10-Q

UNITED STATES

SECURITIES EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended June 30, 2019

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to

STRIKEFORCE TECHNOLOGIES, INC.

(Exact name of registrant as specified in its Charter)

WYOMING	000-55012	22-3827597
(State or other jurisdiction of incorporation or organization)	(Commission file number)	(I.R.S. Employer Identification No.)

1090 King Georges Post Road, Suite 603

Edison, NJ 08837

(Address of Principal Executive Offices)

(732) 661-9641

(Issuer’s telephone number)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Name of each exchange on which registered
N/A	N/A

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value	SFOR	OTC

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such a shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b–2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at August 14, 2019
Common stock, $0.0001 par value	2,678,064,740

Indicate the number of shares outstanding of each of the issuer’s classes of preferred stock, as of the latest practicable date.

Class	Outstanding at August 14, 2019
Preferred stock, Series A, no par value	3

Class	Outstanding at August 14, 2019
Preferred stock, Series B, $0.10 par value	36,667

Transitional Small Business Disclosure Format Yes ¨ No x

Documents Incorporated By Reference

None

STRIKEFORCE TECHNOLOGIES, INC.

INDEX TO FORM 10-Q FILING

JUNE 30, 2019

TABLE OF CONTENTS 

PART I	Financial Information	Page Number
Item 1.	Financial Information	3
	Condensed Consolidated Balance Sheets at June 30, 2019 (unaudited) and December 31, 2018	4
	Condensed Consolidated Statements of Operations for the Three and Six months ended June 30, 2019 and 2018 (unaudited)	5
	Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the Three and Six months ended June 30, 2019 and 2018 (unaudited)	6-7
	Condensed Consolidated Statements of Cash Flows for the Six months ended June 30, 2019 and 2018 (unaudited)	8
	Notes to the Condensed Consolidated Financial Statements for the Six months ended June 30, 2019 and 2018 (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
PART II	Other Information
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28
SIGNATURES		29
EX-31.1	Management Certification
EX-32.1	Sarbanes-Oxley Act

2

PART I

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

General

The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders’ deficit in conformity with generally accepted accounting principles. Except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2018. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the six months ended June 30, 2019 are not necessarily indicative of the results that can be expected for the year ending December 31, 2019.

3

STRIKEFORCE TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2019			December 31, 2018
	(Unaudited)
ASSETS
Current Assets:
Cash	$	89,870		$	86,160
Accounts receivable, net		73,040			20,649
Prepaid expenses		647			4,530
Total current assets		163,557			111,339
Property and equipment, net		6,587			9,259
Operating lease right-of-use asset		199,645			-
Other assets		17,403			18,430
Total Assets	$	387,192		$	139,028
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued expenses	$	915,147		$	945,669
Convertible notes payable (net of discount of $512,708 and $521,763, respectively;
$1,438,100 in default at June 30, 2019 and December 31, 2018)		1,728,392			1,611,337
Convertible notes payable - related parties		355,500			355,500
Notes payable (net of discount of $13,055 and $195,653, respectively;
$2,003,824 and $1,638,824 in default at June 30, 2019 and December 31, 2018, respectively)		2,100,769			2,218,670
Notes payable - related parties		742,513			742,513
Accrued interest (including $1,330,905 and $1,267,749 due to related parties, respectively)		4,625,979			4,428,439
Contingent payment obligation		1,500,000			1,500,000
Financing obligation		1,253,200			825,500
Operating lease liabilites, current portion		34,845			-
Derivative liabilities		2,237,480			1,313,904
Total current liabilities		15,493,825			13,941,532
Operating lease liabilities, long term portion		166,164			-
Total Liabilities		15,659,989			13,941,532
Stockholders' Deficit
Series A Preferred stock, no par value; 100 shares authorized;
3 shares issued and outstanding		987,000			987,000
Series B Preferred stock par value $0.10: 100,000,000 shares authorized;
36,667 and 36,667 shares issued and outstanding, respectively		3,667			3,667
Preferred stock series not designated par value $0.10: 10,000,000 shares authorized;
none issued or outstanding		-			-
Common stock par value $0.0001: 7,500,000,000 shares authorized;
2,566,182,712 and 2,373,749,597 shares issued and outstanding, respectively		256,618			237,374
Additional paid-in capital		27,357,828			26,349,805
Accumulated deficit		(43,143,792	)		(40,824,610	)
Total StrikeForce Technologies, Inc. stockholders' deficit		(14,538,679	)		(13,246,764	)
Noncontrolling interest in consolidated subsidiary		(734,118	)		(555,740	)
Total Stockholders' Deficit		(15,272,797	)		(13,802,504	)
Total Liabilities and Stockholders' Deficit	$	387,192		$	139,028

See accompanying notes to the condensed consolidated financial statements.

4

STRIKEFORCE TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Three Months Ended						For the Six Months Ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenue	$	307,739		$	170,951		$	439,426		$	235,644
Cost of revenue		2,210			2,703			6,081			9,457
Gross margin		305,529			168,248			433,345			226,187
Operating expenses:
Compensation		197,393			155,507			370,912			313,441
Professional fees		115,487			153,460			286,040			343,990
Selling, general and administrative expenses		65,661			420,015			169,031			684,229
Research and development		123,750			123,750			250,212			247,500
Total operating expenses		502,291			852,732			1,076,195			1,589,160
Loss from operations		(196,762	)		(684,484	)		(642,850	)		(1,362,973	)
Other income (expense):
Interest expense		(121,213	)		(303,017	)		(246,242	)		(473,527	)
Debt discount amortization		(295,699	)		-			(595,165	)		-
Private placement costs		(145,511	)		(185,233	)		(342,558	)		(379,249	)
Change in fair value of derivative liabilities		(521,334	)		249,761			(681,710	)		554,771
Extinguishment of derivative liabilities		335,624			-			678,692			-
Loss on extinguishment of debt		(271,356	)		-			(700,993	)		-
Other income		33,266			-			33,266			237
Other income (expense), net		(986,223	)		(238,489	)		(1,854,710	)		(297,768	)
Net loss		(1,182,985	)		(922,973	)		(2,497,560	)		(1,660,741	)
Net loss attributable to noncontrolling interest		66,589			189,576			178,378			307,878
Net loss attributable to common shareholders of StrikeForce Technologies, Inc.	$	(1,116,396	)	$	(733,397	)	$	(2,319,182	)	$	(1,352,863	)
Net loss per share attributable to common shareholders
-Basic and diluted	$	-		$	-		$	-		$	-
Weighted average common shares outstanding
-Basic and diluted		2,493,151,605			2,337,226,895			2,446,688,410			2,336,540,133

See accompanying notes to the condensed consolidated financial statements.  

5

STRIKEFORCE TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018 (Unaudited)

Three months ended June 30, 2019
	Series A Preferred stock, no par value				Series B Preferred stock, par value $0.10				Common stock, par value $0.0001				Additional Paid-in		Accumulated			Noncontrolling			Total Stockholders'
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Interest			Deficit
Balance at April 1, 2019 (unaudited)		3	$	987,000		36,667	$	3,667		2,447,199,702	$	244,719	$	26,923,246	$	(42,027,396	)	$	(667,529	)	$	(14,536,293	)
Fair value of common stock issued for services		-		-		-		-		7,500		1		26		-			-			27
Fair value of vested options		-		-		-		-		-		-		961		-			-			961
																						-
Common stock issued upon conversion of notes and interest		-		-		-		-		118,975,510		11,898		433,595		-			-			445,493
Net loss		-		-		-		-		-		-		-		(1,116,396	)		(66,589	)		(1,182,985	)
Balance at June 30, 2019 (unaudited)		3	$	987,000		36,667	$	3,667		2,566,182,712	$	256,618	$	27,357,828	$	(43,143,792	)	$	(734,118	)	$	(15,272,797	)

Six months ended June 30, 2019
	Series A Preferred stock, no par value				Series B Preferred stock, parvalue $0.10				Common stock, par value $0.0001				Additional Paid-in		Accumulated			Noncontrolling			Total Stockholders'
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Interest			Deficit
Balance at December 31, 2018		3	$	987,000		36,667	$	3,667		2,373,749,597	$	237,374	$	26,349,805	$	(40,824,610	)	$	(555,740	)	$	(13,802,504	)
Fair value of common stock issued for services		-		-		-		-		15,000		2		94		-			-			96
Fair value of vested options		-		-		-		-		-		-		1,912		-			-			1,912
Common stock issued upon conversion of notes and interest		-		-		-		-		192,418,115		19,242		1,006,017		-			-			1,025,259
Net loss		-		-		-		-		-		-		-		(2,319,182	)		(178,378	)		(2,497,560	)
Balance at June 30, 2019 (Unaudited)		3	$	987,000		36,667	$	3,667		2,566,182,712	$	256,618	$	27,357,828	$	(43,143,792	)	$	(734,118	)	$	(15,272,797	)

 

See accompanying notes to the condensed consolidated financial statements.

6

STRIKEFORCE TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018 (Unaudited)

Three months ended June 30, 2018
	Series A Preferred stock, no par value				Series B Preferred stock, par value $0.10						Common stock, par value $0.0001				Additional Paid-in		Accumulated			Noncontrolling			Total Stockholders'
	Shares		Amount		Shares			Amount			Shares		Amount		Capital		Deficit			Interest			Deficit
Balance at April 1, 2018 (unaudited)		3	$	987,000		70,001		$	7,000			2,335,850,741	$	233,585	$	25,708,315	$	(38,162,567	)	$	(118,302	)	$	(11,344,969	)
Fair value of common stock issued for services		-		-		-			-			7,500		1		121		-			-			122
Fair value of vested options		-		-		-			-			-		-		169,374		-			-			169,374
																								-
Common stock issued upon conversion of Series B preferred stock		-		-		(33,334	)		(3,333	)		8,333,500		833		2,500		-			-			-
Net loss		-		-		-			-			-		-		-		(733,397	)		(189,576	)		(922,973	)
Balance at June 30, 2018 (unaudited)		3	$	987,000		36,667		$	3,667			2,344,191,741	$	234,419	$	25,880,310	$	(38,895,964	)	$	(307,878	)	$	(12,098,446	)

Six months ended June 30, 2018
	Series A Preferred stock, no par value				Series B Preferred stock, par value $0.10						Common stock, par value $0.0001				Additional Paid-in		Accumulated			Noncontrolling			Total Stockholders'
	Shares		Amount		Shares			Amount			Shares		Amount		Capital		Deficit			Interest			Deficit
Balance at December 31, 2017		3	$	987,000		70,001		$	7,000			2,335,843,241	$	233,584	$	25,522,331	$	(37,543,101	)	$	-		$	(10,793,186	)
Fair value of common stock issued for services		-		-		-			-			15,000		2		202		-			-			204
Fair value of vested options		-		-		-			-			-		-		355,277		-			-			355,277
Common stock issued upon conversion of Series B preferred stock		-		-		(33,334	)		(3,333	)		8,333,500		833		2,500		-			-			-
Net loss		-		-		-			-			-		-		-		(1,352,863	)		(307,878	)		(1,660,741	)
Balance at June 30, 2018 (Unaudited)		3	$	987,000		36,667		$	3,667			2,344,191,741	$	234,419	$	25,880,310	$	(38,895,964	)	$	(307,878	)	$	(12,098,446	)

 

See accompanying notes to the condensed consolidated financial statements.

7

STRIKEFORCE TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Six Months			For the Six Months
	Ended			Ended
	June 30, 2019			June 30, 2018
	(Unaudited)			(Unaudited)
Cash flows from operating activities:
Net loss	$	(2,497,560	)	$	(1,660,741	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		3,698			3,084
Amortization of discount on notes payable		595,165			270,224
Amortization of right-of-use asset		14,627			-
Fair value of common stock issued for services		96			204
Fair value of vested options		1,912			355,277
Change in fair value of derivative liabilities		681,710			(554,771	)
Private placement costs		342,558			379,249
Loss on extinguishment of debt		700,993			-
Extinguishment of derivative liabilities		(678,692	)		-
Changes in operating assets and liabilities:
Accounts receivable		(52,391	)		15,742
Prepaid expenses		3,884			(9,558	)
Accounts payable and accrued expenses		(30,522	)		(13,321	)
Accrued interest		245,993			197,763
Operating lease liabilities		(13,261	)		-
Net cash used in operating activities		(681,790	)		(1,016,848	)
Cash flows from investing activities:
Purchases of property and equipment		-			(1,559	)
Cash flows from financing activities:
Proceeds from convertible note payable		578,000			365,000
Proceeds from notes payable		-			665,500
Repayment of notes payable		(5,000	)		(75,000	)
Proceeds from finance obligation		112,500			-
Net cash provided by financing activities		685,500			955,500
Net increase (decrease) in cash		3,710			(62,907	)
Cash at beginning of the period		86,160			455,484
Cash at end of the period	$	89,870		$	392,577
Supplemental disclosure of cash flow information:
Interest paid	$	-		$	5,000
Income tax paid	$	-		$	-
Supplemental disclosure of non-cash investing and financing transactions
Fair value of derivative upon issuance of convertible debt recorded as debt discount	$	578,000		$	365,000
Right-of-use assets obtained in exchange for operating lease obligations	$	214,272		$	-
Common stock issued for conversion of debt	$	996,504		$	-
Common stock issued for conversion of accrued interest	$	28,755		$	-
Fair value of financing obligation recorded as debt discount	$	-		$	665,500
Notes payable exchanged for financing obligation	$	295,500		$	-
Accrued interest exchanged for financing obligation	$	19,700		$	-

See accompanying notes to the condensed consolidated financial statements.

8

StrikeForce Technologies, Inc.

June 30, 2019 and 2018

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

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 ongoing strategy is developing and marketing its suite of network security products to the corporate, financial, healthcare, legal, government, technology, insurance, e-commerce and consumer sectors. The Company’s operations are based in Edison, New Jersey.

Basis of Presentation-Unaudited Interim Financial Information

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 six months ended June 30, 2019 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2019. These financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2018 and notes thereto contained in the Annual Report on Form 10-K of the Company as filed with the SEC on April 15, 2019.

The consolidated financial statements include the accounts of the Company and its controlled subsidiary, BlockSafe Technologies, Inc. (“BlockSafe”). BlockSafe is owned 49% by the Company and 31% by three executive officers of the Company, which combined represents an 80% controlling interest in BlockSafe. Accordingly, BlockSafe is consolidated by the Company. Intercompany balances and transactions have been eliminated in consolidation. At June 30, 2019, noncontrolling interests represents 51% of BlockSafe that the Company does not directly own.

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements, for the six months ended June 30, 2019, the Company incurred a net loss of $2,497,560 and used cash in operating activities of $681,790 and at June 30, 2019, the Company had a working capital deficiency of $15,330,268 and a stockholders’ deficit of $15,272,797. In addition, the Company is in default on notes payable and convertible notes payable in the aggregate amount of $3,441,924. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that these financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2018 financial statements, raised substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

At June 30, 2019, the Company had cash on hand in the amount of $89,870. Subsequent to June 30, 2019, the Company issued two unsecured convertible promissory note for proceeds of $86,000. Management estimates that the current funds on hand will be sufficient to continue operations through the next six months. The Company’s ability to continue as a going concern is dependent upon its ability to continue to implement its 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 the Company believes in the viability of its strategy to increase revenues, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon its ability to increase its 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 the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stock holders, in the case of equity financing.

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 income taxes, and accrual of potential liabilities. Actual results could differ from those estimates.

9

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® and MobileTrust® products. We recognize revenue from these arrangements ratably over the contractual service period. 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 a client contract.

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
	June 30, 2019		June 30, 2018
Software	$	264,577	$	56,199
Service		43,162		114,752
Total revenue	$	307,739	$	170,951

	Six Months Ended
	June 30, 2019		June 30, 2018
Software	$	390,791	$	110,385
Service		48,635		125,259
Total revenue	$	439,426	$	235,644

Leases

Prior to January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases . Effective January 1, 2019, the Company adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. The implementation of ASC 842 did not have a material impact on the Company’s consolidated financial statements and did not have a significant impact on our liquidity or on our compliance with our financial covenants associated with our loans. The Company adopted ASC 842 using a modified retrospective approach. As a result, the comparative financial information has not been updated and the required disclosures prior to the date of adoption have not been updated and continue to be reported under the accounting standards in effect for those periods. The Company elected to exclude from its balance sheets recognition of leases having a term of 12 months or less (“short-term leases”) and elected to not separate lease components and non-lease components for its long-term leases. Lease expense is recognized on a straight-line basis over the lease term. At January 1, 2019, the Company had no leases that required recognition of operating lease right-of-use assets or liabilities for operating leases upon adoption of ASC 842. On January 31, 2019, the Company commenced a lease that resulted in the recognition of operating lease right-of-use assets of $214,272, and liabilities for operating leases of $214,272.

10

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 amount 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.

As of June 30, 2019 and December 31, 2018, the Company’s balance sheet includes Level 3 liabilities comprised of the fair value of embedded derivative liabilities of $2,237,480 and $1,313,904, respectively (see Note 5). These embedded derivatives result in Level 3 classification because one or more of the significant inputs are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. The following table sets forth a summary of the changes in the estimated fair value of our embedded derivative during the six month periods ended June 30, 2019 and 2018:

	Six months ended June 30, 2019			Six months ended June 30, 2018
Fair value at beginning of period	$	1,313,904		$	623,195
Recognition of derivative liabilities upon initial valuation		920,558			744,249
Extinguishment of derivative liabilities		(678,692	)		(68,493	)
Net change in the fair value of derivative liabilities		681,710			(486,278	)
Fair value at end of period	$	2,237,480		$	812,673

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. For stock-based derivative financial instruments, the Company uses a probability weighted average Black-Scholes-Merton models to value the derivative instruments at inception and on subsequent valuation dates through the June 30, 2019, reporting date. 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.

Share-Based Payments

The Company issues stock options and warrants, shares of common stock, and equity interests as share-based compensation to employees and non-employees. The Company accounts for its share-based compensation to employees in accordance with FASB ASC 718, Compensation – Stock Compensation . Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period.

In prior periods through December 31, 2018, the Company accounted for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50, Equity - Based Payments to Non-Employees . Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The final fair value of the share-based payment transaction is determined at the performance completion date. For interim periods, the fair value is estimated, and the percentage of completion is applied to that estimate to determine the cumulative expense recorded.

In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting . The guidance was issued to simplify the accounting for share-based transactions by expanding the scope of Topic 718 from only being applicable to share-based payments to employees to also include share-based payment transactions for acquiring goods and services from nonemployees. As a result, nonemployee share-based transactions will be measured by estimating the fair value of the equity instruments at the grant date, taking into consideration the probability of satisfying performance conditions. The Company adopted ASU 2018-07 on January 1, 2019. The adoption of the standard did not have a material impact on our financial statements for the three months and six months ended June 30, 2019 or the previously reported financial statements.

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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 reflects the potential dilution, using the treasury stock method that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the loss of the Company. In computing diluted loss per share, the treasury stock method assumes that outstanding options, warrants, and convertible preferred stock are exercised and the proceeds are used to purchase common stock at the average market price during the period. Options, warrants, and convertible preferred stock may have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options and warrants.

For the six months ended June 30, 2019 and 2018, the dilutive impact of stock options exercisable into 259,500,002 and 259,000,001 shares of common stock, respectively, convertible Series B Preferred stock that can convert into 16,825,556 and 3,135,197 shares of common stock, respectively, and notes payable that can convert into 177,854,318 and 41,131,421 shares of common stock, respectively, have been excluded because their impact on the loss per share is anti-dilutive.

Concentrations

For the six months ended June 30, 2019, sales to three customers comprised 64%, 19% and 11% of revenues, respectively. For the six months ended June 30, 2018, sales to three customers comprised 47%, 33% and 10% of revenues, respectively. At June 30, 2019, three customers comprised 67%, 17% and 11% of accounts receivable, respectively. At December 31, 2018, two customers comprised 68% and 12% of accounts receivable, respectively.

The Company maintains the majority of its cash balances with one financial institution, in the form of demand deposits.  At June 30, 2019, the Company did not have cash deposits that exceeded the federally insured limit of $250,000.  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.

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. The standard is effective for interim and annual reporting periods beginning after December 15, 2019. The Company 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:

	June 30, 2019			December 31, 2018
Secured
(a) DART, in default	$	542,588		$	542,588
Unsecured
(b) Convertible notes with fixed conversion features, in default		895,512			895,512
(c) Convertible notes with adjustable conversion features		803,000			695,000
Total convertible notes principal outstanding		2,241,100			2,133,100
Debt discount		(512,708	)		(521,763	)
Convertible notes, net of discount	$	1,728,392		$	1,611,337

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(a)	At June 30, 2019 and December 31, 2018, $542,588 of notes payables are due to DART/Citco Global. The notes are convertible into shares of the Company’s common stock based on adjustable conversion prices, are secured by all of the Company’s assets, were due in 2010, and are currently in default. Beginning in 2009, the note holder agreed to the forbearance of any further interest on the notes payable to DART/Citco Global.
(b)	At June 30, 2019 and December 31, 2018, convertible notes payable with fixed conversion features (“fixed convertible notes”) consisted of 13 unsecured convertible notes convertible at a fixed amount into 13 shares of the Company’s common stock, at fixed conversion prices ranging from $1,950,000 to $9,750,000,000 per share, as defined in the agreements and adjusted for applicable reverse stock splits. The notes are unsecured, bear interest at 8% to 18% per annum, were due on various dates from March 2008 to March 2015, and are currently in default. At December 31, 2018, the balance of the accrued interest on the fixed convertible notes was $1,079,764. During the six months ended June 30, 2019, interest of $37,257 was accrued. At June 30, 2019, the balance of accrued interest on the fixed convertible notes was $1,117,021.
(c)	At December 31, 2018, there were $695,000 of convertible notes with adjustable conversion features outstanding. During the six months ended June 30, 2019, convertible notes for $578,000 were issued, and convertible notes for $470,000 were converted into shares of the Company’s common stock. At June 30, 2019, the balance of the convertible notes with adjustable conversion features was $803,000.
	During the six months ended June 30, 2019, the Company issued seven convertible notes payable with adjustable conversion features to two lenders for aggregate proceeds of $578,000, bearing interest at 8% to 10% per annum, and maturing through June 2020. At the option of the holder, the notes are convertible into shares of common stock of the Company at a price per share discount of 58% to 61% of the average market price of the Company’s common stock, as defined, for 15 to 20 days preceding a conversion notice. As a result, the Company determined that the conversion option of the convertible notes were not considered indexed to the Company’s own stock and characterized the fair value of the conversion features as derivative liabilities upon issuance. The Company determined that upon issuance of the convertible notes between January 2019 and June 2019, the initial fair value of the embedded conversion feature totaled $920,558 (see Note 8), of which $578,000 was recorded as debt discount offsetting the face amount of the convertible notes, and the remainder of $342,558 was recorded as private placement costs. During the six months ended June 30, 2019, one note holder elected to convert five notes totaling $470,000 plus interest of $28,755 (total of $498,755) into 192,418,115 shares of the Company’s common stock at conversion prices ranging from $0.0012 to $0.0087 per share. On the dates of conversion, the closing price of the Company’s common stock ranged from $0.0028 to $0.0178 per share, or total fair value of shares of $1,025,259. The Company followed the general extinguishment model to record the settlement of the debt. The debt and accrued interest totaled $498,755, the related unamortized discount totaled ($174,489), and the shares issued were measured at their fair value of $1,025,259. The difference of $700,993 was recorded as loss on settlement of debt. In addition, the bifurcated conversion option derivatives, after a final mark-up to $678,692, were removed and recorded as a gain on extinguishment. At December 31, 2018, the balance of unamortized discount on convertible notes with adjustable conversion features was $521,763. During the six months ended June 30, 2019, debt discount of $578,000 was recorded, debt discount amortization of $412,566 was recorded, $174,489 of debt discount was removed related to debt that was converted. At June 30, 2019, the balance of the unamortized discount was $512,708.

At June 30, 2019 and December 31, 2018, accrued interest due for all convertible notes was $1,145,137 and $1,099,005, respectively, and is included in accrued interest in the accompanying balance sheets. Interest expense for all convertible notes payable for the six months ended June 30, 2019 and 2018 was $74,887 and $44,107, respectively.

Note 3 - Convertible Notes Payable – Related Parties

At June 30, 2019 and December 31, 2018, convertible notes payable - related parties consist of 12 convertible notes payable in the aggregate of $355,500. The notes are unsecured and have extended due dates of December 31, 2019. Six notes totaling $268,000 are due to the Company’s Chief Executive Officer, at a compounded interest rate of 8% per annum; two notes totaling $57,000 are due to the Company’s VP of Technology, interest at prime plus 2% and prime plus 4% per annum; and four notes totaling $30,000 are due to the spouse of the Company’s Chief Technology Officer at a compounded interest rate of 8% per annum. $33,000 of the notes are convertible at a fixed conversion price of $7,312,500 per share and $322,500 of the notes are convertible at a fixed conversion price of $9,750,000,000 per share, as defined in the note agreements and adjusted for applicable reverse stock splits.

At December 31, 2018, accrued interest due for the convertible notes – related parties was $563,805. During the six months ended June 30, 2019, interest of $35,346 was accrued. At June 30, 2019, accrued interest due for the convertible notes – related parties was $599,151.

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Note 4 - Notes Payable

Notes payable consisted of the following:

	June 30, 2019			December 31, 2018
Unsecured
(a) Promissory notes-in default	$	413,824		$	413,824
(b) Promissory notes – StrikeForce Investor Group-in default		1,225,000			1,225,000
(c)  Promissory notes issued by BlockSafe ($365,000 and zero in default at June 30, 2019 and December 31, 2018, respectively)		475,000			775,500
Total notes payable principal outstanding		2,113,824			2,414,324
Debt discount		(13,055	)		(195,654	)
Notes payable, net of discount	$	2,100,769		$	2,218,670

(a)	Notes payable, with interest from 8% to 14% per annum, due on various dates from December 2011 to July 2017 and are currently in default. At December 31, 2018, the balance of the accrued interest on the notes payable-various was $505,454. During the six months ended June 30, 2019, $22,505 of interest was accrued. At June 30, 2019, accrued interest on the notes payable-various was $527,959.
(b)	Notes payable to StrikeForce Investor Group (SIG), made up of various investors with unsecured notes, interest at 10% per annum, originally due in 2011, and currently in default. At December 31, 2018, the balance of the accrued interest on the notes payable-SIG was $1,509,844. During the six months ended June 30, 2019, $60,746 of interest was accrued. At June 30, 2019, accrued interest on the notes payable-SIG was $1,570,590.
(c)	At December 31, 2018, BlockSafe (see Note 1) had $775,500 of outstanding unsecured promissory notes, bearing interest at 8% per annum, and maturing through September 2019. During the six months ended June 30, 2019, $5,000 of unsecured promissory notes were paid, and note holders agreed to exchange $295,500 of principal into a financing obligation (see Note 4). At June 30, 2019, the balance of the unsecured promissory notes was $475,000. At June 30, 2019, $365,000 of the unsecured promissory notes were in default.
	At December 31, 2018, the balance of the unamortized discount on the unsecured promissory notes was $195,653. During the six months ended June 30, 2019, debt discount amortization of $182,598 was recorded and the balance of the unamortized discount at June 30, 2019 was $13,055.
	At December 31, 2018, the balance of the accrued interest on the unsecured promissory notes was $46,388. During the six months ended June 30, 2019, $24,700 of interest was accrued and $19,700 of accrued interest was converted into a financing obligation (See Note 4). At June 30, 2019, accrued interest on the unsecured promissory notes was $51,388.

At June 30, 2019 and December 31, 2018, accrued interest due for all notes payable above was $2,149,937 and $2,061,686, respectively, and is included in accrued interest in the accompanying balance sheets. Interest expense for notes payable for the six months ended June 30, 2019 and 2018 was $107,951 and $99,478, respectively.

Note 5 - Notes Payable – Related Parties

Notes payable-related parties notes represent eighteen unsecured notes payable to the Company’s Chief Executive Officer ranging in interest rates of 0% per annum to 10% per annum. The notes are unsecured and have extended due dates of December 31, 2019. At June 30, 2019 and December 31, 2018, the balance due under these notes was $742,513.

At December 31, 2018, accrued interest due for the notes was $703,944. During the six months ended June 30, 2019, interest of $27,810 was accrued. At June 30, 2019, accrued interest due for the notes was $731,754.

Note 6 – Financing Obligation

In 2018, BlockSafe issued promissory notes to nineteen unrelated parties aggregating $775,500. As part of each promissory note agreement BlockSafe 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, in December 2018, BlockSafe agreed to issue tokens to an unrelated party for receipt of $50,000.

At December 31, 2018, the total of the financing obligation for BlockSafe was $825,500. During the six months ended June 30, 2019, BlockSafe agreed to issue tokens to four unrelated parties for receipt of $112,500. In addition, holders of unsecured promissory notes issued by BlockSafe agreed to exchange $295,500 principal and $19,700 of accrued interest into the financing obligation to be paid by tokens to be issued by BlockSafe. At June 30, 2019, the financing obligation was $1,253,200.

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At June 30, 2019 and through the date of filing, BlockSafe 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 June 30, 2019, as the tokens do not exist yet, and were not considered equity, management determined that 100% of the obligation of $1,210,070 is probable of being a liability to be settled by BlockSafe, through the issuance of tokens, or through other means if tokens are never issued, and therefore recorded the financing obligation.

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 (see Note 11). 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 June 30, 2019 and December 31, 2018, 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 – Derivative Financial Instruments

At June 30, 2019, the Company had convertible promissory notes outstanding that are convertible into shares of common stock of the Company at the option of the holders at price per share discounts ranging from 20% to 61% of the Company’s common stock market price, as defined in the note agreements. As the ultimate determination of shares to be issued upon conversion of these notes could exceed the current number of available authorized shares, the Company determined that the conversion features of the convertible notes were not considered indexed to the Company’s own stock and characterized the fair value of the conversion features as derivative liabilities. Accordingly, the conversion features of the notes were separated from the host contracts (i.e. the notes) and characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.

At December 31, 2018, the balance of the derivative liabilities was $1,313,904. During the six months ended June 30, 2019, the Company recorded additions of $920,558 related to the conversion features of notes issued during the period (see Note 2), and an increase in fair value of derivatives of $681,710. In addition, the Company recorded a decrease in derivative liability of $678,692 related to derivative liabilities that were extinguished. At June 30, 2019, the balance of the derivative liabilities was $2,237,480.

The derivative liability was valued at the following dates using a probability weighted Black-Scholes-Merton model with the following assumptions: 

	June 30, 2019			January 2019 to June 2019 (dates of inception)		December 31, 2018
Conversion feature:
Risk-free interest rate		0.23	%	0.18%-0.25%			0.25	%
Expected volatility		163	%	118%-163%			129	%
Expected life (in years)		1 year		1 year			1 year
Expected dividend yield		-			-		-
Fair Value:
Conversion feature	$	2,237,480		$	920,558	$	1,313,904

The risk-free interest rate was based on rates established by the Federal Reserve Bank. The expected volatility is based on the historical volatility of the Company’s stock. The expected life of the conversion feature of the notes was based on the remaining terms of the related notes. The expected dividend yield was based on the fact that the Company has not customarily paid dividends to its common stockholders in the past and does not expect to pay dividends to its common stockholders in the future.

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Note 9 - Operating Lease

In January 2019, the Company entered into a noncancelable operating lease for its headquarters office requiring payments of $4,409 per month, payments increasing 3% each year, and ending on January 31, 2024. At June 30, 2019, the remaining lease term was 4.58 years. The Company does not have any other 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 our 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:

	Six Months Ended June 30, 2019
Lease Cost
Operating lease cost (included in general and administration in the Company’s unaudited condensed statement of operations)	$	27,727
Other Information
Cash paid for amounts included in the measurement of lease liabilities for the first and second quarters of 2019	$	26,457
Weighted average remaining lease term – operating leases (in years)		4.6
Average discount rate – operating leases		10.0	%

The supplemental balance sheet information related to leases for the period is as follows:

	At June 30, 2019
Operating leases
Long-term right-of-use assets		199,645
Short-term operating lease liabilities	$	34,845
Long-term operating lease liabilities		166,164
Total operating lease liabilities	$	201,009

Maturities of the Company’s lease liabilities are as follows:

Year Ending	Operating Leases
2019 (remaining 6 months)	$	26,409
2020		54,371
2021		56,000
2022		57,676
2023		59,411
2024		4,963
Total lease payments		258,830
Less: Imputed interest/present value discount		(57,821	)
Present value of lease liabilities	$	201,009

Lease expenses were $27,727 and $25,343 during the six months ended June 30, 2019 and 2018, respectively.

Note 10 – Stockholders’ Deficit

Common Stock

During the six months ended June 30, 2019, the Company issued an aggregate of 37,906,356 shares of its common stock as follows:

· The Company issued 15,000 shares of its common stock for services, valued at $96.

· A convertible note holder converted $470,000 of principal and $28,755 of accrued interest into 192,418,115 shares of common stock at conversion prices ranging from $0.0012 to $0.0087 per share, with a total fair value of $1,025,259.

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Note 11 - Options

In September 2016 and December 2017, the Company issued options to purchase an aggregate of 259,000,000 shares of its common stock to management and employees. In July 2018, the Company issued options to purchase an aggregate of 500,001 shares of its common stock to a consulting firm. The options are exercisable at $0.016 to $0.00625 per share, vested in 6 to 12 months, and expire through December 2027. During the six months ended June 30, 2019 and 2018, the Company recognized compensation costs of $1,912 and $355,277, respectively, related to the amortization of the fair value of options that vested.

The table below summarizes the Company’s stock option activities for the period January 1, 2019 to June 30, 2019:

	Number of Options Shares		Exercise Price Range Per Share		Weighted Average Exercise Price
Balance, January 1, 2019		259,500,002	$	0.0057-2,242,500	$	0.0062
Granted		-	$	-	$	-
Exercised		-	$	-	$	-
Expired		-	$	-	$	-
Balance outstanding, June 30, 2019		259,500,002	$	0.0057-2,242,500	$	0.0062
Balance exercisable, June 30, 2019		259,486,303	$	0.0057-2,242,500	$	0.0062

At June 30, 2019, the intrinsic value of outstanding options was zero.

The following table summarizes information concerning the Company’s stock options as of June 30, 2019:

		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
$	975,000,000		1		1.00	$	975,000,000		1		1.00	$	975,000,000
$	0.0057		63,000,000		10.00	$	0.0057		63,000,000		10.00	$	0.0057
$	0.016		500,001		1.00	$	0.016		486,302		1.00	$	0.016
$	0.00625		196,000,000		10.00	$	0.0062		196,000,000		10.00	$	0.0062
$	0.00625 - 975,000,000		259,500,002		10.00	$	0.0062		259,486,303		10.00	$	0.0062

Note 12 - Commitments and Contingencies

Legal Proceedings

On June 20, 2016, the Company initiated additional patent litigation against three major competitors in the U.S. District Court for the District of New Jersey, for infringement of United States Patent No. 8,484,698. This litigation is ongoing. On March 14, 2017, one of the parties initiated an inter partes review (IPR) (a procedure for challenging the validity of a United States patent before the United States Patent and Trademark Office) against the Company’s second Patent No. 8,484,698.

On March 14, 2017, the Company initiated additional patent litigation against two major competitors in the U.S. District Court for the District of Massachusetts, for infringement of United States Patent Nos. 7,870,599, 8,484,698 and 8,713,701. This litigation is ongoing.

On March 14, 2017, the Company initiated additional patent litigation against two major competitors in the U.S. District Court for the Eastern District of Virginia, for infringement of United States Patent Nos. 7,870,599, 8,484,698 and 8,713,701. This litigation is ongoing. On June 13, 2017, one of the competitors initiated a lawsuit against the Company in the U.S. District Court for the District of New Jersey for patent infringement (which the Company believes is without merit and will defend vigorously). This litigation is ongoing.

On December 1, 2017, The United States District Court for the Central District of California issued an opinion in the StrikeForce Technologies, Inc. v. SecureAuth Corp. case, which invalidated claims of U.S. Patent Nos. 7,870,599, 8,484,698 and 8,713,701 under 35 U.S.C. §101. The Company strongly disagrees with the Court’s decision and an appeal has been prepared by the Company’s attorney. The Company has agreed to stay its patent litigations in the District of New Jersey against Centrify Corp. and Duo Security Inc. pending the appeal. The Company believes that the litigations currently pending in the District of Massachusetts should also be stayed pending appeal and is discussing such a motion with the defendants in that case. In February 2019, a panel of the United States Court of Appeals for the Federal Circuit issued a “Rule 36” decision, affirming the District Court’s order, thereby dismissing the Company’s lawsuit on the grounds of 35 U.S.C. #101, a statue that concerns what types of inventions are patentable. The Company plans on working with a patent attorney in order to develop an appropriate course of action relating to this case.

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On December 4, 2017, StrikeForce Technologies, Inc. v. Trustwave Holdings, Inc., Civil Action No. 2:16-cv-03573-JMV-MF which was pending in the United States District Court for the District of New Jersey, was settled. Trustwave’s infringing sales were made as an OEM of Duo Security Incorporated. The Company agreed to dismiss its claims against Trustwave because they were essentially duplicative of its claims against Duo Security Incorporated pursuant to StrikeForce Technologies, Inc. v. Duo Security Incorporated, Civil Action No. 2:16-cv-03571.

Asset Sale and Licensing Agreement

On August 24, 2015, the Company entered into an agreement with Cyber Safety, Inc., a New York corporation (“Cyber Safety”) for Cyber Safety to license, and retain an option to purchase, the patents and intellectual property related to the GuardedID® and MobileTrust® software. Cyber Safety had the option to buy the Company’s GuardedID® patent for $9,000,000 that expired on September 30, 2020. In March 2019, the option to purchase agreement was modified to increase the purchase price to $10,000,000 and extend the expiration date to September 30, 2021. If the purchase price is not paid by September 30, 2021, it will increase to $11,000,000 and be due September 30, 2022. The Company anticipates, but cannot guarantee, Cyber Safety will complete the purchase by September 30, 2021. Cyber Safety will also resell the Company’s GuardedID® and MobileTrust® products, for which the Company will receive a royalty, while the Company retains an unlimited license to resell those products. Cyber Safety also licensed the Malware Suite until September 30, 2020 and agreed to pay the Company 15% to 20% of the net amount Cyber Safety receives from this product. During the six months ended June 30, 2019 and 2018, the Company recorded $280,000 and $162 from Cyber Safety.

Contingent Management Fee

The Company and BlockSafe have a management agreement pursuant to which BlockSafe shall remit a management fee of $36,000 per month to the Company, and when BlockSafe 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 currently eliminated in consolidation.

Note 13 – Subsequent Events

Subsequent to June 30, 2019, the Company issued two unsecured convertible promissory notes aggregating $86,000, bearing interest at 8% per annum, and maturing in one year through August 2020. The notes are convertible at a 61% discount to the price of the Company’s common stock, as defined.

Subsequent to June 30, 2019, a convertible note holder converted $118,000 of principal and $7,851 of accrued interest into 111,882,028 shares of common stock at conversion prices ranging from $0.0011 to $0.0012 per share.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Included in this interim report are “forward-looking” statements, within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”) as well as historical information. Some of our statements under “Business”, “Properties”, “Legal Proceedings”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”,” the Notes to Condensed Consolidated Financial Statements” and elsewhere in this report constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that the expectations reflected in these forward-looking statements will prove to be correct. Our actual results could differ materially from those anticipated in forward-looking statements as a result of certain factors, including matters described in the section titled “Risk Factors.” Forward-looking statements include those that use forward-looking terminology, such as the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “project,” “plan,” “will,” “shall,” “should,” and similar expressions, including when used in the negative. Although we believe that the expectations reflected in these forward-looking statements are reasonable and achievable, these statements involve risks and uncertainties and we cannot assure you that actual results will be consistent with these forward-looking statements. We claim the protection afforded by the safe harbor for forward-looking statements provided by the PSLRA.

Such risks include, among others, the following: international, national and local general economic and market conditions: our ability to sustain, manage or forecast our growth; material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; rules and regulation related to cryptocurrency, both domestic and foreign; liquidity of cyrptocurrency; the development of the cyrptocurrency market; international regulations on cyrptocurrency; impact and marketplace perception as a result of enforcement matters promulgated by the Securities and Exchange Commission against bad actors in the cyrptocurrency field and policy papers by the Securities and Exchange Commission on cyrptocurrency; the ability to protect technology; and other factors referenced in this filing.

Consequently, all the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by management will be realized or, even if substantially realized, that they will have the expected consequences to or effects on our business operations. We undertake no obligation to update or revise these forward-looking statements, whether to reflect events or circumstances after the date initially filed or published, to reflect the occurrence of unanticipated events or otherwise.

Additional information concerning these and other risks and uncertainties is contained in our filings with the Securities and Exchange Commission, including the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018.

Unless otherwise noted, references in this Form 10-Q to “StrikeForce”, “we”, “us”, “our”, “SFT”, “our company”, and the “Company” means StrikeForce Technologies, Inc., a Wyoming corporation.

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Background

We are a software development and services company that offers a suite of integrated computer network security products using proprietary technology. Our ongoing strategy is developing and marketing our suite of network security products to the corporate, financial, healthcare, legal, government, technology, insurance, e-commerce and consumer sectors. We plan to continue to grow our business primarily through our globally expanding sales channel and internally generated sales, rather than by acquisitions. Apart from our 49% holding in BlockSafe Technologies, Inc., we have no other subsidiaries and we conduct our operations from our corporate office in Edison, New Jersey.

Our executive office is located at 1090 King Georges Post Road, Suite 603, Edison, NJ 08837. Our telephone number is (732) 661-9641. We have 10 employees. Our Company’s website is www.strikeforcetech.com (we are not including the information contained in our website as part of, nor should the information be relied upon or incorporated by reference into, this report on Form 10-Q).

Intellectual Property

Starting in 2016, we worked with one patent attorney firm to aggressively enforce our patent rights. As of May 1, 2019, we are currently searching for a new firm that will handle the pending enforcement cases.

We successfully settled our first major patent lawsuit in January 2016.

Our patent attorneys filed our fourth “Out of Band” continuation patents. We currently have three patents granted to us for Out-of-Band ProtectID® (Patent Nos.: 7,870,599, 8,484,698 and 8,713,701). In March 2013, our patent attorneys submitted a new “Methods and Apparatus for securing user input in a mobile device” Patent, which is no longer being pursued because of our inability of moving it forward. MobileTrust® is also covered by our GuardedID® patents. We cannot provide assurances that the latter patents will be granted in fiscal 2019 or 2020.

We plan to continue our strategy to aggressively enforce the patent rights relating to our granted Keystroke Encryption patents that help protect our GuardedID® and MobileTrust® products. We were granted three related keystroke encryption patents for which we received the most recent patent on March 3, 2015 (Patent Nos.: 8,566,608, 8,732,483 and 8,973,107).

We have four trademarks that have been approved and registered: ProtectID®, GuardedID®, MobileTrust® and CryptoColor®. A portion of our software is licensed from third parties and the remainder is developed by our own team of developers while leveraging some external consultant expertise as necessitated. We rely upon confidentiality agreements signed by our employees, consultants, and third parties to protect the intellectual property rights.

On September 6, 2017, we entered into a Litigation Funding Agreement with two parties for the purpose of funding the enforcement of certain patents relating to the process of providing dual channel authentication against several infringers. These patent infringement cases are still in process. Our management believes, but cannot guarantee, that this Litigation Funding Agreement will allow us to pursue litigation against any infringement on our patents.

Recently Executed Distribution Agreements

In November 2018, we executed two distribution agreements for our security products in the insurance and hospitality marketplaces, respectively. We anticipate that both agreements will result in a substantial increase in revenues in the latter of 2019 or in 2020, although there can be no assurances of the anticipated results.

Capitalization

On July 15, 2019, we amended our Certificate of Incorporation to increase the number of authorized shares of common stock from 5,000,000,000 to 7,500,000,000.

BlockSafe Technologies, Inc.

BlockSafe Technologies, Inc. (“BlockSafe”) was formed on December 1, 2017 in the State of Wyoming. BlockSafe is intended to be developed as an enterprise focusing on using our licensed technology in the field of cryptocurrency and its use of blockchains. Small revenues have been generated to date as BlockSafe is still in the developmental stage. There can be no assurances on the success of this project or any profitability arising from BlockSafe.

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As of June 30, 2019, no tokens have been developed. There is no assurance as to whether, or at what amount, or on what terms, tokens will be available, if ever. Moreover, there can be no assurance how such technology will function, which could expose us to legal and regulatory issues. In addition, legal and regulatory developments could render the technology impermissible, which could have a material adverse effect on BlockSafe and us.

At present, we hold 49% of the issued and outstanding BlockSafe common stock, with Mark L. Kay, Ramarao Pemmaraju, and, George Waller, our Directors, each a member of the BlockSafe Board of Directors and individually holding 10.3% of the issued and outstanding common stock of BlockSafe, each, for a combined total of 31%. As a result of our 49% ownership and our Directors’ combined 31% ownership of the issued and outstanding BlockSafe common stock, we are effectively able to influence all matters requiring BlockSafe shareholder action, including significant corporate transactions. Therefore, BlockSafe’s financial results have been consolidated with our financial results.

Results of Operations

FOR THE THREE MONTHS ENDED JUNE 30, 2019 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2018

Revenues for the three months ended June 30, 2019 were $307,739 compared to $170,951 for the three months ended June 30, 2018, an increase of $136,788 or 80.0%. The increase in revenues was primarily due to an increase in our software and service revenues. Revenues are derived from software, keyfobs and services.

Cost of revenues for the three months ended June 30, 2019 was $2,210 compared to $2,703 for the three months ended June 30, 2018, a decrease of $493, or 18.2%. The decrease resulted from the decrease in fees resulting from efficiencies implemented related to our revenues. Cost of revenues as a percentage of total revenues for the three months ended June 30, 2019 was 0.8% compared to 1.6% for the three months ended June 30, 2018.

Gross profit for the three months ended June 30, 2019 was $305,529 compared to $168,248 for the three months ended June 30, 2018, an increase of $137,281, or 81.6%. The increase in gross profit was due to the increase in our revenues.

Research and development expenses for the three months ended June 30, 2019 were $123,750 compared to $123,750 for the three months ended June 30, 2018. The salaries, benefits and overhead costs of personnel conducting research and development of our software products primarily comprises our research and development expenses.

Compensation, professional fees, and selling, general and administrative (collectively, “SGA”) expenses for the three months ended June 30, 2019 were $378,541 compared to $728,982 for the three months ended June 30, 2018, a decrease of $350,441 or 48.1%. The decrease was due primarily to the decrease in employee stock-based compensation in the form of stock options. SG&A expenses consist primarily of salaries, benefits and overhead costs for executive and administrative personnel, insurance, fees for professional services, including consulting, legal, and accounting fees, plus travel costs and non-cash stock compensation expense for the issuance of stock options to employees and other general corporate expenses.

For the three months ended June 30, 2019, other expense was ($986,223) as compared to other expense of ($238,489) for the three months ended June 30, 2018, representing an increase in other expense of $747,734, or 314%. The increase was primarily due to increases in the change in the fair value of derivative liabilities, the loss on debt extinguishment and an increase in debt discount amortization, offset by gains from the extinguishment of derivative liabilities.

Our net loss for the three months ended June 30, 2019 was $1,182,985 compared to $922,973 for the three months ended June 30, 2018, an increase of $260,012, or 28.2%. The increase was primarily due to increases in the change in the fair value of derivative liabilities, the loss on debt extinguishment and an increase in debt discount amortization, offset by gains from the extinguishment of derivative liabilities and the increase in revenues.

The net loss attributable to the non-controlling interest in our subsidiary for the three months ended June 30, 2019 was $66,589 compared to $189,576 for the three months ended June 30, 2018, a decrease of $122,987, or 64.9%. These results are due to the net loss recorded by our subsidiary, BlockSafe, which began operations in December 2017.

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FOR THE SIX MONTHS ENDED JUNE 30, 2019 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2018

Revenues for the six months ended June 30, 2019 were $439,426 compared to $235,644 for the six months ended June 30, 2018, an increase of $203,782 or 86.5%. The increase in revenues was primarily due to an increase in our software and service revenues. Revenues are derived from software, keyfobs and services.

Cost of revenues for the six months ended June 30, 2019 was $6,081 compared to $9,457 for the six months ended June 30, 2018, a decrease of $3,376, or 35.7%. The decrease resulted from the decrease in fees resulting from efficiencies implemented related to our revenues. Cost of revenues as a percentage of total revenues for the six months ended June 30, 2019 was 1.4% compared to 4.0% for the six months ended June 30, 2018.

Gross profit for the six months ended June 30, 2019 was $433,345 compared to $226,187 for the six months ended June 30, 2018, an increase of $207,158, or 91.6%. The increase in gross profit was due to the increase in our revenues.

Research and development expenses for the six months ended June 30, 2019 were $250,212 compared to $247,500 for the six months ended June 30, 2018, a nominal increase of $2,712, or 1.1%. The salaries, benefits and overhead costs of personnel conducting research and development of our software products primarily comprises our research and development expenses.

Compensation, professional fees, and selling, general and administrative (collectively, “SGA”) expenses for the six months ended June 30, 2019 were $825,983 compared to $1,341,660 for the six months ended June 30, 2018, a decrease of $515,677 or 38.4%. The decrease was due primarily to the decrease in employee stock-based compensation in the form of stock options. SG&A expenses consist primarily of salaries, benefits and overhead costs for executive and administrative personnel, insurance, fees for professional services, including consulting, legal, and accounting fees, plus travel costs and non-cash stock compensation expense for the issuance of stock options to employees and other general corporate expenses.

For the six months ended June 30, 2019, other expense was ($1,854,710) as compared to other expense of ($297,768) for the six months ended June 30, 2018, representing an increase in other expense of $1,556,942, or 523%. The increase was primarily due to increases in the change in the fair value of derivative liabilities, the loss on debt extinguishment and an increase in debt discount amortization, offset by gains from the extinguishment of derivative liabilities.

Our net loss for the six months ended June 30, 2019 was $2,497,560 compared to $1,660,741 for the six months ended June 30, 2018, an increase of $836,819, or 50.4%. The increase was primarily due to increases in the change in the fair value of derivative liabilities, the loss on debt extinguishment and an increase in debt discount amortization, offset by gains from the extinguishment of derivative liabilities and the increase in revenues.

The net loss attributable to the non-controlling interest in our subsidiary for the six months ended June 30, 2019 was $178,378 compared to $307,878 for the six months ended June 30, 2018, a decrease of $129,500, or 42.1%. These results are due to the net loss recorded by our subsidiary, BlockSafe, which began operations in December 2017.

Liquidity and Capital Resources

Our total current assets at June 30, 2019 were $233,057, which included cash of $89,870, as compared with $111,339 in total current assets at December 31, 2018, which included cash of $86,160. Additionally, we had a stockholders’ deficit in the amount of $15,272,797 at June 30, 2019 compared to a stockholders’ deficit of $13,802,504 at December 31, 2018. We have historically incurred recurring losses and have financed our operations through loans, principally from affiliated parties such as our directors, and from the proceeds of debt and equity financing.

We financed our operations during the six months ended June 30, 2019 primarily from the issuance of convertible debentures of $578,000 and the proceeds from financing obligations of $112,500.

Going Concern

We have yet to establish any history of profitable operations. During the six months ended June 30, 2019, the Company incurred a net loss of $2,497,560 and used cash in operating activities of $681,790, and at June 30, 2019, the Company had a stockholders’ deficit of $15,272,797. In addition, we are in default on notes payable and convertible notes payable in the aggregate amount of $3,076,924 and BlockSafe is in default on notes payable in the aggregate amount of $365,000. 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, 2018 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.

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Our ability to continue as a going concern is dependent upon our ability to raise additional funds and implement our business plan. Management is currently seeking additional funds, primarily through the issuance of debt and equity securities for cash to operate our business. Management anticipates, but cannot provide assurances, that additional financing will arise from the license granted to BlockSafe once BlockSafe becomes revenue producing. Currently, management is attempting to increase revenues and improve gross margins by a revised sales strategy. We are redirecting our sales focus from direct sales to domestic and international sales channel, where we are primarily selling through a channel of Distributors, Value Added Resellers, Strategic Partners and Original Equipment Manufacturers. While we believe in the viability of our strategy to increase revenues and in our ability to raise additional funds, there can be no assurances to that effect. Our ability to continue as a going concern is dependent upon our ability to continually increase our customer base and realize increased revenues from recently signed contracts. No assurance can be given that any future financing 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, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stock holders, in the case of equity financing.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, result of operations, liquidity or capital expenditures.

Critical Accounting Policies

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 potential liabilities and the assumptions made in valuing stock instruments issued for services and derivative 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® and MobileTrust® products. We recognize revenue from these arrangements ratably over the contractual service period. 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 a client contract.

The Company adopted the guidance of ASC 606 on January 1, 2018, and the implementation of ASC 606 did not have a material impact on the Company’s consolidated financial statements.

Cost of revenue includes direct costs and fees related to the sale of our products.

Share-Based Payments

The Company issues stock options and warrants, shares of common stock, and equity interests as share-based compensation to employees and non-employees. The Company accounts for its share-based compensation to employees in accordance with FASB ASC 718, Compensation – Stock Compensation . Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period.

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In prior periods through December 31, 2018, the Company accounted for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50, Equity - Based Payments to Non-Employees . Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The final fair value of the share-based payment transaction is determined at the performance completion date. For interim periods, the fair value is estimated, and the percentage of completion is applied to that estimate to determine the cumulative expense recorded.

In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting . The guidance was issued to simplify the accounting for share-based transactions by expanding the scope of Topic 718 from only being applicable to share-based payments to employees to also include share-based payment transactions for acquiring goods and services from nonemployees. As a result, nonemployee share-based transactions will be measured by estimating the fair value of the equity instruments at the grant date, taking into consideration the probability of satisfying performance conditions. The Company adopted ASU 2018-07 on January 1, 2019. The adoption of the standard did not have a material impact on our financial statements for the three months and six months ended June 30, 2019 or the previously reported financial statements.

Derivative Financial Instruments

We evaluate our 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 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. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

To determine the number of authorized but unissued shares available to satisfy outstanding convertible securities, we use a sequencing method to prioritize its convertible securities as prescribed by ASC 815-40-35. At each reporting date, we review our convertible securities to determine their classification is appropriate.

Recently Issued Accounting Pronouncements

Refer to Note 1 in the accompanying condensed consolidated financial statements.

Additional Information

You are advised to read this Form 10-Q in conjunction with other reports and documents that we file from time to time with the SEC. In particular, please read our Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K, and Current Reports on Form 8-K that we file from time to time. You may obtain copies of these reports directly from us or from the SEC at the SEC’s Public Reference Room at 100 F. Street, N.E. Washington, D.C. 20549, and you may obtain information about obtaining access to the Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains information for electronic filers at its website http://www.sec.gov.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide the information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

(a)     Evaluation of Disclosure Controls and Procedures.

Regulations under the Securities Exchange Act of 1934 (the “Exchange Act”) require public companies to maintain “disclosure controls and procedures,” which are defined as controls and other procedures that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

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We carried out an evaluation, with the participation of our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (CFO) of the effectiveness our disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of June 30, 2019. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures are not effective at the reasonable assurance level due to the following material weaknesses:

1.	We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us as of and for the interim period ended June 30, 2019. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
2.	Our board of directors has no independent director or member with financial expertise which causes ineffective oversight of our external financial reporting and internal control over financial reporting.
3.	We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.

Remediation of Material Weaknesses

We intend to remediate the material weaknesses in our disclosure controls and procedures identified above by adding an independent director or member with financial expertise or hiring a full-time CFO with SEC reporting experience in the future when working capital permits and by working with our independent registered public accounting firm to refine our internal procedures.

(b)     Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On June 20, 2016, we initiated additional patent litigation against three major competitors in the U.S. District Court for the District of New Jersey, for infringement of United States Patent No. 8,484,698. This litigation is ongoing. On March 14, 2017, one of the parties initiated an inter partes review (IPR) (a procedure for challenging the validity of a United States patent before the United States Patent and Trademark Office) against our second Patent No. 8,484,698.

On March 14, 2017, we initiated additional patent litigation against two major competitors in the U.S. District Court for the District of Massachusetts, for infringement of United States Patent Nos. 7,870,599, 8,484,698 and 8,713,701. This litigation is ongoing.

On March 14, 2017, we initiated additional patent litigation against two major competitors in the U.S. District Court for the Eastern District of Virginia, for infringement of United States Patent Nos. 7,870,599, 8,484,698 and 8,713,701. This litigation is ongoing. On June 13, 2017, one of the competitors initiated a lawsuit against us in the U.S. District Court for the District of New Jersey for patent infringement (which we believe is without merit and will defend vigorously). This litigation is ongoing.

On December 1, 2017, The United States District Court for the Central District of California issued an opinion in the StrikeForce Technologies, Inc. v. SecureAuth Corp. case, which invalidated claims of U.S. Patent Nos. 7,870,599, 8,484,698 and 8,713,701 under 35 U.S.C. §101. We strongly disagree with the Court’s decision and an appeal has been prepared by our attorney. We have agreed to stay our patent litigations in the District of New Jersey against Centrify Corp. and Duo Security Inc. pending the appeal. We believe that the litigations currently pending in the District of Massachusetts should also be stayed pending appeal and are discussing such a motion with the defendants in that case. We expect the Court will rule on the appeal in fiscal 2019. However, we cannot guarantee that the appeal will be ruled upon in that time frame, or of the outcome of the ruling.

On December 4, 2017, StrikeForce Technologies, Inc. v. Trustwave Holdings, Inc., Civil Action No. 2:16-cv-03573-JMV-MF which was pending in the United States District Court for the District of New Jersey, was settled. Trustwave’s infringing sales were made as an OEM of Duo Security Incorporated. We agreed to dismiss our claims against Trustwave because they were essentially duplicative of our claims against Duo Security Incorporated pursuant to StrikeForce Technologies, Inc. v. Duo Security Incorporated, Civil Action No. 2:16-cv-03571.

ITEM 1A. RISK FACTORS

Not required under Regulation S-K for “smaller reporting companies.”

Information about risk factors for the interim period ended June 30, 2019, does not differ materially from that set forth in Part I, Item 1A of our 2018 Annual Report on Form 10-K.

ITEM 2. RECENT ISSUANCES OF UNREGISTERED SECURITIES

In April 2019, a convertible note holder converted $60,000 of principal and $3,475 of accrued interest into 23,791,229 shares of common stock at conversion price of $0.002668 per share.

In May 2019, a convertible note holder converted $85,000 of principal and $5,139 of accrued interest into 40,270,485 shares of common stock at conversion prices ranging from $0.001798 to $0.002494 per share.

In June 2019, a convertible note holder converted $65,000 of principal and $4,030 of accrued interest into 54,913,796 shares of common stock at conversion prices ranging from $0.001160 to $0.001450 per share.

In June 2019, we issued a total of 7,500 shares of restricted common stock, valued at $27, relating to a December 2009 retainer agreement with our SEC attorney.

 

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The above offering was made in reliance upon the exemption from registration under Rule 506 of Regulation D promulgated under the Securities Act of 1933 and/or Section 4(2) of the Securities Act of 1933, based on the following: (a) the investors confirmed to us that they were “accredited investors,” as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933 and had such background, education and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the securities; (b) there was no public offering or general solicitation with respect to the offering; (c) the investors were provided with certain disclosure materials and all other information requested with respect to our company; (d) where applicable, the investors acknowledged that all securities being purchased were “restricted securities” for purposes of the Securities Act of 1933, and agreed to transfer such securities only in a transaction registered under the Securities Act of 1933 or exempt from registration under the Securities Act; and (e) where applicable, a legend was placed on the certificates representing each such security stating that it was restricted and could only be transferred if subsequent registered under the Securities Act of 1933 or transferred in a transaction exempt from registration under the Securities Act of 1933.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

We have not made various principal and interest payments on many of our debt obligations. We continue to seek work-out arrangements and applicable refinancing with new or revised debt or equity instruments. See Notes 2 and 4 to the condensed consolidated financial statements.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

 

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ITEM 6. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation of StrikeForce Technologies, Inc.(1)
3.2	By-laws of StrikeForce Technologies, Inc. (1)
3.3	Amended By-laws of StrikeForce Technologies, Inc. (2)
3.4	Amended By-laws of StrikeForce Technologies, Inc. (19)
3.5	Articles of Amendment of StrikeForce Technologies, Inc. (2)
3.6	Amendments to Articles of Incorporation (6)
3.7	Amendments to Articles of Incorporation (7)
3.8	Registration of Classes of Securities (8)
3.9	Amendments to Articles of Incorporation (9)
3.10	Registration of Classes of Securities (10)
3.11	Amendments to Articles of Incorporation (11)
3.12	Registration of Classes of Securities (12)
3.13	Amendments to Articles of Incorporation (13)
3.14	Amendments to Articles of Incorporation (14)
3.15	Amendments to Articles of Incorporation (15)
3.16	Amendments to Articles of Incorporation (16)
3.17	Amendments to Articles of Incorporation (17)
3.18	Amendments to Articles of Incorporation (18)
10.1	Employment Agreement dated as of May 20, 2003, by and between StrikeForce Technologies, Inc. and Mark L. Kay. (1)
10.2	Irrevocable Waiver of Conversion Rights of Mark L. Kay (4)
10.3	Irrevocable Waiver of Conversion Rights of Ramarao Pemmaraju (4)
10.4	Irrevocable Waiver of Conversion Rights of George Waller (4)
10.5	CFO Consultant Agreement with Philip E. Blocker (4)
10.6	2012 Stock Option Plan (5)
10.7	Asset Purchase Agreement between StrikeForce Technologies, Inc. and Cyber Safety, Inc., dated August 24, 2015 (18)
10.8	Amendment to the Asset Purchase Agreement and Distributor and Reseller Agreement between StrikeForce Technologies, Inc. and Cyber Safety, Inc. (19)
10.9	Execution of Litigation Funding Agreement (21)
10.10	BlockSafe Technologies, Inc. Intellectual Property License Agreement (22)
10.11	BlockSafe Technologies, Inc. Management Agreement (22)
10.12	BlockSafe Technologies, Inc. Amended Management Agreement (22)
31.1	Certification by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act, promulgated pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (3)
31.2	Certification by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act, promulgated pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (3)
32.1	Certification by Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, promulgated pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (3)
32.2	Certification by Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, promulgated pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (3)

____________

(1)	Filed as an exhibit to the Registrant’s Form SB-2 dated as of May 11, 2005 and incorporated herein by reference.
(2)	Filed as an exhibit to the Registrant’s Form 8-K dated February 4, 2011 and incorporated herein by reference.
(3)	Filed herewith.
(4)	Filed as an exhibit to the Registrant’s Form S-1/A dated July 31, 2012 and incorporated herein by reference.
(5)	Filed in conjunction with the Registrant’s Form 14A filed October 5, 2012 and incorporated herein by reference.
(6)	Filed as an exhibit to the Registrant’s Form 8-K dated February 5, 2013 and incorporated herein by reference.
(7)	Filed as an exhibit to the Registrant’s Form 8-K dated May 14, 2013 and incorporated herein by reference.
(8)	Filed as an exhibit to the Registrant’s Form 8-A dated July 29, 2013 and incorporated herein by reference.
(9)	Filed as an exhibit to the Registrant’s Form 8-K dated August 22, 2013 and incorporated herein by reference.
(10)	Filed as an exhibit to the Registrant’s Form 8-A dated October 3, 2013 and incorporated herein by reference.
(11)	Filed as an exhibit to the Registrant’s Form 8-K dated October 3, 2013 and incorporated herein by reference.
(12)	Filed as an exhibit to the Registrant’s Form 8-A dated December 31, 2013 and incorporated herein by reference.
(13)	Filed as an exhibit to the Registrant’s Form 8-K dated December 31, 2013 and incorporated herein by reference.
(14)	Filed as an exhibit to the Registrant’s Form 8-K dated March 18, 2014 and incorporated herein by reference.
(15)	Filed as an exhibit to the Registrant’s Form 8-K dated December 22, 2014 and incorporated herein by reference.
(16)	Filed as an exhibit to the Registrant’s Form 8-K dated February 13, 2015 and incorporated herein by reference.
(17)	Filed as an exhibit to the Registrant’s Form 8-K dated July 16, 2019 and incorporated herein by reference.
(18)	Filed as an exhibit to the Registrant’s Form 8-K dated August 4, 2015 and incorporated herein by reference.
(19)	Filed as an exhibit to the Registrant’s Form 8-K dated February 2, 2016 and incorporated herein by reference.
(20)	Filed as an exhibit to the Registrant’s Form 8-K dated May 19, 2017 and incorporated herein by reference.
(21)	Filed as an exhibit to the Registrant’s Form 8-K dated September 11, 2017 and incorporated herein by reference.
(22)	Filed as an exhibit to the Registrant’s Form 10-Q dated June 30, 2018 and incorporated herein by reference.

28

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	STRIKEFORCE TECHNOLOGIES, INC.
Dated: August 19, 2019	By:	/s/ Mark L. Kay
		Mark L. Kay
		Chief Executive Officer

Dated: August 19, 2019	By:	/s/ Philip E. Blocker
		Philip E. Blocker
		Chief Financial Officer and Principal Accounting Officer

29

EX-31.1

EXHIBIT 31.1

CERTIFICATION

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULES 13A-14 AND 15D-14

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Mark L. Kay, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of StrikeForce Technologies, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 19, 2019	/s/ Mark L. Kay
	Mark L. Kay,
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULES 13A-14 AND 15D-14

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Philip E. Blocker, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of StrikeForce Technologies, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

  

Dated: August 19, 2019	/s/ Philip E. Blocker
	Philip E. Blocker,
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of StrikeForce Technologies, Inc. (the "Company") on Form 10-Q for the quarter ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Mark L. Kay, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2001, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 19, 2019	/s/ Mark L. Kay
	Mark L. Kay
	Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of StrikeForce Technologies, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Philip E. Blocker, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2001, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 19, 2019	/s/ Philip E. Blocker
	Philip E. Blocker
	Chief Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 14, 2019
Document And Entity Information
Entity Registrant Name	StrikeForce Technologies Inc.
Entity Central Index Key	0001285543
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Jun. 30, 2019
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2019
Entity Common Stock Shares Outstanding		2,678,064,740

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Current Assets:
Cash	$ 89,870	$ 86,160
Accounts receivable, net	73,040	20,649
Prepaid expenses	647	4,530
Total current assets	163,557	111,339
Property and equipment, net	6,587	9,259
Operating lease right-of-use asset	199,645
Other assets	17,403	18,430
Total Assets	387,192	139,028
Current Liabilities:
Accounts payable and accrued expenses	915,147	945,669
Convertible notes payable (net of discount of $512,708 and $521,763, respectively; $1,438,100 in default at June 30, 2019 and December 31, 2018)	1,728,392	1,611,337
Convertible notes payable - related parties	355,500	355,500
Notes payable (net of discount of $13,055 and $195,653, respectively; $2,003,824 and $1,638,824 in default at June 30, 2019 and December 31, 2018, respectively)	2,100,769	2,218,670
Notes payable - related parties	742,513	742,513
Accrued interest (including $1,330,905 and $1,267,749 due to related parties, respectively)		4,428,439
Contingent payment obligation	1,500,000	1,500,000
Financing obligation	1,253,200	825,500
Operating lease liabilites, current portion	34,845
Derivative liabilities	2,237,480	1,313,904
Total current liabilities	15,493,825	13,941,532
Operating lease liabilities, long term portion	166,164
Total Liabilities	15,659,989	13,941,532
Stockholders' Deficit
Preferred stock, value
Common stock par value $0.0001: 7,500,000,000 shares authorized; 2,566,182,712 and 2,373,749,597 shares issued and outstanding, respectively	256,618	237,374
Additional paid-in capital	27,357,828	26,349,805
Accumulated deficit	(43,143,792)	(40,824,610)
Total StrikeForce Technologies, Inc. stockholders' deficit	(14,538,679)	(13,246,764)
Noncontrolling interest in consolidated subsidiary	(734,118)	(555,740)
Total Stockholders' Deficit	(15,272,797)	(13,802,504)
Total Liabilities and Stockholders' Deficit	387,192	139,028
Preferred Stock Series A [Member]
Stockholders' Deficit
Preferred stock, value	987,000	987,000
Preferred Stock Series B [Member]
Stockholders' Deficit
Preferred stock, value	$ 3,667	$ 3,667

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Current Liabilities
Convertible notes payable, net of discount	$ 512,708	$ 521,763
Convertible notes payable, default	1,438,100	1,438,100
Notes payable, net of discount	13,055	195,653
Notes payable, default	2,003,824	1,638,824
Accrued interest due to related parties	$ 1,330,905	$ 1,267,749
Stockholders' Deficit
Preferred Stock series not designated, par value	$ 0.10	$ 0.10
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, shares par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	7,500,000,000	7,500,000,000
Common stock, shares issued	2,566,281,217	2,373,749,597
Common stock, shares outstanding	2,566,281,217	2,373,749,597
Preferred Stock Series A [Member]
Stockholders' Deficit
Preferred stock, shares authorized	100	100
Preferred stock, shares issued	3	3
Preferred stock, shares outstanding	3	3
Preferred stock, shares par value
Preferred Stock Series B [Member]
Stockholders' Deficit
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	36,667	36,667
Preferred stock, shares outstanding	36,667	36,667
Preferred stock, shares par value	$ 0.10	$ 0.10

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Revenue	$ 307,739	$ 170,951	$ 439,426	$ 235,644
Cost of revenue	2,210	2,703	6,081	9,457
Gross margin	305,529	168,248	433,345	226,187
Operating expenses:
Compensation	197,393	155,507	370,912	313,441
Professional fees	115,487	153,460	286,040	343,990
Selling, general and administrative expenses	65,661	420,015	169,031	684,229
Research and development	123,750	123,750	250,212	247,500
Total operating expenses	502,291	852,732	1,076,195	1,589,160
Loss from operations	(196,762)	(684,484)	(642,850)	(1,362,973)
Other income (expense):
Interest expense	(121,213)	(303,017)	(246,242)	(473,527)
Debt discount amortization	(295,699)		(595,165)
Private placement costs	(145,511)	(185,233)	(342,558)	(379,249)
Change in fair value of derivative liabilities	(521,334)	249,761	(681,710)	554,771
Extinguishment of derivative liabilities	335,624		678,692
Loss on extinguishment of debt	(271,356)		(700,993)
Other income	33,266		33,266	237
Other income (expense), net	(986,223)	(238,489)	(1,854,710)	(297,768)
Net loss	(1,182,985)	(922,973)	(2,497,560)	(1,660,741)
Net loss attributable to noncontrolling interest	66,589	189,576	178,378	307,878
Net loss attributable to common shareholders of StrikeForce Technologies, Inc.	$ (1,116,396)	$ (733,397)	$ (2,319,182)	$ (1,352,863)
Net loss per share attributable to common shareholders
-Basic and diluted
Weighted average common shares outstanding
-Basic and diluted	2,493,151,605	2,337,226,895	2,446,688,410	2,336,540,133

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT - USD ($)	Total	Series B Preferred stock, par value $0.10 [Member]	Common stock, par value $0.0001 [Member]	Additional Paid-in Capital	Accumulated Deficit	Noncontrolling Interest	Series A Preferred stock no par value Shares
Beginning balance, Shares at Dec. 31, 2017		70,001	2,335,843,241				3
Beginning balance, Amount at Dec. 31, 2017	$ (10,793,186)	$ 7,000	$ 233,584	$ 25,522,331	$ (37,543,101)		$ 987,000
Fair value of common stock issued for services, Shares			15,000
Fair value of vested options, Shares
Net loss	(1,660,741)				(1,352,863)	(307,878)
Common stock issued upon conversion of Series B preferred stock, Shares		(33,334)	8,333,500
Fair value of common stock issued for services, Amount	204		$ 2	202
Fair value of vested options, Amount	355,277			355,277
Common stock issued upon conversion of Series B preferred stock, Amount		$ (3,333)	$ 833	2,500
Beginning balance, Shares at Mar. 31, 2018		70,001	2,335,850,741				3
Beginning balance, Shares at Mar. 31, 2018	(11,344,969)	$ 7,000	$ 233,585	25,708,315	(38,162,567)	(118,302)	$ 987,000
Fair value of common stock issued for services, Shares			7,500
Fair value of vested options, Shares
Net loss	(922,973)				(733,397)	(189,576)
Common stock issued upon conversion of Series B preferred stock, Shares		(33,334)	8,333,500
Fair value of common stock issued for services, Amount	122		$ 1	121
Fair value of vested options, Amount	169,374			169,374
Common stock issued upon conversion of Series B preferred stock, Amount		$ (3,333)	$ 833	2,500
Beginning balance, Shares at Jun. 30, 2018		36,667	2,344,191,741				3
Beginning balance, Shares at Jun. 30, 2018	(12,098,446)	$ 3,667	$ 234,419	25,880,310	(38,895,964)	(307,878)	$ 987,000
Beginning balance, Shares at Dec. 31, 2018		36,667	2,373,749,597				3
Beginning balance, Amount at Dec. 31, 2018	(13,802,504)	$ 3,667	$ 237,374	26,349,805	(40,824,610)	(555,740)	$ 987,000
Fair value of common stock issued for services, Shares			15,000
Fair value of vested options, Shares
Common stock issued upon conversion of notes and interest, Shares			192,418,115
Net loss	(2,497,560)				(2,319,182)	(178,378)
Fair value of common stock issued for services, Amount	96		2	94
Fair value of vested options, Amount	1,912			1,912
Common stock issued upon conversion of notes and interest, Amount	1,025,259		$ 19,242	1,006,017
Beginning balance, Shares at Mar. 31, 2019		36,667	2,447,199,702				3
Beginning balance, Shares at Mar. 31, 2019	(14,536,293)	$ 3,667	$ 244,719	26,923,246	(42,027,396)	(667,529)	$ 987,000
Fair value of common stock issued for services, Shares			7,500
Fair value of vested options, Shares
Common stock issued upon conversion of notes and interest, Shares			118,975,510
Net loss	(1,182,985)				(1,116,396)	(66,589)
Fair value of common stock issued for services, Amount	27		1	26
Fair value of vested options, Amount	961			961
Common stock issued upon conversion of notes and interest, Amount	445,493		$ 11,898	433,595
Beginning balance, Shares at Jun. 30, 2019		36,667	2,566,182,712				3
Beginning balance, Shares at Jun. 30, 2019	$ (15,272,797)	$ 3,667	$ 256,618	$ 27,357,828	$ (43,143,792)	$ (734,118)	$ 987,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash flows from operating activities
Net loss	$ (2,497,560)	$ (1,660,741)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	3,698	3,084
Amortization of discount on notes payable	595,165	270,224
Amortization of right-of-use asset	14,627
Fair value of common stock issued for services	96	204
Fair value of vested options	1,912	355,277
Change in fair value of derivative liabilities	681,710	(554,771)
Private placement costs	342,558	379,249
Loss on extinguishment of debt	700,993
Extinguishment of derivative liabilities	(678,692)
Changes in operating assets and liabilities:
Accounts receivable	(52,391)	15,742
Prepaid expenses	3,884	(9,558)
Accounts payable and accrued expenses	(30,522)	(13,321)
Accrued interest	245,993	197,763
Operating lease liabilities	(13,261)
Net cash used in operating activities	(681,790)	(1,016,848)
Cash flows from investing activities:
Purchases of property and equipment		(1,559)
Cash flows from financing activities:
Proceeds from convertible note payable	578,000	365,000
Proceeds from notes payable		665,500
Repayment of notes payable	(5,000)	(75,000)
Proceeds from finance obligation	112,500
Net cash provided by financing activities	685,500	955,500
Net increase (decrease) in cash	3,710	(62,907)
Cash at beginning of the period	88,160	455,484
Cash at end of the period	89,870	392,577
Supplemental disclosure of cash flow information:
Interest paid		5,000
Income tax paid
Supplemental disclosure of non-cash investing and financing transactions
Fair value of derivative upon issuance of convertible debt recorded as debt discount	578,000	365,000
Right-of-use assets obtained in exchange for operating lease obligations	$ 214,272
Common stock issued for conversion of debt	996,504
Common stock issued for conversion of accrued interest	28,755
Fair value of financing obligation recorded as debt discount		$ 665,500
Notes payable exchanged for financing obligation	295,500
Accrued interest exchanged for financing obligation	$ 19,700

XML

Organization and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2019

Organization and Summary of Significant Accounting Policies

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 ongoing strategy is developing and marketing its suite of network security products to the corporate, financial, healthcare, legal, government, technology, insurance, e-commerce and consumer sectors. The Company’s operations are based in Edison, New Jersey.

Basis of Presentation-Unaudited Interim Financial Information

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 six months ended June 30, 2019 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2019. These financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2018 and notes thereto contained in the Annual Report on Form 10-K of the Company as filed with the SEC on April 15, 2019.

The consolidated financial statements include the accounts of the Company and its controlled subsidiary, BlockSafe Technologies, Inc. (“BlockSafe”). BlockSafe is owned 49% by the Company and 31% by three executive officers of the Company, which combined represents an 80% controlling interest in BlockSafe. Accordingly, BlockSafe is consolidated by the Company. Intercompany balances and transactions have been eliminated in consolidation. At June 30, 2019, noncontrolling interests represents 51% of BlockSafe that the Company does not directly own.

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements, for the six months ended June 30, 2019, the Company incurred a net loss of $2,497,560 and used cash in operating activities of $681,790 and at June 30, 2019, the Company had a working capital deficiency of $15,330,268 and a stockholders’ deficit of $15,272,797. In addition, the Company is in default on notes payable and convertible notes payable in the aggregate amount of $3,441,924. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that these financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2018 financial statements, raised substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

At June 30, 2019, the Company had cash on hand in the amount of $89,870. Subsequent to June 30, 2019, the Company issued two unsecured convertible promissory note for proceeds of $86,000. Management estimates that the current funds on hand will be sufficient to continue operations through the next six months. The Company’s ability to continue as a going concern is dependent upon its ability to continue to implement its 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 the Company believes in the viability of its strategy to increase revenues, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon its ability to increase its 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 the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stock holders, in the case of equity financing.

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 income taxes, and 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® and MobileTrust® products. We recognize revenue from these arrangements ratably over the contractual service period. 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 a client contract.

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
	June 30, 2019		June 30, 2018
Software	$	264,577	$	56,199
Service		43,162		114,752
Total revenue	$	307,739	$	170,951

	Six Months Ended
	June 30, 2019		June 30, 2018
Software	$	390,791	$	110,385
Service		48,635		125,259
Total revenue	$	439,426	$	235,644

Leases

Prior to January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases . Effective January 1, 2019, the Company adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. The implementation of ASC 842 did not have a material impact on the Company’s consolidated financial statements and did not have a significant impact on our liquidity or on our compliance with our financial covenants associated with our loans. The Company adopted ASC 842 using a modified retrospective approach. As a result, the comparative financial information has not been updated and the required disclosures prior to the date of adoption have not been updated and continue to be reported under the accounting standards in effect for those periods. The Company elected to exclude from its balance sheets recognition of leases having a term of 12 months or less (“short-term leases”) and elected to not separate lease components and non-lease components for its long-term leases. Lease expense is recognized on a straight-line basis over the lease term. At January 1, 2019, the Company had no leases that required recognition of operating lease right-of-use assets or liabilities for operating leases upon adoption of ASC 842. On January 31, 2019, the Company commenced a lease that resulted in the recognition of operating lease right-of-use assets of $214,272, and liabilities for operating leases of $214,272.

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 amount 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.

As of June 30, 2019 and December 31, 2018, the Company’s balance sheet includes Level 3 liabilities comprised of the fair value of embedded derivative liabilities of $2,237,480 and $1,313,904, respectively (see Note 5). These embedded derivatives result in Level 3 classification because one or more of the significant inputs are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. The following table sets forth a summary of the changes in the estimated fair value of our embedded derivative during the six month periods ended June 30, 2019 and 2018:

	Six months ended June 30, 2019			Six months ended June 30, 2018
Fair value at beginning of period	$	1,313,904		$	623,195
Recognition of derivative liabilities upon initial valuation		920,558			744,249
Extinguishment of derivative liabilities		(678,692	)		(68,493	)
Net change in the fair value of derivative liabilities		681,710			(486,278	)
Fair value at end of period	$	2,237,480		$	812,673

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. For stock-based derivative financial instruments, the Company uses a probability weighted average Black-Scholes-Merton models to value the derivative instruments at inception and on subsequent valuation dates through the June 30, 2019, reporting date. 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.

Share-Based Payments

The Company issues stock options and warrants, shares of common stock, and equity interests as share-based compensation to employees and non-employees. The Company accounts for its share-based compensation to employees in accordance with FASB ASC 718, Compensation – Stock Compensation . Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period.

In prior periods through December 31, 2018, the Company accounted for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50, Equity - Based Payments to Non-Employees . Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The final fair value of the share-based payment transaction is determined at the performance completion date. For interim periods, the fair value is estimated, and the percentage of completion is applied to that estimate to determine the cumulative expense recorded.

In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting . The guidance was issued to simplify the accounting for share-based transactions by expanding the scope of Topic 718 from only being applicable to share-based payments to employees to also include share-based payment transactions for acquiring goods and services from nonemployees. As a result, nonemployee share-based transactions will be measured by estimating the fair value of the equity instruments at the grant date, taking into consideration the probability of satisfying performance conditions. The Company adopted ASU 2018-07 on January 1, 2019. The adoption of the standard did not have a material impact on our financial statements for the three months and six months ended June 30, 2019 or the previously reported financial statements.

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 reflects the potential dilution, using the treasury stock method that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the loss of the Company. In computing diluted loss per share, the treasury stock method assumes that outstanding options, warrants, and convertible preferred stock are exercised and the proceeds are used to purchase common stock at the average market price during the period. Options, warrants, and convertible preferred stock may have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options and warrants.

For the six months ended June 30, 2019 and 2018, the dilutive impact of stock options exercisable into 259,500,002 and 259,000,001 shares of common stock, respectively, convertible Series B Preferred stock that can convert into 16,825,556 and 3,135,197 shares of common stock, respectively, and notes payable that can convert into 177,854,318 and 41,131,421 shares of common stock, respectively, have been excluded because their impact on the loss per share is anti-dilutive.

Concentrations

For the six months ended June 30, 2019, sales to three customers comprised 64%, 19% and 11% of revenues, respectively. For the six months ended June 30, 2018, sales to three customers comprised 47%, 33% and 10% of revenues, respectively. At June 30, 2019, three customers comprised 67%, 17% and 11% of accounts receivable, respectively. At December 31, 2018, two customers comprised 68% and 12% of accounts receivable, respectively.

The Company maintains the majority of its cash balances with one financial institution, in the form of demand deposits.  At June 30, 2019, the Company did not have cash deposits that exceeded the federally insured limit of $250,000.  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.

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. The standard is effective for interim and annual reporting periods beginning after December 15, 2019. The Company 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.

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Convertible Notes Payable

6 Months Ended

Jun. 30, 2019

Convertible Notes Payable

Note 2 - Convertible Notes Payable

Convertible notes payable consisted of the following:

	June 30, 2019			December 31, 2018
Secured
(a) DART, in default	$	542,588		$	542,588
Unsecured
(b) Convertible notes with fixed conversion features, in default		895,512			895,512
(c) Convertible notes with adjustable conversion features		803,000			695,000
Total convertible notes principal outstanding		2,241,100			2,133,100
Debt discount		(512,708	)		(521,763	)
Convertible notes, net of discount	$	1,728,392		$	1,611,337

(a)	At June 30, 2019 and December 31, 2018, $542,588 of notes payables are due to DART/Citco Global. The notes are convertible into shares of the Company’s common stock based on adjustable conversion prices, are secured by all of the Company’s assets, were due in 2010, and are currently in default. Beginning in 2009, the note holder agreed to the forbearance of any further interest on the notes payable to DART/Citco Global.
(b)	At June 30, 2019 and December 31, 2018, convertible notes payable with fixed conversion features (“fixed convertible notes”) consisted of 13 unsecured convertible notes convertible at a fixed amount into 13 shares of the Company’s common stock, at fixed conversion prices ranging from $1,950,000 to $9,750,000,000 per share, as defined in the agreements and adjusted for applicable reverse stock splits. The notes are unsecured, bear interest at 8% to 18% per annum, were due on various dates from March 2008 to March 2015, and are currently in default. At December 31, 2018, the balance of the accrued interest on the fixed convertible notes was $1,079,764. During the six months ended June 30, 2019, interest of $37,257 was accrued. At June 30, 2019, the balance of accrued interest on the fixed convertible notes was $1,117,021.
(c)	At December 31, 2018, there were $695,000 of convertible notes with adjustable conversion features outstanding. During the six months ended June 30, 2019, convertible notes for $578,000 were issued, and convertible notes for $470,000 were converted into shares of the Company’s common stock. At June 30, 2019, the balance of the convertible notes with adjustable conversion features was $803,000.
	During the six months ended June 30, 2019, the Company issued seven convertible notes payable with adjustable conversion features to two lenders for aggregate proceeds of $578,000, bearing interest at 8% to 10% per annum, and maturing through June 2020. At the option of the holder, the notes are convertible into shares of common stock of the Company at a price per share discount of 58% to 61% of the average market price of the Company’s common stock, as defined, for 15 to 20 days preceding a conversion notice. As a result, the Company determined that the conversion option of the convertible notes were not considered indexed to the Company’s own stock and characterized the fair value of the conversion features as derivative liabilities upon issuance. The Company determined that upon issuance of the convertible notes between January 2019 and June 2019, the initial fair value of the embedded conversion feature totaled $920,558 (see Note 8), of which $578,000 was recorded as debt discount offsetting the face amount of the convertible notes, and the remainder of $342,558 was recorded as private placement costs. During the six months ended June 30, 2019, one note holder elected to convert five notes totaling $470,000 plus interest of $28,755 (total of $498,755) into 192,418,115 shares of the Company’s common stock at conversion prices ranging from $0.0012 to $0.0087 per share. On the dates of conversion, the closing price of the Company’s common stock ranged from $0.0028 to $0.0178 per share, or total fair value of shares of $1,025,259. The Company followed the general extinguishment model to record the settlement of the debt. The debt and accrued interest totaled $498,755, the related unamortized discount totaled ($174,489), and the shares issued were measured at their fair value of $1,025,259. The difference of $700,993 was recorded as loss on settlement of debt. In addition, the bifurcated conversion option derivatives, after a final mark-up to $678,692, were removed and recorded as a gain on extinguishment. At December 31, 2018, the balance of unamortized discount on convertible notes with adjustable conversion features was $521,763. During the six months ended June 30, 2019, debt discount of $578,000 was recorded, debt discount amortization of $412,566 was recorded, $174,489 of debt discount was removed related to debt that was converted. At June 30, 2019, the balance of the unamortized discount was $512,708.

At June 30, 2019 and December 31, 2018, accrued interest due for all convertible notes was $1,145,137 and $1,099,005, respectively, and is included in accrued interest in the accompanying balance sheets. Interest expense for all convertible notes payable for the six months ended June 30, 2019 and 2018 was $74,887 and $44,107, respectively.

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Convertible Notes Payable - Related Parties

6 Months Ended

Jun. 30, 2019

Convertible Notes Payable - Related Parties

Note 3 - Convertible Notes Payable Related Parties

At June 30, 2019 and December 31, 2018, convertible notes payable - related parties consist of 12 convertible notes payable in the aggregate of $355,500. The notes are unsecured and have extended due dates of December 31, 2019. Six notes totaling $268,000 are due to the Company’s Chief Executive Officer, at a compounded interest rate of 8% per annum; two notes totaling $57,000 are due to the Company’s VP of Technology, interest at prime plus 2% and prime plus 4% per annum; and four notes totaling $30,000 are due to the spouse of the Company’s Chief Technology Officer at a compounded interest rate of 8% per annum. $33,000 of the notes are convertible at a fixed conversion price of $7,312,500 per share and $322,500 of the notes are convertible at a fixed conversion price of $9,750,000,000 per share, as defined in the note agreements and adjusted for applicable reverse stock splits.

At December 31, 2018, accrued interest due for the convertible notes – related parties was $563,805. During the six months ended June 30, 2019, interest of $35,346 was accrued. At June 30, 2019, accrued interest due for the convertible notes – related parties was $599,151.

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Notes Payable

6 Months Ended

Jun. 30, 2019

Notes Payable

Note 4 - Notes Payable

Notes payable consisted of the following:

	June 30, 2019			December 31, 2018
Unsecured
(a) Promissory notes-in default	$	413,824		$	413,824
(b) Promissory notes – StrikeForce Investor Group-in default		1,225,000			1,225,000
(c)  Promissory notes issued by BlockSafe ($365,000 and zero in default at June 30, 2019 and December 31, 2018, respectively)		475,000			775,500
Total notes payable principal outstanding		2,113,824			2,414,324
Debt discount		(13,055	)		(195,654	)
Notes payable, net of discount	$	2,100,769		$	2,218,670

(a)	Notes payable, with interest from 8% to 14% per annum, due on various dates from December 2011 to July 2017 and are currently in default. At December 31, 2018, the balance of the accrued interest on the notes payable-various was $505,454. During the six months ended June 30, 2019, $22,505 of interest was accrued. At June 30, 2019, accrued interest on the notes payable-various was $527,959.
(b)	Notes payable to StrikeForce Investor Group (SIG), made up of various investors with unsecured notes, interest at 10% per annum, originally due in 2011, and currently in default. At December 31, 2018, the balance of the accrued interest on the notes payable-SIG was $1,509,844. During the six months ended June 30, 2019, $60,746 of interest was accrued. At June 30, 2019, accrued interest on the notes payable-SIG was $1,570,590.
(c)	At December 31, 2018, BlockSafe (see Note 1) had $775,500 of outstanding unsecured promissory notes, bearing interest at 8% per annum, and maturing through September 2019. During the six months ended June 30, 2019, $5,000 of unsecured promissory notes were paid, and note holders agreed to exchange $295,500 of principal into a financing obligation (see Note 4). At June 30, 2019, the balance of the unsecured promissory notes was $475,000. At June 30, 2019, $365,000 of the unsecured promissory notes were in default.
	At December 31, 2018, the balance of the unamortized discount on the unsecured promissory notes was $195,653. During the six months ended June 30, 2019, debt discount amortization of $182,598 was recorded and the balance of the unamortized discount at June 30, 2019 was $13,055.
	At December 31, 2018, the balance of the accrued interest on the unsecured promissory notes was $46,388. During the six months ended June 30, 2019, $24,700 of interest was accrued and $19,700 of accrued interest was converted into a financing obligation (See Note 4). At June 30, 2019, accrued interest on the unsecured promissory notes was $51,388.

At June 30, 2019 and December 31, 2018, accrued interest due for all notes payable above was $2,149,937 and $2,061,686, respectively, and is included in accrued interest in the accompanying balance sheets. Interest expense for notes payable for the six months ended June 30, 2019 and 2018 was $107,951 and $99,478, respectively.

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Notes Payable Related Parties

6 Months Ended

Jun. 30, 2019

Notes Payable Related Parties

Note 5 - Notes Payable Related Parties

Notes payable-related parties notes represent eighteen unsecured notes payable to the Company’s Chief Executive Officer ranging in interest rates of 0% per annum to 10% per annum. The notes are unsecured and have extended due dates of December 31, 2019. At June 30, 2019 and December 31, 2018, the balance due under these notes was $742,513.

At December 31, 2018, accrued interest due for the notes was $703,944. During the six months ended June 30, 2019, interest of $27,810 was accrued. At June 30, 2019, accrued interest due for the notes was $731,754.

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Financing Obligation

6 Months Ended

Jun. 30, 2019

Financing Obligation

Note 6 - Financing Obligation

In 2018, BlockSafe issued promissory notes to nineteen unrelated parties aggregating $775,500. As part of each promissory note agreement BlockSafe 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, in December 2018, BlockSafe agreed to issue tokens to an unrelated party for receipt of $50,000.

At December 31, 2018, the total of the financing obligation for BlockSafe was $825,500. During the six months ended June 30, 2019, BlockSafe agreed to issue tokens to four unrelated parties for receipt of $112,500. In addition, holders of unsecured promissory notes issued by BlockSafe agreed to exchange $295,500 principal and $19,700 of accrued interest into the financing obligation to be paid by tokens to be issued by BlockSafe. At June 30, 2019, the financing obligation was $1,253,200.

At June 30, 2019 and through the date of filing, BlockSafe 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 June 30, 2019, as the tokens do not exist yet, and were not considered equity, management determined that 100% of the obligation of $1,210,070 is probable of being a liability to be settled by BlockSafe, through the issuance of tokens, or through other means if tokens are never issued, and therefore recorded the financing obligation.

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Contingent Payment Obligation

6 Months Ended

Jun. 30, 2019

Contingent Payment Obligation

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 (see Note 11). 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 June 30, 2019 and December 31, 2018, 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

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2019

Organization and Summary of Significant Accounting Policies

Note 8 - Derivative Financial Instruments

At June 30, 2019, the Company had convertible promissory notes outstanding that are convertible into shares of common stock of the Company at the option of the holders at price per share discounts ranging from 20% to 61% of the Company’s common stock market price, as defined in the note agreements. As the ultimate determination of shares to be issued upon conversion of these notes could exceed the current number of available authorized shares, the Company determined that the conversion features of the convertible notes were not considered indexed to the Company’s own stock and characterized the fair value of the conversion features as derivative liabilities. Accordingly, the conversion features of the notes were separated from the host contracts (i.e. the notes) and characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.

At December 31, 2018, the balance of the derivative liabilities was $1,313,904. During the six months ended June 30, 2019, the Company recorded additions of $920,558 related to the conversion features of notes issued during the period (see Note 2), and an increase in fair value of derivatives of $681,710. In addition, the Company recorded a decrease in derivative liability of $678,692 related to derivative liabilities that were extinguished. At June 30, 2019, the balance of the derivative liabilities was $2,237,480.

The derivative liability was valued at the following dates using a probability weighted Black-Scholes-Merton model with the following assumptions: 

	June 30, 2019			January 2019 to June 2019 (dates of inception)		December 31, 2018
Conversion feature:
Risk-free interest rate		0.23	%	0.18%-0.25%			0.25	%
Expected volatility		163	%	118%-163%			129	%
Expected life (in years)		1 year		1 year			1 year
Expected dividend yield		-			-		-
Fair Value:
Conversion feature	$	2,237,480		$	920,558	$	1,313,904

The risk-free interest rate was based on rates established by the Federal Reserve Bank. The expected volatility is based on the historical volatility of the Company’s stock. The expected life of the conversion feature of the notes was based on the remaining terms of the related notes. The expected dividend yield was based on the fact that the Company has not customarily paid dividends to its common stockholders in the past and does not expect to pay dividends to its common stockholders in the future.

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Operating Lease

6 Months Ended

Jun. 30, 2019

Organization and Summary of Significant Accounting Policies

Note 9 - Operating Lease

In January 2019, the Company entered into a noncancelable operating lease for its headquarters office requiring payments of $4,409 per month, payments increasing 3% each year, and ending on January 31, 2024. At June 30, 2019, the remaining lease term was 4.58 years. The Company does not have any other 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 our 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:

	Six Months Ended June 30, 2019
Lease Cost
Operating lease cost (included in general and administration in the Company’s unaudited condensed statement of operations)	$	27,727
Other Information
Cash paid for amounts included in the measurement of lease liabilities for the first and second quarters of 2019	$	26,457
Weighted average remaining lease term – operating leases (in years)		4.6
Average discount rate – operating leases		10.0	%

The supplemental balance sheet information related to leases for the period is as follows:

	At June 30, 2019
Operating leases
Long-term right-of-use assets		199,645
Short-term operating lease liabilities	$	34,845
Long-term operating lease liabilities		166,164
Total operating lease liabilities	$	201,009

Maturities of the Company’s lease liabilities are as follows:

Year Ending	Operating Leases
2019 (remaining 6 months)	$	26,409
2020		54,371
2021		56,000
2022		57,676
2023		59,411
2024		4,963
Total lease payments		258,830
Less: Imputed interest/present value discount		(57,821	)
Present value of lease liabilities	$	201,009

Lease expenses were $27,727 and $25,343 during the six months ended June 30, 2019 and 2018, respectively.

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Stockholders' Deficit

6 Months Ended

Jun. 30, 2019

Organization and Summary of Significant Accounting Policies

Note 10 - Stockholders' Deficit

Common Stock

During the six months ended June 30, 2019, the Company issued an aggregate of 37,906,356 shares of its common stock as follows:

· The Company issued 15,000 shares of its common stock for services, valued at $96.

· A convertible note holder converted $470,000 of principal and $28,755 of accrued interest into 192,418,115 shares of common stock at conversion prices ranging from $0.0012 to $0.0087 per share, with a total fair value of $1,025,259.

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Options

6 Months Ended

Jun. 30, 2019

Organization and Summary of Significant Accounting Policies

Note 11 - Options

In September 2016 and December 2017, the Company issued options to purchase an aggregate of 259,000,000 shares of its common stock to management and employees. In July 2018, the Company issued options to purchase an aggregate of 500,001 shares of its common stock to a consulting firm. The options are exercisable at $0.016 to $0.00625 per share, vested in 6 to 12 months, and expire through December 2027. During the six months ended June 30, 2019 and 2018, the Company recognized compensation costs of $1,912 and $355,277, respectively, related to the amortization of the fair value of options that vested.

The table below summarizes the Company’s stock option activities for the period January 1, 2019 to June 30, 2019:

	Number of Options Shares		Exercise Price Range Per Share		Weighted Average Exercise Price
Balance, January 1, 2019		259,500,002	$	0.0057-2,242,500	$	0.0062
Granted		-	$	-	$	-
Exercised		-	$	-	$	-
Expired		-	$	-	$	-
Balance outstanding, June 30, 2019		259,500,002	$	0.0057-2,242,500	$	0.0062
Balance exercisable, June 30, 2019		259,486,303	$	0.0057-2,242,500	$	0.0062

At June 30, 2019, the intrinsic value of outstanding options was zero.

The following table summarizes information concerning the Company’s stock options as of June 30, 2019:

		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
$	975,000,000		1		1.00	$	975,000,000		1		1.00	$	975,000,000
$	0.0057		63,000,000		10.00	$	0.0057		63,000,000		10.00	$	0.0057
$	0.016		500,001		1.00	$	0.016		486,302		1.00	$	0.016
$	0.00625		196,000,000		10.00	$	0.0062		196,000,000		10.00	$	0.0062
$	0.00625 - 975,000,000		259,500,002		10.00	$	0.0062		259,486,303		10.00	$	0.0062

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2019

Organization and Summary of Significant Accounting Policies

Note 12 - Commitments and Contingencies

Legal Proceedings

On June 20, 2016, the Company initiated additional patent litigation against three major competitors in the U.S. District Court for the District of New Jersey, for infringement of United States Patent No. 8,484,698. This litigation is ongoing. On March 14, 2017, one of the parties initiated an inter partes review (IPR) (a procedure for challenging the validity of a United States patent before the United States Patent and Trademark Office) against the Company’s second Patent No. 8,484,698.

On March 14, 2017, the Company initiated additional patent litigation against two major competitors in the U.S. District Court for the District of Massachusetts, for infringement of United States Patent Nos. 7,870,599, 8,484,698 and 8,713,701. This litigation is ongoing.

On March 14, 2017, the Company initiated additional patent litigation against two major competitors in the U.S. District Court for the Eastern District of Virginia, for infringement of United States Patent Nos. 7,870,599, 8,484,698 and 8,713,701. This litigation is ongoing. On June 13, 2017, one of the competitors initiated a lawsuit against the Company in the U.S. District Court for the District of New Jersey for patent infringement (which the Company believes is without merit and will defend vigorously). This litigation is ongoing.

On December 1, 2017, The United States District Court for the Central District of California issued an opinion in the StrikeForce Technologies, Inc. v. SecureAuth Corp. case, which invalidated claims of U.S. Patent Nos. 7,870,599, 8,484,698 and 8,713,701 under 35 U.S.C. §101. The Company strongly disagrees with the Court’s decision and an appeal has been prepared by the Company’s attorney. The Company has agreed to stay its patent litigations in the District of New Jersey against Centrify Corp. and Duo Security Inc. pending the appeal. The Company believes that the litigations currently pending in the District of Massachusetts should also be stayed pending appeal and is discussing such a motion with the defendants in that case. In February 2019, a panel of the United States Court of Appeals for the Federal Circuit issued a “Rule 36” decision, affirming the District Court’s order, thereby dismissing the Company’s lawsuit on the grounds of 35 U.S.C. #101, a statue that concerns what types of inventions are patentable. The Company plans on working with a patent attorney in order to develop an appropriate course of action relating to this case.

On December 4, 2017, StrikeForce Technologies, Inc. v. Trustwave Holdings, Inc., Civil Action No. 2:16-cv-03573-JMV-MF which was pending in the United States District Court for the District of New Jersey, was settled. Trustwave’s infringing sales were made as an OEM of Duo Security Incorporated. The Company agreed to dismiss its claims against Trustwave because they were essentially duplicative of its claims against Duo Security Incorporated pursuant to StrikeForce Technologies, Inc. v. Duo Security Incorporated, Civil Action No. 2:16-cv-03571.

Asset Sale and Licensing Agreement

On August 24, 2015, the Company entered into an agreement with Cyber Safety, Inc., a New York corporation (“Cyber Safety”) for Cyber Safety to license, and retain an option to purchase, the patents and intellectual property related to the GuardedID® and MobileTrust® software. Cyber Safety had the option to buy the Company’s GuardedID® patent for $9,000,000 that expired on September 30, 2020. In March 2019, the option to purchase agreement was modified to increase the purchase price to $10,000,000 and extend the expiration date to September 30, 2021. If the purchase price is not paid by September 30, 2021, it will increase to $11,000,000 and be due September 30, 2022. The Company anticipates, but cannot guarantee, Cyber Safety will complete the purchase by September 30, 2021. Cyber Safety will also resell the Company’s GuardedID® and MobileTrust® products, for which the Company will receive a royalty, while the Company retains an unlimited license to resell those products. Cyber Safety also licensed the Malware Suite until September 30, 2020 and agreed to pay the Company 15% to 20% of the net amount Cyber Safety receives from this product. During the six months ended June 30, 2019 and 2018, the Company recorded $280,000 and $162 from Cyber Safety.

Contingent Management Fee

The Company and BlockSafe have a management agreement pursuant to which BlockSafe shall remit a management fee of $36,000 per month to the Company, and when BlockSafe 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 currently eliminated in consolidation.

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Subsequent Events

6 Months Ended

Jun. 30, 2019

Organization and Summary of Significant Accounting Policies

Note 13 - Subsequent Events

Subsequent to June 30, 2019, the Company issued two unsecured convertible promissory notes aggregating $86,000, bearing interest at 8% per annum, and maturing in one year through August 2020. The notes are convertible at a 61% discount to the price of the Company’s common stock, as defined.

Subsequent to June 30, 2019, a convertible note holder converted $118,000 of principal and $7,851 of accrued interest into 111,882,028 shares of common stock at conversion prices ranging from $0.0011 to $0.0012 per share.

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Organization and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2019

Organization and Summary of Significant Accounting Policies (Policies)

Basis of Presentation-Unaudited Interim Financial Information

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 six months ended June 30, 2019 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2019. These financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2018 and notes thereto contained in the Annual Report on Form 10-K of the Company as filed with the SEC on April 15, 2019.

The consolidated financial statements include the accounts of the Company and its controlled subsidiary, BlockSafe Technologies, Inc. (“BlockSafe”). BlockSafe is owned 49% by the Company and 31% by three executive officers of the Company, which combined represents an 80% controlling interest in BlockSafe. Accordingly, BlockSafe is consolidated by the Company. Intercompany balances and transactions have been eliminated in consolidation. At June 30, 2019, noncontrolling interests represents 51% of BlockSafe that the Company does not directly own.

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements, for the six months ended June 30, 2019, the Company incurred a net loss of $2,497,560 and used cash in operating activities of $681,790 and at June 30, 2019, the Company had a working capital deficiency of $15,330,268 and a stockholders’ deficit of $15,272,797. In addition, the Company is in default on notes payable and convertible notes payable in the aggregate amount of $3,441,924. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that these financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2018 financial statements, raised substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

At June 30, 2019, the Company had cash on hand in the amount of $89,870. Subsequent to June 30, 2019, the Company issued two unsecured convertible promissory note for proceeds of $86,000. Management estimates that the current funds on hand will be sufficient to continue operations through the next six months. The Company’s ability to continue as a going concern is dependent upon its ability to continue to implement its 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 the Company believes in the viability of its strategy to increase revenues, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon its ability to increase its 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 the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stock holders, in the case of equity financing.

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 income taxes, and 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® and MobileTrust® products. We recognize revenue from these arrangements ratably over the contractual service period. 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 a client contract.

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
	June 30, 2019		June 30, 2018
Software	$	264,577	$	56,199
Service		43,162		114,752
Total revenue	$	307,739	$	170,951

	Six Months Ended
	June 30, 2019		June 30, 2018
Software	$	390,791	$	110,385
Service		48,635		125,259
Total revenue	$	439,426	$	235,644

Leases

Prior to January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases . Effective January 1, 2019, the Company adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. The implementation of ASC 842 did not have a material impact on the Company’s consolidated financial statements and did not have a significant impact on our liquidity or on our compliance with our financial covenants associated with our loans. The Company adopted ASC 842 using a modified retrospective approach. As a result, the comparative financial information has not been updated and the required disclosures prior to the date of adoption have not been updated and continue to be reported under the accounting standards in effect for those periods. The Company elected to exclude from its balance sheets recognition of leases having a term of 12 months or less (“short-term leases”) and elected to not separate lease components and non-lease components for its long-term leases. Lease expense is recognized on a straight-line basis over the lease term. At January 1, 2019, the Company had no leases that required recognition of operating lease right-of-use assets or liabilities for operating leases upon adoption of ASC 842. On January 31, 2019, the Company commenced a lease that resulted in the recognition of operating lease right-of-use assets of $214,272, and liabilities for operating leases of $214,272.

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 amount 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.

As of June 30, 2019 and December 31, 2018, the Company’s balance sheet includes Level 3 liabilities comprised of the fair value of embedded derivative liabilities of $2,237,480 and $1,313,904, respectively (see Note 5). These embedded derivatives result in Level 3 classification because one or more of the significant inputs are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. The following table sets forth a summary of the changes in the estimated fair value of our embedded derivative during the six month periods ended June 30, 2019 and 2018:

	Six months ended June 30, 2019			Six months ended June 30, 2018
Fair value at beginning of period	$	1,313,904		$	623,195
Recognition of derivative liabilities upon initial valuation		920,558			744,249
Extinguishment of derivative liabilities		(678,692	)		(68,493	)
Net change in the fair value of derivative liabilities		681,710			(486,278	)
Fair value at end of period	$	2,237,480		$	812,673

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. For stock-based derivative financial instruments, the Company uses a probability weighted average Black-Scholes-Merton models to value the derivative instruments at inception and on subsequent valuation dates through the June 30, 2019, reporting date. 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.

Share-Based Payments

The Company issues stock options and warrants, shares of common stock, and equity interests as share-based compensation to employees and non-employees. The Company accounts for its share-based compensation to employees in accordance with FASB ASC 718, Compensation – Stock Compensation . Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period.

In prior periods through December 31, 2018, the Company accounted for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50, Equity - Based Payments to Non-Employees . Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The final fair value of the share-based payment transaction is determined at the performance completion date. For interim periods, the fair value is estimated, and the percentage of completion is applied to that estimate to determine the cumulative expense recorded.

In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting . The guidance was issued to simplify the accounting for share-based transactions by expanding the scope of Topic 718 from only being applicable to share-based payments to employees to also include share-based payment transactions for acquiring goods and services from nonemployees. As a result, nonemployee share-based transactions will be measured by estimating the fair value of the equity instruments at the grant date, taking into consideration the probability of satisfying performance conditions. The Company adopted ASU 2018-07 on January 1, 2019. The adoption of the standard did not have a material impact on our financial statements for the three months and six months ended June 30, 2019 or the previously reported financial statements.

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 reflects the potential dilution, using the treasury stock method that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the loss of the Company. In computing diluted loss per share, the treasury stock method assumes that outstanding options, warrants, and convertible preferred stock are exercised and the proceeds are used to purchase common stock at the average market price during the period. Options, warrants, and convertible preferred stock may have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options and warrants.

For the six months ended June 30, 2019 and 2018, the dilutive impact of stock options exercisable into 259,500,002 and 259,000,001 shares of common stock, respectively, convertible Series B Preferred stock that can convert into 16,825,556 and 3,135,197 shares of common stock, respectively, and notes payable that can convert into 177,854,318 and 41,131,421 shares of common stock, respectively, have been excluded because their impact on the loss per share is anti-dilutive.

Concentrations

For the six months ended June 30, 2019, sales to three customers comprised 64%, 19% and 11% of revenues, respectively. For the six months ended June 30, 2018, sales to three customers comprised 47%, 33% and 10% of revenues, respectively. At June 30, 2019, three customers comprised 67%, 17% and 11% of accounts receivable, respectively. At December 31, 2018, two customers comprised 68% and 12% of accounts receivable, respectively.

The Company maintains the majority of its cash balances with one financial institution, in the form of demand deposits.  At June 30, 2019, the Company did not have cash deposits that exceeded the federally insured limit of $250,000.  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.

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. The standard is effective for interim and annual reporting periods beginning after December 15, 2019. The Company 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.

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Organization and Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2019

Organization and Summary of Significant Accounting Policies (Tables)

Schedule of Revenue Recognition

	Three Months Ended
	June 30, 2019		June 30, 2018
Software	$	264,577	$	56,199
Service		43,162		114,752
Total revenue	$	307,739	$	170,951

	Six Months Ended
	June 30, 2019		June 30, 2018
Software	$	390,791	$	110,385
Service		48,635		125,259
Total revenue	$	439,426	$	235,644

Schedule of changes in estimated fair value

	Six months ended June 30, 2019			Six months ended June 30, 2018
Fair value at beginning of period	$	1,313,904		$	623,195
Recognition of derivative liabilities upon initial valuation		920,558			744,249
Extinguishment of derivative liabilities		(678,692	)		(68,493	)
Net change in the fair value of derivative liabilities		681,710			(486,278	)
Fair value at end of period	$	2,237,480		$	812,673

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Convertible Notes Payable (Tables)

6 Months Ended

Jun. 30, 2019

Convertible Notes Payable (Tables)

Schedule of convertible notes payable

	June 30, 2019			December 31, 2018
Secured
(a) DART, in default	$	542,588		$	542,588
Unsecured
(b) Convertible notes with fixed conversion features, in default		895,512			895,512
(c) Convertible notes with adjustable conversion features		803,000			695,000
Total convertible notes principal outstanding		2,241,100			2,133,100
Debt discount		(512,708	)		(521,763	)
Convertible notes, net of discount	$	1,728,392		$	1,611,337

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Notes Payable (Tables)

6 Months Ended

Jun. 30, 2019

Notes Payable (Tables)

Schedule of notes payable

	June 30, 2019			December 31, 2018
Unsecured
(a) Promissory notes-in default	$	413,824		$	413,824
(b) Promissory notes – StrikeForce Investor Group-in default		1,225,000			1,225,000
(c)  Promissory notes issued by BlockSafe ($365,000 and zero in default at June 30, 2019 and December 31, 2018, respectively)		475,000			775,500
Total notes payable principal outstanding		2,113,824			2,414,324
Debt discount		(13,055	)		(195,654	)
Notes payable, net of discount	$	2,100,769		$	2,218,670

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Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2019

Derivative Financial Instruments (Tables)

Summary of derivative liability

	June 30, 2019			January 2019 to June 2019 (dates of inception)		December 31, 2018
Conversion feature:
Risk-free interest rate		0.23	%	0.18%-0.25%			0.25	%
Expected volatility		163	%	118%-163%			129	%
Expected life (in years)		1 year		1 year			1 year
Expected dividend yield		-			-		-
Fair Value:
Conversion feature	$	2,237,480		$	920,558	$	1,313,904

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Operating Lease (Tables)

6 Months Ended

Jun. 30, 2019

Operating Lease (Tables)

Schedule of lease expense and supplemental cash flow information

	Six Months Ended June 30, 2019
Lease Cost
Operating lease cost (included in general and administration in the Company’s unaudited condensed statement of operations)	$	27,727
Other Information
Cash paid for amounts included in the measurement of lease liabilities for the first and second quarters of 2019	$	26,457
Weighted average remaining lease term – operating leases (in years)		4.6
Average discount rate – operating leases		10.0	%

Schedule of supplemental balance sheet information

	At June 30, 2019
Operating leases
Long-term right-of-use assets		199,645
Short-term operating lease liabilities	$	34,845
Long-term operating lease liabilities		166,164
Total operating lease liabilities	$	201,009

Schedule of maturities

Year Ending	Operating Leases
2019 (remaining 6 months)	$	26,409
2020		54,371
2021		56,000
2022		57,676
2023		59,411
2024		4,963
Total lease payments		258,830
Less: Imputed interest/present value discount		(57,821	)
Present value of lease liabilities	$	201,009

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Options (Tables)

6 Months Ended

Jun. 30, 2019

Options (Tables)

Summary of stock option

	Number of Options Shares		Exercise Price Range Per Share		Weighted Average Exercise Price
Balance, January 1, 2019		259,500,002	$	0.0057-2,242,500	$	0.0062
Granted		-	$	-	$	-
Exercised		-	$	-	$	-
Expired		-	$	-	$	-
Balance outstanding, June 30, 2019		259,500,002	$	0.0057-2,242,500	$	0.0062
Balance exercisable, June 30, 2019		259,486,303	$	0.0057-2,242,500	$	0.0062

Summary of stock option outstanding and exercisable

		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
$	975,000,000		1		1.00	$	975,000,000		1		1.00	$	975,000,000
$	0.0057		63,000,000		10.00	$	0.0057		63,000,000		10.00	$	0.0057
$	0.016		500,001		1.00	$	0.016		486,302		1.00	$	0.016
$	0.00625		196,000,000		10.00	$	0.0062		196,000,000		10.00	$	0.0062
$	0.00625 - 975,000,000		259,500,002		10.00	$	0.0062		259,486,303		10.00	$	0.0062

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Organization and Summary of Significant Accounting Policies (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Organization and Summary of Significant Accounting Policies (Details)
Software	$ 264,577	$ 56,199	$ 390,791	$ 110,385
Service	43,162	114,752	48,635	125,259
Total revenue	$ 307,739	$ 170,951	$ 439,426	$ 235,644

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Organization and Summary of Significant Accounting Policies (Details 1) - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Organization and Summary of Significant Accounting Policies (Details 1)
Fair value at beginning of period	$ 1,313,904	$ 623,195
Recognition of derivative liabilities upon initial valuation	920,558	744,249
Extinguishment of derivative liabilities	(678,692)	(68,493)
Net change in the fair value of derivative liabilities	681,710	(486,278)
Fair value at end of period	$ 2,237,480	$ 812,673

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Organization and Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	Mar. 31, 2019	Jan. 31, 2019	Mar. 31, 2018	Dec. 31, 2017
Net loss	$ (1,182,985)	$ (922,973)	$ (2,497,560)	$ (1,660,741)
Net cash provided by (used in) operating activities			(681,790)	(1,016,848)
Working capital deficit	(15,330,268)		(15,330,268)
Stockholders' Deficit	(15,272,797)	(12,098,446)	(15,272,797)	(12,098,446)	(13,802,504)	$ (14,536,293)		$ (11,344,969)	$ (10,793,186)
Cash	89,870	392,577	89,870	$ 392,577	88,160				455,484
Operating lease right-of-use asset	199,645		199,645				$ 214,272
Liabilities for operating leases	166,164		166,164				$ 214,272
Derivative liabilities	$ 2,237,480		$ 2,237,480		$ 1,313,904
Stock option exercisable shares	259,500,002		259,500,002		259,000,001
Notes payable aggregate amount	$ 3,441,924		$ 3,441,924
FDIC insured limit	250,000		250,000
Unsecured convertible promissory notes	86,000		$ 86,000
Notes Payable [Member]
Conversion of common stock shares			177,854,318	41,131,421
Series B Preferred stock, par value $0.10 [Member]
Stockholders' Deficit	$ 3,667	$ 3,667	$ 3,667	$ 3,667	$ 3,667	$ 3,667		$ 7,000	$ 7,000
Conversion of common stock shares			16,825,556	3,135,197
One customer [Member]
Percentage of sales revenues			64.00%	47.00%
Percentage of accounts receivable			67.00%		68.00%
Two customer [Member]
Percentage of sales revenues			19.00%	33.00%
Percentage of accounts receivable			17.00%		12.00%
Three customer [Member]
Percentage of sales revenues			11.00%	10.00%
Percentage of accounts receivable			11.00%

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Convertible Notes Payable (Details) - USD ($)	Jun. 30, 2019		Dec. 31, 2018
Secured
(a) DART in default	$ 542,588	[1]	$ 542,588	[2]
Unsecured
(b) Convertible notes with fixed conversion features, in default	895,512	[3]	895,512	[4]
(c) Convertible notes with adjustable conversion features	803,000	[5]	695,000	[6]
Total convertible notes principal outstanding	2,241,100		2,133,100
Debt discount	(512,708)		(521,763)
Convertible notes, net of discount	$ 1,728,392		$ 1,611,337

[1] At June 30, 2019 and December 31, 2018, $542,588 of notes payables are due to DART/Citco Global. The notes are convertible into shares of the Company's common stock based on adjustable conversion prices, are secured by all of the Company's assets, were due in 2010, and are currently in default. Beginning in 2009, the note holder agreed to the forbearance of any further interest on the notes payable to DART/Citco Global.

[2] At June 30, 2019 and December 31, 2018, $542,588 of notes payables are due to DART/Citco Global. The notes are convertible into shares of the Company's common stock based on adjustable conversion prices, are secured by all of the Company's assets, were due in 2010, and are currently in default. Beginning in 2009, the note holder agreed to the forbearance of any further interest on the notes payable to DART/Citco Global.

[3] At June 30, 2019 and December 31, 2018, convertible notes payable with fixed conversion features ("fixed convertible notes") consisted of 13 unsecured convertible notes convertible at a fixed amount into 13 shares of the Company's common stock, at fixed conversion prices ranging from $1,950,000 to $9,750,000,000 per share, as defined in the agreements and adjusted for applicable reverse stock splits. The notes are unsecured, bear interest at 8% to 18% per annum, were due on various dates from March 2008 to March 2015, and are currently in default. At December 31, 2018, the balance of the accrued interest on the fixed convertible notes was $1,079,764. During the six months ended June 30, 2019, interest of $37,257 was accrued. At June 30, 2019, the balance of accrued interest on the fixed convertible notes was $1,117,021.

[4] At June 30, 2019 and December 31, 2018, convertible notes payable with fixed conversion features ("fixed convertible notes") consisted of 13 unsecured convertible notes convertible at a fixed amount into 13 shares of the Company's common stock, at fixed conversion prices ranging from $1,950,000 to $9,750,000,000 per share, as defined in the agreements and adjusted for applicable reverse stock splits. The notes are unsecured, bear interest at 8% to 18% per annum, were due on various dates from March 2008 to March 2015, and are currently in default. At December 31, 2018, the balance of the accrued interest on the fixed convertible notes was $1,079,764. During the six months ended June 30, 2019, interest of $37,257 was accrued. At June 30, 2019, the balance of accrued interest on the fixed convertible notes was $1,117,021.

[5] At December 31, 2018, there were $695,000 of convertible notes with adjustable conversion features outstanding. During the six months ended June 30, 2019, convertible notes for $578,000 were issued, and convertible notes for $470,000 were converted into shares of the Company's common stock. At June 30, 2019, the balance of the convertible notes with adjustable conversion features was $803,000.

[6] At December 31, 2018, there were $695,000 of convertible notes with adjustable conversion features outstanding. During the six months ended June 30, 2019, convertible notes for $578,000 were issued, and convertible notes for $470,000 were converted into shares of the Company's common stock. At June 30, 2019, the balance of the convertible notes with adjustable conversion features was $803,000.

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Convertible Notes Payable (Details Narrative) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Convertible Notes Payable (Details Narrative)
Acrrued interest of convertible notes	$ 1,145,137	$ 1,099,005
Accrued interest expense	$ 74,887	$ 44,107

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Convertible Notes Payable - Related Parties (Details Narrative) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Convertible notes payable aggregate amount	$ 355,500	$ 355,500
Accured interest due	599,151	563,805
Interest expense	$ 35,346
Extended due date	Dec. 31, 2019
Convertible notes convertible at fixed conversion	$ 2,237,480	$ 1,313,904
Spouse of Company's Chief Technology Officer [Member] | Four Notes [Member]
Convertible notes	$ 30,000
Interest rate	compounded interest rate of 8% per annum
Two Notes [Member] | Company's VP of Technology [Member]
Convertible notes	$ 57,000
Interest rate	interest at prime plus 2% and prime plus 4% per annum
Convertible Notes Fixed Conversion 1 [Member]
Convertible notes convertible at fixed conversion	$ 33,000
Conversion price	$ 7,312,500
Convertible Notes Fixed Conversion 2 [Member]
Conversion price	$ 9,750,000,000
Convertible notes convertible at fixed conversion price	$ 322,500
Six Notes [Member] | Chief Executive Officer [Member]
Interest rate	compounded interest rate of 8% per annum
Covertible notes	$ 268,000

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Notes Payable (Details) - USD ($)	Jun. 30, 2019		Dec. 31, 2018
Unsecured
(a) Promissory notes-in default	$ 413,824	[1]	$ 413,824	[2]
(b) Promissory notes - StrikeForce Investor Group-in default	1,225,000	[3]	1,225,000	[4]
(c) Promissory notes issued by BlockSafe ($365,000 and zero in default at June 30, 2019 and December 31, 2018, respectively)	475,000	[5]	775,500	[6]
Total notes payable principal outstanding	2,113,824		2,414,324
Debt discount	(13,055)		(195,654)
Notes payable, net of discount	$ 2,100,769		$ 2,218,670

[1] Notes payable, with interest from 8% to 14% per annum, due on various dates from December 2011 to July 2017 and are currently in default. At December 31, 2018, the balance of the accrued interest on the notes payable-various was $505,454. During the six months ended June 30, 2019, $22,505 of interest was accrued. At June 30, 2019, accrued interest on the notes payable-various was $527,959.

[2] Notes payable, with interest from 8% to 14% per annum, due on various dates from December 2011 to July 2017 and are currently in default. At December 31, 2018, the balance of the accrued interest on the notes payable-various was $505,454. During the six months ended June 30, 2019, $22,505 of interest was accrued. At June 30, 2019, accrued interest on the notes payable-various was $527,959.

[3] Notes payable to StrikeForce Investor Group (SIG), made up of various investors with unsecured notes, interest at 10% per annum, originally due in 2011, and currently in default. At December 31, 2018, the balance of the accrued interest on the notes payable-SIG was $1,509,844. During the six months ended June 30, 2019, $60,746 of interest was accrued. At June 30, 2019, accrued interest on the notes payable-SIG was $1,570,590.

[4] Notes payable to StrikeForce Investor Group (SIG), made up of various investors with unsecured notes, interest at 10% per annum, originally due in 2011, and currently in default. At December 31, 2018, the balance of the accrued interest on the notes payable-SIG was $1,509,844. During the six months ended June 30, 2019, $60,746 of interest was accrued. At June 30, 2019, accrued interest on the notes payable-SIG was $1,570,590.

[5] At December 31, 2018, BlockSafe (see Note 1) had $775,500 of outstanding unsecured promissory notes, bearing interest at 8% per annum, and maturing through September 2019. During the six months ended June 30, 2019, $5,000 of unsecured promissory notes were paid, and note holders agreed to exchange $295,500 of principal into a financing obligation (see Note 4). At June 30, 2019, the balance of the unsecured promissory notes was $475,000. At June 30, 2019, $365,000 of the unsecured promissory notes were in default.

[6] At December 31, 2018, BlockSafe (see Note 1) had $775,500 of outstanding unsecured promissory notes, bearing interest at 8% per annum, and maturing through September 2019. During the six months ended June 30, 2019, $5,000 of unsecured promissory notes were paid, and note holders agreed to exchange $295,500 of principal into a financing obligation (see Note 4). At June 30, 2019, the balance of the unsecured promissory notes was $475,000. At June 30, 2019, $365,000 of the unsecured promissory notes were in default.

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Notes Payable (Details Narrative) - Notes Payable [Member] - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Accrued interest	$ 2,149,937		$ 2,061,686
Interest expense	$ 107,951	$ 99,478

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Notes Payable Related Parties (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Notes payable	$ 2,113,824		$ 2,113,824		$ 2,414,324
Interest expense	(121,213)	$ (303,017)	$ (246,242)	$ (473,527)
18 unsecured notes payable related parties [Member]
Extended due date			Dec. 31, 2019
Notes payable	742,513		$ 742,513		742,513
Accrued interest	$ 731,754		731,754		$ 703,944
Interest expense			$ 27,810
18 unsecured notes payable related parties [Member] | Maximum [Member]
Interest rate					0.00%
18 unsecured notes payable related parties [Member] | Minimum [Member]
Interest rate					10.00%

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Financing Obligation (Details Narrative) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Financing obligation	$ 1,253,200
Financing obligation, accrued interest		4,428,439
Litigation funding agreement [Member] | Therium Inc. and VGL Capital, LLC [Member]
Financing obligation description	At June 30, 2019, as the tokens do not exist yet, and were not considered equity, management determined that 100% of the obligation of $1,210,070 is probable of being a liability to be settled by BlockSafe, through the issuance of tokens, or through other means if tokens are never issued, and therefore recorded the financing obligation.
Promissory note - various parties [Member] | BlockSafe [Member]
Financing obligation		825,500
Promissory note - various parties [Member] | Tokens [Member] | Four unrelated Party [Member]
Tokens, amount	112,500
Promissory note - various parties [Member] | Unrelated Party [Member] | Tokens [Member]
Tokens, amount		50,000
Promissory note - various parties [Member] | Related Party [Member]
Financing obligation	253,200	$ 775,500
Unsecured notes payable [Member] | Tokens [Member]
Tokens, amount	295,500
Financing obligation, accrued interest	$ 19,700

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Contingent Payment Obligation (Details Narrative) - USD ($)		6 Months Ended
	Sep. 06, 2017	Jun. 30, 2019
Funds received from Funders		$ 1,500,000
Litigation funding agreement [Member] | Therium Inc. and VGL Capital, LLC [Member]
Funds received from Funders	$ 1,500,000
Gross proceeds	$ 1,500,000
Contingent obligation, description	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

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Derivative Financial Instruments (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Conversion feature:
Risk-free interest rate	0.23%	0.25%
Expected volatility	163.00%	129.00%
Expected life (in years)	1 year	1 year
Fair Value:
Conversion feature	$ 2,237,480	$ 1,313,904
Dates of Inception [Member]
Conversion feature:
Expected life (in years)	1 year
Fair Value:
Conversion feature	$ 920,558
Dates of Inception [Member] | Maximum [Member]
Conversion feature:
Risk-free interest rate	0.25%
Expected volatility	163.00%
Dates of Inception [Member] | Minimum [Member]
Conversion feature:
Risk-free interest rate	0.18%
Expected volatility	118.00%

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Derivative Financial Instruments (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Derivative Financial Instruments (Details Narrative)
Common stock price per share discounts ranging description			The Company had convertible promissory notes outstanding that are convertible into shares of common stock of the Company at the option of the holders at price per share discounts ranging from 20% to 61% of the Company’s common stock market price, as defined in the note agreements.
Change in fair value of derivative liabilities	$ 521,334	$ (249,761)	$ 681,710	$ (554,771)
Derivative liabilities	2,237,480		2,237,480		$ 1,313,904
Beneficial conversion feature			920,558
Extinguishment of derivative liabilities	$ 335,624		$ 678,692

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Operating Lease (Details)	6 Months Ended
	Jun. 30, 2019 USD ($)
Lease Cost
Operating lease cost (included in general and administration in the Company's unaudited condensed statement of operations)	$ 27,727
Other Information
Cash paid for amounts included in the measurement of lease liabilities for the first and second quarter 2019	$ 26,457
Weighted average remaining lease term operating leases (in years)	4 years 7 months 6 days
Average discount rate operating leases	10.00%

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Operating Lease (Details 1) - USD ($)	Jun. 30, 2019	Jan. 31, 2019	Dec. 31, 2018
Operating leases
Long-term right-of-use assets	$ 199,645	$ 214,272
Short-term operating lease liabilities	34,845
Long-term operating lease liabilities	166,164
Total operating lease liabilities	$ 201,009

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Operating Lease (Details 2)	Jun. 30, 2019 USD ($)
Operating Lease (Details 2)
2019 (remaining 6 months)	$ 26,409
2020	54,371
2021	56,000
2022	57,676
2023	59,411
2024	4,963
Total lease payments	258,830
Less: Imputed interest/present value discount	(57,821)
Present value of lease liabilities	$ 201,009

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Operating Lease (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Operating Lease (Details Narrative)
Operating lease payments, monthly	$ 4,409
Operating lease term	4 years 6 months 29 days
Lease expenses	$ 27,727	$ 25,343
Operating lease description	payments increasing 3% each year, and ending on January 31, 2024.

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Stockholders Deficit (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Common Stock, shares issued	2,566,281,217		2,373,749,597
Fair value of common stock issued for services, Value	$ 96	$ 204
Convertible Notes Payable [Member]
Debt conversion converted/convertible amount, principal	470,000
Debt conversion converted amount, accrued interest	$ 28,755
Debt conversion converted instrument shares issued	192,418,115
Fair value of common stock issued for services, Value	$ 1,025,259
Convertible Notes Payable [Member] | Minimum [Member]
Conversion price	$ 0.0012
Convertible Notes Payable [Member] | Maximum [Member]
Conversion price	$ 0.0087
Common stock, par value $0.0001 [Member]
Common Stock, shares issued	37,906,356
Fair value of common stock issued for services, Shares	15,000
Fair value of common stock issued for services, Value	$ 96

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Options (Details) - Stock Options [Member]	6 Months Ended
	Jun. 30, 2019 USD ($) $ / shares shares
Outstanding, beginning balance | shares	259,500,002
Granted | shares
Exercised | shares
Expired | shares
Outstanding, ending balance | shares	259,500,002
Exercisable | shares	259,486,303
Weighted Average Exercise Price
Outstanding, beginning balance	$ 0.0062
Granted
Exercised
Expired
Outstanding, ending balance	0.0062
Exercisable	0.0062
Minimum [Member]
Exercise Price Range Per Share
Granted
Exercised
Expired | $
Outstanding, ending balance	$ 0.0057
Exercisable	0.0057
Maximum [Member]
Exercise Price Range Per Share
Granted
Exercised
Expired | $
Outstanding, ending balance	$ 2,242,500
Exercisable	$ 2,242,500

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Options (Details 1) - Stock Options [Member]	6 Months Ended
	Jun. 30, 2019 $ / shares shares
$975,000,000 [Member]
Options Outstanding
Number of warrants outstanding | shares	1
Weighted average remaining contractual life (years)	1 year
Weighted average exercise price | $ / shares	$ 975,000,000
Options Exercisable
Number of warrants exercisable | shares	1
Weighted average remaining contractual life (years)	1 year
Weighted average exercise price | $ / shares	$ 975,000,000
0.0057 [Member]
Options Outstanding
Number of warrants outstanding | shares	63,000,000
Weighted average remaining contractual life (years)	10 years
Weighted average exercise price | $ / shares	$ 0.0057
Options Exercisable
Number of warrants exercisable | shares	63,000,000
Weighted average remaining contractual life (years)	10 years
Weighted average exercise price | $ / shares	$ 0.0057
0.0016 [Member]
Options Outstanding
Number of warrants outstanding | shares	500,001
Weighted average remaining contractual life (years)	1 year
Weighted average exercise price | $ / shares	$ 0.016
Options Exercisable
Number of warrants exercisable | shares	486,302
Weighted average remaining contractual life (years)	1 year
Weighted average exercise price | $ / shares	$ 0.016
$0.00625 [Member]
Options Outstanding
Number of warrants outstanding | shares	196,000,000
Weighted average remaining contractual life (years)	10 years
Weighted average exercise price | $ / shares	$ 0.0062
Options Exercisable
Number of warrants exercisable | shares	196,000,000
Weighted average remaining contractual life (years)	10 years
Weighted average exercise price | $ / shares	$ 0.0062
0.00625 - 975,000,000 [Member]
Options Outstanding
Number of warrants outstanding | shares	259,500,002
Weighted average remaining contractual life (years)	10 years
Weighted average exercise price | $ / shares	$ 0.0062
Options Exercisable
Number of warrants exercisable | shares	259,486,303
Weighted average remaining contractual life (years)	10 years
Weighted average exercise price | $ / shares	$ 0.0062

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Options (Details Narrative) - USD ($)	1 Months Ended	6 Months Ended
	Jul. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Stock Options [Member]
Option issued to purchase common shares	500,001
Expiry year	December 2027
Compensation cost of vested option		$ 1,912	$ 355,277
Stock Options [Member] | Minimum [Member]
Exercise price	0.016
Vesting period	6 months
Stock Options [Member] | Maximum [Member]
Exercise price	0.00625
Vesting period	12 months
September 2016 And December 2017 [Member]
Option issued to purchase common shares		259,000,000

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Commitments and Contingencies (Details Narrative) - USD ($)	1 Months Ended	4 Months Ended	6 Months Ended
	Aug. 24, 2015	Jun. 30, 2019	Jun. 30, 2019	Jun. 30, 2018
Cyber Safety, Inc [Member]
Patent expiry year	Sept. 30, 2020	Sept. 30, 2021
Option to buy patent price	$ 9,000,000	$ 10,000,000
Amount payable to related party			$ 280,000	$ 162
Event of default, purchase price		$ 11,000,000
Event of default, maturity date		Sept. 30, 2022
Cyber Safety, Inc [Member] | Minimum [Member]
Amount receivable from product percentage	15.00%
Cyber Safety, Inc [Member] | Maximum [Member]
Amount receivable from product percentage	20.00%
Management agreement [Member] | BlockSafe [Member]
Management fee periodic payment			$ 36,000
Frequency of periodic payment			Monthly
Amount of milestone to enable the payment of additional fees		$ 1,000,000	$ 1,000,000
Management fees payable upon achievement of first milestone		$ 5,000,000	$ 5,000,000
Management fees payable, term			Payable monthly over three years

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Subsequent Events (Details Narrative) - Subsequent Event [Member] - Convertible Promissory Note [Member]	6 Months Ended
	Jun. 30, 2019 USD ($) $ / shares shares
Convertible promissory note | $	$ 86,000
Debt conversion converted/convertible amount, principal | $	$ 118,000
Debt conversion converted instrument accrued interest, shares issued | shares	7,851
Debt conversion converted instrument, shares issued | shares	111,882,028
Interest rate	8.00%
Convertible promissory note conversion description	The notes are convertible at a 61% discount to the price of the Company’s common stock, as defined.
Discount on price of company common stock	61.00%
Maturity period	August 2020
Minimum [Member]
Conversion price | $ / shares	$ 0.0011
Maximum [Member]
Conversion price | $ / shares	$ 0.0012