10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

Amendment No. 1

☒   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 
For the quarterly period ended June 30, 2020

OR

☐   TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 333-148546

DLT RESOLUTION, INC

(Exact name of registrant as specified in its charter)

Nevada	20-8248213
(State of Incorporation)	(I.R.S. Employer Identification No.)
5940 S. Rainbow Blvd., Ste 400-32132, Las Vegas, NV	89118
(Address of principal executive offices)	(Zip Code)

(702) 796-6363

(Registrant’s telephone number, including area code)

Indicate by check mark if the registrant is a well‑known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐     No ☒

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 ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ☐     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 shorter period that the registrant was required to submit such files). Yes ☐     No ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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	☐	Non‑accelerated filer	☐
Accelerated filer	☐	Smaller reporting company	☒
(Do not check if a smaller reporting company)		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 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐     No ☒

As of August 10, 2020, 25,926,287 shares of the registrant’s Common Stock, $0.001 par value, were issued and 22,667,537 were outstanding.

EXPLANATORY NOTE

The purpose of this Amendment No. 1 to our Quarterly Report on Form 10-Q for the year ended June 30, 2020 (“Form 10-Q”) is to submit Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T. Exhibit 101 consists of the Interactive Data Files for our Form 10-Q for the year ended June 30, 2020, filed with the Securities and Exchange Commission on August 10, 2020.

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Item 6. Exhibits.

The following exhibits are attached hereto:

Exhibit No.	Description of Exhibit
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-15(e) and 15d-15(e), promulgated under the Securities and Exchange Act of 1934, as amended, filed herewith. (1)
31.2	Certification of Principal Accounting Officer pursuant to Rule 13a-15(e) and 15d-15(e), promulgated under the Securities and Exchange Act of 1934, as amended, filed herewith. (1)
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith (1)
101	Interactive data files pursuant to Rule 405 of Regulation S-T

(1) Previously filed or furnished with original Quarterly Report on Form 10-Q for June 30, 2020 filed with the Securities and Exchange Commission on August 10, 2020.

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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.  

DLT Resolution, Inc.
By:	/s/ John Wilkes	/s/ John Wilkes
	John Wilkes	John Wilkes
	President and Chief Executive Officer	Chief Financial Officer, Secretary and Treasurer
	(Principal Executive Officer)	(Principal Financial Officer)
	August 11, 2020	August 11, 2020

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Cover - shares	6 Months Ended
	Jun. 30, 2020	Aug. 10, 2020
Cover [Abstract]
Entity Registrant Name	DLT Resolution Inc.
Entity Central Index Key	0001420368
Document Type	10-Q/A
Amendment Flag	true
Amendment Description	Amendment
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	true
Entity Current Reporting Status	No
Document Period End Date	Jun. 30, 2020
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2020
Entity Ex Transition Period	false
Entity Common Stock Shares Outstanding		22,667,537
Document Quarterly Report	true
Document Transition Report	false
Entity Interactive Data Current	Yes

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Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Current assets
Cash and cash equivalents	$ 37,864	$ 13,140
Accounts receivable, net of allowance for doubtful accounts of $44,730 at June 30, 2020 and $0 at December 31, 2019	305,047	34,631
Total current assets	342,911	47,771
Property, plant and equipment, net of accumulated depreciation	81,660	0
Operating lease - right of use asset	10,456	0
Intangible assets, net of accumulated amortization	4,126,427	376,460
Goodwill	0	165,022
Total assets	4,561,454	589,253
Current liabilities
Bank overdraft	0	16,782
Accounts payable and accrued liabilities	537,514	99,201
Related party payables	35,866	35,880
Interest payable, related party	37,878	34,190
Note payable, related party	81,500	81,500
Notes payable, current portion	5,000	0
Lease obligation - operating lease	6,102	0
Total current liabilities	703,680	267,553
Notes payable, net of current portion	88,146	5,000
Other long term liability	2,400,000	685,000
Lease obligation - operating lease, net of current portion	3,814	0
Total liabilities	3,195,820	957,553
Stockholders' equity (deficit)
Common stock, $0.001 par value; 275,000,000 shares authorized; 25,926,287 and 24,395,037 issued; 22,698,787 and 21,167,537 outstanding at June 30, 2020 and December 31, 2019	25,926	24,395
Common stock subscribed	14,000	0
Additional paid-in capital	6,641,734	4,218,265
Other comprehensive income	(333,758)	(34,430)
Treasury stock, 3,815,000 shares as of June 30, 2020 and December 31, 2019, at cost	(5,300)	(5,300)
Accumulated deficit	(5,040,968)	(4,653,230)
Total stockholders' equity (deficit)	1,365,634	(368,300)
Total liabilities and stockholders' equity (deficit)	4,561,454	589,253
Series A Convertible Preferred Stock [Member]
Stockholders' equity (deficit)
Convertible preferred stock value	0	0
Series B Convertible Preferred Stock [Member]
Stockholders' equity (deficit)
Convertible preferred stock value	$ 64,000	$ 64,000

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Current assets
Accounts receivable, net of allowance for doubtful accounts	$ 44,730	$ 0
Stockholders' deficit
Common stock, shares par value	$ 0.001	$ 0.001
Common stock, shares authorized	275,000,000	275,000,000
Common stock, shares issued	25,926,287	24,395,037
Common stock, shares outstanding	22,698,787	21,167,537
Treasury stock shares	3,815,000	3,815,000
Series A Convertible Preferred Stock [Member]
Stockholders' deficit
Preferred stock, shares par value	$ 1.00	$ 1.00
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	25,000
Preferred stock, shares outstanding	0	25,000
Series B Convertible Preferred Stock [Member]
Stockholders' deficit
Preferred stock, shares par value	$ 1.00	$ 1.00
Preferred stock, shares authorized	500,000	500,000
Preferred stock, shares issued	64,000	64,000
Preferred stock, shares outstanding	64,000	64,000

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Condensed Consolidated Statements of Operations (Unaudited)
Revenue	$ 549,453	$ 113,358	$ 977,800	$ 235,367
Cost of revenue and operating expenses
Cost of revenue	263,828	38,738	502,514	72,412
General and administrative	172,643	86,213	368,888	120,010
Depreciation and amortization	151,765	86,213	267,033	51,212
Professional fees	31,850	31,850	64,421	64,421
Goodwill impairment loss	(4,768)	0	154,419	0
Total operating expenses	614,804	350,976	1,364,629	359,267
Loss from operations	(65,351)	(43,443)	(386,829)	(72,688)
Other income (expense)
Gain/(loss) on stock based liability	0	31,133	0	(495,438)
Foreign exchange gain/(loss)	(3)	(17)	(3)	5,349
Loss on investment	0	0	0	(331,787)
Interest expense	(11,482)	(1,823)	(18,906)	(3,627)
Total other income (expense)	(11,485)	29,293	(18,909)	(825,503)
Net income (loss)	$ (76,836)	$ (14,150)	$ (405,738)	$ (898,191)
Basic loss per common share ? net loss	$ (0.00)	$ (0.00)	$ (0.02)	$ (0.04)
Diluted loss per common share ? net loss	$ (0.00)	$ (0.00)	$ (0.02)	$ (0.04)
Weighted average basic shares outstanding	25,926,287	19,263,408	25,676,802	20,594,092
Weighted average diluted shares outstanding	25,926,287	19,263,408	25,676,802	20,594,092

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Condensed Consolidated Statements of Comprehensive Loss - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Condensed Consolidated Statements of Comprehensive Loss
Net loss	$ (76,836)	$ (14,150)	$ (405,738)	$ (898,191)
Other comprehensive loss
Gain on adjusted value of other long-term liability	(230,000)	0	24	0
Foreign currency translation adjustment	(84,001)	(15,189)	(299,352)	(15,187)
Total other comprehensive loss	(314,001)	(15,189)	(299,328)	(15,187)
Comprehensive loss	$ (390,837)	$ (29,339)	$ (705,066)	$ (882,604)

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Condensed Consolidated Statements of Changes in Stockholders' Deficit - USD ($)	Total	Non-Controlling Interest [Member]	Additional Paid-In Capital	Treasury Stock [Member]	Other comprehensive income [Member]	Accumulated Deficit [Member]	Common Stock Subscribed	Series B Preferred Stocks [Member]	Common Stock [Member]
Balance, shares at Dec. 31, 2018								64,000	24,982,537
Balance, amount at Dec. 31, 2018	$ 736,848	$ 94,087	$ 4,192,678	$ (37,688)	$ (5,300)	$ (3,595,912)	$ 0	$ 64,000	$ 24,983
Foreign currency translation adjustment	15,587	0	0	15,587	0	0	0	0	0
Gain on adjusted value of other long-term liability	0
Net loss	(992,278)	(94,087)	0	0	0	(898,191)	0	$ 0	$ 0
Balance, shares at Jun. 30, 2019								64,000	24,982,537
Balance, amount at Jun. 30, 2019	(239,843)	$ 0	4,192,678	(22,102)	(5,300)	(4,494,103)	0	$ 64,000	$ 24,983
Balance, shares at Dec. 31, 2019		500,000						64,000	24,395,037
Balance, amount at Dec. 31, 2019	(368,300)	$ 0	4,218,265	(5,300)	(34,430)	(4,635,230)	0	$ 64,000	$ 24,395
Issuance of common stock for cash proceeds, shares									31,250
Issuance of common stock for cash proceeds, amount	25,000	0	24,969	0	0	0	0	$ 0	$ 31
Issuance of common stock for acquisitions, shares									1,500,000
Issuance of common stock for acquisitions, amount	2,400,000	0	2,398,500	0	0	0	0	$ 0	$ 1,500
Sale of common stock subscription	14,000						14,000
Foreign currency translation adjustment	(299,352)	0	0	0	(299,352)	0	0	0	0
Gain on adjusted value of other long-term liability	24	0	0	0	24	0	0	0	0
Net loss	(405,738)	$ 0	0		0	(405,738)	0	$ 0	$ 0
Balance, shares at Jun. 30, 2020		500,000						64,000	25,926,287
Balance, amount at Jun. 30, 2020	$ 1,365,634	$ 0	$ 6,641,734	$ (5,300)	$ (333,758)	$ (5,040,968)	$ 14,000	$ 64,000	$ 25,926

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Condensed Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash flows from operating activities
Net loss	$ (405,738)	$ (898,191)
Adjustments to reconcile net loss to net cash used in operating activities
Loss on investment	0	331,787
Loss on stock based liability	0	495,438
Loss related items	0	(50,581)
Depreciation and amortization expense	267,034	51,212
Goodwill impairment loss	154,419	0
Changes in operating assets and liabilities
Accounts receivable	(113,666)	(33,436)
Lease obligation	(3,233)	0
Interest payable, related party	3,688	3,628
Accounts payable and accrued liabilities	70,296	14,471
Accounts payable, related party	0	(25,000)
Net cash used in operating activities	(27,199)	(110,672)
Net cash used in investing activities
Purchase of equipment	(749)	0
Net cash used in investing activities	(749)	0
Cash flows from financing activities
Proceeds from notes payable	86,631	0
Repayment of bank overdrafts	(48,538)	0
Proceeds from sale of common stock	25,000	0
Proceeds from sale of common stock subscription	14,000	0
Proceeds from (repayments to) related parties	(25,772)	136,407
Net cash provided by financing activities	51,321	136,407
Net change in cash	23,373	25,735
Effect of exchange rate on cash	1,351	4,744
Cash at beginning of period	13,140	12,908
Cash at end of period	37,864	43,387
Supplemental cash flow information
Cash paid for interest	0	0
Cash paid for income taxes	0	0
Non-cash investing and financing activities
Other long term liability entered into for acquisition of Union Strategies, Inc.	1,370,000	0
Common shares issued for acquisition of Union Strategies, Inc.	2,400,000	0
Net of Union Strategies, Inc. assets acquired and liabilities assumed	$ 4,000,000	$ 0

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Organization and Significant Accounting Policies

6 Months Ended

Jun. 30, 2020

Organization and Significant Accounting Policies

Note 1 - Organization and Significant Accounting Policies

DLT Resolution Inc. (“DLT, the “Company”, “we” and “our”) operates in three high-tech industry segments: Blockchain Applications; Telecommunications; and Data Services which includes Image Capture, Data Collection, Data Phone Center Services, and Payment Processing. The Company offers secure data management, Information Technology (IT) and other telecommunications services in Canada and the United States. The Company operates a Health Information Exchange providing the ability to request and retrieve medical information and records while meeting all of today’s Security & Compliance demands for HIPAA, PIPEDA and PHIPA. Through our acquisition of Union Strategies, Inc. (“USI”), the Company operates a business focused on designing, installing and maintaining telephony, data, video, storage, and LAN/WAN networks. USI’s clients encompass K-12 and higher education institutions, trades industry organizations, and local government entities having memberships ranging from 100 to 10,000 people that utilize products and services that USI provides by deploying a variety of technologies to keep client networks up and running efficiently.

The Company had an accumulated deficit of $4,653,230 and a working capital deficit of $219,782 as of December 31, 2019. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Continuation of the Company’s existence depends upon its ability to obtain additional capital. Management’s plans in regards to this matter include raising additional equity financing and borrowing funds under a private credit facility and/or other credit sources. These unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and in conformity with the instructions to Form 10-Q and Article 8 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures included in these condensed consolidated financial statements are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements included in this document have been prepared on the same basis as the annual consolidated financial statements, and in our opinion reflect all adjustments, which include normal recurring adjustments necessary for a fair presentation in accordance with US GAAP and SEC regulations for interim financial statements. The results for the three months ended June 30, 2020 are not necessarily indicative of the results that we will have for any subsequent period.

Interim Condensed Consolidated Financial Statements

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and in conformity with the instructions to Form 10-Q and Article 8 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures included in these condensed consolidated financial statements are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements included in this document have been prepared on the same basis as the annual consolidated financial statements, and in our opinion reflect all adjustments, which include normal recurring adjustments necessary for a fair presentation in accordance with US GAAP and SEC regulations for interim financial statements. The results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that we will have for any subsequent period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes to those statements for the year ended December 31, 2019 included in our Annual Report on Form 10-K as filed with the SEC on April 30, 2020.

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. Actual results could differ from those estimates.

Income taxes

Income taxes are provided for using the liability method of accounting in accordance with FASB ASC Topic 740 (formally SFAS No. 109 “Accounting for Income Taxes”). A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment.

At June 30, 2020, there were no uncertain tax positions that require accrual.

Revenue Recognition

The Company follows ASC 606 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue upon the transfer of promised services to customers in amounts that reflect the consideration to which the Company expects to be entitled the transfer of services. The Company considers revenue earned when all the following criteria are met: (i) the contract with the customer has been identified, (ii) the performance obligations have been identified, (iii) the transaction price has been determined, (iv) the transaction price has been allocated to the performance obligations, and (v) the performance obligations have been satisfied. The Company primarily generates revenues through the sale of products through its website and at industry tradeshows.

Net Income (Loss) Per Share

Net loss per share is calculated in accordance with FASB ASC topic 260. Basic earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of common stock outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of common stock outstanding for the period, assuming conversion or exercise of all potentially dilutive securities outstanding during each reporting period presented. Potentially dilutive securities are not presented or used in the computation of diluted loss per share on the statement of operations for periods when the Company incurs net losses, as their effect would be anti-dilutive.

As of June 30, 2020 and 2019, the Company had 64,000 shares of Series B Convertible Preferred Stock issued and outstanding, which were convertible into 12,800 shares of the Company’s common stock. As of June 30, 2020, the Company expects to issue an additional 1,500,000 restricted common shares of stock from recent acquisitions. See Note 2.

Foreign Currency Translation

The functional currency of the Company’s subsidiaries in Canada is the Canadian Dollar. The subsidiaries’ assets and liabilities have been translated to U.S. dollars using exchange rates of 0.734538 and 0.771486 in effect at the balance sheet dates of June 30, 2020 and December 31, 2019, respectively. Unaudited condensed consolidated statements of operations amounts have been translated using the annual weighted average exchange rates of 0.721915 for the six months ended June 30, 2020 and 0.749703 for the three months ended June 30, 2019. Resulting gains or losses from translating foreign currency financial statements are recorded as other comprehensive income (loss). Foreign currency transaction gains and losses resulting from exchange rate fluctuations on transactions denominated in a currency other than the local currency are included in other income (expense). Foreign currency transaction gains recognized for the three-month periods ended June 30, 2020 and 2019 were $0 and $5,366, respectively.

Fair Value of Financial Instruments

Fair value of certain of the Company’s financial instruments including cash, prepaid expenses, accounts payable, accrued expenses, notes payable, and other accrued liabilities approximate cost because of their short maturities. The Company measures and reports fair value in accordance with ASC 820, “Fair Value Measurements and Disclosure” defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value investments.

Fair value, as defined in ASC 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, principal (or most advantageous) markets, and an in-use or an in-exchange valuation premise. The fair value of a liability should reflect the risk of non-performance, which includes, among other things, the Company’s credit risk.

Valuation techniques are generally classified into three categories: the market approach; the income approach; and the cost approach. The selection and application of one or more of the techniques may require significant judgment and are primarily dependent upon the characteristics of the asset or liability, and the quality and availability of inputs. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 also provides fair value hierarchy for inputs and resulting measurement as follows:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3: Unobservable inputs for the asset or liability that are supported by little or no market activity, and that are significant to the fair values.

Fair value measurements are required to be disclosed by the Level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair value measurements using significant unobservable inputs (in Level 3 measurements) are subject to expanded disclosure requirements including a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earning are reported in the statement of income.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) — Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 requires entities to establish an allowance for credit losses for most financial assets. Prior US GAAP was based on an incurred loss methodology for recognizing credit losses on financial assets measured at amortized cost and available-for sale debt securities. The update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 31, 2018. The amendments in this ASU did not have a material impact on our condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (ASC 820) — Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 removes certain disclosures, modifies certain disclosures and adds additional disclosures. ASU 2018-13 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted. The amendments in this ASU did not have a material impact on our condensed consolidated financial statements.

Recent Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes (ASC 740) — Simplifying the Accounting for Income Taxes. ASU 2019-12 which modifies ASC 740 to simplify the accounting for income taxes. The ASU removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. ASU 2019-12 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2020. We have not yet completed the full assessment of the impact on our condensed consolidated financial statements or related disclosures.

In March 2020, The FASB issued ASU 2020-03, Codification Improvements to Financial Instruments – Issue 4: Cross-Reference to Line of-Credit or Revolving-Debt Arrangements Guidance in Subtopic 470-50. Stakeholders the ASU requests that paragraphs 470-50-40-17 through 40-18, which describe the accounting for fees between debtor and creditor and third-party costs directly related to exchanges or modifications of debt instruments, reference paragraph 470-50-40-21 for line-of-credit or revolving-debt arrangements. We have not yet completed the full assessment of the impact on our condensed consolidated financial statements or related disclosures.

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Acquisition

6 Months Ended

Jun. 30, 2020

Acquisition

Note 2 - Acquisition

Acquisition of 1922861 Ontario Inc.

On April 12, 2018, the Company entered into and closed the transactions contemplated by the definitive asset purchase agreement and plan of re-organization by and among the Company, 1922861 Ontario Inc. a corporation organized under the laws of Ontario (“1922861 Ontario Inc.”), the stockholders of 1922861 Ontario Inc. and other parties signatory thereto to acquire all the operating assets of 1922861 Ontario Inc. for 500,000 restricted common shares of DLT Resolution valued at $212,520, and a payment of CAD $19,200 to 1922861 Ontario’s supplier. On September 21, 2018 the 1922861 Ontario Inc. acquisition reached the first milestone and received another 500,000 restricted commons shares of DLT Resolution valued at $205,295. The acquisition is considered a business combination for accounting purposes under ASC 805, and resulted in the integration of 1922861 Ontario Inc.’s operating assets and processes into the Company’s Canadian subsidiary DLT Resolution Corp.

In addition to the consideration on closing, an additional 500,000 restricted shares of Company Common Stock may potentially be issued upon the acquired base generating CAD $500,000 in cumulated gross sales with a 10% pre-tax profit. The Company has allotted 24 months to achieve this milestone. There is full acceleration to allow for full vesting as quickly as the cumulative sales milestones are reached.

The Company applied the acquisition method to the business combination and valued each of the assets acquired (cash, accounts receivable, equipment, customer relationships, software, domain names and non-compete agreements) and liabilities assumed (accounts payable and related party payable) at fair value as of the acquisition date. The carrying values of cash, accounts receivable, accounts payable and related party payable were deemed to be fair value as of the acquisition date. The Company determined the fair value of the equipment to be historical net book value. The preliminary allocation of the purchase price was based on estimates of the fair value of the assets and liabilities assumed based on provisional amounts. However, the allocation of excess purchase and the amounts allocated to intangible assets are now as per valuation of assets and liabilities performed by independent valuer. Under the purchase agreement, the Company issued 1,000,000 shares of Common Stock valued at $417,815 and committed to issue an additional 500,000 shares of Common Stock at certain milestones, which was determined to have a fair value of $685,000 with mark to market pricing of DLT stock price as of December 31, 2019 using its $1.37 closing price on that date and $800,000 as of June 30, 2020 using its $1.60 closing price as of that date. The obligation to issue the 500,000 shares of Company Common Stock is shown as an “other long-term liabilities” on the face of the balance sheet and was valued at $800,000 and $685,000 as of June 30, 2020 and December 31, 2019, respectively. The following table shows the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:

ASSETS ACQUIRED
Accounts receivable	$	18,663
Customer list		103,255
Developed technology		321,679
Domain and trade name		3,971
Non-compete		37,330
Goodwill		169,896
TOTAL ASSETS ACQUIRED	$	654,794
LIABILITIES ASSUMED
Accounts payable		22,197
HST payable		2,147
TOTAL LIABILITIES ASSUMED		24,344
NET ASSETS ACQUIRED	$	630,450

Acquisition of Union Strategies Inc.

On January 30, 2020, the Company entered into transactions contemplated by the definitive share for share exchange agreement and plan of re-organization (the “Purchase Agreement”) by and among the Company, Union Strategies. Inc. (“USI”), the stockholders of USI and other parties signatory thereto to acquire all the issued and outstanding capital stock of USI for 1,500,000 shares of the Company’s restricted Common Stock (the “Closing Shares”). The acquisition resulted in USI becoming a wholly-owned subsidiary of the Company.

In the event that USI’s gross revenue for 2020 exceeds CAD $3,100,000 and it generates a minimum $75,000 in EBITDA (the “Performance Targets”), the Company agreed to issue an additional 1,000,000 shares of restricted Company Common Stock (“the Contingent Shares”) as additional purchase price consideration, which the Company estimates is probable that the Performance Targets will be achieved. Based on the $1.60 closing share price of the Company’s Common Stock on January 30, 2020, the Closing Shares are valued at $2,400,000 and the Contingent Shares are valued at $1,600,000, for a total purchase price consideration of $4,000,000.

The Company applied the acquisition method to the business combination and valued each of the assets acquired and liabilities assumed at fair value as of the acquisition date. The carrying values of accounts receivable, property and equipment, right to use asset, accounts payable, HST payable, accrued liabilities and lease obligation were deemed to be fair value as of the acquisition date. The preliminary allocation of the purchase price is based on estimates of the fair value of the assets and liabilities assumed based on provisional amounts. However, the estimates of the fair value of the assets acquired and liabilities assumed are subject to revision based on the results of their valuation performed by an independent valuer. The obligation to issue the Contingent Shares is subject mark to market pricing of DLT stock price and is included in “other long-term liabilities” on the face of the balance sheet and valued at $1,600,000 based on the $1.60 closing share price of DLT Common Stock on June 30, 2020.

The following table shows the estimated fair values of USI’s assets acquired and liabilities assumed at the January 30, 2020 date of acquisition:

ASSETS ACQUIRED
Accounts receivable, net	$	163,138
Property and equipment, net		91,506
Right to use asset, net		14,001
Customer list		2,073,740
Developed technology		2,073,740
TOTAL ASSETS ACQUIRED	$	4,416,126
LIABILITIES ASSUMED
Accounts payable, HST payable and accrued liabilities		402,582
Lease obligation		13,544
TOTAL LIABILITIES ASSUMED		416,126
NET ASSETS ACQUIRED	$	4,000,000

Pro Forma

The following table presents the unaudited pro forma results of the Company for the years ended December 31, 2019 and 2018 as if the acquisitions of USI and the combined 1922861 Ontario Inc. and DLT Resolution Corp. occurred on January 1, 2018. The pro forma results include estimates and assumptions which management believes are necessary. However, pro forma results do not include an anticipated cost savings or their effects of the planned integration of USI and 1922861 Ontario Inc. and are not necessarily indicative of the result that would have occurred if the business combination had been in effect on the dates indicated, or which may result in the future. The unaudited pro forma revenue and net loss for USI was approximately $2,730,000 and $175,000, respectively, for 2019. The unaudited pro forma revenue and net income for USI was approximately $2,700,000 and $88,000, respectively, for 2018. The unaudited pro forma revenue and net loss for the combined 1922861 Ontario Inc. and DLT Resolution Corp. was approximately $953,000 and $374,000, respectively, for the year ended December 31, 2018. The pro forma information includes adjustments for the amortization of intangible assets.

	Year ended December 31,
	2019			2018
	(unaudited)			(unaudited)
Revenue	$	3,193,000		$	3,653,000
Net loss		(1,730,000	)		(802,000	)

USI and 1922861 Ontario Inc. did not have any material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and net losses.

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Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets

Note 3 - Goodwill and Intangible Assets

Due to a sustained decline in the market capitalization of our common stock during the first quarter of 2020, we performed an interim goodwill impairment test. Management considered that, along with other possible factors affecting the assessment of the Company’s reporting unit for the purposes of performing a goodwill impairment assessment, including management assumptions about expected future revenue forecasts and discount rates, changes in the overall economy, trends in the stock price, estimated control premium, other operating conditions, and the effect of changes in estimates and assumptions that could materially affect the determination of fair value and goodwill. As a result of the significant decline in the current market capitalization despite any of the other positive factors contemplated and relatively little change in our ongoing business operations, the outcome of this goodwill impairment test resulted in a charge for the impairment of goodwill of $159,187 recorded in the unaudited condensed consolidated financial statements for the three months ended June 30, 2020.

We amortize identifiable intangible assets on a straight-line basis over their estimated useful lives. As of June 30, 2020 and December 31, 2019, identifiable intangibles were as follows:

	June 30, 2020			December 31, 2019
Developed technology	$	2,310,755		$	312,452
Customer relationships		2,108,757			100,293
Website		119,000			119,000
Domain and trade name		3,673			3,857
Non-compete		34,523			36,260
Accumulated amortization		(450,281	)		(195,402	)
Total intangible assets, net	$	4,126,427		$	376,460

Expected future amortization expense related to identifiable intangibles based on our carrying amount as of June 30, 2020 for the following five years is as follows (in thousands):

For the Twelve Months ended June 30,
2021	$	581,581
2022		564,803
2023		564,803
2024		564,803
2025		564,803
Thereafter		1,300,235
	$	4,126,427

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Notes Payable

6 Months Ended

Jun. 30, 2020

Notes Payable

Note 4 - Note Payable

On August 1, 2017, the Company issued a non-interest bearing $5,000 note payable due on July 1, 2019 to a third party in exchange for Company Common Stock held by the third party. As of June 30, 2020, the note is unpaid.

The Government of Canada launched CEBA to assist businesses during the current challenges by providing interest-free unsecured loans. During the three months ended June 30, 2020, the Company’s three Canadian subsidiaries each received CAD 40,000 CEBA loans. The loans bear zero interest and may be repaid any time after October 1, 2020 and if repaid on or before December 31, 2022, CEBA will forgive CAD 10,000 in loan principal. Should a CEBA loan be unpaid as of December 31, 2022, the loan converts to a three-year term loan having a 5% annual fixed rate of interest. As of June 30, 2020, the Company has a total of $88,146 (CAD 120,000) in outstanding CEBA loans.

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Other Long-term Liabilities

6 Months Ended

Jun. 30, 2020

Other Long-term Liabilities

Note 5 - Other Long-term Liabilities

Other long-term liabilities consist of the Company’s obligations to issue shares of its Common Stock pursuant to recent acquisitions. See Note 2. As of June 30, 2020, total other long-term liabilities $2,400,000 consisted of $800,000 for shares issuable for the Acquisition of 1922861 Ontario Inc. and $1,600,000 for the shares issuable for the acquisition of USI. As of December 31, 2019, total other long-term liabilities consisted of $685,000 for shares issuable for the Acquisition of 1922861 Ontario Inc. The liabilities are subject to mark to market accounting based on the market price of DLT shares of Common Stock and will be extinguished once the shares are issued.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2020

Stockholders' Equity

Note 6 - Stockholders equity

Common Stock

On January 13, 2020, the Company issued 31,250 shares of restricted Company Common Stock to a third party individual in a stock subscription agreement for $25,000 in cash.

The Company issued 1,500,000 shares of restricted Common Stock pursuant to the Purchase Agreement to acquire USI. See Note 2.

Common stock subscribed

The Company sold a subscription to purchase 14,000 shares of its Common Stock for $14,000 on April 24, 2020. To date, the shares have not been issued to the purchaser.

Series A Convertible Preferred Stock

The Company is authorized to issue 5,000,000 shares of Series A Convertible Preferred Stock. The Series A Convertible Preferred Stock can be converted to common shares at the option of the holder at a rate of $0.10 per share. There were no shares of series A convertible preferred stock issued and outstanding as of June 30, 2020 and December 31, 2019.

Series B Convertible Preferred Stock

The Company is authorized to issue 500,000 shares of Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock can be converted to common shares at the option of the holder at a rate of $0.20 per share. There were 64,000 shares of series B convertible preferred stock issued and outstanding as of June 30, 2020 and December 31, 2019.

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Related Party Transactions

6 Months Ended

Jun. 30, 2020

Related Party Transactions

Note 7 - Related Party Transactions

No compensation was incurred for the services of the Company’s directors or executives during the periods ended June 30, 2020 and 2019.

As of June 30, 2020 and December 31, 2019, the Company had outstanding amounts payable to a related party payables of $20,866 and $20,880. The obligations are unsecured, non-interest bearing, due on demand and payable in Canadian dollars, with the change in the liability from December 31, 2019 to June 30, 2020 attributable to the change in the exchange rate for U.S. and Canadian dollars.

During the six months ended June 30, 2019, the Company also made payments for services rendered by related parties totaling $25,000, resulting in balances owed for such services of $15,000 as of June 30, 2020 and December 31, 2019.

The Company has a note payable to a related party as settlement for consulting services. The note carries interest of 9% compounded annually and is due on demand. As of June 30, 2020 and December 31, 2019, $81,500 of principal and $37,878 and $34,190 of accrued interest was due, respectively.

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Concentrations

6 Months Ended

Jun. 30, 2020

Concentrations

Note 8 - Concentrations

During the three-month and six-month periods ended June 30, 2020 and 2019, no single customer accounted for more than 10% of our total revenue for the respective periods. As of June 30, 2020, two customers had outstanding accounts receivable balances that were 19% and 16%, respectively, of our total accounts receivable at that time. As of December 31, 2019, no single customer had an outstanding accounts receivable balance that exceeded 10% of our total accounts receivable at that time.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies

Note 9 - Commitments and Contingencies

Litigation

On March 29, 2019, DLT Resolution Corp. and DLT Resolution Inc. was served with a Statement of Claimants 300-306 Town Centre Boulevard Limited Partnership/Court File No. CV-19-00617228-000 (Toronto) for unpaid rent and lost revenue related to the premises. In this action, the Plaintiff has claimed damages against the Defendants DLT Resolution Corp. and DLT Resolution Inc. in the amount of $567,385.13 for an alleged breach of lease. The Plaintiff has claimed damages against the Defendant DLT Resolution Inc. in the amount of $567,385.13 for allegedly wrongfully inducing a breach of lease and tortious interference with contractual relations. The Plaintiff has further claimed damages against the Defendant DLT Resolution Inc. in the amount of $567,385.13 for allegedly oppressive conduct under the Ontario Business Corporations Act. The Plaintiff has further claimed compensation for its legal costs and for pre-judgment interest. The Company filed a statement of Defense citing, amongst other things, that it has never entered into any agreement with the landlord, nor guaranteed any such liability. The Defendants DLT Resolution Corp. and DLT Resolution Inc. intend to contest the claim vigorously. There is no intention to make a settlement offer nor have instructions been received to make a settlement offer at this juncture. Since the statement of defense was delivered on 16 May 2019, the Company had no further communication from counsel for the Plaintiff nor have any steps been taken to move the litigation forward. Although there can be no assurance of the Company’s ability to dismiss the claim, management feels the claim is without merit and is confident it will receive a ruling in its favor.

Leases Commitment

Under Topic 842, operating lease expense is generally recognized evenly over the term of the lease. USI has an operating lease for its Edmonton, Canada facility that started in March 2019 and terminates in February 2022. There was no sublease rental income for the three-month periods ended June 30, 2020 and 2019. USI paid approximately $2,179 and $4,401 against the Lease obligation in the three and six months ended June 30, 2020.

USI’s lease agreement does not provide an implicit borrowing rate; therefore, an internal incremental borrowing rate is determined based on information available at lease commencement date for purposes of determining the present value of lease payments.

ROU lease asset and lease liability for the operating lease is recorded in the balance sheet as follows:

	As of
	June 30, 2020
Operating lease - right of use asset	$	10,456
Lease obligations — operating leases, current portion	$	6,102
Lease obligations — operating leases, net of current portion		3,814
Total lease liability	$	9,916
Weighted average remaining lease term (in years)		1.7
Weighted average discount rate		7.75	%

Future lease payments included in the measurement of lease liabilities on the unaudited balance sheet as of June 30, 2020, for the following five fiscal years and thereafter were as follows:

	For the year ending
	December 31,
2020	$	3,526
2021		7,052
2022		1,175
Total future minimum lease payments		11,753
Present value adjustment		1,837
Total	$	9,916

Other Commitments

As permitted under Canadian Corporations Business Act, USI agrees to indemnify officers and directors for certain events or occurrences while the officer or director is, or was, serving at USI’s request in this capacity. The term of the indemnification period is indefinite. There is no limit on the amount of future payments USI could be required to make under these indemnification agreements; however, USI maintains insurance policy coverage that may enable USI to recover a portion of any amounts paid. As a result of USI’s insurance policy coverage, management believes the estimated fair value of these indemnifications is minimal. Accordingly, USI did not record any indemnification liabilities as of June 30, 2020 and December 31, 2019.

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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2020

Significant Accounting Policies (Policies)

Interim Condensed Consolidated Financial Statements

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and in conformity with the instructions to Form 10-Q and Article 8 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures included in these condensed consolidated financial statements are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements included in this document have been prepared on the same basis as the annual consolidated financial statements, and in our opinion reflect all adjustments, which include normal recurring adjustments necessary for a fair presentation in accordance with US GAAP and SEC regulations for interim financial statements. The results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that we will have for any subsequent period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes to those statements for the year ended December 31, 2019 included in our Annual Report on Form 10-K as filed with the SEC on April 30, 2020.

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. Actual results could differ from those estimates.

Income taxes

Income taxes are provided for using the liability method of accounting in accordance with FASB ASC Topic 740 (formally SFAS No. 109 “Accounting for Income Taxes”). A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment.

At June 30, 2020, there were no uncertain tax positions that require accrual.

Revenue Recognition

The Company follows ASC 606 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue upon the transfer of promised services to customers in amounts that reflect the consideration to which the Company expects to be entitled the transfer of services. The Company considers revenue earned when all the following criteria are met: (i) the contract with the customer has been identified, (ii) the performance obligations have been identified, (iii) the transaction price has been determined, (iv) the transaction price has been allocated to the performance obligations, and (v) the performance obligations have been satisfied. The Company primarily generates revenues through the sale of products through its website and at industry tradeshows.

Net Income (Loss) Per Share

Net loss per share is calculated in accordance with FASB ASC topic 260. Basic earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of common stock outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of common stock outstanding for the period, assuming conversion or exercise of all potentially dilutive securities outstanding during each reporting period presented. Potentially dilutive securities are not presented or used in the computation of diluted loss per share on the statement of operations for periods when the Company incurs net losses, as their effect would be anti-dilutive.

As of June 30, 2020 and 2019, the Company had 64,000 shares of Series B Convertible Preferred Stock issued and outstanding, which were convertible into 12,800 shares of the Company’s common stock. As of June 30, 2020, the Company expects to issue an additional 1,500,000 restricted common shares of stock from recent acquisitions. See Note 2.

Foreign Currency Translation

The functional currency of the Company’s subsidiaries in Canada is the Canadian Dollar. The subsidiaries’ assets and liabilities have been translated to U.S. dollars using exchange rates of 0.734538 and 0.771486 in effect at the balance sheet dates of June 30, 2020 and December 31, 2019, respectively. Unaudited condensed consolidated statements of operations amounts have been translated using the annual weighted average exchange rates of 0.721915 for the six months ended June 30, 2020 and 0.749703 for the three months ended June 30, 2019. Resulting gains or losses from translating foreign currency financial statements are recorded as other comprehensive income (loss). Foreign currency transaction gains and losses resulting from exchange rate fluctuations on transactions denominated in a currency other than the local currency are included in other income (expense). Foreign currency transaction gains recognized for the three-month periods ended June 30, 2020 and 2019 were $0 and $5,366, respectively.

Fair Value of Financial Instruments

Fair value of certain of the Company’s financial instruments including cash, prepaid expenses, accounts payable, accrued expenses, notes payable, and other accrued liabilities approximate cost because of their short maturities. The Company measures and reports fair value in accordance with ASC 820, “Fair Value Measurements and Disclosure” defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value investments.

Fair value, as defined in ASC 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, principal (or most advantageous) markets, and an in-use or an in-exchange valuation premise. The fair value of a liability should reflect the risk of non-performance, which includes, among other things, the Company’s credit risk.

Valuation techniques are generally classified into three categories: the market approach; the income approach; and the cost approach. The selection and application of one or more of the techniques may require significant judgment and are primarily dependent upon the characteristics of the asset or liability, and the quality and availability of inputs. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 also provides fair value hierarchy for inputs and resulting measurement as follows:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3: Unobservable inputs for the asset or liability that are supported by little or no market activity, and that are significant to the fair values.

Fair value measurements are required to be disclosed by the Level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair value measurements using significant unobservable inputs (in Level 3 measurements) are subject to expanded disclosure requirements including a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earning are reported in the statement of income.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) — Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 requires entities to establish an allowance for credit losses for most financial assets. Prior US GAAP was based on an incurred loss methodology for recognizing credit losses on financial assets measured at amortized cost and available-for sale debt securities. The update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 31, 2018. The amendments in this ASU did not have a material impact on our condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (ASC 820) — Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 removes certain disclosures, modifies certain disclosures and adds additional disclosures. ASU 2018-13 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted. The amendments in this ASU did not have a material impact on our condensed consolidated financial statements.

Recent Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes (ASC 740) — Simplifying the Accounting for Income Taxes. ASU 2019-12 which modifies ASC 740 to simplify the accounting for income taxes. The ASU removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. ASU 2019-12 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2020. We have not yet completed the full assessment of the impact on our condensed consolidated financial statements or related disclosures.

In March 2020, The FASB issued ASU 2020-03, Codification Improvements to Financial Instruments – Issue 4: Cross-Reference to Line of-Credit or Revolving-Debt Arrangements Guidance in Subtopic 470-50. Stakeholders the ASU requests that paragraphs 470-50-40-17 through 40-18, which describe the accounting for fees between debtor and creditor and third-party costs directly related to exchanges or modifications of debt instruments, reference paragraph 470-50-40-21 for line-of-credit or revolving-debt arrangements. We have not yet completed the full assessment of the impact on our condensed consolidated financial statements or related disclosures.

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Acquisition (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of condensed statement of operations

	Year ended December 31,
	2019			2018
	(unaudited)			(unaudited)
Revenue	$	3,193,000		$	3,653,000
Net loss		(1,730,000	)		(802,000	)

1922861 Ontario Inc. [Member]

Schedule of estimated fair values assets acquired and liabilities

ASSETS ACQUIRED
Accounts receivable	$	18,663
Customer list		103,255
Developed technology		321,679
Domain and trade name		3,971
Non-compete		37,330
Goodwill		169,896
TOTAL ASSETS ACQUIRED	$	654,794
LIABILITIES ASSUMED
Accounts payable		22,197
HST payable		2,147
TOTAL LIABILITIES ASSUMED		24,344
NET ASSETS ACQUIRED	$	630,450

Union Strategies Inc [Member]

Schedule of estimated fair values assets acquired and liabilities

ASSETS ACQUIRED
Accounts receivable, net	$	163,138
Property and equipment, net		91,506
Right to use asset, net		14,001
Customer list		2,073,740
Developed technology		2,073,740
TOTAL ASSETS ACQUIRED	$	4,416,126
LIABILITIES ASSUMED
Accounts payable, HST payable and accrued liabilities		402,582
Lease obligation		13,544
TOTAL LIABILITIES ASSUMED		416,126
NET ASSETS ACQUIRED	$	4,000,000

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Goodwill and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets (Tables)

Scheduole of assets Amortization on a straight-line basis

	June 30, 2020			December 31, 2019
Developed technology	$	2,310,755		$	312,452
Customer relationships		2,108,757			100,293
Website		119,000			119,000
Domain and trade name		3,673			3,857
Non-compete		34,523			36,260
Accumulated amortization		(450,281	)		(195,402	)
Total intangible assets, net	$	4,126,427		$	376,460

Schedule of finite lived intangible assets future amortization expense

For the Twelve Months ended June 30,
2021	$	581,581
2022		564,803
2023		564,803
2024		564,803
2025		564,803
Thereafter		1,300,235
	$	4,126,427

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies

Schedule of lease asset and lease liability for the operating lease

	As of
	June 30, 2020
Operating lease - right of use asset	$	10,456
Lease obligations — operating leases, current portion	$	6,102
Lease obligations — operating leases, net of current portion		3,814
Total lease liability	$	9,916
Weighted average remaining lease term (in years)		1.7
Weighted average discount rate		7.75	%

Schedule of Future lease payments

	For the year ending
	December 31,
2020	$	3,526
2021		7,052
2022		1,175
Total future minimum lease payments		11,753
Present value adjustment		1,837
Total	$	9,916

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Organization and Significant Accounting Policies (Details Narrative)	6 Months Ended		12 Months Ended
	Jun. 30, 2020 USD ($) shares	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($) shares
Working capital deficit | $			$ (219,782)
Accumulated deficit | $	$ (5,040,968)		$ (4,653,230)
Weighted average exchange rates	0.721915	0.749703
Foreign currency translation exchange rate	0.734538		0.771486
Foreign exchange gain | $		$ 5,366
Acquisition of 1922861 Ontario Inc. [Member] | Restricted Stock [Member]
Issuance of common stock for acquisitions, shares	1,500,000
Series B Convertible Preferred Stock [Member] | Convertible note [Member]
Shares reserved for future issuance	12,800		12,800
Series B Convertible Preferred Stock [Member]
Preferred stock; shares issued	64,000		64,000
Preferred stock; shares outstanding	64,000		64,000

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Acquisitions (Details) - 1922861 Ontario Inc. [Member] - USD ($)	Jun. 30, 2020	Jan. 30, 2020
ASSETS ACQUIRED
Accounts receivable	$ 18,663	$ 163,138
Customer list	103,255	2,073,740
Developed technology	321,679	2,073,740
Domain and trade name	3,971
Non-compete	37,330
Goodwill	169,896
TOTAL ASSETS ACQUIRED	654,794	4,416,126
LIABILITIES ASSUMED
Accounts payable	22,197	402,582
HST payable	2,147
TOTAL LIABILITIES ASSUMED	24,344	416,126
NET ASSETS ACQUIRED	$ 630,450	$ 4,000,000

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Acquisitions (Details 1) - 1922861 Ontario Inc. [Member] - USD ($)	Jun. 30, 2020	Jan. 30, 2020
ASSETS ACQUIRED
Accounts receivable, net	$ 18,663	$ 163,138
Property and equipment, net		91,506
Right to use asset, net		14,001
Customer list	103,255	2,073,740
Developed technology	321,679	2,073,740
TOTAL ASSETS ACQUIRED	654,794	4,416,126
LIABILITIES ASSUMED
Accounts payable, HST payable and accrued liabilities	22,197	402,582
Lease obligation		13,544
TOTAL LIABILITIES ASSUMED	24,344	416,126
NET ASSETS ACQUIRED	$ 630,450	$ 4,000,000

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Acquisitions (Details 2) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Acquisitions (Details)
Revenue	$ 3,193,000	$ 3,653,000
Net loss	$ (1,730,000)	$ (802,000)

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Acquisitions (Details Narrative)			1 Months Ended		6 Months Ended		12 Months Ended
	Apr. 12, 2018 USD ($) shares	Apr. 12, 2018 CAD ($) shares	Jan. 30, 2020 USD ($) $ / shares	Sep. 21, 2018 USD ($) shares	Jun. 30, 2020 USD ($) $ / shares shares	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2018 USD ($)
Other long term liability					$ 800,000		$ 685,000
Business acquisition description	In addition to the consideration on closing, an additional 500,000 restricted shares of Company Common Stock may potentially be issued upon the acquired base generating CAD $500,000 in cumulated gross sales with a 10% pre-tax profit.	In addition to the consideration on closing, an additional 500,000 restricted shares of Company Common Stock may potentially be issued upon the acquired base generating CAD $500,000 in cumulated gross sales with a 10% pre-tax profit.
Unaudited pro forma revenue							3,193,000	$ 3,653,000
Net loss							$ (1,730,000)	(802,000)
Other long term liability entered into for acquisition of Union Strategies, Inc.					$ 1,370,000	$ 0
Additional issue of common stock, par value | $ / shares					$ 0.001		$ 0.001
Common stock value					$ 25,926		$ 24,395
Common stock shares issued | shares					25,926,287		24,395,037
Non-Controlling Interest [Member]
Additional issue of common stock, shares | shares					500,000		500,000
Additional issue of common stock, amount | shares					800,000		685,000
Additional issue of common stock, par value | $ / shares					$ 1.60		$ 1.37
Common stock value					$ 417,815
Common stock shares issued | shares					1,000,000
Asset Purchase Agreement [Member]
Restricted common shares issued, shares | shares	500,000	500,000
Restricted common shares issued, value	$ 212,520
Monthly sales		$ 19,200
Asset Purchase Agreement [Member] | Milestone [Member]
Restricted common shares issued, shares | shares				500,000
Restricted common shares issued, value				$ 205,295
1922861 Ontario Inc. [Member]
Unaudited pro forma revenue							$ 2,700,000	88,000
Net loss							(1,730,000)	(802,000)
Issuance of common stock for acquisitions, shares | shares					800,000
Additional purchase price consideration description			In the event that USI’s gross revenue for 2020 exceeds CAD $3,100,000 and it generates a minimum $75,000 in EBITDA (the “Performance Targets”), the Company agreed to issue an additional 1,000,000 shares of restricted Company Common Stock (“the Contingent Shares”) as additional purchase price consideration, which the Company estimates is probable that the Performance Targets will be achieved.
Other long term liability entered into for acquisition of Union Strategies, Inc.					$ 1,600,000
Closing share price | $ / shares			$ 1.60		$ 1.60
Closing shares valued			$ 2,400,000
Contingent shares valued			1,600,000
Purchase price consideration			$ 4,000,000
1922861 Ontario Inc. and DLT Resolution Corp. [Member]
Unaudited pro forma revenue							$ 2,730,000	953,000
Net loss								$ (374,000)
Union Strategies. Inc [Member]
Issuance of common stock for acquisitions, shares | shares					1,600,000
Union Strategies. Inc [Member] | Restricted Stock [Member]
Issuance of common stock for acquisitions, shares | shares					1,500,000
Acquisition [Member]
Monthly sales		$ 500,000
Conditional issuance of common stock shares reserve for future issuance, shares | shares	500,000	500,000
Pre-tax profit, percentages	10.00%	10.00%

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Goodwill and Intangible Assets (Details ) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Accumulated amortization	$ (450,281)	$ (195,402)
Total intangible assets, net	4,126,427	376,460
Non-compete [Member]
Total intangible assets, net	34,523	36,260
Domain and trade name [Member]
Total intangible assets, net	3,673	3,857
Website [Member]
Total intangible assets, net	119,000	119,000
Customer Relationships [Member]
Total intangible assets, net	2,108,757	100,293
Developed Technology [Member]
Total intangible assets, net	$ 2,310,755	$ 312,452

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Goodwill and Intangible Assets (Details 1)	Jun. 30, 2020 USD ($)
For the Twelve Months ended March 31,
2021	$ 581,581
2022	564,803
2023	564,803
2024	564,803
2025	564,803
Thereafter	1,300,235
Total	$ 4,126,427

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Goodwill and Intangible Assets (Details Narrative)	6 Months Ended
	Jun. 30, 2020 USD ($)
Goodwill and Intangible Assets (Details Narrative)
Goodwill impairment loss	$ 159,187

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Notes Payable (Details Narrative)	1 Months Ended	6 Months Ended
	Aug. 01, 2017 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2020 CAD ($)	Dec. 31, 2019 USD ($)
Notes payable, net of current portion		$ 88,146		$ 5,000
CEBA [Member]
Loans received			$ 40,000
Forgive loan principal			$ 10,000
Annual fixed rate		5.00%	5.00%
Outstanding loans		$ 88,146
Loan converts term		3 years	3 years
Debt instrument, maturity date		Dec. 31, 2022	Dec. 31, 2022
Unrelated Party [Member]
Debt instrument, maturity date	Jul. 01, 2019
Notes payable, net of current portion	$ 5,000

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Other Long-term Liabilities (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Other long term liability	$ 2,400,000	$ 685,000
1922861 Ontario Inc. [Member]
Other long term liability		$ 685,000
Issuance of common stock for acquisitions, shares	800,000
Union Strategies. Inc [Member]
Other long term liability	$ 2,400,000
Issuance of common stock for acquisitions, shares	1,600,000

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Stockholders Equity (Details Narrative) - USD ($)		1 Months Ended	6 Months Ended
	Jan. 13, 2020	Apr. 24, 2020	Jun. 30, 2020	Dec. 31, 2019
Union Strategies. Inc [Member]
Issuance of common stock for acquisitions, shares			1,600,000
Restricted Stock [Member]
Issuance of common stock for cash proceeds, shares	31,250	14,000
Issuance of common stock for cash proceeds, amount	$ 25,000	$ 14,000
Restricted Stock [Member] | Union Strategies. Inc [Member]
Issuance of common stock for acquisitions, shares			1,500,000
Series A Convertible Preferred Stock [Member]
Preferred stock, shares authorized			5,000,000	5,000,000
Preferred stock, shares issued			0	25,000
Preferred stock, shares outstanding			0	25,000
Convertible Preferred stock, conversion price			$ 0.10
Series B Convertible Preferred Stock [Member]
Preferred stock, shares authorized			500,000	500,000
Preferred stock, shares issued			64,000	64,000
Preferred stock, shares outstanding			64,000	64,000
Convertible Preferred stock, conversion price			$ 0.20

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Related Party Transactions (Details Narrative) - USD ($)	6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Notes payable, related party	$ 81,500		$ 81,500
Interest payable, related party	37,878		34,190
Proceeds from related party	(25,772)	$ 136,407
Related party payables	(35,866)		(35,880)
Related Party Transaction [Member]
Notes payable, related party	81,500		81,500
Interest payable, related party	37,878		34,190
Proceeds from related party	25,000
Owed amount	$ 15,000		15,000
Accrues interest rate	9.00%
Related party payables	$ 20,866		$ 20,880

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Concentrations (Details Narrative)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2020	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
One Customer [Member]
Concentrations credit risk percentages			19.00%
Accounts Receivable [Member]
Concentrations credit risk percentages					10.00%
Two Customers [Member]
Concentrations credit risk percentages			16.00%
Revenue [Member]
Concentrations credit risk percentages	10.00%	10.00%	10.00%	10.00%

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Commitments and contingencies (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Organization and Significant Accounting Policies
Operating lease - right of use asset	$ 10,456	$ 0
Lease obligation - operating lease	6,102	0
Lease obligation - operating lease, net of current portion	3,814	$ 0
Total lease liability	$ 9,916
Weighted average remaining lease term (in years)	1 year 8 months 12 days
Weighted average discount rate	7.75%

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Commitments and contingencies (Details 1)	Jun. 30, 2020 USD ($)
Future lease payments
2020	$ 3,526
2021	7,052
2022	1,175
Total future minimum lease payments	11,753
Present value adjustment	1,837
Total	$ 9,916

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Commitments and contingencies (Details Narrative) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Claim damages against breach of lease		$ 567,385
Further claimed damages against oppressive conduct		567,385
Operating Lease, Liability	$ 9,916
1922861 Ontario Inc. [Member]
Operating Lease, Liability	$ 2,179	$ 4,401