UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period 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 incorporation or organization) |
(IRS Employer Identification No.) | |
| ||
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | 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 preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by a checkmark whether the registrant has submitted electronically every Interactive Date 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, a smaller reporting company or an emerging growth company. See 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 ☐
As of November 13, 2023, the registrant had outstanding shares of common stock.
FORWARD-LOOKING STATEMENTS
The information in this report contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, (“the Exchange Act”), which are subject to the “safe harbor” created by those sections. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “should,” “could,” “predicts,” “potential,” “continue,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements. All forward-looking statements in this Form 10-Q are made based on our current expectations, forecasts, estimates and assumptions, and involve risks, uncertainties and other factors that could cause results or events to differ materially from those expressed in the forward-looking statements. In evaluating these statements, you should specifically consider various factors, uncertainties and risks that could affect our future results or operations. These factors, uncertainties and risks may cause our actual results to differ materially from any forward-looking statement set forth in this Form 10-Q. You should carefully consider these risk and uncertainties described and other information contained in the reports we file with or furnish to the SEC before making any investment decision with respect to our securities. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.
| 2 |
TABLE OF CONTENTS
| 3 |
BLUE
LINE PROTECTION GROUP, INC.
CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| (unaudited) | (audited) | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Prepaid expenses and deposits | ||||||||
| Total current assets | ||||||||
| Long-term assets: | ||||||||
| Right to use assets | ||||||||
| Machinery
and equipment, net of accumulated depreciation of $ | ||||||||
| Fixed assets of discontinued operations | ||||||||
| Total long term assets | ||||||||
| Security Deposit | ||||||||
| Total assets | ||||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Financed lease liabilities | ||||||||
| Notes payable - related parties | ||||||||
| Convertible notes payable - related parties, net of unamortized discount | ||||||||
| Current portion of operating lease obligation | ||||||||
| Derivative liabilities | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Financed lease liabilities - long term | ||||||||
| Notes payable - related parties | ||||||||
| Operating lease liability-long term | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders’ deficit: | ||||||||
| Preferred Stock, $ par value, shares authorized, shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively | ||||||||
| Common Stock, $ par value, shares authorized, and issued and outstanding as of September 30, 2023 and December 31, 2022, respectively | ||||||||
| Common Stock, owed but not issued, shares and shares as of September 30, 2023 and December 31, 2022, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-1 |
BLUE
LINE PROTECTION GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | $ | $ | $ | |||||||||||||
| Cost of revenue | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Total expenses | ||||||||||||||||
| Operating Income | ( | ) | ||||||||||||||
| Other income (expenses): | ||||||||||||||||
| Gain on sale of fixed asset | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income / (Loss) on derivative | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other income / (expenses) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income / (loss) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Net income per common share: Basic and Diluted | $ | $ | ) | $ | $ | ) | ||||||||||
| Weighted average number of | ||||||||||||||||
| common shares outstanding- Basic | ||||||||||||||||
| common shares outstanding- Diluted | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-2 |
BLUE
LINE PROTECTION GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(UNAUDITED)
| For the nine months ended | ||||||||
| September 30, | ||||||||
| 2023 | 2022 | |||||||
| Operating activities | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization of right to use | ||||||||
| Stock Option expense | ||||||||
| Change in fair value of derivative liabilities | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) / decrease in accounts receivable | ||||||||
| (Increase) / decrease in deposits and prepaid expenses | ( | ) | ||||||
| Increase (decrease) in accounts payable and accrued liabilities | ||||||||
| Increase (decrease) in lease obligations | ( | ) | ( | ) | ||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities | ||||||||
| Purchase of fixed assets | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Financing activities | ||||||||
| Repayments of convertible notes payable - related party | ( | ) | ( | ) | ||||
| Repayments of notes payable - related party | ( | ) | ( | ) | ||||
| Payments on notes payable | ( | ) | ( | ) | ||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Net increase in cash | ( | ) | ||||||
| Cash - beginning | ||||||||
| Cash - ending | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Capitalized leased fixed assets | $ | $ | ||||||
| Derivative resolution | $ | $ | ||||||
| Cancellation of common stock | $ | $ | ||||||
| Gain on the forgiveness of accrued interest - related party | $ | $ | ||||||
| Initial recognition of right of use asset and lease liability | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-3 |
BLUE
LINE PROTECTION GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(UNAUDITED)
| Preferred Stock | Common Stock | Paid-in | Stock | Accumulated | Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Payable | Deficit | Deficit | |||||||||||||||||||||||||
| Balance, June 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Cancellation of common stock | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Forgiveness of interest - related party | - | - | ||||||||||||||||||||||||||||||
| Derivative resolution | - | - | ||||||||||||||||||||||||||||||
| Net income for the three months ended September 30, 2022 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Stock options expense | - | - | ||||||||||||||||||||||||||||||
| Derivative resolution | - | - | ||||||||||||||||||||||||||||||
| Net income for the three months ended September 30, 2023 | - | - | ||||||||||||||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Additional | ||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Stock | Accumulated | Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Payable | Deficit | Deficit | |||||||||||||||||||||||||
| Balance, December 31 , 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Cancellation of common stock | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| - | ||||||||||||||||||||||||||||||||
| Forgiveness of interest - related party | - | - | ||||||||||||||||||||||||||||||
| Derivative resolution | - | - | ||||||||||||||||||||||||||||||
| Net income for the nine months ended September 30, 2022 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Balance, December 31 , 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Stock options expense | - | - | ||||||||||||||||||||||||||||||
| Derivative resolution | - | - | ||||||||||||||||||||||||||||||
| Net income for the nine months ended September 30, 2023 | - | - | ||||||||||||||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-4 |
Blue Line Protection Group, Inc.
Notes to Consolidated Financial Statements
Note 1 – History and organization of the company
The Company was originally organized on September 11, 2006 (Date of Inception) under the laws of the State of Nevada as The Engraving Masters, Inc. The Company was authorized to issue up to shares of its common stock and shares of preferred stock, each with a par value of $ per share.
On March 14, 2014, the Company acquired Blue Line Protection Group, Inc., a Colorado corporation formed in February 2014 (“Blue Line Colorado”), as a wholly-owned subsidiary of the Company. Blue Line Colorado provides protection, compliance, and financial services to the lawful cannabis industry.
On May 2, 2014, the Company changed its name from The Engraving Masters, Inc. to Blue Line Protection Group, Inc. (“BLPG”)
On
July 6, 2021, the Company effected a reverse stock split and a pro-rata decrease in its authorized common stock on a basis of
The Company provides logistics, and compliance services for businesses engaged in the legal cannabis industry. The Company offers asset logistic services, such as armed transportation services; including shipment protection, money escorts, asset vaulting, financial services, such as handling transportation and storage of currency; training; and compliance services.
Note 2 – Accounting policies and procedures
Principles of consolidation
For the periods ended September 30, 2023 and September 30, 2022 the consolidated financial statements include the accounts of Blue Line Protection Group, Inc. (formerly The Engraving Masters, Inc.), Blue Line Advisory Services, Inc. (a Nevada corporation; “BLAS”), Blue Line Capital, Inc. (a Colorado corporation; “Blue Line Capital”), Blue Line Protection Group (California), Inc. (a California corporation; “Blue Line California”), Blue Line Colorado, Blue Line Protection Group Illinois, Inc. (an Illinois corporation; “Blue Line Illinois”), BLPG, Inc. (a Nevada corporation; “Blue Line Nevada”), Blue Line Protection Group (Washington), Inc. (a Washington corporation; “Blue Line Washington”), and Blue Line Protection Group, Inc. (an Arizona corporation; “Blue Line Arizona”). All significant intercompany balances and transactions have been eliminated. BLPG and its subsidiaries are collectively referred herein to as the “Company.”
Interim financial statements
The unaudited interim consolidated financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with 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.
| F-5 |
In the opinion of management, these statements reflect all adjustments, all of which are of a normal recurring nature, which, in the opinion of management, are necessary for a fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2022 and notes thereto included in the Company’s annual report on Form 10-K. The Company follows the same accounting policies in the preparation of interim reports.
Results of operations for the interim periods are not indicative of annual results.
Basis of presentation
The consolidated financial statements present the balance sheets, statements of operations, stockholders’ equity (deficit) and cash flows of the Company and its subsidiaries. The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America.
The Company has adopted December 31 as its fiscal year end.
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.
Cash and cash equivalents
The
Company maintains a cash balance in a non-interest-bearing account. For the purpose of the statements of cash flows, all highly liquid
investments with an original maturity of three months or less are considered to be cash equivalents. As of September 30, 2023 the Company
has cash in excess of FDIC insured limits of $
Accounts receivable
Accounts receivable are stated at the amount the Company expects to collect from outstanding balances and do not bear interest. The Company provides for probable uncollectible amounts through an allowance for doubtful accounts, if an allowance is deemed necessary. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future. On a periodic basis, management evaluates its accounts receivable and determines the requirement for an allowance for doubtful accounts based on its assessment of the current and collectible status of individual accounts with past due balances over 90 days. Account balances are charged against the allowance after all collection efforts have been exhausted and the potential for recovery is considered remote.
Allowance for uncollectible accounts
The
Company estimates losses on receivables based on known troubled accounts, if any, and historical experience of losses incurred. There
was
| F-6 |
Property and equipment
Property and equipment is recorded at cost and capitalized from the initial date of service. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective periods. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. The estimated useful lives for significant property and equipment categories are as follows:
| Automotive Vehicles | ||
| Furniture and Equipment | ||
| Buildings and Improvements |
The
Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the
carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual
disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is
recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in
performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and
the effects of obsolescence, demand, competition and other economic factors. Based on this assessment there was no impairment as
September 30, 2023 and December 31, 2022. Depreciation expense for the three and nine months ended September 30, 2023 and, 2022 was
$
Impairment of long-lived assets
The Company accounts for its long-lived assets in accordance with ASC Topic 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost or carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and its fair value or disposable value. As of September 30, 2023 and December 31, 2022, the Company determined that none of its long-lived assets were impaired.
Concentration of business and credit risk
The Company has no significant off-balance sheet risks such as foreign exchange contracts, option contracts or other hedging arrangements. The Company’s financial instruments that are exposed to concentration of credit risks consist primarily of cash. The Company maintains its cash in bank accounts, which may at times exceed federally insured limits.
The
Company had one major customer which generated
The
Company had one major customer which generated
Related party transactions
FASB ASC 850, “Related Party Disclosures” requires companies to include in their financial statements disclosures of material related party transactions. The Company discloses all material related party transactions. Related parties are defined to include any principal owner, director or executive officer of the Company and any immediate family members of a principal owner, director or executive officer.
| F-7 |
Fair value of financial instruments
The carrying amounts reflected in the balance sheets for cash, accounts payable and related party payables approximate the respective fair values due to the short maturities of these items. The Company does not hold any investments that are available-for-sale.
As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The three levels of the fair value hierarchy are described below:
| Level 1: | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; |
| Level 2: | Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; |
| Level 3: | Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). |
The following table presents the derivative financial instruments, the Company’s only financial liabilities, measured and recorded at fair value on the Company’s consolidated balance sheet on a recurring basis, and their level within the fair value hierarchy as of September 30, 2023 and December 31, 2022:
September 30, 2023
| Amount | Level 1 | Level 2 | Level 3 | |||||||||||||
| Embedded conversion derivative liability | $ | $ | $ | $ | ||||||||||||
| Warrant derivative liabilities | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
December 31, 2022
| Amount | Level 1 | Level 2 | Level 3 | |||||||||||||
| Embedded conversion derivative liability | $ | $ | $ | $ | ||||||||||||
| Warrant derivative liabilities | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
The embedded conversion feature in the convertible debt instruments that the Company issued that became convertible qualified them as derivative instruments since the number of shares issuable under the notes are indeterminate based on guidance in FASB ASC 815, Derivatives and Hedging. These convertible notes tainted all other equity linked instruments including outstanding warrants and fixed rate convertible debt on the date that the instrument became convertible. The valuation of the derivative liability of the warrants was determined through the use of Black Scholes option-pricing model (See Note 7).
| F-8 |
Revenue Recognition
The Company recognizes revenue when delivery of the promised goods or services is transferred to its customers in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods or services. We determine revenue recognition through the following five steps:
| ● | Identify the contract with the customer; | |
| ● | Identify the performance obligations in the contract; | |
| ● | Determine the transaction price; | |
| ● | Allocate the transaction price to the performance obligations in the contract; and | |
| ● | Recognize revenue when, or as, the performance obligations are satisfied. |
We generate substantially all our revenue from providing services to customers. The Company records revenue when the 5 steps above have been completed.
In general, the Company’s business segmentation is aligned according to the nature and economic characteristics. Revenue is characterized by several lines of services and typically the pricing is fixed.
| Three months ended September 30, | ||||||||
| Revenue Breakdown by Streams | 2023 | 2022 | ||||||
| Service: Transportation | $ | $ | ||||||
| Service: Currency Processing | $ | $ | ||||||
| Service: Compliance | $ | $ | ||||||
| Total | $ | $ | ||||||
| Nine months ended September 30, | ||||||||
| Revenue Breakdown by Streams | 2023 | 2022 | ||||||
| Service: Transportation | $ | $ | ||||||
| Service: Currency Processing | $ | $ | ||||||
| Service: Compliance | $ | $ | ||||||
| Total | $ | $ | ||||||
Advertising costs
The
Company expenses all costs of advertising as incurred. Advertising expense for the three and nine months ended September 30, 2023 and
September 30, 2022 amounted to $
General and administrative expenses
The significant components of general and administrative expenses consist mainly of rent and compensation.
| F-9 |
Share-based compensation expense is recorded as a result of stock options granted in return for services rendered. Previously, the share-based payment arrangements with employees were accounted for under ASC 718. On June 20, 2018, the FASB issued ASU 2018-07, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The Company has adopted the new standard and has made some adjustment with regard to the share-based compensation costs. Under the ASU 2018-07, the measurement of equity-classified nonemployee share-based payments is generally fixed on the grant date and the options are no longer revalued on each reporting date. The expenses related to the share-based compensation are recognized on each reporting date. The amount is calculated as the difference between total expenses incurred and the total expenses already recognized.
Cost of Revenue
The Company’s cost of revenue primarily consists of labor, fuel costs and items purchased by the Company specifically for the benefit of the Company’s clients.
Net loss per share is provided in accordance with FASB ASC 260-10, “Earnings per Share”. Basic loss per share is computed by dividing losses available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. For the three and nine months ended September 30, 2023 all common stock equivalents of and , respectively were included in the calculation of diluted income per share as their effect would be dilutive.
Dividends
The Company has not yet adopted any policy regarding payment of dividends. No dividends have been paid or declared since inception.
Income Taxes
The Company follows FASB Codification Topic 740-10-25 (ASC 740-10-25) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.
Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.
Recent Pronouncements
In February 2016, the FASB issued ASU 2016-02, Leases, which amended current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard was effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company elected the practical expedient under ASU 2018-11 “Leases: Targeted Improvements” which allows the Company to apply the transition provision for Topic 842 at the Company’s adoption date instead of at the earliest comparative period presented in the financial statements. Therefore, the Company recognized and measured leases existing at January 1, 2019 but without retrospective application. Therefore, there was no impact recorded to beginning retained earnings or the statement of operations.
The Company evaluated all other recent accounting pronouncements issued and determined that the adoption of these pronouncements would not have a material effect on the financial position, results of operations or cash flows of the Company.
| F-10 |
Note 3 – Going concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has an accumulated deficit and had a working capital deficit as of September 30, 2023. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. The Company is significantly dependent upon its ability, and will continue to attempt, to secure additional equity and/or debt financing. There are no assurances that the Company will be successful in obtaining additional capital.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence. These financial statements do not include any adjustments that might arise from this uncertainty.
Note 4 – Commitments and contingencies
Contingencies
On
November 6, 2015, Daniel Sullivan sent a wage claim demand to the Company. Mr. Sullivan purports to have had an Independent Contractor
Agreement with the Company which provides he is entitled to certain compensation and to be reimbursed for Company expenses. The demand
claims unpaid compensation in the amount of $
Mile
High Real Estate Group, an entity owned by Mr. Sullivan, sent correspondence to the Company stating the Mr. Sullivan and/or Mile High
Real Estate loaned the Company either directly or directly to contractors, material suppliers or utilities for operating and building
remodeling in the amount of $
On
April 14, 2016, the Company entered into an agreement with a third party to provide the Company with investor relations services. Upon
signing the agreement, the Company paid the investor relations consultant $ and agreed to issue the consultant shares
of its restricted common stock. The agreement required the Company to pay the consultant an additional $ prior to June 14, 2016.
The Company cancelled the agreement and is of the opinion that the shares are not owed to the consultant. As of September 30, 2023 and
December 31, 2022 there was a payable recorded of $
Finance leases
On
March 1, 2019, the Company recorded finance lease obligation for a leased a vehicle for $
On
June 2, 2021, the Company recorded finance lease obligation for a leased a vehicle for $
| F-11 |
On
June 17, 2022, the Company recorded finance lease obligation for a leased vehicle for $
| Future minimum lease payments as September 30, 2023 | ||||
| 2023 | $ | |||
| 2024 | ||||
| Total minimum lease payments | $ | |||
Operating Leases
On
October 27, 2016 the Company sold its building located at 5765 Logan Street Denver, Colorado to an unrelated third party for $.
The Company repaid the mortgage on the building in the amount of $
On
May 29, 2018 the Company leased a building located at 4328 E. Magnolia Street, Phoenix, Arizona.
On
January 22, 2019 the Company leased a building located at 7490 Bridgewater Road, Huber Heights, Ohio. The lease is for an initial term
of
On March 14, 2023 effective June 2023 the Company extended the lease on
a building located at 4328 E. Magnolia Street, Phoenix, Arizona.
The
Company adopted ASC 842 and recorded right of use asset and operating lease liability of $
Supplemental balance sheet information related to leases is as follows:
September 30, 2023
| Operating Leases | Classification | September 30, 2023 | ||||
| Right-of-use assets | Operating right of use assets | $ | ||||
| Total | $ | |||||
| Current lease liabilities | Current operating lease liabilities | $ | ||||
| Non-current lease liabilities | Long-term operating lease liabilities | $ | ||||
| Total | $ | |||||
| F-12 |
Lease term and discount rate were as follows:
| September 30, 2023 | ||||
| Weighted average remaining lease term (years) | ||||
| Weighted average discount rate | % | |||
The following summarizes lease expenses for the nine months ended September 30, 2023:
Finance lease expenses:
| Depreciation/amortization expense | $ | |||
| Interest on lease liabilities | ||||
| Finance lease expense | $ |
Supplemental disclosures of cash flow information related to leases were as follows:
| September 2023 | ||||
| Cash paid for operating lease liabilities | $ | |||
Maturities of lease liabilities were as follows as of September 30, 2023:
Operating Leases | ||||
| 2023 | $ | |||
| 2024 | $ | |||
| 2025 | $ | |||
| 2026 | $ | |||
| 2027 | $ | |||
| 2028 | $ | |||
| Total | $ | |||
| Less: Imputed interest | $ | ( | ) | |
| Present value of lease liabilities | $ | |||
| Operating Leases | Classification | December 31, 2022 | ||||
| Right-of-use assets | Operating right of use assets | $ | ||||
| Total | $ | |||||
| Current lease liabilities | Current operating lease liabilities | $ | ||||
| Non-current lease liabilities | Long-term operating lease liabilities | $ | ||||
| Total | $ | |||||
| F-13 |
Lease term and discount rate were as follows:
| December 31, 2022 | ||||
| Weighted average remaining lease term (years) | ||||
| Weighted average discount rate | % | |||
The following summarizes lease expenses for the year ended December 31, 2022:
Finance lease expenses:
| Depreciation/amortization expense | $ | |||
| Interest on lease liabilities | ||||
| Finance lease expense | $ |
Supplemental disclosures of cash flow information related to leases were as follows:
| December 31, 2022 | ||||
| Cash paid for operating lease liabilities | $ | |||
Note 5 – Notes payable
Convertible notes payable to non-related parties
On
October 18, 2017, the Company borrowed $ from an unrelated third party. The Company paid $ of fees associated with the loan,
which was recorded as discount and to be amortized over the term of the debt and was fully amortized as of December 31, 2018. The loan
bears interest at a rate of % (default interest %) and has a maturity date of . The Holder has the option to convert
the outstanding principal and accrued interest into common stock of the Company. . During the year ended December 31, 2018 the Company paid $ to extend the maturity date
until . During the year ended December 31, 2019, the Company paid $ in extension fees. The note was discounted for
a derivative (see note 8 for details) and the discount of $ is being amortized over the life of the note using the effective interest
method which was fully amortized as of December 31, 2018. During the year ended December 31, 2019 the holder converted $ of accrued
interest into shares of common stock resulting in a loss of $. As of December 31, 2021 and December 31, 2020 the balance
outstanding on the loan is $ and $, respectively. On May 28, 2021 the Company entered into a settlement and release agreement
with the Lender and agreed to pay the Lender a settlement of $
On March 21, 2018, the Company borrowed $ from an unrelated third party. The Company paid $ of fees associated with the loan and had amortized $ of the costs as of December 31, 2018. The note bears an interest rate: % (default interest lesser of % or maximum permitted by law) and matures on . . The note was discounted for a derivative (see note 8 for details) and the discount of $ has been fully amortized over the life of the note using the effective interest method. As of September 30, 2023 and December 31, 2022 the amount had been fully amortized. As of September 30, 2023 and December 31, 2022 accrued interest and the note balance had been repaid.
| F-14 |
Note 6 – Notes payable – related parties
Long-term liabilities: Notes payable - related parties
As
of December 31, 2021 the Company owed MKM Capital Advisors and two related entities $
As
of December 31, 2021 the Company owed CGDK, LLC $
Current liabilities: Notes payable – related parties
On July 31, 2014, the Company borrowed $ from an entity controlled by a former officer and shareholder of the Company. The loan is due and payable on demand and bears no interest. As of September 30, 2023 and December 31, 2022, the principal balance owed on this loan is $ and $, respectively.
As
of December 31, 2014, a related party loaned the Company $
Current Liabilities: Convertible notes payable to related parties
As
of December 31, 2021 the Company owed Hypur Inc. $
| ● | On
March 3, 2022 the Company paid Hypur $ | |
| ● | On
or before each date shown below, the Company paid Hypur $ |
| Date | Amount | |||
| $ | ||||
| $ | ||||
| $ | ||||
| $ | ||||
| F-15 |
| ● | On
or before July 31, 2022 the Company agreed to pay Hypur $ | |
| ● | All
principal amounts owed to Hypur under the Promissory Notes will bear interest at | |
| ● | If
by July 31, 2022 all payments required by the Company’s agreement with Hypur have been made in a timely fashion, Hypur will
forgive $ | |
| ● | After
July 31, 2022 future payment plans will be negotiated, provided however that any principal amounts owed to Hypur under the Promissory
Notes after July 31, 2022 will not bear interest in excess of | |
| ● | Hypur will waive any default rights between January 31, 2022 and August 31, 2022 on a month-to-month basis so long as all payments required by the Company’s agreement with Hypur have been made. |
During
the nine months ended September 30, 2023 the Company repaid a total of $
On
September 1, 2016, the Company entered into, a convertible promissory note with Hypur Ventures, L.P., a Delaware limited partnership
(the “Hypur Ventures”) which is a related party, pursuant to which the Company borrowed $
On
October 14, 2016, the Company entered into a convertible promissory note with Hypur Ventures, pursuant to which the Company borrowed
$
On
March 7, 2017, the Company borrowed $
The Company re-measured the fair value of derivative liabilities on September 30, 2023 and December 31, 2022. See Note 7.
| F-16 |
Note 7 – Derivative Liability
The Company analyzed the conversion options for derivative accounting consideration under ASC 815, Derivatives and Hedging, and determined that an instrument should be classified as a liability when a conversion option becomes effective.
The derivative liability in connection with the conversion feature of the convertible debt is measured using level 3 inputs.
The change in the fair value of derivative liabilities is as follows:
| Balance – December 31, 2021 | $ | |||
| Settlement of derivatives upon conversion | $ | ( | ) | |
| Change in fair value of the derivative | $ | |||
| Balance – December 31, 2022 | $ | |||
| Settlement of derivatives upon conversion | $ | ( | ) | |
| Gain on change in fair value of the derivative | $ | |||
| Balance – September 30, 2023 | $ |
The table below shows the Black-Scholes option-pricing model inputs used by the Company to value the derivative liability at each measurement date:
| Nine Months ended September 30, 2023 | Year ended December 31, 2022 | |||||||
| Expected term | ||||||||
| Expected average volatility | % | % | ||||||
| Expected dividend yield | ||||||||
| Risk-free interest rate | % | % |
Note 8 – Stockholders’ deficit
The Company was originally authorized to issue shares of common stock and shares of preferred stock. On May 6, 2014, the Company effected a forward stock split and a pro-rata increase in its authorized common stock on a basis of 14-to-1, whereby each shareholder received 14 newly issued shares of common stock for each 1 share held. Additionally, the number of authorized shares increased to shares of common stock. All references to share and per share amounts in the consolidated financial statements and these notes thereto have been retroactively restated to reflect the forward stock split.
Common stock
During the year ended December 31, 2022, shares of common stock were returned to the treasury.
During
October 2022 the Company issued a total of shares of common stock valued at $
Preferred stock
On
May 3, 2016, the Company entered into, an agreement with Hypur Ventures, L.P., a Delaware limited partnership (the “Hypur Ventures”)
which is a related party pursuant to which the Company sold to Hypur Ventures, in a private placement, shares of the Company’s
preferred stock and
| F-17 |
Between
July and August of 2016 Hypur Ventures purchased an additional shares of the Company’s preferred stock and
The
preferred stock is convertible at any time at the election of Hypur Ventures. The preferred stock shall automatically convert to common
stock if the closing price of the Company’s common stock equals or exceeds $
The Company has reserved thirty million shares of common stock that may be issued upon the conversion and/or exercise of the preferred stock and the warrants.
Note 9 – Options and warrants
Options
All stock options have an exercise price equal to the fair market value of the common stock on the date of grant. The fair value of each option award is estimated using a Black-Scholes-Merton option valuation model. The Company has not paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero in the Black-Scholes-Merton option valuation model. Volatility is an estimate based on the calculated historical volatility of similar entities in industry, in size and in financial leverage, whose share prices are publicly available. The expected life of awards granted represents the period of time that they are expected to be outstanding. The Company has no historical experience with which to establish a basis for determining an expected life of these awards. Therefore, the Company only gave consideration to the contractual terms and did not consider the vesting schedules, exercise patterns and pre-vesting and post-vesting forfeitures significant to the expected life of the option award. The Company bases the risk-free interest rate used in the Black-Scholes-Merton option valuation model on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term equal to the expected life of the award.
| Number
Of Options | Weighted-Average Exercise Price | |||||||
| Outstanding at December 31, 2022 | $ | |||||||
| Granted | $ | | ||||||
| Expired | $ | |||||||
| Cancelled | ( | ) | $ | |||||
| Outstanding at September 30, 2023 | $ | |||||||
| Options exercisable at September 30, 2023 | $ | |||||||
| OPTIONS OUTSTANDING AND EXERCISABLE AT SEPTEMBER 30, 2023 | ||||||||||||||||||||||
| Range
of Exercise Prices | Number
of Options Outstanding | Weighted-
Average Remaining Contractual Life in Years | Weighted- Average Exercise Price | Number Exercisable | Weighted- Average Exercise Price | |||||||||||||||||
| $ | . | $ | $ | |||||||||||||||||||
Total stock-based compensation expense in connection with options and modified awards recognized in the consolidated statement of operations for three and nine months ended September 30, 2023 was $ and $, respectively.
Note 10 – Subsequent events
None.
| F-18 |
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION |
You should read the following discussion and analysis of financial condition and results of operations in conjunction with the consolidated financial statements and related notes appearing elsewhere in this Report.
We were originally incorporated in Nevada on September 11, 2006, under the name The Engraving Masters, Inc. (the “Company”).
On May 2, 2014, we changed our name to Blue Line Protection Group, Inc.
We provide transportation, currency processing, and compliance for businesses engaged in the legal cannabis industry. During the nine months ended September 30, 2023 substantially all our revenue was derived from transportation, currency processing, and compliance services.
It is estimated that the total market for marijuana, legal or otherwise, will exceed the economic value of corn and wheat combined. Marijuana is widely considered the largest cash crop in the United States. Businesses have been positioning themselves for years, each trying to establish a leadership position in the legal marijuana industry.
Cultivation facilities are the producers of legal cannabis that eventually make its way to consumers. Growers’ operations typically span a large geographic footprint, making them susceptible to theft, as are shipments from the growers to testing laboratories or to retail dispensaries. Additionally, due to current federal marijuana legislation and banking environment, growers are finding it increasingly difficult to secure their cash, purchase equipment and obtain financing for expansion.
Dispensaries are the retail face of the legal cannabis industry. All legal sales of cannabis products are transacted through dispensaries that are state-licensed. To maintain their licenses, dispensaries must comply with a variety of state-mandated reporting requirements, including reporting every gram of cannabis passing in and out of the store. Dispensaries also face financing and banking challenges similar to those that growers encounter.
We do not grow, test, transport or sell marijuana.
Armed Protection and Transportation
Fundamental to the legal cannabis industry is the protection of product and cash throughout the distribution channel. Growers ship product from their cultivation facilities to independent laboratories where it is tested for compliance with state-mandated parameters. From the labs, the product is then delivered to the retail dispensaries, where it is sold to the public.
Due to the current banking and regulatory environments, payments between each step in the distribution network are made in cash: from the customer back to the grower. Therefore, these businesses are forced into having to transport bags of money between growers and dispensaries and their own vaults or storage facilities.
The risk of theft of cash and product is present at every stage, even when they are not in transit. Accordingly, all cannabis businesses require security measures to prevent theft, mitigate risk to employees and maintain regulatory compliance.
We began our security and protection operations in Colorado in February 2014. Since then, we have become the largest legal cannabis protection services company in the state. We offer a fully integrated approach to managing the movement of cannabis and cash from growers through dispensaries via armed and armored transport, money processing, vaulting and related credit. Money processing services generally include counting, sorting and wrapping currency.
We also offer security monitoring, asset vaulting, and VIP and dignitary protection.
| 4 |
Results of Operations
Material changes in line items in our Statement of Operations for the nine months ended September 30, 2023 as compared to the same period last year, are discussed below:
| Increase (I) or | ||||
| Item | Decrease (D) | Reason | ||
| Revenue | I | Increase in services | ||
| Cost of revenue | I | Increase in distance traveled | ||
| Revenue | D | Reduction in debt and lower stock prices |
Capital Resources and Liquidity
Our material sources and <uses> of cash during the nine months ended September 30, 2023 and 2022 were:
| 2023 | 2022 | |||||||
| Cash provided by operations | $ | 598,210 | $ | 358,466 | ||||
| Purchase of fixed assets | (104,193 | ) | (18,882 | ) | ||||
| Loan payments | (259,395 | ) | (627,488 | ) | ||||
As of September 30, 2023 we did not have any material capital commitments other than loan payments.
During the next twelve months, we anticipate that we will incur approximately $1,200,000 of general and administrative expenses in order to execute our current business plan. We also plan to incur significant sales, marketing, research and development expenses during the next 12 months. We must obtain additional financing to continue our operations. We may not be able to obtain additional funding on terms that are favorable to us or at all. We may not be able to obtain sufficient funding to continue our operations, or if we do receive funding, to generate adequate revenues in the future or to operate profitably in the future. These conditions raise substantial doubt about our ability to continue as a going concern.
Other than as disclosed above, we do not anticipate any material capital requirements for the twelve months ending September 30, 2024.
Other than as disclosed above, we do not know of any:
| ● | trends, demands, commitments, events or uncertainties that will result in, or that are reasonable likely to result in, our liquidity increasing or decreasing in any material way; or | |
| ● | any significant changes in our expected sources and uses of cash. |
We do not have any commitments or arrangements from any person to provide us with any equity capital.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements.
Critical Accounting Policies
Management considers the following policies critical because they are both important to the portrayal of our financial condition and operating results, and they require management to make judgments and estimates about inherently uncertain matters.
Accounts receivable. Accounts receivable are stated at the amount we expect to collect from outstanding balances and do not bear interest. We provide for probable uncollectible amounts through an allowance for doubtful accounts if an allowance is deemed necessary. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future. On a periodic basis, management evaluates our accounts receivable and determines the requirement for an allowance for doubtful accounts based on its assessment of the current and collectible status of individual accounts with past due balances over 90 days. Account balances are charged against the allowance after all collection efforts have been exhausted and the potential for recovery is considered remote.
| 5 |
Revenue recognition. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which supersedes the revenue recognition requirements in Accounting Standards Codification 605, “Revenue Recognition.” This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASC 606-10-50-5 requires that entities disclose disaggregated revenue information in categories (such as type of good or service, geography, market, type of contract, etc.) that depict how the nature, amount, timing, and uncertainty of revenue and cash flow are affected by economic factors. ASC 606-10-55-89 explains that the extent to which an entity’s revenue is disaggregated depends on the facts and circumstances that pertain to the entity’s contracts with customers and that some entities may need to use more than one type of category to meet the objective for disaggregating revenue. In August 2015, the FASB issued ASU No. 2015-14, which deferred the effective date of the new revenue standard by one year, and allowed entities the option to early adopt the new revenue standard as of the original effective date. There have been multiple standards updates amending this guidance or providing corrections or improvements on issues in the guidance. The requirements for these standards relating to Topic 606 are effective for interim and annual periods beginning after December 15, 2017. This standard permitted adoption using one of two transition methods, either the retrospective or modified retrospective transition method.
We adopted these standards at the beginning of the first quarter of fiscal 2018 using the modified retrospective method. The adoption of these standards did not have an impact on our Statements of Operations for the nine months ended September 30, 2023.
Stock-based compensation. We record stock based compensation in accordance with the guidance in ASC Topic 505 and 718, which requires us to recognize expenses related to the fair value of our employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. We recognize the cost of all share-based awards on a graded vesting basis over the vesting period of the award.
Equity Instruments. We account for equity instruments issued in exchange for the receipt of goods or services from non-employees in accordance with FASB ASC 718-10.
| ITEM 4. | CONTROLS AND PROCEDURES |
Disclosure Controls and Procedures
An evaluation was carried out under the supervision and with the participation of our management, including our Principal Financial Officer and Principal Executive Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report on Form 10-Q. Disclosure controls and procedures are procedures designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this Form 10-Q, is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and is communicated to our management, including our Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our management concluded that, as of September 30, 2023 our disclosure controls and procedures were not effective due to the material weaknesses identified during the audit of our financial statements for the year ended December 31, 2022.
Change in Internal Control over Financial Reporting
Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.
There were no changes in our internal control over financial reporting that occurred during the fiscal quarter covered by this report that materially affected or are reasonably likely to materially affect, our internal control over financial reporting.
| 6 |
PART II
ITEM 6. EXHIBITS
| Exhibit No. | Description of Exhibit | |
| 31.1 | Rule 13a-14(a) Certifications | |
| 31.2 | Rule 13a-14(a) Certifications | |
| 32 | Section 1350 Certifications | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| 7 |
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
| BLUE LINE PROTECTION GROUP, INC. | ||
| November 13, 2023 | By: | /s/ Daniel Allen |
| Daniel Allen, Principal Executive, Financial and | ||
| Accounting Officer | ||
| 8 |
EXHIBIT 31.1
CERTIFICATIONS
I, Daniel Allen, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Blue Line Protection Group, 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 and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or cause such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have significant role in the registrant’s internal control over financial reporting.
| November 13, 2023 | By: | /s/ Daniel Allen |
| Daniel Allen, Principal Executive Officer |
EXHIBIT 31.2
CERTIFICATIONS
I, Daniel Allen, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Blue Line Protection Group, 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 and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or cause such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have significant role in the registrant’s internal control over financial reporting.
| November 13, 2023 | By: | /s/ Daniel Allen |
| Daniel Allen, Principal Financial Officer |
EXHIBIT 32
In connection with the Quarterly Report of Blue Line Protection Group, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2023 as filed with the Securities and Exchange Commission (the “Report”), Daniel Allen, the Company’s Chief Executive and Financial Officer, certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:
| (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 the Company. |
| November 13, 2023 | By: | /s/ Daniel Allen |
| Daniel Allen, Principal Executive and Financial | ||
| Officer |
Cover - shares |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Nov. 13, 2023 |
|
| Cover [Abstract] | ||
| Document Type | 10-Q | |
| Amendment Flag | false | |
| Document Quarterly Report | true | |
| Document Transition Report | false | |
| Document Period End Date | Sep. 30, 2023 | |
| Document Fiscal Period Focus | Q3 | |
| Document Fiscal Year Focus | 2023 | |
| Current Fiscal Year End Date | --12-31 | |
| Entity File Number | 000-52942 | |
| Entity Registrant Name | BLUE LINE PROTECTION GROUP, INC. | |
| Entity Central Index Key | 0001416697 | |
| Entity Tax Identification Number | 20-5543728 | |
| Entity Incorporation, State or Country Code | NV | |
| Entity Address, Address Line One | 5765 Logan St. | |
| Entity Address, City or Town | Denver | |
| Entity Address, State or Province | CO | |
| Entity Address, Postal Zip Code | 80216 | |
| City Area Code | (800) | |
| Local Phone Number | 844-5576 | |
| Entity Current Reporting Status | Yes | |
| Entity Interactive Data Current | Yes | |
| Entity Filer Category | Non-accelerated Filer | |
| Entity Small Business | true | |
| Entity Emerging Growth Company | false | |
| Entity Shell Company | false | |
| Entity Common Stock, Shares Outstanding | 8,250,144 |
Consolidated Balance sheets (Parenthetical) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Property, Plant and Equipment [Line Items] | ||
| Preferred stock, par value | $ 0.001 | $ 0.001 |
| Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
| Preferred stock, shares issued | 20,000,000 | 20,000,000 |
| Preferred stock, shares outstanding | 20,000,000 | 20,000,000 |
| Common stock, par value | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 14,000,000 | 14,000,000 |
| Common stock, shares issued | 8,250,144 | 8,250,144 |
| Common stock, shares outstanding | 8,250,144 | 8,250,144 |
| Common owed but not issued | 129 | 129 |
| Machinery and Equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Accumulated depreciation, property, plant, and equipment | $ 754,281 | $ 687,725 |
Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
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| Income Statement [Abstract] | ||||
| Revenue | $ 1,105,945 | $ 912,453 | $ 3,219,512 | $ 2,897,520 |
| Cost of revenue | (388,852) | (345,485) | (1,117,431) | (939,182) |
| Gross profit | 717,093 | 566,968 | 2,102,081 | 1,958,338 |
| Operating expenses: | ||||
| General and administrative expenses | 495,919 | 611,613 | 1,607,904 | 1,667,229 |
| Total expenses | 495,919 | 611,613 | 1,607,904 | 1,667,229 |
| Operating Income | 221,174 | (44,645) | 494,177 | 291,109 |
| Other income (expenses): | ||||
| Gain on sale of fixed asset | 1,000 | 1,000 | ||
| Interest expense | (44,927) | (11,197) | (143,861) | (151,935) |
| Income / (Loss) on derivative | 28,399 | (44,086) | (20,320) | (203,362) |
| Total other income / (expenses) | (15,528) | (55,283) | (163,181) | (355,297) |
| Net income / (loss) | $ 205,646 | $ (99,928) | $ 330,996 | $ (64,188) |
| Net income per common share: basic | $ 0.02 | $ (0.01) | $ 0.04 | $ (0.01) |
| Net income per common share: Diluted | $ 0.02 | $ (0.01) | $ 0.04 | $ (0.01) |
| Weighted average number of common shares outstanding- Basic | 8,250,144 | 8,448,001 | 8,250,144 | 8,374,927 |
| Weighted average number of common shares outstanding- Diluted | 17,474,060 | 8,448,001 | 17,474,060 | 8,374,927 |
Consolidated Statements of Stockholders' Deficit (Unaudited) - USD ($) |
Preferred Stock [Member] |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Stock Payable [Member] |
Retained Earnings [Member] |
Total |
|---|---|---|---|---|---|---|
| Beginning balance, value at Dec. 31, 2021 | $ 20,000 | $ 8,486 | $ 9,021,126 | $ 13 | $ (11,671,230) | $ (2,621,605) |
| Beginning balance, shares at Dec. 31, 2021 | 20,000,000 | 8,485,144 | ||||
| Cancellation of common stock | $ (260) | 260 | ||||
| Cancellation of common stock, shares | (260,000) | |||||
| Derivative resolution | 417,018 | 417,018 | ||||
| Net income | (64,188) | (64,188) | ||||
| Forgiveness of interest - related party | 250,000 | 250,000 | ||||
| Ending balance, value at Sep. 30, 2022 | $ 20,000 | $ 8,226 | 9,688,404 | 13 | (11,735,418) | (2,018,775) |
| Ending balance, shares at Sep. 30, 2022 | 20,000,000 | 8,225,144 | ||||
| Beginning balance, value at Jun. 30, 2022 | $ 20,000 | $ 8,486 | 9,252,938 | 13 | (11,635,490) | (2,354,053) |
| Beginning balance, shares at Jun. 30, 2022 | 20,000,000 | 8,485,144 | ||||
| Cancellation of common stock | $ (260) | 260 | ||||
| Cancellation of common stock, shares | (260,000) | |||||
| Forgiveness of interest - related party | 250,000 | 250,000 | ||||
| Derivative resolution | 185,206 | 185,206 | ||||
| Net income | (99,928) | (99,928) | ||||
| Ending balance, value at Sep. 30, 2022 | $ 20,000 | $ 8,226 | 9,688,404 | 13 | (11,735,418) | (2,018,775) |
| Ending balance, shares at Sep. 30, 2022 | 20,000,000 | 8,225,144 | ||||
| Beginning balance, value at Dec. 31, 2022 | $ 20,000 | $ 8,251 | 10,046,096 | 13 | (11,965,758) | (1,891,398) |
| Beginning balance, shares at Dec. 31, 2022 | 20,000,000 | 8,250,144 | ||||
| Derivative resolution | 76,682 | 76,682 | ||||
| Net income | 330,996 | 330,996 | ||||
| Stock options expense | 37,590 | 37,590 | ||||
| Ending balance, value at Sep. 30, 2023 | $ 20,000 | $ 8,251 | 10,160,368 | 13 | (11,634,762) | (1,446,130) |
| Ending balance, shares at Sep. 30, 2023 | 20,000,000 | 8,250,144 | ||||
| Beginning balance, value at Jun. 30, 2023 | $ 20,000 | $ 8,251 | 10,116,348 | 13 | (11,840,408) | (1,695,796) |
| Beginning balance, shares at Jun. 30, 2023 | 20,000,000 | 8,250,144 | ||||
| Derivative resolution | 29,589 | 29,589 | ||||
| Net income | 205,646 | 205,646 | ||||
| Stock options expense | 14,431 | 14,431 | ||||
| Ending balance, value at Sep. 30, 2023 | $ 20,000 | $ 8,251 | $ 10,160,368 | $ 13 | $ (11,634,762) | $ (1,446,130) |
| Ending balance, shares at Sep. 30, 2023 | 20,000,000 | 8,250,144 |
History and organization of the company |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| History and organization of the company | Note 1 – History and organization of the company
The Company was originally organized on September 11, 2006 (Date of Inception) under the laws of the State of Nevada as The Engraving Masters, Inc. The Company was authorized to issue up to shares of its common stock and shares of preferred stock, each with a par value of $ per share.
On March 14, 2014, the Company acquired Blue Line Protection Group, Inc., a Colorado corporation formed in February 2014 (“Blue Line Colorado”), as a wholly-owned subsidiary of the Company. Blue Line Colorado provides protection, compliance, and financial services to the lawful cannabis industry.
On May 2, 2014, the Company changed its name from The Engraving Masters, Inc. to Blue Line Protection Group, Inc. (“BLPG”)
On May 6, 2014, the Company effected a forward stock split and a pro-rata increase in its authorized common stock on a basis of 14-to-1, whereby each shareholder received 14 newly issued shares of common stock for each 1 share held. Additionally, the authorized capital of the Company concurrently increased to shares of common stock. All references to share and per share amounts in the consolidated financial statements and accompanying notes thereto have been retroactively restated to reflect the forward stock split.
On July 6, 2021, the Company effected a reverse stock split and a pro-rata decrease in its authorized common stock on a basis of 1-for-100, the authorized capital of the Company concurrently decreased to shares of common stock. All references to share and per share amounts in the consolidated financial statements and accompanying notes thereto have been retroactively restated to reflect the reverse stock split.
The Company provides logistics, and compliance services for businesses engaged in the legal cannabis industry. The Company offers asset logistic services, such as armed transportation services; including shipment protection, money escorts, asset vaulting, financial services, such as handling transportation and storage of currency; training; and compliance services.
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Accounting policies and procedures |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting policies and procedures | Note 2 – Accounting policies and procedures
Principles of consolidation
For the periods ended September 30, 2023 and September 30, 2022 the consolidated financial statements include the accounts of Blue Line Protection Group, Inc. (formerly The Engraving Masters, Inc.), Blue Line Advisory Services, Inc. (a Nevada corporation; “BLAS”), Blue Line Capital, Inc. (a Colorado corporation; “Blue Line Capital”), Blue Line Protection Group (California), Inc. (a California corporation; “Blue Line California”), Blue Line Colorado, Blue Line Protection Group Illinois, Inc. (an Illinois corporation; “Blue Line Illinois”), BLPG, Inc. (a Nevada corporation; “Blue Line Nevada”), Blue Line Protection Group (Washington), Inc. (a Washington corporation; “Blue Line Washington”), and Blue Line Protection Group, Inc. (an Arizona corporation; “Blue Line Arizona”). All significant intercompany balances and transactions have been eliminated. BLPG and its subsidiaries are collectively referred herein to as the “Company.”
Interim financial statements
The unaudited interim consolidated financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with 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.
In the opinion of management, these statements reflect all adjustments, all of which are of a normal recurring nature, which, in the opinion of management, are necessary for a fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2022 and notes thereto included in the Company’s annual report on Form 10-K. The Company follows the same accounting policies in the preparation of interim reports.
Results of operations for the interim periods are not indicative of annual results.
Basis of presentation
The consolidated financial statements present the balance sheets, statements of operations, stockholders’ equity (deficit) and cash flows of the Company and its subsidiaries. The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America.
The Company has adopted December 31 as its fiscal year end.
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.
Cash and cash equivalents
The Company maintains a cash balance in a non-interest-bearing account. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. As of September 30, 2023 the Company has cash in excess of FDIC insured limits of $264,695. There were no cash equivalents as of September 30, 2023 or December 31, 2022.
Accounts receivable
Accounts receivable are stated at the amount the Company expects to collect from outstanding balances and do not bear interest. The Company provides for probable uncollectible amounts through an allowance for doubtful accounts, if an allowance is deemed necessary. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future. On a periodic basis, management evaluates its accounts receivable and determines the requirement for an allowance for doubtful accounts based on its assessment of the current and collectible status of individual accounts with past due balances over 90 days. Account balances are charged against the allowance after all collection efforts have been exhausted and the potential for recovery is considered remote.
Allowance for uncollectible accounts
The Company estimates losses on receivables based on known troubled accounts, if any, and historical experience of losses incurred. There was no allowance for doubtful customer receivables at September 30, 2023 and December 31, 2022.
Property and equipment
Property and equipment is recorded at cost and capitalized from the initial date of service. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective periods. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. The estimated useful lives for significant property and equipment categories are as follows:
The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition and other economic factors. Based on this assessment there was no impairment as September 30, 2023 and December 31, 2022. Depreciation expense for the three and nine months ended September 30, 2023 and, 2022 was $26,960, $95,372, $38,767, and $96,034 respectively. During the nine months ended September 30, 2023 the Company recognized $1,000 from the sale of a vehicle.
Impairment of long-lived assets
The Company accounts for its long-lived assets in accordance with ASC Topic 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost or carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and its fair value or disposable value. As of September 30, 2023 and December 31, 2022, the Company determined that none of its long-lived assets were impaired.
Concentration of business and credit risk
The Company has no significant off-balance sheet risks such as foreign exchange contracts, option contracts or other hedging arrangements. The Company’s financial instruments that are exposed to concentration of credit risks consist primarily of cash. The Company maintains its cash in bank accounts, which may at times exceed federally insured limits.
The Company had one major customer which generated 10% of total revenue for the nine months ended September 30, 2023 and one customer comprised 17% of the account receivable balance at September 30, 2023.
The Company had one major customer which generated 21% of total revenue for the nine months ended September 30, 2022 and one customer comprised 10% of the account receivable balance at September 30, 2022.
Related party transactions
FASB ASC 850, “Related Party Disclosures” requires companies to include in their financial statements disclosures of material related party transactions. The Company discloses all material related party transactions. Related parties are defined to include any principal owner, director or executive officer of the Company and any immediate family members of a principal owner, director or executive officer.
Fair value of financial instruments
The carrying amounts reflected in the balance sheets for cash, accounts payable and related party payables approximate the respective fair values due to the short maturities of these items. The Company does not hold any investments that are available-for-sale.
As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The three levels of the fair value hierarchy are described below:
The following table presents the derivative financial instruments, the Company’s only financial liabilities, measured and recorded at fair value on the Company’s consolidated balance sheet on a recurring basis, and their level within the fair value hierarchy as of September 30, 2023 and December 31, 2022:
September 30, 2023
December 31, 2022
The embedded conversion feature in the convertible debt instruments that the Company issued that became convertible qualified them as derivative instruments since the number of shares issuable under the notes are indeterminate based on guidance in FASB ASC 815, Derivatives and Hedging. These convertible notes tainted all other equity linked instruments including outstanding warrants and fixed rate convertible debt on the date that the instrument became convertible. The valuation of the derivative liability of the warrants was determined through the use of Black Scholes option-pricing model (See Note 7).
Revenue Recognition
The Company recognizes revenue when delivery of the promised goods or services is transferred to its customers in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods or services. We determine revenue recognition through the following five steps:
We generate substantially all our revenue from providing services to customers. The Company records revenue when the 5 steps above have been completed.
In general, the Company’s business segmentation is aligned according to the nature and economic characteristics. Revenue is characterized by several lines of services and typically the pricing is fixed.
Advertising costs
The Company expenses all costs of advertising as incurred. Advertising expense for the three and nine months ended September 30, 2023 and September 30, 2022 amounted to $0, $0, $4,704 and $0, respectively.
General and administrative expenses
The significant components of general and administrative expenses consist mainly of rent and compensation.
Share-based compensation expense is recorded as a result of stock options granted in return for services rendered. Previously, the share-based payment arrangements with employees were accounted for under ASC 718. On June 20, 2018, the FASB issued ASU 2018-07, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The Company has adopted the new standard and has made some adjustment with regard to the share-based compensation costs. Under the ASU 2018-07, the measurement of equity-classified nonemployee share-based payments is generally fixed on the grant date and the options are no longer revalued on each reporting date. The expenses related to the share-based compensation are recognized on each reporting date. The amount is calculated as the difference between total expenses incurred and the total expenses already recognized.
Cost of Revenue
The Company’s cost of revenue primarily consists of labor, fuel costs and items purchased by the Company specifically for the benefit of the Company’s clients.
Net loss per share is provided in accordance with FASB ASC 260-10, “Earnings per Share”. Basic loss per share is computed by dividing losses available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. For the three and nine months ended September 30, 2023 all common stock equivalents of and , respectively were included in the calculation of diluted income per share as their effect would be dilutive.
Dividends
The Company has not yet adopted any policy regarding payment of dividends. No dividends have been paid or declared since inception.
Income Taxes
The Company follows FASB Codification Topic 740-10-25 (ASC 740-10-25) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.
Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.
Recent Pronouncements
In February 2016, the FASB issued ASU 2016-02, Leases, which amended current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard was effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company elected the practical expedient under ASU 2018-11 “Leases: Targeted Improvements” which allows the Company to apply the transition provision for Topic 842 at the Company’s adoption date instead of at the earliest comparative period presented in the financial statements. Therefore, the Company recognized and measured leases existing at January 1, 2019 but without retrospective application. Therefore, there was no impact recorded to beginning retained earnings or the statement of operations.
The Company evaluated all other recent accounting pronouncements issued and determined that the adoption of these pronouncements would not have a material effect on the financial position, results of operations or cash flows of the Company.
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Going concern |
9 Months Ended |
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Sep. 30, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Going concern | Note 3 – Going concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has an accumulated deficit and had a working capital deficit as of September 30, 2023. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. The Company is significantly dependent upon its ability, and will continue to attempt, to secure additional equity and/or debt financing. There are no assurances that the Company will be successful in obtaining additional capital.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence. These financial statements do not include any adjustments that might arise from this uncertainty.
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Commitments and contingencies |
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| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and contingencies | Note 4 – Commitments and contingencies
Contingencies
On November 6, 2015, Daniel Sullivan sent a wage claim demand to the Company. Mr. Sullivan purports to have had an Independent Contractor Agreement with the Company which provides he is entitled to certain compensation and to be reimbursed for Company expenses. The demand claims unpaid compensation in the amount of $8,055 and unreimbursed expenses in the amount of $154,409. The Company denies the agreement was ever signed. If litigation is commenced the Company will defend any claims by Mr. Sullivan.
Mile High Real Estate Group, an entity owned by Mr. Sullivan, sent correspondence to the Company stating the Mr. Sullivan and/or Mile High Real Estate loaned the Company either directly or directly to contractors, material suppliers or utilities for operating and building remodeling in the amount of $98,150. Counsel for Mr. Sullivan stated that he was still compiling information. The Company is investigating whether Mr. Sullivan and/or Mile High Real Estate Group ever made the alleged loans. The Company will defend any claims of Mile High Real Estate Group.
On April 14, 2016, the Company entered into an agreement with a third party to provide the Company with investor relations services. Upon signing the agreement, the Company paid the investor relations consultant $ and agreed to issue the consultant shares of its restricted common stock. The agreement required the Company to pay the consultant an additional $ prior to June 14, 2016. The Company cancelled the agreement and is of the opinion that the shares are not owed to the consultant. As of September 30, 2023 and December 31, 2022 there was a payable recorded of $34,346.
Finance leases
On March 1, 2019, the Company recorded finance lease obligation for a leased a vehicle for $64,354. The Company made a down payment of $30,000 which included delivery fees, taxes and its first month payment and agreed to make 36 monthly payments of $1,129.76, including sales tax. The Company recognized this arrangement as a finance lease based on the determination that the lease exceeded 75% of the economic life of the underlying assets.
On June 2, 2021, the Company recorded finance lease obligation for a leased a vehicle for $56,733. The Company made a down payment of $3,510 which included delivery fees, taxes and its first month payment and agreed to make 24 monthly payments of $2,765.19, including sales tax. The Company recognized this arrangement as a finance lease based on the determination that the lease exceeded 75% of the economic life of the underlying assets.
On June 17, 2022, the Company recorded finance lease obligation for a leased vehicle for $69,255. The Company made a down payment of $2,882 which included delivery fees, taxes and its first month payment and agreed to make 36 monthly payments of $2,338, including sales tax. The Company recognized this arrangement as a finance lease based on the determination that the lease exceeded 75% of the economic life of the underlying assets.
Operating Leases
On October 27, 2016 the Company sold its building located at 5765 Logan Street Denver, Colorado to an unrelated third party for $. The Company repaid the mortgage on the building in the amount of $677,681. After the sale, the Company leased the building from the purchaser of the property. The lease is for an initial term of ten years, with the Company having the option to extend the term of the lease for two additional five-year periods. The lease requires rental payments of $10,000 per month which will increase 2% annually. The Company paid a $30,000 deposit at the inception of the lease.
On May 29, 2018 the Company leased a building located at 4328 E. Magnolia Street, Phoenix, Arizona. The lease is for an initial term of one year, with the Company having the option to extend the term of the lease for additional four year periods. The lease requires rental payments of $3,880 per month which will increase 2% annually. The Company paid a $4,369 deposit at the inception of the lease. The lease was renewed and extended for an additional five year period, with a starting rent of $6,379.20 per month which will increase 4% annually.
On January 22, 2019 the Company leased a building located at 7490 Bridgewater Road, Huber Heights, Ohio. The lease is for an initial term of 63 months. The lease requires rental payments of $3,200 per month and will increase to $3,400 between months 28 through 63. The Company paid a $3,200 deposit at the inception of the lease. During the year ended December 31, 2020 the Company terminated the lease agreement. The Company paid a $35,760 cancellation fee included in rent expense and recorded a gain of $8,800 on the termination of the lease.
On March 14, 2023 effective June 2023 the Company extended the lease on a building located at 4328 E. Magnolia Street, Phoenix, Arizona. The lease is for an initial term of one year, with the Company having the option to extend the term of the lease for additional four-year periods. The lease requires rental payments of $6,379 per month which will increase 4% annually. The Company recorded a capital lease in the amount of $312,432.
The Company adopted ASC 842 and recorded right of use asset and operating lease liability of $1,082,241. The Company used 12% as incremental borrowing rate as is the average interest rate of the Company’s outstanding third party note. The lease agreement gives the Company the option to renew it for two additional 5 year terms but the Company did not consider it likely to exercise that option. Therefore, the Company did not include such amounts in its computations of the present value of remaining lease payment on the adoption date.
Supplemental balance sheet information related to leases is as follows:
September 30, 2023
Lease term and discount rate were as follows:
The following summarizes lease expenses for the nine months ended September 30, 2023:
Finance lease expenses:
Supplemental disclosures of cash flow information related to leases were as follows:
Maturities of lease liabilities were as follows as of September 30, 2023:
December 31, 2022
Lease term and discount rate were as follows:
The following summarizes lease expenses for the year ended December 31, 2022:
Finance lease expenses:
Supplemental disclosures of cash flow information related to leases were as follows:
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Notes payable |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Debt Disclosure [Abstract] | |
| Notes payable | Note 5 – Notes payable
Convertible notes payable to non-related parties
On October 18, 2017, the Company borrowed $ from an unrelated third party. The Company paid $ of fees associated with the loan, which was recorded as discount and to be amortized over the term of the debt and was fully amortized as of December 31, 2018. The loan bears interest at a rate of % (default interest %) and has a maturity date of . The Holder has the option to convert the outstanding principal and accrued interest into common stock of the Company. . During the year ended December 31, 2018 the Company paid $ to extend the maturity date until . During the year ended December 31, 2019, the Company paid $ in extension fees. The note was discounted for a derivative (see note 8 for details) and the discount of $ is being amortized over the life of the note using the effective interest method which was fully amortized as of December 31, 2018. During the year ended December 31, 2019 the holder converted $ of accrued interest into shares of common stock resulting in a loss of $. As of December 31, 2021 and December 31, 2020 the balance outstanding on the loan is $ and $, respectively. On May 28, 2021 the Company entered into a settlement and release agreement with the Lender and agreed to pay the Lender a settlement of $400,000. The first payment of $200,000 was due upon signing and the Company agreed to make additional $100,000 payments on the 30th and 60th day after signing. The additional $250,000 settlement was recorded as interest during the year ended December 31, 2021. As of September 30, 2023 and December 31, 2022 accrued interest and the note balance had been repaid.
On March 21, 2018, the Company borrowed $ from an unrelated third party. The Company paid $ of fees associated with the loan and had amortized $ of the costs as of December 31, 2018. The note bears an interest rate: % (default interest lesser of % or maximum permitted by law) and matures on . . The note was discounted for a derivative (see note 8 for details) and the discount of $ has been fully amortized over the life of the note using the effective interest method. As of September 30, 2023 and December 31, 2022 the amount had been fully amortized. As of September 30, 2023 and December 31, 2022 accrued interest and the note balance had been repaid.
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Notes payable – related parties |
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes payable – related parties | Note 6 – Notes payable – related parties
Long-term liabilities: Notes payable - related parties
As of December 31, 2021 the Company owed MKM Capital Advisors and two related entities $128,600 plus accrued interest of $70,088. The amount owed to the MKM entities was represented by three Promissory Notes dated between February 6, 2015 and July 7, 2016. In March 2022 the MKM entities agreed to (i) consolidate the Promissory Notes into a new note in the principal amount of $128,600 and (ii) forgive the accrued interest of $70,088. The new Promissory Note is due and payable on December 27, 2026 and bears an interest (from December 27, 2021 to the date of payment) of 5% per year. During the six months ended June 30, 2023, the Company repaid $10,947 of principal. Accrued interest as of September 30, 2023 and December 31, 2022, amounted to $0. As of September 30, 2023 the balance owed on the loan is $86,979.
As of December 31, 2021 the Company owed CGDK, LLC $1,185,217, plus accrued interest of $452,246. The amount owed to CGDK was represented by seven Promissory Notes dated between July 9, 2015 and August 6, 2018. In March 2022, CGDK agreed to (i) consolidate the Promissory Notes into a new note in the principal amount of $1,185,217 and (ii) forgive the accrued interest of $452,246. The new Promissory Note is due and payable on December 31, 2026 and bears interest (from January 1, 2022 to the date of payment) at 5% per year. During the year ended December 31, 2022, the loan was assumed by Doyle Knudson a related party. During the nine months ended September 30, 2023 the Company repaid $152,293 of principal and accrued interest. As of September 30, 2023 and December 31, 2022, the balance on the loan is $750,278 and $902,574, respectively.
Current liabilities: Notes payable – related parties
On July 31, 2014, the Company borrowed $ from an entity controlled by a former officer and shareholder of the Company. The loan is due and payable on demand and bears no interest. As of September 30, 2023 and December 31, 2022, the principal balance owed on this loan is $ and $, respectively.
As of December 31, 2014, a related party loaned the Company $180,121, in the form of cash and expenses paid on behalf of the Company. The loan is due and payable on demand and bears no interest. The Company repaid $125,500 towards this note during 2015 and as of September 30, 2023 and December 31, 2022 the principal balance owed on this loan was $54,621 and $54,621, respectively.
Current Liabilities: Convertible notes payable to related parties
As of December 31, 2021 the Company owed Hypur Inc. $688,500 plus accrued interest. The amounts owed to Hypur were represented by eight Promissory Notes dated between September 20, 2016 and September 3, 2019. By an agreement effective January 31, 2022 the Company and Hypur agreed to the following:
During the nine months ended September 30, 2023 the Company repaid a total of $64,393. The amount due as of September 30, 2023 and December 31, 2022 is $264,863 and $329,256, respectively. Hypur forgave $250,000 of accrued interest owed by the Company under the Promissory Notes, which was recognized as additional paid in capital.
On September 1, 2016, the Company entered into, a convertible promissory note with Hypur Ventures, L.P., a Delaware limited partnership (the “Hypur Ventures”) which is a related party, pursuant to which the Company borrowed $75,000. The loan was due 180 days from the date of issuance and bears interest at 10% per annum. The note is convertible into common stock at a price of $.05 per share. The note is mandatory redeemable into common stock if the price per share is over $.50 per share during a 10 day period. The principal balance owed on this loan at September 30, 2023, and December 31, 2022 was $75,000 and $75,000, respectively. Upon default, the note bears a default rate of interest of 15% per annum, and if the default has not been remedied within 30 days, the redemption price would be 150% of the principal amount. As of September 30, 2023 and December 31, 2022, Hyper has waived the default provision until further notice.
On October 14, 2016, the Company entered into a convertible promissory note with Hypur Ventures, pursuant to which the Company borrowed $100,000. The loan was due 180 days from the date of issuance and bears interest at 10% per annum. The note is convertible into common stock at a price of $.05 per share. The note is mandatory redeemable into common stock if the price per share is over $.50 per share during a 10 day period. The principal balance owed on this loan at September 30, 2023 and December 31, 2022 was $100,000 and $100,000, respectively. Upon default, the note bears a default rate of interest of 15% per annum, and if the default has not been remedied within 30 days, the redemption price would be 150% of the principal amount. As of September 30, 2023 and December 31, 2022, Hyper has waived the default provision until further notice.
On March 7, 2017, the Company borrowed $100,000 from Hypur Ventures. The loan is due 180 days from March 7, 2017 and bears interest at 10% per annum. The loan is convertible into shares of the Company’s common stock at a price of $.05 per share. The loan will automatically convert into shares of the Company’s common stock if the price of the Company’s common stock is over $.50 per share during any ten-day period. The principal balance owed on this loan September 30, 2023 and December 31, 2022 was $100,000 and $100,000 respectively. Upon default, the note bears a default rate of interest of 15% per annum, and if the default has not been remedied within 30 days, the redemption price would be 150% of the principal amount. As of September 30, 2023, and December 31, 2022, Hyper has waived the default provision until further notice.
The Company re-measured the fair value of derivative liabilities on September 30, 2023 and December 31, 2022. See Note 7.
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Derivative Liability |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Liability | Note 7 – Derivative Liability
The Company analyzed the conversion options for derivative accounting consideration under ASC 815, Derivatives and Hedging, and determined that an instrument should be classified as a liability when a conversion option becomes effective.
The derivative liability in connection with the conversion feature of the convertible debt is measured using level 3 inputs.
The change in the fair value of derivative liabilities is as follows:
The table below shows the Black-Scholes option-pricing model inputs used by the Company to value the derivative liability at each measurement date:
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Stockholders’ deficit |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Equity [Abstract] | |
| Stockholders’ deficit | Note 8 – Stockholders’ deficit
The Company was originally authorized to issue shares of common stock and shares of preferred stock. On May 6, 2014, the Company effected a forward stock split and a pro-rata increase in its authorized common stock on a basis of 14-to-1, whereby each shareholder received 14 newly issued shares of common stock for each 1 share held. Additionally, the number of authorized shares increased to shares of common stock. All references to share and per share amounts in the consolidated financial statements and these notes thereto have been retroactively restated to reflect the forward stock split.
On July 6, 2021, the Company effected a reverse stock split and a pro-rata decrease in its authorized common stock on a basis of 1-for-100. As a result, the authorized capital of the Company concurrently decreased to shares of common stock. All references to share and per share amounts in the consolidated financial statements and accompanying notes thereto have been retroactively restated to reflect the reverse stock split. The Company issued a total of shares of common stock due to rounding on the reverse stock split.
Common stock
During the year ended December 31, 2022, shares of common stock were returned to the treasury.
During October 2022 the Company issued a total of shares of common stock valued at $4,750 ($0.19 per share) to an employee, the fair market value on the date of issuance.
Preferred stock
On May 3, 2016, the Company entered into, an agreement with Hypur Ventures, L.P., a Delaware limited partnership (the “Hypur Ventures”) which is a related party pursuant to which the Company sold to Hypur Ventures, in a private placement, shares of the Company’s preferred stock and 5,000,000 common stock warrants with a five year term and an exercise price of $0.10, at a purchase price of $ per share for gross proceeds of $500,000. The shares of preferred stock are convertible into shares of the Company’s common stock. The preferred stock has such other rights, preferences and privileges as are set forth in a certificate of designation filed with the Nevada Secretary of State. The Company evaluated the convertible preferred stock under FASB ASC 470-20-30 and determined it contained a beneficial conversion feature. The intrinsic value of the beneficial conversion feature was determined to be $114,229. The beneficial conversion feature was fully amortized and recorded as a deemed dividend.
Between July and August of 2016 Hypur Ventures purchased an additional shares of the Company’s preferred stock and 5,000,000 common stock warrants with a five year term and an exercise price of $0.10, at a purchase price of $ per share for net proceeds of $445,000, net of legal fees of $55,000. The shares of preferred stock are convertible into shares of the Company’s common stock. The preferred stock has such other rights, preferences and privileges as are set forth in a certificate of designation filed with the Nevada Secretary of State. The Company evaluated the convertible preferred stock under FASB ASC 470-20-30 and determined it does not contain a beneficial conversion feature. The intrinsic value of the beneficial conversion feature was determined to be $0.
The preferred stock is convertible at any time at the election of Hypur Ventures. The preferred stock shall automatically convert to common stock if the closing price of the Company’s common stock equals or exceeds $0.50 per share over any consecutive twenty day trading period. The preferred stock terms include a one-time purchase price preference. No preferential dividends apply to the preferred stock. The preferred stock attributes include weighted average anti-dilution protection, rights to appoint one director, pre-emptive rights to purchase future offerings of securities by the Company, demand and piggy-back registration rights.
The Company has reserved thirty million shares of common stock that may be issued upon the conversion and/or exercise of the preferred stock and the warrants.
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Options and warrants |
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| Options And Warrants | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Options and warrants | Note 9 – Options and warrants
Options
All stock options have an exercise price equal to the fair market value of the common stock on the date of grant. The fair value of each option award is estimated using a Black-Scholes-Merton option valuation model. The Company has not paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero in the Black-Scholes-Merton option valuation model. Volatility is an estimate based on the calculated historical volatility of similar entities in industry, in size and in financial leverage, whose share prices are publicly available. The expected life of awards granted represents the period of time that they are expected to be outstanding. The Company has no historical experience with which to establish a basis for determining an expected life of these awards. Therefore, the Company only gave consideration to the contractual terms and did not consider the vesting schedules, exercise patterns and pre-vesting and post-vesting forfeitures significant to the expected life of the option award. The Company bases the risk-free interest rate used in the Black-Scholes-Merton option valuation model on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term equal to the expected life of the award.
Total stock-based compensation expense in connection with options and modified awards recognized in the consolidated statement of operations for three and nine months ended September 30, 2023 was $ and $, respectively.
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Subsequent events |
9 Months Ended |
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Sep. 30, 2023 | |
| Subsequent Events [Abstract] | |
| Subsequent events | Note 10 – Subsequent events
None. |
Accounting policies and procedures (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Principles of consolidation | Principles of consolidation
For the periods ended September 30, 2023 and September 30, 2022 the consolidated financial statements include the accounts of Blue Line Protection Group, Inc. (formerly The Engraving Masters, Inc.), Blue Line Advisory Services, Inc. (a Nevada corporation; “BLAS”), Blue Line Capital, Inc. (a Colorado corporation; “Blue Line Capital”), Blue Line Protection Group (California), Inc. (a California corporation; “Blue Line California”), Blue Line Colorado, Blue Line Protection Group Illinois, Inc. (an Illinois corporation; “Blue Line Illinois”), BLPG, Inc. (a Nevada corporation; “Blue Line Nevada”), Blue Line Protection Group (Washington), Inc. (a Washington corporation; “Blue Line Washington”), and Blue Line Protection Group, Inc. (an Arizona corporation; “Blue Line Arizona”). All significant intercompany balances and transactions have been eliminated. BLPG and its subsidiaries are collectively referred herein to as the “Company.”
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| Interim financial statements | Interim financial statements
The unaudited interim consolidated financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with 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.
In the opinion of management, these statements reflect all adjustments, all of which are of a normal recurring nature, which, in the opinion of management, are necessary for a fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2022 and notes thereto included in the Company’s annual report on Form 10-K. The Company follows the same accounting policies in the preparation of interim reports.
Results of operations for the interim periods are not indicative of annual results.
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| Basis of presentation | Basis of presentation
The consolidated financial statements present the balance sheets, statements of operations, stockholders’ equity (deficit) and cash flows of the Company and its subsidiaries. The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America.
The Company has adopted December 31 as its fiscal year end.
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| Use of estimates | Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.
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| Cash and cash equivalents | Cash and cash equivalents
The Company maintains a cash balance in a non-interest-bearing account. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. As of September 30, 2023 the Company has cash in excess of FDIC insured limits of $264,695. There were no cash equivalents as of September 30, 2023 or December 31, 2022.
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| Accounts receivable | Accounts receivable
Accounts receivable are stated at the amount the Company expects to collect from outstanding balances and do not bear interest. The Company provides for probable uncollectible amounts through an allowance for doubtful accounts, if an allowance is deemed necessary. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future. On a periodic basis, management evaluates its accounts receivable and determines the requirement for an allowance for doubtful accounts based on its assessment of the current and collectible status of individual accounts with past due balances over 90 days. Account balances are charged against the allowance after all collection efforts have been exhausted and the potential for recovery is considered remote.
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| Allowance for uncollectible accounts | Allowance for uncollectible accounts
The Company estimates losses on receivables based on known troubled accounts, if any, and historical experience of losses incurred. There was no allowance for doubtful customer receivables at September 30, 2023 and December 31, 2022.
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| Property and equipment | Property and equipment
Property and equipment is recorded at cost and capitalized from the initial date of service. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective periods. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. The estimated useful lives for significant property and equipment categories are as follows:
The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition and other economic factors. Based on this assessment there was no impairment as September 30, 2023 and December 31, 2022. Depreciation expense for the three and nine months ended September 30, 2023 and, 2022 was $26,960, $95,372, $38,767, and $96,034 respectively. During the nine months ended September 30, 2023 the Company recognized $1,000 from the sale of a vehicle.
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| Impairment of long-lived assets | Impairment of long-lived assets
The Company accounts for its long-lived assets in accordance with ASC Topic 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost or carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and its fair value or disposable value. As of September 30, 2023 and December 31, 2022, the Company determined that none of its long-lived assets were impaired.
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| Concentration of business and credit risk | Concentration of business and credit risk
The Company has no significant off-balance sheet risks such as foreign exchange contracts, option contracts or other hedging arrangements. The Company’s financial instruments that are exposed to concentration of credit risks consist primarily of cash. The Company maintains its cash in bank accounts, which may at times exceed federally insured limits.
The Company had one major customer which generated 10% of total revenue for the nine months ended September 30, 2023 and one customer comprised 17% of the account receivable balance at September 30, 2023.
The Company had one major customer which generated 21% of total revenue for the nine months ended September 30, 2022 and one customer comprised 10% of the account receivable balance at September 30, 2022.
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| Related party transactions | Related party transactions
FASB ASC 850, “Related Party Disclosures” requires companies to include in their financial statements disclosures of material related party transactions. The Company discloses all material related party transactions. Related parties are defined to include any principal owner, director or executive officer of the Company and any immediate family members of a principal owner, director or executive officer.
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| Fair value of financial instruments | Fair value of financial instruments
The carrying amounts reflected in the balance sheets for cash, accounts payable and related party payables approximate the respective fair values due to the short maturities of these items. The Company does not hold any investments that are available-for-sale.
As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The three levels of the fair value hierarchy are described below:
The following table presents the derivative financial instruments, the Company’s only financial liabilities, measured and recorded at fair value on the Company’s consolidated balance sheet on a recurring basis, and their level within the fair value hierarchy as of September 30, 2023 and December 31, 2022:
September 30, 2023
December 31, 2022
The embedded conversion feature in the convertible debt instruments that the Company issued that became convertible qualified them as derivative instruments since the number of shares issuable under the notes are indeterminate based on guidance in FASB ASC 815, Derivatives and Hedging. These convertible notes tainted all other equity linked instruments including outstanding warrants and fixed rate convertible debt on the date that the instrument became convertible. The valuation of the derivative liability of the warrants was determined through the use of Black Scholes option-pricing model (See Note 7).
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| Revenue Recognition | Revenue Recognition
The Company recognizes revenue when delivery of the promised goods or services is transferred to its customers in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods or services. We determine revenue recognition through the following five steps:
We generate substantially all our revenue from providing services to customers. The Company records revenue when the 5 steps above have been completed.
In general, the Company’s business segmentation is aligned according to the nature and economic characteristics. Revenue is characterized by several lines of services and typically the pricing is fixed.
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| Advertising costs | Advertising costs
The Company expenses all costs of advertising as incurred. Advertising expense for the three and nine months ended September 30, 2023 and September 30, 2022 amounted to $0, $0, $4,704 and $0, respectively.
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| General and administrative expenses | General and administrative expenses
The significant components of general and administrative expenses consist mainly of rent and compensation.
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| Share-Based Compensation |
Share-based compensation expense is recorded as a result of stock options granted in return for services rendered. Previously, the share-based payment arrangements with employees were accounted for under ASC 718. On June 20, 2018, the FASB issued ASU 2018-07, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The Company has adopted the new standard and has made some adjustment with regard to the share-based compensation costs. Under the ASU 2018-07, the measurement of equity-classified nonemployee share-based payments is generally fixed on the grant date and the options are no longer revalued on each reporting date. The expenses related to the share-based compensation are recognized on each reporting date. The amount is calculated as the difference between total expenses incurred and the total expenses already recognized.
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| Cost of Revenue | Cost of Revenue
The Company’s cost of revenue primarily consists of labor, fuel costs and items purchased by the Company specifically for the benefit of the Company’s clients.
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| Basic and Diluted Earnings per share |
Net loss per share is provided in accordance with FASB ASC 260-10, “Earnings per Share”. Basic loss per share is computed by dividing losses available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. For the three and nine months ended September 30, 2023 all common stock equivalents of and , respectively were included in the calculation of diluted income per share as their effect would be dilutive.
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| Dividends | Dividends
The Company has not yet adopted any policy regarding payment of dividends. No dividends have been paid or declared since inception.
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| Income Taxes | Income Taxes
The Company follows FASB Codification Topic 740-10-25 (ASC 740-10-25) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.
Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.
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| Recent Pronouncements | Recent Pronouncements
In February 2016, the FASB issued ASU 2016-02, Leases, which amended current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard was effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company elected the practical expedient under ASU 2018-11 “Leases: Targeted Improvements” which allows the Company to apply the transition provision for Topic 842 at the Company’s adoption date instead of at the earliest comparative period presented in the financial statements. Therefore, the Company recognized and measured leases existing at January 1, 2019 but without retrospective application. Therefore, there was no impact recorded to beginning retained earnings or the statement of operations.
The Company evaluated all other recent accounting pronouncements issued and determined that the adoption of these pronouncements would not have a material effect on the financial position, results of operations or cash flows of the Company. |
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Accounting policies and procedures (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Estimated Useful Lives of Property and Equipment |
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| Schedule of Fair Value of Liabilities Measured on Recurring Basis | The following table presents the derivative financial instruments, the Company’s only financial liabilities, measured and recorded at fair value on the Company’s consolidated balance sheet on a recurring basis, and their level within the fair value hierarchy as of September 30, 2023 and December 31, 2022:
September 30, 2023
December 31, 2022
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| Schedule of Revenue by Major Customers by Reporting Segments | In general, the Company’s business segmentation is aligned according to the nature and economic characteristics. Revenue is characterized by several lines of services and typically the pricing is fixed.
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Commitments and contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Future Minimum Lease Payments |
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| Schedule of Operating Leases | Supplemental balance sheet information related to leases is as follows:
September 30, 2023
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| Summary of Operating Lease Liabilities | Lease term and discount rate were as follows:
Lease term and discount rate were as follows:
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| Summary of Lease Expenses | The following summarizes lease expenses for the nine months ended September 30, 2023:
Finance lease expenses:
The following summarizes lease expenses for the year ended December 31, 2022:
Finance lease expenses:
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| Schedule of Cash Flow Information Related to Lease | Supplemental disclosures of cash flow information related to leases were as follows:
Supplemental disclosures of cash flow information related to leases were as follows:
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| Schedule of Maturities of Lease Liabilities | Maturities of lease liabilities were as follows as of September 30, 2023:
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Notes payable – related parties (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Related Debt Maturity |
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Derivative Liability (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Derivative Liabilities at Fair Value | The change in the fair value of derivative liabilities is as follows:
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| Schedule of Derivative Instruments, Black-Scholes Option-Pricing Model Input Used | The table below shows the Black-Scholes option-pricing model inputs used by the Company to value the derivative liability at each measurement date:
|
Options and warrants (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Options And Warrants | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Stock Option Activity |
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| Schedule of Stock Options Outstanding and Exercisable Exercise Price Range |
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History and organization of the company (Details Narrative) - $ / shares |
Jul. 06, 2021 |
May 06, 2014 |
Sep. 30, 2023 |
Dec. 31, 2022 |
May 05, 2014 |
Sep. 11, 2006 |
|---|---|---|---|---|---|---|
| Common stock, shares authorized | 14,000,000 | 1,400,000,000 | 14,000,000 | 14,000,000 | 100,000,000 | |
| Preferred stock, shares authorized | 100,000,000 | 100,000,000 | 100,000,000 | 100,000,000 | ||
| Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | |||
| Equity stock split forward | On July 6, 2021, the Company effected a reverse stock split and a pro-rata decrease in its authorized common stock on a basis of 1-for-100. As a result, the authorized capital of the Company concurrently decreased to 14,000,000 shares of common stock | On May 6, 2014, the Company effected a forward stock split and a pro-rata increase in its authorized common stock on a basis of 14-to-1, whereby each shareholder received 14 newly issued shares of common stock for each 1 share held. | ||||
| Reverse stock split | 1-for-100 | |||||
| Maximum [Member] | ||||||
| Common stock, shares authorized | 100,000,000 |
Schedule of Estimated Useful Lives of Property and Equipment (Details) |
Sep. 30, 2023 |
|---|---|
| Automobiles [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Property and equipment, useful lives | 5 years |
| Furniture and Fixtures [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Property and equipment, useful lives | 5 years |
| Building Improvements [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Property, Plant, and Equipment, Useful Life, Term, Description [Extensible Enumeration] | Useful Life, Shorter of Lease Term or Asset Utility [Member] |
Schedule of Fair Value of Liabilities Measured on Recurring Basis (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|---|
| Platform Operator, Crypto-Asset [Line Items] | |||
| Embedded conversion derivative liability | $ 394,757 | $ 451,119 | |
| Warrant derivative liabilities | |||
| Total | 394,757 | 451,119 | $ 712,784 |
| Fair Value, Inputs, Level 1 [Member] | |||
| Platform Operator, Crypto-Asset [Line Items] | |||
| Embedded conversion derivative liability | |||
| Warrant derivative liabilities | |||
| Total | |||
| Fair Value, Inputs, Level 2 [Member] | |||
| Platform Operator, Crypto-Asset [Line Items] | |||
| Embedded conversion derivative liability | |||
| Warrant derivative liabilities | |||
| Total | |||
| Fair Value, Inputs, Level 3 [Member] | |||
| Platform Operator, Crypto-Asset [Line Items] | |||
| Embedded conversion derivative liability | 394,757 | 451,119 | |
| Warrant derivative liabilities | |||
| Total | $ 394,757 | $ 451,119 |
Schedule of Revenue by Major Customers by Reporting Segments (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Product Information [Line Items] | ||||
| Total | $ 1,105,945 | $ 912,453 | $ 3,219,512 | $ 2,897,520 |
| Transportation [Member] | ||||
| Product Information [Line Items] | ||||
| Total | 505,352 | 386,339 | 1,429,758 | 1,175,417 |
| Currency Processing [Member] | ||||
| Product Information [Line Items] | ||||
| Total | 585,888 | 509,327 | 1,755,196 | 1,696,898 |
| Compliance [Member] | ||||
| Product Information [Line Items] | ||||
| Total | $ 14,705 | $ 16,787 | $ 34,558 | $ 25,205 |
Accounting policies and procedures (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
| Product Information [Line Items] | |||||
| Cash, FDIC insured amount | $ 264,695 | $ 264,695 | |||
| Cash equivalents | 0 | 0 | $ 0 | ||
| Allowance for doubtful receivables | 0 | 0 | $ 0 | ||
| Depreciation | 26,960 | $ 38,767 | 95,372 | $ 96,034 | |
| Advertising expenses | $ 0 | $ 0 | $ 4,704 | $ 0 | |
| Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 9,223,916 | 9,223,916 | |||
| One Major Customers [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | |||||
| Product Information [Line Items] | |||||
| Concentration credit risk, percentage | 10.00% | 21.00% | |||
| One Customers [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | |||||
| Product Information [Line Items] | |||||
| Concentration credit risk, percentage | 17.00% | 10.00% | |||
| Vehicles [Member] | |||||
| Product Information [Line Items] | |||||
| Sale of vehicle | $ 1,000 | ||||
Schedule of Future Minimum Lease Payments (Details) |
Sep. 30, 2023
USD ($)
|
|---|---|
| Commitments and Contingencies Disclosure [Abstract] | |
| 2023 | $ 23,344 |
| 2024 | 19,706 |
| Total minimum lease payments | $ 43,050 |
Schedule of Operating Leases (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Commitments and Contingencies Disclosure [Abstract] | ||
| Operating right of use asset lease | $ 621,300 | $ 408,616 |
| Total | 621,300 | 408,616 |
| Current lease liabilities | 156,498 | 112,250 |
| Non-current lease liabilities | 494,215 | 328,116 |
| Total | $ 650,713 | $ 440,366 |
Summary of Operating Lease Liabilities (Details) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Commitments and Contingencies Disclosure [Abstract] | ||
| Weighted average remaining lease term (years) | 45 years 6 months | 2 years 6 months |
| Weighted average discount rate | 12.00% | 12.00% |
Summary of Lease Expenses (Details) - USD ($) |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| Commitments and Contingencies Disclosure [Abstract] | ||
| Depreciation/amortization expense | $ 99,978 | $ 121,095 |
| Interest on lease liabilities | 48,010 | 6,673 |
| Finance lease expense | $ 147,988 | $ 127,768 |
Schedule of Cash Flow Information Related to Lease (Details) - USD ($) |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| Commitments and Contingencies Disclosure [Abstract] | ||
| Cash paid for operating lease liabilities | $ 102,085 | $ 125,266 |
Schedule of Maturities of Lease Liabilities (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Commitments and Contingencies Disclosure [Abstract] | ||
| 2023 | $ 54,153 | |
| 2024 | 218,833 | |
| 2025 | 224,230 | |
| 2026 | 193,112 | |
| 2027 | 88,179 | |
| 2028 | 39,197 | |
| Total | 817,704 | |
| Less: Imputed interest | (166,991) | |
| Present value of lease liabilities | $ 650,713 | $ 440,366 |
Notes payable (Details Narrative) - USD ($) |
12 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
May 28, 2021 |
Mar. 21, 2018 |
Oct. 18, 2017 |
Dec. 31, 2021 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Jul. 31, 2022 |
Dec. 31, 2020 |
|
| Short-Term Debt [Line Items] | ||||||||
| Debt instrument interest rate | 7.50% | |||||||
| Convertible Notes Payable [Member] | Settlement And Release Agreement [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Repayment of debt | $ 200,000 | |||||||
| Interest expense | 400,000 | |||||||
| Addditional interest expense | $ 250,000 | |||||||
| Convertible Notes Payable [Member] | Settlement And Release Agreement [Member] | 30th Day After Signing [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Repayment of debt | $ 100,000 | |||||||
| Unrelated Third Party [Member] | Convertible Notes Payable [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Debt principal amount | $ 150,000 | |||||||
| Unamortized discount | $ 15,250 | |||||||
| Debt instrument interest rate | 10.00% | |||||||
| Debt instrument interest rate during period | 24.00% | |||||||
| Maturity date | Jul. 16, 2018 | May 11, 2019 | ||||||
| Debt instrument convertible terms of conversion feature | The conversion price is the lesser of (1) lowest trading price during the previous 25 days prior to the note agreement or (2) 50% lowest trading price during the 25 days prior to conversion. Covenants: The Borrower shall not, without the Holder’s consent, sell, lease or dispose of any significant portion of its assets outside the ordinary course of business | |||||||
| Repayment of debt | $ 150,000 | |||||||
| Extension fees | $ 75,000 | |||||||
| Amortization of debt discount | 134,750 | |||||||
| Interest Payable | $ 39,478 | |||||||
| Debt converted into shares of common stock | 2,178,825 | |||||||
| Loss on debt instrument | $ 61,624 | |||||||
| Notes payable | $ 0 | $ 150,000 | ||||||
| Unrelated Third Party [Member] | Convertible Notes Payable Three [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Debt principal amount | $ 45,000 | |||||||
| Debt instrument interest rate | 12.00% | |||||||
| Debt instrument interest rate during period | 15.00% | |||||||
| Maturity date | Mar. 21, 2019 | |||||||
| Debt instrument convertible terms of conversion feature | The Holder has the option to convert the outstanding principal and accrued interest into common stock of the Company. The Conversion price is 55% of the lowest trading price during the 25 Trading Day periods prior to the Conversion. Covenants: The Borrower shall not, without the Holder’s consent, sell, lease or dispose of any significant portion of its assets outside the ordinary course of business | |||||||
| Amortization of debt discount | $ 40,500 | |||||||
| Debt instrument fee amount | 4,500 | |||||||
| Amortization | $ 3,514 | |||||||
Schedule of Related Debt Maturity (Details) |
12 Months Ended |
|---|---|
|
Dec. 31, 2022
USD ($)
| |
| March 31, 2022 [Member] | |
| Short-Term Debt [Line Items] | |
| Maturity date | Mar. 31, 2022 |
| Notes payable | $ 12,500 |
| April 30, 2022 [Member] | |
| Short-Term Debt [Line Items] | |
| Maturity date | Apr. 30, 2022 |
| Notes payable | $ 12,500 |
| May 31, 2022 [Member] | |
| Short-Term Debt [Line Items] | |
| Maturity date | May 31, 2022 |
| Notes payable | $ 12,500 |
| June 30, 2022 [Member] | |
| Short-Term Debt [Line Items] | |
| Maturity date | Jun. 30, 2022 |
| Notes payable | $ 12,500 |
Schedule of Derivative Liabilities at Fair Value (Details) - USD ($) |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
| Beginning, balance shares | $ 451,119 | $ 712,784 |
| Settlement of derivatives upon conversion | (76,682) | (442,389) |
| Gain on change in fair value of the derivative | 20,320 | 180,724 |
| Ending, balance shares | $ 394,757 | $ 451,119 |
Stockholders’ deficit (Details Narrative) - USD ($) |
1 Months Ended | 2 Months Ended | 12 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
Jul. 06, 2021 |
Jul. 06, 2021 |
May 03, 2016 |
May 06, 2014 |
Oct. 31, 2022 |
Aug. 31, 2016 |
Dec. 31, 2022 |
Sep. 30, 2023 |
May 05, 2014 |
Sep. 11, 2006 |
|
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
| Common stock, shares authorized | 14,000,000 | 14,000,000 | 1,400,000,000 | 14,000,000 | 14,000,000 | 100,000,000 | ||||
| Preferred stock, shares authorized | 100,000,000 | 100,000,000 | 100,000,000 | 100,000,000 | ||||||
| Stockholders' equity note, stock split | On July 6, 2021, the Company effected a reverse stock split and a pro-rata decrease in its authorized common stock on a basis of 1-for-100. As a result, the authorized capital of the Company concurrently decreased to 14,000,000 shares of common stock | On May 6, 2014, the Company effected a forward stock split and a pro-rata increase in its authorized common stock on a basis of 14-to-1, whereby each shareholder received 14 newly issued shares of common stock for each 1 share held. | ||||||||
| Crown Bridge Partners, LLC [Member] | Common Stock [Member] | ||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
| Debt conversion shares | 25,000 | 260,000 | ||||||||
| Debt conversion amount | $ 4,750 | |||||||||
| Debt conversion price per share | $ 0.19 | |||||||||
| Common Stock [Member] | ||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
| Rounding from reverse stock split, shares | 1,570 | |||||||||
| Preferred Stock [Member] | Hypur Ventures, L.P., [Member] | ||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
| Issuance of common stock, shares | 10,000,000 | 10,000,000 | ||||||||
| Issuance of common stock warrants | 5,000,000 | 5,000,000 | ||||||||
| Warrants exercise price per shares | $ 0.10 | $ 0.10 | ||||||||
| Purchase price per share | $ 0.05 | $ 0.05 | ||||||||
| Proceeds from issuance of warrants | $ 500,000 | $ 445,000 | ||||||||
| Conversion of beneficial features, intrinsic value | $ 114,229 | $ 0 | ||||||||
| Warrants and Rights Outstanding, Term | 5 years | |||||||||
| Legal Fees | $ 55,000 | |||||||||
| Debt conversion trading conversion price per shares | $ 0.50 | |||||||||
Summary of Stock Option Activity (Details) |
9 Months Ended |
|---|---|
|
Sep. 30, 2023
$ / shares
shares
| |
| Options And Warrants | |
| Number of Options, Outstanding, Beginning | shares | 3,022,000 |
| Weighted-Average Exercise Price, Outstanding, Beginning | $ / shares | |
| Number of Options, Granted | shares | 350,000 |
| Weighted-Average Exercise Price, Granted | $ / shares | $ 0.21 |
| Number of Options, Expired | shares | |
| Weighted-Average Exercise Price, Expired | $ / shares | |
| Number of Options, Cancelled | shares | (45,000) |
| Weighted-Average Exercise Price, Cancelled | $ / shares | $ 0.21 |
| Number of Options, Outstanding, Ending | shares | 3,327,000 |
| Weighted-Average Exercise Price, Outstanding, Ending | $ / shares | $ 0.21 |
| Number of Options, Exercisable, Ending | shares | 1,713,500 |
| Weighted-Average Exercise Price, Exercisable, Ending | $ / shares | $ 0.21 |
Schedule of Stock Options Outstanding and Exercisable Exercise Price Range (Details) |
9 Months Ended |
|---|---|
|
Sep. 30, 2023
$ / shares
shares
| |
| Options And Warrants | |
| Range of Exercise Prices | $ 0.21 |
| Number of Options Outstanding | shares | 3,327,000 |
| Weighted-Average Remaining Contractual Life in Years | 3 years 9 months |
| Weighted- Average Exercise Price | $ 0.21 |
| Number Exercisable | shares | 1,713,500 |
| Weighted- Average Exercise Price | $ 0.21 |
Options and warrants (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2023 |
|
| Options And Warrants | ||
| Stock-based compensation expense | $ 14,431 | $ 37,590 |
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