UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarter ended:
or
For the Transition Period from ___________ to____________
Commission File Number:
(Exact Name of registrant as specified in its charter)
| (State or other jurisdiction of | (IRS Employer I.D. No.) |
| incorporation) |
(Address of principal executive offices and Zip Code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered |
| N/A | N/A |
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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted 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 and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| 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 May 15, 2024, there were shares outstanding of the registrant’s common stock.
WYTEC INTERNATIONAL, INC.
FORM 10-Q
March 31, 2024
Table of Contents
| 2 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
WYTEC INTERNATIONAL, INC.
BALANCE SHEETS
(Unaudited)
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Inventory | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Investment in limited liability company | ||||||||
| Operating lease, right-of-use asset | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders' Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accounts payable, related parties | ||||||||
| Other payable | ||||||||
| Operating lease, right-of-use obligation, current portion | ||||||||
| Contract liability | ||||||||
| Notes payable, current portion | ||||||||
| Convertible promissory notes | ||||||||
| Promissory notes, shareholders | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Operating lease, right-of-use obligation, long term portion | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (See Note M) | ||||||||
| Stockholders' deficit: | ||||||||
| Preferred stock, par value $ per share, shares authorized: | ||||||||
| Series A convertible preferred stock, par value $ per share, shares designated, shares issued and shares outstanding at March 31, 2024 and December 31, 2023 | ||||||||
| Series B convertible preferred stock, par value $ per share, shares designated, shares issued and shares outstanding at March 31, 2024 and December 31, 2023 | ||||||||
| Series C convertible preferred stock, par value $ per share, shares designated, shares issued and outstanding at March 31, 2024 and December 31, 2023 | ||||||||
| Common stock, par value $ per share, shares authorized, and shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Repurchased shares | ( | ) | ( | ) | ||||
| Subscriptions payable | ||||||||
| Treasury stock: | ||||||||
| Series A convertible preferred stock, at cost, shares | ( | ) | ( | ) | ||||
| Series B convertible preferred stock, at cost, shares | ( | ) | ( | ) | ||||
| Total stockholders' deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders' deficit | $ | $ | ||||||
See accompanying notes to unaudited financial statements
| 3 |
WYTEC INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenues | $ | $ | ||||||
| Cost of revenues | ||||||||
| Gross profit | ||||||||
| Expenses: | ||||||||
| Selling, general and administrative | ||||||||
| Research and development | ||||||||
| Depreciation and amortization | ||||||||
| Operating expenses, net | ||||||||
| Net operating loss | ( |
) | ( |
) | ||||
| Other expense: | ||||||||
| Interest expense | ||||||||
| Total other expense | ||||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
| Weighted average number of common shares outstanding - basic and fully diluted | ||||||||
| Net loss per share - basic and fully diluted | $ | ) | $ | ) | ||||
See accompanying notes to unaudited financial statements
| 4 |
WYTEC INTERNATIONAL, INC.
STATEMENTS OF STOCKHOLDERS' DEFICIT
For the three months ended March 31, 2024 and 2023
(Unaudited)
| Class A | Class B | Class C | Class A Preferred | |||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | Treasury Stock | ||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||
| Balance, January 1, 2024 | $ | $ | $ | $ | $ | ( |
) | |||||||||||||||||||||||||||||||||
| Conversion of note payable into common stock | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| Warrants exercised for cash | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| Cashless warrant exercised | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| Stock issued to existing holders | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| Extension of warrants | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Common stock issuable for board member compensation | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Net loss for the three months ended March 31, 2024 | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | $ | $ | ( |
) | |||||||||||||||||||||||||||||||||
| Balance, January 1, 2023 | $ | $ | $ | $ | $ | ( |
) | |||||||||||||||||||||||||||||||||
| Net loss for the three months ended March 31, 2023 | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | $ | $ | ( |
) | |||||||||||||||||||||||||||||||||
See accompanying notes to unaudited financial statements
| 5 |
WYTEC INTERNATIONAL, INC.
STATEMENTS OF STOCKHOLDERS' DEFICIT
For the three months ended March 31, 2024 and 2023
(Unaudited)
(Continued)
| Class B Preferred | Additional | Total |
||||||||||||||||||||||||||
| Treasury Stock | Paid-in | Repurchased | Subscriptions | Accumulated | Stockholders’ | |||||||||||||||||||||||
| Shares | Amount | Capital | Shares | Payable | Deficit | Deficit | ||||||||||||||||||||||
| Balance, January 1, 2024 | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||
| Conversion of note payable into common stock | – | |||||||||||||||||||||||||||
| Warrants exercised for cash | – | |||||||||||||||||||||||||||
| Cashless warrant exercised | – | ( |
) | |||||||||||||||||||||||||
| Stock issued to existing holders | – | |||||||||||||||||||||||||||
| Extension of warrants | – | |||||||||||||||||||||||||||
| Common stock issuable for board member compensation | – | |||||||||||||||||||||||||||
| Net loss for the three months ended March 31, 2024 | – | ( |
) | ( |
) | |||||||||||||||||||||||
| Balance, March 31, 2024 | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||
| Balance, January 1, 2023 | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||
| Net loss for the three months ended March 31, 2023 | – | ( |
) | ( |
) | |||||||||||||||||||||||
| Balance, March 31, 2023 | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||
See accompanying notes to unaudited financial statements
| 6 |
WYTEC INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Three Months | ||||||||
| Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Stock based compensation | ||||||||
| Non-cash lease expense | ||||||||
| Decrease (increase) in operating assets | ||||||||
| Accounts receivable | ||||||||
| Inventory | ( | ) | ||||||
| Other current assets | ( | ) | ||||||
| Increase (decrease) in operating liabilities | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Accounts payable, related party | ( | ) | ||||||
| Contract liability | ( | ) | ||||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of equipment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities | ||||||||
| Proceeds from promissory notes, shareholders | ||||||||
| Proceeds from issuance of convertible promissory notes | ||||||||
| Payments on notes payable | ( | ) | ( | ) | ||||
| Proceeds from exercise of warrants | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash - beginning of period | ||||||||
| Cash - end of period | $ | $ | ||||||
| Supplemental disclosures: | ||||||||
| Interest paid | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Conversion of accrued interest and note payable into common stock | $ | $ | ||||||
| ROU assets and operating lease obligations recognized | $ | $ | ||||||
See accompanying notes to unaudited financial statements
| 7 |
WYTEC INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE A – SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles (“U.S. GAAP”), have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the audited financial statements and footnotes included in the Company's Annual Report on Form 10-K filed with the SEC on March 29, 2024. The results for the three months ended March 31, 2024, are not necessarily indicative of the results to be expected for the year ended December 31, 2024. These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained therein.
Description of Business: Wytec International, Inc. (“Wytec,” “we,” “our,” “us,” or the “Company”), a Nevada corporation, designs, manufactures, and installs carrier-class Wi-Fi Solutions in the 70 and 80 gigahertz licensed frequency program to local government, Mobile Service Operations, National Telecommunications Operators, and corporate enterprises. Wytec was previously involved in the sale of wired and wireless services, including products, wireless data cards, back-office platform and rate plans to their commercial and enterprise clients and has been engaged in the sale of Federal Communications Commission (“FCC”) registered links participating in the 70 and 80 gigahertz licensed frequency program (the “Program”). The Program allowed qualified individuals to own a segment of the “backhaul” infrastructure of Wytec’s city-wide business deployment.
Basis of Accounting: The accompanying financial statements have been prepared by the Company’s management in accordance with U.S. GAAP and applied on a consistent basis.
Revenue Recognition. Revenue is recognized by applying the following five steps: 1) identify the contract with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations; and 5) recognize revenue when (or as) we satisfy a performance obligation.
The Company earns revenues from contracts with customers for sales and installation of cellular enhancement equipment and support agreements. Revenue from the sale and installation of cellular enhancement equipment is recognized either when the installation is completed or as the Company installs the cellular enhancement equipment, depending on the complexity of the system, such as the degree of customization of the equipment being installed, and the agreement with the customer. Revenue from the installation of systems, which management believes have an alternative use, is recognized upon customer acceptance. This assessment, at contract inception, is based on the combination of equipment ordered, the services performed and whether or not material effort, within the context of the contract, would be required to rework the equipment for another project. For example, such contracts are usually completed within 30-45 days. In larger more complex projects where the Company is creating an asset for the customer with no alternative use and has an enforceable right to payment for performance prior to contract completion, we recognize revenue utilizing the percentage of completion method. This method measures completion based on management’s estimate of total costs to complete each contract because management considers total costs to be the best available measure of progress on the contract. During 2024 and 2023, all sales and installation revenue were recognized when the installation was completed, per company policy.
Support agreements entered into with customers are generally for a period of one year, during which the Company stands ready to provide service and support for installed systems at the customer site. Support agreement amounts are billed in advance to the customer, as agreed in the contract, and recorded as a contract liability. During the period, the Company provides unspecified firmware upgrades to installed client equipment as they are available. Management estimates that straight line recognition of revenue over the period of the support agreement contract is representative of the pattern of delivery on the Company’s obligation under these agreements.
| 8 |
The Company has applied the practical expedient that permits the Company to recognize revenue without regard to significant financing components based on the Company’s expectations about the transfer of services and the receipt of payment from customers. The effect of this practical expedient is not material to the Company’s financial statements.
Sales tax is recorded on a net basis and excluded from revenue.
Inventory: Inventory is stated at the lower of cost or selling price less costs to complete and sell. Specific identification is used to track inventory and record cost of goods sold when the inventory is sold.
Allowance for Credit Losses: The allowance
for credit losses is evaluated on a regular basis through periodic reviews of the collectability of the receivables in light of historical
experience, adverse situations that may affect our customers' ability to repay, and prevailing economic conditions. This evaluation is
inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Accounts
receivable are determined to be past due based on how recently payments have been received and those considered uncollectible are charged
against the allowance account in the period they are deemed uncollectible.
Operating Leases Right-of-use Assets and Operating Lease Obligations: If we determine that an arrangement is or contains a lease, we recognize a right-of-use (“ROU”) asset and lease obligation at the commencement date of the lease. ROU assets represent our right to use an underlying asset for the lease term and lease obligations represent our lease payments arising from the lease. Operating lease ROU assets and obligations are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Stock Based Compensation: The Company measures stock-based compensation expense for stock awards at the grant date, based on the fair value-based measurement of the award, and the expense is recorded over the related service period, generally the vesting period, net of estimated forfeitures. The Company calculates the fair value-based measurement of warrants using the Black-Scholes valuation model and the simplified method and recognizes expense using the straight-line attribution approach.
Estimating the fair value of share-based awards requires the input of subjective assumptions, including the estimated fair value of the Company’s common stock, the expected life of the warrants and stock price volatility. The fair value of the Company’s common stock is determined by the Board reasonably and in good faith with an independent valuation review, which requires judgmental inputs and assumptions such as cash flow projections, peer company comparisons, market data, growth rates and discount rate.
The expected term of the warrant is estimated using the contractual life as the Company has no historical information from which to develop reasonable expectations about future exercise patterns. For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of warrants. The risk-free rate is based on the U.S. Treasury yield curve commensurate with the expected term of the option. The expected dividend yield is 0% because the Company has not historically paid, and does not expect, for the foreseeable future, to pay a dividend on its common stock.
Cost Method Investment: Investments made by the Company are currently classified as cost method investment, or investments that do not hold any significant influence or control and do not have a readily-determinable fair value. As the investment does not have a readily-determinable fair value and as the investment is not into an investment fund, the measurement alternate approach, in accordance with ASC 321, is used to measure the fair value of the investment. The measurement alternate approach is defined as cost, less impairment, adjusted (increased or decreased) for information about fair value of the investment from observable price changes, whenever those occur.
| 9 |
NOTE B – GOING CONCERN
Our financial statements are prepared using accounting
principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets
and liquidation of liabilities in the normal course of business. We have incurred continuous losses from operations, have an accumulated
deficit of $
In addition, the Company expects to have ongoing requirements for capital investment to implement its business plan. Finally, the Company’s ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered by entrance into established markets and the competitive environment in which it operates.
We estimate that we will need approximately $3,100,000 of capital or financing over the next twelve months to fund our planned operations, which we plan to satisfy as described below under “Satisfaction of our Cash Needs for the Next 12 Months.
Since inception, operations have primarily been funded through private placements of equity and convertible debt. Management expects to continue to seek additional funding through private or public sources. The Company’s ability to continue as a going concern is ultimately dependent on its ability to generate sufficient cash from operations to meet cash needs and/or to raise funds to finance ongoing operations and repay debt. There can be no assurance that the Company will be successful in these efforts. These factors, among others, indicate substantial doubt that the Company will be able to continue as a going concern for a period of one year from the filing of these financial statements. Management plans to raise additional funding through a capital raise associated with a public offering and/or additional private capital raises.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or the amounts and classification of liabilities that might be necessary should it be unable to continue as a going concern.
As of March 31, 2024, our cash balance was $
NOTE C – REVENUE AND ACCOUNTS RECEIVABLE
The Company invoices customers and recognizes accounts receivable in an amount it expects to receive from the customer. The Company has contracted payment terms with its customer of net 30 days. The Company recognized revenue from performance obligations satisfied as of a point in time and over time as disaggregated in the table below.
Timing of Revenue Recognition
| Schedule of disaggregation of revenue | ||||||||
| For the Three Months Ended | ||||||||
| March 31, | March 31, | |||||||
| 2024 | 2023 | |||||||
| Point in Time | $ | $ | ||||||
| Over Time | ||||||||
| 10 |
The Company earns revenues from in-building
cellular systems and network services. Revenues from the sale and installation of in-building cellular systems, including fixed
wireless, SmartDAS, and 4G LTE, totaled $
Revenues from network and other services
totaled $
The Company’s contracts for support services
are typically for terms of one year or less. The aggregate amount of contract performance obligation as of March 31, 2024 that the
Company expects to recognize over the next year is $
The Company is under no obligation and is not in the practice of providing customers with returns, rebates, discounts, or refunds. The Company, accordingly, does not recognize these obligations at the time of revenue recognition. The Company may receive future consideration from customers who enter into support agreements. Those services are delivered as of a point in time when the customer requests the service. Future consideration as described is excluded from the transaction price calculated for support agreement performance obligations.
NOTE D – INVESTMENT IN LIMITED LIABILITY COMPANY
The Company made an investment into another
company in the amount of $
NOTE E – PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
| Schedule of property and equipment | ||||||||
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Telecommunication equipment and computers | $ | $ | ||||||
| Vehicle | ||||||||
| Office furniture and fixtures | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Depreciation expense for the three months ended
March 31, 2024 and 2023 was $
| 11 |
NOTE F – DEBT
The Company’s debt consists of the following:
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Notes payable to a financial institution, at 8.75% per annum, with the equipment purchased pledged as collateral and varying due dates through November 2024 | $ | $ | ||||||
| Unsecured promissory note payable to a director of the Company, at 7% per annum, due in August 2024 | ||||||||
| Unsecured promissory note payable to the president of the Company, at 5% per annum, due in October 2024 | ||||||||
| Secured convertible promissory notes payable to various investors, at 9.5% per annum, due on December 31, 2024 | ||||||||
| Unsecured promissory note payable to a shareholder, at 9.5% per annum, due on June 30, 2024 | ||||||||
| Unsecured promissory note payable to the president of the Company, at 7% per annum, due on September 30,2024 | ||||||||
| Total | $ | $ | ||||||
In February 2020, we issued a note in the amount
of $
In October 2021, the president of the Company
loaned the Company $
In January 2023, the president of the Company
loaned the Company $
| 12 |
In February 2023, we commenced an offering of
up to $25,000,000 of 9.5% secured convertible promissory notes (“2023 Notes”) pursuant to a private placement in accordance
with Rule 506(c) of Regulation D of the Securities Act of 1933, as amended (the “2023 Offering”). The 2023 Notes together
with all accrued and unpaid interest will be payable on or before December 31, 2024 and will be secured by a perfected recorded first
priority security interest in the Company’s LP-16 patent. If the Company’s common stock is listed on the NASDAQ Capital Markets
on or before the maturity date, the outstanding Notes will automatically be converted into shares of the Company’s common stock
at a rate equal to the price per share in the public offering. If the Notes have not otherwise been automatically converted into shares
of the Company’s common stock, the noteholders (“2023 Noteholders”) will have the option, on or before the maturity
date, to convert all or a portion of their outstanding 2023 Notes into shares of the Company’s common stock at a rate equal to $5.00
per share and, immediately upon the conversion, the converting Noteholders will be issued a number of new warrants from the Company equal
to the dollar amount of the conversion divided by $5.00 (the “2023 Warrants”). The 2023 Warrants will be exercisable until
December 31, 2024 at an exercise price equal to the greater of (i) five dollars ($5.00) or (ii) eighty-five percent (85%) of the 10-day
moving average of the Company’s public trading price if the Company’s securities are trading on a public securities trading
market. The Company issued a total of $
NOTE G – REPURCHASE AGREEMENT
In April 2020, we entered into a Repurchase and
General Release Agreement with one shareholder pursuant to which we promised to pay the amount of $200,000 due on December 31, 2020 in
exchange for 40,000 shares of common stock and 40,000 shares of Series B Preferred Stock (which shares automatically converted into 40,000
shares of common stock in April 2022). The agreement stated that the Company was to make $10,000 monthly installments with the balance
payable on the maturity date. The agreement contains a feature that allows the Company to extend the maturity date of the amount payable
to March 31, 2021 in the Company’s sole discretion, and if the Company exercises this option, the $10,000 monthly installments will
continue until the extended maturity date on which date the remaining balance will be due. During the quarter ended December 31, 2020,
the Company extended the maturity date under the terms of the agreement to March 2021. The Company made payments in the amount of $
NOTE H – LEASES
Short Term Leases
The Company leased its office space
on a month to month basis until February 29, 2024. Total lease expense related to this short term lease was $
Operating Leases
The Company leases its office
space and leased Wi-Fi facilities under operating leases. For the three month period ended March 31, 2024 and 2023, operating
lease expense totaled $
The remaining weighted average lease term is
| 13 |
Future minimum lease payments as of March 31, 2024 are as follows:
| 2025 | $ | |||
| 2026 | ||||
| Total minimum lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Present value of minimum lease payment | $ | |||
| Less: current portion of lease obligation | ||||
| Long-term lease obligation | $ | |||
NOTE I – WARRANTS
The Company has common stock purchase
warrants outstanding at March 31, 2024 to purchase
To calculate the fair value of stock warrants at the date of grant, we use the Black-Scholes option pricing model. The volatility used is based on historical volatilities of selected peer group companies. Management estimated the fair value of the underlying common stock by utilizing the discounted cash flow method and the prior transaction method approaches and determined a fair value of $5.00. Management estimates the average volatility considering current and future expected market conditions. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Each issuance is individually valued according to this procedure as of the date of issue with maturity dates through October 11, 2026, volatility estimates between 28.30% to 29.69% and risk-free rates 4.70% to 5.00% in the period.
During June 2023, the Company issued common
stock purchase warrants (“Warrants”) pursuant to its offering of up to up to $25,000,000 of 9.5% secured convertible promissory
notes (“Notes”) pursuant to a private placement in accordance with Rule 506(c) of Regulation D of the Securities Act of 1933,
as amended (the “2022 Offering”), and
During the third quarter of 2023, the Company
issued
During October 2023, the Company issued
common stock purchase warrants as compensation to the director of operations of the Company. The total cost of the warrants was $,
which was recorded in additional paid in capital and which was reduced by $
During the fourth quarter of 2023, the Company
issued
| 14 |
During December 2023, the Company issued
During December 2023, the Company issued
In December 2023, the Company extended the expiration date of all warrants expiring on December 31, 2023 to January 31, 2024. Due to the modification of the warrants, the difference between the fair value of the modified warrants and the fair value of the warrants immediately before modification was recorded as a warrant expense, which was only applicable to service warrants. Total incremental increase in the warrants was $, which was recorded as stock compensation expense and is included in the general and administrative expenses in the accompanying statement of operations for the year ended December 31, 2023.
During December 2023, the Company issued a total
of shares of the Company’s common stock upon the exercise of Warrants, 2023 Warrants, and other common
stock purchase warrants by several investors at an exercise price of $5.00 per share or a total of $
During December 2023, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of a total of common stock purchase warrants by several investors.
In January 2024, the Company extended the expiration date of 2,000,000 common stock purchase warrants owned by the president of the Company, to December 31, 2025. Due to the modification of the warrants, the difference between the fair value of the modified warrants and the fair value of the warrants immediately before the modification was recorded as a warrant expense, which was only applicable to service warrants. The total incremental increase in the warrants was $.
During the first quarter of 2024, the
Company issued
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by Mr. Christopher Stuart, a director of the Company. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by ERI. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by thirteen investors. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
In January 2024, the Company issued a total of
shares of the Company’s common stock upon the exercise of Warrants, 2023 Warrants and, other common stock
purchase warrants by a total of six investors at an exercise price of $5.00 per share for total proceeds of $
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In January 2024, the Company extended the expiration date of 85,784 common stock purchase warrants owned by Mr. Christopher Stuart and 71,233 common stock purchase warrants owned by ERI from January 31, 2024 to December 31, 2024.
The following is a summary of activity and outstanding common stock warrants:
| # of Warrants | ||||
| Balance, December 31, 2023 | ||||
| Warrants granted | ||||
| Warrants exercised | ( | ) | ||
| Warrants expired | ( | ) | ||
| Balance, March 31, 2024 | ||||
| Exercisable, March 31, 2024 | ||||
As of March 31, 2024, the outstanding and exercisable warrants have a weighted average remaining term of years and have an estimated $aggregate intrinsic value. The intrinsic value is calculated by taking the difference between the exercise price and the fair market value of the stock at March 31, 2024 multiplied by the number of warrants.
NOTE J – STOCKHOLDERS’ EQUITY
During the second quarter of 2023, the Company
issued a total of shares of the Company’s common stock along with common stock purchase warrants upon the conversion
of $
During the second quarter of 2023, the Company cancelled the subscription payable shares owed pursuant to the Consulting Agreement. The subscription payable shares were originally recorded upon the signing of that certain consulting agreement by and between the Company and a consultant, dated October 1, 2021 (the “Consulting Agreement”), but were never issued. Subsequently, the Company entered into the recession agreement with the consultant (the “Recession Agreement”) which rescinded and terminated the Consulting Agreement. Accordingly, the subscription payable shares have been removed.
During the third quarter of 2023, the Company
issued a total of shares of common stock and Warrants upon the conversion of $
During the fourth quarter of 2023, the Company
issued a total of shares of common stock, Warrants, 2023 Warrants, and other common stock purchase warrants
upon the conversion of $
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During the fourth quarter of 2023, the Company
issued a total of shares of common stock upon the exercise of Warrants, 2023 Warrants, and other common stock
purchase warrants at an exercise price of $
During December 2023, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by several investors.
During December 2023, the Company issued a total of shares to the Company’s directors as compensation valued at $for current and past services performed.
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by Mr. Christopher Stuart, a director of the Company. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by ERI. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by thirteen investors. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
NOTE K – RELATED PARTY TRANSACTIONS
The Company has an accounts payable balance
owed to Richardson & Associates in the amount of $
In 2021, ERI loaned the Company a total of $
In August 2023, ERI purchased $
In January 2022, the Company issued warrants
to purchase up to
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In February 2020, Mr. Christopher Stuart, a director
of the Company, purchased 12.5 units, each unit consisting of $
In February 2022, Mr. Stuart purchased for
$
In November and December 2022, we borrowed a total
of $
In August 2023, Mr. Stuart purchased $
In January 2024, a total of
In October 2021, the president of the Company
loaned the Company $
In September 2022, the president of the Company
loaned the Company $
In January 2024, the Company extended the expiration date of 2,000,000 common stock purchase warrants owned by the president of the Company to December 31, 2025.
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In October 2022, the president of the Company entered into an agreement, as amended in November 2022, to exchange shares of the Company’s Series C Preferred Stock owned by him for shares of the Company’s common stock. The exchange will close on the earlier of the effective date of the initial public offering of the Company’s common stock on the NASDAQ Capital Markets or October 6, 2025.
In January 2023, the president of the Company
loaned $
The Company has an accounts payable balance owed
to Mr. Robert Cook in the amount of $
NOTE L – CUSTOMER CONCENTRATIONS
The Company derived $
NOTE M – COMMITMENTS AND CONTINGENCIES
We are party to various legal proceedings arising in the ordinary course of business. We are not currently a party to any legal proceedings that management believes could have a material adverse effect on our financial statements.
At March 31, 2024 and December 31, 2023 our other
payable balance of $
In October 2022, the president of the Company entered into an agreement, as amended in November 2022, to exchange 1,000 shares of the Company’s Series C Preferred Stock owned by him for 3,000,000 shares of the Company’s common stock. The exchange will close on the earlier of the effective date of the initial public offering of the Company’s common stock on the NASDAQ Capital Markets or October 6, 2025.
See Note C in regards to commitments related to contracts with customers. See Note H in regards to commitments related to leases.
NOTE N – SUBSEQUENT EVENTS
In May 2024, the Company issued a total of 18,750 shares of the Company’s common stock to the Company’s five directors as compensation for services provided to the Company during the first quarter of 2024, valued at a total of 93,750.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This report contains forward-looking statements that are based on current expectations, estimates, forecasts and projections about Wytec International, Inc. (“Wytec,” “Company,” “us,” “we” or “our”), the industry in which we operate and other matters, as well as management's beliefs and assumptions and other statements regarding matters that are not historical facts. These statements include, in particular, statements about our plans, strategies and prospects. For example, when we use words such as “projects,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “should,” “would,” “could,” “will,” “opportunity,” “potential” or “may,” and variations of such words or other words that convey uncertainty of future events or outcomes, we are making forward-looking statements.
These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause the Company’s actual results to be materially different from any future results expressed or implied by the Company in those statements. The most important factors that could prevent the Company from achieving its stated goals include, but are not limited to, the following:
| (a) | volatility or decline of our stock price; | |
| (b) | potential fluctuation in quarterly results; | |
| (c) | failure to earn revenues or profits; | |
| (d) | inadequate capital to continue our business; | |
| (e) | insufficient revenues to cover operating costs; | |
| (f) | barriers to raising the additional capital or to obtaining the financing needed to implement our business plans; | |
| (g) | dilution experienced by our shareholders in their ownership of the Company because of the issuance of additional securities by us, or the exercise of warrants or conversion of outstanding convertible securities; | |
| (h) | inability to complete research and development of our technology with little or no current revenue; | |
| (i) | lack of demand for our products and services; | |
| (j) | loss of customers; | |
| (k) | rapid and significant changes in markets; | |
| (l) | technological innovations causing our technology to become obsolete; | |
| (m) | increased competition from existing competitors and new entrants in the market; | |
| (n) | litigation with or legal claims and allegations by outside parties; | |
| (o) | inability to start or acquire new businesses, or lack of success of new businesses started or acquired by us, if any; | |
| (p) | inability to effectively develop or commercialize our technology; and | |
| (q) | inability to obtain patent or other protection for our proprietary intellectual property. |
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Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. We caution you not to place undue reliance on the statements, which speak only as of the date of this Form 10-Q. The cautionary statements contained or referred to in this section should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.
We do not undertake any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events.
The following discussion should be read in conjunction with our unaudited financial statements and notes to those statements. In addition to historical information, the following discussion and other parts of this annual report contain forward-looking statements and information that involves risks and uncertainties.
Overview of Current Operations
Wytec International, Inc., a Nevada corporation (“Wytec,” the “Company,” “we,” “us,” or “our”), is a designer and developer of small cell technology and wide area networks designed to support 5G network deployments across the United States. Currently, we offer in-building cellular (known as a distributed antenna system, “DAS”) and private Long-term Evolution “private LTE” solutions utilizing multiple vendors through a channel agreement with Synnex Corporation, a leading distributor and solutions aggregator hosting more than 22,000 technology vendors across the world. Concurrently, Wytec is the owner of patented small cell technology, which we call the “LPN-16,” designed to support dense citywide 5G network coverage. Small cell technology is purported by PricewaterhouseCoopers International Limited to be the key component to 5G deployment.
In September 2023, we engaged Trabus Technologies to begin Wytec’s artificial intelligence (“AI”), machine learning (“ML”), and blockchain software development in preparation for a series of state and federal pilot projects to be conducted across the United States which are expected to commence in the second or third quarter of 2024. In October 2023, Wytec filed two provisional patent applications with the United States Patent and Trademark Office (“USPTO”) to enhance its LPN-16 small cell to include AI, ML, and blockchain technologies capable of supporting advanced multi-sensor technology.
In October 2023, Wytec signed a development agreement with Lemko Corporation to manufacture the updated version of our LPN-16 with AI, ML, and blockchain technologies. This agreement was signed in conjunction with our development of an integrated solution with the Nextivity Corporation (“Nextivity”) to enhance the in-building solution, utilizing Nextivity’s Cel-Fi, we currently offer to the over 190 Independent School District (“ISD”) members of the Central Texas Purchasing Alliance (“CTPA”). Wytec plans to include gunshot and drug detection solutions in conjunction with its in-building cellular services as a part of a pilot project offered to over 40 of the CTPA members requesting to be included in the pilot program.
We expect 5G to have a transformative impact on the economy and we believe that 5G citywide deployments will rely substantially on small cell technology to facilitate this impact. We believe our LPN-16 small cell can solve many of the long-term challenges faced by operators needing access to implement their 5G initiatives. It can also assist cities challenged with on-going technology upgrades, network growth demands, political hurdles, and new business models needed to realize the benefits of a 5G network. In addition to aligning with technical and governmental issues, the LPN-16 is designed to meet the standards for 5G deployment and, for operator needs, adheres to the Federal Communications Commission (“FCC”) policy initiatives addressing public safety and First Responder initiatives. Specifically, the FCC’s Report and Order 14-153, Acceleration of Broadband Deployment by Improving Wireless Facilities Siting Policies, adopts rules to help spur wireless broadband deployment by facilitating the sharing of wireless transmission equipment using “neutral host” functionality to simultaneously support multiple providers. The LPN-16 was specifically designed to support neutral host features and performance. The FCC’s goal of “shared used” and “neutral host” seeks to expand coverage and capacity more quickly, reduce costs, and promote access to infrastructure which reduces barriers to deployment and incentivize the sharing of resources, rather than relying on new builds for every stakeholder, thereby safeguarding environmental, aesthetic, historic and local land-use values.
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We have implemented an aggressive intellectual property strategy and continue to pursue patent protection for new innovations. In addition to the LPN-16 covered by our current patent, we have identified additional upgrades and additions to the LPN-16 which further tie it to the goals and timelines of Wytec’s 5G development business model, FCC policy initiatives, and customer business usage which we believe could lead to additional patentable property. We intend to file for patent protection on these developments. Our strategy is to continually monitor the costs and benefits of our patent applications and pursue those that will best protect our business and expand the core value of the Company.
We have recruited and hired a seasoned management team with both private and public company experience and relevant technical and industry experience to develop and execute our operating plan. In addition, we have identified key engineering resources for intellectual property development, antenna development, and hardware, software, and firmware engineering, as well as integration and testing that we believe will allow us to continue to expand our technology and intellectual property.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations, including the discussion on liquidity and capital resources, are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management re-evaluates its estimates and judgments, particularly those related to the determination of the estimated recoverable amounts of trade accounts receivable, impairment of long-lived assets, revenue recognition and deferred tax assets. We believe the following critical accounting policies require more significant judgment and estimates used in the preparation of the financial statements.
Revenue Recognition. Wytec International, Inc. follows the revenue standards of Financial Accounting Standards Board Update No. 2014-09: “Revenue from Contracts with Customers (Topic 606).” The core principle of the revenue model is that revenue is recognized when a customer obtains control of a good or service. A customer obtains control when it has the ability to direct the use of and obtain the benefits from the good or service. Revenue is recognized in accordance with that core principle by applying the following five steps: 1) identify the contract with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations; and 5) recognize revenue when (or as) we satisfy a performance obligation.
Our contracts for the sale of Cel-Fi systems generally include the performance obligation to sell and install (including testing, commissioning and integration services) equipment. The performance obligation is deemed satisfied once the equipment has been installed, placed in service and customer signs off on their acceptance, at a point in time.
Network service revenues are recognized each month as services are rendered.
The Company generally provides a one-year warranty on its products for materials and workmanship but may provide multiple year warranties as negotiated, and will pass on the warranties from its vendors, if any, which generally covers this one-year period. In accordance with ASC 450-20-25, the Company accrues for product warranties when the loss is probable and can be reasonably estimated. At March 31, 2024, the Company has estimated no product warranty accrual given the Company’s de minimis historical financial warranty experience.
Revenue is recorded and recognized when installation is complete. Maintenance and monitoring rates are pre-set based upon the building’s square footage. Cost of sales includes all equipment and labor that is connected to a project and all other costs are general and administrative. Laredo Independent School District projects are subject to contracted rates.
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Warrants: The Company estimates and applies its judgement when determining the inputs to the Black Scholes calculation that is used to calculate the expense for the warrants issued. The volatility used is based on historical volatilities of selected peer group companies. Management estimated the fair value of the underlying common stock by utilizing the discounted cash flow method and prior transaction method approaches. Management estimates the average volatility considering current and future expected market conditions. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Each issuance is individually valued according to this procedure as of the date of issuance.
Results of Operations for the Three Months Ended March 31, 2024 and 2023
Revenue for the three months ended March 31, 2024 and 2023 was $14,598 and $20,409, respectively. The decrease in revenue of $5,811 or 28% was primarily due to decrease in revenue from our in-building cellular systems.
Cost of sales for the three months ended March 31, 2024 and 2023 was $263 and $7,515, respectively. This decrease of $7,252, or 97%, was primarily due to decrease in costs incurred related to the sales of our in-building cellular systems.
General and administrative expenses were $1,327,216 for the three months ended March 31, 2024, as compared to $316,815 for the three months ended March 31, 2023; this resulted in an increase of $1,010,400 or 319%. Contributing factors to the increase include an increase in professional and consulting fees of $178,676 and an increase in stock compensation of $889,235 which was offset by a decrease in payroll by $22,869, a decrease in marketing and advertising by $19,959, a decrease in stock fees of $4,696, and a decrease in travel expenses of $2,783 for the three months ended March 31, 2024.
We estimate that we will need approximately $3,100,000 of capital or financing over the next twelve months to fund our planned operations, which we plan to satisfy as described below under “Satisfaction of our Cash Needs for the Next 12 Months.”
We anticipate that we will incur operating losses in the next twelve months. Our revenue is not expected to exceed our investment and operating costs in the next twelve months. Our prospects must be considered in light of the risks, expenses, and difficulties frequently encountered by companies in their early stage of operations. To address these risks, we must, among other things, seek growth opportunities through investment and acquisitions, implement and successfully execute our business strategy, respond to competitive developments, and attract, retain and motivate qualified personnel. We cannot assure that we will be successful in addressing such risks, and the failure to do so could have a material adverse effect on our business prospects, financial condition, and results of operations.
Cash Flow from Operating Activities
Cash flows used in operating activities during the three months ended March 31, 2024 were $457,377 compared to $370,665 during the three months ended March 31, 2023. This increase of $86,712 was primarily due to stock compensation during the three months ended March 31, 2024 to the same period in 2023.
Cash Flow from Investing Activities
Cash flows used by investing activities during the three months ended March 31, 2024 were $1,899 compared to the cash flows used by investing activities of $-0- during the three months ended March 31, 2023. Capital expenditures totaled $1,899 and $-0- during the three months ended March 31, 2024 and March 31, 2023, respectively.
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Cash Flow from Financing Activities
Cash flows provided by financing activities during the three months ended March 31, 2024 were $290,633 compared to $532,617 during the three months ended March 31, 2023. These receipts represent proceeds from the sale of shares of the Company’s common stock and common stock purchase warrants, and the issuance of debt.
Satisfaction of Our Cash Obligations for the Next 12 Months
As of March 31, 2024, our cash balance was $396,117. Our plan for satisfying our cash requirements for the next twelve months is through a combination of sales -generated income, including revenue from our installation contracts with the Texas school districts, private placements of our capital stock, exercise of warrants, third party financing, and/or traditional bank financing. There is no assurance that we will be able to meet our working capital requirements through the private placement of equity or debt or from any other source.
Other Funding Arrangements
On September 28, 2023, (the “Effective Date”), we entered into a Share Purchase Agreement (the “SPA”) with Gem Global Yield LLC SCS (“GEM” or the “Purchaser”) and Gem Yield Bahamas Limited (“GYBL”). Pursuant to the SPA, we may sell to the Purchaser from time to time up to $100,000,000 (the “Aggregate Limit”) in shares of our common stock during the 36 month period after the first day on which the Company’s common stock trades on a nationally recognized United States stock exchange or any other exchange platform in the world (the “Public Listing Date”). Pursuant to the SPA, after the Public Listing Date, the Company may issue a draw down notice pursuant to which the Company may sell the Purchaser an amount of shares that shall not exceed 400% of the average daily trading volume for the 30 days immediately preceding the date on which the Company delivers the draw down notice. The per share price shall equal 90% of the average applicable Daily Closing Price (as defined in the SPA) of the Company’s common stock during the applicable Draw Down Pricing Period (as defined in the SPA). Notwithstanding the foregoing, within five trading days after the Public Listing Date, the Company may issue a draw down notice for an amount up to $10,000,000 of the Aggregate Limit. Unless earlier terminated as provided in the SPA, the SPA terminates automatically on the earliest of (i) thirty-six (36) consecutive months after the Public Listing Date; (ii) thirty-six (36) months from the Effective Date (as may be extended as provided in the SPA), and (iii) the date the Purchaser shall have purchased the Aggregate Limit.
Pursuant to the SPA, in consideration for these services, we agreed to pay GYBL the following consideration: (i) a commitment fee equal to two (2) percent of the Aggregate Limit (the “Commitment Fee”) payable in cash from the proceeds of the Draw Downs (as defined in the SPA) or in freely tradeable shares of common stock of the Company valued at the Daily Closing Price (as defined in the SPA) at the time of each Draw Down (as defined in the SPA), at the option of Wytec, deliverable as described in the SPA so long as the entire Commitment Fee is paid on or before the first anniversary of the Public Listing Date and (ii) a warrant granting GYBL the right to purchase shares of our common stock having an expiration date that is the third anniversary of the Public Listing Date at the exercise price and upon the terms set forth more fully in the SPA, up to the number of shares of common stock that is equal to 3.7% of the total number of shares of common stock outstanding calculated on a fully diluted basis as of the Public Listing Date (the “Warrant”). The Commitment Fee will not be payable and the Warrant will not be issuable if the Company’s common stock does not become publicly listed.
Pursuant to a Registration Rights Agreement, dated September 28, 2023, between us and the Purchaser and GYBL (the “Registration Rights Agreement”), no later than thirty (30) calendar days after the Public Listing Date, we are obligated to file a registration statement with the Securities and Exchange Commission (“SEC”) to register the shares of common stock issuable pursuant to the SPA. Pursuant to the Registration Rights Agreement, we are obligated to have the registration statement declared effective by the SEC on the earlier of (A) the 45th calendar day after the date on which the registration statement is filed with the SEC and (B) the fifth business day after the date the Company is notified by the SEC that the registration statement will not be reviewed.
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Other Payable
During 2019, $895,000 of deferred revenue, related to amounts billed and collected before services related to registered links and related equipment and services (“Links”) previously sold by the Company had been completed, was reclassified to other payable due to the Company exiting the business of installing Links. Since that time, a total of $560,000 of the amount was exchanged for a total of 119,000 shares of the Company’s common stock, leaving a balance of $335,000 at March 31, 2024. The Company intends to relieve the remaining liability through a combination of exchanges for common stock and cash.
Going Concern
Our financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. We have incurred continuous losses from operations, have an accumulated deficit of $32,479,571 at March 31, 2024, and have reported negative cash flows from operations. In addition, we do not currently have the cash resources to meet our operating commitments for the next twelve months from the date of this report. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern must be considered in light of the problems, expenses, and complications frequently encountered by entrance into established markets and the competitive nature in which we operate.
Our ability to continue as a going concern is dependent on our ability to generate sufficient cash from operations to meet our cash needs and/or to raise funds to finance ongoing operations and repay debt. However, there can be no assurance that we will be successful in our efforts to raise additional debt or equity capital and/or that our cash generated by our operations will be adequate to meet our needs. These factors, among others, indicate that we may be unable to continue as a going concern for a reasonable period of time.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Recently Issued Accounting Standards
We have reviewed the standards issued by the Financial Accounting Standards Board (“FASB”) through March 31, 2024 and which are not yet effective. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption. The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncement will have a material impact on its financial statements.
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Item 3. Quantitative and Qualitative Disclosure About Market Risk.
Not Applicable.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our principal executive officer during the year ended December 31, 2023, William Gray, and our principal financial officer during the year ended December 31, 2023, Karen Stegall, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15I under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on that evaluation, Mr. Gray and Ms. Stegall have concluded that our disclosure controls and procedures are not effective, which are discussed below in more detail, in timely alerting them to material information relating to us required to be included in our periodic SEC filings and in ensuring that information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of material weaknesses in internal control over financial reporting as identified below under the heading “Management’s Report on Internal Control over Financial Reporting.” Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
The Company may be involved in legal actions and claims arising in the ordinary course of business from time to time. As of the date of the report, there are no legal matters of which management is aware.
Item 1A. Risk Factors.
During the quarter ended March 31, 2024, there have been no material changes from the risk factors previously in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023.
Item 2. Unregistered Sales of Equity Securities.
During the first quarter of 2024, the Company issued a total of 65,956 common stock purchase warrants to a total of six investors in conjunction with the conversion of $309,515 of promissory notes and $20,264 of accrued interest into 65,958 shares of the Company’s common stock in accordance with Rule 506(c) of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”).
During the first quarter of 2024, the Company issued a total of 59,504 shares of the Company’s common stock upon the exercise of a total of 59,504 common stock purchase warrants by a total of six investors at an exercise price of $5.00 per share or a total of $297,520 in accordance with Rule 506(c) of Regulation D of the Securities Act.
In January 2024, the Company issued a total of 107,060 shares of the Company’s common stock upon the cashless exercise of 193,254 common stock purchase warrants by a total of fifteen in accordance with Rule 506(c) of Regulation D of the Securities Act. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $535,300.
In January 2024, the Company issued a total of 94,030 shares of the Company’s common stock upon the cashless exercise of 132,500 common stock purchase warrants by a total of two in accordance with Rule 506(b) of Regulation D of the Securities Act. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $238,900.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
During the quarter ended March 31, 2024, no director
or officer
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Item 6. Exhibits.
| (1) | Incorporated by reference from the original filing of the Registration Statement on January 10, 2017. |
| (2) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, dated September 21, 2018. |
| (3) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, dated January 4, 2021. |
| (4) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, dated January 3, 2024. |
| (5) | Incorporated by reference to the Form 10-K filed with the Securities and Exchange Commission on June 25, 2021. |
| (6) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, filed on October 13, 2022. |
| (7) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, filed on November 28, 2023. |
| (8) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, filed on December 6, 2023. |
| (9) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, filed on February 5, 2024. |
| * | Filed herewith. Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and otherwise are not subject to liability under those sections. |
| 28 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
WYTEC INTERNATIONAL, INC.
By: /s/ William H. Gray
William H. Gray, Chief Executive Officer and
President (Principal Executive Officer)
By: /s/ Karen Stegall
Karen Stegall, interim Chief Financial Officer
(Principal Accounting Officer)
Date: May 15, 2024
| 29 |
EXHIBIT 31.1
CERTIFICATION
I, William H. Gray, certify that:
| 1. | I have reviewed this report on Form 10-Q of Wytec International, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report. |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (of persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting. |
Dated: May 15, 2024
/s/ William H. Gray
William H. Gray, Chief Executive Officer and President
(Principal Executive Officer)
EXHIBIT 31.2
CERTIFICATION
I, Karen Stegall, certify that:
| 1. | I have reviewed this report on Form 10-Q of Wytec International, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report. |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (of persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting. |
Dated: May 15, 2024
/s/ Karen Stegall
Karen Stegall, interim Chief Financial Officer
(Principal Accounting Officer)
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Wytec International, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2024 (the “Report”) I, William H. Gray, Chief Executive Officer and President of the Company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: May 15, 2024
/s/ William H. Gray
William H. Gray, Chief Executive Officer and President
(Principal Executive Officer)
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Wytec International, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2024 (the “Report”) I, Karen Stegall, interim Chief Financial Officer of the Company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: May 15, 2024
/s/ Karen Stegall
Karen Stegall, interim Chief Financial Officer
(Principal Accounting Officer)
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
STATEMENTS OF OPERATIONS (Unaudited) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Income Statement [Abstract] | ||
| Revenues | $ 14,598 | $ 20,409 |
| Cost of revenues | 263 | 7,515 |
| Gross profit | 14,335 | 12,894 |
| Expenses: | ||
| Selling, general and administrative | 1,327,216 | 316,816 |
| Research and development | 28,369 | 0 |
| Depreciation and amortization | 8,396 | 11,002 |
| Operating expenses, net | 1,363,981 | 327,818 |
| Net operating loss | (1,349,646) | (314,924) |
| Other expense: | ||
| Interest expense | 20,711 | 46,605 |
| Total other expense | 20,711 | 46,605 |
| Net loss | $ (1,370,357) | $ (361,529) |
| Weighted average number of common shares outstanding - basic | 13,521,015 | 12,195,166 |
| Weighted average number of common shares outstanding - fully diluted | 13,521,015 | 12,195,166 |
| Net loss per share, basic | $ (0.10) | $ (0.03) |
| Net loss per share, fully diluted | $ (0.10) | $ (0.03) |
STATEMENTS OF STOCKHOLDERS' DEFICIT (Unaudited) - USD ($) |
Preferred Stock Class A [Member] |
Preferred Stock Class B [Member] |
Preferred Stock Class C [Member] |
Common Stock [Member] |
Class A Preferred Treasury Stock [Member] |
Class B Preferred Treasury Stock [Member] |
Additional Paid-in Capital [Member] |
Repurchased Shares [Member] |
Subscriptions Payable [Member] |
Retained Earnings [Member] |
Total |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Beginning balance, value at Dec. 31, 2022 | $ 100 | $ 45 | $ 1 | $ 12,194 | $ (179,368) | $ (79,882) | $ 25,118,101 | $ (80,000) | $ 25,400 | $ (27,798,203) | $ (2,981,612) |
| Beginning balance, shares at Dec. 31, 2022 | 100,000 | 44,535 | 1,000 | 12,195,166 | 100,000 | 44,535 | |||||
| Net loss | (361,529) | (361,529) | |||||||||
| Ending balance, value at Mar. 31, 2023 | $ 2,380 | $ 2,856 | $ 1 | $ 12,194 | $ (179,368) | $ (79,882) | 25,118,101 | (80,000) | 25,400 | (28,159,732) | (3,343,141) |
| Ending balance, shares at Mar. 31, 2023 | 2,380,000 | 2,856,335 | 1,000 | 12,195,166 | 100,000 | 44,535 | |||||
| Beginning balance, value at Dec. 31, 2023 | $ 100 | $ 45 | $ 1 | $ 13,287 | $ (179,368) | $ (79,882) | 30,558,906 | (80,000) | (31,109,214) | (876,125) | |
| Beginning balance, shares at Dec. 31, 2023 | 100,000 | 44,535 | 1,000 | 13,288,692 | 100,000 | 44,535 | |||||
| Conversion of note payable into common stock | $ 66 | 329,713 | 329,779 | ||||||||
| Conversion of note payable into common stock, shares | 65,956 | ||||||||||
| Warrants exercised for cash | $ 60 | 297,460 | 297,520 | ||||||||
| Warrants exercised for cash, shares | 59,504 | ||||||||||
| Cashless warrant exercised | $ 47 | (47) | |||||||||
| Cashless warrant exercised, shares | 46,250 | ||||||||||
| Stock issued to existing holders | $ 155 | 774,045 | 774,200 | ||||||||
| Stock issued to existing holders, shares | 154,840 | ||||||||||
| Extension of warrants | 21,285 | 21,285 | |||||||||
| Common stock issuable for board member compensation | 93,750 | 93,750 | |||||||||
| Net loss | (1,370,357) | (1,370,357) | |||||||||
| Ending balance, value at Mar. 31, 2024 | $ 100 | $ 45 | $ 1 | $ 13,615 | $ (179,368) | $ (79,882) | $ 31,981,362 | $ (80,000) | $ 93,750 | $ (32,479,571) | $ (729,948) |
| Ending balance, shares at Mar. 31, 2024 | 100,000 | 44,535 | 1,000 | 13,615,242 | 100,000 | 44,535 |
Pay vs Performance Disclosure - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Pay vs Performance Disclosure [Table] | ||
| Net Income (Loss) | $ (1,370,357) | $ (361,529) |
Insider Trading Arrangements |
3 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Insider Trading Arrangements [Line Items] | |
| Rule 10b5-1 Arrangement Adopted | false |
| Non-Rule 10b5-1 Arrangement Adopted | false |
| Rule 10b5-1 Arrangement Terminated | false |
| Non-Rule 10b5-1 Arrangement Terminated | false |
SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Accounting Policies [Abstract] | |
| SIGNIFICANT ACCOUNTING POLICIES | NOTE A – SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles (“U.S. GAAP”), have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the audited financial statements and footnotes included in the Company's Annual Report on Form 10-K filed with the SEC on March 29, 2024. The results for the three months ended March 31, 2024, are not necessarily indicative of the results to be expected for the year ended December 31, 2024. These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained therein.
Description of Business: Wytec International, Inc. (“Wytec,” “we,” “our,” “us,” or the “Company”), a Nevada corporation, designs, manufactures, and installs carrier-class Wi-Fi Solutions in the 70 and 80 gigahertz licensed frequency program to local government, Mobile Service Operations, National Telecommunications Operators, and corporate enterprises. Wytec was previously involved in the sale of wired and wireless services, including products, wireless data cards, back-office platform and rate plans to their commercial and enterprise clients and has been engaged in the sale of Federal Communications Commission (“FCC”) registered links participating in the 70 and 80 gigahertz licensed frequency program (the “Program”). The Program allowed qualified individuals to own a segment of the “backhaul” infrastructure of Wytec’s city-wide business deployment.
Basis of Accounting: The accompanying financial statements have been prepared by the Company’s management in accordance with U.S. GAAP and applied on a consistent basis.
Revenue Recognition. Revenue is recognized by applying the following five steps: 1) identify the contract with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations; and 5) recognize revenue when (or as) we satisfy a performance obligation.
The Company earns revenues from contracts with customers for sales and installation of cellular enhancement equipment and support agreements. Revenue from the sale and installation of cellular enhancement equipment is recognized either when the installation is completed or as the Company installs the cellular enhancement equipment, depending on the complexity of the system, such as the degree of customization of the equipment being installed, and the agreement with the customer. Revenue from the installation of systems, which management believes have an alternative use, is recognized upon customer acceptance. This assessment, at contract inception, is based on the combination of equipment ordered, the services performed and whether or not material effort, within the context of the contract, would be required to rework the equipment for another project. For example, such contracts are usually completed within 30-45 days. In larger more complex projects where the Company is creating an asset for the customer with no alternative use and has an enforceable right to payment for performance prior to contract completion, we recognize revenue utilizing the percentage of completion method. This method measures completion based on management’s estimate of total costs to complete each contract because management considers total costs to be the best available measure of progress on the contract. During 2024 and 2023, all sales and installation revenue were recognized when the installation was completed, per company policy.
Support agreements entered into with customers are generally for a period of one year, during which the Company stands ready to provide service and support for installed systems at the customer site. Support agreement amounts are billed in advance to the customer, as agreed in the contract, and recorded as a contract liability. During the period, the Company provides unspecified firmware upgrades to installed client equipment as they are available. Management estimates that straight line recognition of revenue over the period of the support agreement contract is representative of the pattern of delivery on the Company’s obligation under these agreements.
The Company has applied the practical expedient that permits the Company to recognize revenue without regard to significant financing components based on the Company’s expectations about the transfer of services and the receipt of payment from customers. The effect of this practical expedient is not material to the Company’s financial statements.
Sales tax is recorded on a net basis and excluded from revenue.
Inventory: Inventory is stated at the lower of cost or selling price less costs to complete and sell. Specific identification is used to track inventory and record cost of goods sold when the inventory is sold.
Allowance for Credit Losses: The allowance for credit losses is evaluated on a regular basis through periodic reviews of the collectability of the receivables in light of historical experience, adverse situations that may affect our customers' ability to repay, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Accounts receivable are determined to be past due based on how recently payments have been received and those considered uncollectible are charged against the allowance account in the period they are deemed uncollectible. No allowance for trade accounts receivable was determined to be necessary at March 31, 2024 and December 31, 2023.
Operating Leases Right-of-use Assets and Operating Lease Obligations: If we determine that an arrangement is or contains a lease, we recognize a right-of-use (“ROU”) asset and lease obligation at the commencement date of the lease. ROU assets represent our right to use an underlying asset for the lease term and lease obligations represent our lease payments arising from the lease. Operating lease ROU assets and obligations are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Stock Based Compensation: The Company measures stock-based compensation expense for stock awards at the grant date, based on the fair value-based measurement of the award, and the expense is recorded over the related service period, generally the vesting period, net of estimated forfeitures. The Company calculates the fair value-based measurement of warrants using the Black-Scholes valuation model and the simplified method and recognizes expense using the straight-line attribution approach.
Estimating the fair value of share-based awards requires the input of subjective assumptions, including the estimated fair value of the Company’s common stock, the expected life of the warrants and stock price volatility. The fair value of the Company’s common stock is determined by the Board reasonably and in good faith with an independent valuation review, which requires judgmental inputs and assumptions such as cash flow projections, peer company comparisons, market data, growth rates and discount rate.
The expected term of the warrant is estimated using the contractual life as the Company has no historical information from which to develop reasonable expectations about future exercise patterns. For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of warrants. The risk-free rate is based on the U.S. Treasury yield curve commensurate with the expected term of the option. The expected dividend yield is 0% because the Company has not historically paid, and does not expect, for the foreseeable future, to pay a dividend on its common stock.
Cost Method Investment: Investments made by the Company are currently classified as cost method investment, or investments that do not hold any significant influence or control and do not have a readily-determinable fair value. As the investment does not have a readily-determinable fair value and as the investment is not into an investment fund, the measurement alternate approach, in accordance with ASC 321, is used to measure the fair value of the investment. The measurement alternate approach is defined as cost, less impairment, adjusted (increased or decreased) for information about fair value of the investment from observable price changes, whenever those occur.
|
GOING CONCERN |
3 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| GOING CONCERN | NOTE B – GOING CONCERN
Our financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. We have incurred continuous losses from operations, have an accumulated deficit of $32,479,571 at March 31, 2024, and have reported negative cash flows from operations. In addition, we do not currently have the cash resources to meet our operating commitments for the next twelve months from the date of this report. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
In addition, the Company expects to have ongoing requirements for capital investment to implement its business plan. Finally, the Company’s ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered by entrance into established markets and the competitive environment in which it operates.
We estimate that we will need approximately $3,100,000 of capital or financing over the next twelve months to fund our planned operations, which we plan to satisfy as described below under “Satisfaction of our Cash Needs for the Next 12 Months.
Since inception, operations have primarily been funded through private placements of equity and convertible debt. Management expects to continue to seek additional funding through private or public sources. The Company’s ability to continue as a going concern is ultimately dependent on its ability to generate sufficient cash from operations to meet cash needs and/or to raise funds to finance ongoing operations and repay debt. There can be no assurance that the Company will be successful in these efforts. These factors, among others, indicate substantial doubt that the Company will be able to continue as a going concern for a period of one year from the filing of these financial statements. Management plans to raise additional funding through a capital raise associated with a public offering and/or additional private capital raises.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or the amounts and classification of liabilities that might be necessary should it be unable to continue as a going concern.
As of March 31, 2024, our cash balance was $396,117. Our plan for satisfying our cash requirements for the next twelve months is through sales-generated income, including revenue from our installation contracts with the Texas school districts, private placements of our capital stock, exercise of warrants, third party financing, and/or traditional bank financing. We anticipate sales-generated income during that same period, but do not anticipate generating sufficient revenue to meet our working capital requirements. Consequently, we intend to attempt to find sources of additional capital in the future to fund our growth and expansion through additional equity or debt financing or credit facilities. There is no assurance that we will be able to meet our working capital requirements through the private placement of equity or debt or from any other source.
|
REVENUE AND ACCOUNTS RECEIVABLE |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| REVENUE AND ACCOUNTS RECEIVABLE | NOTE C – REVENUE AND ACCOUNTS RECEIVABLE
The Company invoices customers and recognizes accounts receivable in an amount it expects to receive from the customer. The Company has contracted payment terms with its customer of net 30 days. The Company recognized revenue from performance obligations satisfied as of a point in time and over time as disaggregated in the table below.
Timing of Revenue Recognition
The Company earns revenues from in-building cellular systems and network services. Revenues from the sale and installation of in-building cellular systems, including fixed wireless, SmartDAS, and 4G LTE, totaled $4,950 and $14,000 during the three months ended March 31, 2024 and 2023, respectively. The contracts for the sale of in-building cellular systems generally include the performance obligation to sell and install (including testing, commissioning and integration services) equipment. The amount of revenue earned related to the sales of equipment was $2,250 and $5,500 during the three months ended March 31, 2024 and 2023, respectively. The amount of revenue earned related to installation and other services was $2,700 and $8,500 during the three months ended March 31, 2024 and 2023, respectively. The performance obligation for the sale of equipment is deemed to be satisfied on the date the customer takes physical possession of the equipment and has control of the equipment. For installation, testing, commissioning and integration services, the Company measures progress toward complete satisfaction of the performance obligations ratably as the services are performed.
Revenues from network and other services totaled $9,648 and $6,409 during the three months ended March 31, 2024 and 2023 respectively. Network service revenues are recognized each month as services are rendered.
The Company’s contracts for support services are typically for terms of one year or less. The aggregate amount of contract performance obligation as of March 31, 2024 that the Company expects to recognize over the next year is $13,683.
The Company is under no obligation and is not in the practice of providing customers with returns, rebates, discounts, or refunds. The Company, accordingly, does not recognize these obligations at the time of revenue recognition. The Company may receive future consideration from customers who enter into support agreements. Those services are delivered as of a point in time when the customer requests the service. Future consideration as described is excluded from the transaction price calculated for support agreement performance obligations.
|
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INVESTMENT IN LIMITED LIABILITY COMPANY |
3 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Investment Company [Abstract] | |
| INVESTMENT IN LIMITED LIABILITY COMPANY | NOTE D – INVESTMENT IN LIMITED LIABILITY COMPANY
The Company made an investment into another company in the amount of $600,000 during the year ended December 31, 2023 for a total ownership percent of 0.56%. The Companies ownership at quarter end March 31, 2024 was 0.53%, though the ownership percentage decreased, the investments total equity increased slightly and The Companies share of any dividends did not change significantly. The investment is classified as a cost method investment as the fair value of the investment is not readily- determinable. The investment is valued as cost, less impairment, adjusted for any observable price changes. For the quarter ended March 31, 2024, there were no dividends received and the Company determined that no impairment existed at March 31, 2024.
|
PROPERTY AND EQUIPMENT |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PROPERTY AND EQUIPMENT | NOTE E – PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
Depreciation expense for the three months ended March 31, 2024 and 2023 was $8,396 and $11,002, respectively.
|
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DEBT |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DEBT | NOTE F – DEBT
The Company’s debt consists of the following:
In February 2020, we issued a note in the amount of $625,000 bearing simple interest at a rate of 7% per annum to Mr. Christopher Stuart, a director of the Company, initially due in August 2021. The note, as amended, contains a feature that allows the Company to extend the maturity date up to six months, seven times, in the Company’s sole discretion. This note was issued along with common stock purchase warrants that were determined to have a fair market value of $80,053 on the issuance date, which was recorded as a debt discount and amortized over the term of the notes, being fully amortized by year end December 31, 2021. The Company has exercised six extensions extending the maturity date of the note to August 13, 2024.
In October 2021, the president of the Company loaned the Company $10,000 pursuant to an unsecured promissory note initially due on October 21, 2022. The note was amended in October 2022 to extend the maturity date to October 21, 2023 and in November 2023 to extend the maturity date to October 21, 2024. The maturity date of the note, as amended, may be extended by an additional six months in the sole discretion of the Company up to two times. The note bears simple interest at a rate of 5% per annum.
In January 2023, the president of the Company loaned the Company $25,000 pursuant to an unsecured promissory note due on March 31, 2024. The note bears simple interest at a rate of 7% per annum. The maturity date of the note may be extended by an additional six months in the sole discretion of the Company up to two times. The Company has exercised one extension extending the maturity date of the note to September 30, 2024.
In February 2023, we commenced an offering of up to $25,000,000 of 9.5% secured convertible promissory notes (“2023 Notes”) pursuant to a private placement in accordance with Rule 506(c) of Regulation D of the Securities Act of 1933, as amended (the “2023 Offering”). The 2023 Notes together with all accrued and unpaid interest will be payable on or before December 31, 2024 and will be secured by a perfected recorded first priority security interest in the Company’s LP-16 patent. If the Company’s common stock is listed on the NASDAQ Capital Markets on or before the maturity date, the outstanding Notes will automatically be converted into shares of the Company’s common stock at a rate equal to the price per share in the public offering. If the Notes have not otherwise been automatically converted into shares of the Company’s common stock, the noteholders (“2023 Noteholders”) will have the option, on or before the maturity date, to convert all or a portion of their outstanding 2023 Notes into shares of the Company’s common stock at a rate equal to $5.00 per share and, immediately upon the conversion, the converting Noteholders will be issued a number of new warrants from the Company equal to the dollar amount of the conversion divided by $5.00 (the “2023 Warrants”). The 2023 Warrants will be exercisable until December 31, 2024 at an exercise price equal to the greater of (i) five dollars ($5.00) or (ii) eighty-five percent (85%) of the 10-day moving average of the Company’s public trading price if the Company’s securities are trading on a public securities trading market. The Company issued a total of $2,289,515 of 2023 Notes pursuant to this offering, which ended in December 2023, including $1,925,000 of which was converted into common stock and 2023 Warrants during the year ended December 31, 2023 and $309,515 of which was converted into common stock and 2023 Warrants during the three months ended March 31, 2024.
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REPURCHASE AGREEMENT |
3 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Repurchase Agreement | |
| REPURCHASE AGREEMENT | NOTE G – REPURCHASE AGREEMENT
In April 2020, we entered into a Repurchase and General Release Agreement with one shareholder pursuant to which we promised to pay the amount of $200,000 due on December 31, 2020 in exchange for 40,000 shares of common stock and 40,000 shares of Series B Preferred Stock (which shares automatically converted into 40,000 shares of common stock in April 2022). The agreement stated that the Company was to make $10,000 monthly installments with the balance payable on the maturity date. The agreement contains a feature that allows the Company to extend the maturity date of the amount payable to March 31, 2021 in the Company’s sole discretion, and if the Company exercises this option, the $10,000 monthly installments will continue until the extended maturity date on which date the remaining balance will be due. During the quarter ended December 31, 2020, the Company extended the maturity date under the terms of the agreement to March 2021. The Company made payments in the amount of $80,000 during the period, however, the shareholder has not properly returned the shares so they may be canceled. As the shares had not been properly returned, the Company is not obligated, per the agreement, to pay any monies and the $80,000 was paid in good faith that the shares would be returned. The Company is pursuing action against the shareholder to get the shares returned or get the monies paid returned. Until such time, the $80,000 payments have been recorded as a reduction of additional paid in capital.
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LEASES |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Leases | ||||||||||||||||||||||||||||||||||||||||||||||
| LEASES | NOTE H – LEASES
Short Term Leases
The Company leased its office space on a month to month basis until February 29, 2024. Total lease expense related to this short term lease was $12,200 and $18,300 for the three months ended March 31, 2024 and March 31, 2023, respectively.
Operating Leases
The Company leases its office space and leased Wi-Fi facilities under operating leases. For the three month period ended March 31, 2024 and 2023, operating lease expense totaled $6,400 and $2,723, respectively.
The remaining weighted average lease term is 1.92 years and the weighted average discount rate is 9.5% as of March 31, 2024.
Future minimum lease payments as of March 31, 2024 are as follows:
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WARRANTS |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warrants | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| WARRANTS | NOTE I – WARRANTS
The Company has common stock purchase warrants outstanding at March 31, 2024 to purchase 2,518,745 shares of common stock, all of which are exercisable until various dates through October 11, 2026. The warrants are exercisable at the following amounts and rates: are exercisable on a cash or cashless basis at an exercise price of $1.00 per share, are exercisable on a cash or cashless basis at an exercise price of $5.00 per share, and are exercisable for cash at an exercise price of the greater of (i) $5.00 per share or (ii) 85% of the average closing price of our common stock, as quoted on the public securities trading market on which our common stock is then traded with the highest volume, for ten (10) consecutive trading days immediately prior to the date of exercise.
To calculate the fair value of stock warrants at the date of grant, we use the Black-Scholes option pricing model. The volatility used is based on historical volatilities of selected peer group companies. Management estimated the fair value of the underlying common stock by utilizing the discounted cash flow method and the prior transaction method approaches and determined a fair value of $5.00. Management estimates the average volatility considering current and future expected market conditions. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Each issuance is individually valued according to this procedure as of the date of issue with maturity dates through October 11, 2026, volatility estimates between 28.30% to 29.69% and risk-free rates 4.70% to 5.00% in the period.
During June 2023, the Company issued common stock purchase warrants (“Warrants”) pursuant to its offering of up to up to $25,000,000 of 9.5% secured convertible promissory notes (“Notes”) pursuant to a private placement in accordance with Rule 506(c) of Regulation D of the Securities Act of 1933, as amended (the “2022 Offering”), and 10,000 2023 Warrants along with shares of common stock upon the conversion of a total of $104,386 of Notes, 2023 Notes, and accrued interest. The total value of the Warrants and 2023 Warrants, which $14,667 and was recorded in additional paid in capital.
During the third quarter of 2023, the Company issued 32,873 Warrants along with shares of common stock upon the conversion of $164,394 of Notes and accrued interest. The total value of the Warrants was $13,597 and was recorded in additional paid in capital.
During October 2023, the Company issued common stock purchase warrants as compensation to the director of operations of the Company. The total cost of the warrants was $, which was recorded in additional paid in capital and which was reduced by $1,487 during the quarter ended March 31, 2024 because the warrants were amended and restated in February 2024 to correct the expiration date to October 11, 2026.
During the fourth quarter of 2023, the Company issued 38,716 common stock purchase warrants, 47,765 Warrants, and 385,336 2023 Warrants along with 472,375 shares of common stock upon the conversion of a total of $2,342,621 of promissory notes, Notes, 2023 Notes, and accrued interest. The total value of the common stock purchase warrants, Warrants, and 2023 Warrants was $37,520, which was recorded in additional paid in capital.
During December 2023, the Company issued 71,233 common stock purchase warrants along with shares of common stock upon the conversion of a convertible promissory note in the principal amount of $320,242 (the “New ERI Note”) bearing interest at a rate of 9.5% per annum, due and payable on or before December 31, 2023, owned by Eagle Rock Investments, L.L.C., a limited liability company of which a majority of the outstanding equity is owned by Christopher Stuart, a director of the Company (“ERI”), or a total of $356,167 of principal and accrued interest. The total value of the common stock purchase warrants was $12,265, which was recorded as additional paid in capital.
During December 2023, the Company issued 85,784 common stock purchase warrants along with shares of common stock upon the conversion of a convertible promissory note in the principal amount of $385,658 (the “New Stuart Note”) bearing interest at a rate of 9.5% per annum, due and payable on or before December 31, 2023, owned by Mr. Christopher Stuart, a director of the Company, or a total of $428,921 of principal and accrued interest. The total value of the common stock purchase warrants was $14,770, which was recorded as additional paid in capital.
In December 2023, the Company extended the expiration date of all warrants expiring on December 31, 2023 to January 31, 2024. Due to the modification of the warrants, the difference between the fair value of the modified warrants and the fair value of the warrants immediately before modification was recorded as a warrant expense, which was only applicable to service warrants. Total incremental increase in the warrants was $, which was recorded as stock compensation expense and is included in the general and administrative expenses in the accompanying statement of operations for the year ended December 31, 2023.
During December 2023, the Company issued a total of shares of the Company’s common stock upon the exercise of Warrants, 2023 Warrants, and other common stock purchase warrants by several investors at an exercise price of $5.00 per share or a total of $605,866 in proceeds.
During December 2023, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of a total of common stock purchase warrants by several investors.
In January 2024, the Company extended the expiration date of 2,000,000 common stock purchase warrants owned by the president of the Company, to December 31, 2025. Due to the modification of the warrants, the difference between the fair value of the modified warrants and the fair value of the warrants immediately before the modification was recorded as a warrant expense, which was only applicable to service warrants. The total incremental increase in the warrants was $.
During the first quarter of 2024, the Company issued 65,956 2023 Warrants along with shares of common stock upon the conversion of $309,515 of 2023 Notes and $20,264 of accrued interest. The total value of the 2023 Warrants was $69,818 and was recorded in additional paid in capital.
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by Mr. Christopher Stuart, a director of the Company. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by ERI. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by thirteen investors. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
In January 2024, the Company issued a total of shares of the Company’s common stock upon the exercise of Warrants, 2023 Warrants and, other common stock purchase warrants by a total of six investors at an exercise price of $5.00 per share for total proceeds of $297,520.
In January 2024, the Company extended the expiration date of 85,784 common stock purchase warrants owned by Mr. Christopher Stuart and 71,233 common stock purchase warrants owned by ERI from January 31, 2024 to December 31, 2024.
The following is a summary of activity and outstanding common stock warrants:
As of March 31, 2024, the outstanding and exercisable warrants have a weighted average remaining term of years and have an estimated $aggregate intrinsic value. The intrinsic value is calculated by taking the difference between the exercise price and the fair market value of the stock at March 31, 2024 multiplied by the number of warrants.
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STOCKHOLDERS’ EQUITY |
3 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Equity [Abstract] | |
| STOCKHOLDERS’ EQUITY | NOTE J – STOCKHOLDERS’ EQUITY
During the second quarter of 2023, the Company issued a total of shares of the Company’s common stock along with common stock purchase warrants upon the conversion of $50,000 of Notes, $50,000 of 2023 Notes, and $4,399 of accrued interest. The total value of the common stock purchase warrants was $17,792, which was recorded as additional paid in capital.
During the second quarter of 2023, the Company cancelled the subscription payable shares owed pursuant to the Consulting Agreement. The subscription payable shares were originally recorded upon the signing of that certain consulting agreement by and between the Company and a consultant, dated October 1, 2021 (the “Consulting Agreement”), but were never issued. Subsequently, the Company entered into the recession agreement with the consultant (the “Recession Agreement”) which rescinded and terminated the Consulting Agreement. Accordingly, the subscription payable shares have been removed.
During the third quarter of 2023, the Company issued a total of shares of common stock and Warrants upon the conversion of $150,000 of Notes and $14,367 of accrued interest. The total value of the Warrants was $13,597, which was recorded as additional paid in capital.
During the fourth quarter of 2023, the Company issued a total of shares of common stock, Warrants, 2023 Warrants, and other common stock purchase warrants upon the conversion of $212,000 of Notes, $1,875,000 of 2023 Notes, the $320,242 New ERI Note, the $385,658 New Stuart Note, $180,000 of other notes, and $168,391 of accrued interest. The total value of the Warrants, 2023 Warrants, and other common stock purchase warrants was $356,872, which was recorded as additional paid in capital.
During the fourth quarter of 2023, the Company issued a total of shares of common stock upon the exercise of Warrants, 2023 Warrants, and other common stock purchase warrants at an exercise price of $5.00 per share for total proceeds of $605,866.
During December 2023, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by several investors.
During December 2023, the Company issued a total of shares to the Company’s directors as compensation valued at $for current and past services performed.
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by Mr. Christopher Stuart, a director of the Company. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by ERI. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by thirteen investors. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
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RELATED PARTY TRANSACTIONS |
3 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Related Party Transactions [Abstract] | |
| RELATED PARTY TRANSACTIONS | NOTE K – RELATED PARTY TRANSACTIONS
The Company has an accounts payable balance owed to Richardson & Associates in the amount of $253,772 as of March 31, 2024, and $253,772 as of December 31, 2023. The Company incurred expense of $0 and $7,188 with Richardson & Associates during the three months ended March 31, 2024 and 2023, respectively. Mark Richardson is the owner of Richardson & Associates and he was a director of Wytec International, Inc. from September 2019 until November 2023.
In 2021, ERI loaned the Company a total of $250,000 and made a line of credit in the amount of $250,000 available to the Company until December 31, 2022. In June 2022, ERI loaned the Company an additional $50,000 pursuant an unsecured promissory note. In October 2022, we entered into the ERI Agreement with ERI, pursuant to which ERI exchanged the two above referenced promissory notes ($300,000 principal and $20,242 accrued but unpaid interest) for a convertible promissory note in the principal amount of $320,242. The line of credit also expired with no amounts drawn upon it. The New ERI Note, along with associated accrued interest, was converted into shares of common stock and common stock purchase warrants during the year ended December 31, 2023 for a total of shares and warrants.
In August 2023, ERI purchased $100,000 of 2023 Notes. This 2023 Note, along with associated accrued interest, was converted into shares of common stock and common stock purchase warrant during the year ended December 31, 2023 for a total of shares and 2023 Warrants.
In January 2022, the Company issued warrants to purchase up to 40,000 shares of Wytec’s common stock on a cash or cashless basis to ERI in consideration for making the $250,000 line of credit available to Wytec. These warrants were exercised on a cashless basis during the three months ended March 31, 2024 for a total of 22,159 shares.
In February 2020, Mr. Christopher Stuart, a director of the Company, purchased 12.5 units, each unit consisting of $50,000 7% promissory notes and five thousand common stock purchase warrants pursuant to a prior private placement made by the Company. The accrued interest on the 7% promissory note was credited to ERI and converted into units every six months at the conversion rate of $5.00 per unit, each unit consisting of one share of common stock and one common stock purchase warrant, pursuant to the Company’s prior private placement of units or a total of 13,125 units through August 31, 2021. In December 2021, ERI exercised of these common stock purchase warrants at an exercise price of $5.00 per share or a total $43,750 for shares of the Company’s common stock. The note, as amended, contains a feature that allows the Company to extend the maturity date up to six months up to seven times, in the Company’s sole discretion. The Company has exercised six extensions extending the maturity date of the note to August 13, 2024.
In February 2022, Mr. Stuart purchased for $175,000 a unit, consisting of (i) a $175,000 7% promissory note with a maturity date of August 31, 2023 and (ii) 17,500 common stock purchase warrants exercisable on a cash or cashless basis until December 31, 2024 at an exercise price of $5.00 per share, offered by the Company in its private placement pursuant to Rule 506(b) of Regulation D promulgated under Section 4(a)(2) of the Securities Act of 1933, as amended, commenced by the Company in February 2022. In April 2022, Mr. Stuart loaned the Company $100,000 pursuant to an unsecured promissory note and, in September 2022, Mr. Stuart loaned the Company an additional $100,000 pursuant to an unsecured promissory note. In October 2022, we entered into the Stuart Agreement with Mr. Stuart pursuant to which Mr. Stuart exchanged the three above referenced promissory notes ($375,000 principal and $10,658 accrued but unpaid interest) for a convertible promissory note in the principal amount of $385,658. See NOTE E - DEBT for a description of the Stuart Agreement. This New Stuart Note, along with associated accrued interest, was converted into shares of common stock and common stock purchase warrants during the year ended December 31, 2023 for a total of shares and warrants.
In November and December 2022, we borrowed a total of $150,000 from Mr. Stuart pursuant to unsecured convertible promissory notes, as amended in December 2023, to allow us to extend the maturity date of the notes by up to three additional six month periods instead of two additional six month periods as set forth in the original notes in consideration for permitting the optional conversion of the notes and possible issuance of warrants as below described. The notes bear simple interest at a rate of 7% per annum and initially matured on June 30, 2023. The Company exercised one extension for each note extending the maturity date of the notes to December 31, 2023. In accordance with the December 2023 amendments, Mr. Stuart has the option to elect at any time until the maturity date to convert all or any portion of the outstanding principal and accrued interest on these promissory notes into shares of our common stock at a rate equal to $5.00 per share and immediately upon the conversion, Mr. Stuart will be issued a number of new warrants from Wytec equal to the dollar amount of the conversion divided by $5.00. The warrants will be exercisable on a cash or cashless until December 31, 2023 at an exercise price equal to the greater of (i) five dollars ($5.00) or (ii) eighty-five percent (85%) of the 10-day moving average of Wytec’s public trading price if Wytec’s securities are trading on a public securities trading market. These notes, along with associated accrued interest, were converted into shares of common stock and common stock purchase warrants during the year ended December 31, 2023 for a total of shares and warrants. These warrants were exercised on a cashless basis during the three months ended March 31, 2024 for a total of shares.
In August 2023, Mr. Stuart purchased $100,000 of 2023 Notes. This 2023 Note, along with associated accrued interest, was converted into shares of common stock and common stock purchase warrant during the year ended December 31, 2023 for a total of shares and warrants.
In January 2024, a total of 74,375 warrants were exercised on a cashless basis by Mr. Stuart and ERI for a total of shares.
In October 2021, the president of the Company loaned the Company $10,000 pursuant to an unsecured promissory note initially due on October 21, 2022. The note was amended in October 2022 to extend the maturity date to October 21, 2023 and in November 2023 to extend the maturity date to October 21, 2024. The maturity date of the note, as amended, may be extended by an additional six months in the sole discretion of the Company up to two times. The note bears simple interest at a rate of 5% per annum.
In September 2022, the president of the Company loaned the Company $25,000 pursuant to an unsecured promissory note initially due on March 30, 2023. The note bears simple interest at a rate of 7% per annum. The maturity date of the note may be extended by an additional six months in the sole discretion of the Company up to two times. The Company has exercised both extensions extending the maturity date of the note to March 30, 2024. This note, along with associated accrued interest, was paid back during the year ended December 31, 2023.
In January 2024, the Company extended the expiration date of 2,000,000 common stock purchase warrants owned by the president of the Company to December 31, 2025.
In October 2022, the president of the Company entered into an agreement, as amended in November 2022, to exchange shares of the Company’s Series C Preferred Stock owned by him for shares of the Company’s common stock. The exchange will close on the earlier of the effective date of the initial public offering of the Company’s common stock on the NASDAQ Capital Markets or October 6, 2025.
In January 2023, the president of the Company loaned $25,000 to the Company pursuant to an unsecured promissory note initially due on March 31, 2024. The note bears simple interest at a rate of 7% per annum. The maturity date of the note may be extended by an additional six months September 30, 2024.
The Company has an accounts payable balance owed to Mr. Robert Cook in the amount of $7,100 as of March 31, 2024 for prior consulting services.
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CUSTOMER CONCENTRATIONS |
3 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Risks and Uncertainties [Abstract] | |
| CUSTOMER CONCENTRATIONS | NOTE L – CUSTOMER CONCENTRATIONS
The Company derived $12,414, 85% from two customers and $19,783, 97% from a single customer, of revenue in the three months ended March 31, 2024 and March 31, 2023, respectively. We continue to endeavor to diversify our customer base and make efforts to mitigate the risk associated with excess concentration of sales from a limited number of customers.
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COMMITMENTS AND CONTINGENCIES |
3 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| COMMITMENTS AND CONTINGENCIES | NOTE M – COMMITMENTS AND CONTINGENCIES
We are party to various legal proceedings arising in the ordinary course of business. We are not currently a party to any legal proceedings that management believes could have a material adverse effect on our financial statements.
At March 31, 2024 and December 31, 2023 our other payable balance of $335,000 consists of amounts billed and collected before services related to Links previously sold by the Company had been completed and was reclassified from deferred revenue to other payable due to the Company’s exiting the business of installing Links. The Company intends to relieve the remaining amount of this liability through a combination of exchanges for common stock and cash.
In October 2022, the president of the Company entered into an agreement, as amended in November 2022, to exchange 1,000 shares of the Company’s Series C Preferred Stock owned by him for 3,000,000 shares of the Company’s common stock. The exchange will close on the earlier of the effective date of the initial public offering of the Company’s common stock on the NASDAQ Capital Markets or October 6, 2025.
See Note C in regards to commitments related to contracts with customers. See Note H in regards to commitments related to leases.
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SUBSEQUENT EVENTS |
3 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | NOTE N – SUBSEQUENT EVENTS
In May 2024, the Company issued a total of 18,750 shares of the Company’s common stock to the Company’s five directors as compensation for services provided to the Company during the first quarter of 2024, valued at a total of 93,750.
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SIGNIFICANT ACCOUNTING POLICIES (Policies) |
3 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Accounting Policies [Abstract] | |
| Basis of Presentation | Basis of Presentation: The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles (“U.S. GAAP”), have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the audited financial statements and footnotes included in the Company's Annual Report on Form 10-K filed with the SEC on March 29, 2024. The results for the three months ended March 31, 2024, are not necessarily indicative of the results to be expected for the year ended December 31, 2024. These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained therein.
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| Description of Business | Description of Business: Wytec International, Inc. (“Wytec,” “we,” “our,” “us,” or the “Company”), a Nevada corporation, designs, manufactures, and installs carrier-class Wi-Fi Solutions in the 70 and 80 gigahertz licensed frequency program to local government, Mobile Service Operations, National Telecommunications Operators, and corporate enterprises. Wytec was previously involved in the sale of wired and wireless services, including products, wireless data cards, back-office platform and rate plans to their commercial and enterprise clients and has been engaged in the sale of Federal Communications Commission (“FCC”) registered links participating in the 70 and 80 gigahertz licensed frequency program (the “Program”). The Program allowed qualified individuals to own a segment of the “backhaul” infrastructure of Wytec’s city-wide business deployment.
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| Basis of Accounting | Basis of Accounting: The accompanying financial statements have been prepared by the Company’s management in accordance with U.S. GAAP and applied on a consistent basis.
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| Revenue Recognition | Revenue Recognition. Revenue is recognized by applying the following five steps: 1) identify the contract with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations; and 5) recognize revenue when (or as) we satisfy a performance obligation.
The Company earns revenues from contracts with customers for sales and installation of cellular enhancement equipment and support agreements. Revenue from the sale and installation of cellular enhancement equipment is recognized either when the installation is completed or as the Company installs the cellular enhancement equipment, depending on the complexity of the system, such as the degree of customization of the equipment being installed, and the agreement with the customer. Revenue from the installation of systems, which management believes have an alternative use, is recognized upon customer acceptance. This assessment, at contract inception, is based on the combination of equipment ordered, the services performed and whether or not material effort, within the context of the contract, would be required to rework the equipment for another project. For example, such contracts are usually completed within 30-45 days. In larger more complex projects where the Company is creating an asset for the customer with no alternative use and has an enforceable right to payment for performance prior to contract completion, we recognize revenue utilizing the percentage of completion method. This method measures completion based on management’s estimate of total costs to complete each contract because management considers total costs to be the best available measure of progress on the contract. During 2024 and 2023, all sales and installation revenue were recognized when the installation was completed, per company policy.
Support agreements entered into with customers are generally for a period of one year, during which the Company stands ready to provide service and support for installed systems at the customer site. Support agreement amounts are billed in advance to the customer, as agreed in the contract, and recorded as a contract liability. During the period, the Company provides unspecified firmware upgrades to installed client equipment as they are available. Management estimates that straight line recognition of revenue over the period of the support agreement contract is representative of the pattern of delivery on the Company’s obligation under these agreements.
The Company has applied the practical expedient that permits the Company to recognize revenue without regard to significant financing components based on the Company’s expectations about the transfer of services and the receipt of payment from customers. The effect of this practical expedient is not material to the Company’s financial statements.
Sales tax is recorded on a net basis and excluded from revenue.
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| Inventory | Inventory: Inventory is stated at the lower of cost or selling price less costs to complete and sell. Specific identification is used to track inventory and record cost of goods sold when the inventory is sold.
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| Allowance for Credit Losses | Allowance for Credit Losses: The allowance for credit losses is evaluated on a regular basis through periodic reviews of the collectability of the receivables in light of historical experience, adverse situations that may affect our customers' ability to repay, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Accounts receivable are determined to be past due based on how recently payments have been received and those considered uncollectible are charged against the allowance account in the period they are deemed uncollectible. No allowance for trade accounts receivable was determined to be necessary at March 31, 2024 and December 31, 2023.
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| Operating Leases Right-of-use Assets and Operating Lease Obligations | Operating Leases Right-of-use Assets and Operating Lease Obligations: If we determine that an arrangement is or contains a lease, we recognize a right-of-use (“ROU”) asset and lease obligation at the commencement date of the lease. ROU assets represent our right to use an underlying asset for the lease term and lease obligations represent our lease payments arising from the lease. Operating lease ROU assets and obligations are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
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| Stock Based Compensation | Stock Based Compensation: The Company measures stock-based compensation expense for stock awards at the grant date, based on the fair value-based measurement of the award, and the expense is recorded over the related service period, generally the vesting period, net of estimated forfeitures. The Company calculates the fair value-based measurement of warrants using the Black-Scholes valuation model and the simplified method and recognizes expense using the straight-line attribution approach.
Estimating the fair value of share-based awards requires the input of subjective assumptions, including the estimated fair value of the Company’s common stock, the expected life of the warrants and stock price volatility. The fair value of the Company’s common stock is determined by the Board reasonably and in good faith with an independent valuation review, which requires judgmental inputs and assumptions such as cash flow projections, peer company comparisons, market data, growth rates and discount rate.
The expected term of the warrant is estimated using the contractual life as the Company has no historical information from which to develop reasonable expectations about future exercise patterns. For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of warrants. The risk-free rate is based on the U.S. Treasury yield curve commensurate with the expected term of the option. The expected dividend yield is 0% because the Company has not historically paid, and does not expect, for the foreseeable future, to pay a dividend on its common stock.
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| Cost Method Investment | Cost Method Investment: Investments made by the Company are currently classified as cost method investment, or investments that do not hold any significant influence or control and do not have a readily-determinable fair value. As the investment does not have a readily-determinable fair value and as the investment is not into an investment fund, the measurement alternate approach, in accordance with ASC 321, is used to measure the fair value of the investment. The measurement alternate approach is defined as cost, less impairment, adjusted (increased or decreased) for information about fair value of the investment from observable price changes, whenever those occur.
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REVENUE AND ACCOUNTS RECEIVABLE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of disaggregation of revenue |
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PROPERTY AND EQUIPMENT (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of property and equipment |
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DEBT (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of debt |
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LEASES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Leases | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of future minimum lease payments |
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WARRANTS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warrants | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of warrant activity |
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SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Accounting Policies [Abstract] | ||
| Allowance for doubtful accounts | $ 0 | $ 0 |
GOING CONCERN (Details Narrative) - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
| Accumulated deficit | $ 32,479,571 | $ 31,109,214 |
| Cash balance | $ 396,117 |
REVENUE AND ACCOUNTS RECEIVABLE (Details - Disaggregation of Revenue) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Disaggregation of Revenue [Line Items] | ||
| Revenue | $ 14,598 | $ 20,409 |
| Transferred at Point in Time [Member] | ||
| Disaggregation of Revenue [Line Items] | ||
| Revenue | 4,950 | 14,000 |
| Transferred over Time [Member] | ||
| Disaggregation of Revenue [Line Items] | ||
| Revenue | $ 9,648 | $ 6,409 |
REVENUE AND ACCOUNTS RECEIVABLE (Details Narrative) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Disaggregation of Revenue [Line Items] | ||
| Contract performance obligation recognized | $ 13,683 | |
| Transferred over Time [Member] | ||
| Disaggregation of Revenue [Line Items] | ||
| Revenues | 9,648 | $ 6,409 |
| Cel Fi And Network Systems [Member] | ||
| Disaggregation of Revenue [Line Items] | ||
| Revenues | 4,950 | 14,000 |
| Equipment Sales [Member] | ||
| Disaggregation of Revenue [Line Items] | ||
| Revenues | 2,250 | 5,500 |
| Installation And Other Services [Member] | ||
| Disaggregation of Revenue [Line Items] | ||
| Revenues | $ 2,700 | $ 8,500 |
INVESTMENT IN LIMITED LIABILITY COMPANY (Details Narrative) - Investment [Member] - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2023 |
Mar. 31, 2024 |
|
| Investment amount | $ 600,000 | |
| Ownership percent | 0.56% | 0.53% |
PROPERTY AND EQUIPMENT (Details) - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Property, Plant and Equipment [Line Items] | ||
| Less: accumulated depreciation | $ (313,011) | $ (306,868) |
| Property and equipment, net | 19,708 | 26,205 |
| Telecommunication Equipment And Computers [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property and equipment, gross | 299,885 | 299,943 |
| Vehicles [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property and equipment, gross | 23,805 | 23,805 |
| Furniture and Fixtures [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property and equipment, gross | $ 9,029 | $ 9,325 |
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Property, Plant and Equipment [Abstract] | ||
| Depreciation expense | $ 8,396 | $ 11,002 |
DEBT (Details - Debt) - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Short-Term Debt [Line Items] | ||
| Debt outstanding | $ 779,722 | $ 1,096,124 |
| Note Payable 1 [Member] | ||
| Short-Term Debt [Line Items] | ||
| Debt outstanding | 14,722 | 21,609 |
| Note Payable 2 [Member] | ||
| Short-Term Debt [Line Items] | ||
| Debt outstanding | 625,000 | 625,000 |
| Note Payable 3 [Member] | ||
| Short-Term Debt [Line Items] | ||
| Debt outstanding | 10,000 | 10,000 |
| Note Payable 4 [Member] | ||
| Short-Term Debt [Line Items] | ||
| Debt outstanding | 55,000 | 364,515 |
| Note Payable 5 [Member] | ||
| Short-Term Debt [Line Items] | ||
| Debt outstanding | 50,000 | 50,000 |
| Note Payable 6 [Member] | ||
| Short-Term Debt [Line Items] | ||
| Debt outstanding | $ 25,000 | $ 25,000 |
DEBT (Details Narrative) - USD ($) |
1 Months Ended | 3 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|---|
Jan. 31, 2023 |
Oct. 31, 2021 |
Feb. 29, 2020 |
Mar. 31, 2024 |
Dec. 31, 2023 |
|
| Debt Instrument [Line Items] | |||||
| Note payable | $ 779,722 | $ 1,096,124 | |||
| February 2023 Private Placement [Member] | |||||
| Debt Instrument [Line Items] | |||||
| Debt converted, amount converted | 309,515 | $ 1,925,000 | |||
| Feb 2023 Private Placement [Member] | |||||
| Debt Instrument [Line Items] | |||||
| Debt face amount | $ 2,289,515 | ||||
| Feb 2020 Note [Member] | |||||
| Debt Instrument [Line Items] | |||||
| Note payable | $ 625,000 | ||||
| Debt stated interest rate | 7.00% | ||||
| Warrants issued, shares | 62,500 | ||||
| Warrants issued, value | $ 80,053 | ||||
| Maturity date | Aug. 13, 2024 | ||||
| October 2021 Note [Member] | |||||
| Debt Instrument [Line Items] | |||||
| Note payable | $ 10,000 | ||||
| Maturity date | Oct. 21, 2023 | ||||
| Debt stated interest rate | 5.00% | ||||
| January 2023 Note [Member] | |||||
| Debt Instrument [Line Items] | |||||
| Note payable | $ 25,000 | ||||
| Maturity date | Mar. 31, 2024 | ||||
| Debt stated interest rate | 7.00% | ||||
REPURCHASE AGREEMENT (Details Narrative) - Repurchase Agreement [Member] - USD ($) |
1 Months Ended | 3 Months Ended |
|---|---|---|
Apr. 30, 2020 |
Dec. 31, 2020 |
|
| Offsetting Assets [Line Items] | ||
| Payments for repurchase agreement | $ 80,000 | |
| Reduction of APIC | $ 80,000 |
LEASES (Details) - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Leases | ||
| 2025 | $ 75,800 | |
| 2026 | 71,500 | |
| Total minimum lease payments | 147,300 | |
| Less: imputed interest | (13,239) | |
| Present value of minimum lease payment | 134,061 | |
| Less: current portion of lease obligation | 65,861 | $ 0 |
| Long-term lease obligation | $ 68,200 | $ 0 |
LEASES (Details Narrative) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Leases | ||
| Short term lease | $ 12,200 | $ 18,300 |
| Operating lease expense | $ 6,400 | $ 2,723 |
| Operating Leases remaining lease term | 1 year 11 months 1 day | |
| Operating Leases discount rate | 9.50% | |
WARRANTS (Details) - Warrant [Member] |
3 Months Ended |
|---|---|
|
Mar. 31, 2024
shares
| |
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
| Number of warrants outstanding, beginning balance | 2,925,596 |
| Number of warrants granted | 65,956 |
| Number of warrants exercised | (385,258) |
| Number of warrants expired | (87,549) |
| Number of warrants outstanding, ending balance | 2,518,745 |
| Number of warrants exercisable | 2,518,745 |
CUSTOMER CONCENTRATIONS (Details Narrative) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Concentration Risk [Line Items] | ||
| Revenues | $ 14,598 | $ 20,409 |
| Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Two Customers [Member] | ||
| Concentration Risk [Line Items] | ||
| Revenues | $ 12,414 | |
| Concentration risk percentage | 85.00% | |
| Revenue Benchmark [Member] | Customer Concentration Risk [Member] | One Customer [Member] | ||
| Concentration Risk [Line Items] | ||
| Revenues | $ 19,783 | |
| Concentration risk percentage | 97.00% | |
COMMITMENTS AND CONTINGENCIES (Details Narrative) |
Dec. 31, 2023
USD ($)
|
|---|---|
| Links [Member] | |
| Product Liability Contingency [Line Items] | |
| Other payable | $ 335,000 |