10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________.

Commission file number: 000-55053

Blow & Drive Interlock Corporation

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	46-3590850 (I.R.S. Employer Identification No.)
1427 S. Robertson Blvd. Los Angeles, CA (Address of principal executive offices)	90035 (Zip Code)

(877) 238-4492

Registrant’s telephone number, including area code

(Former address, if changed since last report)

(Former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]       No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X]       No [  ].

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

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer [  ]	Smaller reporting company [X]
(Do not check if a smaller reporting company)
	Emerging growth company [  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

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

Applicable only to issuers involved in bankruptcy proceedings during the preceding five years:

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [  ]      No[  ]

Applicable only to corporate issuers:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 9, 2019, there were 31,350,683 shares of common stock, $0.0001 par value, issued and outstanding.

CAUTIONARY STATEMENT

All statements included or incorporated by reference in this Quarterly Report on Form 10-Q (this “Form 10-Q”), other than statements or characterizations of historical fact, are “forward-looking statements” within the meaning of the Securities Exchange Act of 1934 as amended (the “Exchange Act”). Examples of forward-looking statements include, but are not limited to, statements concerning projected sales, costs, expenses and gross margins; our accounting estimates, assumptions and judgments; the prospective demand for our products; the projected growth in our industry; the competitive nature of and anticipated growth in our industry; and our prospective needs for, and the availability of, additional capital. These forward-looking statements are based on our current expectations, estimates, approximations and projections about our industry and business, management’s beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by such words as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” similar expressions and variations or negatives of these words. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors, some of which are set forth in the “Risk Factors” section of our Report on Form 10-K for the year ended December 31, 2018, filed on July 19, 2019, and this Report, which could cause our financial results, including our net income or loss or growth in net income or loss to differ materially from prior results, which in turn could, among other things, cause the price of our common stock to fluctuate substantially. These forward-looking statements speak only as of the date of this report. We undertake no obligation to revise or update publicly any forward-looking statement for any reason, except as otherwise required by law.

BLOW & DRIVE INTERLOCK CORPORATION

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION		3
ITEM 1	Financial Statements	3
ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	34
ITEM 4	Controls and Procedures	34
PART II – OTHER INFORMATION		35
ITEM 1	Legal Proceedings	35
ITEM 1A	Risk Factors	36
ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	36
ITEM 3	Defaults Upon Senior Securities	36
ITEM 4	Mine Safety Disclosures	36
ITEM 5	Other Information	36
ITEM 6	Exhibits	37

2

PART I – FINANCIAL INFORMATION

ITEM 1 Financial Statements

The consolidated balance sheets as of June 30, 2019 (unaudited) and December 31, 2018, the consolidated statements of operations for the three months and six months ended June 30, 2019 and 2018, the consolidated statement of stockholders equity (deficit) for the six months ended June 30, 2019, and the consolidated statements of cash flows for the six months ending June 30, 2019 and 2018, follow. The unaudited interim condensed financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. All such adjustments are of a normal and recurring nature.

3

BLOW & DRIVE INTERLOCK CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	June 30, 2019			December 31, 2018
ASSETS
Current Assets:
Cash	$	12,426		$	775
Accounts receivable		11,785			5,355
Prepaid expenses		1,198			1,016
Total current assets		25,409			7,146
Deposits		6,481			6,481
Total assets	$	31,890		$	13,627
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accrued expenses	$	26,734		$	65,988
Accrued royalty payable		56,635			26,885
Accrued interest		184,286			17,155
Accrued interest – related parties		342,118			190,618
Deferred revenue		17,182			92,162
Derivative liability		29,907			22,517
Notes payable, net of debt discount of $0 and $7,549 at June 30, 2019 and December 31, 2018, respectively		67,159			117,776
Notes payable to related parties		29,000			29,000
Convertible notes payable, net of $5,124 and $5,124 at June 30, 2019 and December 31, 2018, respectively		2,376			2,376
Total current liabilities		755,397			564,477
Non-current Liabilities:
Notes payable, less current portion and net of debt discount of $0 and $6,925 at June 30, 2019 and December 31, 2018, respectively		-			18,069
Notes payable to related parties, less current portion		2,246,200			2,020,000
Convertible notes, less current portion and net of $3,841 and $5,122 at June 30, 2019 and December 31, 2018, respectively		16,159			13,597
Total non-current liabilities		2,262,359			2,051,666
Total Liabilities		3,017,756			2,616,143
Commitments and Contingencies
Stockholders’ Deficit
Preferred stock, par value $0.001, 20,000,000 shares authorized, 1,000,000 and 1,000,000 shares issued or issuable and outstanding as of June 30, 2019 and December 31, 2018, respectively		1,000			1,000
Common stock, par value $0.0001, 100,000,000 shares authorized, 30,566,920 and 31,073,529 shares issued or issuable and outstanding as of June 30, 2019 and December 31, 2018, respectively		3,057			3,107
Additional paid-in capital		3,514,249			3,489,699
Accumulated deficit		(6,504,172	)		(6,096,322	)
Total stockholders’ deficit		(2,985,866	)		(2,602,516	)
Total liabilities and stockholders’ deficit	$	31,890		$	13,627

See accompanying notes to unaudited condensed consolidated financial statements.

4

BLOW & DRIVE INTERLOCK CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Six Months Ended June 30,						Three Months Ended June 30,
	2019			2018			2019			2018
Revenues:
Monitoring revenues	$	363,243		$	443,231		$	149,556		$	264,744
Distributorship revenues		36,681			39,265			18,990			16,095
Total revenues		399,924			482,496			168,546			280,839
Cost of revenues:
Monitoring cost of revenue		25,233			76,681			3,598			29,068
Distributorship cost of revenue		-			-			-			-
Total cost of revenues		25,233			76,681			3,598			29,068
Gross profit		374,691			405,815			164,948			251,771
Operating expenses:
Payroll		210,718			466,149			112,678			229,737
Professional fees		147,297			88,055			105,751			50,963
General and administrative		131,492			469,095			71,418			219,539
Total operating expenses		489,507			1,023,299			289,847			500,239
Loss from operations		(114,816	)		(617,484	)		(124,899	)		(248,468	)
Other Income (Expense):
Interest expense, net		(338,808	)		(210,558	)		(161,984	)		(108,237	)
Change in fair value of derivative liability		(7,390	)		4,293			(5,558	)		11,579
Gain (loss) on extinguishment of debt		54,764						-			-
Total other income (expense)		(291,434	)		(206,265	)		(167,542	)		(96,658	)
Loss before provision for income taxes		(406,250	)		(823,749	)		(292,441	)		(345,126	)
Provision for income taxes		1,600			800			-			800
Net loss	$	(407,850	)	$	(824,549	)	$	(292,441	)	$	(345,926	)
Earnings (loss) per share:
Basic and diluted	$	(0.01	)	$	(0.03	)	$	(0.01	)	$	(0.01	)
Weighted-average shares of common stock outstanding:
Basic and diluted		30,447,549			28,108,346			30,447,549			29,388,261

See accompanying notes to unaudited condensed consolidated financial statements.

5

BLOW & DRIVE INTERLOCK CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

											Additional					Total
	Preferred Stock - Sries A				Common Stock						Paid-in		Accumulated			Stockholders’
	Shares		Amount		Shares			Amount			Capital		Deficit			Deficit
Balance at December 31, 2018		1,000,000	$	1,000		31,073,529		$	3,107		$	3,489,699	$	(6,096,322	)	$	(2,602,516	)
Shares issued for services		-		-		250,000			25			24,475		-			24,500
Shares returned related to anti-dilution		-		-		(756,609	)		(75	)		75		-			-
Net loss		-		-		-			-			-		(115,409	)		(115,409	)
Balance at March 31, 2019		1,000,000		1,000		30,566,920			3,057			3,514,249		(6,211,731	)		(2,693,425	)
Net loss		-		-		-			-			-		(292,441	)		(292,441	)
Balance at June 30, 2019		1,000,000	$	1,000		30,566,920		$	3,057		$	3,514,249	$	(6,504,172	)	$	(2,985,866	)

									Additional						Total
	Preferred Stock - Sries A				Common Stock				Paid-in			Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital			Deficit			Deficit
Balance at December 31, 2017		1,000,000	$	1,000		26,223,834	$	2,622	$	2,911,753		$	(4,296,645	)	$	(1,381,270	)
Shares issued for services		-		-		450,000		45		104,955			-			105,000
Shares issued for cash		-		-		1,450,000		145		156,355			-			156,500
Shares returned related to anti-dilution		-		-		210,876		21		(21	)		-			-
Net loss		-		-		-		-		-			(478,623	)		(478,623	)
Balance at March 31, 2018		1,000,000		1,000		28,334,710		2,833		3,173,042			(4,775,268	)		(1,598,393	)
Shares issued for services		-		-		26,000		3		5,197			-			5,200
Shares issued for cash		-		-		1,653,383		165		204,040			-			204,205
Shares returned related to anti-dilution		-		-		190,033		19		(19	)		-			-
Conversion of debt to common stock		-		-		32,812		3		5,080			-			5,083
Net loss		-		-		-		-		-			(345,926	)		(345,926	)
Balance at June 30, 2018		1,000,000	$	1,000		30,236,938	$	3,023	$	3,387,340		$	(5,121,194	)	$	(1,729,831	)

See accompanying notes to unaudited condensed consolidated financial statements.

6

BLOW & DRIVE INTERLOCK CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended June 30,
	2019			2018
Cash flows from operating activities:
Net loss	$	(407,850	)	$	(824,549	)
Adjustments to reconcile net loss to net cash used in operating activities
Stock or warrants issued for services		24,500			110,200
Allowance for doubtful accounts		-			(26,541	)
Amortization of debt discount		17,035			24,536
Increase in derivative liabilities		-			(15,370	)
Change in fair value of derivative liability		7,390			11,078
Debt converted to common shares		-			5,083
(Gain)/loss on extinguishment of debt		(54,764	)		-
Changes in operating assets and liabilities
Accounts receivable		(6,430	)		55,457
Prepaid expenses		(182	)		1,506
Accounts payable		-			(29,250	)
Accrued expenses		(39,254	)		8,795
Accrued royalties payable		29,750			60,866
Accrued interest		170,325			54,561
Accrued interest related party		151,500			-
Deferred revenue		(74,980	)		(56,676	)
Net cash used in operating activities		(182,960	)		(620,304	)
Cash flows from financing activities:
Proceeds from issuance of common stock		-			360,705
Proceeds from issuance of notes payable		-			21,600
Principal payments on notes payable		(31,589	)		(31,588	)
Proceeds from issuance of convertible notes payable		-			20,000
Principal payments on convertible notes payable		-			(5,000	)
Proceeds from issuance of notes payable related party		226,200			600,127
Payments on note payable related party		-			(96,050	)
Net cash provided by financing activities		194,611			869,794
Net increase in cash		11,651			249,490
Cash at beginning of period		775			31,874
Cash at end of period	$	12,426		$	281,364
Supplemental discolsures of cash flow information
Cash paid during the period for:
Interest paid	$	-		$	91,634
Income taxes paid	$	800		$	-
Supplemental disclosure of non-cash investing and financing activities
Common stock and warrants issued for services	$	24,500		$	110,200

See accompanying notes to unaudited condensed consolidated financial statements.

7

BLOW AND DRIVE INTERLOCK CORPORATION

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

Blow & Drive Interlock (“the Company”) was incorporated on July 2, 2013 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. The Company markets and rents alcohol ignition interlock devices to DUI/DWI offenders as part of their mandatory court or motor vehicle department programs. As of June 30, 2019, the BDI-747/1 device was only approved in Arizona and Texas. The number of states where our BDI-747/1 device is approved has decreased primarily as a result of new state certification rules that require increased capital investment that we are not able to afford.

In 2015, the Company formed BDI Manufacturing, Inc., an Arizona corporation which is a 100% wholly owned subsidiary of Blow & Drive Interlock Corporation. The Company markets, installs and monitors a breath alcohol ignition interlock device (BAIID) called the BDI-747/1, which is a mechanism that is installed on the steering column of an automobile and into which a driver exhales. The device in turn provides a blood-alcohol concentration analysis. If the driver’s blood-alcohol content is higher than a certain pre-programmed limit, the device prevents the ignition from engaging and the automobile from starting. These devices are often required for use by DUI or DWI (“driving under the influence” or “driving while intoxicated”) offenders as part of a mandatory court or motor vehicle department program.

The Company licenses the rights to third party distributors to promote the BDI-747/1 and provide services related to the device. The distributorships are for specific geographical areas (either entire states or certain counties within states). The Company currently has entered into two distributorship agreements. Under the distribution agreements the Company typically receives a onetime fee, and then is entitled to receive a per unit registration fee and a per unit monthly fee for each BDI-747/1 unit the distributor has in inventory or on the road beginning thirty (30) days after the distributor receives the unit.

On December 31, 2018, Laurence Wainer, CEO of the Company, and The Doheny Group, a major note holder of the Company, reached an agreement in which Laurence Wainer sold 8,924,000 shares of common stock and 1,000,000 shares of preferred stock for a total of $30,000. Upon completion of the sale, David Haridim, managing member of The Doheny Group, assumed the position of CEO of Blow and Drive.

NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the results of operations of BDI Manufacturing (the Subsidiary). All material intercompany accounts and transactions between the Company and the Subsidiary have been eliminated in consolidation.

The consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted pursuant to such rules and regulations. These consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The unaudited information contained herein has been prepared on the same basis as the Company’s audited consolidated financial statements, and, in the opinion of the Company’s management, includes all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of the information for the periods presented. The interim results presented herein are not necessarily indicative of the results of operations that may be expected for the full fiscal year ending December 31, 2019 or any future period.

8

Use of Estimates in the Preparation of Financial Statements

The preparation of the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. These estimates and assumptions may affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. As a result, actual results could differ from these estimates.

Going Concern

The Company’s unaudited condensed consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. As of June 30 2019, the Company had an accumulated deficit of $6,504,172 and net loss of $407,850 for the six months ended June 30, 2019. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease or reduce its operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. The Company will continue to raise funds through the sale of its equity securities or issuance of notes payable to obtain additional operating capital. The Company is dependent upon its ability to, and will continue to attempt to, secure additional equity and/or debt financing until the Company can earn revenue and realize positive cash flow from its operations. There are no assurances that the Company will be successful in earning revenue and realizing positive cash flow from its operations. Without sufficient financing it would be unlikely that the Company will continue as a going concern.

Based on the Company’s current rate of cash outflows, cash on hand and proceeds from the prior sale of equity securities and issuance of notes payable, management believes that its current cash will not be sufficient to meet the anticipated cash needs for working capital for the next 12 months. The Company’s plans with respect to its liquidity issues include, but are not limited to, the following:

1)	Continue to issue restricted stock for compensation due to consultants and for its legacy accounts payable in lieu of cash payments; and
2)	Seek additional capital to continue its operations as it rolls out its current products. The Company is currently evaluating additional debt or equity financing opportunities and may execute them when appropriate. However, there can be no assurances that the Company can consummate such a transaction or consummate a transaction at favorable pricing.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and achieve profitable operations. These condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.

Reclassifications

Certain reclassifications have been made to amounts in prior periods to conform to the current period presentation. All reclassifications have been applied consistently to the periods presented.

Revenue Recognition

On January 1, 2019, the Company adopted FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance.

9

The Company’s principal activity from which it generates revenue is a service which is the use of its interlock units. Revenue is measured based on considerations specified in a contract with a customer. A contract exists when it becomes a legally enforceable agreement with a customer. These contracts define each party’s rights, payment terms and other contractual terms and conditions of the sale. Consideration is typically paid at time of sale via credit card, check, or cash when the interlock units are installed on customers’ vehicles

A performance obligation is a promise in a contract to provide a distinct service to the customer, which for the Company is transfer of a service to customers. Performance obligations promised in a contract are identified based on the services that will be provided to the customer that are both capable of being distinct and are distinct in the context of the contract, whereby the service is separately identifiable from other promises in the contract. The Company has concluded the services accounted for as the single performance obligation.

The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. The transaction price is determined based on the consideration to which the Company will be entitled to receive in exchange for transferring goods to the customer. The Company does not issue refunds.

The Company recognizes revenue when it satisfies a performance obligation in a contract by providing a service to a customer when the Company installs the interlock units on the customers’ vehicles. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

Deferred revenue

Deferred revenue consists of customer orders paid in advance of the delivery of the order. Deferred revenue is classified as short-term as the typical order ships within approximately three weeks of placing the order. Deferred revenue is recognized as revenue when the product is shipped to the customer and all other revenue recognition criteria have been met.

Advertising and Marketing Costs

Advertising and marketing costs are recorded as general and administrative expenses when they are incurred. Advertising and marketing expenses were $267 and $61,915 for the six months ended June 30, 2019 and 2018, respectively. Advertising and marketing expenses were $267 and $45,054 for the three months ended June 30, 2019 and 2018, respectively.

Accounts Receivable and Allowance for Doubtful Accounts

The Company’s accounts receivable primarily consist of trade receivables. The Company records an allowance for doubtful accounts that is based on historical trends, customer knowledge, any known disputes, and the aging of the accounts receivable balances combined with management’s estimate of future potential recoverability. Receivables are written off against the allowance after all attempts to collect a receivable have failed. The Company believes its allowance for doubtful accounts as of June 30, 2019 and December 31, 2018 is adequate, but actual write-offs could exceed the recorded allowance.

Royalty Accrual

The Company entered into royalty agreement to be paid out in perpetuity based on number of units sold for specified product model in years 2018, 2017 and 2016 in connection with notes payable as discussed in Note 11. These estimates were performed at the inception for the notes to reflect the associated debt discount. The Company accruals royalties and is reduced by payments. The Company wrote off $255,030 in accrued royalties to gain on extinguishment of debt in December 2018 due to the December 31, 2018 settlement with two royalty noteholders in which they relinquished all claims to accrued royalties.

10

Derivative Liability

The Company applies the provisions of ASC Topic 815-40, Contracts in Entity’s Own Equity (“ASC Topic 815-40”), under which convertible instruments, which contain terms that protect holders from declines in the stock price, may not be exempt from derivative accounting treatment. As a result, embedded conversion options (whose exercise price is not fixed and determinable) in convertible debt (which is not conventionally convertible due to the exercise price not being fixed and determinable) are initially recorded as a liability and are revalued at fair value at each reporting date using the Black Sholes Model. The Company revalues these derivatives each quarter using the Black Sholes Model. The change in valuation is accounted for as a gain or loss in derivative liability.

Convertible Debt and Warrants Issued with Convertible Debt

Convertible debt is accounted for under the guidelines established by ASC 470, Debt with Conversion and Other Options and ASC 740, Beneficial Conversion Features. The Company records a beneficial conversion feature (“BCF”) when convertible debt is issued with conversion features at fixed or adjustable rates that are below market value when issued. If, however, the conversion feature is dependent upon a condition being met or the occurrence of a specific event, the BCF will be recorded when the related contingency is met or occurs. The BCF for the convertible instrument is recorded as a reduction, or discount, to the carrying amount of the convertible instrument equal to the fair value of the conversion feature. The discount is then amortized to interest over the life of the underlying debt using the effective interest method.

The Company calculates the fair value of warrants issued with the convertible instruments using the Black-Scholes valuation method, using the same assumptions used for valuing employee options for purposes of ASC 718, Compensation – Stock Compensation, except that the contractual life of the warrant is used. Under these guidelines, the Company allocates the value of the proceeds received from a convertible debt transaction between the conversion feature and any other detachable instruments (such as warrants) on a relative fair value basis. The allocated fair value is recorded as a debt discount or premium and is amortized over the expected term of the convertible debt to interest expense.

For modifications of convertible debt, the Company records a modification that changes the fair value of an embedded conversion feature, including a BCF, as a debt discount which is then amortized to interest expense over the remaining life of the debt. If modification is considered substantial (i.e. greater than 10% of the carrying value of the debt), an extinguishment of debt is deemed to have occurred, resulting in the recognition of an extinguishment gain or loss.

Fair Value of Financial Instruments

The Company utilizes ASC 820-10, Fair Value Measurement and Disclosure, for valuing financial assets and liabilities measured on a recurring basis. Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value:

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 table below describes the Company’s valuation of financial instruments using guidance from ASC 820-10:

Description	Level 1		Level 2		Level 3
Balance December 31, 2018	$	-	$	22,517	$	-
Change in fair value of derivative liability		-		7,390		-
Balance June 30, 2019	$	-	$	29,907	$	-

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Net Income (Loss) Per Share

Basic earnings per share is calculated by dividing income available to common stockholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share is computed using the weighted average number of common and dilutive common share equivalents outstanding during the period.

Related Parties

Related parties are any entities or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management and policies of the Company.

Concentrations

All of the Company’s ignition interlock devices are purchased from one supplier in China. The loss of this supplier could have a material impact on the Company’s ability to timely obtain additional units.

Income Taxes

The Company accounts for its income taxes in accordance with Income Taxes Topic of the FASB ASC 740, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

The Company also follows ASC 740-10-25, which provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprise’s financial statements in accordance with ASC Topic 740, “Accounting for Income Taxes”. ASC 740-10-25 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Derivative Liabilities

The Company assessed the classification of its derivative financial instruments as of June 30, 2019, which consist of convertible instruments and rights to shares of the Company’s common stock and determined that such derivatives meet the criteria for liability classification under ASC 815. ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional, as defined.

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional standards for “Accounting for Derivative Instruments and Hedging Activities”.

ASC 815-40 provides that, among other things, generally, if an event is not within the entity’s control or could require net cash settlement, then the contract shall be classified as an asset or a liability.

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Recently Issued Accounting Pronouncements

Pronouncements Not Yet Effective

● Fair Value Measurements

In August 2018, the FASB amended “Fair Value Measurements” to modify the disclosure requirements related to fair value. The amendment removes requirements to disclose (1) the amount of and reasons for transfers between levels 1 and 2 of the fair value hierarchy, (2) our policy related to the timing of transfers between levels, and (3) the valuation processes used in level 3 measurements. It clarifies that, for investments measured at net asset value, disclosure of liquidation timing is only required if the investee has communicated the timing either to us or publicly. It also clarifies that the narrative disclosure of the effect of changes in level 3 inputs should be based on changes that could occur at the reporting date. The amendment adds a requirement to disclose the range and weighted average of significant unobservable inputs used in level 3 measurements. The guidance is effective for the Company with the Company’s quarterly filing for the period ended March 31, 2020 and the Company will make the required disclosure changes in that filing. Adoption will not have an impact on the Company’s consolidated results of operations, consolidated financial position, and cash flows.

● Retirement Plans

In August 2018, the FASB amended “Retirement Plans” to modify the disclosure requirements for defined benefit plans. For the Company, the amendment requires the disclosure of the weighted average interest crediting rate used for cash balance plans and an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. It removes the requirement to disclose the approximate amount of future benefits covered by insurance contracts. The guidance is effective for the Company with the Company’s annual filing for the year ended December 31, 2020 and the Company will make the required disclosure changes in that filing. Adoption will not have an impact on the Company’s consolidated results of operations, consolidated financial position, and cash flows.

● Intangibles – Goodwill and other – Internal-Use Software

In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company’s accounting for the service element of a hosting arrangement that is a service contract is not affected by the proposed amendments and will continue to be expensed as incurred in accordance with existing guidance. This standard does not expand on existing disclosure requirements except to require a description of the nature of hosting arrangements that are service contracts. This standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted, including adoption in any interim period for which financial statements have not been issued. Entities can choose to adopt the new guidance prospectively or retrospectively. The Company plans to adopt the updated disclosure requirements of ASU No. 2018-15 prospectively in the first quarter of fiscal 2020, coinciding with the standard’s effective date, and expects the impact from this standard to be immaterial.

● Improvements to Nonemployee Share-based Payment Accounting

In June 2018, the FASB issued ASU No. 2018-07 “Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”). ASU 2018-07 aligns the accounting for share-based payment awards to employees and non-employees. Under ASU 2018-07 the existing employee guidance will apply to nonemployee share-based transactions, except for specific guidance related to the attribution of compensation cost. ASU 2018-07 should be applied to all new awards granted after the date of adoption. ASU 2018-07 is effective for annual and interim periods beginning after December 15, 2018, and early adoption is permitted. The Company adopted ASU 2018-07 effective January 1, 2019; such adoption had no material impact on the Company’s consolidated financial statements.

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● Income Statement – Reporting Comprehensive Income

In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220) (ASU 2018-02), which amends existing standards for income statement-reporting comprehensive income to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Tax Cuts and Jobs Act and improve the usefulness of information reported to financial statements users. ASU 2018-02 will be effective for beginning after December 15, 2018, and early adoption is permitted. The Company adopted ASU 2018-02 effective January 1, 2019; such adoption had no material impact on the Company’s consolidated financial statements.

● Goodwill

In January 2017, the FASB amended “Goodwill” to simplify the subsequent measurement of goodwill. The amended guidance eliminates Step 2 from the goodwill impairment test. Instead, impairment is defined as the amount by which the carrying value of the reporting unit exceeds its fair value, up to the total amount of goodwill of the reporting unit. The new guidance is effective for the Company on January 1, 2020 and is not expected to have an impact on our consolidated results of operations, consolidated financial position, and cash flows.

● Financial Instruments

In June 2016, the FASB amended “Financial Instruments” to provide financial statement users with more decision-useful information about the expected credit losses on debt instruments and other commitments to extend credit held by a reporting entity at each reporting date. During November 2018 and April 2019, the FASB made amendments to the new standard that clarified guidance on several matters, including accrued interest, recoveries, and various codification improvements. The new standard, as amended, replaces the incurred loss impairment methodology in the current standard with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to support credit loss estimates. The new guidance is effective for us on January 1, 2020, and in the first half of 2019, we established an implementation team and began analyzing the impact on our current policies and procedures to identify potential differences that would result from applying the requirements of the new standard. The implementation team reports findings and progress of the project to management on a frequent basis. Through this process, we have identified appropriate changes to our processes, systems, and controls to support recognition and disclosure under the new standard. The Company is still evaluating the impact of the new standard on the Company’s consolidated results of operations, consolidated financial position, and cash flows.

Other recently issued accounting updates are not expected to have a material impact on the Company’s Interim Financial Statements.

Recently Adopted Accounting Pronouncements

● Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), to address diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. For public entities, the standard is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. For all other entities, the standard is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. The Company adopted ASU 2016-15 effective January 1, 2018; such adoption had no material impact on the Company’s consolidated financial statements.

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● Leases (ASU 2019-01)

In March 2019, the FASB issued ASU 2019-01, Leases (Topic 842) Codification Improvements, which removed the requirement for an entity to disclose in the interim periods after adoption, the effect of the change on income from continuing operations, net income, any other affected financial statement line item, and any affected per share amount. For lessors, the new leasing standard requires leases to be classified as a sales-type, direct financing or operating leases. These criteria focus on the transfer of control of the underlying lease asset. This standard and related update was effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company adopted ASU 2016-02 effective January 1, 2019; such adoption had no material impact on the Company’s financial statements, given that the noncancelable term of the Company’s current lease is less than 12 months.

● Leases (ASU 2016-02)

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires the recognition of lease assets and lease liabilities on the balance sheet by lessees for those leases currently classified as operating leases under ASC 840 “Leases.” These amendments also require qualitative disclosures along with specific quantitative disclosures. These amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Company can elect to record a cumulative-effect adjustment as of the beginning of the year of adoption or apply a modified retrospective transition approach. The Company expects that substantially all of its operating lease commitments will be subject to the new guidance and will be recognized as operating lease liabilities and right-of-use assets upon adoption. The Company adopted ASU 2016-02 effective January 1, 2019; such adoption had no material impact on the Company’s financial statements, given that the noncancelable term of the Company’s current lease is less than 12 months.

● Revenue from Contracts with Customers

On January 1, 2019, the Company adopted FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance.

The Company’s principal activity from which it generates revenue is a service which is the use of its interlock units. Revenue is measured based on considerations specified in a contract with a customer. A contract exists when it becomes a legally enforceable agreement with a customer. These contracts define each party’s rights, payment terms and other contractual terms and conditions of the sale. Consideration is typically paid at time of sale via credit card, check, or cash when the interlock units are installed on customers’ vehicles

A performance obligation is a promise in a contract to provide a distinct service to the customer, which for the Company is transfer of a service to customers. Performance obligations promised in a contract are identified based on the services that will be provided to the customer that are both capable of being distinct and are distinct in the context of the contract, whereby the service is separately identifiable from other promises in the contract. The Company has concluded the services accounted for as the single performance obligation.

The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. The transaction price is determined based on the consideration to which the Company will be entitled to receive in exchange for transferring goods to the customer. The Company does not issue refunds.

The Company recognizes revenue when it satisfies a performance obligation in a contract by providing a service to a customer when the Company installs the interlock units on the customers’ vehicles. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

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NOTE 3 – SEGMENT REPORTING

The Company has two reportable segments: (1) Monitoring and (2) Distributorships.

Monitoring fees on Company installed units

The Company rents units directly to customers and installs the units in the customer’s vehicles. The rental periods range from a few months to 2 years and include a combination of down payments made by the customer and monthly payments paid under the agreements with the Company. Revenue is recognized from these companies on the straight-line basis over the term of the agreement. Amounts collected in excess of those earned are classified as deferred revenue in the balance sheet, and amounts earned in excess of amounts collected are reflected in accounts receivable in the balance sheet at June 30, 2019 and December 31, 2018.

Distributorships

The Company enters into arrangements that include multiple deliverables, which typically consist of the sale of exclusive distributorship territory rights, startup supplies package, promotional material, three weeks of onsite training and ongoing monthly support services. The Company accounts for each material element within an arrangement with multiple deliverables as separate units of accounting. Revenue is allocated to each unit of accounting under the guidance of ASC Topic 605-25, Multiple-Element Revenue Arrangements, which provides criteria for separating consideration in multiple-deliverable arrangements by establishing a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable is based on vendor-specific objective evidence (“VSOE”) if available, third-party evidence if VSOE is not available, or estimated selling price if neither VSOE nor third-party evidence is available. The Company is required to determine the best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis. The Company generally does not separately sell distributorships or training on a standalone basis. Therefore, the Company does not have VSOE for the selling price of these units nor is third party evidence available and thus management uses its best estimate of selling prices in their allocation of revenue to each deliverable in the multiple element arrangement.

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The following table summarizes net sales and identifiable operating income by segment:

	Six Months Ended June 30,						Three Months Ended June 30,
	2019			2018			2019			2018
Segment gross profit (a):
Monitoring	$	338,010		$	366,550		$	145,958		$	235,676
Distributorships		36,681			39,265			18,990			16,095
Gross profit		374,691			405,815			164,948			251,771
Identifiable segment operating expenses (b):
Monitoring		-			-			-			-
Distributorships		-			-			-			-
Total operating expenses		-			-			-			-
Identifiable segment operating income (c):
Monitoring		338,010			366,550			145,958			235,676
Distributorships		36,681			39,265			18,990			16,095
		374,691			405,815			164,948			251,771
Reconciliation of identifiable segment income to corporate income (d):
Payroll		210,718			466,149			112,678			229,737
Professional fees		147,297			88,055			105,751			50,963
General and administrative expenses		131,492			469,095			71,418			219,539
Interest expense		338,808			210,558			161,984			108,237
Change in fair value of derivative liability		7,390			(4,293	)		5,558			(11,579	)
Gain on extinguishment of debt		(54,764	)		-			-			-
		780,941			1,229,564			457,389			596,897
Loss before provision for income taxes		(406,250	)		(823,749	)		(292,441	)		(345,126	)
Provision for income taxes		1,600			800			-			800
Net loss	$	(407,850	)	$	(824,549	)	$	(292,441	)	$	(345,926	)
Total net property, plant, and equipment assets
Monitoring	$	-		$	-		$	-		$	-
Distributorships		-			-			-			-
Corporate		-			-			-			-
	$	-		$	-		$	-		$	-

(a) Segment gross profit includes segment net sales less segment cost of sales

(b) Identifiable segment operating expenses consists of identifiable depreciation expense

(c) Identifiable segment operating incomes consists of segment gross profit less identifiable operating expense

(d) General corporate expense consists of all other non-identifiable expenses

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NOTE 4 – ACCRUED EXPENSES

Accrued Expenses consist of the following:

Description	June 30, 2019		December 31, 2018
Accrued payroll and payroll taxes	$	20,004	$	17,616
Deferred rent		-		5,317
Income tax payable		6,730		5,930
Other accrued expenses		-		37,125
Total	$	26,734	$	65,988

NOTE 5 – NOTES PAYABLE

Notes payable consist of the following:

	As of June 30, 2019						As of December 31, 2018
Terms	Amount		Discount		Net Balance		Amount			Discount			Net Balance
December 2017 ($50,000) -15% interest due in December 2020 including issuance of 100,000 shares of common stock with exercise price at $0.25 per share.	$	-	$	-	$	-	$	40,736		$	(14,474	)	$	26,262
October 2018 ($60,000) - $561 daily principal and interest until paid in full		-		-		-		42,424			-			42,424
October 2018 ($72,800) - $11,527 monthly principal and interest for first six months, $9,975 monthly principal and interest last six months		67,159		-		67,159		67,159			-			67,159
Total notes payable		67,159		-		67,159		150,319			(14,474	)		135,845
Less: non-current portion		-		-		-		(24,994	)		6,925			(18,069	)
Notes payable, current portion	$	67,159	$	-	$	67,159	$	125,325		$	(7,549	)	$	117,776

December 2017 - $50,000

On December 1, 2017, the Company provided an agreement to a third party to obtain a $50,000 promissory note in exchange for $50,000 in cash. The promissory note had a maturity date of December 1, 2020 and bears interest at 15% per annum. The note required total payments of $1,733 per month. The Company recorded a debt discount of $22,650 related to the value of the issued shares associated with the process of obtaining the note to be amortized over the life of the note. In January 2019, the note was settled with no additional payment and $43,930 was recognized as a gain on settlement. Total interest expense was $0 and $1,706 for the three months ended June 30, 2019 and 2018, respectively, and $0 and $3,539 for the six months ended June 30, 2019 and 2018, respectively.

October 2018 - $60,000

On October 11, 2018, the Company provided an agreement to a third party to obtain a $60,000 promissory note in exchange for $59,105 in cash ($895 in processing fee was deducted from cash). The promissory note had a maturity date of May 5, 2019 and bears interest at 55% per annum. The note required total payments of $561.43 each business day. The note was settled on January 16, 2019 for $30,806, and a gain on settlement was recorded for $10,834. Total interest expense was $0 and $0 for the three months ended June 30, 2019 and 2018, respectively, and $0 and $0 for the six months ended June 30, 2019 and 2018, respectively.

October 2018 - $72,800

On October 4, 2018, the Company provided an agreement to a third party to obtain a $72,800 promissory note in exchange for $72,800 in cash. The promissory note had a maturity date of October 4, 2019 and bears interest at 51% per annum. The note required total payments of $11,526.67 per month for the first six months and $6,794.67 per month for the last six months. Total interest expense was $8,536 and $0 for the three months ended June 30, 2019 and 2018, respectively, and $17,126 and $0 for the six months ended June 30, 2019 and 2018, respectively.

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NOTE 6 – NOTES PAYABLE TO RELATED PARTIES

Notes payable to related parties consist of the following:

Terms	June 30, 2019			December 31, 2018
August 2018 ($1,365,000) – Replaced August 2018 note ($1,365,000) that replaced November 2017 note ($765,000 balance at August 1, 2018), February 2018 note ($100,000) and March 2018 note ($500,000). Includes $635,000 penalty on default of August 2018 ($1,365,000) note and $20,000 for missed payment on August 2018 note. Interest only monthly payment of $50,500 for life of note. Entire principal due December 1, 2023.	$	2,020,000		$	2,020,000
December 2018 ($6,000) – No interest with principal due on December 17, 2019.		6,000			6,000
December 2018 ($23,000) – No interest with principal due on December 13, 2019.		23,000			23,000
January 2019 ($32,700) – No interest with principal due on January 3, 2020.		32,700			-
January 2019 ($40,000) – No interest with principal due on January 11, 2020.		40,000			-
January 2019 ($14,500) – No interest with principal due on January 15, 2020.		14,500			-
February 2019 ($15,000) – No interest with principal due on February 1, 2020.		15,000			-
February 2019 ($5,000) – No interest with principal due on February 19, 2020.		5,000			-
March 2019 ($10,000) – No interest with principal due on March 4, 2020.		10,000			-
May 2019 ($20,000) – No interest with principal due on May 1, 2020		20,000			-
June 2019 ($89,000) – No interest with principal due on June 3, 2020		89,000			-
Total notes payable to related parties		2,275,200			2,049,000
Less: non-current portion		(2,246,200	)		(2,020,000	)
Notes payable to related parties, current portion	$	29,000		$	29,000

December 2018 - $2,222,000

On December 1, 2018, the Company entered into an agreement with a related third party to replace the August 2018 note of $1,365,000 with a new note for $2,020,000. The new note also includes a default penalty of $635,000 on the August 2018 note and $20,000 for a missed payment on the August 2018 note. The note calls for interest only payments of $50,500 per month for the life of the note. The entire principal is due on December 1, 2023. Accrued interest payments totaling $202,000 were not made by the Company. Per the note agreement, this amount was added to the principal, thus increasing the principal amount to $2,222,000.

Total interest expense was $303,000 and $0 for the six months ended June 30, 2019 and 2018, respectively. Total interest expense was $151,500 and $0 for the three months ended June 30, 2019 and 2018, respectively.

December 2018 - $6,000

On December 17, 2018, the Company entered into an agreement with a related party, Doheny Group, to obtain a $6,000 loan. The note bears no interest and is due in full on December 17, 2019.

December 2018 - $23,000

On December 31, 2018, the Company entered into an agreement with a related party, Doheny Group, to obtain a $23,000 loan. The note bears no interest and is due in full on December 31, 2019.

January 2019 - $32,700

On January 3, 2019, the Company entered into an agreement with a related party, Doheny Group, to obtain a $32,700 loan. The note bears no interest and is due in full on January 3, 2020.

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January 2019 - $40,000

On January 11, 2019, the Company entered into an agreement with a related party, Doheny Group, to obtain a $40,000 loan. The note bears no interest and is due in full on January 11, 2020.

January 2019 - $14,500

On January 15, 2019, the Company entered into an agreement with a related party, Doheny Group, to obtain a $14,500 loan. The note bears no interest and is due in full on January 15, 2020.

February 2019 - $15,000

On February 1, 2019, the Company entered into an agreement with a related party, Doheny Group, to obtain a $15,000 loan. The note bears no interest and is due in full on February 1, 2020.

February 2019 - $5,000

On February 19, 2019, the Company entered into an agreement with a related party, Doheny Group, to obtain a $5,000 loan. The note bears no interest and is due in full on February 19, 2020.

March 2019 - $10,000

On March 4, 2019, the Company entered into an agreement with a related party, Doheny Group, to obtain a $10,000 loan. The note bears no interest and is due in full on March 4, 2020.

May 2019 - $20,000

On May 1, 2019, the Company entered into an agreement with a related party, Doheny Group, to obtain a $20,000 loan. The note bears no interest and is due in full on May 1, 2020.

June 2019 - $89,000

On June 3, 2019, the Company entered into an agreement with a related party, Doheny Group, to obtain a $89,000 loan. The note bears no interest and is due in full on June 3, 2020.

NOTE 7 – CONVERTIBLE NOTES PAYABLE

Convertible notes payable consists of the following:

	As of June 30, 2019									As of December 31, 2018
Terms	Amount			Discount			Net Balance			Amount			Discount			Net Balance
August 2015 ($15,000) - 7.5% interest bearing convertible debenture due on August 7, 2017 with interest only payments and due upon maturity.		7,500			-			7,500			7,500			-			7,500
March 2018 ($20,000) – 10% interest bearing convertible debenture due on March 9, 2021, with interest paid in cash for the first six months, and either in cash or shares of common stock thereafter. Principal is due March 9, 2021, paid either in cash or common stock, at the Company’s discretion		20,000			(8,965	)		11,035			20,000			(11,527	)		8,473
Total convertible notes payable		27,500			(8,965	)		18,535			27,500			(11,527	)		15,973
Less: non-current portion		(20,000	)		3,841			(16,159	)		(20,000	)		6,403			(13,597	)
Convertible notes payable, current portion	$	7,500		$	(5,124	)	$	2,376		$	7,500		$	(5,124	)	$	2,376

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August 2015 - $15,000

On August 7, 2015, the Company entered into an agreement with a third party non-affiliate and issued a 7.5% interest bearing convertible debenture for $15,000 due on August 7, 2017, with conversion features commencing after 180 days following the date of the note. Payments of interest only were due monthly beginning September 2015. The loan is convertible at 70% of the average of the closing prices for the common stock during the five trading days prior to the conversion date. In connection with this Convertible note payable, the Company recorded a $5,770 discount on debt, related to the beneficial conversion feature of the note to be amortized over the life of the note or until the note is converted or repaid. This note was bifurcated with the embedded conversion option recorded as a derivative liability at fair value (See Note 9). On May 6, 2016 the note holder elected to convert $7,500 in principal into 30,000 shares of common stock. The note is currently in default.

In connection with the issuance of the August Convertible Note Payable, the Company issued a warrant on August 7, 2015 to purchase 30,000 shares of the Company’s common stock at a purchase price of $0.50 per share. The Black Scholes model was used in valuing the warrants in determining the relative fair value of the warrants issued in connection with the convertible note payable using the following inputs: Expected Term – 3 years, Expected Dividend Rate – 0%, Volatility – 100%, Risk Free Interest Rate -1.08%. The Company recorded an additional $4,873 discount on debt, related to the relative fair value of the warrants issued associated with the note to be amortized over the life of the note.

Total interest expense was $141 and $141 for the three months ended June 30, 2019 and 2018, respectively, and $282 and $282 for the six months ended June 30, 2019.

March 2018 - $20,000

On March 9, 2018, the Company entered into an agreement with a non-affiliated shareholder and issued a 10% interest bearing convertible debenture for $20,000 due on March 9, 2021. Payments of interest is in cash for the first six months, thereafter, interest may be paid either in cash or common stock of the Company. The loan is convertible at 61% of the average of the closing prices for the common stock during the five trading days prior to the conversion date but may not be converted if such conversion would cause the holder to own more than 4.9% of outstanding common stock after giving effect to the conversion. In connection with this Convertible Note Payable, the Company recorded a $20,000 discount on debt (the total discount was $47,768, of which $27,768 was expensed), related to the beneficial conversion feature of the note to be amortized over the life of the note or until the note is converted or repaid. This note was bifurcated with the embedded conversion option recorded as a derivative liability at fair value. During the six months ended June 30, 2019, this note has not been converted.

Total interest expense was $500 and $313 for the three months ended June 30, 2019 and 2018, respectively, and $1,000 and $626 for the six months ended June 30, 2019 and 2018, respectively.

NOTE 8 – DERIVATIVE LIABILITIES

Derivative liabilities consisted of the following:

	June 30, 2019		December 31, 2018
August 2015 - $15,000 convertible debt	$	6,359	$	6,523
March 2018 - $20,000 convertible debt		23,549		15,994
Total derivative liabilities	$	29,907	$	22,517

The Company applies the provisions of ASC Topic 815-40, Contracts in Entity’s Own Equity (“ASC Topic 815-40”), under which convertible instruments, which contain terms that protect holders from declines in the stock price, may not be exempt from derivative accounting treatment. As a result, embedded conversion options (whose exercise price is not fixed and determinable) in convertible debt (which is not conventionally convertible due to the exercise price not being fixed and determinable) are initially recorded as a liability and are revalued at fair value at each reporting date using the Black Sholes Model.

August 2015 Convertible Debt - $15,000

In August 2015, the Company entered into a $15,000 convertible note with variable conversion pricing. The following inputs were used within the Black Sholes Model to determine the initial relative fair values of the $15,000 convertible note with expected term of 1.58 years, expected dividend rate of 0%, volatility of 100% and risk-free interest rate 0.61%.

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March 2018 Convertible Debt - $20,000

In March 2018, the Company entered into a $20,000 convertible note with variable conversion pricing. The following inputs were used within the Black Sholes Model to determine the initial relative fair values of the $20,000 convertible note with expected term of 3.35 years, expected dividend rate of 0%, volatility of 413% and risk free interest rate 2.90%.

The Company revalues these derivatives each quarter using the Black Sholes Model. The change in valuation is accounted for as a gain or loss in derivative liability. The following table describes the derivative liability as of December 31, 2018 and June 30, 2019.

	December 31, 2018		Additions		Changes			June 30, 2019
August 2015 - $15,000 convertible debt	$	6,523	$	-	$	(165	)	$	6,358
March 2018 - $20,000 convertible debt		15,994		-		7,555			23,549
Total	$	22,517	$	-	$	7,390		$	29,907

NOTE 9 – ACCRUED ROYALTY PAYABLE

The Company has estimated the royalties to be paid out in perpetuity under royalty agreements. The Company entered into royalty agreement as follows:

● November 2017 Royalty Agreement – The Company entered into a royalty agreement with a related party on November 1, 2017 in relation to a note payable of $900,000. This note replaced the September and November 2016 Royalty Agreements. Under the royalty agreement, the Company is required to pay a royalty fee of from $1.50 to $3.00 per month for every ignition interlock devise that the Company has on the road in customers’ vehicles, the amount depending on how many devices are installed.

● August 2018 Royalty Agreement – the Company entered into a royalty agreement with a related party on August 1, 2018 in relation to a note payable of $1,365,000. This note replaced the November 2017 Royalty Agreement as well as other, non-royalty notes payable. Under the royalty agreement, the Company is required to pay $1.50 and accrue an additional $3.50 for every ignition interlock devise for the first nine months of the note payable. After the first nine months, the Company is required to pay $1.50 per devise and the amount accrued during the first nine months will be paid monthly through the next twelve months. After the note payable is paid in full, the Company is required to pay $3.00 per devise in perpetuity.

● December 2018 royalty Agreement – the Company entered into a royalty agreement with a related party on December 1, 2018 in relation to a note payable of $2,020,000. This note replaced the August 2018 Royalty Agreement. Under the royalty agreement, the Company is required to pay a royalty fee of $5.00 per month for every ignition interlock device that the Company has on the road in customers’ vehicles.

Based on the royalty agreement, the Company had the following royalty accruals:

	June 30, 2019		December 31, 2018
November 2017 royalty agreement	$	3,327	$	3,327
August 2018 royalty agreement		18,058		18,058
December 2018 royalty agreement		35,250		5,500
Total accrued royalties	$	56,635	$	26,885

Royalty expense was $13,251 and $47,416 for the three months ended June 30, 2019 and 2018, respectively, and $29,751 and $89,945 for the six months ended June 30, 2019 and 2018, respectively.

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NOTE 10 – STOCKHOLDERS’ EQUITY

Preferred Stock

The Company’s articles of incorporation authorize the Company to issue up to 20,000,000 preferred shares of $0.001 par value.

Series A Preferred Stock

The Company has been authorized to issue 1,000,000 shares of Series A Preferred Stock. The Series A shares have the following preferences: no dividend rights; no liquidation preference over the Company’s common stock; no conversion rights; no redemption rights; no call rights by the Company; each share of Series A Preferred stock will have one hundred (100) votes on all matters validly brought to the Company’s common stockholders.

During the three months ended March 31, 2017, the Company entered into a material definitive agreement to issue 1,000,000 shares of series A preferred stock to an officer and director of the Company with a preliminary estimated value of $350,000. As of June 30, 2019, the total number of preferred shares issued or issuable was 1,000,000.

Common Stock

The Company has authorized 100,000,000 shares of $.0001. Holders of common stock are entitled to one vote for each share held. There are no restrictions that limit the Company’s ability to pay dividends on its common stock, subject to the requirements of the Delaware Revised Statutes. The Company has not declared any dividends since incorporation.

During the three and six months ended June 30, 2019, the Company issued no additional shares and 250,000 additional shares of its common stock for services valued at $24,500, respectively. The total number of shares issued or issuable as of June 30, 2019 was 30,659,244.

NOTE 12 – INCOME (LOSS) PER SHARE

Net income (loss) per share is provided in accordance with FASB ASC 260-10, “Earnings per Share”. Basic net income (loss) per common share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average shares outstanding, assuming all dilutive potential common shares were issued, unless doing so is anti-dilutive.

The following shares are not included in the computation of diluted income (loss) per share, because their inclusion would be anti-dilutive:

	Six Months Ended June 30,				Three Months Ended June 30,
	2019		2018		2019		2018
Preferred shares		-		-		-
Convertible notes		434,058		58,299		434,058		58,299
Warrants		6,537,586		5,597,586		6,537,586		5,597,586
Options		-		-		-		-
Total anti-dilutive weighted average shares		6,971,644		5,655,885		6,971,644		5,655,885

If all dilutive securities had been exercised at June 30, 2019, the total number of common shares outstanding would be as follows:

Common Shares	30,566,920
Preferred Shares	-
Convertible notes	434,058
Warrants	6,537,586
Options	-
Total potential shares	37,538,564

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NOTE 13 – COMMITMENTS AND CONTINGENCIES

On December 1, 2016, the Company entered into a four-year lease with Cahuenga Management LLC for a storefront location at 15503 Cahuenga Blvd., North Hollywood, California 91601. Base rent under the lease is $2,200 per month, with an escalating provision up to $2,404 throughout the lease term. The rental agreement includes operating expenses such as common area maintenance, property taxes and insurance. The Company moved into the offices of David Haridim effective January 1, 2019. David Haridim is not charging the Company rent.

On August 28, 2017, the Company entered into a one-year lease with B3 Investments, LLC for a storefront location at Suites D104 and D105, 2406 24^th Street, South Phoenix, Arizona. Base rent under the lease is $1,350 per month plus 2% ($27) rental tax. The rental agreement includes operating expenses such as common area maintenance, property taxes and insurance.

Total rent expense was $21,672 and $16,053 for the three months ended June 30, 2019 and 2018, respectively, and $32,902 and $30,691 for the six months ended June 30, 2019 and 2018, respectively.

Legal Proceedings

In the ordinary course of business, the Company from time to time is involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon the Company’s financial condition and/or results of operations. However, in the opinion of management, other than as set forth herein, matters currently pending or threatened against the Company are not expected to have a material adverse effect on the Company’s financial position or results of operations.

NOTE 14 – RELATED PARTY TRANSACTIONS

The Company had the following related party transactions:

● Notes payable of $2,275,200 to the Doheny Group at June 30, 2019 (refer to notes payable related party section)

● 2,669,761 shares of common stock, of which 1,863,152 were granted to the Doheny Group in relation to notes payable.

NOTE 15 – SUBSEQUENT EVENTS

The Company follows the guidance in FASB ASC Topic 855, Subsequent Events (“ASC 855”), which provides guidance to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before the consolidated financial statements are issued or are available to be issued. ASC 855 sets forth (i) the period after the balance sheet date during which management of a reporting entity evaluates events or transactions that may occur for potential recognition or disclosure in the consolidated financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its consolidated financial statements, and (iii) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date.

On July 10, 2019, the Company entered into a loan agreement with The Doheny Group for $13,000. The loan has no interest (0%), no monthly payments, and a balloon payment of $13,000 on July 10, 2020.

On July 18, 2019, the Company entered into a loan agreement with The Doheny Group for $8,000. The loan has no interest (0%), no monthly payments, and a balloon payment of $8,000 on July 18, 2020.

On July 26, 2019, the Company entered into a loan agreement with The Doheny Group for $25,000. The loan has no interest (0%), no monthly payments, and a balloon payment of $25,000 on July 26, 2020.

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ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations

Disclaimer Regarding Forward Looking Statements

Our Management’s Discussion and Analysis or Plan of Operations contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.

Although the forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

Overview

We are a previous development stage company that was incorporated in the State of Delaware in July 2013. In the year ending December 31, 2018, we generated total revenues of $942,160, compared to $1,235,433 in the year ending December 31, 2017. For the three months ended June 30, 2019 and 2018, we had total revenues of $399,924 and $482,495, respectively, and a net loss of $407,850 and $824,551, respectively.

We market distributorships and lease a breath alcohol ignition interlock device called the BDI-747/1, which is a mechanism that is installed on the steering column of an automobile and into which a driver exhales. The device in turn provides a blood-alcohol concentration analysis. If the driver’s blood-alcohol content is higher than a certain pre-programmed limit, the device prevents the ignition from engaging and the automobile from starting. These devices are often required for use by DUI or DWI (“driving under the influence” or “driving while intoxicated”) offenders as part of a mandatory court or motor vehicle department program.

We paid Well Electric, a company located in China with experience in design and manufacture of ignition interlock devices, $30,000 to design and manufacture the prototype ignition interlock device for us. Well Electric produced six prototype devices for us which we received in November 2014.

At July 27, 2015 we began production of our patent pending BDI Model #1 power line filter to attach to our BDI-747 Breath Alcohol Ignition Interlock Device which together were certified by NHSTA on June 17, 2015 to work to together to meet or exceed 2013 NHSTA guidelines.

As of December 31, 2017, the BDI-747/1 was approved for use in five states, namely Oregon, Texas, Arizona, Kentucky, and Tennessee. As of December 31, 2018, the BDI-747/1 device was approved in Oregon, Texas, Arizona, and Kentucky. As of June 30, 2019, the BDI-747/1 device was only approved in Arizona and Texas. The states where our BDI-747/1 device is approved has decreased primarily as a result of new state certification rules that require increased capital investment that we are not able to afford.

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We have a storefront location in Phoenix, Arizona and contract with four qualified contractors to install, calibrate, remove and monitor the devices. Our business plan includes growth of the company by continuing to complete and submit more state applications and to build up our service infrastructure by utilizing our own retail infrastructure, distributors and franchisees.

As of December 31, 2017, we had approximately 1,558 units on the road, with approximately 1,451 devices being leased directly from us and approximately 107 devices leased through our distributors. As of December 31, 2018, we had approximately 1,100 units on the road, with approximately 885 devices being leased directly from us and approximately 215 devices leased through our distributors. The decrease in the total number of devices we have on the road is primarily due to the fact the BDI-747/1 devices was approved in fewer states in 2018 compared to 2017. As of June 30, 2019, we had approximately 895 units on the road, with approximately 717 devices being leased directly from us and approximately 178 devices leased through our distributors.

Due to the decrease in the number of states where our BDI-747/1 device is approved, and the resulting decrease in the number of devices we have on the road, our management is currently exploring all options related to our business, including, but not limited to: (i) taking out loans or selling our stock in order to raise money to continue, and try to expand, our current business; (ii) trying to acquire a synergistic business and grow our current business; or (iii) selling our current business and trying to find another business to, in or out of our current business segment, to take over the public corporation.

Our website is www.blowanddrive.com.

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Results of Operations

Three Months Ended June 30, 2019 (Unaudited) Compared to Three Months Ended June 30, 2018 (Unaudited)

	Three Months Ended
	June 30, 2019						June 30, 2018						Changes
	Amount			% of Revenue			Amount			% of Revenue			Amount			%
Revenues:
Monitoring revenues	$	149,556			88.7	%	$	264,744			94.3	%	$	(115,188	)		-43.5	%
Distributorship revenues		18,990			11.3	%		16,095			5.7	%		2,895			18.0	%
Total revenues		168,546			100.0	%		280,839			100.0	%		(112,293	)		-40.0	%
Cost of revenues:
Monitoring cost of revenue		3,598			2.1	%		29,068			10.4	%		(25,470	)		-87.6	%
Distributorship cost of revenue		-			0.0	%		-			0.0	%		-			n/a
Total cost of revenues		3,598			2.1	%		29,068			10.4	%		(25,470	)		-87.6	%
Gross profit		164,948			97.9	%		251,771			89.6	%		(86,823	)		-34.5	%
Operating expenses:
Payroll		112,678			66.9	%		229,737			81.8	%		(117,059	)		-51.0	%
Professional fees		105,751			62.7	%		50,963			18.1	%		54,788			107.5	%
General and administrative		71,418			42.4	%		219,539			78.2	%		(148,121	)		-67.5	%
Total operating expenses		289,847			172.0	%		500,239			178.1	%		(210,392	)		-42.1	%
Loss from operations		(124,899	)		-74.1	%		(248,468	)		-88.5	%		123,569			-49.7	%
Other Income (Expense):
Interest expense, net		(161,984	)		-96.1	%		(108,237	)		-38.5	%		(53,747	)		49.7	%
Change in fair value of derivative liability		(5,558	)		-3.3	%		11,579			4.1	%		(17,137	)		-148.0	%
Gain (loss) on extinguishment of debt		-			0.0	%		-			0.0	%		-			n/a
Total other income (expense)		(167,542	)		-99.4	%		(96,658	)		-34.4	%		(70,884	)		73.3	%
Loss before provision for income taxes		(292,441	)		-173.5	%		(345,126	)		-122.9	%		52,685			-15.3	%
Provision for income taxes		-			0.0	%		800			0.3	%		(800	)		n/a
Net loss	$	(292,441	)		-173.5	%	$	(345,926	)		-123.2	%	$	53,485			-15.5	%

Operating Loss; Net Loss

Our net loss decreased by $53,485, from ($345,926) for the three months ended June 30, 2018 to ($292,441) for the three months ended June 30, 2019. Our operating loss decreased by $123,569, from ($248,468) to ($124,899) for the same periods. The decrease in our net loss for the three months ended June 30, 2019, compared to the three months ended June 30, 2018, is primarily the result of lower cost of revenues, lower general and administrative expenses, lower payroll, partially offset by decreased revenues and increases professional fees and interest expense, net. These changes are detailed below.

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Revenue

Monitoring Revenues. Monitoring revenues decreased by $115,188, or 43.5%, to $149,556 in the second quarter of fiscal 2019 from $264,744 in the second quarter last year. The decrease is due to a decrease in the number of monthly recurring payments we received from our customers that rent our BDI-747/1 breathalyzer device for the ongoing monitoring services related to the devices in the second quarter of fiscal 2019 compared to second quarter of last year. This decrease is primarily related to the fact our device is authorized in less states than it was during the same period in fiscal year 2018.

Distributorship Revenues. Distributorship revenues increased by $2,895, or 18.0%, to $18,990 in the second quarter of fiscal 2019 from $16,095 in the second quarter last year. The increase is due to an increase in number of units with customers through distributors.

Cost of Revenue

Our cost of revenue for the three months ended June 30, 2019 was $3,598, compared to $29,068 for the three months ended June 30, 2018. Our cost of revenue for the three months ended June 30, 2019 and June 30, 2018, was completely related to our monthly monitoring services we provide to our customers. The decrease in our cost of revenue was due to the fact we ordered more parts and supplies from our supplier in the period in 2018 compared to the period in 2019.

Payroll

Payroll expense decreased by $117,059, or 51.0%, to $112,678 in the second quarter of fiscal 2019 from $229,737 in the second quarter last year. The decrease in payroll is due to controlling overhead expenses and decreasing personnel in the second quarter of fiscal 2019 compared to second quarter of last year. Our decrease in personnel is related to us having less units on the road.

Professional Fees

Professional fees increased by $54,788, or 107.5%, to $105,751 in the second quarter of fiscal 2019 from $50,963 in the second quarter last year. These fees are largely related to fees paid for legal, accounting and audit services. We expect these fees to continue grow steadily if our business expands. In the event we undertake an unusual transaction, such as an acquisition, securities offering, or file a registration statement, we would expect these fees to substantially increase during that period.

General and Administrative Expenses

General and administrative expenses decreased by $148,121, or 67.5%, to $71,418 in the second quarter of fiscal 2019 from $219,539 in the second quarter last year. The decrease is due to the following:

● Decrease of approximately $27,000 in royalty expense in the second quarter of fiscal 2019 compared to second quarter last year.

● Decrease of approximately $121,000 in software expense as we did not have any software services in the second quarter of fiscal 2019 compared to second quarter of last year.

● Decrease of approximately $31,000 in investor relations.

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Interest Expense

Interest expense increased by $53,747, or 49.7%, to $161,984 in the second quarter of fiscal 2019 from $108,237 in the second quarter last year. The increase is due to increase in loans from related parties.

Change in Fair Value of Derivative Liability

During the three months ended June 30, 2019, we had a change in fair value of derivative liability of ($5,558) compared to $11,579 for the three months ended June 30, 2018. The change in fair value of derivative liability in the three months ended June 30, 2019, relates to the conversion feature of a promissory note we had outstanding during this period. Change in fair value of derivative liability results from changes in valuation at end of the reporting period. Since the conversion price on the promissory note is calculated based on a discount to the closing price of our common stock, as our closing price fluctuates it changes the fair value of the derivative liability.

Six Months Ended June 30, 2019 (Unaudited) Compared to Six Months Ended June 30, 2018 (Unaudited)

	Six Months Ended
	June 30, 2019						June 30, 2018						Changes
	Amount			% of Revenue			Amount			% of Revenue			Amount			%
Revenues:
Monitoring revenues	$	363,243			90.8	%	$	443,231			91.9	%	$	(79,988	)		-18.0	%
Distributorship revenues		36,681			9.2	%		39,265			8.1	%		(2,584	)		-6.6	%
Total revenues		399,924			100.0	%		482,496			100.0	%		(82,572	)		-17.1	%
Cost of revenues:
Monitoring cost of revenue		25,233			6.3	%		76,681			15.9	%		(51,448	)		-67.1	%
Distributorship cost of revenue		-			0.0	%		-			0.0	%		-			n/a
Total cost of revenues		25,233			6.3	%		76,681			15.9	%		(51,448	)		-67.1	%
Gross profit		374,691			93.7	%		405,815			84.1	%		(31,124	)		-7.7	%
Operating expenses:
Payroll		210,718			52.7	%		466,149			96.6	%		(255,431	)		-54.8	%
Professional fees		147,297			36.8	%		88,055			18.2	%		59,242			67.3	%
General and administrative		131,492			32.9	%		469,095			97.2	%		(337,603	)		-72.0	%
Total operating expenses		489,507			122.4	%		1,023,299			212.1	%		(533,792	)		-52.2	%
Loss from operations		(114,816	)		-28.7	%		(617,484	)		-128.0	%		502,668			-81.4	%
Other Income (Expense):
Interest expense, net		(338,808	)		-84.7	%		(210,558	)		-43.6	%		(128,250	)		60.9	%
Change in fair value of derivative liability		(7,390	)		-1.8	%		4,293			0.9	%		(11,683	)		-272.1	%
Gain (loss) on extinguishment of debt		54,764			13.7	%		-			0.0	%		54,764			n/a
Total other income (expense)		(291,434	)		-72.9	%		(206,265	)		-42.7	%		(85,169	)		41.3	%
Loss before provision for income taxes		(406,250	)		-101.6	%		(823,749	)		-170.7	%		417,499			-50.7	%
Provision for income taxes		1,600			0.4	%		800			0.2	%		800			n/a
Net loss	$	(407,850	)		-102.0	%	$	(824,549	)		-170.9	%	$	416,699			-50.5	%

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Operating Loss; Net Loss

Our net loss decreased by $416,699, from ($824,549) for the six months ended June 30, 2018 to ($407,850) for the six months ended June 30, 2019. Our operating loss decreased by $502,668, from ($617,484) to ($114,816) for the same periods. The decrease in our net loss for the six months ended June 30, 2019, compared to the six months ended June 30, 2018, is primarily the result of lower cost of revenues, lower general and administrative expenses, lower payroll, partially offset by decreased revenues and increases professional fees and interest expense, net. These changes are detailed below.

Revenue

Monitoring Revenues. Monitoring revenues decreased by $79,988, or 18.0%, to $363,243 in the six months ended June 30, 2019 from $443,231 in the six months ended June 30, 2018. The decrease is due to decrease in number of monthly recurring payments we received from our customers that rent our BDI-747/1 breathalyzer device for the ongoing monitoring services related to the devices in the first six months of fiscal 2019 compared to first six months of last year. This decrease is primarily related to the fact our device is authorized in less states than it was during the same period in fiscal year 2018.

Distributorship Revenues. Distributorship revenues decreased by $2,584, or 6.6%, to $36,681 in the second quarter of fiscal 2019 from $39,265 in the second quarter last year. The decrease is due to a decrease in number of units with customers through distributors.

Cost of Revenue

Our cost of revenue for the six months ended June 30, 2019 was $25,233, compared to $76,681 for the six months ended June 30, 2018. Our cost of revenue for the six months ended June 30, 2019 and 2018 was completely related to our monthly monitoring services we provide to our customers. The decrease in our cost of revenue was due to the fact we ordered more parts and supplies from our supplier in the period in 2018 compared to the period in 2019.

Payroll

Payroll expense decreased by $255,431, or 54.8%, to $210,718 in the first six months of fiscal 2019 from $466,149 in the first six months of last year. The decrease in payroll is due to controlling overhead expenses and decreasing personnel due to the decrease in the number of units we have on the road.

Professional Fees

Professional fees increased by $59,242, or 67.3%, to $147,297 in the first six months of fiscal 2019 from $88,055 in the first six months of last year. These fees are largely related to fees paid for legal, accounting and audit services. We expect these fees to continue grow steadily if our business expands. In the event we undertake an unusual transaction, such as an acquisition, securities offering, or file a registration statement, we would expect these fees to substantially increase during that period.

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General and Administrative Expenses

General and administrative expenses decreased by $337,603, or 72.0%, to $131,492 in the first six months of fiscal 2019 from $469,095 in the first six months of last year. The decrease is due to the following:

● Decrease of approximately $60,000 in royalty expense in the first six months of fiscal 2019 compared to first six months last year.

● Decrease of approximately $132,000 in software expense as we did not have any software services in the first six months of fiscal 2019 compared to first six months of last year.

● Decrease of approximately $61,000 in marketing and advertising expenses due to reduction in working capital.

● Decrease of approximately $72,000 in investor relations expenses.

Interest Expense

Interest expense increased by $128,250, or 60.9%, to $338,808 in the first six months of fiscal 2019 from $210,558 in the first six months of last year. The increase is due to increase in loans from related parties.

Change in Fair Value of Derivative Liability

During the six months ended June 30, 2019, we had a change in fair value of derivative liability of ($7,390) compared to $4,293 for the six months ended June 30, 2018. The change in fair value of derivative liability in the six months ended June 30, 2019, relates to the conversion feature of a promissory note we had outstanding during this period. Change in fair value of derivative liability results from changes in valuation at end of the reporting period. Since the conversion price on the promissory note is calculated based on a discount to the closing price of our common stock, as our closing price fluctuates it changes the fair value of the derivative liability.

Gain on Extinguishment of Debt

Gain on extinguishment of debt of $54,764 resulted from forgiveness and settlement of debt in the first quarter of fiscal 2019.

31

Liquidity and Capital Resources for the Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018

Introduction

Our cash on hand as of June 30, 2019 was $12,426, compared to $775 at December 31, 2018. During the three months ended June 30, 2019 and 2018, because of our operating losses, we did not generate positive operating cash flows. As a result, we have short term cash needs. These needs are being satisfied through proceeds from the sales of our securities and loans from both related parties and third parties. We currently do not believe we will be able to satisfy our cash needs from our revenues for some time.

Our cash, current assets, total assets, current liabilities, and total liabilities as of June 30, 2019 and as of December 31, 2018, respectively, are as follows:

	June 30, 2019		December 31, 2018		Change
Cash	$	12,426	$	775	$	11,651
Total current assets	$	25,409	$	7,146	$	18,263
Total assets	$	31,890	$	13,627	$	18,263
Total current liabilities	$	755,397	$	564,477	$	190,920
Total liabilities	$	3,017,756	$	2,616,143	$	401,613

Our current assets increased as of June 30, 2019 as compared to December 31, 2018, primarily due to us having more cash on hand and accounts receivable at June 30, 2019. The increase in our total assets between the two periods was also primarily related to us having more cash on hand and accounts receivable at June 30, 2019.

Our current liabilities increased slightly as of June 30, 2019 as compared to December 31, 2018. This increase was primarily due to increases in our accrued royalty payable, accrued interest, accrued interest-related party, and derivative liability, offset by decreases in accrued expenses, deferred revenue, and accounts payable, net of debt discount.

In order to repay our obligations in full or in part when due, we will be required to raise significant capital from other sources. There is no assurance, however, that we will be successful in these efforts.

Sources and Uses of Cash

Our cash flows from operating, investing and financing activities are summarized as follows:

Operations

We had net cash used in operating activities of $182,960 for the six months ended June 30, 2019, as compared to $620,304 for the six months ended June 30, 2018. For the period in 2019, the net cash used in operating activities consisted primarily of our net income (loss) of ($407,850), adjusted primarily by a non-cash change in fair value of derivative liability of $7,390, shares issued for services of $24,500, gain on extinguishment of debt of ($54,764), and amortization of debt discount of $17,035, as well as changes in, accrued expenses of ($39,254), accounts receivable ($6,430), prepaid expenses of ($182), deferred revenue of ($74,980), accrued royalties payable of $29,750, accrued interest, related party of $151,500, and accrued interest of $170,325. For the period in 2018, the net cash used in operating activities consisted primarily of our net income (loss) of ($824,549), increase in derivative liabilities of ($15,370), an allowance for doubtful accounts of ($26,541), adjusted primarily by a non-cash change in fair value of derivative liability of $11,078, shares issued for services of $110,200, and amortization of debt discount of $24,536, as well as changes in, accrued expenses of $8,795, accounts receivable of $55,457, prepaid expenses of $1,506, accounts payable of ($29,250), deferred revenue of ($56,676), accrued royalties payable of $60,866, and accrued interest of $54,561.

32

Investments

We did not have any cash provided by/used in investing activities in the six months ended June 30, 2019 or June 30, 2018.

Financing

We had net cash provided by financing activities for the six months ended June 30, 2019 of $194,611, compared to $869,794 for the six months ended June 30, 2018. For the six months ended June 30, 2019, our net cash from financing activities consisted of proceeds from related party notes payable of $226,200, partially offset by repayments of notes payable of $31,589. For the six months ended June 30, 2018, our net cash from financing activities consisted of proceeds from convertible notes payable of $20,000, proceeds from related party notes payable of $600,127, proceeds of notes payable of $21,600, and proceeds from issuance of common stock of $360,705, partially offset by repayments of notes payable of $31,588, repayments of convertible notes payable of $5,000, and repayments of related party notes payable of $96,050.

Critical Accounting Estimates

As discussed in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended December 30, 2018, we consider our estimates on inventory valuation, long-lived assets and self-insurance liabilities to be the most critical in understanding the judgments that are involved in preparing our consolidated financial statements. There have been no significant changes to these estimates in the six months ended June 30, 2019.

Our adoption of ASC 606, Revenue Recognition, did not change the way the Company recognized revenue for the first six months of fiscal year 2019 compared to same period last year.

Recently Issued Accounting Updates

See Note 2 to the Interim Financial Statements included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

Off Balance Sheet Arrangements

We have no off balance sheet arrangements.

Commitments and Contingent Liabilities

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. As of June 30, 2019, we have no contingent liability that is required to be recorded nor disclosed.

33

ITEM 3 Quantitative and Qualitative Disclosures About Market Risk

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

ITEM 4 Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Pursuant to rules adopted by the Securities and Exchange Commission we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to rules promulgated under the Securities Exchange Act of 1934. This evaluation was done as of the end of June 30, 2019 under the supervision and with the participation of our principal executive officer and our principal financial officer.

Based upon our evaluation, our principal executive and financial officer concluded that, as of June 30, 2019, our existing disclosure controls and procedures were not effective. Disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to management, including the principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. With only two officers in charge of such reporting controls, there is no backup to the oversight of such individual and thus such disclosure controls and procedures may not be considered effective.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our first quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Internal Control over Financial Reporting

We are responsible for establishing and maintaining adequate internal control over financial reporting in accordance with Rule 13a-15 of the Securities Exchange Act of 1934. Our president conducted an evaluation of the effectiveness of our internal control over financial reporting as of June 30, 2019, based on the criteria establish in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was ineffective as of June 30, 2019, based on those criteria. A control system can provide only reasonably, not absolute, assurance that the objectives of the control system are met and no evaluation of controls can provide absolute assurance that all control issues have been detected.

34

Management assessed the effectiveness of our internal control over financial reporting as of June 30, 2019 and identified the following material weaknesses, which are outlined further in our Annual Report on Form 10-K for the year ended December 31, 2018:

Inadequate segregation of duties: We have an inadequate number of personnel to properly implement control procedures.

We have not documented our internal controls: We have limited policies and procedures that cover the recording and reporting of financial transactions and accounting provisions. As a result we may be delayed in our ability to calculate certain accounting provisions.

We do not have effective controls over the control environment. A formally adopted written code of business conduct and ethics that governs our employees, officers, and directors was not in place. Additionally, management has not developed and effectively communicated to our employees its accounting policies and procedures. This has resulted in inconsistent practices. We also do not have independent members on our Board of Directors.

We have not been able to timely and accurately record convertible debt transactions, deferred revenue, and derivative liabilities in the financial statements. As a result, we have needed additional time, beyond the filing deadlines, to file our periodic reports.

PART II – OTHER INFORMATION

ITEM 1 Legal Proceedings

On February 21, 2018, we filed a Complaint in the Superior Court of the State of Arizona, County of Maricopa against EZ Interlock, LLC (Blow & Drive Interlock Corp. v. EZ Interlock, LLC (Case No. CV2018-051689, Superior Court of the State of Arizona, Maricopa County) for Conversion, Implied/Quasi Contract and Quantum Meruit, Unjust Enrichment, Tortious Interference with Business Expectancy/Prospective Business Relations, and Lost Profits. The basis for our lawsuit was that EZ Interlock an authorized installer of ours in the State of Arizona, was a customer of BDI Interlock, LLC, one of our distributors, and EZ Interlock was installing our BDI-747/1 devices for customers in Arizona and collecting fees from such customers, but stopped remitting payment to BDI Interlock, LLC, which, in turn, was unable to remit funds to us. We filed the lawsuit to have EZ Interlock stop installing our devices, return our devices in its possession, and pay the amounts owed to BDI Interlock and us for the customers paying EZ Interlock for our devices. EZ Interlock filed an Answer and Counterclaim on July 23, 2018. Shortly after filing our Complaint, the Court granted our request for a Temporary Restraining Order and Preliminary Injunction from continuing to install devices and return the devices in its possession. On February 7, 2019, our new management elected to dismiss the lawsuit, without prejudice, based on their opinion that our chances of recovering money from EZ Interlock was slim compared to amount that would be necessary to fund the litigation. We received most of our devices back from EZ Interlock. No discovery was conducted during the litigation.

In the ordinary course of business, we are from time to time involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. However, in the opinion of our management, other than as set forth herein, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.

35

ITEM 1A Risk Factors

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

ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended June 30, 2019, we did not issue any unregistered securities.

ITEM 3 Defaults Upon Senior Securities

There have been no events which are required to be reported under this Item.

ITEM 4 Mine Safety Disclosures

There have been no events which are required to be reported under this Item.

ITEM 5 Other Information

There have been no events which are required to be reported under this Item.

36

ITEM 6 Exhibits

Item No.	Description
3.1 (1)	Certificate of Incorporation of Jam Run Acquisition Corporation dated June 28, 2013
3.2 (17)	Articles of Amendment to Articles of Incorporation to Jam Run Acquisition Corporation dated February 6, 2014 (changing corporate name to Blow & Drive Interlock Corporation)
3.3 (1)	Bylaws of Jam Run Acquisition Corporation (now Blow & Drive Interlock Corporation) dated June 2013
10.1 (2)	Agreement between Tiber Creek Corporation and Laurence Wainer dated January 25, 2014
10.2 (2)	Promissory Note between the Company and Laurence Wainer dated February 16, 2014
10.3 (3)	Lease Agreement by and between Marsel Plaza LLC and Laurence Wainer and Blow and Drive Interlock Corporation dated January 21, 2015
10.4 (4)	Exclusive Distributorship Agreement with Theenk Inc. dated August 21, 2015
10.5 (4)	Exclusive Distributorship Agreement with Jay Lopez dated July 24, 2015
10.6 (4)	Independent Contractor Agreement with Laurence Wainer dated September 11, 2015
10.7 (5)	Exclusive Distributorship Agreement with Stephen Ferraro dated November 9, 2015
10.4 (6)	Supply Agreement by and between BDI Manufacturing, Inc., an Arizona corporation, and C4 Development Ltd. dated June 29, 2015
10.5 (7)	Securities Purchase Agreement with David Stuart Petlak entered into on November 19, 2015
10.6 (7)	Convertible Promissory Note issued to David Stuart Petlak dated November 19, 2015
10.7 (7)	Common Stock Warrant issued to David Stuart Petlak dated November 19, 2015
10.8 (8)	Exclusive Distributorship Agreement with dba Blow & Drive Houston dated January 11, 2016
10.9 (9)	Secured Promissory Note and Agreement with Ira Silver dated January 20, 2016
10.10 (9)	Secured Promissory Note and Agreement with Chaim K. Wainer dated October 29, 2015
10.11 (10)	Securities Purchase Agreement with Dr. Oren Azulay dated March 30, 2016
10.12 (10)	Common Stock Purchase Agreement with Gustavo Arceo dated April 2016
10.13 (10)	Common Stock Purchase Agreement with LGL LLC dated May 6, 2016
10.14 (11)	Loan and Security Agreement with Doheny Group, LLC dated June 30, 2019 September 30, 2016
10.15 (11)	Phase 1 Loan Agreement with Doheny Group, LLC dated September 30, 2016 June 30, 2019
10.16 (11)	Royalty Agreement with Doheny Group, LLC dated September 30, 2016 June 30, 2019
10.17 (11)	Common Stock Purchase Agreement with Doheny Group, LLC dated September 30, 2016 June 30, 2019

37

10.18 (11)	Agreement with Abraham Summers and Gnossis International, LLC
10.19 (12)	Termination of Services Agreement by and between Blow & Drive Interlock Corporation, Abraham Summers and Gnosiis International, LLC dated June 19, 2017
10.20 (13)	Amendment No. 1 to Debt Conversion and Series A Preferred Stock Purchase Agreement dated May 17, 2017
10.21 (13)	Amendment No. 1 to Loan and Security Agreement with Doheny Group, LLC dated June 3, 2017
10.22 (13)	Amendment No. 1 to Royalty Agreement with Doheny Group, LLC dated June 3, 2017
10.23 (14)	Form of Securities Purchase Agreement
10.24 (14)	Settlement Agreement by and between Blow & Drive Interlock Corporation and J C Lopez/BDI Interlock, LLC dated January 21, 2018 (memorializing oral agreement between the parties dated June 30, 2019)
10.25 (15)	Agreement to Purchase Common Stock and Preferred Stock dated December 31, 2018
10.26 (16)	Debt Conversion and Series A Preferred Stock Purchase Agreement by and between Blow & Drive Interlock Corporation and Laurence Wainer dated March 7, 2017
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith).
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Accounting Officer (filed herewith).
32.1	Section 1350 Certification of Chief Executive Officer (filed herewith).
32.2	Section 1350 Certification of Chief Accounting Officer (filed herewith).
101.INS **	XBRL Instance Document
101.SCH **	XBRL Taxonomy Extension Schema Document
101.CAL **	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF **	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB **	XBRL Taxonomy Extension Label Linkbase Document
101.PRE **	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

(1)	Incorporated by reference from our Registration Statement on Form 10, filed with the Commission on September 30, 2013.
(2)	Incorporated by reference from our Registration Statement on Form S-1, filed with the Commission on July 24, 2014.

38

(3)	Incorporated by reference from our Annual Report on Form 10-K, filed with the Commission on March 30, 2015.
(4)	Incorporated by reference from our Current Report on Form 8-K filed with the Commission on September 11, 2015.
(5)	Incorporated by reference from our Current Report on Form 8-K filed with the Commission on November 12, 2015.
(6)	Incorporated by reference from our Quarterly Report on Form 10-Q, filed with the Commission on August 13, 2015.
(7)	Incorporated by reference from our Current Report on Form 8-K filed with the Commission on September 11, 2015.
(8)	Incorporated by reference from our Current Report on Form 8-K filed with the Commission on February 22, 2016.
(9)	Incorporated by reference from our Current Report on Form 8-K filed with the Commission on March 17, 2016.
(10)	Incorporated by reference from our Quarterly Report on Form 10-Q filed with the Commission on August 22, 2016.
(11)	Incorporated by reference from our Quarterly Report on Form 10-Q filed with the Commission on November 21, 2016.
(12)	Incorporated by reference from our Current Report on Form 10-Q filed with the Commission on July 3, 2017.
(13)	Incorporated by reference from our Quarterly Report on Form 10-Q filed with the Commission on August 21, 2017.
(14)	Incorporated by reference from our Quarterly Report on Form 10-Q filed with the Commission on February 9, 2018.
(15)	Incorporated by reference from our Current Report on Form 8-K filed with the Commission on January 11, 2019.
(16)	Incorporated by reference from our Current Report on Form 8-K filed with the Commission on March 15, 2017.
(17)	Incorporated by reference from our Quarterly Report on Form 10-Q filed with the Commission on June 27, 2019.

39

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Blow & Drive Interlock Corporation
Dated: August 14, 2019		/s/ David Haridim
	By:	David Haridim
		President (Principal Executive Officer)

40

EX-31.1

EXHIBIT 31.1

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

I, David Haridim, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Blow & Drive Interlock Corporation;
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 Exhibit Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 14, 2019
		/s/ David Haridim
	By:	David Haridim
		President

EX-31.2

EXHIBIT 31.2

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

I, David Haridim, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Blow & Drive Interlock Corporation;
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 Exhibit Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 14, 2019
		/s/ David Haridim
	By:	David Haridim
		Chief Financial Officer and Chief Accounting Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 USC, SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Blow & Drive Interlock Corporation (the “Company”) on Form 10-Q for the quarter ended June 30, 2019, as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, David Haridim, President of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

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

(2) Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 14, 2019
		/s/ David Haridim
	By:	David Haridim
		President

A signed original of this written statement required by Section 906 has been provided to Blow & Drive Interlock Corporation and will be retained by Blow & Drive Interlock Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 USC, SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Blow & Drive Interlock Corporation (the “Company”) on Form 10-Q for the quarter ended June 30, 2019, as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, David Haridim, Interim Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

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

(2) Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 14, 2019
		/s/ David Haridim
	By:	David Haridim
		Chief Financial Officer and Chief Accounting Officer

A signed original of this written statement required by Section 906 has been provided to Blow & Drive Interlock Corporation and will be retained by Blow & Drive Interlock Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 09, 2019
Document And Entity Information
Entity Registrant Name	Blow & Drive Interlock Corp
Entity Central Index Key	0001586495
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business Flag	true
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		31,350,683
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2019

XML

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Current Assets:
Cash	$ 12,426	$ 775
Accounts receivable	11,785	5,355
Prepaid expenses	1,198	1,016
Total current assets	25,409	7,146
Deposits	6,481	6,481
Total assets	31,890	13,627
Current Liabilities:
Accrued expenses	26,734	65,988
Accrued royalty payable	56,635	26,885
Accrued interest	184,286	17,155
Accrued interest - related parties	342,118	190,618
Deferred revenue	17,182	92,162
Derivative liability	29,907	22,517
Notes payable, net of debt discount of $0 and $7,549 at June 30, 2019 and December 31, 2018, respectively	67,159	117,776
Notes payable to related parties	29,000	29,000
Convertible notes payable, net of $5,124 and $5,124 at June 30, 2019 and December 31, 2018, respectively	2,376	2,376
Total current liabilities	755,397	564,477
Non-current Liabilities:
Notes payable, less current portion and net of debt discount of $0 and $6,925 at June 30, 2019 and December 31, 2018, respectively		18,069
Notes payable to related parties, less current portion	2,246,200	2,020,000
Convertible notes, less current portion and net of $3,841 and $5,122 at June 30, 2019 and December 31, 2018, respectively	16,159	13,597
Total non-current liabilities	2,262,359	2,051,666
Total Liabilities	3,017,756	2,616,143
Commitments and Contingencies
Stockholders' Deficit
Preferred stock, par value $0.001, 20,000,000 shares authorized, 1,000,000 and 1,000,000 shares issued or issuable and outstanding as of June 30, 2019 and December 31, 2018, respectively	1,000	1,000
Common stock, par value $0.0001, 100,000,000 shares authorized, 30,566,920 and 31,073,529 shares issued or issuable and outstanding as of June 30, 2019 and December 31, 2018, respectively	3,057	3,107
Additional paid-in capital	3,514,249	3,489,699
Accumulated deficit	(6,504,172)	(6,096,322)
Total stockholders' deficit	(2,985,866)	(2,602,516)
Total liabilities and stockholders' deficit	$ 31,890	$ 13,627

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Notes payable, debt discount current	$ 0	$ 7,549
Convertible notes payable, current	5,124	5,124
Notes payable, debt discount noncurrent	0	6,925
Convertible notes payable, noncurrent	$ 3,841	$ 5,122
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	1,000,000	1,000,000
Preferred stock, shares outstanding	1,000,000	1,000,000
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	30,566,920	31,073,529
Common stock, shares outstanding	30,566,920	31,073,529

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenues:
Total revenues	$ 168,546	$ 280,839	$ 399,924	$ 482,496
Cost of revenues:
Total cost of revenues	3,598	29,068	25,233	76,681
Gross profit	164,948	251,771	374,691	405,815
Operating expenses:
Payroll	112,678	229,737	210,718	466,149
Professional fees	105,751	50,963	147,297	88,055
General and administrative	71,418	219,539	131,492	469,095
Total operating expenses	289,847	500,239	489,507	1,023,299
Loss from operations	(124,899)	(248,468)	(114,816)	(617,484)
Other Income (Expense):
Interest expense, net	(161,984)	(108,237)	(338,808)	(210,558)
Change in fair value of derivative liability	(5,558)	11,579	(7,390)	4,293
Gain (loss) on extinguishment of debt			54,764
Total other income (expense)	(167,542)	(96,658)	(291,434)	(206,265)
Loss before provision for income taxes	(292,441)	(345,126)	(406,250)	(823,749)
Provision for income taxes		800	1,600	800
Net loss	$ (292,441)	$ (345,926)	$ (407,850)	$ (824,549)
Earnings (loss) per share: Basic and diluted	$ (0.01)	$ (0.01)	$ (0.01)	$ (0.03)
Weighted-average shares of common stock outstanding: Basic and diluted	30,447,549	29,388,261	30,447,549	28,108,346
Monitoring Revenues [Member]
Revenues:
Total revenues	$ 149,556	$ 264,744	$ 363,243	$ 443,231
Distributorship Revenues [Member]
Revenues:
Total revenues	18,990	16,095	36,681	39,265
Monitoring Cost of Revenue [Member]
Cost of revenues:
Total cost of revenues	3,598	29,068	25,233	76,681
Distributoship Cost of Revenue [Member]
Cost of revenues:
Total cost of revenues

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Condensed Consolidated Statements of Stockholders' Deficit (Unaudited) - USD ($)	Series A Preferred Stock [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Total
Beginning Balance at Dec. 31, 2017	$ 1,000	$ 2,622	$ 2,911,753	$ (4,296,645)	$ (1,381,270)
Beginning Balance, shares at Dec. 31, 2017	1,000,000	26,223,834
Shares issued for services		$ 45	104,955		105,000
Shares issued for services, shares		450,000
Shares issued for cash		$ 145	156,355		156,500
Shares issued for cash, shares		1,450,000
Shares returned related to anti-dilution		$ 21	(21)
Shares returned related to anti-dilution, shares		210,876
Conversion of debt to common stock
Net loss				(478,623)	(478,623)
Ending Balance at Mar. 31, 2018	$ 1,000	$ 2,833	3,173,042	(4,775,268)	(1,598,393)
Ending Balance, shares at Mar. 31, 2018	1,000,000	28,334,710
Beginning Balance at Dec. 31, 2017	$ 1,000	$ 2,622	2,911,753	(4,296,645)	(1,381,270)
Beginning Balance, shares at Dec. 31, 2017	1,000,000	26,223,834
Net loss					(824,549)
Ending Balance at Jun. 30, 2018	$ 1,000	$ 3,023	3,387,340	(5,121,194)	(1,729,831)
Ending Balance, shares at Jun. 30, 2018	1,000,000	30,236,938
Beginning Balance at Mar. 31, 2018	$ 1,000	$ 2,833	3,173,042	(4,775,268)	(1,598,393)
Beginning Balance, shares at Mar. 31, 2018	1,000,000	28,334,710
Shares issued for services		$ 3	5,197		5,200
Shares issued for services, shares		26,000
Shares issued for cash		$ 165	204,040		204,205
Shares issued for cash, shares		1,653,383
Shares returned related to anti-dilution		$ 19	(19)
Shares returned related to anti-dilution, shares		190,033
Conversion of debt to common stock		$ 3	5,080		5,083
Conversion of debt to common stock, shares		32,812
Net loss				(345,926)	(345,926)
Ending Balance at Jun. 30, 2018	$ 1,000	$ 3,023	3,387,340	(5,121,194)	(1,729,831)
Ending Balance, shares at Jun. 30, 2018	1,000,000	30,236,938
Beginning Balance at Dec. 31, 2018	$ 1,000	$ 3,107	3,489,699	(6,096,322)	(2,602,516)
Beginning Balance, shares at Dec. 31, 2018	1,000,000	31,073,529
Shares issued for services		$ 25	24,475		24,500
Shares issued for services, shares		250,000
Shares returned related to anti-dilution		$ (75)	75
Shares returned related to anti-dilution, shares		(756,609)
Net loss				(115,409)	(115,409)
Ending Balance at Mar. 31, 2019	$ 1,000	$ 3,057	3,514,249	(6,211,731)	(2,693,425)
Ending Balance, shares at Mar. 31, 2019	1,000,000	30,566,920
Beginning Balance at Dec. 31, 2018	$ 1,000	$ 3,107	3,489,699	(6,096,322)	(2,602,516)
Beginning Balance, shares at Dec. 31, 2018	1,000,000	31,073,529
Net loss					(407,850)
Ending Balance at Jun. 30, 2019	$ 1,000	$ 3,057	3,514,249	(6,504,172)	(2,985,866)
Ending Balance, shares at Jun. 30, 2019	1,000,000	30,566,920
Beginning Balance at Mar. 31, 2019	$ 1,000	$ 3,057	3,514,249	(6,211,731)	(2,693,425)
Beginning Balance, shares at Mar. 31, 2019	1,000,000	30,566,920
Shares issued for services
Shares issued for cash
Shares returned related to anti-dilution
Conversion of debt to common stock
Net loss				(292,441)	(292,441)
Ending Balance at Jun. 30, 2019	$ 1,000	$ 3,057	$ 3,514,249	$ (6,504,172)	$ (2,985,866)
Ending Balance, shares at Jun. 30, 2019	1,000,000	30,566,920

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Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Cash flows from operating activities:
Net loss	$ (292,441)	$ (115,409)	$ (345,926)	$ (478,623)	$ (407,850)	$ (824,549)
Adjustments to reconcile net loss to net cash used in operating activities
Stock or warrants issued for services					24,500	110,200
Allowance for doubtful accounts						(26,541)
Amortization of debt discount					17,035	24,536
Increase in derivative liabilities						(15,370)
Change in fair value of derivative liability					7,390	11,078	$ (7,390)
Debt converted to common shares						5,083
(Gain)/loss on extinguishment of debt					(54,764)
Changes in operating assets and liabilities
Accounts receivable					(6,430)	55,457
Prepaid expenses					(182)	1,506
Accounts payable						(29,250)
Accrued expenses					(39,254)	8,795
Accrued royalties payable					29,750	60,866
Accrued interest					170,325	54,561
Accrued interest related party					151,500
Deferred revenue					(74,980)	(56,676)
Net cash used in operating activities					(182,960)	(620,304)
Cash flows from financing activities:
Proceeds from issuance of common stock						360,705
Proceeds from issuance of notes payable						21,600
Principal payments on notes payable					(31,589)	(31,588)
Proceeds from issuance of convertible notes payable						20,000
Principal payments on convertible notes payable						(5,000)
Proceeds from issuance of notes payable related party					226,200	600,127
Payments on note payable related party						(96,050)
Net cash provided by financing activities					194,611	869,794
Net increase in cash					11,651	249,490
Cash at beginning of period		$ 775		$ 31,874	775	31,874	31,874
Cash at end of period	$ 12,426		$ 281,364		12,426	281,364	$ 775
Supplemental discolsures of cash flow information
Cash paid during the period for: Interest paid						91,634
Cash paid during the period for: Income taxes paid					800
Supplemental disclosure of non-cash investing and financing activities
Common stock and warrants issued for services					$ 24,500	$ 110,200

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Organization and Nature of Business

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Nature of Business

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

Blow & Drive Interlock (“the Company”) was incorporated on July 2, 2013 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. The Company markets and rents alcohol ignition interlock devices to DUI/DWI offenders as part of their mandatory court or motor vehicle department programs. As of June 30, 2019, the BDI-747/1 device was only approved in Arizona and Texas. The number of states where our BDI-747/1 device is approved has decreased primarily as a result of new state certification rules that require increased capital investment that we are not able to afford.

In 2015, the Company formed BDI Manufacturing, Inc., an Arizona corporation which is a 100% wholly owned subsidiary of Blow & Drive Interlock Corporation. The Company markets, installs and monitors a breath alcohol ignition interlock device (BAIID) called the BDI-747/1, which is a mechanism that is installed on the steering column of an automobile and into which a driver exhales. The device in turn provides a blood-alcohol concentration analysis. If the driver’s blood-alcohol content is higher than a certain pre-programmed limit, the device prevents the ignition from engaging and the automobile from starting. These devices are often required for use by DUI or DWI (“driving under the influence” or “driving while intoxicated”) offenders as part of a mandatory court or motor vehicle department program.

The Company licenses the rights to third party distributors to promote the BDI-747/1 and provide services related to the device. The distributorships are for specific geographical areas (either entire states or certain counties within states). The Company currently has entered into two distributorship agreements. Under the distribution agreements the Company typically receives a onetime fee, and then is entitled to receive a per unit registration fee and a per unit monthly fee for each BDI-747/1 unit the distributor has in inventory or on the road beginning thirty (30) days after the distributor receives the unit.

On December 31, 2018, Laurence Wainer, CEO of the Company, and The Doheny Group, a major note holder of the Company, reached an agreement in which Laurence Wainer sold 8,924,000 shares of common stock and 1,000,000 shares of preferred stock for a total of $30,000. Upon completion of the sale, David Haridim, managing member of The Doheny Group, assumed the position of CEO of Blow and Drive.

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Basis of Presentation and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Basis of Presentation and Summary of Significant Accounting Policies

NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the results of operations of BDI Manufacturing (the Subsidiary). All material intercompany accounts and transactions between the Company and the Subsidiary have been eliminated in consolidation.

The consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted pursuant to such rules and regulations. These consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The unaudited information contained herein has been prepared on the same basis as the Company’s audited consolidated financial statements, and, in the opinion of the Company’s management, includes all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of the information for the periods presented. The interim results presented herein are not necessarily indicative of the results of operations that may be expected for the full fiscal year ending December 31, 2019 or any future period.

Use of Estimates in the Preparation of Financial Statements

The preparation of the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. These estimates and assumptions may affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. As a result, actual results could differ from these estimates.

Going Concern

The Company’s unaudited condensed consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. As of June 30 2019, the Company had an accumulated deficit of $6,504,172 and net loss of $407,850 for the six months ended June 30, 2019. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease or reduce its operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. The Company will continue to raise funds through the sale of its equity securities or issuance of notes payable to obtain additional operating capital. The Company is dependent upon its ability to, and will continue to attempt to, secure additional equity and/or debt financing until the Company can earn revenue and realize positive cash flow from its operations. There are no assurances that the Company will be successful in earning revenue and realizing positive cash flow from its operations. Without sufficient financing it would be unlikely that the Company will continue as a going concern.

Based on the Company’s current rate of cash outflows, cash on hand and proceeds from the prior sale of equity securities and issuance of notes payable, management believes that its current cash will not be sufficient to meet the anticipated cash needs for working capital for the next 12 months. The Company’s plans with respect to its liquidity issues include, but are not limited to, the following:

1)	Continue to issue restricted stock for compensation due to consultants and for its legacy accounts payable in lieu of cash payments; and
2)	Seek additional capital to continue its operations as it rolls out its current products. The Company is currently evaluating additional debt or equity financing opportunities and may execute them when appropriate. However, there can be no assurances that the Company can consummate such a transaction or consummate a transaction at favorable pricing.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and achieve profitable operations. These condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.

Reclassifications

Certain reclassifications have been made to amounts in prior periods to conform to the current period presentation. All reclassifications have been applied consistently to the periods presented.

Revenue Recognition

On January 1, 2019, the Company adopted FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance.

The Company’s principal activity from which it generates revenue is a service which is the use of its interlock units. Revenue is measured based on considerations specified in a contract with a customer. A contract exists when it becomes a legally enforceable agreement with a customer. These contracts define each party’s rights, payment terms and other contractual terms and conditions of the sale. Consideration is typically paid at time of sale via credit card, check, or cash when the interlock units are installed on customers’ vehicles

A performance obligation is a promise in a contract to provide a distinct service to the customer, which for the Company is transfer of a service to customers. Performance obligations promised in a contract are identified based on the services that will be provided to the customer that are both capable of being distinct and are distinct in the context of the contract, whereby the service is separately identifiable from other promises in the contract. The Company has concluded the services accounted for as the single performance obligation.

The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. The transaction price is determined based on the consideration to which the Company will be entitled to receive in exchange for transferring goods to the customer. The Company does not issue refunds.

The Company recognizes revenue when it satisfies a performance obligation in a contract by providing a service to a customer when the Company installs the interlock units on the customers’ vehicles. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

Deferred revenue

Deferred revenue consists of customer orders paid in advance of the delivery of the order. Deferred revenue is classified as short-term as the typical order ships within approximately three weeks of placing the order. Deferred revenue is recognized as revenue when the product is shipped to the customer and all other revenue recognition criteria have been met.

Advertising and Marketing Costs

Advertising and marketing costs are recorded as general and administrative expenses when they are incurred. Advertising and marketing expenses were $267 and $61,915 for the six months ended June 30, 2019 and 2018, respectively. Advertising and marketing expenses were $267 and $45,054 for the three months ended June 30, 2019 and 2018, respectively.

Accounts Receivable and Allowance for Doubtful Accounts

The Company’s accounts receivable primarily consist of trade receivables. The Company records an allowance for doubtful accounts that is based on historical trends, customer knowledge, any known disputes, and the aging of the accounts receivable balances combined with management’s estimate of future potential recoverability. Receivables are written off against the allowance after all attempts to collect a receivable have failed. The Company believes its allowance for doubtful accounts as of June 30, 2019 and December 31, 2018 is adequate, but actual write-offs could exceed the recorded allowance.

Royalty Accrual

The Company entered into royalty agreement to be paid out in perpetuity based on number of units sold for specified product model in years 2018, 2017 and 2016 in connection with notes payable as discussed in Note 11. These estimates were performed at the inception for the notes to reflect the associated debt discount. The Company accruals royalties and is reduced by payments. The Company wrote off $255,030 in accrued royalties to gain on extinguishment of debt in December 2018 due to the December 31, 2018 settlement with two royalty noteholders in which they relinquished all claims to accrued royalties.

Derivative Liability

The Company applies the provisions of ASC Topic 815-40, Contracts in Entity’s Own Equity (“ASC Topic 815-40”), under which convertible instruments, which contain terms that protect holders from declines in the stock price, may not be exempt from derivative accounting treatment. As a result, embedded conversion options (whose exercise price is not fixed and determinable) in convertible debt (which is not conventionally convertible due to the exercise price not being fixed and determinable) are initially recorded as a liability and are revalued at fair value at each reporting date using the Black Sholes Model. The Company revalues these derivatives each quarter using the Black Sholes Model. The change in valuation is accounted for as a gain or loss in derivative liability.

Convertible Debt and Warrants Issued with Convertible Debt

Convertible debt is accounted for under the guidelines established by ASC 470, Debt with Conversion and Other Options and ASC 740, Beneficial Conversion Features. The Company records a beneficial conversion feature (“BCF”) when convertible debt is issued with conversion features at fixed or adjustable rates that are below market value when issued. If, however, the conversion feature is dependent upon a condition being met or the occurrence of a specific event, the BCF will be recorded when the related contingency is met or occurs. The BCF for the convertible instrument is recorded as a reduction, or discount, to the carrying amount of the convertible instrument equal to the fair value of the conversion feature. The discount is then amortized to interest over the life of the underlying debt using the effective interest method.

The Company calculates the fair value of warrants issued with the convertible instruments using the Black-Scholes valuation method, using the same assumptions used for valuing employee options for purposes of ASC 718, Compensation – Stock Compensation, except that the contractual life of the warrant is used. Under these guidelines, the Company allocates the value of the proceeds received from a convertible debt transaction between the conversion feature and any other detachable instruments (such as warrants) on a relative fair value basis. The allocated fair value is recorded as a debt discount or premium and is amortized over the expected term of the convertible debt to interest expense.

For modifications of convertible debt, the Company records a modification that changes the fair value of an embedded conversion feature, including a BCF, as a debt discount which is then amortized to interest expense over the remaining life of the debt. If modification is considered substantial (i.e. greater than 10% of the carrying value of the debt), an extinguishment of debt is deemed to have occurred, resulting in the recognition of an extinguishment gain or loss.

Fair Value of Financial Instruments

The Company utilizes ASC 820-10, Fair Value Measurement and Disclosure, for valuing financial assets and liabilities measured on a recurring basis. Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value:

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 table below describes the Company’s valuation of financial instruments using guidance from ASC 820-10:

Description	Level 1		Level 2		Level 3
Balance December 31, 2018	$	-	$	22,517	$	-
Change in fair value of derivative liability		-		7,390		-
Balance June 30, 2019	$	-	$	29,907	$	-

Net Income (Loss) Per Share

Basic earnings per share is calculated by dividing income available to common stockholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share is computed using the weighted average number of common and dilutive common share equivalents outstanding during the period.

Related Parties

Related parties are any entities or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management and policies of the Company.

Concentrations

All of the Company’s ignition interlock devices are purchased from one supplier in China. The loss of this supplier could have a material impact on the Company’s ability to timely obtain additional units.

Income Taxes

The Company accounts for its income taxes in accordance with Income Taxes Topic of the FASB ASC 740, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

The Company also follows ASC 740-10-25, which provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprise’s financial statements in accordance with ASC Topic 740, “Accounting for Income Taxes”. ASC 740-10-25 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Derivative Liabilities

The Company assessed the classification of its derivative financial instruments as of June 30, 2019, which consist of convertible instruments and rights to shares of the Company’s common stock and determined that such derivatives meet the criteria for liability classification under ASC 815. ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional, as defined.

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional standards for “Accounting for Derivative Instruments and Hedging Activities”.

ASC 815-40 provides that, among other things, generally, if an event is not within the entity’s control or could require net cash settlement, then the contract shall be classified as an asset or a liability.

Recently Issued Accounting Pronouncements

Pronouncements Not Yet Effective

● Fair Value Measurements

In August 2018, the FASB amended “Fair Value Measurements” to modify the disclosure requirements related to fair value. The amendment removes requirements to disclose (1) the amount of and reasons for transfers between levels 1 and 2 of the fair value hierarchy, (2) our policy related to the timing of transfers between levels, and (3) the valuation processes used in level 3 measurements. It clarifies that, for investments measured at net asset value, disclosure of liquidation timing is only required if the investee has communicated the timing either to us or publicly. It also clarifies that the narrative disclosure of the effect of changes in level 3 inputs should be based on changes that could occur at the reporting date. The amendment adds a requirement to disclose the range and weighted average of significant unobservable inputs used in level 3 measurements. The guidance is effective for the Company with the Company’s quarterly filing for the period ended March 31, 2020 and the Company will make the required disclosure changes in that filing. Adoption will not have an impact on the Company’s consolidated results of operations, consolidated financial position, and cash flows.

● Retirement Plans

In August 2018, the FASB amended “Retirement Plans” to modify the disclosure requirements for defined benefit plans. For the Company, the amendment requires the disclosure of the weighted average interest crediting rate used for cash balance plans and an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. It removes the requirement to disclose the approximate amount of future benefits covered by insurance contracts. The guidance is effective for the Company with the Company’s annual filing for the year ended December 31, 2020 and the Company will make the required disclosure changes in that filing. Adoption will not have an impact on the Company’s consolidated results of operations, consolidated financial position, and cash flows.

● Intangibles – Goodwill and other – Internal-Use Software

In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company’s accounting for the service element of a hosting arrangement that is a service contract is not affected by the proposed amendments and will continue to be expensed as incurred in accordance with existing guidance. This standard does not expand on existing disclosure requirements except to require a description of the nature of hosting arrangements that are service contracts. This standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted, including adoption in any interim period for which financial statements have not been issued. Entities can choose to adopt the new guidance prospectively or retrospectively. The Company plans to adopt the updated disclosure requirements of ASU No. 2018-15 prospectively in the first quarter of fiscal 2020, coinciding with the standard’s effective date, and expects the impact from this standard to be immaterial.

● Improvements to Nonemployee Share-based Payment Accounting

In June 2018, the FASB issued ASU No. 2018-07 “Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”). ASU 2018-07 aligns the accounting for share-based payment awards to employees and non-employees. Under ASU 2018-07 the existing employee guidance will apply to nonemployee share-based transactions, except for specific guidance related to the attribution of compensation cost. ASU 2018-07 should be applied to all new awards granted after the date of adoption. ASU 2018-07 is effective for annual and interim periods beginning after December 15, 2018, and early adoption is permitted. The Company adopted ASU 2018-07 effective January 1, 2019; such adoption had no material impact on the Company’s consolidated financial statements.

● Income Statement – Reporting Comprehensive Income

In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220) (ASU 2018-02), which amends existing standards for income statement-reporting comprehensive income to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Tax Cuts and Jobs Act and improve the usefulness of information reported to financial statements users. ASU 2018-02 will be effective for beginning after December 15, 2018, and early adoption is permitted. The Company adopted ASU 2018-02 effective January 1, 2019; such adoption had no material impact on the Company’s consolidated financial statements.

● Goodwill

In January 2017, the FASB amended “Goodwill” to simplify the subsequent measurement of goodwill. The amended guidance eliminates Step 2 from the goodwill impairment test. Instead, impairment is defined as the amount by which the carrying value of the reporting unit exceeds its fair value, up to the total amount of goodwill of the reporting unit. The new guidance is effective for the Company on January 1, 2020 and is not expected to have an impact on our consolidated results of operations, consolidated financial position, and cash flows.

● Financial Instruments

In June 2016, the FASB amended “Financial Instruments” to provide financial statement users with more decision-useful information about the expected credit losses on debt instruments and other commitments to extend credit held by a reporting entity at each reporting date. During November 2018 and April 2019, the FASB made amendments to the new standard that clarified guidance on several matters, including accrued interest, recoveries, and various codification improvements. The new standard, as amended, replaces the incurred loss impairment methodology in the current standard with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to support credit loss estimates. The new guidance is effective for us on January 1, 2020, and in the first half of 2019, we established an implementation team and began analyzing the impact on our current policies and procedures to identify potential differences that would result from applying the requirements of the new standard. The implementation team reports findings and progress of the project to management on a frequent basis. Through this process, we have identified appropriate changes to our processes, systems, and controls to support recognition and disclosure under the new standard. The Company is still evaluating the impact of the new standard on the Company’s consolidated results of operations, consolidated financial position, and cash flows.

Other recently issued accounting updates are not expected to have a material impact on the Company’s Interim Financial Statements.

Recently Adopted Accounting Pronouncements

● Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), to address diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. For public entities, the standard is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. For all other entities, the standard is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. The Company adopted ASU 2016-15 effective January 1, 2018; such adoption had no material impact on the Company’s consolidated financial statements.

● Leases (ASU 2019-01)

In March 2019, the FASB issued ASU 2019-01, Leases (Topic 842) Codification Improvements, which removed the requirement for an entity to disclose in the interim periods after adoption, the effect of the change on income from continuing operations, net income, any other affected financial statement line item, and any affected per share amount. For lessors, the new leasing standard requires leases to be classified as a sales-type, direct financing or operating leases. These criteria focus on the transfer of control of the underlying lease asset. This standard and related update was effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company adopted ASU 2016-02 effective January 1, 2019; such adoption had no material impact on the Company’s financial statements, given that the noncancelable term of the Company’s current lease is less than 12 months.

● Leases (ASU 2016-02)

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires the recognition of lease assets and lease liabilities on the balance sheet by lessees for those leases currently classified as operating leases under ASC 840 “Leases.” These amendments also require qualitative disclosures along with specific quantitative disclosures. These amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Company can elect to record a cumulative-effect adjustment as of the beginning of the year of adoption or apply a modified retrospective transition approach. The Company expects that substantially all of its operating lease commitments will be subject to the new guidance and will be recognized as operating lease liabilities and right-of-use assets upon adoption. The Company adopted ASU 2016-02 effective January 1, 2019; such adoption had no material impact on the Company’s financial statements, given that the noncancelable term of the Company’s current lease is less than 12 months.

● Revenue from Contracts with Customers

On January 1, 2019, the Company adopted FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance.

The Company’s principal activity from which it generates revenue is a service which is the use of its interlock units. Revenue is measured based on considerations specified in a contract with a customer. A contract exists when it becomes a legally enforceable agreement with a customer. These contracts define each party’s rights, payment terms and other contractual terms and conditions of the sale. Consideration is typically paid at time of sale via credit card, check, or cash when the interlock units are installed on customers’ vehicles

A performance obligation is a promise in a contract to provide a distinct service to the customer, which for the Company is transfer of a service to customers. Performance obligations promised in a contract are identified based on the services that will be provided to the customer that are both capable of being distinct and are distinct in the context of the contract, whereby the service is separately identifiable from other promises in the contract. The Company has concluded the services accounted for as the single performance obligation.

The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. The transaction price is determined based on the consideration to which the Company will be entitled to receive in exchange for transferring goods to the customer. The Company does not issue refunds.

The Company recognizes revenue when it satisfies a performance obligation in a contract by providing a service to a customer when the Company installs the interlock units on the customers’ vehicles. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

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Segment Reporting

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Segment Reporting

NOTE 3 – SEGMENT REPORTING

The Company has two reportable segments: (1) Monitoring and (2) Distributorships.

Monitoring fees on Company installed units

The Company rents units directly to customers and installs the units in the customer’s vehicles. The rental periods range from a few months to 2 years and include a combination of down payments made by the customer and monthly payments paid under the agreements with the Company. Revenue is recognized from these companies on the straight-line basis over the term of the agreement. Amounts collected in excess of those earned are classified as deferred revenue in the balance sheet, and amounts earned in excess of amounts collected are reflected in accounts receivable in the balance sheet at June 30, 2019 and December 31, 2018.

Distributorships

The Company enters into arrangements that include multiple deliverables, which typically consist of the sale of exclusive distributorship territory rights, startup supplies package, promotional material, three weeks of onsite training and ongoing monthly support services. The Company accounts for each material element within an arrangement with multiple deliverables as separate units of accounting. Revenue is allocated to each unit of accounting under the guidance of ASC Topic 605-25, Multiple-Element Revenue Arrangements, which provides criteria for separating consideration in multiple-deliverable arrangements by establishing a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable is based on vendor-specific objective evidence (“VSOE”) if available, third-party evidence if VSOE is not available, or estimated selling price if neither VSOE nor third-party evidence is available. The Company is required to determine the best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis. The Company generally does not separately sell distributorships or training on a standalone basis. Therefore, the Company does not have VSOE for the selling price of these units nor is third party evidence available and thus management uses its best estimate of selling prices in their allocation of revenue to each deliverable in the multiple element arrangement.

The following table summarizes net sales and identifiable operating income by segment:

	Six Months Ended June 30,						Three Months Ended June 30,
	2019			2018			2019			2018
Segment gross profit (a):
Monitoring	$	338,010		$	366,550		$	145,958		$	235,676
Distributorships		36,681			39,265			18,990			16,095
Gross profit		374,691			405,815			164,948			251,771
Identifiable segment operating expenses (b):
Monitoring		-			-			-			-
Distributorships		-			-			-			-
Total operating expenses		-			-			-			-
Identifiable segment operating income (c):
Monitoring		338,010			366,550			145,958			235,676
Distributorships		36,681			39,265			18,990			16,095
		374,691			405,815			164,948			251,771
Reconciliation of identifiable segment income to corporate income (d):
Payroll		210,718			466,149			112,678			229,737
Professional fees		147,297			88,055			105,751			50,963
General and administrative expenses		131,492			469,095			71,418			219,539
Interest expense		338,808			210,558			161,984			108,237
Change in fair value of derivative liability		7,390			(4,293	)		5,558			(11,579	)
Gain on extinguishment of debt		(54,764	)		-			-			-
		780,941			1,229,564			457,389			596,897
Loss before provision for income taxes		(406,250	)		(823,749	)		(292,441	)		(345,126	)
Provision for income taxes		1,600			800			-			800
Net loss	$	(407,850	)	$	(824,549	)	$	(292,441	)	$	(345,926	)
Total net property, plant, and equipment assets
Monitoring	$	-		$	-		$	-		$	-
Distributorships		-			-			-			-
Corporate		-			-			-			-
	$	-		$	-		$	-		$	-

(a) Segment gross profit includes segment net sales less segment cost of sales

(b) Identifiable segment operating expenses consists of identifiable depreciation expense

(c) Identifiable segment operating incomes consists of segment gross profit less identifiable operating expense

(d) General corporate expense consists of all other non-identifiable expenses

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Accrued Expenses

6 Months Ended

Jun. 30, 2019

Payables and Accruals [Abstract]

Accrued Expenses

NOTE 4 – ACCRUED EXPENSES

Accrued Expenses consist of the following:

Description	June 30, 2019		December 31, 2018
Accrued payroll and payroll taxes	$	20,004	$	17,616
Deferred rent		-		5,317
Income tax payable		6,730		5,930
Other accrued expenses		-		37,125
Total	$	26,734	$	65,988

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Notes Payable

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Notes Payable

NOTE 5 – NOTES PAYABLE

Notes payable consist of the following:

	As of June 30, 2019						As of December 31, 2018
Terms	Amount		Discount		Net Balance		Amount			Discount			Net Balance
December 2017 ($50,000) -15% interest due in December 2020 including issuance of 100,000 shares of common stock with exercise price at $0.25 per share.	$	-	$	-	$	-	$	40,736		$	(14,474	)	$	26,262
October 2018 ($60,000) - $561 daily principal and interest until paid in full		-		-		-		42,424			-			42,424
October 2018 ($72,800) - $11,527 monthly principal and interest for first six months, $9,975 monthly principal and interest last six months		67,159		-		67,159		67,159			-			67,159
Total notes payable		67,159		-		67,159		150,319			(14,474	)		135,845
Less: non-current portion		-		-		-		(24,994	)		6,925			(18,069	)
Notes payable, current portion	$	67,159	$	-	$	67,159	$	125,325		$	(7,549	)	$	117,776

December 2017 - $50,000

On December 1, 2017, the Company provided an agreement to a third party to obtain a $50,000 promissory note in exchange for $50,000 in cash. The promissory note had a maturity date of December 1, 2020 and bears interest at 15% per annum. The note required total payments of $1,733 per month. The Company recorded a debt discount of $22,650 related to the value of the issued shares associated with the process of obtaining the note to be amortized over the life of the note. In January 2019, the note was settled with no additional payment and $43,930 was recognized as a gain on settlement. Total interest expense was $0 and $1,706 for the three months ended June 30, 2019 and 2018, respectively, and $0 and $3,539 for the six months ended June 30, 2019 and 2018, respectively.

October 2018 - $60,000

On October 11, 2018, the Company provided an agreement to a third party to obtain a $60,000 promissory note in exchange for $59,105 in cash ($895 in processing fee was deducted from cash). The promissory note had a maturity date of May 5, 2019 and bears interest at 55% per annum. The note required total payments of $561.43 each business day. The note was settled on January 16, 2019 for $30,806, and a gain on settlement was recorded for $10,834. Total interest expense was $0 and $0 for the three months ended June 30, 2019 and 2018, respectively, and $0 and $0 for the six months ended June 30, 2019 and 2018, respectively.

October 2018 - $72,800

On October 4, 2018, the Company provided an agreement to a third party to obtain a $72,800 promissory note in exchange for $72,800 in cash. The promissory note had a maturity date of October 4, 2019 and bears interest at 51% per annum. The note required total payments of $11,526.67 per month for the first six months and $6,794.67 per month for the last six months. The note was settled on January 16, 2019 for $30,806, and a gain on settlement was recorded for $10,834. Total interest expense was $8,536 and $0 for the three months ended June 30, 2019 and 2018, respectively, and $17,126 and $0 for the six months ended June 30, 2019 and 2018, respectively.

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Notes Payable to Related Parties

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Notes Payable to Related Parties

NOTE 6 – NOTES PAYABLE TO RELATED PARTIES

Notes payable to related parties consist of the following:

Terms	June 30, 2019			December 31, 2018
August 2018 ($1,365,000) – Replaced August 2018 note ($1,365,000) that replaced November 2017 note ($765,000 balance at August 1, 2018), February 2018 note ($100,000) and March 2018 note ($500,000). Includes $635,000 penalty on default of August 2018 ($1,365,000) note and $20,000 for missed payment on August 2018 note. Interest only monthly payment of $50,500 for life of note. Entire principal due December 1, 2023.	$	2,020,000		$	2,020,000
December 2018 ($6,000) – No interest with principal due on December 17, 2019.		6,000			6,000
December 2018 ($23,000) – No interest with principal due on December 13, 2019.		23,000			23,000
January 2019 ($32,700) – No interest with principal due on January 3, 2020.		32,700			-
January 2019 ($40,000) – No interest with principal due on January 11, 2020.		40,000			-
January 2019 ($14,500) – No interest with principal due on January 15, 2020.		14,500			-
February 2019 ($15,000) – No interest with principal due on February 1, 2020.		15,000			-
February 2019 ($5,000) – No interest with principal due on February 19, 2020.		5,000			-
March 2019 ($10,000) – No interest with principal due on March 4, 2020.		10,000			-
May 2019 ($20,000) – No interest with principal due on May 1, 2020		20,000			-
June 2019 ($89,000) – No interest with principal due on June 3, 2020		89,000			-
Total notes payable to related parties		2,275,200			2,049,000
Less: non-current portion		(2,246,200	)		(2,020,000	)
Notes payable to related parties, current portion	$	29,000		$	29,000

December 2018 - $2,222,000

On December 1, 2018, the Company entered into an agreement with a related third party to replace the August 2018 note of $1,365,000 with a new note for $2,020,000. The new note also includes a default penalty of $635,000 on the August 2018 note and $20,000 for a missed payment on the August 2018 note. The note calls for interest only payments of $50,500 per month for the life of the note. The entire principal is due on December 1, 2023. Accrued interest payments totaling $202,000 were not made by the Company. Per the note agreement, this amount was added to the principal, thus increasing the principal amount to $2,222,000.

Total interest expense was $303,000 and $0 for the six months ended June 30, 2019 and 2018, respectively. Total interest expense was $151,500 and $0 for the three months ended June 30, 2019 and 2018, respectively.

December 2018 - $6,000

On December 17, 2018, the Company entered into an agreement with a related party, Doheny Group, to obtain a $6,000 loan. The note bears no interest and is due in full on December 17, 2019.

December 2018 - $23,000

On December 31, 2018, the Company entered into an agreement with a related party, Doheny Group, to obtain a $23,000 loan. The note bears no interest and is due in full on December 31, 2019.

January 2019 - $32,700

On January 3, 2019, the Company entered into an agreement with a related party, Doheny Group, to obtain a $32,700 loan. The note bears no interest and is due in full on January 3, 2020.

January 2019 - $40,000

On January 11, 2019, the Company entered into an agreement with a related party, Doheny Group, to obtain a $40,000 loan. The note bears no interest and is due in full on January 11, 2020.

January 2019 - $14,500

On January 15, 2019, the Company entered into an agreement with a related party, Doheny Group, to obtain a $14,500 loan. The note bears no interest and is due in full on January 15, 2020.

February 2019 - $15,000

On February 1, 2019, the Company entered into an agreement with a related party, Doheny Group, to obtain a $15,000 loan. The note bears no interest and is due in full on February 1, 2020.

February 2019 - $5,000

On February 19, 2019, the Company entered into an agreement with a related party, Doheny Group, to obtain a $5,000 loan. The note bears no interest and is due in full on February 19, 2020.

March 2019 - $10,000

On March 4, 2019, the Company entered into an agreement with a related party, Doheny Group, to obtain a $10,000 loan. The note bears no interest and is due in full on March 4, 2020.

May 2019 - $20,000

On May 1, 2019, the Company entered into an agreement with a related party, Doheny Group, to obtain a $20,000 loan. The note bears no interest and is due in full on May 1, 2020.

June 2019 - $89,000

On June 3, 2019, the Company entered into an agreement with a related party, Doheny Group, to obtain a $89,000 loan. The note bears no interest and is due in full on June 3, 2020.

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Convertible Notes Payable

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Convertible Notes Payable

NOTE 7 – CONVERTIBLE NOTES PAYABLE

Convertible notes payable consists of the following:

	As of June 30, 2019									As of December 31, 2018
Terms	Amount			Discount			Net Balance			Amount			Discount			Net Balance
August 2015 ($15,000) - 7.5% interest bearing convertible debenture due on August 7, 2017 with interest only payments and due upon maturity.		7,500			-			7,500			7,500			-			7,500
March 2018 ($20,000) – 10% interest bearing convertible debenture due on March 9, 2021, with interest paid in cash for the first six months, and either in cash or shares of common stock thereafter. Principal is due March 9, 2021, paid either in cash or common stock, at the Company’s discretion		20,000			(8,965	)		11,035			20,000			(11,527	)		8,473
Total convertible notes payable		27,500			(8,965	)		18,535			27,500			(11,527	)		15,973
Less: non-current portion		(20,000	)		3,841			(16,159	)		(20,000	)		6,403			(13,597	)
Convertible notes payable, current portion	$	7,500		$	(5,124	)	$	2,376		$	7,500		$	(5,124	)	$	2,376

August 2015 - $15,000

On August 7, 2015, the Company entered into an agreement with a third party non-affiliate and issued a 7.5% interest bearing convertible debenture for $15,000 due on August 7, 2017, with conversion features commencing after 180 days following the date of the note. Payments of interest only were due monthly beginning September 2015. The loan is convertible at 70% of the average of the closing prices for the common stock during the five trading days prior to the conversion date. In connection with this Convertible note payable, the Company recorded a $5,770 discount on debt, related to the beneficial conversion feature of the note to be amortized over the life of the note or until the note is converted or repaid. This note was bifurcated with the embedded conversion option recorded as a derivative liability at fair value (See Note 9). On May 6, 2016 the note holder elected to convert $7,500 in principal into 30,000 shares of common stock. The note is currently in default.

In connection with the issuance of the August Convertible Note Payable, the Company issued a warrant on August 7, 2015 to purchase 30,000 shares of the Company’s common stock at a purchase price of $0.50 per share. The Black Scholes model was used in valuing the warrants in determining the relative fair value of the warrants issued in connection with the convertible note payable using the following inputs: Expected Term – 3 years, Expected Dividend Rate – 0%, Volatility – 100%, Risk Free Interest Rate -1.08%. The Company recorded an additional $4,873 discount on debt, related to the relative fair value of the warrants issued associated with the note to be amortized over the life of the note.

Total interest expense was $141 and $141 for the three months ended June 30, 2019 and 2018, respectively, and $282 and $282 for the six months ended June 30, 2019.

March 2018 - $20,000

On March 9, 2018, the Company entered into an agreement with a non-affiliated shareholder and issued a 10% interest bearing convertible debenture for $20,000 due on March 9, 2021. Payments of interest is in cash for the first six months, thereafter, interest may be paid either in cash or common stock of the Company. The loan is convertible at 61% of the average of the closing prices for the common stock during the five trading days prior to the conversion date but may not be converted if such conversion would cause the holder to own more than 4.9% of outstanding common stock after giving effect to the conversion. In connection with this Convertible Note Payable, the Company recorded a $20,000 discount on debt (the total discount was $47,768, of which $27,768 was expensed), related to the beneficial conversion feature of the note to be amortized over the life of the note or until the note is converted or repaid. This note was bifurcated with the embedded conversion option recorded as a derivative liability at fair value. During the six months ended June 30, 2019, this note has not been converted.

Total interest expense was $500 and $313 for the three months ended June 30, 2019 and 2018, respectively, and $1,000 and $626 for the six months ended June 30, 2019 and 2018, respectively.

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Derivative Liabilities

6 Months Ended

Jun. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Liabilities

NOTE 8 – DERIVATIVE LIABILITIES

Derivative liabilities consisted of the following:

	June 30, 2019		December 31, 2018
August 2015 - $15,000 convertible debt	$	6,359	$	6,523
March 2018 - $20,000 convertible debt		23,549		15,994
Total derivative liabilities	$	29,907	$	22,517

The Company applies the provisions of ASC Topic 815-40, Contracts in Entity’s Own Equity (“ASC Topic 815-40”), under which convertible instruments, which contain terms that protect holders from declines in the stock price, may not be exempt from derivative accounting treatment. As a result, embedded conversion options (whose exercise price is not fixed and determinable) in convertible debt (which is not conventionally convertible due to the exercise price not being fixed and determinable) are initially recorded as a liability and are revalued at fair value at each reporting date using the Black Sholes Model.

August 2015 Convertible Debt - $15,000

In August 2015, the Company entered into a $15,000 convertible note with variable conversion pricing. The following inputs were used within the Black Sholes Model to determine the initial relative fair values of the $15,000 convertible note with expected term of 1.58 years, expected dividend rate of 0%, volatility of 100% and risk-free interest rate 0.61%.

March 2018 Convertible Debt - $20,000

In March 2018, the Company entered into a $20,000 convertible note with variable conversion pricing. The following inputs were used within the Black Sholes Model to determine the initial relative fair values of the $20,000 convertible note with expected term of 3.35 years, expected dividend rate of 0%, volatility of 413% and risk free interest rate 2.90%.

The Company revalues these derivatives each quarter using the Black Sholes Model. The change in valuation is accounted for as a gain or loss in derivative liability. The following table describes the derivative liability as of December 31, 2018 and June 30, 2019.

	December 31, 2018		Additions		Changes			June 30, 2019
August 2015 - $15,000 convertible debt	$	6,523	$	-	$	(165	)	$	6,358
March 2018 - $20,000 convertible debt		15,994		-		7,555			23,549
Total	$	22,517	$	-	$	7,390		$	29,907

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Accrued Royalty Payable

6 Months Ended

Jun. 30, 2019

Accrued Royalty Payable

Accrued Royalty Payable

NOTE 9 – ACCRUED ROYALTY PAYABLE

The Company has estimated the royalties to be paid out in perpetuity under royalty agreements. The Company entered into royalty agreement as follows:

● November 2017 Royalty Agreement – The Company entered into a royalty agreement with a related party on November 1, 2017 in relation to a note payable of $900,000. This note replaced the September and November 2016 Royalty Agreements. Under the royalty agreement, the Company is required to pay a royalty fee of from $1.50 to $3.00 per month for every ignition interlock devise that the Company has on the road in customers’ vehicles, the amount depending on how many devices are installed.

● August 2018 Royalty Agreement – the Company entered into a royalty agreement with a related party on August 1, 2018 in relation to a note payable of $1,365,000. This note replaced the November 2017 Royalty Agreement as well as other, non-royalty notes payable. Under the royalty agreement, the Company is required to pay $1.50 and accrue an additional $3.50 for every ignition interlock devise for the first nine months of the note payable. After the first nine months, the Company is required to pay $1.50 per devise and the amount accrued during the first nine months will be paid monthly through the next twelve months. After the note payable is paid in full, the Company is required to pay $3.00 per devise in perpetuity.

● December 2018 royalty Agreement – the Company entered into a royalty agreement with a related party on December 1, 2018 in relation to a note payable of $2,020,000. This note replaced the August 2018 Royalty Agreement. Under the royalty agreement, the Company is required to pay a royalty fee of $5.00 per month for every ignition interlock device that the Company has on the road in customers’ vehicles.

Based on the royalty agreement, the Company had the following royalty accruals:

	June 30, 2019		December 31, 2018
November 2017 royalty agreement	$	3,327	$	3,327
August 2018 royalty agreement		18,058		18,058
December 2018 royalty agreement		35,250		5,500
Total accrued royalties	$	56,635	$	26,885

Royalty expense was $13,251 and $47,416 for the three months ended June 30, 2019 and 2018, respectively, and $29,751 and $89,945 for the six months ended June 30, 2019 and 2018, respectively.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Stockholders' Equity

NOTE 10 – STOCKHOLDERS’ EQUITY

Preferred Stock

The Company’s articles of incorporation authorize the Company to issue up to 20,000,000 preferred shares of $0.001 par value.

Series A Preferred Stock

The Company has been authorized to issue 1,000,000 shares of Series A Preferred Stock. The Series A shares have the following preferences: no dividend rights; no liquidation preference over the Company’s common stock; no conversion rights; no redemption rights; no call rights by the Company; each share of Series A Preferred stock will have one hundred (100) votes on all matters validly brought to the Company’s common stockholders.

During the three months ended March 31, 2017, the Company entered into a material definitive agreement to issue 1,000,000 shares of series A preferred stock to an officer and director of the Company with a preliminary estimated value of $350,000. As of June 30, 2019, the total number of preferred shares issued or issuable was 1,000,000.

Common Stock

The Company has authorized 100,000,000 shares of $.0001. Holders of common stock are entitled to one vote for each share held. There are no restrictions that limit the Company’s ability to pay dividends on its common stock, subject to the requirements of the Delaware Revised Statutes. The Company has not declared any dividends since incorporation.

During the three and six months ended June 30, 2019, the Company issued no additional shares and 250,000 additional shares of its common stock for services valued at $24,500, respectively. The total number of shares issued or issuable as of June 30, 2019 was 30,659,244.

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Income (Loss) Per Share

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Income (Loss) Per Share

NOTE 12 – INCOME (LOSS) PER SHARE

Net income (loss) per share is provided in accordance with FASB ASC 260-10, “Earnings per Share”. Basic net income (loss) per common share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average shares outstanding, assuming all dilutive potential common shares were issued, unless doing so is anti-dilutive.

The following shares are not included in the computation of diluted income (loss) per share, because their inclusion would be anti-dilutive:

	Six Months Ended June 30,				Three Months Ended June 30,
	2019		2018		2019		2018
Preferred shares		-		-		-
Convertible notes		434,058		58,299		434,058		58,299
Warrants		6,537,586		5,597,586		6,537,586		5,597,586
Options		-		-		-		-
Total anti-dilutive weighted average shares		6,971,644		5,655,885		6,971,644		5,655,885

If all dilutive securities had been exercised at June 30, 2019, the total number of common shares outstanding would be as follows:

Common Shares	30,566,920
Preferred Shares	-
Convertible notes	434,058
Warrants	6,537,586
Options	-
Total potential shares	37,538,564

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 13 – COMMITMENTS AND CONTINGENCIES

On December 1, 2016, the Company entered into a four-year lease with Cahuenga Management LLC for a storefront location at 15503 Cahuenga Blvd., North Hollywood, California 91601. Base rent under the lease is $2,200 per month, with an escalating provision up to $2,404 throughout the lease term. The rental agreement includes operating expenses such as common area maintenance, property taxes and insurance. The Company moved into the offices of David Haridim effective January 1, 2019. David Haridim is not charging the Company rent.

On August 28, 2017, the Company entered into a one-year lease with B3 Investments, LLC for a storefront location at Suites D104 and D105, 2406 24^th Street, South Phoenix, Arizona. Base rent under the lease is $1,350 per month plus 2% ($27) rental tax. The rental agreement includes operating expenses such as common area maintenance, property taxes and insurance.

Total rent expense was $21,672 and $16,053 for the three months ended June 30, 2019 and 2018, respectively, and $32,902 and $30,691 for the six months ended June 30, 2019 and 2018, respectively.

Legal Proceedings

In the ordinary course of business, the Company from time to time is involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon the Company’s financial condition and/or results of operations. However, in the opinion of management, other than as set forth herein, matters currently pending or threatened against the Company are not expected to have a material adverse effect on the Company’s financial position or results of operations.

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Related Party Transactions

6 Months Ended

Jun. 30, 2019

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 14 – RELATED PARTY TRANSACTIONS

The Company had the following related party transactions:

● Notes payable of $2,275,200 to the Doheny Group at June 30, 2019 (refer to notes payable related party section)

● 2,669,761 shares of common stock, of which 1,863,152 were granted to the Doheny Group in relation to notes payable.

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Subsequent Events

6 Months Ended

Jun. 30, 2019

Subsequent Events [Abstract]

Subsequent Events

NOTE 15 – SUBSEQUENT EVENTS

The Company follows the guidance in FASB ASC Topic 855, Subsequent Events (“ASC 855”), which provides guidance to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before the consolidated financial statements are issued or are available to be issued. ASC 855 sets forth (i) the period after the balance sheet date during which management of a reporting entity evaluates events or transactions that may occur for potential recognition or disclosure in the consolidated financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its consolidated financial statements, and (iii) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date.

On July 10, 2019, the Company entered into a loan agreement with The Doheny Group for $13,000. The loan has no interest (0%), no monthly payments, and a balloon payment of $13,000 on July 10, 2020.

On July 18, 2019, the Company entered into a loan agreement with The Doheny Group for $8,000. The loan has no interest (0%), no monthly payments, and a balloon payment of $8,000 on July 18, 2020.

On July 26, 2019, the Company entered into a loan agreement with The Doheny Group for $25,000. The loan has no interest (0%), no monthly payments, and a balloon payment of $25,000 on July 26, 2020.

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Basis of Presentation and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Principles of Consolidation and Basis of Presentation

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the results of operations of BDI Manufacturing (the Subsidiary). All material intercompany accounts and transactions between the Company and the Subsidiary have been eliminated in consolidation.

The consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted pursuant to such rules and regulations. These consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The unaudited information contained herein has been prepared on the same basis as the Company’s audited consolidated financial statements, and, in the opinion of the Company’s management, includes all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of the information for the periods presented. The interim results presented herein are not necessarily indicative of the results of operations that may be expected for the full fiscal year ending December 31, 2019 or any future period.

Use of Estimates in the Preparation of Financial Statements

Use of Estimates in the Preparation of Financial Statements

The preparation of the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. These estimates and assumptions may affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. As a result, actual results could differ from these estimates.

Going Concern

Going Concern

The Company’s unaudited condensed consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. As of June 30 2019, the Company had an accumulated deficit of $6,504,172 and net loss of $407,850 for the six months ended June 30, 2019. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease or reduce its operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. The Company will continue to raise funds through the sale of its equity securities or issuance of notes payable to obtain additional operating capital. The Company is dependent upon its ability to, and will continue to attempt to, secure additional equity and/or debt financing until the Company can earn revenue and realize positive cash flow from its operations. There are no assurances that the Company will be successful in earning revenue and realizing positive cash flow from its operations. Without sufficient financing it would be unlikely that the Company will continue as a going concern.

Based on the Company’s current rate of cash outflows, cash on hand and proceeds from the prior sale of equity securities and issuance of notes payable, management believes that its current cash will not be sufficient to meet the anticipated cash needs for working capital for the next 12 months. The Company’s plans with respect to its liquidity issues include, but are not limited to, the following:

1)	Continue to issue restricted stock for compensation due to consultants and for its legacy accounts payable in lieu of cash payments; and
2)	Seek additional capital to continue its operations as it rolls out its current products. The Company is currently evaluating additional debt or equity financing opportunities and may execute them when appropriate. However, there can be no assurances that the Company can consummate such a transaction or consummate a transaction at favorable pricing.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and achieve profitable operations. These condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.

Reclassifications

Reclassifications

Certain reclassifications have been made to amounts in prior periods to conform to the current period presentation. All reclassifications have been applied consistently to the periods presented.

Revenue Recognition

Revenue Recognition

On January 1, 2019, the Company adopted FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance.

The Company’s principal activity from which it generates revenue is a service which is the use of its interlock units. Revenue is measured based on considerations specified in a contract with a customer. A contract exists when it becomes a legally enforceable agreement with a customer. These contracts define each party’s rights, payment terms and other contractual terms and conditions of the sale. Consideration is typically paid at time of sale via credit card, check, or cash when the interlock units are installed on customers’ vehicles

A performance obligation is a promise in a contract to provide a distinct service to the customer, which for the Company is transfer of a service to customers. Performance obligations promised in a contract are identified based on the services that will be provided to the customer that are both capable of being distinct and are distinct in the context of the contract, whereby the service is separately identifiable from other promises in the contract. The Company has concluded the services accounted for as the single performance obligation.

The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. The transaction price is determined based on the consideration to which the Company will be entitled to receive in exchange for transferring goods to the customer. The Company does not issue refunds.

The Company recognizes revenue when it satisfies a performance obligation in a contract by providing a service to a customer when the Company installs the interlock units on the customers’ vehicles. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

Deferred Revenue

Deferred revenue

Deferred revenue consists of customer orders paid in advance of the delivery of the order. Deferred revenue is classified as short-term as the typical order ships within approximately three weeks of placing the order. Deferred revenue is recognized as revenue when the product is shipped to the customer and all other revenue recognition criteria have been met.

Advertising and Marketing Costs

Advertising and Marketing Costs

Advertising and marketing costs are recorded as general and administrative expenses when they are incurred. Advertising and marketing expenses were $267 and $61,915 for the six months ended June 30, 2019 and 2018, respectively. Advertising and marketing expenses were $267 and $45,054 for the three months ended June 30, 2019 and 2018, respectively.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable and Allowance for Doubtful Accounts

The Company’s accounts receivable primarily consist of trade receivables. The Company records an allowance for doubtful accounts that is based on historical trends, customer knowledge, any known disputes, and the aging of the accounts receivable balances combined with management’s estimate of future potential recoverability. Receivables are written off against the allowance after all attempts to collect a receivable have failed. The Company believes its allowance for doubtful accounts as of June 30, 2019 and December 31, 2018 is adequate, but actual write-offs could exceed the recorded allowance.

Royalty Accrual

Royalty Accrual

The Company entered into royalty agreement to be paid out in perpetuity based on number of units sold for specified product model in years 2018, 2017 and 2016 in connection with notes payable as discussed in Note 11. These estimates were performed at the inception for the notes to reflect the associated debt discount. The Company accruals royalties and is reduced by payments. The Company wrote off $255,030 in accrued royalties to gain on extinguishment of debt in December 2018 due to the December 31, 2018 settlement with two royalty noteholders in which they relinquished all claims to accrued royalties.

Derivative Liability

Derivative Liability

The Company applies the provisions of ASC Topic 815-40, Contracts in Entity’s Own Equity (“ASC Topic 815-40”), under which convertible instruments, which contain terms that protect holders from declines in the stock price, may not be exempt from derivative accounting treatment. As a result, embedded conversion options (whose exercise price is not fixed and determinable) in convertible debt (which is not conventionally convertible due to the exercise price not being fixed and determinable) are initially recorded as a liability and are revalued at fair value at each reporting date using the Black Sholes Model. The Company revalues these derivatives each quarter using the Black Sholes Model. The change in valuation is accounted for as a gain or loss in derivative liability.

Convertible Debt and Warrants Issued with Convertible Debt

Convertible Debt and Warrants Issued with Convertible Debt

Convertible debt is accounted for under the guidelines established by ASC 470, Debt with Conversion and Other Options and ASC 740, Beneficial Conversion Features. The Company records a beneficial conversion feature (“BCF”) when convertible debt is issued with conversion features at fixed or adjustable rates that are below market value when issued. If, however, the conversion feature is dependent upon a condition being met or the occurrence of a specific event, the BCF will be recorded when the related contingency is met or occurs. The BCF for the convertible instrument is recorded as a reduction, or discount, to the carrying amount of the convertible instrument equal to the fair value of the conversion feature. The discount is then amortized to interest over the life of the underlying debt using the effective interest method.

The Company calculates the fair value of warrants issued with the convertible instruments using the Black-Scholes valuation method, using the same assumptions used for valuing employee options for purposes of ASC 718, Compensation – Stock Compensation, except that the contractual life of the warrant is used. Under these guidelines, the Company allocates the value of the proceeds received from a convertible debt transaction between the conversion feature and any other detachable instruments (such as warrants) on a relative fair value basis. The allocated fair value is recorded as a debt discount or premium and is amortized over the expected term of the convertible debt to interest expense.

For modifications of convertible debt, the Company records a modification that changes the fair value of an embedded conversion feature, including a BCF, as a debt discount which is then amortized to interest expense over the remaining life of the debt. If modification is considered substantial (i.e. greater than 10% of the carrying value of the debt), an extinguishment of debt is deemed to have occurred, resulting in the recognition of an extinguishment gain or loss.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company utilizes ASC 820-10, Fair Value Measurement and Disclosure, for valuing financial assets and liabilities measured on a recurring basis. Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value:

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 table below describes the Company’s valuation of financial instruments using guidance from ASC 820-10:

Description	Level 1		Level 2		Level 3
Balance December 31, 2018	$	-	$	22,517	$	-
Change in fair value of derivative liability		-		7,390		-
Balance June 30, 2019	$	-	$	29,907	$	-

Net Income (Loss) Per Share

Net Income (Loss) Per Share

Basic earnings per share is calculated by dividing income available to common stockholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share is computed using the weighted average number of common and dilutive common share equivalents outstanding during the period.

Related Parties

Related Parties

Related parties are any entities or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management and policies of the Company.

Concentrations

Concentrations

All of the Company’s ignition interlock devices are purchased from one supplier in China. The loss of this supplier could have a material impact on the Company’s ability to timely obtain additional units.

Income Taxes

Income Taxes

The Company accounts for its income taxes in accordance with Income Taxes Topic of the FASB ASC 740, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

The Company also follows ASC 740-10-25, which provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprise’s financial statements in accordance with ASC Topic 740, “Accounting for Income Taxes”. ASC 740-10-25 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Derivative Liabilities

Derivative Liabilities

The Company assessed the classification of its derivative financial instruments as of June 30, 2019, which consist of convertible instruments and rights to shares of the Company’s common stock and determined that such derivatives meet the criteria for liability classification under ASC 815. ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional, as defined.

Convertible Instruments

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional standards for “Accounting for Derivative Instruments and Hedging Activities”.

ASC 815-40 provides that, among other things, generally, if an event is not within the entity’s control or could require net cash settlement, then the contract shall be classified as an asset or a liability.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

Pronouncements Not Yet Effective

● Fair Value Measurements

In August 2018, the FASB amended “Fair Value Measurements” to modify the disclosure requirements related to fair value. The amendment removes requirements to disclose (1) the amount of and reasons for transfers between levels 1 and 2 of the fair value hierarchy, (2) our policy related to the timing of transfers between levels, and (3) the valuation processes used in level 3 measurements. It clarifies that, for investments measured at net asset value, disclosure of liquidation timing is only required if the investee has communicated the timing either to us or publicly. It also clarifies that the narrative disclosure of the effect of changes in level 3 inputs should be based on changes that could occur at the reporting date. The amendment adds a requirement to disclose the range and weighted average of significant unobservable inputs used in level 3 measurements. The guidance is effective for the Company with the Company’s quarterly filing for the period ended March 31, 2020 and the Company will make the required disclosure changes in that filing. Adoption will not have an impact on the Company’s consolidated results of operations, consolidated financial position, and cash flows.

● Retirement Plans

In August 2018, the FASB amended “Retirement Plans” to modify the disclosure requirements for defined benefit plans. For the Company, the amendment requires the disclosure of the weighted average interest crediting rate used for cash balance plans and an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. It removes the requirement to disclose the approximate amount of future benefits covered by insurance contracts. The guidance is effective for the Company with the Company’s annual filing for the year ended December 31, 2020 and the Company will make the required disclosure changes in that filing. Adoption will not have an impact on the Company’s consolidated results of operations, consolidated financial position, and cash flows.

● Intangibles – Goodwill and other – Internal-Use Software

In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company’s accounting for the service element of a hosting arrangement that is a service contract is not affected by the proposed amendments and will continue to be expensed as incurred in accordance with existing guidance. This standard does not expand on existing disclosure requirements except to require a description of the nature of hosting arrangements that are service contracts. This standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted, including adoption in any interim period for which financial statements have not been issued. Entities can choose to adopt the new guidance prospectively or retrospectively. The Company plans to adopt the updated disclosure requirements of ASU No. 2018-15 prospectively in the first quarter of fiscal 2020, coinciding with the standard’s effective date, and expects the impact from this standard to be immaterial.

● Improvements to Nonemployee Share-based Payment Accounting

In June 2018, the FASB issued ASU No. 2018-07 “Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”). ASU 2018-07 aligns the accounting for share-based payment awards to employees and non-employees. Under ASU 2018-07 the existing employee guidance will apply to nonemployee share-based transactions, except for specific guidance related to the attribution of compensation cost. ASU 2018-07 should be applied to all new awards granted after the date of adoption. ASU 2018-07 is effective for annual and interim periods beginning after December 15, 2018, and early adoption is permitted. The Company adopted ASU 2018-07 effective January 1, 2019; such adoption had no material impact on the Company’s consolidated financial statements.

● Income Statement – Reporting Comprehensive Income

In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220) (ASU 2018-02), which amends existing standards for income statement-reporting comprehensive income to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Tax Cuts and Jobs Act and improve the usefulness of information reported to financial statements users. ASU 2018-02 will be effective for beginning after December 15, 2018, and early adoption is permitted. The Company adopted ASU 2018-02 effective January 1, 2019; such adoption had no material impact on the Company’s consolidated financial statements.

● Goodwill

In January 2017, the FASB amended “Goodwill” to simplify the subsequent measurement of goodwill. The amended guidance eliminates Step 2 from the goodwill impairment test. Instead, impairment is defined as the amount by which the carrying value of the reporting unit exceeds its fair value, up to the total amount of goodwill of the reporting unit. The new guidance is effective for the Company on January 1, 2020 and is not expected to have an impact on our consolidated results of operations, consolidated financial position, and cash flows.

● Financial Instruments

In June 2016, the FASB amended “Financial Instruments” to provide financial statement users with more decision-useful information about the expected credit losses on debt instruments and other commitments to extend credit held by a reporting entity at each reporting date. During November 2018 and April 2019, the FASB made amendments to the new standard that clarified guidance on several matters, including accrued interest, recoveries, and various codification improvements. The new standard, as amended, replaces the incurred loss impairment methodology in the current standard with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to support credit loss estimates. The new guidance is effective for us on January 1, 2020, and in the first half of 2019, we established an implementation team and began analyzing the impact on our current policies and procedures to identify potential differences that would result from applying the requirements of the new standard. The implementation team reports findings and progress of the project to management on a frequent basis. Through this process, we have identified appropriate changes to our processes, systems, and controls to support recognition and disclosure under the new standard. The Company is still evaluating the impact of the new standard on the Company’s consolidated results of operations, consolidated financial position, and cash flows.

Other recently issued accounting updates are not expected to have a material impact on the Company’s Interim Financial Statements.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

● Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), to address diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. For public entities, the standard is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. For all other entities, the standard is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. The Company adopted ASU 2016-15 effective January 1, 2018; such adoption had no material impact on the Company’s consolidated financial statements.

● Leases (ASU 2019-01)

In March 2019, the FASB issued ASU 2019-01, Leases (Topic 842) Codification Improvements, which removed the requirement for an entity to disclose in the interim periods after adoption, the effect of the change on income from continuing operations, net income, any other affected financial statement line item, and any affected per share amount. For lessors, the new leasing standard requires leases to be classified as a sales-type, direct financing or operating leases. These criteria focus on the transfer of control of the underlying lease asset. This standard and related update was effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company adopted ASU 2016-02 effective January 1, 2019; such adoption had no material impact on the Company’s financial statements, given that the noncancelable term of the Company’s current lease is less than 12 months.

● Leases (ASU 2016-02)

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires the recognition of lease assets and lease liabilities on the balance sheet by lessees for those leases currently classified as operating leases under ASC 840 “Leases.” These amendments also require qualitative disclosures along with specific quantitative disclosures. These amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Company can elect to record a cumulative-effect adjustment as of the beginning of the year of adoption or apply a modified retrospective transition approach. The Company expects that substantially all of its operating lease commitments will be subject to the new guidance and will be recognized as operating lease liabilities and right-of-use assets upon adoption. The Company adopted ASU 2016-02 effective January 1, 2019; such adoption had no material impact on the Company’s financial statements, given that the noncancelable term of the Company’s current lease is less than 12 months.

● Revenue from Contracts with Customers

On January 1, 2019, the Company adopted FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance.

The Company’s principal activity from which it generates revenue is a service which is the use of its interlock units. Revenue is measured based on considerations specified in a contract with a customer. A contract exists when it becomes a legally enforceable agreement with a customer. These contracts define each party’s rights, payment terms and other contractual terms and conditions of the sale. Consideration is typically paid at time of sale via credit card, check, or cash when the interlock units are installed on customers’ vehicles

A performance obligation is a promise in a contract to provide a distinct service to the customer, which for the Company is transfer of a service to customers. Performance obligations promised in a contract are identified based on the services that will be provided to the customer that are both capable of being distinct and are distinct in the context of the contract, whereby the service is separately identifiable from other promises in the contract. The Company has concluded the services accounted for as the single performance obligation.

The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. The transaction price is determined based on the consideration to which the Company will be entitled to receive in exchange for transferring goods to the customer. The Company does not issue refunds.

The Company recognizes revenue when it satisfies a performance obligation in a contract by providing a service to a customer when the Company installs the interlock units on the customers’ vehicles. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

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Basis of Presentation and Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Schedule of Financial Instruments Measured at Fair Value on Recurring Basis

The table below describes the Company’s valuation of financial instruments using guidance from ASC 820-10:

Description	Level 1		Level 2		Level 3
Balance December 31, 2018	$	-	$	22,517	$	-
Change in fair value of derivative liability		-		7,390		-
Balance June 30, 2019	$	-	$	29,907	$	-

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Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Schedule of Net Sales and Identifiable Operating Income by Segment

The following table summarizes net sales and identifiable operating income by segment:

	Six Months Ended June 30,						Three Months Ended June 30,
	2019			2018			2019			2018
Segment gross profit (a):
Monitoring	$	338,010		$	366,550		$	145,958		$	235,676
Distributorships		36,681			39,265			18,990			16,095
Gross profit		374,691			405,815			164,948			251,771
Identifiable segment operating expenses (b):
Monitoring		-			-			-			-
Distributorships		-			-			-			-
Total operating expenses		-			-			-			-
Identifiable segment operating income (c):
Monitoring		338,010			366,550			145,958			235,676
Distributorships		36,681			39,265			18,990			16,095
		374,691			405,815			164,948			251,771
Reconciliation of identifiable segment income to corporate income (d):
Payroll		210,718			466,149			112,678			229,737
Professional fees		147,297			88,055			105,751			50,963
General and administrative expenses		131,492			469,095			71,418			219,539
Interest expense		338,808			210,558			161,984			108,237
Change in fair value of derivative liability		7,390			(4,293	)		5,558			(11,579	)
Gain on extinguishment of debt		(54,764	)		-			-			-
		780,941			1,229,564			457,389			596,897
Loss before provision for income taxes		(406,250	)		(823,749	)		(292,441	)		(345,126	)
Provision for income taxes		1,600			800			-			800
Net loss	$	(407,850	)	$	(824,549	)	$	(292,441	)	$	(345,926	)
Total net property, plant, and equipment assets
Monitoring	$	-		$	-		$	-		$	-
Distributorships		-			-			-			-
Corporate		-			-			-			-
	$	-		$	-		$	-		$	-

(a) Segment gross profit includes segment net sales less segment cost of sales

(b) Identifiable segment operating expenses consists of identifiable depreciation expense

(c) Identifiable segment operating incomes consists of segment gross profit less identifiable operating expense

(d) General corporate expense consists of all other non-identifiable expenses

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Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2019

Payables and Accruals [Abstract]

Schedule of Accrued Expense

Accrued Expenses consist of the following:

Description	June 30, 2019		December 31, 2018
Accrued payroll and payroll taxes	$	20,004	$	17,616
Deferred rent		-		5,317
Income tax payable		6,730		5,930
Other accrued expenses		-		37,125
Total	$	26,734	$	65,988

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Notes Payable (Tables)

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Schedule of Notes Payable

Notes payable consist of the following:

	As of June 30, 2019						As of December 31, 2018
Terms	Amount		Discount		Net Balance		Amount			Discount			Net Balance
December 2017 ($50,000) -15% interest due in December 2020 including issuance of 100,000 shares of common stock with exercise price at $0.25 per share.	$	-	$	-	$	-	$	40,736		$	(14,474	)	$	26,262
October 2018 ($60,000) - $561 daily principal and interest until paid in full		-		-		-		42,424			-			42,424
October 2018 ($72,800) - $11,527 monthly principal and interest for first six months, $9,975 monthly principal and interest last six months		67,159		-		67,159		67,159			-			67,159
Total notes payable		67,159		-		67,159		150,319			(14,474	)		135,845
Less: non-current portion		-		-		-		(24,994	)		6,925			(18,069	)
Notes payable, current portion	$	67,159	$	-	$	67,159	$	125,325		$	(7,549	)	$	117,776

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Notes Payable to Related Parties (Tables)

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Schedule of Notes Payable Related Parties

Notes payable to related parties consist of the following:

Terms	June 30, 2019			December 31, 2018
August 2018 ($1,365,000) – Replaced August 2018 note ($1,365,000) that replaced November 2017 note ($765,000 balance at August 1, 2018), February 2018 note ($100,000) and March 2018 note ($500,000). Includes $635,000 penalty on default of August 2018 ($1,365,000) note and $20,000 for missed payment on August 2018 note. Interest only monthly payment of $50,500 for life of note. Entire principal due December 1, 2023.	$	2,020,000		$	2,020,000
December 2018 ($6,000) – No interest with principal due on December 17, 2019.		6,000			6,000
December 2018 ($23,000) – No interest with principal due on December 13, 2019.		23,000			23,000
January 2019 ($32,700) – No interest with principal due on January 3, 2020.		32,700			-
January 2019 ($40,000) – No interest with principal due on January 11, 2020.		40,000			-
January 2019 ($14,500) – No interest with principal due on January 15, 2020.		14,500			-
February 2019 ($15,000) – No interest with principal due on February 1, 2020.		15,000			-
February 2019 ($5,000) – No interest with principal due on February 19, 2020.		5,000			-
March 2019 ($10,000) – No interest with principal due on March 4, 2020.		10,000			-
May 2019 ($20,000) – No interest with principal due on May 1, 2020		20,000			-
June 2019 ($89,000) – No interest with principal due on June 3, 2020		89,000			-
Total notes payable to related parties		2,275,200			2,049,000
Less: non-current portion		(2,246,200	)		(2,020,000	)
Notes payable to related parties, current portion	$	29,000		$	29,000

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Convertible Notes Payable (Tables)

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Schedule of Convertible Notes Payable

Convertible notes payable consists of the following:

	As of June 30, 2019									As of December 31, 2018
Terms	Amount			Discount			Net Balance			Amount			Discount			Net Balance
August 2015 ($15,000) - 7.5% interest bearing convertible debenture due on August 7, 2017 with interest only payments and due upon maturity.		7,500			-			7,500			7,500			-			7,500
March 2018 ($20,000) – 10% interest bearing convertible debenture due on March 9, 2021, with interest paid in cash for the first six months, and either in cash or shares of common stock thereafter. Principal is due March 9, 2021, paid either in cash or common stock, at the Company’s discretion		20,000			(8,965	)		11,035			20,000			(11,527	)		8,473
Total convertible notes payable		27,500			(8,965	)		18,535			27,500			(11,527	)		15,973
Less: non-current portion		(20,000	)		3,841			(16,159	)		(20,000	)		6,403			(13,597	)
Convertible notes payable, current portion	$	7,500		$	(5,124	)	$	2,376		$	7,500		$	(5,124	)	$	2,376

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Derivative Liabilities (Tables)

6 Months Ended

Jun. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Liabilities

Derivative liabilities consisted of the following:

	June 30, 2019		December 31, 2018
August 2015 - $15,000 convertible debt	$	6,359	$	6,523
March 2018 - $20,000 convertible debt		23,549		15,994
Total derivative liabilities	$	29,907	$	22,517

Schedule of Revalue of Derivatives Using Black Scholes Model

The following table describes the derivative liability as of December 31, 2018 and June 30, 2019.

	December 31, 2018		Additions		Changes			June 30, 2019
August 2015 - $15,000 convertible debt	$	6,523	$	-	$	(165	)	$	6,358
March 2018 - $20,000 convertible debt		15,994		-		7,555			23,549
Total	$	22,517	$	-	$	7,390		$	29,907

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Accrued Royalty Payable (Tables)

6 Months Ended

Jun. 30, 2019

Accrued Royalty Payable

Schedule of Accrued Royalties

Based on the royalty agreement, the Company had the following royalty accruals:

	June 30, 2019		December 31, 2018
November 2017 royalty agreement	$	3,327	$	3,327
August 2018 royalty agreement		18,058		18,058
December 2018 royalty agreement		35,250		5,500
Total accrued royalties	$	56,635	$	26,885

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Income (Loss) Per Share (Tables)

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following shares are not included in the computation of diluted income (loss) per share, because their inclusion would be anti-dilutive:

	Six Months Ended June 30,				Three Months Ended June 30,
	2019		2018		2019		2018
Preferred shares		-		-		-
Convertible notes		434,058		58,299		434,058		58,299
Warrants		6,537,586		5,597,586		6,537,586		5,597,586
Options		-		-		-		-
Total anti-dilutive weighted average shares		6,971,644		5,655,885		6,971,644		5,655,885

Schedule of Dilutive Securities of Common Shares Outstanding

If all dilutive securities had been exercised at June 30, 2019, the total number of common shares outstanding would be as follows:

Common Shares	30,566,920
Preferred Shares	-
Convertible notes	434,058
Warrants	6,537,586
Options	-
Total potential shares	37,538,564

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Organization and Nature of Business (Details Narrative) - USD ($)	Dec. 31, 2018	Dec. 31, 2015
Laurence Wainer [Member]
Number of stock sold during period value	$ 30,000
Common Stock [Member] | Laurence Wainer [Member]
Number of stock sold during period	8,924,000
Preferred Stock [Member] | Laurence Wainer [Member]
Number of stock sold during period	1,000,000
Arizona Corporation [Member]
Ownership percent		100.00%

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Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Accounting Policies [Abstract]
Accumulated deficit	$ (6,504,172)				$ (6,504,172)		$ (6,096,322)
Net loss	(292,441)	$ (115,409)	$ (345,926)	$ (478,623)	(407,850)	$ (824,549)
Advertising and marketing expenses	$ 267		$ 45,054		$ 267	$ 61,915
Accrued royalties							$ 255,030
Maximum percentage of carrying value of debt							10.00%

XML

Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Financial Instruments Measured at Fair Value on Recurring Basis (Details)	6 Months Ended
	Jun. 30, 2019 USD ($)
Fair Value, Inputs, Level 1 [Member]
Balance, beginning
Change in fair value of derivative liability
Balance, ending
Fair Value, Inputs, Level 2 [Member]
Balance, beginning	22,517
Change in fair value of derivative liability	7,390
Balance, ending	29,907
Fair Value, Inputs, Level 3 [Member]
Balance, beginning
Change in fair value of derivative liability
Balance, ending

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Segment Reporting (Details Narrative)	6 Months Ended
	Jun. 30, 2019 Device
Segment Reporting [Abstract]
Number of reportable segments	2
Rental period description	The rental periods range from a few months to 2 years and include a combination of down payments made by the customer and monthly payments paid under the agreements with the Company.

XML

Segment Reporting - Schedule of Net Sales and Identifiable Operating Income by Segment (Details) - USD ($)		3 Months Ended				6 Months Ended		12 Months Ended
		Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Gross Profit		$ 164,948		$ 251,771		$ 374,691	$ 405,815
Total operating expenses		289,847		500,239		489,507	1,023,299
Payroll		112,678		229,737		210,718	466,149
Professional fees		105,751		50,963		147,297	88,055
General and administrative expenses		71,418		219,539		131,492	469,095
Interest expense		161,984		108,237		338,808	210,558
Change in fair value of derivative liability						(7,390)	(11,078)	$ 7,390
Gain on extinguishment of debt						54,764
Loss before provision for income taxes		(292,441)		(345,126)		(406,250)	(823,749)
Provision for income taxes				800		1,600	800
Net loss		(292,441)	$ (115,409)	(345,926)	$ (478,623)	(407,850)	(824,549)
Monitoring [Member]
Gross Profit	[1]	145,958		235,676		338,010	366,550
Total operating expenses	[2]
Identifiable segment operating income	[3]	145,958		235,676		338,010	366,550
Total net property, plant, and equipment assets
Distributorships [Member]
Gross Profit	[1]	18,990		16,095		36,681	39,265
Total operating expenses	[2]
Identifiable segment operating income	[3]	18,990		16,095		36,681	39,265
Total net property, plant, and equipment assets
Operating Segment [Member]
Gross Profit	[1]	164,948		251,771		374,691	405,815
Total operating expenses	[2]
Identifiable segment operating income	[3]	164,948		251,771		374,691	405,815
Payroll	[4]	112,678		229,737		210,718	466,149
Professional fees	[4]	105,751		50,963		147,297	88,055
General and administrative expenses	[4]	71,418		219,539		131,492	469,095
Interest expense	[4]	161,984		108,237		338,808	210,558
Change in fair value of derivative liability	[4]	5,558		(11,579)		7,390	(4,293)
Gain on extinguishment of debt	[4]					(54,764)
Reconciliation of identifiable segment income to corporate income	[4]	457,389		596,897		780,941	1,229,564
Loss before provision for income taxes		(292,441)		(345,126)		(406,250)	(823,749)
Provision for income taxes				800		1,600	800
Net loss		(292,441)		(345,926)		(407,850)	(824,549)
Total net property, plant, and equipment assets
Corporate [Member]
Total net property, plant, and equipment assets

[1] Segment gross profit includes segment net sales less segment cost of sales

[2] Identifiable segment operating expenses consists of identifiable depreciation expense

[3] Identifiable segment operating incomes consists of segment gross profit less identifiable operating expense

[4] General corporate expense consists of all other non-identifiable expenses

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Accrued Expenses - Schedule of Accrued Expense (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Payables and Accruals [Abstract]
Accrued payroll and payroll taxes	$ 20,004	$ 17,616
Deferred rent		5,317
Income tax payable	6,730	5,930
Other accrued expenses		37,125
Total	$ 26,734	$ 65,988

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Notes Payable (Details Narrative) - USD ($)					1 Months Ended	3 Months Ended		6 Months Ended
	Jan. 16, 2019	Oct. 11, 2018	Oct. 04, 2018	Dec. 02, 2017	Jan. 31, 2019	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Amortization of debt discount								$ 17,035	$ 24,536
Gain on extinguishments of debt								54,764
Repayment of note payable								31,589	31,588
December 2017 Note [Member]
Notes payable				$ 50,000
Debt instrument, maturity date				Dec. 01, 2020
Promissory note interest, percentage				15.00%
Principal per month, amount				$ 1,733
Amortization of debt discount				22,650
Gain on extinguishments of debt					$ 43,930
Interest expense						0	1,706	0	3,539
December 2017 Note [Member] | Third Party [Member]
Notes payable				$ 50,000
October 2018 Note [Member]
Notes payable		$ 59,105
Debt instrument, maturity date		May 05, 2019
Promissory note interest, percentage		55.00%
Gain on extinguishments of debt	$ 10,834
Interest expense						0	0	0	0
Note payable, processing fee		$ 895
Principal per business day, amount		561
Repayment of note payable	$ 30,806
October 2018 Note [Member] | Third Party [Member]
Notes payable		$ 60,000
October 2018 Note 1 [Member]
Notes payable			$ 72,800
Debt instrument, maturity date			Oct. 04, 2019
Promissory note interest, percentage			51.00%
Interest expense						$ 8,536	$ 0	$ 17,126	$ 0
October 2018 Note 1 [Member] | First Six Months [Member]
Principal per month, amount			$ 11,527
October 2018 Note 1 [Member] | Last Six Months [Member]
Principal per month, amount			9,975
October 2018 Note 1 [Member] | Third Party [Member]
Notes payable			$ 72,800

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Notes Payable - Schedule of Notes Payable (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Notes payable, gross amount	$ 67,159	$ 150,319
Notes payable, discount		(14,474)
Notes payable, net balance	67,159	135,845
Less: non-current portion, gross		(24,994)
Less: non-current portion, discount		6,925
Less: non-current portion, net		(18,069)
Notes payable, current portion, gross	67,159	125,325
Notes payable, current portion, discount		(7,549)
Notes payable, current portion	67,159	117,776
December 2017 Note [Member]
Notes payable, gross amount		40,736
Notes payable, discount		(14,474)
Notes payable, net balance		26,262
October 2018 Note [Member]
Notes payable, gross amount		42,424
Notes payable, discount
Notes payable, net balance		42,424
October 2018 Note 1 [Member]
Notes payable, gross amount	67,159	67,159
Notes payable, discount
Notes payable, net balance	$ 67,159	$ 67,159

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Notes Payable - Schedule of Notes Payable (Details) (Parenthetical) - USD ($)	Oct. 11, 2018	Oct. 04, 2018	Dec. 02, 2017	Jun. 30, 2019	Dec. 31, 2018
Common stock shares issued				30,566,920	31,073,529
December 2017 Note [Member]
Notes payable			$ 50,000
Interest bearing percentage			15.00%
Per month amount			$ 1,733
Debt due date			Dec. 01, 2020
Common stock shares issued			100,000
Exercise price per share			$ 0.25
December 2017 Note [Member] | Third Party [Member]
Notes payable			$ 50,000
October 2018 Note [Member]
Notes payable	$ 59,105
Interest bearing percentage	55.00%
Debt due date	May 05, 2019
Principal per business day, amount	$ 561
October 2018 Note [Member] | Third Party [Member]
Notes payable	$ 60,000
October 2018 Note 1 [Member]
Notes payable		$ 72,800
Interest bearing percentage		51.00%
Debt due date		Oct. 04, 2019
October 2018 Note 1 [Member] | First Six Months [Member]
Per month amount		$ 11,527
October 2018 Note 1 [Member] | Last Six Months [Member]
Per month amount		9,975
October 2018 Note 1 [Member] | Third Party [Member]
Notes payable		$ 72,800

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Notes Payable to Related Parties (Details Narrative) - USD ($)												3 Months Ended		6 Months Ended
	Jun. 03, 2019	May 01, 2019	Mar. 04, 2019	Feb. 19, 2019	Feb. 01, 2019	Jan. 15, 2019	Jan. 11, 2019	Jan. 03, 2019	Dec. 31, 2018	Dec. 17, 2018	Dec. 01, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Notes payable principal balance									$ 2,049,000			$ 2,275,200		$ 2,275,200
Agreement With a Related Party [Member] | Doheny Group [Member]
Note for principal balance	$ 89,000	$ 20,000	$ 10,000	$ 5,000	$ 15,000	$ 14,500	$ 40,000	$ 32,700	$ 23,000	$ 6,000
Debt instrument, maturity date	Jun. 03, 2020	May 01, 2020	Mar. 04, 2020	Feb. 19, 2020	Feb. 01, 2020	Jan. 15, 2020	Jan. 11, 2020	Jan. 03, 2020	Dec. 31, 2019	Dec. 17, 2019
New Note [Member] | Replacement of a Note [Member]
Note for principal balance											$ 2,222,000
August 2018, New Promissory Note [Member] | Replacement of a Note [Member]
Notes payable principal balance											1,365,000
December 2018, New Promissory Note [Member]
Loan default penalty											635,000
Debt instrument, missed payment											20,000
Interest only payments, monthly											$ 50,500
Debt instrument, maturity date											Dec. 01, 2023
Accrued interest payments											$ 202,000
Interest expense, related party debt												$ 151,500	$ 0	$ 303,000	$ 0
December 2018, New Promissory Note [Member] | Third Party [Member]
Note for principal balance											$ 2,020,000

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Notes Payable to Related Parties - Schedule of Notes Payable Related Parties (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Total notes payable to related parties	$ 2,275,200	$ 2,049,000
Less: non-current portion	(2,246,200)	(2,020,000)
Notes payable, current portion	29,000	29,000
August 2018 Note [Member]
Total notes payable to related parties	2,020,000	2,020,000
December 2018 Note [Member]
Total notes payable to related parties	6,000	6,000
December 2018 Note 1 [Member]
Total notes payable to related parties	23,000	23,000
January 2019 Note [Member]
Total notes payable to related parties	32,700
January 2019 Note 1 [Member]
Total notes payable to related parties	40,000
January 2019 Note 2 [Member]
Total notes payable to related parties	14,500
February 2019 Note [Member]
Total notes payable to related parties	15,000
February 2019 Note 1 [Member]
Total notes payable to related parties	5,000
March 2019 Note [Member]
Total notes payable to related parties	10,000
May 2019 Note [Member]
Total notes payable to related parties	20,000
June 2019 Note [Member]
Total notes payable to related parties	$ 89,000

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Notes Payable to Related Parties - Schedule of Notes Payable Related Parties (Details) (Parenthetical) - USD ($)	Jun. 03, 2019	May 01, 2019	Mar. 04, 2019	Feb. 19, 2019	Feb. 01, 2019	Jan. 15, 2019	Jan. 11, 2019	Jan. 03, 2019	Dec. 31, 2018	Dec. 17, 2018	Dec. 01, 2018
August 2018 Note [Member]
Note for principal balance											$ 1,365,000
Loan default penalty											635,000
Debt instrument, missed payment											20,000
Interest paid, monthly											$ 50,500
Debt instrument, maturity date											Dec. 01, 2023
November 2017 Note [Member] | Replacement of a Note [Member]
Principal payments, monthly											$ 765,000
February 2018 Note [Member] | Replacement of a Note [Member]
Principal payments, monthly											100,000
March 2018 Note [Member] | Replacement of a Note [Member]
Principal payments, monthly											$ 500,000
December 2018 Note [Member]
Note for principal balance										$ 6,000
Debt instrument, maturity date										Dec. 17, 2019
December 2018 Note 1 [Member]
Note for principal balance									$ 23,000
Debt instrument, maturity date									Dec. 13, 2019
January 2019 Note [Member]
Note for principal balance								$ 32,700
Debt instrument, maturity date								Jan. 03, 2020
January 2019 Note 1 [Member]
Note for principal balance							$ 40,000
Debt instrument, maturity date							Jan. 11, 2020
January 2019 Note 2 [Member]
Note for principal balance						$ 14,500
Debt instrument, maturity date						Jan. 15, 2020
February 2019 Note [Member]
Note for principal balance					$ 15,000
Debt instrument, maturity date					Feb. 01, 2020
February 2019 Note 1 [Member]
Note for principal balance				$ 5,000
Debt instrument, maturity date				Feb. 19, 2020
March 2019 Note [Member]
Note for principal balance			$ 10,000
Debt instrument, maturity date			Mar. 04, 2020
May 2019 Note [Member]
Note for principal balance		$ 20,000
Debt instrument, maturity date		May 01, 2020
June 2019 Note [Member]
Note for principal balance	$ 89,000
Debt instrument, maturity date	Jun. 03, 2020

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Convertible Notes Payable (Details Narrative)				3 Months Ended		6 Months Ended
	Mar. 09, 2018 USD ($)	May 06, 2016 USD ($) shares	Aug. 07, 2015 USD ($) Device $ / shares shares	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)
Convertible notes				$ 18,535		$ 18,535		$ 15,973
Amortization of debt discount						17,035	$ 24,536
Expected Dividend Rate [Member]
Warrants measurement input | Device			0.00
Volatility [Member]
Warrants measurement input | Device			1.00
Risk Free Interest Rate [Member]
Warrants measurement input | Device			0.0108
Convertible Debenture Due on August 7, 2017 [Member]
Interest bearing percentage			7.50%
Convertible notes			$ 15,000	7,500		7,500		7,500
Debt instrument, maturity date			Aug. 07, 2017
Percentage of accrued interest to be converted to common stock			70.00%
Debt instrument, convertible, terms of conversion feature			On August 7, 2015, the Company entered into an agreement with a third party non-affiliate and issued a 7.5% interest bearing convertible debenture for $15,000 due on August 7, 2017, with conversion features commencing after 180 days following the date of the note. Payments of interest only were due monthly beginning September 2015. The loan is convertible at 70% of the average of the closing prices for the common stock during the five trading days prior to the conversion date.
Amortization of debt discount			$ 5,770
Conversion of debt		$ 7,500
Common stock conversion shares | shares		30,000
Warrants outstanding | shares			30,000
Warrants exercise price | $ / shares			$ 0.50
Warrants, term			3 years
Additional discount on debt			$ 4,873
Interest expense				141	$ 141	282	282
Convertible Debenture Due on March 9, 2021 [Member]
Interest bearing percentage	10.00%
Convertible notes	$ 20,000			11,035		11,035		$ 8,473
Debt instrument, maturity date	Mar. 09, 2021
Percentage of accrued interest to be converted to common stock	61.00%
Debt instrument, convertible, terms of conversion feature	The loan is convertible at 61% of the average of the closing prices for the common stock during the five trading days prior to the conversion date but may not be converted if such conversion would cause the holder to own more than 4.9% of outstanding common stock after giving effect to the conversion.
Amortization of debt discount	$ 20,000
Interest expense				$ 500	$ 313	$ 1,000	$ 626
Convertible Debenture Due on March 9, 2021 [Member] | Total Discount [Member]
Amortization of debt discount	47,768
Convertible Debenture Due on March 9, 2021 [Member] | Expenses Related Beneficial Feature [Member]
Amortization of debt discount	$ 27,768

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Convertible Notes Payable - Schedule of Convertible Notes Payable (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018	Mar. 09, 2018	Aug. 07, 2015
Convertible notes, gross amount	$ 27,500	$ 27,500
Convertible notes, discount	(8,965)	(11,527)
Convertible notes, net balance	18,535	15,973
Less: non-current portion, gross amount	(20,000)	(20,000)
Less: non-current portion, discount	3,841	6,403
Less: non-current portion, net	(16,159)	(13,597)
Convertible notes, current portion, gross amount	7,500	7,500
Convertible notes, current portion, discount	(5,124)	(5,124)
Convertible notes, current portion	2,376	2,376
Convertible Debenture Due on August 7, 2017 [Member]
Convertible notes, gross amount	7,500	7,500
Convertible notes, discount
Convertible notes, net balance	7,500	7,500		$ 15,000
Convertible Debenture Due on March 9, 2021 [Member]
Convertible notes, gross amount	20,000	20,000
Convertible notes, discount	(8,965)	(11,527)
Convertible notes, net balance	$ 11,035	$ 8,473	$ 20,000

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Convertible Notes Payable - Schedule of Convertible Notes Payable (Details) (Parenthetical) - USD ($)	Mar. 09, 2018	Aug. 07, 2015	Jun. 30, 2019	Dec. 31, 2018
Convertible notes			$ 18,535	$ 15,973
Convertible Debenture Due on August 7, 2017 [Member]
Convertible notes		$ 15,000	7,500	7,500
Interest bearing percentage		7.50%
Convertible debt due date		Aug. 07, 2017
Convertible Debenture Due on March 9, 2021 [Member]
Convertible notes	$ 20,000		$ 11,035	$ 8,473
Interest bearing percentage	10.00%
Convertible debt due date	Mar. 09, 2021

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Derivative Liabilities (Details Narrative) - USD ($)	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018	Mar. 31, 2018	Aug. 31, 2015
Convertible notes	$ 18,535	$ 15,973
Derivative [Member] | Expected Dividend Rate [Member]
Warrants measurement input			0.00%		0.00%
Derivative [Member] | Volatility [Member]
Warrants measurement input			413.00%		100.00%
Derivative [Member] | Risk Free Interest Rate [Member]
Warrants measurement input			2.90%		0.61%
August 2015 Convertible Debenture [Member] | Derivative [Member]
Convertible notes					$ 15,000
Convertible debt, fair value					$ 15,000
Warrants, term					1 year 6 months 29 days
March 2018 Convertible Debenture [Member] | Derivative [Member]
Convertible notes			$ 20,000	$ 20,000
Convertible debt, fair value				$ 20,000
Warrants, term				3 years 4 months 6 days

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Derivative Liabilities - Schedule of Derivative Liabilities (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Derivative liability	$ 29,907	$ 22,517
August 2015 Convertible Debt [Member]
Derivative liability	6,359	6,523
March 2018 Convertible Debt [Member]
Derivative liability	$ 23,549	$ 15,994

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Derivative Liabilities - Schedule of Derivative Liabilities (Details) (Parenthetical) - USD ($)	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018	Mar. 31, 2018	Aug. 31, 2015
Convertible debt	$ 18,535	$ 15,973
August 2015 Convertible Debenture [Member] | Derivative [Member]
Convertible debt					$ 15,000
March 2018 Convertible Debenture [Member] | Derivative [Member]
Convertible debt			$ 20,000	$ 20,000

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Derivative Liabilities - Schedule of Revalue of Derivatives Using Black Scholes Model (Details) - USD ($)	6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Derivative liability	$ 29,907		$ 22,517
Additions
Changes	(7,390)	$ (11,078)	7,390
August 2015 Convertible Debt [Member]
Derivative liability	6,359		6,523
Additions
Changes			(165)
March 2018 Convertible Debt [Member]
Derivative liability	$ 23,549		15,994
Additions
Changes			$ 7,555

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Derivative Liabilities - Schedule of Revalue of Derivatives Using Black Scholes Model (Details) (Parenthetical) - USD ($)	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018	Mar. 31, 2018	Aug. 31, 2015
Convertible debt	$ 18,535	$ 15,973
August 2015 Convertible Debenture [Member] | Derivative [Member]
Convertible debt					$ 15,000
March 2018 Convertible Debenture [Member] | Derivative [Member]
Convertible debt			$ 20,000	$ 20,000

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Accrued Royalty Payable (Details Narrative) - USD ($)				3 Months Ended		6 Months Ended
	Dec. 01, 2018	Aug. 01, 2018	Nov. 01, 2017	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Notes payable - related party				$ 29,000		$ 29,000		$ 29,000
Royalty fee and expense				$ 13,251	$ 47,416	$ 29,751	$ 29,751
November 2017 Royalty Agreement [Member]
Notes payable - related party			$ 900,000
Royalty fee description			Under the royalty agreement, the Company is required to pay a royalty fee of from $1.50 to $3.00 per month for every ignition interlock devise that the Company has on the road in customers' vehicles, the amount depending on how many devices are installed.
August 2018, Royalty Agreement [Member]
Notes payable - related party		$ 1,365,000
Royalty fee description		This note replaced the November 2017 Royalty Agreement as well as other, non-royalty notes payable. Under the royalty agreement, the Company is required to pay $1.50 and accrue an additional $3.50 for every ignition interlock devise for the first nine months of the note payable. After the first nine months, the Company is required to pay $1.50 per devise and the amount accrued during the first nine months will be paid monthly through the next twelve months. After the note payable is paid in full, the Company is required to pay $3.00 per devise in perpetuity.
December 2018 Royalty Agreement [Member]
Notes payable - related party	$ 2,020,000
Royalty fee description	This note replaced the August 2018 Royalty Agreement. Under the royalty agreement, the Company is required to pay a royalty fee of $5.00 per month for every ignition interlock device that the Company has on the road in customers' vehicles.

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Accrued Royalty Payable - Schedule of Accrued Royalties (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Total accrued royalties	$ 56,635	$ 26,885
November 2017 Royalty Agreement [Member]
Total accrued royalties	3,327	3,327
August 2018 Royalty Agreement [Member]
Total accrued royalties	18,058	18,058
December 2018 Royalty Agreement [Member]
Total accrued royalties	$ 35,250	$ 5,500

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Stockholders' Equity (Details Narrative) - USD ($)	3 Months Ended					6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Mar. 31, 2017	Jun. 30, 2019	Dec. 31, 2018
Preferred stock, shares authorized	20,000,000					20,000,000	20,000,000
Preferred stock, par value	$ 0.001					$ 0.001	$ 0.001
Number of preferred stock shares issued, value			$ 204,205	$ 156,500
Preferred stock, shares issued	1,000,000					1,000,000	1,000,000
Common stock, shares authorized	100,000,000					100,000,000	100,000,000
Common stock, par value	$ 0.0001					$ 0.0001	$ 0.0001
Shares issued for services, value		$ 24,500	5,200	105,000
Common stock, shares issued	30,566,920					30,566,920	31,073,529
Common Stock [Member]
Number of preferred stock shares issued, value
Shares issued for services, shares	250,000					250,000
Shares issued for services, value						$ 24,500
Common Stockholders [Member]
Common stock voting rights						Holders of common stock are entitled to one vote for each share held.
Series A Preferred Stock [Member]
Preferred stock, shares authorized	1,000,000					1,000,000
Preferred stock, voting rights						Series A Preferred stock will have one hundred (100) votes on all matters
Number of preferred stock shares issued, value
Shares issued for services, value
Series A Preferred Stock [Member] | Material Definitive Agreement [Member] | Officer and Director [Member]
Stock issued during period, shares					1,000,000
Number of preferred stock shares issued, value					$ 350,000

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Income (Loss) Per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Total anti-dilutive weighted average shares	6,971,644	5,655,885	6,971,644	565,585
Preferred Shares [Member]
Total anti-dilutive weighted average shares
Convertible Notes [Member]
Total anti-dilutive weighted average shares	434,058	58,299	434,058	58,299
Warrants [Member]
Total anti-dilutive weighted average shares	6,537,586	5,597,586	6,537,586	5,597,586
Options [Member]
Total anti-dilutive weighted average shares

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Income (Loss) Per Share - Schedule of Dilutive Securities of Common Shares Outstanding (Details)	6 Months Ended
	Jun. 30, 2019 shares
Total potential shares	37,538,564
Common Shares [Member]
Total potential shares	30,566,920
Preferred Shares [Member]
Total potential shares
Convertible Notes [Member]
Total potential shares	434,058
Warrants [Member]
Total potential shares	6,537,586
Options [Member]
Total potential shares

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Commitments and Contingencies (Details Narrative) - USD ($)			3 Months Ended		6 Months Ended
	Aug. 28, 2017	Dec. 01, 2016	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Rent expense			$ 21,672	$ 16,053	$ 32,902	$ 30,691
Cahuenga Management LLC [Member]
Lease term		4 years
Lease amount per month		$ 2,200
Maximum provision for escalating		$ 2,404
B3 Investments, LLC [Member]
Lease term	1 year
Lease amount per month	$ 1,350
Lease description	On August 28, 2017, the Company entered into a one-year lease with B3 Investments, LLC for a storefront location at Suites D104 and D105, 2406 24th Street, South Phoenix, Arizona. Base rent under the lease is $1,350 per month plus 2% ($27) rental tax.
Percentage of rental tax rate	2.00%
Rental tax	$ 27

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Related Party Transactions (Details Narrative) - Doheny Group [Member]	6 Months Ended
	Jun. 30, 2019 USD ($) shares
Notes payable | $	$ 2,275,200
Number of common stock granted	2,669,761
Notes Payable [Member]
Number of common stock granted	1,863,152

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Subsequent Events (Details Narrative) - Subsequent Event [Member] - Loan Agreement [Member] - The Doheny Group [Member] - USD ($)	Jul. 26, 2019	Jul. 18, 2019	Jul. 10, 2019
Loan amount	$ 25,000	$ 8,000	$ 13,000
Debt interest rate	0.00%	0.00%	0.00%
Debt monthly payment
Debt balloon payment	$ 25,000	$ 8,000	$ 13,000
Debt balloon payment date	Jul. 26, 2020	Jul. 18, 2020	Jul. 10, 2020