BLACKRIDGE TECHNOLOGY INTERNATIONAL, INC.
|
(Exact name of issuer as specified in its charter)
|
Nevada
|
20-1282850
|
(State or Other Jurisdiction of incorporation or organization)
|
(I.R.S. Employer I.D. No.)
|
Reno, NV 89511
|
(Address of Principal Executive Offices)
|
(855) 807-8776
|
(Registrant’s Telephone Number, Including Area Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Large accelerated filer
|
☐ .
|
Accelerated filer
|
☐ .
|
Non-accelerated filer
|
X .
|
Smaller reporting company
|
X .
|
Emerging growth company
|
X ..
|
Class
|
Outstanding as of November 14, 2019
|
Common Stock, $0.001 par value per share
|
100,209,188 shares
|
PART I - Financial Information
|
||
Item 1. Financial Statements (Unaudited)
|
Page
|
|
|
Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018
|
F-2 |
|
Condensed Consolidated Statements of Operations for the Three and nine Months Ended September 30, 2019 and 2018
|
F-3 |
Condensed Consolidated Statements of Changes in Stockholders’ Equity For the Nine Months Ended September 30, 2019 and 2018
|
F -4 |
|
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended September 30, 2019 and 2018
|
F- 5 |
|
|
Condensed Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2019 and 2018
|
F -6 |
|
Notes to Condensed Consolidated Financial Statements
|
F -7 |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
|
1 | |
Item 3. Quantitative and Qualitative Disclosures About Market Risk
|
8 | |
Item 4. Controls and Procedures
|
8 | |
PART II - Other Information
|
||
Item 1. Legal Proceedings
|
9 | |
Item 1A. Risk Factors
|
9 | |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
9 | |
Item 3. Defaults upon Senior Securities
|
9 | |
Item 4. Mine Safety Disclosures
|
9 | |
Item 5. Other Information
|
9 | |
Item 6. Exhibits
|
9 | |
Signatures
|
10 |
Financial Statements (Unaudited)
|
Page
|
|
|
Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018
|
F-2
|
|
Condensed Consolidated Statements of Operations for the Three and nine Months Ended September 30, 2019 and 2018
|
F-3
|
Condensed Consolidated Statements of Stockholder’s Equity For the Nine Months Ended September 30, 2019 and 2018
|
F-4
|
|
Condensed Consolidated Statements of Stockholder’s Equity for the Three Months Ended September 30, 2019 and 2018
|
F-5
|
|
|
Condensed Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2019 and 2018
|
F-6
|
|
Notes to Condensed Consolidated Financial Statements
|
F-7
|
September 30,
|
December 31,
|
|||||||
2019
|
2018
|
|||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash
|
$
|
276,167
|
$
|
4,693,950
|
||||
Accounts receivable
|
269,511
|
102,292
|
||||||
Inventory
|
95,013
|
56,003
|
||||||
Prepaid expenses
|
220,345
|
122,713
|
||||||
Total Current Assets
|
861,036
|
4,974,958
|
||||||
Property and equipment, net
|
134,694
|
78,821
|
||||||
Intangible assets, net
|
10,369,326
|
8,920,360
|
||||||
Total Assets
|
$
|
11,365,056
|
$
|
13,974,139
|
||||
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
||||||||
Current Liabilities
|
||||||||
Accounts payable and accrued expenses
|
$
|
3,940,261
|
$
|
2,089,322
|
||||
Accounts payable and accrued expenses – related party
|
367,011
|
9,690
|
||||||
Accrued interest
|
739,298
|
714,187
|
||||||
Accrued interest – related party
|
208,708
|
177,419
|
||||||
Wages payable
|
1,946,241
|
1,928,639
|
||||||
Deferred revenue
|
31,434
|
3,535
|
||||||
Short-term notes payable
|
45,232
|
45,232
|
||||||
Current portion of long term debt
|
66,655
|
366,657
|
||||||
Convertible notes, short term, net of discounts
|
17,226,807
|
3,248,746
|
||||||
Convertible notes, long term, net of discounts, current portion
|
107,327
|
39,726
|
||||||
Convertible notes, short term – related party
|
758,172
|
183,172
|
||||||
Total Current Liabilities
|
25,437,146
|
8,806,325
|
||||||
Total Liabilities
|
25,437,146
|
8,806,325
|
||||||
Stockholders' (Deficit) Equity
|
||||||||
Preferred Stock A, Par Value $0.001, 48,000,000 shares authorized; 3,577,370 issued and outstanding at September 30, 2019 and December 31, 2018, respectively
|
3,577
|
3,577
|
||||||
Preferred Stock B, Par Value $0.001, 2,000,000 shares authorized; 14,000 and none issued and outstanding at September 30, 2019 and December 31, 2018, respectively
|
14
|
-
|
||||||
Common Stock, Par Value $0.001, 500,000,000 shares authorized; 99,868,418 and 96,872,725 issued and outstanding at September 30, 2019 and December 31, 2018, respectively
|
99,868
|
96,873
|
||||||
Additional paid-in capital
|
76,242,582
|
72,114,707
|
||||||
Accumulated deficit
|
(90,418,131
|
)
|
(67,047,343
|
)
|
||||
Total Stockholders' (Deficit) Equity
|
(14,072,090
|
)
|
5,167,814
|
|||||
Total Liabilities and Stockholders' (Deficit) Equity
|
$
|
11,365,056
|
$
|
13,974,139
|
For the
Three Months Ended
|
For the
Nine Months Ended
|
|||||||||||||||
September 30,
2019
|
September 30,
2018
|
September 30,
2019
|
September 30,
2018
|
|||||||||||||
Revenue
|
$
|
108,811
|
$
|
74,102
|
$
|
297,611
|
$
|
144,116
|
||||||||
Cost of Goods Sold
|
-
|
8,543
|
819
|
8,593
|
||||||||||||
Gross Profit
|
108,811
|
65,559
|
296,792
|
135,523
|
||||||||||||
Operating Expenses
|
||||||||||||||||
Engineering
|
1,853
|
48,775
|
81,208
|
84,119
|
||||||||||||
Sales and Marketing
|
15,303
|
5,620
|
143,192
|
5,774
|
||||||||||||
General and Administrative
|
3,572,044
|
3,824,520
|
10,790,247
|
10,254,826
|
||||||||||||
Total Operating Expenses
|
3,589,200
|
3,878,915
|
11,014,647
|
10,344,719
|
||||||||||||
Gain (Loss) from Operations
|
(3,480,389
|
)
|
(3,813,356
|
)
|
(10,717,855
|
)
|
(10,209,196
|
)
|
||||||||
Other Income (Expense)
|
||||||||||||||||
Loss on extinguishment
|
309,013
|
(511,086
|
)
|
309,013
|
(606,890
|
)
|
||||||||||
Interest Income
|
-
|
-
|
-
|
-
|
||||||||||||
Interest (Expense)
|
(4,574,131
|
)
|
(610,167
|
)
|
(12,930,657
|
)
|
(909,611
|
)
|
||||||||
Interest (Expense) - related party
|
(15,370
|
)
|
(33,758
|
)
|
(31,289
|
)
|
(115,722
|
)
|
||||||||
Total Other Income (Expense)
|
(4,280,488
|
)
|
(1,155,011
|
)
|
(12,652,933
|
(11,841,419
|
)
|
|||||||||
Net Loss Before Income Taxes
|
(7,760,877
|
)
|
(4,968,367
|
)
|
(23,370,788
|
)
|
(632,223
|
)
|
||||||||
Income tax
|
-
|
-
|
-
|
-
|
||||||||||||
Net Loss
|
$
|
(7,760,877
|
)
|
$
|
(4,968,367
|
)
|
$
|
(23,370,788
|
)
|
$
|
(11,841,419
|
)
|
||||
Basic and Diluted loss per share
|
$
|
(0.08
|
)
|
$
|
(0.06
|
)
|
$
|
(0.24
|
)
|
$
|
(0.15
|
)
|
||||
Weighted Average Shares Outstanding – Basic and Diluted
|
98,259,658
|
83,479,985
|
97,388,301
|
80,888,116
|
Shares
Outstanding – Preferred A
|
Preferred
Stock A
|
Shares
Outstanding – Preferred B
|
Preferred
Stock B
|
Shares
Outstanding - Common
|
Common Stock
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Total
Stockholders’
Deficit
|
||||||||||||||||||||||||||||
Balance as of December 31, 2018
|
3,577,370
|
$
|
3,577
|
-
|
$
|
-
|
96,872,725
|
$
|
96,873
|
$
|
72,114,707
|
$
|
(67,047,343
|
)
|
$
|
5,167,814
|
||||||||||||||||||||
Issuance of preferred stock
|
-
|
-
|
14,000
|
14
|
-
|
-
|
349,986
|
-
|
350,000
|
|||||||||||||||||||||||||||
Issuance of common stock for advances
|
-
|
-
|
-
|
-
|
425,000
|
425
|
(425
|
)
|
-
|
-
|
||||||||||||||||||||||||||
Issuance of restricted stock for wages
|
-
|
-
|
-
|
-
|
792,435
|
792
|
178,642
|
-
|
179,434
|
|||||||||||||||||||||||||||
Issuance of stock in conjunction with contracts
|
-
|
-
|
-
|
-
|
240,000
|
240
|
57,360
|
-
|
57,600
|
|||||||||||||||||||||||||||
BlackRidge Research equity sales
|
-
|
-
|
-
|
-
|
-
|
-
|
1,983,755
|
-
|
1,983,755
|
|||||||||||||||||||||||||||
Issuance of options for payables
|
-
|
-
|
-
|
-
|
-
|
-
|
7,551
|
-
|
7,551
|
|||||||||||||||||||||||||||
Issuance of stock in conjunction with debt agreements
|
-
|
-
|
-
|
-
|
1,538,258
|
1,538
|
244,328
|
-
|
245,866
|
|||||||||||||||||||||||||||
Issuance of warrants in conjunction with debt agreements
|
-
|
-
|
-
|
-
|
-
|
-
|
100,049
|
-
|
100,049
|
|||||||||||||||||||||||||||
Issuance of options in conjunction with contracts
|
-
|
-
|
-
|
-
|
-
|
-
|
29,270
|
-
|
29,270
|
|||||||||||||||||||||||||||
Issuance of options for wages payable
|
-
|
-
|
-
|
-
|
-
|
-
|
469,906
|
-
|
469,906
|
|||||||||||||||||||||||||||
Share based compensation
|
-
|
-
|
-
|
-
|
-
|
-
|
707,453
|
-
|
707,453
|
|||||||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(23,370,788
|
)
|
(23,370,788
|
)
|
|||||||||||||||||||||||||
Balance as of September 30, 2019
|
3,577,370
|
3,577
|
14,000
|
$
|
14
|
99,868,418
|
99,868
|
76,242,582
|
(90,418,131
|
)
|
(14,072,090
|
)
|
||||||||||||||||||||||||
Balance as of December 31, 2017
|
3,639,783
|
3,640
|
-
|
-
|
77,063,171
|
77,063
|
51,384,027
|
(49,896,376
|
)
|
1,568,354
|
||||||||||||||||||||||||||
Preferred share conversion
|
(45,173
|
)
|
(45
|
)
|
-
|
-
|
535,565
|
536
|
(491
|
)
|
-
|
-
|
||||||||||||||||||||||||
Issuance of restricted stock for wages
|
-
|
-
|
-
|
-
|
78,125
|
78
|
24,922
|
-
|
25,000
|
|||||||||||||||||||||||||||
Issuance of stock in conjunction with contracts
|
-
|
-
|
-
|
-
|
5,719,304
|
5,719
|
407,951
|
-
|
413,670
|
|||||||||||||||||||||||||||
Issuance of options in conjunction with contracts
|
-
|
-
|
-
|
-
|
-
|
-
|
85,921
|
-
|
85,921
|
|||||||||||||||||||||||||||
Issuance of stock for debt conversion
|
-
|
-
|
-
|
-
|
4,775,638
|
4,776
|
1,189,134
|
-
|
1,193,910
|
|||||||||||||||||||||||||||
Issuance of stock for wages payable
|
-
|
-
|
-
|
-
|
2,935,818
|
2,936
|
1,024,600
|
-
|
1,027,536
|
|||||||||||||||||||||||||||
Beneficial conversion feature on convertible debt
|
-
|
-
|
-
|
-
|
-
|
-
|
5,726,678
|
-
|
5,726,678
|
|||||||||||||||||||||||||||
Issuance of warrants in conjunction with debt
|
-
|
-
|
-
|
-
|
-
|
-
|
6,250,898
|
-
|
6,250,898
|
|||||||||||||||||||||||||||
Share based compensation
|
-
|
-
|
-
|
-
|
-
|
-
|
708,684
|
-
|
708,684
|
|||||||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(11,841,419
|
)
|
(11,841,419
|
)
|
|||||||||||||||||||||||||
Balance as of September 30, 2018
|
3,594,610
|
$
|
3,595
|
-
|
$
|
-
|
91,107,621
|
$
|
91,108
|
$
|
66,802,323
|
$
|
(61,737,795
|
)
|
$
|
5,159,231
|
Shares Outstanding – Preferred A
|
Preferred Stock A
|
Shares Outstanding – Preferred B
|
Preferred Stock B
|
Shares Outstanding - Common
|
Common Stock
|
Additional Paid-in
Capital
|
Accumulated Deficit
|
Subscriptions
Payable
|
Total Stockholders’ Deficit
|
|||||||||||||||||||||||||||||||
Balance as of June 30, 2019
|
3,577,370
|
$
|
3,577
|
-
|
$
|
-
|
97,297,725
|
$
|
97,298
|
$
|
74,049,275
|
$
|
(82,657,254
|
)
|
$
|
333,795
|
$
|
(8,173,309
|
)
|
|||||||||||||||||||||
Issuance of preferred stock
|
-
|
-
|
14,000
|
14
|
-
|
-
|
349,986
|
-
|
(350,000
|
)
|
-
|
|||||||||||||||||||||||||||||
Issuance of restricted stock for wages
|
-
|
-
|
-
|
-
|
792,435
|
792
|
178,642
|
-
|
-
|
179,434
|
||||||||||||||||||||||||||||||
Issuance of stock in conjunction with contracts
|
-
|
-
|
-
|
-
|
240,000
|
240
|
57,360
|
-
|
-
|
57,600
|
||||||||||||||||||||||||||||||
BlackRidge Research equity sales
|
-
|
-
|
-
|
-
|
-
|
-
|
500,000
|
-
|
16,205
|
516,205
|
||||||||||||||||||||||||||||||
Issuance of options for payables
|
-
|
-
|
-
|
-
|
-
|
-
|
7,551
|
-
|
-
|
7,551
|
||||||||||||||||||||||||||||||
Issuance of stock in conjunction with debt agreements
|
-
|
-
|
-
|
-
|
1,538,258
|
1,538
|
244,328
|
-
|
-
|
245,866
|
||||||||||||||||||||||||||||||
Issuance of warrants in conjunction with debt agreements
|
-
|
-
|
-
|
-
|
-
|
-
|
100,049
|
-
|
-
|
100,049
|
||||||||||||||||||||||||||||||
Issuance of options in conjunction with contracts
|
-
|
-
|
-
|
-
|
-
|
-
|
16,088
|
-
|
-
|
16,088
|
||||||||||||||||||||||||||||||
Issuance of options for wages payable
|
-
|
-
|
-
|
-
|
-
|
-
|
469,906
|
-
|
-
|
469,906
|
||||||||||||||||||||||||||||||
Share based compensation
|
-
|
-
|
-
|
-
|
-
|
-
|
269,397
|
-
|
-
|
269,397
|
||||||||||||||||||||||||||||||
Net loss
|
-
|
-
|
- |
- |
-
|
-
|
-
|
(7,760,877
|
)
|
-
|
(7,760,877
|
)
|
||||||||||||||||||||||||||||
Balance as of September 30, 2019
|
3,577,370
|
3,577
|
14,000
|
$
|
14
|
99,868,418
|
99,868
|
76,242,582
|
(90,418,131
|
)
|
-
|
(14,072,090
|
)
|
|||||||||||||||||||||||||||
Balance as of June 30, 2018
|
3,594,610
|
3,595
|
-
|
$
|
-
|
83,396,165
|
83,396
|
58,027,102
|
(56,769,428
|
)
|
-
|
1,344,665
|
||||||||||||||||||||||||||||
Issuance of options in conjunction with contracts
|
-
|
-
|
-
|
-
|
-
|
-
|
85,921
|
-
|
-
|
85,921
|
||||||||||||||||||||||||||||||
Issuance of stock for debt conversion
|
-
|
-
|
-
|
-
|
4,775,638
|
4,776
|
1,189,134
|
-
|
-
|
1,193,910
|
||||||||||||||||||||||||||||||
Issuance of stock for wages payable
|
-
|
-
|
-
|
-
|
2,935,818
|
2,936
|
1,024,600
|
-
|
-
|
1,027,536
|
||||||||||||||||||||||||||||||
Beneficial conversion feature on convertible debt
|
-
|
-
|
- |
- |
-
|
-
|
2,859,566
|
-
|
-
|
2,859,566
|
||||||||||||||||||||||||||||||
Issuance of warrants in conjunction with debt
|
-
|
-
|
- |
- |
-
|
-
|
3,115,441
|
-
|
-
|
3,115,441
|
||||||||||||||||||||||||||||||
Share based compensation
|
-
|
-
|
- |
- |
-
|
-
|
500,560
|
-
|
-
|
500,560
|
||||||||||||||||||||||||||||||
Net loss
|
-
|
-
|
- |
- |
-
|
-
|
-
|
(4,968,367
|
)
|
-
|
(4,968,367
|
)
|
||||||||||||||||||||||||||||
Balance as of September 30, 2018
|
3,594,610
|
$
|
3,595
|
-
|
$
|
-
|
91,107,621
|
$
|
91,108
|
$
|
66,802,323
|
$
|
(61,737,795
|
)
|
$
|
-
|
$
|
5,159,231
|
Nine Months
Ended September 30,
|
||||||||
2019
|
2018
|
|||||||
Cash Flows From Operating Activities
|
||||||||
Net loss
|
$
|
(23,370,788
|
)
|
$
|
(11,841,419
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
365,718
|
348,712
|
||||||
Amortization of debt discounts
|
11,559,076
|
520,022
|
||||||
Common stock and warrants issued in conjunction with contracts
|
60,000
|
413,670
|
||||||
Share based compensation
|
707,453
|
708,684
|
||||||
Warrants issued in conjunction with contracts
|
29,270
|
85,921
|
||||||
(Gain) loss on extinguishment of debt
|
(309,013
|
)
|
606,890
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(167,219
|
)
|
48,859
|
|||||
Inventory
|
(39,010
|
)
|
(15,595
|
)
|
||||
Prepaid expenses
|
(97,632
|
)
|
237,493
|
|||||
Accounts payable
|
1,868,439
|
(42,330
|
)
|
|||||
Accounts payable – related party
|
357,321
|
(11,411
|
)
|
|||||
Accrued interest
|
1,357,612
|
380,104
|
||||||
Accrued interest – related party
|
31,289
|
115,722
|
||||||
Deferred revenue
|
27,899
|
(3,822
|
)
|
|||||
Wages payable
|
963,606
|
736,108
|
||||||
Net Cash Used in Operating Activities
|
(6,655,979
|
)
|
(7,712,392
|
)
|
||||
Cash Flows From Investing Activities
|
||||||||
Capitalized patent costs
|
(18,898
|
)
|
-
|
|||||
Purchases of property and equipment
|
(79,386
|
)
|
-
|
|||||
Purchases of intangible assets
|
(1,772,273
|
)
|
(1,683,431
|
)
|
||||
Net Cash Used in Investing Activities
|
(1,870,557
|
)
|
(1,683,431
|
)
|
||||
Cash Flows From Financing Activities
|
||||||||
Proceeds from sale of preferred stock
|
350,000
|
-
|
||||||
Proceeds from BlackRidge Research equity sales
|
1,983,755
|
-
|
||||||
Proceeds from short term notes – related party
|
600,000
|
732,000
|
||||||
Proceeds from issuance of short term convertible notes
|
1,500,000
|
10,832,000
|
||||||
Proceeds from advances – related party
|
-
|
75,000
|
||||||
Repayments of short term debt
|
(25,000
|
)
|
(5,000
|
)
|
||||
Repayments on long term debt
|
(300,002
|
)
|
(300,001
|
)
|
||||
Net Cash Provided by Financing Activities
|
4,108,753
|
11,333,999
|
||||||
Net Increase (Decrease) In Cash
|
(4,417,783
|
)
|
1,938,176
|
|||||
Cash, Beginning of Period
|
4,693,950
|
421,869
|
||||||
Cash, End of Period
|
$
|
276,167
|
$
|
2,360,045
|
||||
Non-Cash Investing and Financing Activities
|
||||||||
Wages payable included in capitalized intangible assets
|
$
|
-
|
$
|
23,338
|
||||
Preferred stock converted to common stock
|
$
|
-
|
$
|
536
|
||||
Common stock issued in conjunction with debt agreements
|
$
|
245,866
|
$
|
-
|
||||
Warrants issued in conjunction with debt agreements
|
$
|
100,049
|
$
|
5,644,008
|
||||
Common stock issued for wages payable
|
$
|
198,108
|
$
|
-
|
||||
Options issued for wages payable
|
$
|
707,453
|
$
|
-
|
||||
Conversion of debt and interest
|
-
|
1,193,910
|
||||||
Beneficial conversion features
|
$
|
-
|
$
|
5,726,678
|
||||
Supplemental Disclosure of Cash Flow Information:
|
||||||||
Cash paid for interest
|
$
|
13,969
|
$
|
9,485
|
||||
Cash paid for income taxes
|
$
|
-
|
$
|
-
|
Revenue
Nine Months
Ended September 30,
|
Accounts Receivable
September 30,
|
|||||||||||||||
Customers
|
2019
|
2018
|
2019
|
2018
|
||||||||||||
Customer A
|
64
|
%
|
77
|
%
|
41
|
%
|
7
|
%
|
||||||||
Customer B
|
11
|
%
|
17
|
%
|
15
|
%
|
77
|
%
|
||||||||
Customer C
|
2
|
%
|
7
|
%
|
8
|
%
|
16
|
%
|
||||||||
Customer D
|
23
|
%
|
-
|
%
|
36
|
%
|
-
|
%
|
|
Revenue
|
|||||||
Three Months
Ended September 30,
|
||||||||
Customers
|
2019
|
2018
|
||||||
Customer A
|
33
|
%
|
1
|
%
|
||||
Customer B
|
4
|
%
|
70
|
%
|
||||
Customer C
|
2
|
%
|
29
|
%
|
||||
Customer D
|
62
|
%
|
-
|
%
|
|
As of
September 30,
2019
|
As of
December 31,
2018
|
||||||
Inventory
|
$
|
430,668
|
$
|
391,658
|
||||
Less: allowance for obsolescence
|
(335,655
|
)
|
(335,655
|
)
|
||||
|
$
|
95,013
|
$
|
56,003
|
Three Months
Ended September 30,
|
Nine Months
Ended September 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Product
|
$
|
90,966
|
$
|
-
|
$
|
159,719
|
$
|
4,804
|
||||||||
Technical support and other
|
17,845
|
74,102
|
137,892
|
139,312
|
||||||||||||
Total
|
$
|
108,811
|
$
|
74,102
|
$
|
297,611
|
$
|
144,116
|
|
As of
September 30,
2019
|
As of
December 31,
2018
|
Estimated
Useful Life
|
||||||
Patent Costs
|
561,744
|
542,846
|
15 years
|
||||||
Software Licenses
|
58,260
|
58,260
|
7 years
|
||||||
Software Development Costs
|
11,980,333
|
10,208,061
|
5 years
|
||||||
Less: accumulated amortization
|
(2,231,011
|
)
|
(1,888,807
|
)
|
|
||||
|
$
|
10,369,326
|
$
|
8,920,360
|
|
September 30,
2019
|
December 31,
2018
|
|||||||
Beginning Balance
|
$
|
45,232
|
$
|
50,232
|
||||
Repayments
|
-
|
(5,000
|
)
|
|||||
Ending Balance
|
$
|
45,232
|
$
|
45,232
|
September 30,
2019
|
December 31,
2018
|
|||||||
Beginning Balance
|
$
|
366,657
|
$
|
766,658
|
||||
Repayments
|
(300,002
|
)
|
(400,001
|
)
|
||||
Ending Balance
|
$
|
66,655
|
$
|
366,657
|
||||
Short Term Portion of Long Term Debt
|
$
|
66,655
|
$
|
366,657
|
||||
Long Term Debt
|
$
|
-
|
$
|
-
|
September 30,
2019
|
December 31,
2018
|
|||||||
Beginning Balance, net of discounts
|
$
|
3,471,644
|
$
|
601,576
|
||||
Proceeds from issuance of convertible notes, net of issuance Discounts
|
-
|
1,903,438
|
||||||
New convertible notes net of discounts
|
1,754,085
|
-
|
||||||
Repayments
|
(25,000
|
)
|
-
|
|||||
Restructuring of debt
|
1,332,501
|
(112,017
|
)
|
|||||
Conversion of notes payable into common stock
|
-
|
(570,000
|
)
|
|||||
Amortization of discounts
|
11,559,076
|
1,648,647
|
||||||
Ending Balance, net of discounts
|
$
|
18,092,306
|
$
|
3,471,644
|
||||
Convertible notes, short term
|
$
|
20,934,275
|
$
|
17,860,274
|
||||
Convertible notes, short term – related party
|
$
|
758,172
|
$
|
183,172
|
||||
Convertible notes, long term
|
$
|
150,000
|
$
|
150,000
|
||||
Debt discounts
|
$
|
3,750,141
|
$
|
14,721,802
|
Note(s) Date
|
Maturity Date
|
Interest
|
Principal
|
||||||
1/31/2018*
|
1/31/2019
|
8
|
%
|
$
|
100,000
|
||||
7/10/2018*
|
7/10/2019
|
9
|
%
|
32,000
|
|||||
7/13/2018*
|
7/13/2019
|
9
|
%
|
200,000
|
|||||
12/4/2018
|
12/4/2019
|
9
|
%
|
3,000,000
|
|||||
12/19/2018
|
12/19/2019
|
9
|
%
|
3,000,000
|
|||||
7/25/2019
|
7/25/2020
|
9
|
%
|
9,590,775
|
|||||
8/14/2019
|
8/14/2020
|
9
|
%
|
350,000
|
|||||
8/29/2019
|
8/29/2020
|
6
|
%
|
784,000
|
|||||
9/11/2019
|
9/11/2020
|
10
|
%
|
282,500
|
|||||
9/17/2019
|
9/17/2020
|
9
|
%
|
3,270,000
|
|||||
9/26/2019
|
9/26/2020
|
10
|
%
|
85,000
|
|||||
9/27/2019
|
9/27/2020
|
10
|
%
|
240,000
|
|||||
$
|
20,934,275
|
Year Ending December 31,
|
||||
2019 (three months)
|
$
|
38,924
|
||
2020
|
227,541
|
|||
2021
|
232,628
|
|||
2022
|
237,731
|
|||
2023 and thereafter
|
18,569
|
|||
Total minimum lease payments
|
$
|
755,393
|
September 30,
|
December 31,
|
|||||||||
Party Name:
|
Relationship:
|
Nature of transactions:
|
2019
|
2018
|
||||||
John Bluher
|
Chief Financial Officer
|
Expense reimbursement
|
$
|
11,037
|
$
|
4,465
|
||||
Robert Graham
|
Chairman and CEO
|
Expense reimbursement
|
10,688
|
-
|
||||||
John Hayes
|
Chief Technology Officer
|
Advances
|
300,000
|
-
|
||||||
John Hayes
|
Chief Technology Officer
|
Expense reimbursement
|
45,286
|
5,225
|
||||||
|
|
|
$
|
367,011
|
$
|
9,690
|
|
Commitment
Date
|
|||
Expected dividends
|
0
|
%
|
||
Expected term
|
5 years
|
|||
Risk free rate
|
1.42 - 2.49
|
%
|
||
Volatility
|
47.64 – 48.46
|
%
|
Employee and Director
Options
Outstanding
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Life
|
Weighted
Average
Grant Date
Fair Value
|
||||||||||
Balance – December 31, 2017
|
6,962,560
|
$
|
0.60
|
4.65 years
|
$
|
0.28
|
|||||||
Granted
|
10,390,741
|
|
0.33
|
5 years
|
|
0.16
|
|||||||
Exercised
|
-
|
||||||||||||
Expired
|
(57,827
|
)
|
|||||||||||
Forfeited
|
(349,048
|
)
|
|||||||||||
Ending Balance – December 31, 2018
|
16,946,426
|
|
0.43
|
4.32 years
|
|
0.20
|
|||||||
Granted
|
21,531,000
|
|
0.25
|
5 years
|
|
0.06
|
|||||||
Exercised
|
-
|
||||||||||||
Expired
|
(63,839
|
)
|
|||||||||||
Forfeited
|
(227,738
|
)
|
|||||||||||
Ending Balance –September 30, 2019
|
38,185,848
|
$
|
0.33
|
4.33 years
|
$
|
0.12
|
|||||||
Exercisable options
|
10,392,791
|
$
|
0.43
|
3.63 years
|
$
|
0.20
|
Options Outstanding
|
Option Exercisable
|
|||||||||||||||||||||||||
Exercise Price Range |
Number
Outstanding |
Weighted Average
Remaining Contractual Life (in years) |
Weighted Average
Exercise Price |
Number
Exercisable |
Weighted
Average Exercise Price |
Intrinsic Value
|
||||||||||||||||||||
$
|
0.25 - $0.60
|
38,185,848
|
4.33
|
$
|
0.33
|
10,392,791
|
$
|
0.43
|
$
|
-
|
|
Commitment
Date
|
|||
Expected dividends
|
0
|
%
|
||
Expected term
|
5 - 7 years
|
|||
Risk free rate
|
1.51 - 2.62
|
%
|
||
Volatility
|
47.64 – 48.46
|
%
|
Warrants Outstanding
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Life
|
Weighted
Average
Grant Date
Fair Value
|
||||||||||
Balance – December 31, 2017
|
43,068,636
|
$
|
0.45
|
4.69 years
|
$
|
0.08
|
|||||||
Granted
|
73,755,856
|
|
0.26
|
6.68 years
|
|
0.14
|
|||||||
Exercised
|
-
|
||||||||||||
Expired
|
-
|
||||||||||||
Forfeited
|
(7,087,500
|
)
|
|||||||||||
Ending Balance – December 31, 2018
|
109,736,992
|
|
0.32
|
5.46 years
|
|
0.13
|
|||||||
Granted
|
6,324,258
|
|
0.26
|
6.26 years
|
|
0.06
|
|||||||
Exercised
|
-
|
||||||||||||
Expired
|
-
|
||||||||||||
Forfeited
|
-
|
||||||||||||
Ending Balance – September 30, 2019
|
116,061,250
|
$
|
0.32
|
4.78 years
|
$
|
0.13
|
|||||||
Exercisable warrants
|
116,061,250
|
$
|
0.32
|
4.78 years
|
$
|
0.13
|
Warrants Outstanding
|
Warrants Exercisable
|
|||||||||||||||||||||||||
Exercise
Price Range
|
Number
Outstanding |
Weighted Average
Remaining Contractual Life (in years) |
Weighted Average
Exercise Price |
Number
Exercisable |
Weighted
Average Exercise Price |
Intrinsic Value
|
||||||||||||||||||||
$
|
0.01 - $0.70
|
116,061,250
|
4.78
|
$
|
0.32
|
116,061,250
|
$
|
0.32
|
$
|
1,328,095
|
As of
June 30,
2019
|
As of
December 31,
2018
|
|||||||
Warrants (exercise price $0.01 - $0.70/share)
|
116,061,250
|
109,736,992
|
||||||
Options (exercise price $0.25 - $0.66/share)
|
45,438,773
|
20,436,601
|
||||||
Preferred Stock (exchange ratio 16.69 – 17.11)
|
61,137,484
|
59,691,998
|
||||||
Preferred Stock in BlackRidge Research (exchange ratio 200)
|
8,000,000
|
-
|
||||||
Convertible Debt
|
84,918,245
|
-
|
||||||
315,555,752
|
189,865,591
|
•
|
1U rack-mountable 1GbE or 10GbE network appliance;
|
•
|
1GbE fanless desktop appliance;
|
•
|
VMware ESXi™ and KVM virtual appliances;
|
•
|
Amazon Web Services and Microsoft Azure cloud virtual appliances;
|
•
|
Windows and Linux software endpoints; and
|
•
|
IoT endpoints and devices.
|
Useful Life
|
|
Patent Costs
|
20 years
|
Software Licenses
|
7 years
|
Software Development Costs
|
15 years
|
•
|
Identification of the contract, or contracts, with a customer
|
•
|
Identification of the performance obligations in the contract
|
•
|
Determination of the transaction price
|
•
|
Allocation of the transaction price to the performance obligations in the contract
|
•
|
Recognition of revenue when, or as, we satisfy performance obligation
|
10.1
|
|
10.2
|
|
10.3
|
|
10.4
|
|
10.5
|
|
31.1
|
|
31.2
|
|
32.1
|
|
32.2
|
101 INS
|
XBRL Instance Document*
|
101 SCH
|
XBRL Schema Document*
|
101 CAL
|
XBRL Calculation Linkbase Document*
|
101 DEF
|
XBRL Definition Linkbase Document*
|
101 LAB
|
XBRL Labels Linkbase Document*
|
101 PRE
|
XBRL Presentation Linkbase Document*
|
Date:
|
November 14, 2019
|
By:
|
/s/ Robert Graham
|
Robert Graham,
Chief Executive Officer and President
|
Date:
|
November 14, 2019
|
By:
|
/s/ John Bluher
|
John Bluher,
Chief Financial Officer
|
PEJ1CUZ#5,*1CMJ1'M.O
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