Cover
Cover | 6 Months Ended |
Jun. 30, 2022 | |
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 ($) | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Current Assets: | |||
Cash | $ 1,594 | $ 99,432 | $ 32,313 |
Accounts receivable, net of allowances of $9,710 as of June 30, 2022 and December 31, 2021, respectively | 650,403 | 727,297 | 953,826 |
Prepaid expenses and other current assets | 198,220 | 218,821 | 96,483 |
Total current assets | 850,217 | 1,045,550 | 1,082,622 |
Right of Use Asset Operating Lease, net | 684,552 | 41,490 | 120,777 |
Property and equipment, net | 30,982 | 41,138 | 48,199 |
Software, net | 421,224 | 417,650 | 354,905 |
Deposits | 10,144 | 6,937 | 6,937 |
Total assets | 1,997,119 | 1,552,765 | 1,613,440 |
Current Liabilities: | |||
Accounts payable | 1,086,528 | 536,863 | 343,073 |
Accrued payroll | 341,691 | 425,839 | 353,268 |
Accrued interest payable | 670,117 | 594,241 | 531,409 |
Accrued retirement | 280,958 | 275,422 | 264,675 |
Deferred revenue | 475,400 | 497,734 | 320,042 |
Accrued expenses other and other current liabilities | 154,729 | 167,310 | 74,579 |
Operating lease liability - Short-term | 73,030 | 42,347 | 80,258 |
Current maturities of long-term obligations | 765,000 | 765,000 | 1,004,445 |
Current maturities of long-term obligations - related parties | 295,000 | 190,000 | 0 |
Notes payable, net | 943,521 | 383,824 | 162,500 |
Notes payable - related parties | 229,000 | 229,000 | 0 |
Total current liabilities | 5,314,974 | 4,107,580 | 3,134,249 |
Notes payable: | |||
Other | 458,576 | 458,309 | 457,769 |
Related parties | 998,975 | 1,084,765 | 1,015,820 |
Payroll Taxes Current 2022 | 0 | 69,025 | |
Operating lease liability - Long-term | 612,136 | 0 | 42,347 |
Total liabilities | 7,384,661 | 5,650,654 | 4,719,210 |
Stockholders' Deficiency: | |||
Common stock, $.001 par value, 60,000,000 shares authorized; 33,561,124 and 32,700,883 as of June 30, 2022 and December 31, 2021, respectively. shares issued and outstanding | 447 | 436 | 387 |
Additional paid-in capital | 31,780,806 | 31,369,036 | 30,792,391 |
Accumulated deficit | (37,168,795) | (35,467,361) | (33,898,548) |
Total stockholders' deficiency | (5,387,542) | (4,097,889) | (3,105,770) |
Total liabilities and stockholders' deficiency | $ 1,997,119 | $ 1,552,765 | $ 1,613,440 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
BALANCE SHEETS | |||
Allowances for Accounts Receivable | $ 9,710 | $ 9,710 | $ 10,089 |
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 | 447,482 | 436,012 | 387,492 |
Common stock, shares outstanding | 33,561,124 | 436,012 | 29,061,883 |
STATEMENTS OF OPERATIONS (Unaud
STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
STATEMENTS OF OPERATIONS (Unaudited) | ||||||
Revenue | $ 1,696,492 | $ 1,797,504 | $ 3,363,562 | $ 3,621,846 | $ 7,224,242 | $ 7,219,446 |
Cost of revenue | 1,059,639 | 1,109,223 | 2,180,879 | 2,182,138 | 4,489,306 | 4,177,268 |
Gross profit | 636,853 | 688,281 | 1,182,683 | 1,439,708 | 2,734,936 | 3,042,178 |
Costs And Expenses: | ||||||
General and administrative | 613,317 | 541,711 | 1,217,300 | 1,006,103 | 2,159,378 | 1,696,415 |
Selling | 612,957 | 507,042 | 1,260,582 | 894,767 | 1,983,127 | 1,344,472 |
Total costs and expenses | 1,226,274 | 1,048,753 | 2,477,882 | 1,900,870 | 4,142,505 | 3,040,887 |
Operating income (loss) | (589,421) | (360,472) | (1,295,199) | (461,162) | (1,407,569) | 1,291 |
Interest Income and Expense | ||||||
Interest income | 10 | 1 | 18 | 3 | 37 | 786 |
Related parties | (22,728) | (16,541) | (46,142) | (31,054) | (72,455) | (62,789) |
Other Income - (see Note 6 & Note 7) | 120,505 | 967,007 | ||||
Other | (221,061) | (39,491) | (360,111) | (76,517) | (209,331) | (230,299) |
Total interest expense | (243,789) | (56,032) | (406,253) | (107,571) | (281,786) | (293,088) |
Total other income (expense) | (243,779) | (56,031) | (406,235) | (107,568) | ||
Net loss | $ (833,200) | $ (416,503) | $ (1,701,434) | $ (568,730) | $ (1,568,813) | $ 675,996 |
Net loss per share - basic | $ (3.91) | $ 1.74 | ||||
Net loss per share - diluted | $ (1.88) | $ (1.07) | $ (3.87) | $ (1.46) | $ (3.91) | $ 1.17 |
Weighted average shares outstanding - basic | 443,953 | 389,845 | 440,005 | 388,675 | 401,637 | 387,492 |
Weighted average shares outstanding - diluted | 443,953 | 389,845 | 440,005 | 388,675 | 401,637 | 579,335 |
STATEMENTS OF CHANGES IN STOCKH
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Balance, Amount | $ (4,816,866) | $ (4,097,889) | $ (3,229,749) | $ (3,105,770) | $ (4,097,889) | $ (3,105,770) | $ (3,105,770) | $ (3,907,310) |
Stock Based Compensation, Amount | 52,631 | 110,168 | 117,587 | 125,544 | ||||
Net Income, Amount | (833,200) | (868,234) | (416,503) | (152,227) | (1,701,434) | (568,730) | (1,568,813) | 675,996 |
Stock based compensation | 51,708 | 923 | 81,920 | 28,248 | ||||
Issuance Of Common Stock, Amount | 158,125 | |||||||
Exercise Of Stock Options, Amount | 14,930 | 98,930 | ||||||
Warrants Issued, Amount | 202,052 | |||||||
Issuance of common stock, amount | 58,125 | |||||||
Warrants issued, amount | 210,816 | 148,334 | ||||||
Exercise of warrants, amount | 0 | |||||||
Balance, Amount | $ (5,387,542) | $ (4,816,866) | $ (3,491,277) | $ (3,229,749) | $ (5,387,542) | $ (3,491,277) | $ (4,097,889) | $ (3,105,770) |
Common Stock | ||||||||
Balance, Shares | 436,012 | 436,012 | 29,061,883 | 387,492 | 436,012 | 387,492 | 387,492 | 387,492 |
Balance, Amount | $ 436 | $ 436 | $ 29,061 | $ 387 | $ 436 | $ 387 | $ 387 | $ 387 |
Stock Based Compensation, Amount | 0 | 0 | ||||||
Net Income, Amount | 0 | 0 | 0 | 0 | 0 | $ 0 | ||
Stock based compensation | $ 0 | $ 0 | $ 0 | $ 0 | 0 | |||
Issuance Of Common Stock, Amount | $ 17 | |||||||
Exercise Of Stock Options, Shares | 31,853 | |||||||
Issuance Of Common Stock, Shares | 3,334 | 16,667 | ||||||
Exercise Of Stock Options, Amount | $ 4 | $ 32 | ||||||
Warrants Issued, Amount | $ 0 | |||||||
Issuance of common stock, amount | $ 3 | |||||||
Exercise of stock options, shares | 3,787 | |||||||
Warrants issued, shares | 0 | 0 | ||||||
Warrants issued, amount | $ 0 | $ 0 | ||||||
Exercise of warrants, shares | 11,470 | |||||||
Exercise of warrants, amount | $ 11 | |||||||
Balance, Shares | 447,482 | 436,012 | 394,613 | 29,061,883 | 447,482 | 394,613 | 436,012 | 387,492 |
Balance, Amount | $ 447 | $ 436 | $ 394 | $ 29,061 | $ 447 | $ 394 | $ 436 | $ 387 |
Additional Paid-In Capital | ||||||||
Balance, Amount | 31,518,293 | 31,369,036 | 30,820,639 | 30,792,391 | 31,369,036 | 30,792,391 | 30,792,391 | 30,666,847 |
Stock Based Compensation, Amount | 117,587 | 125,544 | ||||||
Net Income, Amount | 0 | 0 | 0 | 0 | 0 | 0 | ||
Stock based compensation | 51,708 | 923 | 81,920 | 28,248 | ||||
Issuance Of Common Stock, Amount | 158,108 | |||||||
Exercise Of Stock Options, Amount | 14,926 | 98,898 | ||||||
Warrants Issued, Amount | 202,052 | |||||||
Issuance of common stock, amount | 58,122 | |||||||
Warrants issued, amount | 210,816 | 148,334 | ||||||
Exercise of warrants, amount | 11 | |||||||
Balance, Amount | 31,780,806 | 31,518,293 | 30,975,607 | 30,820,639 | 31,780,806 | 30,975,607 | 31,369,036 | 30,792,391 |
Accumulated Deficit | ||||||||
Balance, Amount | (36,335,595) | (35,467,361) | (34,050,775) | (33,898,548) | (35,467,361) | (33,898,548) | (33,898,548) | (34,574,544) |
Stock Based Compensation, Amount | 0 | 0 | ||||||
Net Income, Amount | (833,200) | (868,234) | (416,503) | (152,227) | (1,568,813) | 675,996 | ||
Stock based compensation | 0 | 0 | 0 | 0 | ||||
Issuance Of Common Stock, Amount | 0 | |||||||
Exercise Of Stock Options, Amount | 0 | 0 | ||||||
Warrants Issued, Amount | 0 | |||||||
Issuance of common stock, amount | 0 | |||||||
Warrants issued, amount | 0 | 0 | ||||||
Exercise of warrants, amount | 0 | |||||||
Balance, Amount | $ (37,168,795) | $ (36,335,595) | $ (34,467,278) | $ (34,050,775) | $ (37,168,795) | $ (34,467,278) | $ (35,467,361) | $ (33,898,548) |
STATEMENTS OF CASH FLOWS (Unaud
STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash Flows From Operating Activities: | ||||
Net Income (loss) | $ (1,701,434) | $ (568,730) | $ (1,568,813) | $ 675,996 |
Stock Based Compensation | 52,631 | 110,168 | 117,587 | 125,544 |
Depreciation And Amortization | 117,686 | 87,551 | 186,379 | 97,874 |
Amortization Of Debt Discount | 255,042 | 0 | 51,891 | 0 |
Net loss | (1,701,434) | (568,730) | ||
Bad Debt Expense | 9,000 | 7,000 | ||
Adjustments to reconcile net loss to net cash used by operating activities: | ||||
Forgiveness Of Note Payable And Interest | (120,505) | (963,516) | ||
(increase) Decrease In Assets: | ||||
Accounts Receivable | 76,894 | 157,170 | 217,529 | (528,537) |
Prepaid Expenses And Other Current Assets | 17,394 | (26,730) | (64,213) | (31,198) |
Increase (decrease) In Liabilities: | ||||
Accounts Payable | 549,665 | 14,978 | 193,790 | 125,296 |
Deferred Revenue | (22,334) | 109,424 | 177,692 | 141,218 |
Accrued Expenses And Other Current Liabilities | 12,014 | 98,469 | 254,846 | (63,432) |
Net Cash Used In Operating Activities | (636,906) | (12,380) | (544,817) | (413,755) |
Cash Flows From Investing Activities: | ||||
Purchases Of Property And Equipment | (969) | (8,722) | (13,506) | (48,310) |
Capitalization Of Software Development Costs | (110,378) | (121,175) | (229,528) | (255,230) |
Accrued retirement | 5,536 | 5,320 | ||
Net Cash Used In Investing Activities | (111,347) | (129,897) | (243,034) | (303,540) |
Cash Flows From Financing Activities: | ||||
Proceeds From Note Payable | 0 | 299,000 | 403,200 | 957,372 |
Debt Issuance Costs | (53,445) | (25,160) | ||
Proceeds From Notes Payable - Related Parties | 578,000 | 50,000 | ||
Repayments Of Notes Payable - Related Parties | (96,635) | |||
Gross proceeds from notes payable | 918,900 | 0 | ||
Repayments Of Note Payable - Short-term | (215,040) | (167,527) | ||
Repayment Of Long-term Obligations | (200,000) | |||
Proceeds From The Exercise Of Common Stock Options | 0 | 14,930 | 98,930 | 0 |
Repayment of long-term obligations | 0 | (200,000) | ||
Net Cash Provided By Financing Activities | 650,415 | 113,930 | 854,970 | 743,210 |
Net Increase (Decrease) In Cash | (97,838) | (28,347) | 67,119 | 25,915 |
Cash - Beginning Of Year | 99,432 | 32,313 | 32,313 | 6,398 |
Cash - End Of Year | 1,594 | 3,966 | 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: | ||||
Cash payments for interest | 54,826 | 39,369 | ||
Warrant Issued In Conjunction With Debts | $ 202,052 | $ 0 | ||
Right of use assets obtained in exchange for new operating lease liabilities | $ 691,009 | $ 0 | ||
Common Stock Issued To Extinguish Debt | 100,000 | 0 | ||
Common Stock Issued For Prepaid Consulting Agreement | $ 58,125 | $ 0 |
Basis of Presentation
Basis of Presentation | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Basis of Presentation | ||
Basis Of Presentation Business | 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, 2021 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, 2021 filed with the U.S. Securities and Exchange Commission (SEC). Results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2022. | 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 Capital Resour
Management Plans Capital Resources | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Basis of Presentation | ||
Management Plans | Note 2. Management Plans - Capital Resources The Company reported net losses of $1,701,434 and $568,730 for the six months ended June 30, 2022 and 2021, respectively, and stockholders’ deficiencies of $5,387,542 and $4,097,889 at June 30, 2022 and December 31, 2021, respectively. The Company had a working capital deficit of approximately $4.4 million at June 30, 2022. These factors raise substantial doubt about the entity’s ability to continue as a going concern within one year. The Company has plans to issue stock via an equity raise of $15 million in the third quarter of 2022, restructure certain debt and anticipates significant growth of business. These plans, in management’s opinion, will allow the Company to meet its obligations and 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 certain obligations, using operational cash flow to pay down balances and extending terms, and provided financing with the issuance of new loans. During April 2022, the Company entered into a financing arrangement with Talos Victory Fund, LLC, for $296,000. Under the terms of the loan, amortization payments are due beginning August 12, 2022, and each month thereafter with the final payment due on April 12, 2023. During May 2022, the Company entered into a financing arrangement with Mast Hill Fund, L.P. for $355,000. Under the terms of the loan, amortization payments are due beginning September 27, 2022, and each month thereafter with the final payment due on May 26, 2023. As previously reported, on January 31, 2022, the Company, entered into a Stock Purchase Agreement (the “Pratum 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 (“Pratum”), whereby the Company agreed to acquire all of the issued and outstanding equity securities of the Company from the Seller Parties (the “Pratum Acquisition”). Pursuant to the terms of the Pratum Agreement, the Agreement could be terminated under certain circumstances, including, among other things, if the Pratum Acquisition does not close by March 31, 2022 (the “Outside Date”). On March 28, 2022, the Company, the Seller Parties, and Pratum entered into an agreement whereby the parties agreed to extend the Outside Date, as set forth in Section 2.1 of the Pratum Agreement, to May 15, 2022. On June 15, 2022, the Company, received notice of termination of the Pratum Agreement from the Seller Parties and Pratum pursuant to Section 8.1(a)(ii) of the Pratum Agreement on the basis that the Acquisition had not closed by the outside date of May 15, 2022, as amended. During the first quarter of 2022, the Company filed an S-1 for a public offering of $15 million of common stock and redeemable warrants, which was expected to be used for the Pratum Acquisition and working capital needs. Following the termination of the Pratum Agreement the Company has been reevaluating its capital needs and structure of the offering. The completion of this offering is not a certainty. Should the offering not proceed or be further delayed, or should it occur in a reduced format, the Company anticipates that it 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 anticipated improving operational results due to reduction of expenses, increased bookings and deposits in our Services business, and an influx of new Nodeware orders under contract at June 30, 2022 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. | 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 | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Summary of Significant Accounting Policies | ||
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, 2021 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, 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 June 30, 2022 or 2021 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 June 30, Six Months Ended June 30, 2022 2021 2022 2021 Managed support services $ 1,115,607 $ 1,057,431 $ 2,204,614 $ 2,128,331 Cybersecurity projects and software 580,885 689,073 1,158,948 1,391,515 Other IT consulting services 0 51,000 0 102,000 Total sales $ 1,696,492 $ 1,797,504 $ 3,363,562 $ 3,621,846 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, 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, revenue 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 six months ended June 30, 2022, sales to one client, including sales under subcontracts for services to several entities, accounted for 65.8% and 65.5%, respectively, of total sales (58.8% and 58.1%, respectively for the three and six months ended June 30, 2021) and 20.7% of accounts receivable at June 30, 2022 (15.6% at December 31, 2021). Capitalization of Software for Resale Leases - | 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 Weighted average common shares outstanding - Basic 401,637 387,492 Basic net income (loss) per share $ (3.91 ) $ 1.74 Effect of dilutive securities-stock options 0 82,879 Effect of dilutive securities-convertible debt 0 108,964 Weighted average common shares outstanding - Diluted 401,637 579,335 Diluted net income (loss) per share $ (3.91 ) $ 1.17 Anti-dilutive shares excluded from net income per share 301,651 52,867 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. |
Sale of Certain Accounts Receiv
Sale of Certain Accounts Receivable | 6 Months Ended |
Jun. 30, 2022 | |
Sale of Certain Accounts Receivable | |
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 8.35% at June 30, 2022) 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 six months ended June 30, 2022, the Company sold approximately $1,062,000 ($1,778,000 – for the six months ended June 30, 2021) of its accounts receivable to the Purchaser. As of June 30, 2022, approximately $303,000 ($148,000 - December 31, 2021) of these receivables remained outstanding. Additionally, as of June 30, 2022, the Company had $1,000 available under the financing line with the Purchaser ($66,000 at December 31, 2021). After deducting estimated fees, allowance for bad debts and advances from the Purchaser, the net receivable from the Purchaser amounted to $38,000 at June 30, 2022 ($15,000 at December 31, 2021), 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 $22,306 for the six months ended June 30, 2022 ($13,967 – for the six months ended June 30, 2021). These financing line fees are classified on the statements of operations as interest expense. |
NOTES PAYABLE - CURRENT
NOTES PAYABLE - CURRENT | 12 Months Ended |
Dec. 31, 2021 | |
NOTES PAYABLE - CURRENT | |
Notes payable - 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 |
Capitalization of Software for
Capitalization of Software for Resale | 6 Months Ended |
Jun. 30, 2022 | |
Capitalization of Software for Resale | |
Capitalization of Software for Resale | Note 5 Capitalization of Software for Resale As of June 30, 2022, there were $789,350 of costs capitalized ($678,973 as of December 31, 2021) and $368,126 of accumulated amortization ($261,323 as of December 31, 2021). During the three and six months ended June 30, 2022, there was $53,402 and $106,803 respectively, of amortization expense recorded ($39,844 and 74,794 respectively, for the three and six months ended June 30, 2021). Costs incurred prior to reaching technological feasibility are expensed as incurred. During the three and six months ended June 30, 2022, there was approximately $7,800 and $16,100, respectively, of labor amounts expensed related to these development costs ($46,900 and $87,700, respectively, for the three and six months ended June 30, 2021). |
Deferred Revenue and Performanc
Deferred Revenue and Performance Obligations | 6 Months Ended |
Jun. 30, 2022 | |
Deferred Revenue and Performance Obligations | |
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 June 30, 2022 and 2021, that was included in the deferred revenue balances at the beginning of the respective periods, was approximately $136,100 and $132,800, respectively. Revenue recognized during the six months ended June 30, 2022 and 2021 that was included in the deferred revenue balances at the beginning of the respective periods was approximately $278,300 and $210,300, 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 June 30, 2022, total remaining non-cancelable performance obligations under the Company’s contracts with customers was approximately $704,000. The Company expects to recognize all of this revenue over the next 12 months. |
Debt Obligations
Debt Obligations | 6 Months Ended |
Jun. 30, 2022 | |
Debt Obligations | |
Debt Obligations | Note 7. Debt Obligations During the six months ended June 30, 2022, the Company entered into a financing arrangement (the “Second Mast Hill Loan”) with Mast Hill Fund, L.P. (“Mast Hill”), a Delaware limited partnership. In exchange for a promissory note, Mast Hill 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 Second Mast Hill Loan, payments of $44,400, including principal and interest, are due beginning June 15, 2022, and each month thereafter with the final payment due on February 15, 2023. As additional consideration for the Second Mast Hill Loan), the Company issued the “Lender” a 5-year warrant to purchase 12,334 shares of Company common stock at a fixed price of $12.00 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 $131,600 will be amortized to interest expense over the life of the Promissory Note and is recorded as a discount to the promissory note. Debt issuance costs of $54,650 were incurred and are being amortized to interest expense over the life of the Promissory Note and is recorded as a discount to the promissory note. At June 30, 2022, the Company deferred the June 15, 2022 payment per the terms of the Second Mast Hill Loan. On April 12, 2022, the Company entered into a financing arrangement (the “Talos Loan”) with Talos Victory Fund, LLC (“Talos”), a Delaware limited liability company. In exchange for a promissory note, Talos agreed to lend the Company $296,000, which bears interest at a rate of eight percent (8%) per annum, less $29,600 original issue discount. Under the terms of the Talos Loan, payments of $35,520, including principal and interest, are due beginning August 12, 2022, and each month thereafter with the final payment due on April 12, 2023. As additional consideration for the Second Mast Hill Loan), the Company issued the “Lender” a 5-year warrant to purchase 9,867 shares of Company common stock at a fixed price of $12.00 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 $74,000 will be amortized to interest expense over the life of the Promissory Note and is recorded as a discount to the promissory note. Debt issuance costs of $45,920 were incurred and are being amortized over a twelve-month period ending April 2023. On May 27, 2022, the Company entered into a financing arrangement (the “Third Mast Hill Loan”) with Mast Hill. In exchange for a promissory note, Mast Hill agreed to lend the Company $355,000, which bears interest at a rate of eight percent (8%) per annum, less $35,500 original issue discount. Under the terms of the Third Mast Hill Loan, payments of $42,600, including principal and interest, are due beginning September 27, 2022, and each month thereafter with the final payment due on May 26, 2023. As additional consideration for the Second Mast Hill Loan), the Company issued the “Lender” a 5-year warrant to purchase 11,834 shares of Company common stock at a fixed price of $12.00 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 $113,400 will be amortized to interest expense over the life of the Promissory Note and is recorded as a discount to the promissory note. Debt issuance costs of $54,975 were incurred and are being amortized over a twelve-month period ending May 2023. On June 30, 2022, the Company and Donald W. Reeve, a director of the Company, entered into two note modification agreements with respect to the Promissory Note originally dated December 30, 2020 and the Promissory Note originally dated May 25, 2021. There were two payments of principal of $100,000 each due June 1, 2022. The Modification agreements each extended the previously amended due dates from June 1, 2022 to September 1, 2022. |
LONG-TERM OBLIGATIONS
LONG-TERM OBLIGATIONS | 12 Months Ended |
Dec. 31, 2021 | |
LONG-TERM OBLIGATIONS | |
Long 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 |
Earnings per Share
Earnings per Share | 6 Months Ended |
Jun. 30, 2022 | |
Earnings per Share | |
Earnings per Share | Note 8. 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. F-9 Table of Contents The following table sets forth the computation of basic and diluted net loss per share for the three months ended: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Numerator for basic and diluted net loss per share: Net loss $ (833,200 ) $ (416,503 ) $ (1,701,434 ) $ (568,730 ) Basic and diluted net loss per share $ (1.88 ) $ (1.07 ) $ (3.87 ) $ (1.46 ) Weighted average common shares outstanding Basic and diluted shares 443,953 389,845 440,005 388,675 Anti-dilutive shares excluded from net loss per share calculation 319,350 308,644 319,350 308,644 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. |
Stock Option Plans and Agreemen
Stock Option Plans and Agreements | 6 Months Ended |
Jun. 30, 2022 | |
Stock Option Plans and Agreements | |
Stock Option Plans and Agreements | Note 9. Stock Option Plans and Agreements The Company has approved stock option plans and agreements covering up to an aggregate of 217,394 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. 1,267 options were granted for the six months ended June 30, 2022. 7,667 options were granted for the six months ended June 30, 2021. The following assumptions were used for the six months ended June 30, 2022. Risk-free interest rate 1.26%-3.35 % Expected dividend yield 0 % Expected stock price volatility 110%-130 % Expected life of options (years) 2.75 The Company recorded expense for options issued to employees and independent service providers of $51,708 and $52,631 for the three and six months ended June 30, 2022, respectively ($81,920 and $110,168 for the three and six months ended June 30, 2021). 4,800 options vested during the six months ended June 30, 2022. The Company issued 10,000 performance-based stock options during 2021 at $18.375 per share to an executive of the Company. Certain revenue targets must be made to grant the options in three tranches of 3,334 shares each. In the three months ended June 30, 2022, the Company amended the targets for these options and recognized one third of the compensation in the amount of $45,275. The remaining unrecognized compensation expense for these options was approximately $90,550 at June 30, 2022. A summary of all stock option activity for the six months ended June 30, 2022 follows: Number of Weighted Remaining Aggregate Options Average Contractual Intrinsic Outstanding Exercise Price Term Value Outstanding at December 31, 2021 143,401 $ 5.85 Granted 1,267 9.75 Expired (4,634 ) 3.30 Outstanding at June 30, 2022 140,034 $ 5.92 2.9 years $ 870,900 At June 30, 2022- vested or expected to vest 133,234 $ 5.33 2.9 years $ 870,900 Exercisable 133,234 $ 5.33 2.9 years $ 870,900 |
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 2,667 common shares at an exercise price of $14.438 per share to a former executive of the Company who consults with the Company. The individual forfeited an option grant of 6,307 common shares from the 2009 Plan. On April 19, 2021, the Company issued 10,000 performance-based stock options at $18.375 per share to an executive of the Company. Certain revenue targets must be made to grant the options in three tranches of 3,334 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 6,667 common shares at an exercise price of $3.75 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 3,334 common shares at an exercise price of $9.00 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 334 common shares at an exercise price of $7.50 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 145,474 $ 3.90 Granted 25,067 $ 6.15 Expired (4,466 ) $ 10.95 Forfeited (333 ) $ 3.75 Outstanding at December 31, 2020 165,742 $ 3.98 Granted 23,420 $ 15.98 Exercised (31,854 ) $ 2.78 Expired (600 ) $ 7.13 Forfeited (13,307 ) $ 7.20 Outstanding at December 31, 2021 143,401 $ 5.85 3.4 years $ 544,100 Vested or expected to vest at December 31, 2021 133,400 $ 4.95 3.3 years $ 544,100 Exercisable at December 31, 2021 133,067 $ 4.88 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 $15.95 and $6.15 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 6,667 options granted in consideration for providing the financing on August 24, 2020. |
Warrants
Warrants | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Warrants | ||
Warrants | Note 10. Warrants On April 29, 2022, Mast Hill Fund, LP elected to purchase 18,667 warrant shares in a cashless exercise per the terms of the warrant agreement dated November 3, 2021. Based on the calculation per the agreement, 11,470 shares were issued to Mast Hill Fund, LP. | 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 18,667 shares of Company common stock at a fixed price of $12.00 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 2,135 shares of Company common stock at a fixed price of $14.40 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 | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Lease | ||
Lease | Note 11. Lease Beginning on August 1, 2016, the Company leased its headquarters facility under an operating lease agreement that was scheduled to expire on June 30, 2022. Rent expense was $80,000 annually during the first year of the lease term and increased by 1.5% annually thereafter. The lease was terminated one month early, and a new lease agreement, at the existing headquarters location, commenced on June 1, 2022. The term of the new lease agreement is 84 months. The first year’s rent will be $118,487 and will increase by 2% annually thereafter. Supplemental balance sheet information related to the leases on June 30, 2022 and December 31, 2021 is as follows: Description Classification June 30, 2022 December 31, 2021 Right of Use Asset - Lease, net Other assets (non-current) $ 684,552 $ 41,490 Operating Lease Liability - Short Term Accrued liabilities 73,030 42,347 Operating Lease Liability - Long Term Other long-term liabilities 612,136 0 Total Operating Lease Liability $ 685,166 $ 42,347 Discount Rate - Operating Lease 7.0 % 6.0 % | 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 | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Related Party Accrued Interest Payable | ||
Related Party Accrued Interest Payable | Note 12. Related Party Accrued Interest Payable Included in accrued interest payable is amounts due to related parties of approximately $134,000, at June 30, 2022 ($107,000 at December 31, 2021). An additional $136,675 of accrued interest to related parties is included with short and long-term debt and is due to be paid after June 30, 2022. | NOTE 13. - RELATED PARTY ACCRUED INTEREST PAYABLE Accrued Interest Payable - |
Subsequent Events
Subsequent Events | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Subsequent Events | ||
Subsequent Events | Note 13. Subsequent Events On July 29, 2022, the “Company and Andrew Hoyen (“Lender”), a director and executive officer of the Company, entered into a note modification agreement (the “Modification Agreement”) with respect to the Line of Credit Note and Agreement in the original principal sum of up to $100,000, dated July 18, 2017, issued by the Company to the Lender (the “Hoyen Note”). The Note and the Modification Agreement was approved by the disinterested members of the Company’s Board of Directors. The Modification Agreement extends the due date of the Note to July 31, 2023, on which date the current outstanding principal balance of $90,000 and accrued and unpaid interest will be due. Pursuant to the Modification Agreement, the Company agreed to repay to Lender $16,000 of the accrued interest on the Hoyen Note and off-set such repayment against the exercise on July 29, 2022 by Lender of certain options to acquire 5,334 shares of the Company’s common stock. The remaining accrued and unpaid interest on the Hoyen Note was $10,930 as of July 29, 2022. Except as set forth in the Modification Agreement, the terms of the Hoyen Note remain the same On August 10, 2022, the Company received funding from a loan agreement with Stripe and Celtic Bank. The loan amount was $139,400 plus a fixed fee of $11,152. The repayment amount of $150,522 will be repaid at a repayment rate of 25% of the Company’s receivables automatically withheld by Stripe. There is no financing percentage. The repayment start date is August 15, 2022, with a minimum payment amount of $16,728 over every 60-day period. The final repayment date is February 6, 2024, if total repayment amount is not paid as of that date. | 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. |
Retroactive Effect of Reverse S
Retroactive Effect of Reverse Stock Split | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Subsequent Events | ||
Retroactive Effect of Reverse Stock Split | Note 14. Retroactive Effect of Reverse Stock Split On December 15, 2021, the Company’s board of directors approved a reverse stock split of outstanding shares of common stock by a ratio within the range of 3-to-1 and 75-to-1, to be effective at the ratio and date to be determined by the board of directors. The stockholders approved granting discretionary authority to the Company’s board of directors to amend the Company’s Certificate of Incorporation to effect the reverse stock split within the range of 3-to-1 and 75-to-1 at the annual meeting on January 26, 2022. On October 17, 2022 the board of directors approved a reverse stock split of the outstanding shares of common stock by a ratio of 75-to-1, which became effective October 19, 2022. All share and per share data in the accompanying financial statements have been retroactively restated to reflect the effect of the reverse stock split. | NOTE 15. - RETROACTIVE EFFECT OF REVERSE STOCK SPLIT On December 15, 2021, the Company’s board of directors approved a reverse stock split of outstanding shares of common stock by a ratio within the range of 3-to-1 and 75-to-1, to be effective at the ratio and date to be determined by the board of directors. The stockholders approved granting discretionary authority to the Company’s board of directors to amend the Company’s Certificate of Incorporation to effect the reverse stock split within the range of 3-to-1 and 75-to-1 at the annual meeting on January 26, 2022. On October 17, 2022 the board of directors approved a reverse stock split of the outstanding shares of common stock by a ratio of 75-to-1, which became effective October 19, 2022. All share and per share data in the accompanying financial statements have been retroactively restated to reflect the effect of the reverse stock split. 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 $7.50 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 12,334 shares of Company common stock at a fixed price of $12.00 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 $12.75 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 1,619 shares of Company common stock at a fixed price of $14.40 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) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | 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). | |
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. 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. |
Revenue | The Company’s total revenue recognized from contracts from customers was comprised of three major services: Managed support services, Cybersecurity projects, 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 June 30, 2022 or 2021 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 June 30, Six Months Ended June 30, 2022 2021 2022 2021 Managed support services $ 1,115,607 $ 1,057,431 $ 2,204,614 $ 2,128,331 Cybersecurity projects and software 580,885 689,073 1,158,948 1,391,515 Other IT consulting services 0 51,000 0 102,000 Total sales $ 1,696,492 $ 1,797,504 $ 3,363,562 $ 3,621,846 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, 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, revenue 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 six months ended June 30, 2022, sales to one client, including sales under subcontracts for services to several entities, accounted for 65.8% and 65.5%, respectively, of total sales (58.8% and 58.1%, respectively for the three and six months ended June 30, 2021) and 20.7% of accounts receivable at June 30, 2022 (15.6% at December 31, 2021). | |
Capitalization of Software for Resale | Capitalization of Software for Resale | Capitalization of Software for Resale - |
Leases | Leases - | |
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 - | |
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. | |
Earnings Per Share | 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 Weighted average common shares outstanding - Basic 401,637 387,492 Basic net income (loss) per share $ (3.91 ) $ 1.74 Effect of dilutive securities-stock options 0 82,879 Effect of dilutive securities-convertible debt 0 108,964 Weighted average common shares outstanding - Diluted 401,637 579,335 Diluted net income (loss) per share $ (3.91 ) $ 1.17 Anti-dilutive shares excluded from net income per share 301,651 52,867 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) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Summary of Significant Accounting Policies | ||
Disaggregation Of Revenue | Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Managed support services $ 1,115,607 $ 1,057,431 $ 2,204,614 $ 2,128,331 Cybersecurity projects and software 580,885 689,073 1,158,948 1,391,515 Other IT consulting services 0 51,000 0 102,000 Total sales $ 1,696,492 $ 1,797,504 $ 3,363,562 $ 3,621,846 | 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 | Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Numerator for basic and diluted net loss per share: Net loss $ (833,200 ) $ (416,503 ) $ (1,701,434 ) $ (568,730 ) Basic and diluted net loss per share $ (1.88 ) $ (1.07 ) $ (3.87 ) $ (1.46 ) Weighted average common shares outstanding Basic and diluted shares 443,953 389,845 440,005 388,675 Anti-dilutive shares excluded from net loss per share calculation 319,350 308,644 319,350 308,644 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. | Years ended December 31, 2021 2020 Numerator for basic and diluted net income per share: Net income (loss) $ (1,568,813 ) $ 675,996 Weighted average common shares outstanding - Basic 401,637 387,492 Basic net income (loss) per share $ (3.91 ) $ 1.74 Effect of dilutive securities-stock options 0 82,879 Effect of dilutive securities-convertible debt 0 108,964 Weighted average common shares outstanding - Diluted 401,637 579,335 Diluted net income (loss) per share $ (3.91 ) $ 1.17 Anti-dilutive shares excluded from net income per share 301,651 52,867 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Earnings per Share | ||
Schedule of earning Loss per share, basic and diluted | Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Numerator for basic and diluted net loss per share: Net loss $ (833,200 ) $ (416,503 ) $ (1,701,434 ) $ (568,730 ) Basic and diluted net loss per share $ (1.88 ) $ (1.07 ) $ (3.87 ) $ (1.46 ) Weighted average common shares outstanding Basic and diluted shares 443,953 389,845 440,005 388,675 Anti-dilutive shares excluded from net loss per share calculation 319,350 308,644 319,350 308,644 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. | Years ended December 31, 2021 2020 Numerator for basic and diluted net income per share: Net income (loss) $ (1,568,813 ) $ 675,996 Weighted average common shares outstanding - Basic 401,637 387,492 Basic net income (loss) per share $ (3.91 ) $ 1.74 Effect of dilutive securities-stock options 0 82,879 Effect of dilutive securities-convertible debt 0 108,964 Weighted average common shares outstanding - Diluted 401,637 579,335 Diluted net income (loss) per share $ (3.91 ) $ 1.17 Anti-dilutive shares excluded from net income per share 301,651 52,867 |
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 AGREEM_2
STOCK OPTION PLANS AND AGREEMENTS (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Stock Option Plans and Agreements | ||
Schedule Of Share-based Payment Award, Stock Options, Valuation Assumptions | Risk-free interest rate 1.26%-3.35 % Expected dividend yield 0 % Expected stock price volatility 110%-130 % Expected life of options (years) 2.75 | 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 Weighted Remaining Aggregate Options Average Contractual Intrinsic Outstanding Exercise Price Term Value Outstanding at December 31, 2021 143,401 $ 5.85 Granted 1,267 9.75 Expired (4,634 ) 3.30 Outstanding at June 30, 2022 140,034 $ 5.92 2.9 years $ 870,900 At June 30, 2022- vested or expected to vest 133,234 $ 5.33 2.9 years $ 870,900 Exercisable 133,234 $ 5.33 2.9 years $ 870,900 | Number of Options Outstanding Weighted Average Exercise Price Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2019 145,474 $ 3.90 Granted 25,067 $ 6.15 Expired (4,466 ) $ 10.95 Forfeited (333 ) $ 3.75 Outstanding at December 31, 2020 165,742 $ 3.98 Granted 23,420 $ 15.98 Exercised (31,854 ) $ 2.78 Expired (600 ) $ 7.13 Forfeited (13,307 ) $ 7.20 Outstanding at December 31, 2021 143,401 $ 5.85 3.4 years $ 544,100 Vested or expected to vest at December 31, 2021 133,400 $ 4.95 3.3 years $ 544,100 Exercisable at December 31, 2021 133,067 $ 4.88 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 % |
Lease (Tables)
Lease (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Lease (Tables) | |
Supplemental operating lease information | Description Classification June 30, 2022 December 31, 2021 Right of Use Asset - Lease, net Other assets (non-current) $ 684,552 $ 41,490 Operating Lease Liability - Short Term Accrued liabilities 73,030 42,347 Operating Lease Liability - Long Term Other long-term liabilities 612,136 0 Total Operating Lease Liability $ 685,166 $ 42,347 Discount Rate - Operating Lease 7.0 % 6.0 % |
Management Plans Capital Reso_2
Management Plans Capital Resources (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Net Income (loss) | $ (833,200) | $ (868,234) | $ (416,503) | $ (152,227) | $ (1,701,434) | $ (568,730) | $ (1,568,813) | $ 675,996 | ||
Operating Income (loss) | (589,421) | (360,472) | (1,295,199) | (461,162) | (1,407,569) | 1,291 | ||||
Total Stockholders' Deficiency | (5,387,542) | (4,816,866) | $ (3,491,277) | $ (3,229,749) | (5,387,542) | (3,491,277) | (4,097,889) | (3,105,770) | $ (3,907,310) | |
Working capital deficit | $ 4,400,000 | 4,400,000 | (3,100,000) | |||||||
Stock Issued | 15,000,000 | |||||||||
Public offering | $ 15,000,000 | 15,000,000 | ||||||||
Payment percentage of receipts | 229,000 | |||||||||
Short-term Note Payable | $ 100,000 | |||||||||
Interest Rate | 6% | |||||||||
Notes Payable | $ 383,824 | |||||||||
Payment On Debt | 0 | $ 200,000 | ||||||||
2023 and 2024 [Member] | ||||||||||
Notes Payable | 446,000 | |||||||||
Talos Victory Fund [Member] | ||||||||||
Loan | 296,000 | |||||||||
Mast Hill Fund L P [Member] | ||||||||||
Loan | $ 355,000 | $ 370,000 | 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 | |||||||||
Related Party [Member] | ||||||||||
Interest Rate | 6% | |||||||||
Notes Payable | 328,000 | |||||||||
Demand Notes | $ 50,000 | 96,600 | ||||||||
Three Related Parties [Member] | ||||||||||
Demand Notes | 167,500 | |||||||||
Demand Notes Remaining Balance | $ 166,500 | |||||||||
Two Board Members | ||||||||||
Interest Rate of down payment | 50% | |||||||||
Demand Notes payable issued | $ 79,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Total sales | $ 1,696,492 | $ 1,797,504 | $ 3,363,562 | $ 3,621,846 | $ 7,224,242 | $ 7,219,446 |
Managed Support Services | ||||||
Total sales | 1,115,607 | 1,057,431 | 2,204,614 | 2,128,331 | 4,325,067 | 4,669,570 |
Cybersecurity Projects and Software | ||||||
Total sales | 580,885 | 689,073 | 1,158,948 | 1,391,515 | 2,780,175 | 2,285,876 |
Other IT Consulting Services | ||||||
Total sales | $ 119,000 | $ 264,000 | ||||
Other IT consulting services | ||||||
Total sales | $ 0 | $ 51,000 | $ 0 | $ 102,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Summary of Significant Accounting Policies | ||||||||
Net Income (loss) | $ (833,200) | $ (868,234) | $ (416,503) | $ (152,227) | $ (1,701,434) | $ (568,730) | $ (1,568,813) | $ 675,996 |
Weighted average shares outstanding - basic | 443,953 | 389,845 | 440,005 | 388,675 | 401,637 | 387,492 | ||
Net loss per share - basic | $ (3.91) | $ 1.74 | ||||||
Effect of dilutive securities-stock options | 0 | 82,879 | ||||||
Effect of dilutive securities-convertible debt | 0 | 108,964 | ||||||
Weighted Average Shares Outstanding Diluted | 443,953 | 389,845 | 440,005 | 388,675 | 401,637 | 579,335 | ||
Net loss per share - diluted | $ (1.88) | $ (1.07) | $ (3.87) | $ (1.46) | $ (3.91) | $ 1.17 | ||
Anti-dilutive Shares Excluded From Net Loss Per Share | 319,350 | 308,644 | 319,350 | 308,644 | 301,651 | 52,867 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | 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 | $ 53,402 | $ 39,844 | $ 106,803 | $ 74,794 | 166,783 | 85,002 | |
2022 | 217,722 | ||||||
2023 | 144,989 | ||||||
2024 | 63,208 | ||||||
2025 | 2,731 | ||||||
Labor expense related to development cost | 153,600 | 159,700 | |||||
Recognized Revenue | 136,100 | $ 132,800 | 278,300 | $ 210,300 | $ 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. | ||||||
Accounts Receivable | $ 650,403 | $ 650,403 | $ 727,297 | $ 953,826 | |||
Sales Revenue Net [Member] | Customer A | |||||||
Concentration risk | 65.80% | 58.80% | 65.50% | 58.10% | 59.60% | 61.20% | |
Accounts Receivable [Member] | Customer A | |||||||
Concentration risk | 20.70% | 15.60% | 15.60% | 38.80% | |||
Customer 1 | |||||||
Accounts Receivable | $ 1,500,000 | ||||||
Customer 1 | Maximum [Member] | |||||||
Percentage of down payment | 75% | ||||||
Customer 1 | Minimum [Member] | |||||||
Percentage of down payment | 50% |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Jun. 30, 2022 | Dec. 31, 2020 | |
Property, Plant And Equipment, Gross | $ 246,204 | $ 232,698 | |
Accumulated Depreciation | (205,066) | (184,499) | |
Property And Equipment, Net | $ 41,138 | $ 30,982 | 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 |
Sale of Certain Accounts Rece_2
Sale of Certain Accounts Receivable (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Retained amount rate | 10% | |||
Prime plus rate | 3.60% | |||
Effective rate | 8.35% | 0% | 0% | |
Sublimit on accounts receivable by customer | $ 1,500,000 | |||
Maximum limit of financing line | 2,000,000 | |||
Purchaser [Member] | ||||
Accounts receivable | 1,062,000 | $ 1,778,000 | ||
Net receivable from financing agreement | 38,000 | $ 15,000 | ||
Remained outstanding receivables financiing agreeent | 303,000 | 148,000 | ||
Additional remained outstanding receivables financiing agreeent | 1,000 | $ 66,000 | ||
Cost associated with the financing line | $ 22,306 | $ 13,967 |
Capitalization of Software fo_2
Capitalization of Software for Resale (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Capitalization of Software for Resale | ||||||
Software development capitalized costs accumulated amortization | $ 368,126 | $ 368,126 | $ 261,323 | |||
Amortization of software development capitalized costs | 789,350 | 678,973 | ||||
Development costs | 7,800 | $ 46,900 | 16,100 | $ 87,700 | ||
Amortization expense | $ 53,402 | $ 39,844 | $ 106,803 | $ 74,794 | $ 166,783 | $ 85,002 |
NOTES PAYABLE - CURRENT (Detail
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 (Deta_2
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 (Deta_3
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% | |
Monthly Payments Of Principal And Interest | $ 53,760 | |
Conversion Price | $ 7.50 | |
Finder's Fee | $ 20,160 | |
Legal Fees | 5,000 | |
Obligated Unrelated Third Parties | $ 150,000 | $ 150,000 |
Unsecured Conversion Price | $ 3.75 | |
Notes Bear Interest | 6% |
LONG-TERM OBLIGATIONS (Details)
LONG-TERM 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 |
LONG-TERM OBLIGATIONS (Details
LONG-TERM 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 |
LONG-TERM OBLIGATIONS (Detail_2
LONG-TERM OBLIGATIONS (Details 2) | Dec. 31, 2021 USD ($) |
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 (Detail_3
LONG-TERM OBLIGATIONS (Details Narrative) - USD ($) | 12 Months Ended | |||||||||||||||
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. 31, 2022 | 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 | |||||||||||||||
Aggregate Purchase Price | $ 8,500,000 | |||||||||||||||
Conversion Price | $ 7.50 | |||||||||||||||
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% | |||||||||||||||
Note Payable | $ 467,225 | |||||||||||||||
Principal Due Amount | 500,000 | |||||||||||||||
Deferred Financing Costs | 32,775 | |||||||||||||||
Note payable, 10%, secured, due January 1, 2018 [Member] | ||||||||||||||||
Bears Interest Rate | 10% | |||||||||||||||
Aggregate Purchase Price | $ 175,000 | |||||||||||||||
Issued Secured Notes Payable | $ 265,000 | $ 265,000 | ||||||||||||||
Convertible term note payable, 12%, secured, due January 1, 2024 [Member] | ||||||||||||||||
Bears Interest Rate | 12% | |||||||||||||||
Principal Due Amount | $ 500,000 | |||||||||||||||
Conversion Price | $ 18.75 | |||||||||||||||
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 | |||||||||||||||
2020 note payable, 6%, unsecured, due August 24, 2024 [Member] | ||||||||||||||||
Lender Fee Payment | 166,473 | |||||||||||||||
Principal Due Amount | $ 550,000 | |||||||||||||||
Convertible term note payable, 7%, secured, due January 1, 2024 [Member] | ||||||||||||||||
Bears Interest Rate | 7% | |||||||||||||||
Note Payable | $ 467,225 | |||||||||||||||
Common Stock, Share Price | $ 7.5 | |||||||||||||||
Convertible notes payable, 6%, due January 1, 2024 [Member] | ||||||||||||||||
Bears Interest Rate | 6% | 6% | ||||||||||||||
Common Stock, Share Price | $ 3.75 | |||||||||||||||
Exercisable Per Share | $ 7.50 | |||||||||||||||
Note Payable To Former Related Party | $ 9,000 | |||||||||||||||
Issue Borrower | 334 | |||||||||||||||
Interes Rate Effective | 6% | 6% | ||||||||||||||
Note payable of up to $500,000, 7.5%, due August 31, 2026 [Member] | ||||||||||||||||
Bears Interest Rate | 7.50% | 6% | ||||||||||||||
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 | |||||||||||||||
Convertible notes payable, 6% [Member] | ||||||||||||||||
Bears Interest Rate | 6% | |||||||||||||||
Common Stock, Share Price | $ 3.75 | |||||||||||||||
Note Payable To Former Related Party | $ 146,300 | |||||||||||||||
Interes Rate Effective | 6% | 6% | ||||||||||||||
Convertible note payable, 7%, due June 30, 2023 [Member] | ||||||||||||||||
Principal Due Amount | $ 25,000 | |||||||||||||||
Common Stock, Share Price | $ 0.10 | $ 7.50 | ||||||||||||||
Note payable, $75,000 line of credit, 6%, unsecured [Member] | ||||||||||||||||
Bears Interest Rate | 6% | |||||||||||||||
Common Stock, Shares Purchased | 5,334 | |||||||||||||||
Common Stock, Share Price | 0.10 | $ 3 | ||||||||||||||
Working Capital | $ 100,000 | |||||||||||||||
Note payable, $75,000 line of credit, 6%, unsecured [Member] | ||||||||||||||||
Bears Interest Rate | 6% | |||||||||||||||
Common Stock, Shares Purchased | 5,334 | |||||||||||||||
Common Stock, Share Price | $ 0.10 | $ 3 | ||||||||||||||
Working Capital | $ 75,000 |
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 |
2005 Plan [Member] | ||
Common Stock, Shares Purchased | 13,200 | 990,000 |
2019 Plan [Member] | ||
Shares Available For Grant | 1,687 | |
Common Stock, Shares Purchased | 20,000 | |
2009 Plan [Member] | ||
Shares Available For Grant | 0 | |
Common Stock, Shares Purchased | 48,894 | 3,667,000 |
2020 Plan [Member] | ||
Shares Available For Grant | 734 | |
Common Stock, Shares Purchased | 20,000 |
Deferred Revenue and Performa_2
Deferred Revenue and Performance Obligations (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Stock Option Plans and Agreements | ||||||
Remaining non-cancelable performance obligations | $ 704,000 | $ 704,000 | ||||
Revenue recognized | $ 136,100 | $ 132,800 | $ 278,300 | $ 210,300 | $ 500,000 | $ 320,000 |
Debt Obligations (Details Narra
Debt Obligations (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended | |||
Apr. 12, 2022 | May 27, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | Sep. 01, 2022 | Nov. 03, 2021 | |
Debt issuance costs | $ 53,445 | $ 25,160 | ||||
Warrants exercise price | $ 12 | |||||
Talos Victory Fund [Member] | ||||||
Bears interest rate | 8% | |||||
Borrowed amount | $ 296,000 | |||||
Original issue discount | 29,600 | |||||
Loan | $ 35,520 | |||||
Donald W. Reeve [Member] | ||||||
Date of Promissory Note | May 25, 2021 | |||||
Payment of principal amount | $ 100,000 | |||||
Mast Hill Fund L P [Member] | ||||||
Bears interest rate | 8% | 8% | ||||
Borrowed amount | $ 355,000 | $ 370,000 | ||||
Due maturity date | April 12, 2023 | May 26, 2023 | February 15, 2023 | |||
Amortized to interest expense | $ 113,400 | $ 131,600 | ||||
Debt issuance costs | $ 45,920 | $ 54,975 | $ 54,650 | |||
Warrant to purchase commo stock shares | 9,867 | 11,834 | 12,334 | |||
Warrants exercise price | $ 12 | $ 12 | $ 12 | |||
Warrants term | 5 years | 5 years | ||||
Original issue discount | $ 35,500 | $ 37,000 | ||||
Loan | $ 42,600 |
Stock Option Agreements and T_2
Stock Option Agreements and Transactions (Details) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Expected Dividend Yield | 0% | 0% | 0% |
Expected Stock Price Volatility | 100% | ||
Expected Life Of Options | 2 years 9 months | ||
Minimum [Member] | |||
Expected Stock Price Volatility | 110% | 100% | |
Expected Life Of Options | 1 year 3 months | 1 year 9 months | |
Risk-free Interest Rate | 1.26% | 0.16% | 0.17% |
Maximum [Member] | |||
Expected Stock Price Volatility | 130% | 140% | |
Expected Life Of Options | 5 years 3 months | 3 years 3 days | |
Risk-free Interest Rate | 3.35% | 0.64% | 1.40% |
Stock Option Agreements and T_3
Stock Option Agreements and Transactions (Details 1) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stock Option Plans and Agreements | |||
Number Of Options Outstanding, Beginning | 143,401 | 12,430,500 | 145,474 |
Number Of Options Granted | 1,267 | 23,420 | 25,067 |
Number Of Options Exercised | (31,854) | ||
Number Of Options Forfeited | (13,307) | (333) | |
Number Of Options Expired | (4,634) | (600) | (4,466) |
Number Of Options Outstanding, Ending | 140,034 | 143,401 | 165,742 |
Number Of Options Vested Or Expected To Vest | 133,234 | 133,400 | |
Number Of Options Exercisable | 133,234 | 133,067 | |
Weighted Average Exercise Price Outstanding, Beginning | $ 0.08 | $ 0.05 | $ 3.90 |
Weighted Average Exercise Price Granted | 0.13 | 15.98 | 6.15 |
Weighted Average Exercise Price Exercised | 2.78 | ||
Weighted Average Exercise Price Expired | 0.04 | 7.13 | 10.95 |
Weighted Average Exercise Price Forfeited | 7.20 | 3.75 | |
Weighted Average Exercise Price Outstanding, Ending | 0.08 | 5.85 | $ 3.98 |
Weighted Average Exercise Price Vested Or Expected To Vest | 0.07 | 4.95 | |
Weighted Average Exercise Price Exercisable | $ 0.07 | $ 4.88 | |
Weighted-average Remaining Contractual Term Outstanding | 2 years 10 months 24 days | 3 years 4 months 24 days | |
Weighted-average Remaining Contractual Term Vested Or Expected To Vest | 2 years 10 months 24 days | 3 years 3 months 18 days | |
Weighted-average Remaining Contractual Term Exercisable | 2 years 10 months 24 days | 3 years 3 months 18 days | |
Aggregate Intrinsic Value Outstanding | $ 870,900 | $ 544,100 | |
Aggregate Intrinsic Value Vested Or Expected To Vest | 870,900 | 544,100 | |
Aggregate Intrinsic Value Exercisable | $ 870,900 | $ 544,100 |
Stock Option Agreements and T_4
Stock Option Agreements and Transactions (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||
Apr. 06, 2021 | May 07, 2019 | Apr. 19, 2021 | Nov. 17, 2020 | Aug. 24, 2020 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | 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 | $ 90,550 | $ 90,550 | $ 135,800 | |||||||||
Options And Granted | 3,334 | 7,667 | ||||||||||
Weighted Average Fair Value Of Options Granted Per Share | $ 15.95 | $ 6.15 | ||||||||||
Common Stock Average Exercise Price | $ 15.75 | |||||||||||
Stock Option To Purchase Common Stock Shares Exercise Price | $ 14,438 | $ 1.50 | $ 18.375 | $ 9 | $ 3.75 | $ 7.50 | ||||||
Stock Option To Purchase Common Stock Shares | 2,667 | 33,334 | 3,334 | 6,667 | 334 | |||||||
Options Shares | 10,000 | 3,334 | ||||||||||
Interest Expense | $ 15,450 | $ 52,900 | $ 243,789 | $ 56,032 | $ 406,253 | $ 107,571 | $ 281,786 | $ 293,088 | $ 14,250 | |||
Options Granted In Consideration For Providing The Financing | 6,667 | |||||||||||
Note Payable Agreement Amount | $ 166,473 | $ 9,000 | ||||||||||
Options Vested | 9,354 | 4,800 | ||||||||||
Option Forfeited | 6,307 | |||||||||||
Note Payable Related Party | $ 500,000 | $ 146,300 | ||||||||||
Note Payable Interest Rate | 7.50% | 6% | 6% | 6% | ||||||||
Note Payable Maturity Date | Aug. 31, 2026 | Jan. 01, 2022 | Aug. 24, 2024 | Jan. 01, 2024 | ||||||||
Borrowed Funds | 249,000 | $ 50,000 | $ 200,000 | |||||||||
Borrowed Funds Outstanding | $ 499,000 | |||||||||||
Performance Shares [Member] | ||||||||||||
Common Shares Outstanding | 19,354 | |||||||||||
Option [Member] | ||||||||||||
Interest Expense | $ 958 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Earnings per Share | ||||||||
Net Income (loss) | $ (833,200) | $ (868,234) | $ (416,503) | $ (152,227) | $ (1,701,434) | $ (568,730) | $ (1,568,813) | $ 675,996 |
Basic and diluted net loss per share | $ (1.88) | $ (1.07) | $ (3.87) | $ (1.46) | ||||
Weighted average common shares outstanding Basic and diluted shares | 443,953 | 389,845 | 440,005 | 388,675 | ||||
Anti-dilutive shares excluded from net loss per share calculation | 319,350 | 308,644 | 319,350 | 308,644 | 301,651 | 52,867 |
Stock Option Plans and Agreem_3
Stock Option Plans and Agreements (Details) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Expected dividend yield | 0% | 0% | 0% |
Expected life of options | 2 years 9 months | ||
Expected stock price volatility | 100% | ||
Minimum [Member] | |||
Expected life of options | 1 year 3 months | 1 year 9 months | |
Risk-free interest rate | 1.26% | 0.16% | 0.17% |
Expected stock price volatility | 110% | 100% | |
Maximum [Member] | |||
Expected life of options | 5 years 3 months | 3 years 3 days | |
Risk-free interest rate | 3.35% | 0.64% | 1.40% |
Expected stock price volatility | 130% | 140% |
Stock Option Plans and Agreem_4
Stock Option Plans and Agreements (Details 1) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stock Option Plans and Agreements | |||
Number Of Options Outstanding, Beginning | 143,401 | 12,430,500 | 145,474 |
Number of options granted | 1,267 | 23,420 | 25,067 |
Number of options expired | (4,634) | (600) | (4,466) |
Number Of Options Outstanding, Ending | 140,034 | 143,401 | 165,742 |
Number of options vested or expected to vest | 133,234 | 133,400 | |
Number of options exercisable | 133,234 | 133,067 | |
Weighted Average Exercise Price Outstanding, Beginning | $ 0.08 | $ 0.05 | $ 3.90 |
Weighted average exercise price granted | 0.13 | 15.98 | 6.15 |
Weighted average exercise price expired | 0.04 | 7.13 | 10.95 |
Weighted Average Exercise Price Outstanding, Ending | 0.08 | 5.85 | $ 3.98 |
Weighted average exercise price vested or expected to vest | 0.07 | 4.95 | |
Weighted average exercise price exercisable | $ 0.07 | $ 4.88 | |
Weighted-average remaining contractual term outstanding | 2 years 10 months 24 days | 3 years 4 months 24 days | |
Weighted-average remaining contractual term vested or expected to vest | 2 years 10 months 24 days | 3 years 3 months 18 days | |
Weighted-average remaining contractual term exercisable | 2 years 10 months 24 days | 3 years 3 months 18 days | |
Aggregate intrinsic value outstanding | $ 870,900 | $ 544,100 | |
Aggregate intrinsic value vested or expected to vest | 870,900 | 544,100 | |
Aggregate intrinsic value exercisable | $ 870,900 | $ 544,100 |
Stock Option Plans and Agreem_5
Stock Option Plans and Agreements (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Apr. 06, 2021 | Apr. 19, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Stock Option Plans and Agreements | |||||||
Option expense | $ 51,708 | $ 81,920 | $ 52,631 | $ 110,168 | |||
Unrecognized compensation cost | 90,550 | 90,550 | $ 135,800 | ||||
Recognized compensation | $ 45,275 | $ 45,275 | |||||
Options and granted | 3,334 | 7,667 | |||||
Performance-based stock options | 10,000 | ||||||
Option price | $ 18.375 | $ 18.375 | |||||
Options granted during period | 1,267 | ||||||
Aggregate shares of common stock authorized under stock option plans and agreements | 217,394 | 217,394 | |||||
Options shares | 10,000 | 3,334 | |||||
Options vested | 9,354 | 4,800 |
Warrants (Details Narrative)
Warrants (Details Narrative) - USD ($) | Nov. 03, 2021 | Jun. 30, 2022 | May 27, 2022 | Apr. 29, 2022 | Apr. 12, 2022 |
Warrant To Purchase Shares Of Common Stock | 18,667 | ||||
Warrant To Purchase Shares Of Common Stock, Exercise Price Per Share | $ 12 | ||||
Warrant To Purchase Shares Of Common Stock Term | 5-year | ||||
Estimated Fair Value Of The Warrant | $ 181,900 | ||||
Mast Hill Fund L P [Member] | |||||
Warrant To Purchase Shares Of Common Stock | 18,667 | ||||
Warrant To Purchase Shares Of Common Stock, Exercise Price Per Share | $ 12 | $ 12 | $ 12 | ||
Issuance of stock | 11,470 | ||||
J.H. Darbie & Co., Inc. [Member] | |||||
Warrant To Purchase Shares Of Common Stock | 2,135 | ||||
Warrant To Purchase Shares Of Common Stock, Exercise Price Per Share | $ 14.40 | ||||
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) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
INCOME TAXES | |||
Statutory U.s. Federal Tax Rate | 21% | 21% | |
Change In Valuation Allowance | (20.70%) | (4.20%) | |
Net Operating Loss Carryforward Expiration | (5.90%) | 13.40% | |
State Income Taxes | 3% | (1.50%) | |
Expired Stock-based Compensation | 1.10% | 1% | |
Forgiveness Of Ppp Loan | 1.60% | (29.90%) | |
Other Permanent Non-deductible Items | (0.10%) | 0.20% | |
Effective Income Tax Rate | 8.35% | 0% | 0% |
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 | Jun. 30, 2022 | Dec. 31, 2020 | |
Lease (Tables) | |||
Right of use asset - lease, net | $ 41,490 | $ 684,552 | $ 120,777 |
Operating lease liability - short-term | 42,347 | 73,030 | 80,258 |
Operating lease liability - long-term | 0 | 612,136 | $ 42,347 |
Total operating lease liability | $ 42,347 | $ 685,166 | |
Discount Rate Operating Lease | 6% | 7% | |
Operating Lease Liability - Short-term | $ 42,437 | ||
Operating Lease Liability - Long-term | $ 0 | ||
Discount Rate - Operating Lease | 6% |
Lease (Details Narrative)
Lease (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Lease (Tables) | ||
Leases expires | June 30, 2022 | June 30, 2022 |
Rent expense | $ 80,000 | $ 80,000 |
Leases rate | 1.50% | 1.50% |
Description of lease agreement | The term of the new lease agreement is 84 months. The first year’s rent will be $118,487 and will increase by 2% annually thereafter | |
Right-of-use Asset | $ 265,825 | |
Lease Liability | $ 265,825 |
Related Party Accrued Interes_2
Related Party Accrued Interest Payable (Details Narrative) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Related Party Accrued Interest Payable | |||
Accrued interest payable, related parties, current | $ 134,000 | $ 107,000 | $ 62,000 |
Additional accrued interest to related parties | $ 136,675 | $ 116,465 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Aug. 10, 2022 | Jul. 29, 2022 | Jan. 31, 2022 |
Minimum payment amount | $ 16,728 | ||
Debt description | The repayment start date is August 15, 2022, with a minimum payment amount of $16,728 over every 60-day period. The final repayment date is February 6, 2024, if total repayment amount is not paid as of that date. | ||
Fixed fee | $ 11,152 | ||
Payment percentage of receipts amount | 25% | ||
Repayment amount | $ 150,522 | ||
Aggregate Purchase Price | $ 8,500,000 | ||
Acquisition Consideration Paid To Seller Parties | 8,000,000 | ||
Acquisition Consideration Deposited | $ 500,000 | ||
Andrew Hoyen [Member] | Subsequent Event [Member] | |||
Line of Credit | $ 100,000 | ||
Current outstanding principal balance | 90,000 | ||
Accrued interest | $ 16,000 | ||
Options to acquire | 5,334 | ||
Remaining accrued and unpaid interest | $ 10,930 |
Retroactive Effect of Reverse_2
Retroactive Effect of Reverse Stock Split (Details Narrative) - USD ($) | 1 Months Ended | |
Feb. 15, 2022 | Dec. 31, 2021 | |
Original Issue Discount | $ 44,800 | |
Conversion Price | $ 7.50 | |
Financing Arrangement [Member] | ||
Common Stock, Shares Purchased | 1,619 | |
Cash Fee Payment | $ 14,650 | |
Lend Amount | 370,000 | |
Original Issue Discount | $ 37,000 | |
Common Stock, Share Price | $ 12.75 | |
Common Stock, Fixed Price | 14.40 | |
Conversion Price | $ 7.50 | |
Percentage Of Penalty Due | 15% | |
Warrant Coverage On The Principal Amount | 40% | |
Percentage Of Gross Proceeds Of Loan | 4.39% | |
Percentage Of Exercise Price Of Warrant Issued | 120% | |
Warrant Coverage On Gross Proceeds Of Loan | 7% | |
Bears Interest Rate | 8% | |
Warrant Issued To Purchase Shares Of Common Stock | 12,334 | |
Warrant Issued To Purchase Shares Of Common Stock, Purchase Price | $ 12 |