Cover
Cover | 12 Months Ended |
Dec. 31, 2021 | |
Cover [Abstract] | |
Entity Registrant Name | INFINITE GROUP, INC. |
Entity Central Index Key | 0000884650 |
Document Type | S-1/A |
Amendment Flag | true |
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 |
Amendment Description | The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. |
Local Phone Number | 385-0610 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Current Assets: | ||
Cash | $ 99,432 | $ 32,313 |
Accounts Receivable, Net Of Allowances Of $9,710 And $10,089 As Of December 31, 2021 And 2020, Respectively | 727,297 | 953,826 |
Prepaid Expenses And Other Current Assets | 218,821 | 96,483 |
Total Current Assets | 1,045,550 | 1,082,622 |
Right Of Use Asset Operating Lease, Net | 41,490 | 120,777 |
Property And Equipment, Net | 41,138 | 48,199 |
Software, Net | 417,650 | 354,905 |
Deposits | 6,937 | 6,937 |
Total Assets | 1,552,765 | 1,613,440 |
Current Liabilities: | ||
Accounts Payable | 536,863 | 343,073 |
Accrued Payroll | 425,839 | 353,268 |
Accrued Interest Payable | 594,241 | 531,409 |
Accrued Retirement | 275,422 | 264,675 |
Deferred Revenue | 497,734 | 320,042 |
Accrued Expenses Other And Other Current Liabilities | 167,310 | 74,579 |
Current Maturities Of Long-term Obligations | 765,000 | 1,004,445 |
Operating Lease Liability - Short-term | 42,347 | 80,258 |
Current Maturities Of Long-term Obligations - Related Parties | 190,000 | 0 |
Notes Payable, Net | 383,824 | 162,500 |
Notes Payable - Related Parties | 229,000 | 0 |
Total Current Liabilities | 4,107,580 | 3,134,249 |
Notes Payable: | ||
Other | 458,309 | 457,769 |
Related Parties | 1,084,765 | 1,015,820 |
Payroll Taxes Due 2022 | 0 | 69,025 |
Operating Lease Liability - Long-term | 0 | 42,347 |
Total Liabilities | 5,650,654 | 4,719,210 |
Stockholders' Deficiency: | ||
Common Stock, $.001 Par Value, 60,000,000 Shares Authorized; Issued And Outstanding: 32,700,883 And 29,061,883 Shares As Of December 31, 2021 And 2020, Respectively. | 32,700 | 29,061 |
Additional Paid-in Capital | 31,336,772 | 30,763,717 |
Accumulated Deficit | (35,467,361) | (33,898,548) |
Total Stockholders' Deficiency | (4,097,889) | (3,105,770) |
Total Liabilities And Stockholders' Deficiency | $ 1,552,765 | $ 1,613,440 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
BALANCE SHEETS | ||
Allowances For Accounts Receivable | $ 9,710 | $ 10,089 |
Common Stock, Par Value | $ 1 | $ 0.001 |
Common Stock, Shares Authorized | 60,000,000 | 60,000,000 |
Common Stock, Shares Issued | 32,700,883 | 32,700,883 |
Common Stock, Shares Outstanding | 29,061,883 | 29,061,883 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
STATEMENTS OF OPERATIONS | ||
Sales | $ 7,224,242 | $ 7,219,446 |
Cost Of Sales | 4,489,306 | 4,177,268 |
Gross Profit | 2,734,936 | 3,042,178 |
Costs And Expenses: | ||
General And Administrative | 2,159,378 | 1,696,415 |
Selling | 1,983,127 | 1,344,472 |
Total Costs And Expenses | 4,142,505 | 3,040,887 |
Operating Income (loss) | (1,407,569) | 1,291 |
Other Income - (see Note 6 & Note 7) | 120,505 | 967,007 |
Interest Income | 37 | 786 |
Interest Expense: | ||
Related Parties | (72,455) | (62,789) |
Other | (209,331) | (230,299) |
Total Interest Expense | (281,786) | (293,088) |
Net Income (loss) | $ (1,568,813) | $ 675,996 |
Net Income (loss) Per Share Basic And Diluted | $ (0.05) | $ 0.02 |
Weighted Average Shares Outstanding Basic | 30,122,738 | 29,061,883 |
Weighted Average Shares Outstanding Diluted | 30,122,738 | 43,450,086 |
STATEMENTS OF CHANGES IN STOCKH
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY (Unaudited) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Balance, Amount | $ (3,105,770) | $ (3,907,310) |
Stock Based Compensation, Amount | 117,587 | 125,544 |
Net Income, Amount | (1,568,813) | 675,996 |
Issuance Of Common Stock, Amount | 158,125 | |
Exercise Of Stock Options, Amount | 98,930 | |
Warrants Issued, Amount | 202,052 | |
Balance, Amount | $ (4,097,889) | $ (3,105,770) |
Common Stock | ||
Balance, Shares | 29,061,883 | 29,061,883 |
Balance, Amount | $ 29,061 | $ 29,061 |
Stock Based Compensation, Amount | 0 | 0 |
Net Income, Amount | 0 | $ 0 |
Stock Based Compensation, Amount | $ 0 | |
Issuance Of Common Stock, Shares | 1,250,000 | |
Issuance Of Common Stock, Amount | $ 1,250 | |
Exercise Of Stock Options, Shares | 2,389,000 | |
Exercise Of Stock Options, Amount | $ 2,389 | |
Warrants Issued, Amount | $ 0 | |
Balance, Shares | 32,700,883 | 29,061,883 |
Balance, Amount | $ 32,700 | $ 29,061 |
Additional Paid-In Capital | ||
Balance, Amount | 30,763,717 | 30,638,173 |
Stock Based Compensation, Amount | 117,587 | 125,544 |
Net Income, Amount | 0 | 0 |
Issuance Of Common Stock, Amount | 156,875 | |
Exercise Of Stock Options, Amount | 96,541 | |
Warrants Issued, Amount | 202,052 | |
Balance, Amount | 31,336,772 | 30,763,717 |
Accumulated Deficit | ||
Balance, Amount | (33,898,548) | (34,574,544) |
Stock Based Compensation, Amount | 0 | 0 |
Net Income, Amount | (1,568,813) | 675,996 |
Issuance Of Common Stock, Amount | 0 | |
Exercise Of Stock Options, Amount | 0 | |
Warrants Issued, Amount | 0 | |
Balance, Amount | $ (35,467,361) | $ (33,898,548) |
STATEMENTS OF CASH FLOWS (Unaud
STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash Flows From Operating Activities: | ||
Net Income (loss) | $ (1,568,813) | $ 675,996 |
Stock Based Compensation | 117,587 | 125,544 |
Depreciation And Amortization | 186,379 | 97,874 |
Amortization Of Debt Discount | 51,891 | 0 |
Bad Debt Expense | 9,000 | 7,000 |
Forgiveness Of Note Payable And Interest | (120,505) | (963,516) |
(increase) Decrease In Assets: | ||
Accounts Receivable | 217,529 | (528,537) |
Prepaid Expenses And Other Current Assets | (64,213) | (31,198) |
Increase (decrease) In Liabilities: | ||
Accounts Payable | 193,790 | 125,296 |
Deferred Revenue | 177,692 | 141,218 |
Accrued Expenses And Other Current Liabilities | 254,846 | (63,432) |
Net Cash Used In Operating Activities | (544,817) | (413,755) |
Cash Flows From Investing Activities: | ||
Purchases Of Property And Equipment | (13,506) | (48,310) |
Capitalization Of Software Development Costs | (229,528) | (255,230) |
Net Cash Used In Investing Activities | (243,034) | (303,540) |
Cash Flows From Financing Activities: | ||
Proceeds From Note Payable | 403,200 | 957,372 |
Debt Issuance Costs | (25,160) | 0 |
Proceeds From Notes Payable - Related Parties | 578,000 | 50,000 |
Repayments Of Notes Payable - Related Parties | 0 | (96,635) |
Repayments Of Note Payable - Short-term | 0 | (167,527) |
Repayment Of Long-term Obligations | (200,000) | 0 |
Proceeds From The Exercise Of Common Stock Options | 98,930 | 0 |
Net Cash Provided By Financing Activities | 854,970 | 743,210 |
Net Increase In Cash | 67,119 | 25,915 |
Cash - Beginning Of Year | 32,313 | 6,398 |
Cash - End Of Year | 99,432 | 32,313 |
Supplemental Disclosures Of Cash Flow Information: Cash Payments For: | ||
Interest | 84,203 | 346,328 |
Income Taxes | 0 | 0 |
Non-cash Investing And Financing Activities: | ||
Warrant Issued In Conjunction With Debts | $ 202,052 | $ 0 |
Common Stock Issued To Extinguish Debt | 100,000 | 0 |
Common Stock Issued For Prepaid Consulting Agreement | $ 58,125 | $ 0 |
BASIS OF PRESENTATION BUSINESS
BASIS OF PRESENTATION BUSINESS | 12 Months Ended |
Dec. 31, 2021 | |
BASIS OF PRESENTATION BUSINESS | |
Basis Of Presentation Business | 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 2021 and 2020. All assets are located in the United States. |
MANAGEMENT PLANS
MANAGEMENT PLANS | 12 Months Ended |
Dec. 31, 2021 | |
MANAGEMENT PLANS | |
Management Plans | NOTE 2. - MANAGEMENT PLANS The Company reported operating loss of $1,407,569 in 2021 and operating income of $1,291 in 2020, net loss of $1,568,813 in 2021 and net income of $675,996 in 2020, and stockholders’ deficiencies of $4,097,889 and $3,105,770 at December 31, 2021 and 2020, respectively. The Company has a working capital deficit of approximately $ 3.1 million at December 31, 2021. Previously, this has raised substantial doubt about the entity’s ability to continue as a going concern within one year. The Company has plans to issue stock, restructure certain debt and anticipates significant growth of business. These plans, in management’s opinion, will allow the Company to meet its obligations alleviate the substantial doubt. The Company’s mission is to drive shareholder value by developing and bringing to market automated, cost effective, and innovative cybersecurity technologies. The Company’s strategy is to build its business by designing, developing, and marketing IT security-based products and solutions that fill technology gaps in cybersecurity. The Company's goal is to increase sales and generate cash flow from operations on a consistent basis. The Company’s business plans require improving the results of its operations in future periods. The Company has renegotiated the terms of some certain obligations, using operational cash flow to pay down balances and extending terms, and provided financing with the issuance of new loans. During 2020, the Company paid off approximately $96,600 to related parties under the terms of demand notes and established a $328,000 note payable from a related party as part of a modification. During 2020, the Company paid off approximately $167,500 to a third party under the terms of demand notes and extended the terms of the remaining $166,500 balance. During 2021, the Company has renegotiated the due dates of approximately $446,000 of notes payable into 2023 and 2024. During 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. The Company recorded a gain of approximately $120,500. During 2021, the Company received proceeds of $229,000 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 March 31, 2022. The Company also issued four demand notes payable to two board members for $79,000 in total. The demand notes bear a 6% interest rate. The Company also issued a demand note payable to another related party for $50,000 in total. The demand note bears a 6% interest rate. During 2021, the Company entered into a financing arrangement with Mast Hill Fund, L.P. for $448,000. 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 (Notes 5 and 9). During 2022, the Company entered into a financing arrangement with Mast Hill Fund, L.P. for $370,000. Under the terms of the Loan, amortization payments are due beginning June 15, 2022, and each month thereafter with the final payment due on February 15, 2023. During the first quarter of 2022, the Company filed an S-1 for a public offering of $15 million of common stock and warrants, which is expected to be used for the acquisition discussed in Note 14 and working capital needs. The Company anticipates this offering to during the second quarter of 2022. The completion of this offering is not a certainty. Should the offering not proceed or be delayed, or should it occur in a reduced format, the Company will scale down spending to reduce costs and to increase cash flow while continuing to grow the operations at a slower pace. 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. The Company may need to extend existing debt agreements in order to provide resources for other purposes. 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 | 12 Months Ended |
Dec. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary Of Significant Accounting Policies | NOTE 3. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounts Receivable Credit is granted to substantially all customers throughout the United States. The Company carries its accounts receivable at invoice amount, less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts, based on a history of past write-offs and collections and current credit conditions. The Company’s policy is to not accrue interest on past due receivables. Management determined that an allowance of $9,710 for doubtful accounts was reasonably stated at December 31, 2021 ($10,089 - 2020). 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, 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 year ended December 31, 2021, the Company sold approximately $3,629,800 ($1,749,700 - 2020) of its accounts receivable to the Purchaser. As of December 31, 2021, $148,155 ($0 - 2020) of these receivables remained outstanding. Additionally, as of December 31, 2021, the Company had $66,000 available under the financing line with the financial institution ($362,000 - 2020). After deducting estimated fees and advances from the Purchaser, the net receivable from the Purchaser amounted to $14,816 at December 31, 2021 ($0 - 2020) 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 $34,200 for the year ended December 31, 2021 ($21,100 - 2020). 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’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, 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: Years Ended December 31, 2021 2020 Managed support services $ 4,325,067 $ 4,669,570 Cybersecurity projects and software 2,780,175 2,285,876 Other IT consulting services 119,000 264,000 Total sales $ 7,224,242 $ 7,219,446 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 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 recognized. For the year ended December 31, 2021, we recognized revenue of approximately $320,000 that was included in the deferred revenue liability balance at the beginning of the period presented. Deferred revenue that will be realized during the succeeding 12-month period is approximately $500,000. 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 2021, sales to one client, including sales under subcontracts for services to several entities, accounted for 59.6% of total sales (61.2% - 2020) and 15.6% of accounts receivable at December 31, 2021 (38.8% - 2020). 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, 2021 or 2020. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2021 and 2020, the Company recognized no interest and penalties. The Company files U.S. federal tax returns and tax returns in various states. The tax years 2018 through 2021 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. The carrying amount of the Company’s term debt and notes payable approximates fair value because the effective yields on these obligations, which include contractual interest rates, taken together with other features such as concurrent issuance of warrants, are comparable to rates of returns for instruments of similar credit risk. Earnings Per Share - The following table sets forth the computation of basic and diluted loss per share as of December 31, 2021 and 2020: Years ended December 31, 2021 2020 Numerator for basic and diluted net income per share: Net income (loss) $ (1,568,813 ) $ 675,996 Basic and diluted net income (loss) per share $ (0.05 ) $ 0.02 Weighted average common shares outstanding Basic shares 30,122,738 29,061,883 Diluted shares 30,122,738 43,450,086 Anti-dilutive shares excluded from net income per share 22,623,804 3,965,000 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 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2021 | |
PROPERTY AND EQUIPMENT | |
Property And Equipment | NOTE 4. - PROPERTY AND EQUIPMENT Property and equipment consists of: December 31, Depreciable Lives 2021 2020 Software 3 years $ 72,834 $ 72,834 Equipment 3 to 10 years 155,635 142,129 Furniture and fixtures 5 to 7 years 17,735 17,735 246,204 232,698 Accumulated depreciation (205,066 ) (184,499 ) $ 41,138 $ 48,199 Depreciation expense was $20,567 and $6,025 for the years ended December 31, 2021 and 2020, respectively. |
CURRENT
CURRENT | 12 Months Ended |
Dec. 31, 2021 | |
CURRENT | |
Current | NOTE 5. - NOTES PAYABLE - CURRENT Notes payable consist of: December 31, 2021 2020 Demand note payable, 10%, secured by software (A) $ 12,500 $ 12,500 Convertible promissory note, 8%, due November 3, 2022 (B) 448,000 0 Convertible notes payable, 6% 150,000 150,000 610,500 162,500 Less: Deferred financing costs (B) 58,300 0 Debt discounts - warrants (B) 168,377 0 $ 383,823 $ 162,500 (A) Demand Note payable, 10%, secured by Software (B) Convertible promissory note, 8%, due November 3, 2022 (C) Convertible notes payable, 6%, maturity date of December 31, 2016 - Notes payable - related parties consist of: December 31, 2021 2020 Demand notes payable to director, 6%, unsecured $ 130,000 $ 0 Demand note payable to employee, 6% unsecured 50,000 0 Demand notes payable to officer and director, 6%, unsecured 37,000 0 Demand note payable to officer and director, 6%, unsecured 12,000 0 $ 229,000 $ 0 |
TERM OBLIGATIONS
TERM OBLIGATIONS | 12 Months Ended |
Dec. 31, 2021 | |
TERM OBLIGATIONS | |
Term Obligations | NOTE 6. - LONG-TERM OBLIGATIONS Notes Payable - Other - December 31, 2021 2020 2016 note payable, 6%, unsecured, due December 31, 2021 (A) $ 500,000 $ 500,000 Note payable, 10%, secured, due January 1, 2018 (B) 265,000 265,000 Convertible term note payable,12%, secured, due January 1, 2024 (C) 175,000 175,000 Term note payable - PBGC, 6%, secured (D) 0 246,000 2020 note payable, 6%, unsecured, due August 24, 2024 (E) 166,473 166,473 Convertible term note payable,7%, secured (F) 100,000 100,000 Convertible notes payable, 6%, due January 1, 2024 (G) 9,000 9,000 Accrued interest due after 2021(H) 7,836 7,296 1,223,309 1,468,769 Less: deferred financing costs 0 6,555 1,223,309 1,462,214 Less: current maturities 765,000 1,004,445 $ 458,309 $ 457,769 (A) 2016 note payable, 6%, unsecured, due December 31, 2021 - (B) Note payable, 10%, secured, due January 1, 2018 - (C) Convertible term note payable, 12%, secured, due January 1, 2024 - (D) Term note payable - PBGC, 6%, secured - (E) 2020 note payable, 6%, unsecured, due August 24, 2024 (F) Convertible term note payable, 7%, secured, due January 1, 2024 (G) Convertible notes payable, 6%, due January 1, 2024 - (H) Accrued interest due after 2021 - Notes Payable - Related Parties Notes payable - related parties consist of: December 31, 2021 2020 Note payable, up to $500,000, 7.5%, due August 31, 2026 (A) $ 499,000 $ 250,000 2020 Note payable, 6%, due January 1, 2024 (B) 328,000 328,000 Convertible notes payable, 6% (C) 146,300 146,300 Convertible note payable, 7%, due June 30, 2023 (D) 25,000 25,000 Note payable, $100,000 line of credit, 6%, unsecured (E) 90,000 90,000 Note payable, $75,000 line of credit, 6%, unsecured (F) 70,000 70,000 Accrued interest due after 2022 (G) 116,465 106,520 1,274,765 1,015,820 Less current maturities 190,000 - $ 1,084,765 $ 1,015,820 (A) Note payable of up to $500,000, 7.5%, due August 31, 2026 - (B) 2020 Note payable, 6%, due January 1, 2024 - (C) Convertible notes payable , 6% - st st 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) Convertible note payable, 7%, due June 30, 2023 - (E) Note payable, $100,000 line of credit, 6%, unsecured - (F) Note payable, $75,000 line of credit, 6%, unsecured - (G) Accrued interest due after 2022 - Long-Term Obligations As of December 31, 2021, 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 2022 $ 1,156,500 $ 0 $ 1,156,500 2022 638,000 226,677 411,323 2023 206,667 0 206,667 2024 837,408 0 837,408 2025 0 0 0 2026 499,000 0 499,000 Total long-term obligations $ 3,337,575 $ 226,677 $ 3,110,898 |
STOCK AND STOCK OPTION PLANS
STOCK AND STOCK OPTION PLANS | 12 Months Ended |
Dec. 31, 2021 | |
STOCK AND STOCK OPTION PLANS | |
Stock And Stock Option Plans | NOTE 7. - STOCK AND STOCK OPTION PLANS Preferred Stock - 2005 Plan - 2009 Plan - 2019 Plan - 2020 Plan - |
STOCK OPTION AGREEMENTS AND TRA
STOCK OPTION AGREEMENTS AND TRANSACTIONS | 12 Months Ended |
Dec. 31, 2021 | |
STOCK OPTION AGREEMENTS AND TRANSACTIONS | |
Stock Option Agreements And Transactions | NOTE 8. - STOCK OPTION AGREEMENTS AND TRANSACTIONS The Company grants stock options to its key employees and independent service providers as it deems appropriate. Most options expire from five to ten years after the grant date. Option Agreements - On April 6, 2021, the Company granted a stock option to purchase a total of 200,000 common shares at an exercise price of $0.1925 per share to a former executive of the Company who consults with the Company. The individual forfeited an option grant of 473,000 common shares from the 2009 Plan. On April 19, 2021, the Company issued 750,000 performance-based stock options 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 December 31, 2021. The remaining stock options issued during the year ended December 31, 2021 included in the table below relate to options issued to employees as compensation expense. 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 $0.05 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 $0.12 and recorded interest expense of $15,450 using the Black-Scholes option pricing model to determine the estimated fair value of the option in 2020. On February 14, 2021, the Company extended this note payable agreement’s due date to January 1, 2024. 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 $0.10 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, 2021 and 2020. 2021 2020 Risk free interest rate 0.16% to 0.64 % 0.17% to 1.40 % Expected dividend yield 0 % 0 % Expected stock price volatility 100% to 140 % 100 % Expected life of options 1.25 to 5.25 years 1.75 to 3.01 years The following is a summary of stock option activity, including qualified and non-qualified options for the years ended December 31, 2021 and 2020: Number of Options Outstanding Weighted Average Exercise Price Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2019 10,910,500 $ 0.05 Granted 1,880,000 $ 0.07 Expired (335,000 ) $ 0.15 Forfeited (25,000 ) $ 0.05 Outstanding at December 31, 2020 12,430,500 $ 0.05 Granted 1,756,500 $ 0.21 Exercised (2,389,000 ) $ 0.04 Expired (45,000 ) $ 0.10 Forfeited (998,000 ) $ 0.10 Outstanding at December 31, 2021 10,755,000 $ 0.08 3.4 years $ 544,100 Vested or expected to vest at December 31, 2021 10,005,000 $ 0.07 3.3 years $ 544,100 Exercisable at December 31, 2021 9,980,000 $ 0.07 3.3 years $ 544,100 At December 31, 2021, there was approximately $135,800 of total unrecognized compensation cost related to outstanding non-vested options. The weighted average fair value of options granted was $0.21 and $0.07 per share for the years ended December 31, 2021 and 2020, 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. |
WARRANTS
WARRANTS | 12 Months Ended |
Dec. 31, 2021 | |
WARRANTS | |
Warrants | NOTE 9. - WARRANTS On November 3, 2021, as additional consideration for the convertible promissory note financing (Note 6), the Company issued the Mast Hill Fund, L.P. (the “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. The Company has granted the Lender 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 Lender, other than in respect of the Loan. The Company evaluated the terms of the warrant under ASC 480 and ASC 815 and determined that they were to be treated as equity instruments. The value of the warrant (calculated using the Black-Scholes option pricing model to determine the estimated fair value of the warrant) of approximately $181,900 will be amortized to interest expense over the life of the Promissory Note and is recorded as a discount to the promissory note (Note 6). On November 3, 2021, J.H. Darbie & Co., Inc., a registered broker-dealer, acted as a finder in connection with the same convertible promissory note and was paid a cash fee of $20,160 and issued a 5-year warrant to purchase 160,125 shares of Company common stock at a fixed price of $0.192 per share, subject to price adjustments for certain actions, including dilutive issuances. The Company has granted the Finder customary “piggy-back” registration rights with respect to the shares issuable upon exercise of the warrant. The Company evaluated the terms of the warrant under ASC 480 and ASC 815 and determined that they were to be treated as equity instruments. The value of the warrant (calculated using the Black-Scholes option pricing model to determine the estimated fair value of the warrant) of approximately $20,200 will be amortized to interest expense over the life of the Promissory Note and is recorded as a discount to the promissory note (Note 6). |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2021 | |
INCOME TAXES | |
Income Taxes | NOTE 10. - INCOME TAXES The components of income tax expense (benefit) consists of the following: December 31, 2021 2020 Deferred: Federal $ (277,000 ) $ 39,000 State (47,000 ) (10,000 ) (324,000 ) 29,000 Change in valuation allowance 324,000 (29,000 ) $ 0 $ 0 At December 31, 2021, the Company had federal net operating loss carryforwards of approximately $8,500,000 ($6,900,000 - 2020) and various state net operating loss carryforwards of approximately $4,900,000 ($3,200,000 - 2020). Approximately $2,100,000 of these carryforwards can be carried forward indefinitely, while the remaining carryforwards expire from 2022 through 2041. 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, 2021, a net deferred tax asset, representing the future benefit attributed primarily to the available net operating loss carryforwards in the amount of approximately $2,238,000 ($1,914,000 - 2020), 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, 2021 2020 Deferred tax assets (liabilities): Net operating loss carryforwards $ 1,956,000 $ 1,550,000 Defined benefit pension liability 0 60,000 Operating Lease ROU (10,000 ) (30,000 ) Operating Lease Liability 10,000 30,000 Deferred Revenue 0 11,000 Property and Equipment (14,000 ) 0 Reserves and accrued expenses payable 296,000 293,000 Gross deferred tax asset 2,238,000 1,914,000 Deferred tax asset valuation allowance (2,238,000 ) (1,914,000 ) 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, 2021 2020 Statutory U.S. federal tax rate 21.0 % 21.0 % Change in valuation allowance (20.7 ) (4.2 ) Net operating loss carryforward expiration (5.9 ) 13.4 State taxes 3.0 (1.5 ) Expired stock-based compensation 1.1 1.0 Forgiveness of PPP Loan 1.6 (29.9 ) Other permanent non-deductible items (0.1 ) 0.2 Effective income tax rate 0.0 % 0.0 % |
EMPLOYEE RETIREMENT PLANS
EMPLOYEE RETIREMENT PLANS | 12 Months Ended |
Dec. 31, 2021 | |
EMPLOYEE RETIREMENT PLANS | |
Employee Retirement Plans | NOTE 11. - EMPLOYEE RETIREMENT PLANS Simple IRA Plan 401(k) Plan - |
LEASE
LEASE | 12 Months Ended |
Dec. 31, 2021 | |
LEASE | |
Lease | NOTE 12. - 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. Upon adoption of the ASU on January 1, 2019, the Company recognized a right-of-use asset of $265,825 and a lease liability of $265,825 related to the existing office lease that is classified as an operating lease. Supplemental balance sheet information related to the operating lease was as follows: December 31, 2021 Right of use asset - lease, net $ 41,490 Operating lease liability - short-term $ 42,437 Operating lease liability - long-term 0 Total operating lease liability $ 42,437 Discount rate - operating lease 6.0 % |
RELATED PARTY ACCRUED INTEREST
RELATED PARTY ACCRUED INTEREST PAYABLE | 12 Months Ended |
Dec. 31, 2021 | |
RELATED PARTY ACCRUED INTEREST PAYABLE | |
Related Party Accrued Interest Payable | NOTE 13. - RELATED PARTY ACCRUED INTEREST PAYABLE Accrued Interest Payable - |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2021 | |
SUBSEQUENT EVENTS | |
Subsequent Events | NOTE 14. - SUBSEQUENT EVENTS On January 31, 2022, the Company entered into a Stock Purchase Agreement (the “Agreement”), by and among the Company; the David A. Nelson, Jr. Living Trust (“Seller”); David A. Nelson, Jr. (the “Beneficiary” and, together with Seller, the “Seller Parties”); and Pratum, Inc., an Iowa corporation (the “Pratum”) and security services firm that helps clients solve challenges and find the right balance between information security, IT support, and compliance. Pratum is based in Ankeny, Iowa. Pursuant to the Agreement, Company agreed to acquire all of the issued and outstanding equity securities of the Company from the Seller Parties (the “Acquisition”) for an aggregate purchase price of $8,500,000 (the “Acquisition Consideration”), subject to customary purchase price adjustments for, among other things, indebtedness of Pratum as of the closing. $8,000,000 of the Acquisition Consideration will be paid to the Seller Parties at closing and $500,000 of the Acquisition Consideration will be deposited at closing with an escrow agent to be held in escrow for a period of six months. The escrow amount may be used to account for indemnification claims and any post-closing adjustment of the Acquisition Consideration. The Agreement contains customary representations, warranties and covenants by each of the parties, and contains indemnification provisions under which the parties have agreed, subject to certain limitations, to indemnify each other against losses resulting from certain liabilities. The closing of the Acquisition is subject to customary conditions, including, among others, (i) receipt of any necessary regulatory approvals and licenses, (ii) the absence of any litigation or governmental order that restrains, prevents or materially alters the transactions contemplated by the Agreement, (iii) the accuracy of the parties’ representations and warranties contained in the Agreement remaining true as of closing (subject to certain qualifications), (iv) Pratum’s and the Seller Parties’ material compliance with the covenants and agreements in the Agreement, and (v) the Buyer obtaining sufficient debt or equity financing to fund the Acquisition Consideration. The Company expects the transaction to close in the first half of 2022. The Agreement also contains customary pre-closing covenants, including the obligation of Pratum and the Seller Parties to cause Pratum to conduct its business in all material respects in the ordinary course and to refrain from taking certain specified actions without the written consent of the Company. On March 28, 2022 the parties to the Pratum Agreement amended the agreement to extend the outside date for closing from March 31, 2022 to May 15, 2022. Accordingly, the Pratum Agreement may be terminated under certain circumstances, including, among others if the Acquisition does not close by May 15, 2022. Additionally, either party may terminate the Agreement upon a breach by the other party of any representation, warranty, covenant or agreement made by such breaching party in the Agreement, such that the conditions related to the representations, warranties, covenants and agreements made by such breaching party would not be satisfied and such breach or condition is not curable or, if curable, is not cured 30 days after written notice of such breach. On February 15, 2022, 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 $370,000, which bears interest at a rate of eight percent (8%) per annum, less $37,000 original issue discount. Under the terms of the Loan, amortization payments are due beginning June 15, 2022, and each month thereafter with the final payment due on February 15, 2023. 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 925,000 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 40% warrant coverage on the principal amount of the Loan. The closing price of the Company common stock on February 15, 2022 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 and a similar loan between the Company and Lender entered into on November 2, 2021. J.H. Darbie & Co., Inc. ( “Finder”), a registered broker-dealer, acted as a finder in connection with the Loan, and was paid a cash fee of $14,650 (4.39% of the gross proceeds of the Loan) and issued a 5-year warrant to purchase 121,407 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 the Finder customary “piggy-back” registration rights with respect to the shares issuable upon exercise of the warrant. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Accounts Receivable | Credit is granted to substantially all customers throughout the United States. The Company carries its accounts receivable at invoice amount, less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts, based on a history of past write-offs and collections and current credit conditions. The Company’s policy is to not accrue interest on past due receivables. Management determined that an allowance of $9,710 for doubtful accounts was reasonably stated at December 31, 2021 ($10,089 - 2020). |
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, 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 year ended December 31, 2021, the Company sold approximately $3,629,800 ($1,749,700 - 2020) of its accounts receivable to the Purchaser. As of December 31, 2021, $148,155 ($0 - 2020) of these receivables remained outstanding. Additionally, as of December 31, 2021, the Company had $66,000 available under the financing line with the financial institution ($362,000 - 2020). After deducting estimated fees and advances from the Purchaser, the net receivable from the Purchaser amounted to $14,816 at December 31, 2021 ($0 - 2020) 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 $34,200 for the year ended December 31, 2021 ($21,100 - 2020). These financing line fees are classified on the statements of operations as interest expense. |
Property And Equipment | Property and Equipment - |
Capitalization Of Software For Resale | Capitalization of Software for Resale - |
Accounting For The Impairment Or Disposal Of Long-lived Assets | Accounting for the Impairment or Disposal of Long-Lived Assets - |
Revenue Recognition | 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’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, 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: Years Ended December 31, 2021 2020 Managed support services $ 4,325,067 $ 4,669,570 Cybersecurity projects and software 2,780,175 2,285,876 Other IT consulting services 119,000 264,000 Total sales $ 7,224,242 $ 7,219,446 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 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 recognized. For the year ended December 31, 2021, we recognized revenue of approximately $320,000 that was included in the deferred revenue liability balance at the beginning of the period presented. Deferred revenue that will be realized during the succeeding 12-month period is approximately $500,000. 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 2021, sales to one client, including sales under subcontracts for services to several entities, accounted for 59.6% of total sales (61.2% - 2020) and 15.6% of accounts receivable at December 31, 2021 (38.8% - 2020). |
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, 2021 or 2020. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2021 and 2020, the Company recognized no interest and penalties. The Company files U.S. federal tax returns and tax returns in various states. The tax years 2018 through 2021 remain open to examination by the taxing jurisdictions to which the Company is subject. |
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. The carrying amount of the Company’s term debt and notes payable approximates fair value because the effective yields on these obligations, which include contractual interest rates, taken together with other features such as concurrent issuance of warrants, are comparable to rates of returns for instruments of similar credit risk. |
Earnings Per Share | Earnings Per Share - 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 | Reclassifications - |
Use Of Estimates | Use of Estimates - |
Leases |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Disaggregation Of Revenue | Years Ended December 31, 2021 2020 Managed support services $ 4,325,067 $ 4,669,570 Cybersecurity projects and software 2,780,175 2,285,876 Other IT consulting services 119,000 264,000 Total sales $ 7,224,242 $ 7,219,446 |
Schedule Of Earnings Per Share, Basic And Diluted | Years ended December 31, 2021 2020 Numerator for basic and diluted net income per share: Net income (loss) $ (1,568,813 ) $ 675,996 Basic and diluted net income (loss) per share $ (0.05 ) $ 0.02 Weighted average common shares outstanding Basic shares 30,122,738 29,061,883 Diluted shares 30,122,738 43,450,086 Anti-dilutive shares excluded from net income per share 22,623,804 3,965,000 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
PROPERTY AND EQUIPMENT | |
Property, Plant And Equipment | December 31, Depreciable Lives 2021 2020 Software 3 years $ 72,834 $ 72,834 Equipment 3 to 10 years 155,635 142,129 Furniture and fixtures 5 to 7 years 17,735 17,735 246,204 232,698 Accumulated depreciation (205,066 ) (184,499 ) $ 41,138 $ 48,199 |
NOTES PAYABLE - CURRENT (Tables
NOTES PAYABLE - CURRENT (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
NOTES PAYABLE - CURRENT (Tables) | |
Notes Payable - Related Parties | December 31, 2021 2020 Demand notes payable to director, 6%, unsecured $ 130,000 $ 0 Demand note payable to employee, 6% unsecured 50,000 0 Demand notes payable to officer and director, 6%, unsecured 37,000 0 Demand note payable to officer and director, 6%, unsecured 12,000 0 $ 229,000 $ 0 |
Schedule Of Notes Payable | December 31, 2021 2020 Demand note payable, 10%, secured by software (A) $ 12,500 $ 12,500 Convertible promissory note, 8%, due November 3, 2022 (B) 448,000 0 Convertible notes payable, 6% 150,000 150,000 610,500 162,500 Less: Deferred financing costs (B) 58,300 0 Debt discounts - warrants (B) 168,377 0 $ 383,823 $ 162,500 |
LONG-TERM OBLIGATIONS (Tables)
LONG-TERM OBLIGATIONS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
LONG-TERM OBLIGATIONS (Tables) | |
Contractual Obligation, Fiscal Year Maturity Schedule | December 31, 2021 2020 2016 note payable, 6%, unsecured, due December 31, 2021 (A) $ 500,000 $ 500,000 Note payable, 10%, secured, due January 1, 2018 (B) 265,000 265,000 Convertible term note payable,12%, secured, due January 1, 2024 (C) 175,000 175,000 Term note payable - PBGC, 6%, secured (D) 0 246,000 2020 note payable, 6%, unsecured, due August 24, 2024 (E) 166,473 166,473 Convertible term note payable,7%, secured (F) 100,000 100,000 Convertible notes payable, 6%, due January 1, 2024 (G) 9,000 9,000 Accrued interest due after 2021(H) 7,836 7,296 1,223,309 1,468,769 Less: deferred financing costs 0 6,555 1,223,309 1,462,214 Less: current maturities 765,000 1,004,445 $ 458,309 $ 457,769 Annual Annual Payments Amortization Net Due Prior to 2022 $ 1,156,500 $ 0 $ 1,156,500 2022 638,000 226,677 411,323 2023 206,667 0 206,667 2024 837,408 0 837,408 2025 0 0 0 2026 499,000 0 499,000 Total long-term obligations $ 3,337,575 $ 226,677 $ 3,110,898 |
Schedule Of Notes Payable - Related Parties | December 31, 2021 2020 Note payable, up to $500,000, 7.5%, due August 31, 2026 (A) $ 499,000 $ 250,000 2020 Note payable, 6%, due January 1, 2024 (B) 328,000 328,000 Convertible notes payable, 6% (C) 146,300 146,300 Convertible note payable, 7%, due June 30, 2023 (D) 25,000 25,000 Note payable, $100,000 line of credit, 6%, unsecured (E) 90,000 90,000 Note payable, $75,000 line of credit, 6%, unsecured (F) 70,000 70,000 Accrued interest due after 2022 (G) 116,465 106,520 1,274,765 1,015,820 Less current maturities 190,000 - $ 1,084,765 $ 1,015,820 |
STOCK OPTION PLANS AND AGREEMEN
STOCK OPTION PLANS AND AGREEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
STOCK OPTION PLANS AND AGREEMENTS (Tables) | |
Schedule Of Share-based Payment Award, Stock Options, Valuation Assumptions | 2021 2020 Risk free interest rate 0.16% to 0.64 % 0.17% to 1.40 % Expected dividend yield 0 % 0 % Expected stock price volatility 100% to 140 % 100 % Expected life of options 1.25 to 5.25 years 1.75 to 3.01 years |
Schedule Of Share-based Compensation, Stock Options, Activity | Number of Options Outstanding Weighted Average Exercise Price Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2019 10,910,500 $ 0.05 Granted 1,880,000 $ 0.07 Expired (335,000 ) $ 0.15 Forfeited (25,000 ) $ 0.05 Outstanding at December 31, 2020 12,430,500 $ 0.05 Granted 1,756,500 $ 0.21 Exercised (2,389,000 ) $ 0.04 Expired (45,000 ) $ 0.10 Forfeited (998,000 ) $ 0.10 Outstanding at December 31, 2021 10,755,000 $ 0.08 3.4 years $ 544,100 Vested or expected to vest at December 31, 2021 10,005,000 $ 0.07 3.3 years $ 544,100 Exercisable at December 31, 2021 9,980,000 $ 0.07 3.3 years $ 544,100 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
INCOME TAXES | |
Schedule Of Components Of Income Tax Expense (benefit) | December 31, 2021 2020 Deferred: Federal $ (277,000 ) $ 39,000 State (47,000 ) (10,000 ) (324,000 ) 29,000 Change in valuation allowance 324,000 (29,000 ) $ 0 $ 0 |
Schedule Of Deferred Tax Assets And Liabilities | December 31, 2021 2020 Deferred tax assets (liabilities): Net operating loss carryforwards $ 1,956,000 $ 1,550,000 Defined benefit pension liability 0 60,000 Operating Lease ROU (10,000 ) (30,000 ) Operating Lease Liability 10,000 30,000 Deferred Revenue 0 11,000 Property and Equipment (14,000 ) 0 Reserves and accrued expenses payable 296,000 293,000 Gross deferred tax asset 2,238,000 1,914,000 Deferred tax asset valuation allowance (2,238,000 ) (1,914,000 ) Net deferred tax asset $ 0 $ 0 |
Schedule Of Effective Income Tax Rate Reconciliation | December 31, 2021 2020 Statutory U.S. federal tax rate 21.0 % 21.0 % Change in valuation allowance (20.7 ) (4.2 ) Net operating loss carryforward expiration (5.9 ) 13.4 State taxes 3.0 (1.5 ) Expired stock-based compensation 1.1 1.0 Forgiveness of PPP Loan 1.6 (29.9 ) Other permanent non-deductible items (0.1 ) 0.2 Effective income tax rate 0.0 % 0.0 % |
Management Plans Capital Resour
Management Plans Capital Resources (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Net Income (loss) | $ (1,568,813) | $ 675,996 | ||
Operating Income (loss) | (1,407,569) | 1,291 | ||
Total Stockholders' Deficiency | (4,097,889) | (3,105,770) | $ (3,907,310) | |
Working Capital Deficit | (3,100,000) | |||
Proceeds From Related Parties | 229,000 | |||
Short-term Note Payable | $ 100,000 | |||
Interest Rate | 6.00% | |||
Notes Payable | $ 383,824 | 162,500 | ||
Subsequent Event [Member] | ||||
Public Offering | $ 15,000,000 | |||
Mast Hill Fund L P [Member] | ||||
Loan | 448,000 | |||
Long Term Debt Agreement [Member] | ||||
Payment On Debt | 200,000 | |||
Debt Outstanding Principal | 246,000 | |||
Accrued Interest | 74,500 | |||
Gain On Debt | $ 120,500 | |||
Two Board Members | ||||
Interest Rate | 6.00% | |||
Demand Notes | $ 79,000 | |||
Three Related Parties [Member] | ||||
Demand Notes | 167,500 | |||
Demand Notes Remaining Balance | 166,500 | |||
Related Party [Member] | ||||
Interest Rate | 6.00% | |||
Notes Payable | 328,000 | |||
Demand Notes | $ 50,000 | $ 96,600 | ||
2023 and 2024 [Member] | ||||
Notes Payable | $ 446,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Sales | $ 7,224,242 | $ 7,219,446 |
Managed Support Services | ||
Sales | 4,325,067 | 4,669,570 |
Cybersecurity Projects and Software | ||
Sales | 2,780,175 | 2,285,876 |
Other IT Consulting Services | ||
Sales | $ 119,000 | $ 264,000 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Net Income (loss) | $ (1,568,813) | $ 675,996 |
Basic And Diluted Net Income Per Share | $ (0.05) | $ 0.02 |
Basic Shares | 30,122,738 | 29,061,883 |
Diluted Shares | 30,122,738 | 43,450,086 |
Anti-dilutive Shares Excluded From Net Loss Per Share | 22,623,804 | 3,965,000 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Allowance For Doubtful Accounts Receivable | $ 9,710 | $ 10,089 | |
Account Receivables Outstanding | 148,155 | 0 | |
Accounts Receivable | 2,000,000 | ||
Capitalized Costs | 678,973 | 449,445 | |
Accumulated Amortization | 261,323 | 94,541 | |
Accounts Receivable Sold | 3,629,800 | 1,749,700 | |
Accounts Receivable Available | 66,000 | 362,000 | |
Net Receivable | 14,816 | 0 | |
Financing Line Cost | 34,200 | 21,100 | |
Amortization Expense | 166,783 | 85,002 | |
2022 | 217,722 | ||
2023 | 144,989 | ||
2024 | 63,208 | ||
2025 | 2,731 | ||
Development Costs | 153,600 | $ 159,700 | |
Recognized Revenue | $ 500,000 | 320,000 | |
Future Amortization Expenses | $ 428,650 | ||
Sale Of Certain Accounts Receivable Description | 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, 2021) against the average daily outstanding balance of funds advanced. | ||
Sales Revenue Net [Member] | Customer A | |||
Concentration Risk | 59.60% | 61.20% | |
Accounts Receivable [Member] | Customer A | |||
Concentration Risk | 15.60% | 38.80% | |
Customer 1 | |||
Accounts Receivable | $ 1,500,000 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant And Equipment, Gross | $ 246,204 | $ 232,698 |
Accumulated Depreciation | (205,066) | (184,499) |
Property And Equipment, Net | $ 41,138 | 48,199 |
Minimum [Member] | Equipment [Member] | ||
Depreciable Lives | 3 years | |
Maximum [Member] | Equipment [Member] | ||
Depreciable Lives | 10 years | |
Software | ||
Property, Plant And Equipment, Gross | $ 72,834 | 72,834 |
Depreciable Lives | 3 years | |
Equipment | ||
Property, Plant And Equipment, Gross | $ 155,635 | 142,129 |
Furniture and Fixtures | ||
Property, Plant And Equipment, Gross | $ 17,735 | $ 17,735 |
Furniture and Fixtures | Minimum [Member] | ||
Depreciable Lives | 5 years | |
Furniture and Fixtures | Maximum [Member] | ||
Depreciable Lives | 7 years |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
PROPERTY AND EQUIPMENT | ||
Depreciation | $ 20,567 | $ 6,025 |
NOTES PAYABLE CURRENT (Details)
NOTES PAYABLE CURRENT (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
NOTES PAYABLE - CURRENT (Tables) | ||
Demand Note Payable, 10%, Secured By Software | $ 12,500 | $ 12,500 |
Convertible Promissory Note, 8%, Due November 3, 2022 (b) | 448,000 | 0 |
Convertible Notes Payable, 6% | 150,000 | 150,000 |
Notes Payable, Current | 610,500 | 162,500 |
Less: Deferred Financing Costs (b) | 58,300 | 0 |
Debt Discounts - Warrants (b) | 168,377 | 0 |
Notes Payable | $ 383,823 | $ 162,500 |
NOTES PAYABLE CURRENT (Details
NOTES PAYABLE CURRENT (Details 1) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Notes Payable, Related Parties | $ 229,000 | $ 0 |
Demand Notes Payable To Director 6% Unsecured [Member] | ||
Notes Payable, Related Parties | 130,000 | 0 |
Demand Note Payable To Employee 6% Unsecured [Member] | ||
Notes Payable, Related Parties | 50,000 | 0 |
Demand Notes Payable To Officer and Director [Member] | ||
Notes Payable, Related Parties | 37,000 | 0 |
Demand Note Payable Officer And Director [Member] | ||
Notes Payable, Related Parties | $ 12,000 | $ 0 |
NOTES PAYABLE CURRENT (Detail_2
NOTES PAYABLE CURRENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
NOTES PAYABLE - CURRENT (Tables) | ||
Original Issue Discount | $ 44,800 | |
Convertible Promissory Note | $ 448,000 | |
Interest Rate | 8.00% | |
Monthly Payments Of Principal And Interest | $ 53,760 | |
Conversion Price | $ 0.10 | |
Finder's Fee | $ 20,160 | |
Legal Fees | 5,000 | |
Obligated Unrelated Third Parties | $ 150,000 | $ 150,000 |
Unsecured Conversion Price | $ 0.05 | |
Notes Bear Interest | 6.00% |
LONGTERM OBLIGATIONS (Details)
LONGTERM OBLIGATIONS (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Long-term Debt | $ 1,223,309 | $ 1,468,769 |
Less Deferred Financing Costs | 0 | 6,555 |
Total | 1,223,309 | 1,462,214 |
Less Current Maturities | 765,000 | 1,004,445 |
Long-term Debt, Excluding Current Maturities | 458,309 | 457,769 |
Notes Payable - Other 1 | ||
Long-term Debt | 500,000 | 500,000 |
Notes Payable - Other 2 | ||
Long-term Debt | 265,000 | 265,000 |
Notes Payable - Other 3 | ||
Long-term Debt | 175,000 | 175,000 |
Notes Payable - Other 4 | ||
Long-term Debt | 0 | 246,000 |
Notes Payable - Other 5 | ||
Long-term Debt | 166,473 | 166,473 |
Notes Payable - Other 6 | ||
Long-term Debt | 100,000 | 100,000 |
Notes Payable - Other 7 | ||
Long-term Debt | 9,000 | 9,000 |
Accrued interest due after 2021(H) | ||
Long-term Debt | $ 7,836 | $ 7,296 |
LONGTERM OBLIGATIONS (Details 1
LONGTERM OBLIGATIONS (Details 1) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Notes Payable - Related Parties | $ 1,274,765 | $ 1,015,820 |
Less Current Maturities | 190,000 | 0 |
Notes Payable - Related Parties, Excluding Current Maturities | 1,084,765 | 1,015,820 |
Note Payable - Related Party 3 | ||
Notes Payable - Related Parties | 146,300 | 146,300 |
Note Payable - Related Party 4 | ||
Notes Payable - Related Parties | 25,000 | 25,000 |
Note Payable - Related Party 5 | ||
Notes Payable - Related Parties | 90,000 | 90,000 |
Note Payable - Related Party 6 | ||
Notes Payable - Related Parties | 70,000 | 70,000 |
Accrued interest due after 2022 | ||
Notes Payable - Related Parties | 116,465 | 106,520 |
Note Payable - Related Party 1 | ||
Notes Payable - Related Parties | 499,000 | 250,000 |
Note Payable - Related Party 2 | ||
Notes Payable - Related Parties | $ 328,000 | $ 328,000 |
LONGTERM OBLIGATIONS (Details 2
LONGTERM OBLIGATIONS (Details 2) | Dec. 31, 2021USD ($) |
Due Prior To 2022 | $ 1,156,500 |
2022 | 411,323 |
2023 | 206,667 |
2024 | 837,408 |
2025 | 0 |
2026 | 499,000 |
Total Long-term Obligations | 3,110,898 |
Annual Payments | |
Due Prior To 2022 | 1,156,500 |
2022 | 638,000 |
2023 | 206,667 |
2024 | 837,408 |
2025 | 0 |
2026 | 499,000 |
Total Long-term Obligations | 3,337,575 |
Annual Amortization | |
Due Prior To 2022 | 0 |
2022 | 226,677 |
2023 | 0 |
2024 | 0 |
2025 | 0 |
2026 | 0 |
Total Long-term Obligations | $ 226,677 |
LONG-TERM OBLIGATIONS (Details
LONG-TERM OBLIGATIONS (Details Narrative) - USD ($) | May 07, 2019 | Mar. 14, 2016 | Feb. 12, 2015 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2004 | Dec. 31, 2003 | Jan. 01, 2022 | Jan. 01, 2021 | Sep. 15, 2018 | Jan. 31, 2018 | Sep. 21, 2017 | Jul. 18, 2017 | Oct. 17, 2011 |
Note Payable | $ 383,824 | $ 162,500 | |||||||||||||
Conversion Price | $ 0.10 | ||||||||||||||
2016 note payable, 6%, unsecured, due December 31, 2021 [Member] | |||||||||||||||
Obligation Amount | $ 500,000 | ||||||||||||||
Balance Amount | $ 500,000 | 493,445 | |||||||||||||
Lender Fee Payment Share | 2,500,000 | ||||||||||||||
Lender Fee Payment | $ 37,500 | ||||||||||||||
Bears Interest Rate | 6.00% | ||||||||||||||
Note Payable | $ 467,225 | ||||||||||||||
Principal Due Amount | 500,000 | ||||||||||||||
Deferred Financing Costs | 32,775 | ||||||||||||||
Term note payable - PBGC, 6%, secured [Member] | |||||||||||||||
Gain On Notes | $ 120,500 | ||||||||||||||
Accrued Interest | 74,500 | ||||||||||||||
Balloon Payment Due | $ 219,000 | ||||||||||||||
Settled Long-term Debt Agreement | $ 200,000 | ||||||||||||||
Aggregate Purchase Price | 300,000 | ||||||||||||||
Note payable of up to $500,000, 7.5%, due August 31, 2026 [Member] | |||||||||||||||
Bears Interest Rate | 7.50% | 6.00% | |||||||||||||
Note Payable | $ 500,000 | ||||||||||||||
Principal Due Amount | $ 249,000 | 50,000 | $ 200,000 | ||||||||||||
Balloon Payment Due | $ 219,000 | ||||||||||||||
2020 Note payable, 6%, due January 1, 2024 [Member] | |||||||||||||||
Principal Due Amount | 100,000 | ||||||||||||||
Balloon Payment Due | $ 128,000 | ||||||||||||||
2020 note payable, 6%, unsecured, due August 24, 2024 [Member] | |||||||||||||||
Lender Fee Payment | 166,473 | ||||||||||||||
Principal Due Amount | 550,000 | ||||||||||||||
Note payable, $100,000 line of credit, 6%, unsecured [Member] | |||||||||||||||
Bears Interest Rate | 6.00% | ||||||||||||||
Common Stock, Shares Purchased | 400,000 | ||||||||||||||
Common Stock, Share Price | $ 0.10 | $ 0.04 | |||||||||||||
Working Capital | $ 100,000 | ||||||||||||||
Note payable, $75,000 line of credit, 6%, unsecured [Member] | |||||||||||||||
Bears Interest Rate | 6.00% | ||||||||||||||
Common Stock, Shares Purchased | 400,000 | ||||||||||||||
Common Stock, Share Price | $ 0.10 | $ 0.04 | |||||||||||||
Working Capital | $ 75,000 | ||||||||||||||
Note payable, 10%, secured, due January 1, 2018 [Member] | |||||||||||||||
Bears Interest Rate | 10.00% | ||||||||||||||
Aggregate Purchase Price | $ 175,000 | ||||||||||||||
Issued Secured Notes Payable | $ 265,000 | $ 265,000 | |||||||||||||
Convertible term note payable, 7%, secured, due January 1, 2024 [Member] | |||||||||||||||
Bears Interest Rate | 7.00% | ||||||||||||||
Note Payable | $ 467,225 | ||||||||||||||
Common Stock, Share Price | $ 0.10 | ||||||||||||||
Convertible notes payable, 6%, due January 1, 2024 [Member] | |||||||||||||||
Bears Interest Rate | 6.00% | 6.00% | |||||||||||||
Common Stock, Share Price | $ 0.05 | ||||||||||||||
Exercisable Per Share | $ 0.10 | ||||||||||||||
Note Payable To Former Related Party | $ 9,000 | ||||||||||||||
Issue Borrower | 25,000 | ||||||||||||||
Interes Rate Effective | 6.00% | 6.00% | |||||||||||||
Convertible notes payable, 6% [Member] | |||||||||||||||
Bears Interest Rate | 6.00% | ||||||||||||||
Common Stock, Share Price | $ 0.05 | ||||||||||||||
Note Payable To Former Related Party | $ 146,300 | ||||||||||||||
Interes Rate Effective | 6.00% | 6.00% | |||||||||||||
Convertible note payable, 7%, due June 30, 2023 [Member] | |||||||||||||||
Principal Due Amount | $ 25,000 | ||||||||||||||
Common Stock, Share Price | $ 0.10 | $ 0.10 | |||||||||||||
Convertible term note payable, 12%, secured, due January 1, 2024 [Member] | |||||||||||||||
Bears Interest Rate | 12.00% | ||||||||||||||
Principal Due Amount | $ 500,000 | ||||||||||||||
Conversion Price | $ 0.25 |
STOCK AND STOCK OPTION PLANS (D
STOCK AND STOCK OPTION PLANS (Details Narrative) - $ / shares | Dec. 31, 2021 | Dec. 31, 2020 |
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 |
2019 Plan [Member] | ||
Shares Available For Grant | 126,500 | |
Common Stock, Shares Purchased | 1,500,000 | |
2020 Plan [Member] | ||
Shares Available For Grant | 55,000 | |
Common Stock, Shares Purchased | 1,500,000 | |
2009 Plan [Member] | ||
Shares Available For Grant | 0 | |
Common Stock, Shares Purchased | 3,667,000 | 3,667,000 |
2005 Plan [Member] | ||
Common Stock, Shares Purchased | 990,000 | 990,000 |
Stock Option Agreements and T_2
Stock Option Agreements and Transactions (Details) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Expected Dividend Yield | 0.00% | 0.00% |
Expected Stock Price Volatility | 100.00% | |
Minimum [Member] | ||
Expected Stock Price Volatility | 100.00% | |
Expected Life Of Options | 1 year 3 months | 1 year 9 months |
Risk-free Interest Rate | 0.16% | 0.17% |
Maximum [Member] | ||
Expected Stock Price Volatility | 140.00% | |
Expected Life Of Options | 5 years 3 months | 3 years 3 days |
Risk-free Interest Rate | 0.64% | 1.40% |
Stock Option Agreements and T_3
Stock Option Agreements and Transactions (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
STOCK OPTION PLANS AND AGREEMENTS (Tables) | ||
Number Of Options Outstanding, Beginning | 12,430,500 | 10,910,500 |
Number Of Options Granted | 1,756,500 | 1,880,000 |
Number Of Options Exercised | (2,389,000) | |
Number Of Options Forfeited | (998,000) | (25,000) |
Number Of Options Expired | (45,000) | (335,000) |
Number Of Options Outstanding, Ending | 10,755,000 | 12,430,500 |
Number Of Options Vested Or Expected To Vest | 10,005,000 | |
Number Of Options Exercisable | 9,980,000 | |
Weighted Average Exercise Price Outstanding, Beginning | $ 0.05 | $ 0.05 |
Weighted Average Exercise Price Granted | 0.21 | 0.07 |
Weighted Average Exercise Price Exercised | 0.04 | |
Weighted Average Exercise Price Expired | 0.10 | 0.15 |
Weighted Average Exercise Price Forfeited | 0.10 | 0.05 |
Weighted Average Exercise Price Outstanding, Ending | 0.08 | $ 0.05 |
Weighted Average Exercise Price Vested Or Expected To Vest | 0.07 | |
Weighted Average Exercise Price Exercisable | $ 0.07 | |
Weighted-average Remaining Contractual Term Outstanding | 3.4 | |
Weighted-average Remaining Contractual Term Vested Or Expected To Vest | 3.3 | |
Weighted-average Remaining Contractual Term Exercisable | 3.3 | |
Aggregate Intrinsic Value Outstanding | $ 544,100 | |
Aggregate Intrinsic Value Vested Or Expected To Vest | 544,100 | |
Aggregate Intrinsic Value Exercisable | $ 544,100 |
Stock Option Agreements and T_4
Stock Option Agreements and Transactions (Details Narrative) - USD ($) | Apr. 06, 2021 | May 07, 2019 | Apr. 19, 2021 | Nov. 17, 2020 | Aug. 24, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Total Unrecognized Compensation Cost Related To Outstanding Non-vested Options | $ 135,800 | |||||||
Total Unrecognized Compensation Cost | $ 135,800 | |||||||
Options And Granted | 250,000 | |||||||
Weighted Average Fair Value Of Options Granted Per Share | $ 0.21 | $ 0.07 | ||||||
Common Stock Average Exercise Price | $ 0.21 | |||||||
Stock Option To Purchase Common Stock Shares Exercise Price | $ 0.1925 | $ 0.02 | $ 0.245 | $ 0.12 | $ 0.05 | $ 0.10 | ||
Stock Option To Purchase Common Stock Shares | 200,000 | 2,500,000 | 250,000 | 500,000 | 25,000 | |||
Options Shares | 750,000 | |||||||
Interest Expense | $ 15,450 | $ 52,900 | $ 281,786 | $ 293,088 | $ 14,250 | |||
Options Granted In Consideration For Providing The Financing | 500,000 | |||||||
Note Payable Agreement Amount | $ 166,473 | $ 9,000 | ||||||
Options Vested | 701,500 | |||||||
Option Forfeited | 473,000 | |||||||
Note Payable Related Party | $ 500,000 | $ 146,300 | ||||||
Note Payable Interest Rate | 7.50% | 6.00% | 6.00% | 6.00% | ||||
Note Payable Maturity Date | Aug. 31, 2026 | Jan. 1, 2022 | Aug. 24, 2024 | Jan. 1, 2024 | ||||
Borrowed Funds | 249,000 | $ 50,000 | $ 200,000 | |||||
Borrowed Funds Outstanding | $ 499,000 | |||||||
Common Shares Outstanding | 29,061,883 | 29,061,883 | ||||||
Option [Member] | ||||||||
Interest Expense | $ 958 | |||||||
Performance Shares [Member] | ||||||||
Common Shares Outstanding | 1,451,500 |
Warrants (Details Narrative)
Warrants (Details Narrative) | Nov. 03, 2021USD ($)$ / sharesshares |
Warrant To Purchase Shares Of Common Stock | shares | 1,400,000 |
Warrant To Purchase Shares Of Common Stock, Exercise Price Per Share | $ / shares | $ 0.16 |
Warrant To Purchase Shares Of Common Stock Term | 5-year |
Estimated Fair Value Of The Warrant | $ 181,900 |
J.H. Darbie & Co., Inc. [Member] | |
Warrant To Purchase Shares Of Common Stock | shares | 160,125 |
Warrant To Purchase Shares Of Common Stock, Exercise Price Per Share | $ / shares | $ 0.192 |
Warrant To Purchase Shares Of Common Stock Term | 5-year |
Estimated Fair Value Of The Warrant | $ 20,200 |
Payment Of Fee In Cash | $ 20,160 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Deferred: | ||
Federal | $ (277,000) | $ 39,000 |
State | (47,000) | (10,000) |
Deferred Income Tax Expense (benefit) | (324,000) | 29,000 |
Change In Valuation Allowance | (324,000) | (29,000) |
Income Tax Expense (benefit) | $ 0 | $ 0 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred Tax Assets (liabilities): | ||
Net Operating Loss Carryforwards | $ 1,956,000 | $ 1,550,000 |
Defined Benefit Pension Liability | 0 | 60,000 |
Operating Lease Rou | (10,000) | (30,000) |
Operating Lease Liability | 10,000 | 30,000 |
Deferred Revenue | 0 | 11,000 |
Property And Equipment | (14,000) | 0 |
Reserves And Accrued Expenses Payable | 296,000 | 293,000 |
Gross Deferred Tax Asset | 2,238,000 | 1,914,000 |
Deferred Tax Asset Valuation Allowance | (2,238,000) | (1,914,000) |
Net Deferred Tax Asset | $ 0 | $ 0 |
Income Taxes (Details 2)
Income Taxes (Details 2) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
INCOME TAXES | ||
Statutory U.s. Federal Tax Rate | 21.00% | 21.00% |
Change In Valuation Allowance | (20.70%) | (4.20%) |
Net Operating Loss Carryforward Expiration | (5.90%) | 13.40% |
State Income Taxes | 3.00% | (1.50%) |
Expired Stock-based Compensation | 1.10% | 1.00% |
Forgiveness Of Ppp Loan | 1.60% | (29.90%) |
Other Permanent Non-deductible Items | (0.10%) | 0.20% |
Effective Income Tax Rate | 0.00% | 0.00% |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Operating Loss Carryforwards | $ 2,238,000 | $ 1,914,000 |
Deferred Tax Asset Valuation Allowance | 2,100,000 | 1,914,000 |
State | ||
Operating Loss Carryforwards | 4,900,000 | 3,200,000 |
Federal | ||
Operating Loss Carryforwards | $ 8,500,000 | $ 6,900,000 |
Employee Retirement Plans (Deta
Employee Retirement Plans (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Simple IRA Plan [Member] | ||
Annual Compensation | $ 5,000 | |
Defined Contribution Plan, Accrued Liability | 275,422 | $ 264,675 |
Simple IRA Plan [Member] | Maximum [Member] | ||
Annual Compensation | 11,500 | |
401 (k) Plan [Member] | ||
Employee Contribution | 19,500 | |
401 (k) Plan [Member] | Maximum [Member] | ||
Employee Contribution | $ 6,500 |
Lease (Details)
Lease (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Lease (Details) | ||
Right Of Use Asset - Lease, Net | $ 41,490 | $ 120,777 |
Operating Lease Liability - Short-term | 42,437 | |
Operating Lease Liability - Long-term | 0 | |
Operating Lease Liabililty | $ 42,437 | |
Discount Rate - Operating Lease | 6.00% |
Lease (Details Narrative)
Lease (Details Narrative) | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Lease (Details) | |
Leases Expires | June 30, 2022 |
Rent Expense | $ 80,000 |
Leases Rate | 1.5 |
Right-of-use Asset | $ 265,825 |
Lease Liability | $ 265,825 |
Related Party Accrued Interes_2
Related Party Accrued Interest Payable (Details Narrative) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
RELATED PARTY ACCRUED INTEREST PAYABLE | ||
Accrued Interest Payable, Related Parties, Current | $ 107,000 | $ 62,000 |
Additional Accrued Interest To Related Parties | $ 116,465 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 1 Months Ended | ||
Feb. 15, 2022 | Jan. 31, 2022 | Dec. 31, 2021 | |
Original Issue Discount | $ 44,800 | ||
Conversion Price | $ 0.10 | ||
Subsequent Event [Member] | |||
Aggregate Purchase Price | $ 8,500,000 | ||
Acquisition Consideration Paid To Seller Parties | 8,000,000 | ||
Acquisition Consideration Deposited | $ 500,000 | ||
Subsequent Event [Member] | Financing Arrangement [Member] | |||
Common Stock, Shares Purchased | 121,407 | ||
Cash Fee Payment | $ 14,650 | ||
Lend Amount | 370,000 | ||
Original Issue Discount | $ 37,000 | ||
Common Stock, Share Price | $ 0.17 | ||
Common Stock, Fixed Price | 0.192 | ||
Conversion Price | $ 0.10 | ||
Percentage Of Penalty Due | 15.00% | ||
Warrant Coverage On The Principal Amount | 40.00% | ||
Percentage Of Gross Proceeds Of Loan | 4.39% | ||
Percentage Of Exercise Price Of Warrant Issued | 120.00% | ||
Warrant Coverage On Gross Proceeds Of Loan | 7.00% | ||
Bears Interest Rate | 8.00% | ||
Warrant Issued To Purchase Shares Of Common Stock | 925,000 | ||
Warrant Issued To Purchase Shares Of Common Stock, Purchase Price | $ 0.16 |