outbreak has not had a material adverse impact on our operations. The extent of the impact of COVID-19 on the Company's operational and financial results will depend on future developments, including the duration and spread of the outbreak and related governmental or other regulatory actions. On January 15, 2021, the Company extended a note payable agreement of $175,000 with a third party. The note has an interest rate of 12% and is due on January 1, 2024. On January 15, 2021, the Company extended a note payable agreement of $100,000 with a third party. The note has an interest rate of 7% and is due on January 1, 2024. On February 14, 2021, the Company extended a note payable agreement of $146,300 and accrued interest of $97,102 with a related party. The note has an interest rate of 6% and is due on January 1, 2024. On February 14, 2021, the Company extended a note payable agreement of $25,000 and accrued interest of $35,135 with a related party. The note has an interest rate of 6% and is due on June 30, 2023 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Summary of Significant Accounting Policies | ||
Reclassifications | Reclassifications | Reclassifications - |
Fair Value of Financial Instruments | Fair Value of Financial Instruments | Fair Value of Financial Instruments - · Level 1 uses observable inputs such as quoted prices in active markets; · Level 2 uses inputs other than quoted prices in active markets that are either directly or indirectly observable; and · Level 3 is defined as unobservable inputs in which little or no market data exist and requires the Company to develop its own assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The carrying amounts of cash, accounts receivable and accounts payable and accrued expenses are reasonable estimates of their fair value due to their short maturity. Based on the borrowing rates currently available to the Company for loans similar to its term debt and notes payable, the fair value approximates the carrying amounts. |
Revenue, | The Company’s total revenue recognized from contracts from customers was comprised of three major services: Managed support services, Cybersecurity projects and software and Other IT consulting services. The categories depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. There were no material unsatisfied performance obligations at September 30, 2021 or 2020 for contracts with an expected original duration of more than one year. The following table summarizes the revenue recognized by the major services: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Managed support services $ 1,114,851 $ 1,192,469 $ 3,243,183 $ 3,533,777 Cybersecurity projects and software 704,889 601,080 2,096,403 1,700,728 Other IT consulting services 17,000 51,000 119,000 213,000 Total sales $ 1,836,740 $ 1,844,549 $ 5,458,586 $ 5,447,505 Managed support services Managed support services consist of revenue primarily from our subcontracts with Peraton (which purchased Perspecta in May 2021) for services to its end clients, principally a major establishment of the U.S. Government for which we manage one of the nation’s largest physical and virtual Microsoft Windows environments. · We generate revenue primarily from these subcontracts through fixed price service and support agreements. Revenues are earned and billed weekly and are generally paid within 45 days. The revenues are recognized at time of service. Cybersecurity projects and software Cybersecurity projects and software revenue includes the selling of licenses of Nodeware® and third-party software, principally Webroot™ as well as performing cybersecurity assessments and testing. · Nodeware® and Webroot™ software offerings consist of fees generated from the use of the respective software by our customers. Revenue is recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Substantially all customers are billed in the month of the service and is cancellable upon notice per the respective agreements. Substantially all payments are electronically billed, and the billed amounts are paid to the Company instantaneously via an online payment platform. If payments are made in advance, revenues related to the term associated with our software licenses is recognized ratably over the contractual period. · Some of our customers have the option to purchase additional subscription and support services at a stated price. These options generally do not provide a material right as they are priced at our standalone selling price. · Cybersecurity assessments and testing services are considered distinct performance obligations when sold stand alone or with other products. These contracts generally have terms of one year or less. For substantially all these contracts, revenue is recognized when the specific performance obligation is satisfied. If the contract has multiple performance obligations, the revenue is recognized when the performance obligations are satisfied. Depending on the nature of the service, the amounts recognized are based on an allocation of the transaction price to each performance obligation based on a relative standalone selling price of the products sold. · In substantially all agreements, a 50% to 75% down payment is required before work is initiated. Down payments received are deferred until revenue is earned. Upon completion of performance obligation of service, payment terms are 30 days. Other IT consulting services Other IT consulting services consists of services such as project management and general IT consulting services. · We generate revenue via fixed price service agreements. These are based on periodic billings of a fixed dollar amount for recurring services of a similar nature performed according to the contractual arrangements with clients. The revenues are recognized at time of service. Based on historical experience, the Company believes that collection is reasonably assured. During the three and nine months ended September 30, 2021, sales to one client, including sales under subcontracts for services to several entities, accounted for 60.7% and 59.0%, respectively, of total sales (60.4% and 61.5%, respectively, in 2020) and 22.6% of accounts receivable at September 30, 2021 (38.8% - December 31, 2020). | |
Capitalization of Software for Resale | Capitalization of Software for Resale Capitalization of Software for Resale - | |
Leases | Leases - | Leases - |
Account receivable | Accounts Receivable - | |
Concentration of Credit Risk | Concentration of Credit Risk | |
Loan Origination Fees | Loan Origination Fees | |
Sale of Certain Accounts Receivable | Sale of Certain Accounts Receivable - These transactions qualify for a sale of assets since (1) the Company has transferred all of its right, title and interest in the selected accounts receivable invoices to the financial institution, (2) the Purchaser may pledge, sell or transfer the selected accounts receivable invoices, and (3) the Company has no effective control over the selected accounts receivable invoices since it is not entitled to or obligated to repurchase or redeem the invoices before their maturity and it does not have the ability to unilaterally cause the Purchaser to return the invoices. Under FASB ASC 860, after a transfer of financial assets, an entity recognizes the financial and servicing assets it controls and the liabilities it has incurred, derecognizes financial assets when control has been surrendered, and derecognizes liabilities when extinguished. Pursuant to the provisions of FASB ASC 860, the Company reflects the transactions as a sale of assets and establishes an accounts receivable from the Purchaser for the retained amount less the costs of the transaction and less any anticipated future loss in the value of the retained asset. The retained amount is equal to 10% of the total accounts receivable invoice sold to the Purchaser. The fee is charged at prime plus 3.6% (effective rate of 6.85% at December 31, 2020) against the average daily outstanding balance of funds advanced. The estimated future loss reserve for each receivable included in the estimated value of the retained asset is based on the payment history of the accounts receivable customer and is included in the allowance for doubtful accounts, if any. As collateral, the Company granted the Purchaser a first priority interest in accounts receivable and a blanket lien, which may be junior to other creditors, on all other assets. The financing line provides the Company the ability to finance up to $2,000,000 of selected accounts receivable invoices, which includes a sublimit for one of the Company’s customers of $1,500,000. During the year ended December 31, 2020, the Company sold approximately $1,749,697 ($4,742,933 - 2019) of its accounts receivable to the Purchaser. As of December 31, 2020, $0 ($324,125 - 2019) of these receivables remained outstanding. Additionally, as of December 31, 2020, the Company had $362,000 available under the financing line with the financial institution ($67,000 - 2019). After deducting estimated fees and advances from the Purchaser, the net receivable from the Purchaser amounted to $0 at December 31, 2020 ($32,412 - 2019) and is included in accounts receivable in the accompanying balance sheets as of that date. There were no gains or losses on the sale of the accounts receivable because all were collected. The cost associated with the financing line was approximately $21,100 for the year ended December 31, 2020 ($53,600 - 2019). These financing line fees are classified on the statements of operations as interest expense. | |
Property and Equipment | Property and Equipment - | |
Accounting for the Impairment or Disposal of Long-Lived Assets | Accounting for the Impairment or Disposal of Long-Lived Assets - | |
Revenue Recognition | The Company’s revenues are generated under both time and material and fixed price agreements. Managed Support services revenue is recognized when the associated costs are incurred, which coincides with the consulting services being provided. Time and materials service agreements are based on hours worked and are billed at agreed upon hourly rates for the respective position plus other billable direct costs. Fixed price service agreements are based on a fixed amount of periodic billings for recurring services of a similar nature performed according to the contractual arrangements with clients. These agreements are arrangements for monthly or weekly support services. Under both types of agreements, the delivery of services occurs when an employee works on a specific project or assignment as stated in the contract or purchase order. Based on historical experience, the Company believes that collection is reasonably assured. The Company sells licenses of Nodeware and third-party software, principally Webroot. Substantially all customers are invoiced monthly at fixed rates for license fees and revenue is recognized over time. The Company sold VMware software and service credits in 2019. Sales were recorded upon receipt of the software or credits by the customer. The Company did not take title to the software or credits. Accordingly, the Company accounted for these as agent sales and reduced its sales amount by the related cost of sales. The Company’s total revenue recognized from contracts from customers was comprised of three major services: Managed support services, Cybersecurity projects and software and Other IT consulting services. The categories depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. There were no material unsatisfied performance obligations at December 31, 2020 or 2019 for contracts with an expected original duration of more than one year. The following table summarizes the revenue recognized by the major services: Years Ended December 31, 2020 2019 Managed support services $ 4,669,570 $ 4,986,217 Cybersecurity projects and software 2,285,876 1,569,972 Other IT consulting services 264,000 538,090 Total revenue $ 7,219,446 $ 7,094,279 Managed support services Managed support services consist of revenue primarily from our subcontracts for services to its end clients, principally a major establishment of the U.S. Government for which we manage one of the nation’s largest physical and virtual Microsoft Windows environments. · We generate revenue primarily from these subcontracts through fixed price service and support agreements. Revenues are earned and billed weekly and are generally paid within 45 days. The revenues are recognized at time of service. Cyber security projects and software Cyber security projects and software revenue includes the selling of licenses of Nodeware™ and third-party software, principally Webroot™ as well as performing cybersecurity assessments, testing and consulting as a CISO (Chief Information Security Officer). · Nodeware™ and Webroot™ software offerings consist of fees generated from the use of the respective software by our customers. Revenue is recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Substantially all customers are billed in the month of the service and is cancellable upon notice per the respective agreements. Substantially all payments are electronically billed, and the billed amounts are paid to the Company instantaneously via an online payment platform. If payments are made in advance, revenues related to the term associated with our software licenses is recognized ratably over the contractual period. · Some of our customers have the option to purchase additional subscription and support services at a stated price. These options generally do not provide a material right as they are priced at our standalone selling price. · Cybersecurity assessments, testing and Chief Information Security Officer (CISO) services are considered distinct performance obligations when sold stand alone or with other products. These contracts generally have terms of one year or less. For substantially all these contracts, revenue is recognized when the specific performance obligation is satisfied. If the contract has multiple performance obligations, the revenue is recognized when the performance obligations are satisfied. Depending on the nature of the service, the amounts recognized are either based on an allocation of the transaction price to each performance obligation based on a relative standalone selling price of the products sold. · In substantially all agreements, a 50% to 75% down payment is required before work is initiated. Down payments received are deferred until revenue is earned. For the year ended December 31, 2020, we recognized revenue of approximately $169,000 that was included in the deferred revenue balance at the beginning of the period presented. Deferred revenue that will be realized during the succeeding 12-month period is approximately $311,000, and the remaining deferred revenue of $10,000 is scheduled to be realized in 2022. Other IT consulting services Other IT consulting services consists of services such as project management and general IT consulting services. · We generate revenue via fixed price service agreements. These are based on periodic billings of a fixed dollar amount for recurring services of a similar nature performed according to the contractual arrangements with clients. The revenues are recognized at time of service. Based on historical experience, the Company believes that collection is reasonably assured. During 2020, sales to one client, including sales under subcontracts for services to several entities, accounted for 61.2% of total sales (62.6% - 2019) and 38.8% of accounts receivable at December 31, 2020 (22.1% - 2019). | |
Revenue and Cost of Revenue | Revenue and Cost of Revenue - | |
Stock Options | Stock Options - | |
Income Taxes | Income Taxes - The Company periodically reviews tax positions taken to determine if it is more likely than not that the position would be sustained upon examination. The Company did not have any material unrecognized tax benefit at December 31, 2020 or 2019. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2020 and 2019, the Company recognized no interest and penalties. The Company files U.S. federal tax returns and tax returns in various states. The tax years 2017 through 2020 remain open to examination by the taxing jurisdictions to which the Company is subject. | |
Earnings Per Share | Earnings Per Share - The following table sets forth the computation of basic and diluted loss per share as of December 31, 2020 and 2019: Years ended December 31, 2020 2019 Numerator for basic and diluted net income per share: Basic net income $ 675,996 $ 47,977 Plus: Interest expense saved on converted debt 27,068 0 Diluted net income $ 703,064 $ 47,977 Basic and diluted net income per share $ .02 $ .00 Weighted average common shares outstanding Basic shares 29,061,883 29,061,883 Plus: Stock options 6,215,883 750,000 Plus: Convertible debt 9,422,320 0 Diluted shares 44,700,086 29,811,883 Anti-dilutive shares excluded from net income per share 2,715,000 29,195,736 Certain common shares issuable under stock options and convertible notes payable have been omitted from the diluted net income (loss) per share calculation because their inclusion is considered anti-dilutive because the exercise or conversion prices were greater than the average market price of the common shares or their inclusion would have been anti-dilutive. | |
Use of Estimates | Use of Estimates - |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Summary of Significant Accounting Policies | ||
Schedule of earning Loss per share, basic and diluted | Years ended December 31, 2020 2019 Numerator for basic and diluted net income per share: Basic net income $ 675,996 $ 47,977 Plus: Interest expense saved on converted debt 27,068 0 Diluted net income $ 703,064 $ 47,977 Basic and diluted net income per share $ .02 $ .00 Weighted average common shares outstanding Basic shares 29,061,883 29,061,883 Plus: Stock options 6,215,883 750,000 Plus: Convertible debt 9,422,320 0 Diluted shares 44,700,086 29,811,883 Anti-dilutive shares excluded from net income per share 2,715,000 29,195,736 | |
Schedule of Disaggregation of revenue | Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Managed support services $ 1,114,851 $ 1,192,469 $ 3,243,183 $ 3,533,777 Cybersecurity projects and software 704,889 601,080 2,096,403 1,700,728 Other IT consulting services 17,000 51,000 119,000 213,000 Total sales $ 1,836,740 $ 1,844,549 $ 5,458,586 $ 5,447,505 | Years Ended December 31, 2020 2019 Managed support services $ 4,669,570 $ 4,986,217 Cybersecurity projects and software 2,285,876 1,569,972 Other IT consulting services 264,000 538,090 Total revenue $ 7,219,446 $ 7,094,279 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Earnings per Share | |
Schedule of earning Loss per share, basic and diluted | Years ended December 31, 2020 2019 Numerator for basic and diluted net income per share: Basic net income $ 675,996 $ 47,977 Plus: Interest expense saved on converted debt 27,068 0 Diluted net income $ 703,064 $ 47,977 Basic and diluted net income per share $ .02 $ .00 Weighted average common shares outstanding Basic shares 29,061,883 29,061,883 Plus: Stock options 6,215,883 750,000 Plus: Convertible debt 9,422,320 0 Diluted shares 44,700,086 29,811,883 Anti-dilutive shares excluded from net income per share 2,715,000 29,195,736 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
PROPERTY AND EQUIPMENT | |
Property and equipment | December 31, Depreciable Lives 2020 2019 Software 3 years $ 72,834 $ 34,934 Equipment 3 to 10 years 142,129 131,719 Furniture and fixtures 5 to 7 years 17,735 17,735 232,698 184,388 Accumulated depreciation (184,499 ) (178,473 ) $ 48,199 $ 5,915 |
Stock Option Plans and Agreem_2
Stock Option Plans and Agreements (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Stock Transactions | ||
Stock option valuation assumptions | Risk-free interest rate 0.16% - 0.43 % Expected dividend yield 0 % Expected stock price volatility 100-140 % Expected life of options 2.75 – 5.25 years | 2020 2019 Risk free interest rate 0.17% to 1.40 % 1.38% to 2.55 % Expected dividend yield 0 % 0 % Expected stock price volatility 100 % 100 % Expected life of options 1.75 to 3.01 years 2.75 to 3.90 years |
Stock option activity | Number of Options Outstanding Weighted Average Exercise Price Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2020 12,430,500 $ .05 Granted 1,755,000 .21 Exercised (2,319,000 ) .04 Forfeited (898,000 ) .08 Expired (45,000 ) .10 Outstanding at September 30, 2021 10,923,500 $ .08 3.6 years $ 1,466,000 At September 30, 2021 - vested or expected to vest 10,173,500 $ .08 3.6 years $ 1,150,000 Exercisable 10,088,500 $ .07 3.5 years $ 1,149,700 | Number of Options Outstanding Weighted Average Exercise Price Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2018 7,920,000 $ .09 Granted 4,203,500 $ .03 Expired (275,000 ) $ .07 Forfeited (938,000 ) $ .23 Outstanding at December 31, 2019 10,910,500 $ .05 Granted 1,880,000 $ .07 Expired (335,000 ) $ .15 Forfeited (25,000 ) $ .05 Outstanding at December 31, 2020 12,430,500 $ .05 3.3 years $ 480,400 Vested or expected to vest at December 31, 2020 12,430,500 $ .05 3.3 years $ 480,400 Exercisable at December 31, 2020 11,885,500 $ .05 3.3 years $ 467,800 |
NOTES PAYABLE CURRENT (Tables)
NOTES PAYABLE CURRENT (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
NOTES PAYABLE CURRENT | |
Notes payable | December 31, 2020 2019 Demand note payable, 10%, secured by Software (A) $ 12,500 $ 12,500 Demand note payable to former director, 10%, unsecured (B) 0 30,000 Convertible demand note payable to former director, 12%, unsecured (B) 0 40,000 Convertible notes payable, 6% (C) 150,000 150,000 Convertible term note payable, 7%, secured (D) 0 100,000 $ 162,500 $ 332,500 |
Notes payable -- related parties | December 31, 2020 2019 Demand notes payable to officer and director, 6%, unsecured $ 0 $ 38,000 Demand note payable to director, 6%, unsecured 0 20,000 $ 0 $ 58,000 |
LONGTERM OBLIGATIONS (Tables)
LONGTERM OBLIGATIONS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
LONGTERM OBLIGATIONS | |
Notes payable - other | December 31 2020 2019 2016 note payable, 6%, unsecured, due December 31, 2021 (A) $ 500,000 $ 500,000 Convertible note payable, 6%, due January 1, 2020 (B) 0 264,000 Note payable, 10%, secured, due January 1, 2018 (C) 265,000 265,000 Convertible term note payable, 12%, secured, due August 31, 2018 (D) 175,000 175,000 Term note payable - PBGC, 6%, secured (E) 246,000 246,000 2020 note payable, 6%, unsecured, due August 24, 2024 (F) 166,473 0 Convertible term note payable, 7%, secured (G) 100,000 0 Convertible notes payable, 6%, due January 1, 2024 (H) 9,000 9,000 Accrued interest due after 2021(I) 7,296 0 1,468,769 1,459,000 Less: deferred financing costs 6,555 13,110 1,462,214 1,445,890 Less: current maturities 1,004,445 950,000 $ 457,769 $ 495,890 |
Notes payable ~ related parties | December 31, 2020 2019 Note payable, up to $500,000, 7.5%, due August 31, 2026 (A) $ 250,000 $ 200,000 2020 Note payable, 6%, due January 1, 2024 (B) 328,000 0 Convertible notes payable, 6% (C) 146,300 146,300 Note payable, $400,000 line of credit, 8.35%, unsecured (D) 0 366,635 Convertible note payable, 7%, due June 30, 2023 (E) 25,000 25,000 Note payable, $100,000 line of credit, 6%, unsecured (F) 90,000 90,000 Note payable, $75,000 line of credit, 6%, unsecured (G) 70,000 70,000 Accrued interest due after 2021(H) 106,520 0 1,015,820 897,935 Less current maturities 0 512,935 $ 1,015,820 $ 385,000 |
Long-term obligations | Annual Annual Payments Amortization Net Due Prior to 2021 $ 673,500 $ 0 $ 673,500 2021 500,000 6,555 493,445 2022 190,000 0 190,000 2023 205,500 0 205,500 2024 828,089 0 828,089 2025 0 0 0 2026 250,000 0 250,000 Total long-term obligations $ 2,647,089 $ 6,555 $ 2,640,534 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
INCOME TAXES | |
Components of income tax expense (benefit) | December 31, 2020 2019 Deferred: Federal $ 39,000 $ 49,000 State (10,000 ) 6,000 29,000 55,000 Change in valuation allowance (29,000 ) (55,000 ) $ 0 $ 0 |
Deferred tax assets and liabilities | December 31, 2020 2019 Deferred tax assets (liabilities): Net operating loss carryforwards $ 1,550,000 $ 1,650,000 Defined benefit pension liability 60,000 60,000 Operating Lease ROU (30,000 ) (48,000 ) Operating Lease Liability 30,000 48,000 Deferred Revenue 11,000 0 Reserves and accrued expenses payable 293,000 233,000 Gross deferred tax asset 1,914,000 1,943,000 Deferred tax asset valuation allowance (1,914,000 ) (1,943,000 ) Net deferred tax asset $ 0 $ 0 |
Effective income tax rate reconciliation | December 31, 2020 2019 Statutory U.S. federal tax rate 21.0 % 21.0 % Change in valuation allowance (4.2 ) (115.6 ) Net operating loss carryforward expiration 13.4 71.5 State taxes (1.5 ) 12.8 Expired stock-based compensation 1.0 3.1 Forgiveness of PPP loan (29.9 ) 0.0 Other permanent non-deductible items .2 7.2 Effective income tax rate 0.0 % 0.0 % |
Lease (Tables)
Lease (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Lease | |
Supplemental operating lease information | December 31, 2020 Right of use asset – lease, net $ 120,777 Operating lease liability - short-term $ 80,258 Operating lease liability - long-term 42,347 Total operating lease liability $ 122,605 Discount rate - operating lease 6.0 % |
Management Plans Capital Resour
Management Plans Capital Resources (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2017 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | |
Net loss | $ (269,806) | $ (108,848) | $ (838,536) | $ (187,735) | $ 675,996 | $ 47,977 | ||||||
Operating income | (331,004) | (3,275) | (792,166) | 29,159 | 1,291 | 329,137 | ||||||
Total stockholders' deficiency | (3,671,887) | $ 3,988,824 | (3,671,887) | $ 3,988,824 | (3,105,770) | (3,907,310) | $ (4,000,094) | $ (3,491,277) | $ (3,229,749) | $ (3,967,217) | $ (3,911,242) | |
Working capital deficit | (2,500,000) | (2,500,000) | (2,100,000) | |||||||||
Lines of credit related parties | $ 175,000 | |||||||||||
Borrow amount | $ 140,000 | $ 20,000 | ||||||||||
Unrelated third party [Member] | ||||||||||||
Net proceeds | 403,200 | |||||||||||
Vice President [Member] | ||||||||||||
Promissory note | 150,000 | 150,000 | ||||||||||
Three Related Parties [Member] | ||||||||||||
Demand notes | 12,000 | $ 12,000 | ||||||||||
During 2019 [Member] | ||||||||||||
Note payable | $ 50,000 | $ 200,000 | ||||||||||
Financial agreement under plan | 250,000 | |||||||||||
During 2017 [Member] | ||||||||||||
Financial agreement under plan | $ 15,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Sales | $ 1,836,740 | $ 1,844,549 | $ 5,458,586 | $ 5,447,505 | $ 7,219,446 | $ 7,094,279 |
Managed Support Services | ||||||
Sales | 1,114,851 | 1,192,469 | 3,243,183 | 3,533,777 | 4,669,570 | 4,986,217 |
Cybersecurity Projects and Software | ||||||
Sales | 704,889 | 601,080 | 2,096,403 | 1,700,728 | 2,285,876 | 1,569,972 |
Other IT Consulting Services | ||||||
Sales | $ 17,000 | $ 51,000 | $ 119,000 | $ 213,000 | $ 264,000 | $ 538,090 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Summary of Significant Accounting Policies | ||||||
Net income | $ 675,996 | $ 47,977 | ||||
Plus: Interest expense saved on converted debt | 27,068 | 0 | ||||
Diluted net income | $ 703,064 | $ 47,977 | ||||
Basic and diluted net income per share | $ (0.01) | $ 0 | $ (0.03) | $ (0.01) | $ 0.02 | $ 0 |
Weighted average common shares outstanding - basic | 29,978,872 | 29,061,883 | 29,421,641 | 29,061,883 | 29,061,883 | 29,061,883 |
Plus: Stock options | 6,215,883 | 750,000 | ||||
Plus: Convertible debt | 9,422,320 | 0 | ||||
Weighted average comon shares outstanding - diluted | 29,978,872 | 29,061,883 | 29,421,641 | 29,061,883 | 43,450,086 | 29,811,883 |
Anti-dilutive shares excluded from net loss per share | 21,185,207 | 22,180,976 | 21,185,207 | 22,180,976 | 2,715,000 | 29,195,736 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Agent sales | $ 0 | $ 238,136 | ||||
Allowance for doubtful accounts receivable | $ 10,089 | $ 10,089 | 10,089 | 17,455 | ||
Outstanding receivable | 0 | 324,125 | ||||
Financial institution line under financing | 362,000 | 67,000 | ||||
Gain loss on Sale | 21,100 | 53,600 | ||||
Revenue recognize | 169,000 | |||||
Deferred revenue, | 10,000 | |||||
Purchaser [Member] | ||||||
Accounts receivable sale | 1,749,697 | 4,742,933 | ||||
Fees and advances | $ 0 | $ 32,412 | ||||
Customer A | Sales [Member] | ||||||
Concentration Risk, Percentage | 60.70% | 60.40% | 59.00% | 61.50% | 61.20% | 62.60% |
Customer A | Accounts Receivable [Member] | ||||||
Concentration Risk, Percentage | 22.60% | 38.80% | 38.80% | 22.10% |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Sep. 30, 2021 | Dec. 31, 2019 | |
Property, plant and equipment, gross | $ 232,698 | $ 184,388 | |
Accumulated depreciation | (184,499) | (178,473) | |
Property and equipment, net | 48,199 | $ 45,562 | 5,915 |
Software | |||
Property, plant and equipment, gross | $ 72,834 | 34,934 | |
Depreciable lives | 3 years | ||
Equipment | |||
Property, plant and equipment, gross | $ 142,129 | 131,719 | |
Equipment | Minimum | |||
Depreciable lives | 3 years | ||
Equipment | Maximum | |||
Depreciable lives | 10 years | ||
Furniture and Fixtures | |||
Property, plant and equipment, gross | $ 17,735 | $ 17,735 | |
Furniture and Fixtures | Minimum | |||
Depreciable lives | 5 years | ||
Furniture and Fixtures | Maximum | |||
Depreciable lives | 7 years |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT | ||
Depreciation | $ 6,026 | $ 4,567 |
Sale of Certain Accounts Rece_2
Sale of Certain Accounts Receivable (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Retained amount rate | 10 | ||
Prime plus rate | 3.6 | ||
Accounts receivable | $ 2,000,000 | ||
Gains or losses accounts receivable | 24,247 | $ 17,363 | |
Customer A | Accounts Receivables [Member] | |||
Accounts receivable | 2,471,000 | $ 1,437,000 | |
Purchaser [Member] | |||
Accounts receivable | 222,000 | 0 | |
Remained outstanding receivables | 71,000 | 362,000 | |
Allowance for bad debts | $ 22,000 | $ 0 |
Capitalization of Software fo_2
Capitalization of Software for Resale (Details Narratives) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Capitalization of Software for Resale | ||||||
Software development capitalized costs, gross | $ 629,820 | $ 629,820 | $ 449,445 | $ 194,215 | ||
Software development capitalized costs accumulated amortization | 211,626 | 211,626 | 94,541 | 9,539 | ||
Software development capitalized costs, net | 418,194 | 418,194 | 354,905 | 184,676 | ||
Amortization of software development capitalized costs | 42,291 | $ 24,914 | 117,085 | $ 55,430 | 85,002 | 9,539 |
Labor amounts expensed | $ 43,800 | $ 38,500 | $ 131,500 | $ 115,900 | 159,700 | $ 58,000 |
Future amortization 2021 | 148,146 | |||||
Future amortization 2022 | 140,276 | |||||
Future amortization 2023 | 64,813 | |||||
Future amortization 2024 | $ 1,670 |
NOTES PAYABLE CURRENT (Details)
NOTES PAYABLE CURRENT (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Notes payable, current | $ 162,500 | $ 332,500 |
Note Payable 1 | ||
Notes payable, current | 12,500 | 12,500 |
Note Payable 2 | ||
Notes payable, current | 0 | 30,000 |
Note Payable 3 | ||
Notes payable, current | 0 | 40,000 |
Note Payable 4 | ||
Notes payable, current | 150,000 | 150,000 |
Note Payable 5 | ||
Notes payable, current | $ 0 | $ 100,000 |
NOTES PAYABLE CURRENT (Details
NOTES PAYABLE CURRENT (Details 1) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Notes payable, related parties, current | $ 0 | $ 58,000 |
Note Payable - Related Party 1 | ||
Notes payable, related parties, current | 0 | 38,000 |
Note Payable - Related Party 2 | ||
Notes payable, related parties, current | $ 0 | $ 20,000 |
LONGTERM OBLIGATIONS (Details)
LONGTERM OBLIGATIONS (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Long-term debt | $ 1,468,769 | $ 1,459,000 | |
Less deferred financing costs | 6,555 | 13,110 | |
Total | $ 499,000 | 1,462,214 | 1,445,890 |
Less current maturities | 1,004,445 | 950,000 | |
Long-term debt, excluding current maturities | 457,769 | 495,890 | |
Notes Payable - Other 1 | |||
Long-term debt | 500,000 | 500,000 | |
Notes Payable - Other 2 | |||
Long-term debt | 0 | 264,000 | |
Notes Payable - Other 3 | |||
Long-term debt | 265,000 | 265,000 | |
Notes Payable - Other 4 | |||
Long-term debt | 175,000 | 175,000 | |
Notes Payable - Other 5 | |||
Long-term debt | 246,000 | 246,000 | |
Notes Payable - Other 6 | |||
Long-term debt | 166,473 | 0 | |
Notes Payable - Other 7 | |||
Long-term debt | 100,000 | 0 | |
Notes Payable - Other 8 | |||
Long-term debt | 9,000 | 9,000 | |
Accrued interest due after 2021(I) | |||
Long-term debt | $ 7,296 | $ 0 |
LONGTERM OBLIGATIONS (Details 1
LONGTERM OBLIGATIONS (Details 1) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Notes payable - related parties | $ 1,015,820 | $ 897,935 | |
Less current maturities, | 0 | 512,935 | |
Notes payable - related parties, excluding current maturities | $ 155,000 | 0 | 58,000 |
Note Payable - Related Party 3 | |||
Notes payable - related parties | 146,300 | 146,300 | |
Note Payable - Related Party 4 | |||
Notes payable - related parties | 0 | 366,635 | |
Note Payable - Related Party 5 | |||
Notes payable - related parties | 25,000 | 25,000 | |
Note Payable - Related Party 6 | |||
Notes payable - related parties | 90,000 | 90,000 | |
Note Payable - Related Party 7 | |||
Notes payable - related parties | 70,000 | 70,000 | |
Accrued interest due after 2021 | |||
Notes payable - related parties | 106,520 | 0 | |
Note Payable - Related Party 1 | |||
Notes payable - related parties | 250,000 | 200,000 | |
Note Payable - Related Party 2 | |||
Notes payable - related parties | $ 328,000 | $ 0 |
LONGTERM OBLIGATIONS (Details 2
LONGTERM OBLIGATIONS (Details 2) | Dec. 31, 2020USD ($) |
Due Prior to 2021 | $ 673,500 |
2021 | 493,445 |
2022 | 190,000 |
2023 | 205,500 |
2024 | 828,089 |
2025 | 0 |
2026 | 250,000 |
Total long-term obligations | 2,640,534 |
Annual Payments | |
Due Prior to 2021 | 673,500 |
2021 | 500,000 |
2022 | 190,000 |
2023 | 205,500 |
2024 | 828,089 |
2025 | 0 |
2026 | 250,000 |
Total long-term obligations | 2,647,089 |
Annual Amortization | |
Due Prior to 2021 | 0 |
2021 | 6,555 |
2022 | 0 |
2023 | 0 |
2024 | 0 |
2025 | 0 |
2026 | 0 |
Total long-term obligations | $ 6,555 |
CARES ACT (Details Narrative)
CARES ACT (Details Narrative) | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Stock Transactions | |
Forgiveness of note payable and interest | $ 963,516 |
Proceeds from notes payable - related parties | 957,372 |
Deferred deposits | 138,050 |
Deferred amount | $ 69,025 |
STOCK AND STOCK OPTION PLANS (D
STOCK AND STOCK OPTION PLANS (Details Narrative) - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Preferred stock, par or stated value per share | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
2009 Plan [Member] | ||
Stock option aggregate purchase shares | 3,427,000 | |
2019 Plan [Member] | ||
Stock option aggregate purchase shares | 1,500,000 | |
Granted of common shares | 1,500 | |
2005 Plan [Member] | ||
Stock option aggregate purchase shares | 990,000 | |
2020 Plan [Member] | ||
Stock option aggregate purchase shares | 1,500,000 | |
Granted of common shares | 560,000 |
Deferred Revenue and Performa_2
Deferred Revenue and Performance Obligations (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Stock Transactions | ||||
Remaining non-cancelable performance obligations | $ 430,000 | $ 430,000 | ||
Revenue recognized | $ 233,400 | $ 67,200 | $ 323,800 | $ 149,900 |
Debt Obligations (Details Narra
Debt Obligations (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Borrowed amount | $ 249,000 | ||
Interest rate | 7.50% | ||
Proceeds from related parties | $ 404,000 | ||
Short-term note payable | $ 100,000 | ||
Interest rate | 6 | ||
Balance amount | $ 499,000 | $ 1,462,214 | $ 1,445,890 |
Due maturity date | August 31, 2026 | ||
Note payable related party | $ 155,000 | $ 0 | $ 58,000 |
Two board members [Member] | |||
Interest rate | 6.00% | ||
Demand notes payable | $ 55,000 | ||
PBGC [Member] | |||
Settled long-term debt | 200,000 | ||
Outstanding principal amount | 246,000 | ||
Accrued interest | 74,500 | ||
Expected gain | 120,500 | ||
Note payable related party | $ 500,000 |
Stock Transactions (Details Nar
Stock Transactions (Details Narrative) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2021USD ($)$ / shares | Sep. 30, 2021USD ($)$ / sharesshares | |
Prepaid expenses | $ | $ 58,125 | $ 58,125 |
Common stock share issued for service | shares | 50,000 | |
Share price | $ / shares | $ 0.2325 | $ 0.2325 |
Description | April 1, 2021 to September 30, 2021 | |
Expense | $ | $ 11,600 | $ 25,200 |
Consultant [Member] | ||
Common stock share issued for service | shares | 200,000 | |
Share price | $ / shares | $ 0.2325 | $ 0.2325 |
Description | March 1, 2021 to February 28, 2023 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Earnings per Share | ||||||
Net loss | $ (269,806) | $ (108,848) | $ (838,536) | $ (187,735) | $ 675,996 | $ 47,977 |
Basic and diluted net loss per share | $ (0.01) | $ 0 | $ (0.03) | $ 0.01 | ||
Weighted average common shares outstanding basic and diluted shares | 29,978,872 | 29,061,883 | 29,421,641 | 29,061,883 | ||
Anti-dilutive shares excluded from net loss per share calculation | 21,185,207 | 22,180,976 | 21,185,207 | 22,180,976 | 2,715,000 | 29,195,736 |
Stock Option Plans and Agreem_3
Stock Option Plans and Agreements (Details) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Expected dividend yield | 0 | 0 | 0 |
Minimum | |||
Risk-free interest rate | 0.16 | 0.17 | 1.38 |
Expected life of options | 2 years 9 months | 1 year 9 months | 2 years 9 months |
Expected stock price volatility | 100 | 100 | 100 |
Maximum | |||
Risk-free interest rate | 0.43 | 1.40 | 2.55 |
Expected life of options | 5 years 3 months | 3 years 3 days | 3 years 10 months 24 days |
Expected stock price volatility | 140 |
Stock Option Plans and Agreem_4
Stock Option Plans and Agreements (Details 1) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Stock Transactions | |||
Number of options outstanding, beginning | 12,430,500 | 10,910,500 | 7,920,000 |
Number of options granted | 1,755,000 | 1,880,000 | 4,203,500 |
Number of options Exercised | (2,319,000) | ||
Number of options forfeited | 898,000 | (25,000) | (938,000) |
Number of options expired | 45,000 | 335,000 | 275,000 |
Number of options outstanding, ending | 10,923,500 | 12,430,500 | 10,910,500 |
Number of options vested or expected to vest | 10,173,500 | 12,430,500 | |
Number of options exercisable | 10,088,500 | 11,885,500 | |
Weighted average exercise price outstanding, beginning | $ 0.05 | $ 0.05 | $ 0.09 |
Weighted average exercise price granted | 0.21 | 0.07 | 0.03 |
Weighted average exercise price exercised | 0.04 | ||
Weighted average exercise price forfeited | 0.08 | 0.05 | 0.23 |
Weighted average exercise price expired | 0.10 | 0.15 | 0.07 |
Weighted average exercise price outstanding, ending | 0.08 | 0.05 | $ 0.05 |
Weighted average exercise price vested or expected to vest | 0.08 | 0.05 | |
Weighted average exercise price exercisable | $ 0.07 | $ 0.05 | |
Weighted-average remaining contractual term outstanding | 3.6 | 3.3 years | |
Weighted-average remaining contractual term vested or expected to vest | 3.6 | 3.3 years | |
Weighted-average remaining contractual term exercisable | 3.5 | 3.3 years | |
Aggregate intrinsic value outstanding | $ 1,466,000 | $ 480,400 | |
Aggregate intrinsic value vested or expected to vest | 1,150,000 | 480,400 | |
Aggregate intrinsic value exercisable | $ 1,149,700 | $ 467,800 |
Stock Option Plans and Agreem_5
Stock Option Plans and Agreements (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Option expense | $ 7,296 | $ 34,341 | $ 117,464 | $ 53,318 | ||
Stock option aggregate common stock shares | 11,863,000 | |||||
Unrecognized compensation cost | $ 135,800 | $ 135,800 | $ 0 | |||
Options and granted | 1,755,000 | 1,555,000 | ||||
Performance-based stock options | 750,000 | |||||
Option price | $ 0.245 | $ 0.245 | ||||
Options shares | 250,000 | |||||
Options vested | 1,440,000 | |||||
Weighted average fair value of options granted | $ 0.07 | $ 0.03 | ||||
On May 7, 2019 [Member] | ||||||
Weighted average exercise price | $ 0.02 | |||||
Note payable | $ 500,000 | |||||
Interest rate | 7.50% | |||||
borrowed outstanding amount | $ 50,000 | $ 200,000 | ||||
Remaining outstanding balance | $ 250,000 | |||||
Stock option to purchase | 2,500,000 | |||||
Interest expense | $ 14,250 | |||||
On August 24, 2020 [Member] | ||||||
Weighted average exercise price | $ 0.05 | |||||
Note payable | $ 166,473 | |||||
Interest rate | 6.00% | |||||
Stock option to purchase | 500,000 | |||||
Interest expense | $ 52,900 | |||||
On November 17, 2020 [Member] | ||||||
Weighted average exercise price | $ 0.12 | |||||
Note payable | $ 146,300 | |||||
Interest rate | 6.00% | |||||
Stock option to purchase | 250,000 | |||||
Interest expense | $ 15,450 | |||||
On December 31, 2020 [Member] | ||||||
Weighted average exercise price | $ 0.10 | |||||
Note payable | $ 9,000 | |||||
Interest rate | 6.00% | |||||
Stock option to purchase | 25,000 | |||||
Interest expense | $ 958 | |||||
Option Agreements [Member] | ||||||
Performance-based stock options | 750,000 | |||||
Options vested | 750,000 | |||||
Weighted average exercise price | $ 0.12 | |||||
Options forfeited unvested | 938,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Deferred: | ||
Federal | $ 39,000 | $ 49,000 |
State | (10,000) | 6,000 |
Deferred income tax expense (benefit) | 29,000 | 55,000 |
Change in valuation allowance | (29,000) | (55,000) |
Income tax expense (benefit) | $ 0 | $ 0 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets (liabilities): | ||
Net operating loss carryforwards | $ 1,550,000 | $ 1,650,000 |
Defined benefit pension liability | 60,000 | 60,000 |
Operating lease ROU | (30,000) | (48,000) |
Operating lease liability | 30,000 | 48,000 |
Deferred Revenues | 11,000 | 0 |
Reserves and accrued expenses payable | 293,000 | 233,000 |
Gross deferred tax asset | 1,914,000 | 1,943,000 |
Deferred tax asset valuation allowance | (1,914,000) | (1,943,000) |
Net deferred tax asset | $ 0 | $ 0 |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
INCOME TAXES | ||
Statutory U.S. federal tax rate | 21.00% | 21.00% |
Change in valuation allowance (%) | (4.20%) | (115.60%) |
Net operating loss carryforward expiration | 13.40% | 71.50% |
State income taxes (%) | (1.50%) | 12.80% |
Expired stock-based compensation | 1.00% | 3.10% |
Forgiveness of PPP loan | (29.90%) | 0.00% |
Other permanent non-deductible items | 0.20% | 7.20% |
Effective income tax rate | 0.00% | 0.00% |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax asset valuation allowance | $ 1,914,000 | $ 1,943,000 |
State | ||
Operating loss carryforwards | 3,200,000 | 3,200,000 |
Federal | ||
Operating loss carryforwards | $ 6,900,000 | $ 7,300,000 |
Lease (Details)
Lease (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Sep. 30, 2021 | Dec. 31, 2019 | |
Lease | |||
Right of use asset - lease, net | $ 120,777 | $ 61,765 | $ 195,441 |
Operating lease liability - short-term | 80,258 | 63,050 | 74,373 |
Operating lease liability - long-term | 42,347 | 0 | $ 122,605 |
Operating lease liabililty | $ 122,605 | $ 63,050 | |
Discount rate - operating lease | 6.00% |
Lease (Details Narrative)
Lease (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Lease | |||
Leases expires | June 30, 2022 | ||
Rent expense | $ 80,000 | ||
Leases rate | 1.5 | ||
Right of use asset - lease, net | $ 61,765 | $ 120,777 | $ 195,441 |
Operating lease liability - short-term | 63,050 | 80,258 | 74,373 |
Operating lease liability - long-term | 0 | 42,347 | $ 122,605 |
Operating lease liabililty | $ 63,050 | $ 122,605 |
Related Party Accounts Receiv_2
Related Party Accounts Receivable and Accrued Interest Payable (Details Narrative) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Related Party Accounts Receivable and Accrued Interest Payable | |||
Accrued interest payable, related parties, current | $ 86,344 | $ 62,114 | $ 157,067 |
Additional accrued interest to related parties | $ 114,460 | $ 106,520 |
Subsequent Events (Details Narr
Subsequent Events (Details NarrativeS) - USD ($) | Nov. 03, 2021 | Nov. 02, 2021 | Oct. 28, 2021 | Sep. 30, 2021 |
Interest rate | 7.50% | |||
Common stock, share price | $ 0.2325 | |||
Three Related Parties [Member] | ||||
Demand notes | $ 12,000 | |||
Interest rate | 6.00% | |||
Richard Popper [Member] | Subsequent Event [Member] | ||||
Demand notes | $ 150,000 | |||
Interest rate | 6.00% | |||
Common stock, shares purchased | 1,000,000 | |||
Common stock, shares purchased in exchange for the conversion and cancellation of an aggregate of principal amount | $ 100,000 | |||
Common share, par value | $ 0.001 | |||
Common stock, share price | 0.10 | |||
Common stock, closing price | $ 0.17 | |||
Mast Hill Fund [Member] | Subsequent Event [Member] | ||||
Interest rate | 8.00% | |||
Common stock, closing price | $ 0.17 | |||
Loan payable | $ 448,000 | |||
Original issue discount | $ 44,800 | |||
Conversion price | $ 0.10 | |||
Percentage of penalty due | 15.00% | |||
Warrant issued to purchase shares of common stock | 1,400,000 | |||
Warrant issued to purchase shares of common stock, purchase price | $ 0.16 | |||
J.H. Darbie & Co., Inc. [Member] | Subsequent Event [Member] | ||||
Warrant issued to purchase shares of common stock | 160,125 | |||
Warrant issued to purchase shares of common stock, purchase price | $ 0.192 | |||
Loan fee paid in cash | $ 20,160 |