See accompanying notes to the condensed consolidated financial statements.
See accompanying notes to the condensed consolidated financial statements.
See accompanying notes to the condensed consolidated financial statements.
See accompanying notes to the condensed consolidated financial statements.
See accompanying notes to the condensed consolidated financial statements.
Notes to the Condensed Consolidated Financial Statements
Three months ended March 31, 2022 and 2021
Note 1 - Organization and Summary of Significant Accounting Policies
StrikeForce Technologies, Inc. (the “Company”) is a software development and services company that offers a suite of integrated computer network security products using proprietary technology. The Company’s operations are based in Edison, New Jersey.
Basis of presentation and principles of consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods have been included. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2022. These financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2021 and notes thereto contained in the Annual Report on Form 10-K of the Company as filed with the SEC on April 14, 2022.
The condensed consolidated financial statements include the accounts of the Company and its subsidiary, BlockSafe Technologies, Inc. (“BST”). BST is owned 49% by the Company and 31% by three executive officers of the Company. BST meets the definition of a variable interest entity (“VIE”) and based on the determination that the Company is the primary beneficiary of BST. BST’s operating results, assets and liabilities are consolidated by the Company. Intercompany balances and transactions have been eliminated in consolidation.
At March 31, 2022, noncontrolling interests represents 51% of BST that the Company does not directly own. The Company and BST have a management agreement pursuant to which BST shall remit a management fee of $36,000 per month to the Company, and when BST reaches a milestone of $1,000,000 in financing, an additional management fee of $5,000,000 shall be owed to the Company, payable monthly over three years. The management fee is eliminated in consolidation. At March 31, 2022 and December 31, 2021, the amount of VIE cash on the accompanying condensed consolidated balance sheets can be used only to settle obligations of BST, and the amounts of VIE accounts payable, VIE Notes Payable, VIE Accrued Interest, and VIE Financing Obligation have no recourse to the general credit of the Company.
Going Concern
We have yet to establish any history of profitable operations. During the three months ended March 31, 2022, the Company incurred a net loss of $2,867,000 and used cash in operating activities of $1,060,000, and at March 31, 2022, the Company had a stockholders’ deficit of $12,814,000. In addition, we are in default on notes payable and convertible notes payable in the aggregate amount of $2,861,000. These factors raise substantial doubt about our ability to continue as a going concern within one year after the date the financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report published on our December 31, 2021 year-end financial statements, raised substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements do not include any adjustments that might result from the outcome of this uncertainty should we be unable to continue as a going concern.
Management estimates that the current funds on hand will be sufficient to continue operations through the next six months. Our ability to continue as a going concern is dependent upon our ability to continue to implement our business plan. Currently, management is attempting to increase revenues by selling through a channel of distributors, value added resellers, strategic partners and original equipment manufacturers. While we believe in the viability of its strategy to increase revenues, there can be no assurances to that effect. Our ability to continue as a going concern is dependent upon our ability to increase our customer base and realize increased revenues. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, if needed, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing.
COVID-19
In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, has adversely affected workforces, customers, economies, and financial markets globally. It has also disrupted the normal operations of many businesses. This outbreak could decrease spending, adversely affect demand for the Company’s products, and harm the Company’s business and results of operations.
During the three months ended March 31, 2022 and the year ended December 31, 2021, the Company believes the COVID-19 pandemic did impact its operating results. For the three months ended March 31, 2022 and the year ended December 31, 2021, sales to customers decreased by 30% and 7%, respectively, as compared to the prior year. However, the Company has not observed any impairments of its assets or a significant change in the fair value of its assets due to the COVID-19 pandemic. At this time, it is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or results of operations, financial condition, or liquidity.
The Company has been following the recommendations of health authorities to minimize exposure risk for its team members during the pandemic, including the temporary closure of its corporate office and having team members work remotely. During the second quarter of 2021, the Company reopened its corporate office while continuing to adhere to the guidelines issued by health authorities. Many customers and vendors have transitioned to electronic submission of invoices and payments.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include those related to accounting for financing obligations, assumptions used in valuing stock instruments issued for services, assumptions used in valuing derivative liabilities, the valuation allowance for deferred tax assets, and the accrual of potential liabilities. Actual results could differ from those estimates.
Revenue Recognition
The Company follows the guidance of Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.
The Company’s revenue consists of revenue from sales and support of our software products. Revenue primarily consists of sales of software licenses of our ProtectID®, GuardedID®, MobileTrust® and SafeVchat™ products. The Company recognizes subscription revenue over a one-month period based on a typical monthly renewal cycle in accordance with its customer agreement terms. For service contracts, the Company’s performance obligations are satisfied, and the related revenue is recognized, as services are rendered.
The Company offers no discounts, rebates, rights of return, or other allowances to clients which would result in the establishment of reserves against service revenue. Additionally, to date, the Company has not incurred incremental costs in obtaining customer contracts.
Cost of revenue includes direct costs and fees related to the sale of our products.
The following tables present our revenue disaggregated by major product and service lines:
| | Three months ended | |
| | March 31, 2022 | | | March 31, 2021 | |
Software | | $ | 32,000 | | | $ | 45,000 | |
Service | | | - | | | | 1,000 | |
Total revenue | | $ | 32,000 | | | $ | 46,000 | |
Fair Value of Financial Instruments
The Company follows the authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) for fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels as follows:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly.
Level 3—Unobservable inputs based on the Company’s assumptions.
The Company is required to use of observable market data if such data is available without undue cost and effort.
The Company believes the carrying amounts reported in the balance sheet for accounts receivable, accounts payable, accrued expenses, convertible notes, and notes payables approximate fair values because of the short-term nature of these financial instruments.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The Company evaluates embedded conversion features within its convertible debt to determine whether the embedded conversion features should be bifurcated from the host instrument and accounted for as a derivative. The fair value of the embedded derivatives are determined using the trinomial/binomial valuation method at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. All outstanding derivative financial instruments were extinguished during fiscal year 2021.
Stock-Based Compensation
The Company periodically issues stock options, warrants, and shares of common stock as share-based compensation to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for such grants issued and vesting based on FASB ASC 718, Compensation – Stock Compensation (Topic 718) whereby the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period. The Company recognizes the fair value of stock-based compensation within its Statements of Operations with classification depending on the nature of the services rendered.
The fair value of the Company’s stock options and warrants are estimated using the Black-Scholes-Merton option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or restricted stock, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton option pricing model and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods.
Loss per Share
Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding, plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Diluted loss per share excludes all potential common shares if their effect is anti-dilutive. The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive:
| | Three months ended | |
| | March 31, 2022 | | | March 31, 2021 | |
Options to purchase common stock | | | 83,133,001 | | | | 40,633,001 | |
Warrants to purchase common stock | | | 68,981,234 | | | | 27,355,475 | |
Convertible notes | | | 21 | | | | 21 | |
Convertible Series B Preferred stock | | | 1,284,394 | | | | 492,455 | |
Total | | | 153,398,650 | | | | 68,480,952 | |
Concentrations
For the three months ended March 31, 2022, sales to four customers comprised 38%, 26%, 11% and 10% of revenues. For the three months ended March 31, 2021, sales to two customers comprised 72% and 15% of revenues. At March 31, 2022, two customers comprised 59% and 18% of accounts receivable.
The Company maintains the majority of its cash balances with one financial institution, in the form of demand deposits. At March 31, 2022, the Company had cash deposits that exceeded the federally insured limit of $250,000 per account. The Company believes that no significant concentration of credit risk exists with respect to its cash balances because of its assessment of the creditworthiness and financial viability of the financial institution.
Segments
The Company operates in one segment for the development and distribution of our software products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base, single sales team, marketing department, customer service department, operations department, finance and accounting department to support its operations and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying financial statements.
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC 326”). The standard significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivables. The standard will replace today’s “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. As a small business filer, ASU 2020-06 will be effective January 1, 2024, for the Company and the provisions of this update can be adopted using either the modified retrospective method or a fully retrospective method. Management is currently assessing the impact of adopting this standard on the Company’s financial statements and related disclosures.
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.
Note 2 - Convertible Notes Payable
Convertible notes payable consisted of the following:
| | March 31, 2022 | | | December 31, 2021 | |
Secured | | | | | | |
(a) Convertible notes due to AL-Bank | | $ | 483,000 | | | $ | 503,000 | |
| | | | | | | | |
Unsecured | | | | | | | | |
(b) Convertible notes with fixed conversion features, in default | | | 895,000 | | | | 895,000 | |
Total Convertible notes | | $ | 1,378,000 | | | $ | 1,398,000 | |
| (a) | During fiscal 2005, the Company issued notes payable to DART/Citco Global in the aggregate of $543,000. The notes bear interest at an average rate of 7.5% per annum and matured in December 2010. The aggregate notes are convertible by the note holder into approximately less than one share of the Company’s common stock based on a fixed conversion price adjusted for applicable reverse stock splits that occurred in the prior years. In fiscal 2009, the note holders agreed to the forbearance of any interest on the notes payable to DART/Citco Global. In August 2021, the notes were assigned to Aktieselskabet Arbejdernes Landsbank (“AL-Bank”), a financing institution based in Denmark. In September 2021, the Company executed a repayment agreement with AL-Bank whereby the Company shall make monthly payments of $10,000 to AL-Bank, starting in October 2021 and ending in January 2025, for a total of $400,000. Once the payments are made in full in accordance with the repayment agreement, the remaining balance of $143,000 shall be forgiven and will be accounted at that time. At December 30, 2021, the outstanding balance of convertible notes payable amounted to $503,000. |
| | |
| | During the three months ended March 31, 2022, the Company made principal payments of $20,000. |
| | |
| | At March 31, 2022, the outstanding balance of the secured convertible notes payable amounted to $483,000. The convertible notes payable, including accrued interest are convertible to approximately two shares of the Company’s common stock. |
| | |
| (b) | During fiscals 2005 through 2007, the Company issued notes payable in the aggregate of $895,000. The notes are unsecured, bear interest at a rate starting at 8% up to 18% per annum, were due on various dates from March 2008 to March 2015, and are currently in default. The aggregate notes are convertible by the note holders into approximately less than one share of the Company’s common stock based on fixed conversion prices adjusted for applicable reverse stock splits that occurred in prior years. |
At March 31, 2022 and December 31, 2021, the outstanding balance of unsecured convertible notes payable amounted to $895,000, respectively and deemed in default. The convertible notes payable, including accrued interest are convertible to approximately thirteen shares of the Company’s common stock.
Note 3 - Convertible Notes Payable – Related Parties
In prior years, the Company issued unsecured convertible notes to its Chief Executive Officer (CEO) in exchange for cash and/or services rendered. The notes have a compounded interest rate of 8% per annum and will mature on December 31, 2022, as amended. The aggregate notes are convertible by the note holders into approximately less than one share of the Company’s common stock at fixed conversion prices adjusted for applicable reverse stock splits that occurred in prior years. As of March 31, 2022 and December 31, 2021, the outstanding balance of the notes payable amounted to $268,000. As of March 31, 2022, the convertible notes payable, including accrued interest are convertible to approximately six shares of the Company’s common stock.
Note 4 - Notes Payable
Notes payable consisted of the following:
| | March 31, 2022 | | | December 31, 2021 | |
Unsecured notes | | | | | | |
(a) Notes payable- $1,639,000 - in default | | $ | 1,639,000 | | | $ | 1,639,000 | |
(b) Notes payable issued by BST - in default | | | 310,000 | | | | 310,000 | |
(c) Note payable-EID loan | | | 150,000 | | | | 150,000 | |
| | | | | | | | |
Secured notes payable | | | | | | | | |
(d) Notes payable - in default | | | 16,000 | | | | 23,000 | |
Total notes payable principal outstanding | | | 2,115,000 | | | | 2,122,000 | |
Less current portion of notes payable, net of discount | | | (1,965,000 | ) | | | (1,972,000 | ) |
Long term notes payable | | $ | 150,000 | | | $ | 150,000 | |
| (a) | In previous years, the Company issued notes payable in exchange for cash. The notes are unsecured, bear interest at a rate of 8% through 14% per annum and matured starting in fiscal 2011 up to November 2021. At March 31, 2022 and December 31, 2021, the outstanding balance of the notes payable was $1,639,000, respectively, and are deemed in default |
| | |
| (b) | In fiscal 2018, the Company’s consolidated subsidiary BlockSafe, issued promissory notes in exchange for cash. The notes are unsecured, bearing interest at a rate of 8% per annum, and matured in September 2019. At March 31, 2022 and December 31, 2021, the outstanding balance of the notes payable amounted to $310,000, respectively, and are deemed in default. |
| (c) | On May 15, 2020, the Company received a $150,000 loan (the “EID Loan”) from the Small Business Administration (SBA) under the SBA’s Economic Injury Disaster Loan program. The EID Loan has a thirty-year term and bears interest at a rate of 3.75% per annum. Monthly principal and interest payments of $250 per month are deferred for twenty-four months and will commence in June 2022. The EID Loan may be prepaid at any time prior to maturity with no prepayment penalties. The proceeds from the EID Loan must be used for working capital. The EID Loan contains customary events of default and other provisions customary for a loan of this type. |
| | |
| | Outstanding balance of the note payable as of March 31, 2022 and December 31, 2021 amounted to $150,000, respectively. The Company was in compliance with the terms of the EID loan as of March 31, 2022. |
| | |
| (d) | In fiscal 2019 and 2020, the Company issued notes payable aggregating $468,000. The notes bear interest at a rate starting from 8% to 148% per annum, each agreement secured by substantially all of the assets of the Company, maturing between March 2020 and July 2021. The Company also made principal payments of $319,000, and one secured note of $21,000 was extinguished as part of a debt settlement obligation transaction. At December 31, 2021, the outstanding balance of the secured note agreements was $23,000. |
| | |
| | During the three months ended March 31, 2022, the Company made principal payments of $7,000. |
| | |
| | At March 31, 2022, the outstanding balance of the secured notes payable was $16,000 and is deemed in default. The Company and the note holder are in negotiations to extend the due date of the note. |
Note 5 - Notes Payable – Related Party
Notes payable-related party notes represent unsecured notes payable to the Company’s Chief Executive Officer (CEO) ranging in interest rates of 0% per annum to 10% per annum and will mature on December 31, 2022, as amended. The outstanding balance of these notes payable at March 31, 2022 and December 31, 2021 amounted to $693,000, respectively.
Note 6 – Financing Obligation
The Company is in the process of developing Coins or Tokens which are an envisioned virtual currency. In fiscal 2018, the Company’s consolidated subsidiary BlockSafe (BST), issued promissory notes to unrelated parties aggregating $776,000. As part of issuance, the Company agreed to pay a financing obligation to the note holders equal to the note principal in tokens, as defined, to be issued by BlockSafe. In addition, the Company also agreed to issue tokens to an unrelated party in exchange for cash of $50,000.
During the year ended December 31, 2019, BlockSafe agreed to issue tokens to unrelated parties in exchange for cash of $122,000. In addition, certain note holders of promissory notes issued by BlockSafe agreed to exchange $315,000 of outstanding principal and accrued interest into the financing obligation to be paid by tokens to be issued by BlockSafe.
At March 31, 2022 and December 31, 2021, the outstanding balance of financing obligations amounted to $1,263,000, respectively, to be paid in tokens, as defined. At March 31, 2022 and through the date of filing, BST has not developed or issued any tokens and there is no assurance as to whether, or at what amount, or on what terms, tokens will be available to be issued, if ever. At March 31, 2022, as the tokens do not exist, and any amounts received for tokens are not considered equity or revenue, management determined that 100% of the obligation of $1,263,000 is a liability to be settled by BST, through the issuance of tokens, or through other means if tokens are never issued.
Note 7 – Contingent Payment Obligation
On September 6, 2017, the Company entered into a litigation funding agreement with Therium Inc. (subsequently Therium Luxembourg) and VGL Capital, LLC (collectively the “Funders”). Under the agreement, the Company received $1,500,000 from the Funders to allow the Company to pursue patent enforcement actions against infringements of its patents. In exchange, the Funders are entitled to receive, after the payment of legal fees, the first $1,500,000 from the gross proceeds of any claims awarded, 10% of any additional claim proceeds until the Funders have received an additional $7,500,000, and 2.5% of any claim proceeds thereafter. The Funders shall be paid only in the event that the Company achieves recoveries of claim proceeds.
At March 31, 2022 and December 31, 2021, the Company has reflected the $1,500,000 received from the Funders as a contingent payment obligation to be paid only if claim proceeds are recovered.
Note 8 - Operating Lease
In January 2019, the Company entered into a noncancelable operating lease for its office headquarters office requiring payments of approximately $4,000 per month, payments increasing 3% each year, and ending on January 31, 2024. We determine if an arrangement is a lease at inception. Lease assets are presented as operating lease right-of-use assets and the related liabilities are presented as lease liabilities in our consolidated balance sheets pursuant to ASC 842, Leases.
Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The operating lease ROU asset includes any lease payments made and excludes lease incentives.
The components of lease expense and supplemental cash flow information related to leases for the period are as follows:
| | Three months ended March 31, 2022 | | | Three months ended March 31, 2021 | |
Lease Cost | | | | | | |
Operating lease cost (included in general and administration in the Company’s statement of operations) | | $ | 14,000 | | | $ | 14,000 | |
| | | | | | | | |
Other Information | | | | | | | | |
Cash paid for amounts included in the measurement of lease liabilities for the three months ended March 31, 2022 and 2021 | | $ | 14,000 | | | $ | 14,000 | |
Weighted average remaining lease term – operating leases (in years) | | | 1.8 | | | | 2.8 | |
Average discount rate – operating leases | | | 10.0 | % | | | 10.0 | % |
The supplemental balance sheet information related to leases for the period is as follows:
| | At March 31, 2022 | |
Operating leases | | | |
Long-term right-of-use assets | | $ | 94,000 | |
| | | | |
Short-term operating lease liabilities | | $ | 55,000 | |
Long-term operating lease liabilities | | | 43,000 | |
Total operating lease liabilities | | $ | 98,000 | |
Maturities of the Company’s lease liabilities are as follows:
Year Ending | | Operating Leases | |
2022 (9 months) | | | 43,000 | |
2023 | | | 59,000 | |
2024 | | | 5,000 | |
Total lease payments | | | 107,000 | |
Less: Imputed interest/present value discount | | | (9,000 | ) |
Present value of lease liabilities | | $ | 98,000 | |
Lease expenses were $14,000 and $14,000 during the three months ended March 31, 2022 and 2021, respectively.
Note 9 – Stockholders’ Deficit
Common Stock
During the three months ended March 31, 2022, the Company issued an aggregate of 134,853 shares of its common stock for consulting services, with a fair value of $6,000.
Warrants
The table below summarizes the Company’s warrant activities for the three months ended March 31, 2022:
| | Number of Warrant Shares | | | Exercise Price Range Per Share | | | Weighted Average Exercise Price | |
| | | | | | | | | |
Balance, January 1, 2022 | | | 68,981,234 | | | 0.0045-2.90 | | | $ | 0.042647 | |
Granted | | | - | | | | - | | | | - | |
Canceled/Expired | | | - | | | | - | | | | - | |
Exercised | | | - | | | | - | | | | - | |
Balance, March 31, 2022 | | | 68,981,234 | | | $ | 0.0045-2.90 | | | $ | 0.042647 | |
| | | | | | | | | | | | |
Balance outstanding and exercisable, March 31, 2022 | | | 68,981,234 | | | $ | 0.0045-2.90 | | | $ | 0.042647 | |
At March 31, 2022, the intrinsic value of the warrants amounted to $464,000.
The following table summarizes information concerning outstanding and exercisable warrants as of March 31, 2022:
| | | Warrants Outstanding and Exercisable | |
Range of Exercise Prices | | | Number Outstanding | | | Average Remaining Contractual Life (in years) | | | Weighted Average Exercise Price | |
| | | | | | | | | | |
| $ | 0.0045 | | | | 13,349,242 | | | | 4.00 | | | $ | 0.0045 | |
| | | | | | | | | | | | | | |
| $ | 0.085 | | | | 588,235 | | | | 4.00 | | | $ | 0.085 | |
| | | | | | | | | | | | | | |
| $ | 0.05 | | | | 55,000,000 | | | | 5.00 | | | $ | 0.05 | |
| | | | | | | | | | | | | | |
| $ | 0.75 | | | | 26,515 | | | | 3.00 | | | $ | 0.75 | |
| | | | | | | | | | | | | | |
| $ | 2.90 | | | | 17,241 | | | | 3.00 | | | $ | 2.90 | |
| | | | | | | | | | | | | | |
| $ | 0.0045 - $2.90 | | | | 68,981,234 | | | | 4.00 | | | $ | 0.042647 | |
Note 10 – Stock Options
The table below summarizes the Company’s stock option activities for the three months ended March 31, 2022:
| | Number of Options Shares | | | Exercise Price Range Per Share | | | Weighted Average Exercise Price | |
Balance, January 1, 2022 | | | 83,133,001 | | | 0.005- 1,121,250,000 | | | $ | 0.0274 | |
Granted | | | - | | | | - | | | | - | |
Exercised | | | - | | | | - | | | | - | |
Expired | | | - | | | | - | | | | - | |
Balance outstanding, March 31, 2022 | | | 83,133,001 | | | $ | 0.005- 1,121,250,000 | | | $ | 0.0274 | |
Balance exercisable, March 31, 2022 | | | 53,433,547 | | | $ | 0.005- 1,121,250,000 | | | $ | 0.0274 | |
At March 31, 2022, the intrinsic value of outstanding options was $717,000.
During the period ended March 31, 2022, the Company recognized stock compensation expense of $1,636,000 to account the fair value of stock options that vested. As of March 31, 2022, fair value of unvested stock options amounted to $1.3 million and will be recognized as stock compensation expense in future periods as it vests.
The following table summarizes information concerning the Company’s stock options as of March 31, 2022:
| | | Options Outstanding | | | Options Exercisable | |
Range of Exercise Prices | | | Number Outstanding | | | Average Remaining Contractual Life (in years) | | | Weighted Average Exercise Price | | | Number Exercisable | | | Average Remaining Contractual Life (in years) | | | Weighted Average Exercise Price | |
| | | | | | | | | | | | | | | | | | | |
| $ | 1,121,250,000 | | | | 1 | | | | 2 | | | $ | 1,121,250,000 | | | | 1 | | | | 1 | | | $ | 1,121,250,000 | |
| $ | 2.85 | | | | 126,000 | | | | 7 | | | | 2.85 | | | | 126,000 | | | | 6 | | | | 2.85 | |
| $ | 3.125 | | | | 392,000 | | | | 6 | | | | 3.125 | | | | 392,000 | | | | 5 | | | | 3.125 | |
| $ | 2.05 | | | | 115,000 | | | | 9 | | | | 2.05 | | | | 115,000 | | | | 8 | | | | 2.05 | |
| $ | 0.0375 | | | | 65,000,000 | | | | 10 | | | | 0.0375 | | | | 36,748,634 | | | | 10 | | | | 0.0375 | |
| $ | 0.005 | | | | 17,500,000 | | | | 10 | | | | 0.005 | | | | 16,051,912 | | | | 10 | | | | 0.005 | |
| $ | 0.005 – 1,121,250,000 | | | | 83,133,001 | | | | 6.8 | | | $ | 0.03704 | | | | 53,433,547 | | | | 6.8 | | | $ | 0.0274 | |
Note 11 – Subsequent Events
Subsequent to March 31, 2022, the Company issued 96,083 shares of common stock for services with a fair value of $4,000.
In May 2022, the Company amended the exercise price of 50 million shares of stock warrants granted in September 2021 from $0.05 per share to $0.02 per share. As a result, these warrant holders exercised their warrants and the Company issued 50 million shares of common stock for cash proceeds of $1,000,000. As an inducement to these warrant holders to exercise their warrants, the Company granted them stock warrants to purchase 50 million shares of common stock. The warrants are exercisable at $0.05 per share and will expire in 5 years. The Company is in the process of determining the appropriate accounting for these transactions.
