10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2020

or

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

Commission file number: 000-55722

HELIX TCS, INC.

(Exact name of registrant as specified in its charter)

Delaware	81-4046024
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

10200 E. Girard Avenue, Suite B420

Denver, CO 80231

(Address of Principal Executive Offices) (Zip Code)

Telephone: (720) 328-5372

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	HLIX	OTCQB

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 report(s)), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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	☒
		Emerging growth company	☐

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

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

As of May 12, 2020, the registrant had 97,924,212 shares of its common stock, par value $0.001 per share, outstanding. 

Table of Contents

		PAGE
PART I	FINANCIAL INFORMATION	1
ITEM 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019 (unaudited)	1
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2020 and 2019 (unaudited)	2
	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2020 and 2019 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019 (unaudited)	5
	Notes to the Condensed Consolidated Financial Statements	6
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	44
ITEM 4.	Controls and Procedures	44
PART II	OTHER INFORMATION	45
ITEM 1.	Legal Proceedings	45
ITEM 1A.	Risk Factors	45
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
ITEM 3	Defaults upon Senior Securities	45
ITEM 4.	Mine Safety Disclosures	45
ITEM 5.	Other Information	45
ITEM 6.	Exhibits	45
SIGNATURES		47

i

PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

HELIX TCS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	March 31,			December 31,
	2020			2019
ASSETS
Current assets:
Cash	$	616,837		$	652,524
Accounts receivable, net		1,504,765			1,870,722
Prepaid expenses and other current assets		874,334			737,159
Costs & earnings in excess of billings		260,895			257,819
Total current assets		3,256,831			3,518,224
Property and equipment, net		979,012			805,679
Intangible assets, net		11,834,840			14,395,287
Goodwill		53,716,206			53,716,206
Deposits and other assets		1,392,680			1,172,601
Promissory note receivable		75,000			75,000
Total assets	$	71,254,569		$	73,682,997
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities		2,868,554			3,263,146
Billings in excess of costs		74,801			164,663
Notes payable and financing arrangements, current portion		450,977			24,805
Obligation pursuant to acquisition		50,000			50,000
Convertible notes payable, net of discount		846,563			832,492
Convertible notes payable, net of discount - related party		1,285,220			1,584,360
Warrant liability		113,942			715,259
Promissory notes		300,000			300,000
Total current liabilities		5,990,057			6,934,725
Long-term liabilities:
Notes payable and financing arrangements, net of current portion		429,082			433,087
Convertible notes payable, net of discount		385,000			385,000
Other long-term liabilities		1,077,834			783,230
Total long-term liabilities		1,891,916			1,601,317
Total liabilities		7,881,973			8,536,042
Shareholders’ equity:
Preferred stock (Class A), $0.001 par value, 3,000,000 shares authorized; 1,000,000 issued and outstanding as of March 31, 2020 and December 31, 2019		1,000			1,000
Preferred stock (Class B), $0.001 par value, 17,000,000 shares authorized; 13,784,201 issued and outstanding as of March 31, 2020 and December 31, 2019		13,784			13,784
Common stock; par value $0.001; 200,000,000 shares authorized; 96,045,386 shares issued and outstanding as of March 31, 2020; 93,608,619 shares issued and outstanding as of December 31, 2019		96,045			93,608
Additional paid-in capital		102,174,494			100,906,143
Accumulated other comprehensive income		(58,824	)		(79,901	)
Accumulated deficit		(38,853,903	)		(35,787,679	)
Total shareholders’ equity		63,372,596			65,146,955
Total liabilities and shareholders’ equity		71,254,569			73,682,997

See accompanying notes to the unaudited condensed consolidated financial statements

1

HELIX TCS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the Three Months Ended March 31,
	2020			2019
Security and guarding	$	1,593,449		$	1,204,711
Systems installation		174,946			28,541
Software		2,784,036			2,137,855
Total revenues	$	4,552,431		$	3,371,107
Cost of revenue		2,266,679			1,925,219
Gross margin		2,285,752			1,445,888
Operating expenses:
Selling, general and administrative		903,731			936,878
Salaries and wages		1,731,061			1,251,577
Professional and legal fees		474,417			688,455
Depreciation and amortization		1,222,592			1,165,641
Loss on impairment of intangible assets		1,369,978			-
Total operating expenses		5,701,779			4,042,551
Loss from operations		(3,416,027	)		(2,596,663	)
Other income (expenses):
Change in fair value of convertible note		(339,620	)		(987,963	)
Change in fair value of convertible note - related party		498,233			(3,524,009	)
Change in fair value of warrant liability		657,525			(1,632,956	)
Change in fair value of contingent consideration		-			(1,136,700	)
Loss on issuance of warrants		-			(787,209	)
Interest (expense) income		(503,842	)		(176,201	)
Other income		37,507			-
Other income (expenses)		349,803			(8,245,038	)
Net income (loss)	$	(3,066,224	)	$	(10,841,701	)
Other comprehensive (loss) income:
Changes in foreign currency translation adjustment		21,077			4,247
Total other comprehensive (loss) income		21,077			4,247
Total comprehensive income (loss)		(3,045,147	)		(10,837,454	)
Net income (loss) attributable to common shareholders	$	(3,045,147	)	$	(10,837,454	)
Net income (loss) per share attributable to common shareholders:
Basic	$	(0.03	)	$	(0.15	)
Diluted	$	(0.03	)	$	(0.15	)
Weighted average common shares outstanding:
Basic		94,694,656			73,163,893
Diluted		94,694,656			73,163,893

See accompanying notes to the unaudited condensed consolidated financial statements.

2

HELIX TCS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

	Common Stock				Preferred Stock (Class A)				Preferred Stock (Class B)				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Shareholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Income			Deficit			Equity
Balance at December 31, 2019		93,608,619	$	93,608		1,000,000	$	1,000		13,784,201	$	13,784	$	100,906,143	$	(79,901	)	$	(35,787,679	)	$	65,146,955
Issuance of common stock per investment unit agreements		270,270		270		-		-		-		-		43,522		-			-			43,792
Issuance of common stock resulting from convertible note conversion		1,648,606		1,649		-		-		-		-		425,041		-			-			426,690
Share-based compensation expense		350,000		350		-		-		-		-		743,712		-			-			744,062
Issuance of common stock resulting from convertible note PIK interest (paid)		167,891		168		-		-		-		-		56,076		-			-			56,244
Foreign currency translation		-		-		-		-		-		-				21,077						21,077
Net loss		-		-		-		-		-		-		-		-			(3,066,224	)		(3,066,224	)
Balance at March 31, 2020		96,045,386	$	96,045		1,000,000	$	1,000		13,784,201	$	13,784	$	102,174,494	$	(58,824	)	$	(38,853,903	)	$	63,372,596

3

	Common Stock				Preferred Stock (Class A)				Preferred Stock (Class B)				Additional Paid-In		Accumulated Other Comprehensive		Accumulated			Total Shareholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Income		Deficit			Equity
Balance at December 31, 2018		72,660,825	$	72,660		1,000,000		1000		13,784,201	$	13,784	$	82,831,014	$	17,991	$	(26,207,510	)	$	56,728,939
Issuance of common stock per stock subscription agreements		1,255,222		1,255																	1,255
Issuance of common stock resulting from convertible note conversion		155,421		156										117,781							117,937
Issuance of common stock to employees under Stock Incentive Plan		250,000		250										319,750							320,000
Issuance of common stock resulting from inducement of consulting agreement		20,000		20										27,380							27,400
Grant of an option to purchase common stock														56,667							56,667
Issuance of common stock resulting from exercise of stock options		6,082		6										4,799							4,805
Issuance of common stock resulting from cashless exercise of stock options		62,847		63																	63
Foreign currency translation																4,247					4,247
Net loss																		(10,841,701	)		(10,841,701	)
Balance at March 31, 2019		74,410,397	$	74,410		1,000,000	$	1,000		13,784,201	$	13,784	$	83,357,391	$	22,238	$	(37,049,211	)	$	46,419,612

See accompanying notes to the unaudited condensed consolidated financial statements.

4

HELIX TCS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Three Months Ended March 31,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(3,066,224	)	$	(10,841,701	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,222,592			1,165,641
Accretion of debt discounts		300,234			128,794
Loss on issuance of warrants		-			787,209
Provision for doubtful accounts		229,720			69,896
Share-based compensation expense		744,062			408,935
Change in fair value of convertible notes, net of discount		339,620			987,963
Change in fair value of warrant liability		(657,525	)		1,632,956
Change in fair value of convertible notes, net of discount - related party		(498,233	)		3,524,009
Change in fair value of contingent consideration		-			1,136,700
Loss on impairment of intangible assets		1,369,978			-
Gain on reduction of contingent consideration		-			(100,000	)
Change in operating assets and liabilities:
Accounts receivable		141,822			(73,040	)
Prepaid expenses and other current assets		(136,543	)		99,205
Deposits and other assets		11,289			-
Due to related party		-			(32,489	)
Costs & earnings in excess of billings		(3,076	)		22,702
Accounts payable and accrued expenses		(258,794	)		(139,956	)
Deferred rent		-			(2,937	)
Billings in excess of costs		(89,862	)		1,806
Right of use assets and liabilities		(11,356	)		48,432
Net cash used in operating activities		(362,296	)		(1,175,875	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(205,456	)		(9,195	)
Payments for business combination, net of cash acquired		-			(26,667	)
Net cash (used in) provided by investing activities		(205,456	)		(35,862	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments pursuant to advances from related parties		-			(42,000	)
Payments pursuant to notes payable and financing arrangements		(77,833	)		(7,060	)
Payments pursuant to a promissory note		-			(280,000	)
Proceeds from notes payable and financing arrangements		500,000			-
Proceeds from the issuance of a promissory note		-			280,000
Proceeds from the issuance of convertible notes payable		-			1,925,000
Proceeds from the issuance of common stock and warrants		100,000			1,129,700
Net cash provided by financing activities		522,167			3,005,640
Effect of foreign exchange rate changes on cash		9,898			41,120
Net change in cash		(35,687	)		1,835,023
Cash, beginning of period		652,524			285,761
Cash, end of period	$	616,837		$	2,120,784
Supplemental disclosure of cash and non-cash transactions:
Cash paid for interest	$	63,740		$	-
Common stock issued pursuant to convertible notes payable	$	426,690		$	117,936
Debt discount for warrant liability	$	-		$	(1,542,001	)
PIK interest payment of common stock	$	56,244		$	-
Supplemental non-cash amounts of lease liabilities arising from obtaining right of use assets	$	301,396		$	1,485,511

See accompanying notes to the unaudited condensed consolidated financial statements.

5

HELIX TCS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Description of Business

Helix TCS, Inc. (the “Company” or “Helix”) was incorporated in Delaware on March 13, 2014. Pursuant to the acquisition of the assets of Helix TCS, LLC, as discussed below, we changed our name from Jubilee4 Gold, Inc. to Helix TCS, Inc. effective October 25, 2015.

Effective October 25, 2015, we entered into an acquisition and exchange agreement with Helix TCS, LLC. We closed the transaction contemplated under the acquisition and exchange agreement on December 23, 2015 and Helix TCS, LLC was merged into and with Helix. 

Effective October 1, 2015, for accounting purposes, as part of an acquisition amounting to a reorganization dated December 21, 2015, Helix Opportunities LLC exchanged 100% of Helix TCS, LLC and its wholly-owned subsidiaries, Security Consultants Group, LLC and Boss Security Solutions, Inc. to the Company in exchange for 20 million common shares and 1 million convertible preferred shares of the Company.

The acquisition of Helix was treated as a recapitalization for financial accounting purposes. Jubilee4 Gold, Inc. is considered the acquiree for accounting purposes and their historical financial statements before the Acquisition Agreement were replaced with the historical financial statements of the Company. The common stock account of the Company continues post-merger, while the retained earnings of the acquiree is eliminated. Furthermore, on April 11, 2016, the Company acquired the assets of Revolutionary Software, LLC (“Revolutionary”).

On March 3, 2018, Helix TCS, Inc. and its wholly owned subsidiary, Helix Acquisition Sub, Inc. (“BioTrackTHC Merger Sub”), entered into an Agreement and Plan of Merger (the “BioTrackTHC Merger Agreement”) with Bio-Tech Medical Software, Inc. (“BioTrackTHC”) and Terence J. Ferraro, as the representative of the BioTrackTHC stockholders, pursuant to which BioTrackTHC Merger Sub merged with and into BioTrackTHC (the “BioTrackTHC Merger”).

On June 1, 2018 (the “BioTrackTHC Closing Date”), in connection with closing the BioTrackTHC Merger, the Company issued 38,184,985 unregistered shares of its common stock to BioTrackTHC stockholders, of which 1,852,677 shares were held back to satisfy indemnification obligations in the BioTrackTHC Merger Agreement, if necessary. The Company also assumed the Bio-Tech Medical Software, Inc. 2014 Stock Incentive Plan (“BioTrackTHC Stock Plan”), pursuant to which options exercisable in the amount of 8,132,410 shares of common stock are outstanding. As a result, BioTrackTHC stockholders owned approximately 48% of the Company on a fully diluted basis as of the BioTrackTHC Closing Date.

On August 3, 2018 (the “Engeni Closing Date”), the Company and its wholly owned subsidiary, Engeni Merger Sub, LLC (“Engeni Merger Sub”), entered into an Agreement and Plan of Merger (the “Engeni Merger Agreement”) with Engeni LLC (“Engeni US”), Engeni S.A (“Engeni SA”), Scott Zienkewicz, Nicolas Heller and Alberto Pardo Saleme (the Engeni US members), and Scott Zienkewicz, as the representative of the Engeni US members. Pursuant to the Engeni Merger Agreement, Engeni Merger Sub merged with and into Engeni US, with Engeni US surviving the merger as a wholly-owned subsidiary of the Company (the “Engeni Merger”).

On the Engeni Closing Date, in connection with closing the Engeni Merger Agreement, the Company issued 366,700 shares of Company common stock to Engeni US members. Furthermore, the Company subsequently issued Engeni US members 733,300 shares of Company common stock on April 2, 2019.

On April 1, 2019 (“Tan Security Closing Date”), the Company entered into a Membership Interest and Stock Purchase Agreement (the “Tan Security Acquisition Agreement”) with Tan’s International Security and Tan’s International LLC (collectively, “Tan Security”). Pursuant to the Tan Security Acquisition Agreement, the Company purchased all membership interests and capital stock of Tan Security and collectively holds 100% of the interests of Tan Security (the “Tan Security Acquisition”).

On February 5, 2019, the Company and its wholly owned subsidiary, Merger Sub, entered into an Agreement and Plan of Merger (the “Amercanex Merger Agreement”) with Green Tree International, Inc. (“GTI”) and Steve Janjic, as the representative of the GTI shareholders, pursuant to which Merger Sub merged with and into GTI (the “GTI Merger”).

On September 10, 2019 (the “GTI Closing Date”), the Company closed the GTI Merger and entered into an Addendum No. 1 to the Amercanex Merger Agreement acknowledging and approving certain events that occurred since signing as well as implementing various related amendments to the Amercanex Merger Agreement. In connection with closing the GTI Merger, the Company issued 16,765,727 unregistered shares of Company common stock to GTI shareholders, of which 4,140,274 shares were held back to satisfy indemnification obligations in the Amercanex Merger Agreement, if necessary.

6

2. Going Concern Uncertainty, Financial Condition and Management’s Plans  

The Company believes that there is substantial doubt about the Company’s ability to continue as a going concern. The Company believes that its available cash balance as of the date of this filing will not be sufficient to fund its anticipated level of operations for at least the next 12 months. The Company believes that its ability to continue operations depends on its ability to sustain and grow revenue and results of operations as well as its ability to access capital markets when necessary to accomplish the Company’s strategic objectives. The Company believes that it will continue to incur losses for the immediate future. The Company expects to finance future cash needs from its results of operations and, depending on the results of operations, the Company may need additional equity or debt financing until it can achieve profitability and positive cash flows from operating activities, if ever. 

At March 31, 2020, the Company had a working capital deficit of $2,733,226, as compared to a working capital deficit of $3,416,501 at December 31, 2019. The decrease of $683,275 in the Company’s working capital deficit from December 31, 2019 to March 31, 2020 was primarily the result of a decrease in accounts payable and accrued expenses, a non-cash decrease in the fair market value of the Company’s convertible notes payable, net of discount – related party and a non-cash decrease in warrant liability, partially offset by an increase in notes payable and financing arrangements, current portion.

The Company’s future capital requirements for its operations will depend on many factors, including the profitability of its businesses, the number and cash requirements of other acquisition candidates that the Company pursues, and the costs of operations. The Company has been investing in expanding its operation in new states, its security service in Colorado and California, and upgrading the capabilities of BioTrackTHC. The Company’s management has taken several actions to ensure that it will have sufficient liquidity to meet its obligations for the next twelve months, including growing and diversifying its revenue streams, selectively reducing expenses, and considering additional funding. Additionally, if the Company’s actual revenues are less than forecasted, the Company anticipates that variable expenses will also decline, and the Company’s management can implement expense reduction as necessary. The Company is evaluating other measures to further improve its liquidity, including the sale of equity or debt securities. Lastly, the Company may elect to reduce certain related-party and third-party debt by converting such debt into common shares. The Company’s management believes that these actions will enable the Company to meet its liquidity requirements for the next twelve months. There is no assurance that the Company will be successful in any capital-raising efforts that it may undertake to fund operations during 2020 and beyond.  

The Company plans to generate positive cash flow from its Colorado and California security operations and BioTrackTHC to address some of the liquidity concerns. However, to execute the Company’s business plan, service existing indebtedness and implement its business strategy, the Company anticipates that it will need to obtain additional financing from time to time and may choose to raise additional funds through public or private equity or debt financings, borrowings from affiliates or other arrangements. The Company cannot be sure that any additional funding, if needed, will be available on terms favorable to the Company or at all. Furthermore, any additional capital raised through the sale of equity or equity-linked securities may dilute the Company’s current stockholders’ ownership and could also result in a decrease in the market price of the Company’s common stock. The terms of those securities issued by the Company in future capital transactions may be more favorable to new investors and may include the issuance of warrants or other derivative securities, which may have a further dilutive effect. The Company also may be required to recognize non-cash expenses in connection with certain securities it issues, such as convertible notes and warrants, which may adversely impact the Company’s operating results and financial condition. Furthermore, any debt financing, if available, may subject the Company to restrictive covenants and significant interest costs. There can be no assurance that the Company will be able to raise additional capital, when needed, to continue operations in their current form.

7

3. Summary of Significant Accounting Policies

Principles of Consolidation 

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, which include Helix TCS, LLC (“Helix TCS”), Security Consultants Group, LLC (“Security Consultants”), Boss Security Solutions, Inc. (“Boss Security”), Security Grade, BioTrackTHC (since June 1, 2018), Engeni US (since August 3, 2018), Tan Security (since April 1, 2019) and Green Tree International, Inc. (since September 10, 2019). These interim statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2019. 

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Changes in estimates and assumptions are reflected in reported results in the period in which they become known. Use of estimates includes the following: 1) allowance for doubtful accounts, 2) estimated useful lives of property, equipment and intangible assets, 3) intangibles impairment, 4) valuation of convertible notes payable and 5) revenue recognition. Actual results could differ from estimates.

Cash

Cash consists of checking accounts. The Company considers all highly-liquid investments purchased with a maturity of three months or less at the time of purchase to be cash equivalents. The Company has no cash equivalents as of March 31, 2020 or December 31, 2019.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information; and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and economic conditions.

Management charges balances off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company determines when receivables are past due, or delinquent based on how recently payments have been received.

Outstanding account balances are reviewed individually for collectability. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. Allowance for doubtful accounts was $348,068 and $273,138 at March 31, 2020 and December 31, 2019, respectively.

Long-Lived Assets, Including Definite Lived Intangible Assets

Long-lived assets, other than goodwill and other indefinite-lived intangibles, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows derived from such assets. Definite-lived intangible assets primarily consist of non-compete agreements and customer relationships. For long-lived assets used in operations, impairment losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. The Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value. When an impairment exists, the related assets are written down to fair value.

Goodwill

Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. Goodwill is not amortized; rather, it is subject to a periodic assessment for impairment by applying a fair value-based test. Helix reviews goodwill for possible impairment annually during the fourth quarter, or whenever events or circumstances indicate that the carrying amount may not be recoverable.

The impairment model prescribes a two-step method for determining goodwill impairment. However, an entity is permitted to first assess qualitative factors to determine whether the two-step goodwill impairment test is necessary. The qualitative factors considered by Helix may include, but are not limited to, general economic conditions, Helix’s outlook, market performance of Helix’s industry and recent and forecasted financial performance. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that a reporting unit’s fair value is less than its carrying amount. Otherwise, no further impairment testing is required. In the first step, Helix determines the fair value of its reporting unit using a discounted cash flow analysis. If the net book value of the reporting unit exceeds its fair value, Helix then performs the second step of the impairment test, which requires allocation of the reporting unit’s fair value to all of its assets and liabilities using the acquisition method prescribed under authoritative guidance for business combinations with any residual fair value being allocated to goodwill. An impairment charge is recognized when the implied fair value of Helix’s goodwill is less than its carrying amount.

Assumptions and estimates used in the evaluation of impairment may affect the carrying value of long-lived assets, which could result in impairment charges in future periods. Such assumptions include projections of future cash flows and the current fair value of the asset.

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Accounting for Acquisitions

In accordance with the guidance for business combinations, the Company determines whether a transaction or other event is a business combination, which requires that the assets acquired, and liabilities assumed constitute a business. Each business combination is then accounted for by applying the acquisition method. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. The Company capitalizes acquisition-related costs and fees associated with asset acquisitions and immediately expense acquisition-related costs and fees associated with business combinations.

Business Combinations

The Company accounts for its business combinations under the provisions of Accounting Standards Codification (“ASC”) Topic 805-10, Business Combinations (“ASC 805-10”), which requires that the purchase method of accounting be used for all business combinations. Assets acquired and liabilities assumed, including non-controlling interests, are recorded at the date of acquisition at their respective fair values. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. Acquisition-related expenses are recognized separately from the business combinations and are expensed as incurred. If the business combination provides for contingent consideration, the Company records the contingent consideration at fair value at the acquisition date and any changes in fair value after the acquisition date are accounted for as measurement-period adjustments. Changes in fair value of contingent consideration resulting from events after the acquisition date, such as earn-outs, are recognized as follows: 1) if the contingent consideration is classified as equity, the contingent consideration is not re-measured and its subsequent settlement is accounted for within equity, or 2) if the contingent consideration is classified as a liability, the changes in fair value are recognized in earnings.

The estimated fair value of net assets acquired, including the allocation of the fair value to identifiable assets and liabilities, was determined using established valuation techniques. The estimated fair value of the net assets acquired was determined using the income approach to valuation based on the discounted cash flow method. Under this method, expected future cash flows of the business on a stand-alone basis are discounted back to a present value. The estimated fair value of identifiable intangible assets, consisting of software and trade name acquired were determined using the relief from royalty method.

The most significant assumptions under the relief from royalty method used to value software and trade names include: estimated remaining useful life, expected revenue, royalty rate, tax rate, discount rate and tax amortization benefit. The discounted cash flow method used to value non-compete agreements includes assumptions such as: expected revenue, term of the non-compete agreements, probability and ability to compete, operating margin, tax rate and discount rate. Management has developed these assumptions on the basis of historical knowledge of the business and projected financial information of the Company. These assumptions may vary based on future events, perceptions of different market participants and other factors outside the control of management, and such variations may be significant to estimated values.

Revenue Recognition

Under FASB Topic 606, Revenue from Contacts with Customers (“ASC 606”), the Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration which is expected to be received in exchange for those goods or services. The Company recognizes revenue following the five-step model prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenues when (or as) the Company satisfies a performance obligation.

The security services revenue is generated from performing armed and unarmed guarding which is contracted for on an hourly basis. Revenues associated with these contracted services are recognized under time-based arrangements as services are provided.

Additionally, the Company provides transportation security services, which are generally contracted for on a per-run basis and sometimes additional fees and surcharges are also billed to the client depending on the length of the run. Revenues associated with these services are recognized as the transportation service is provided.

The Company also generates revenue from developing and licensing seed to sale cannabis compliance software to both private-sector and public-sector (government agencies) businesses that are involved in cannabis related operations. The Company also generates revenue from on-going training, support and software customization services.

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Occasionally, the Company will enter into systems installation arrangements. Installation jobs are estimated based on the cost of equipment to be installed, the number of hours expected to be incurred to complete the job and other ancillary costs. Revenue associated with these services are recognized over the arrangement period.

Lastly, the Company generates monthly recurring revenues from Cannalytics, its business intelligence and data tool for commercial customers. Revenue is recognized monthly.

Segment Information

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision-making group is composed of the Chief Executive Officer and the Chief Financial Officer, which reviews the financial performance and the results of operations of the segments prepared in accordance with GAAP when making decisions about allocating resources and assessing performance of the Company.

Asset information by operating segment is not presented since the chief operating decision maker does not review this information by segment. The reporting segments follow the same accounting policies used in the preparation of the Company’s consolidated financial statements.

Expenses

Cost of Revenue

The cost of revenues is the total cost incurred to obtain a sale and the cost of the goods or services sold. Cost of revenues primarily consisted of hourly compensation for security personnel and employees involved in the creation and development of licensing software.

Operating Expenses

Operating expenses encompass selling general and administrative expenses, salaries and wages, professional and legal fees and depreciation and amortization. Selling, general and administrative expenses consist primarily of rent/moving expenses, advertising and travel expenses. Salaries and wages is composed of non-revenue generating employees. Professional services are principally comprised of outside legal, audit, information technology consulting, marketing and outsourcing services as well as the costs related to being a publicly traded company.

Other Income

Other income consisted of a gain on the change in fair value of convertible notes, gain on the change in the fair value of warrant liability, loss on the change in fair value of convertible notes – related party, loss on the change in fair value of contingent consideration, loss on issuance of warrants and interest expense.

Property and Equipment

Property and equipment are stated at cost and depreciated on a straight-line basis over their estimated useful lives. Useful lives are 3 years for vehicles and 5 years for furniture and equipment. Maintenance and repairs are expensed as incurred and major improvements are capitalized. When assets are sold, or retired, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included in loss from operations.

Contingencies

Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.

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Advertising

Advertising costs are expensed as incurred and included in selling, general and administrative expenses and amounted to $5,420 and $69,271 for the three months ended March 31, 2020 and 2019, respectively.

Foreign Currency

The local currency is the functional currency for one entity’s operations outside the United States. Assets and liabilities of these operations are translated to U.S. dollars at the exchange rate in effect at the end of each period. Income statement accounts are translated at the average exchange rate prevailing during the period. Translation adjustments arising from the use of differing exchange rates from period to period are included as a component of other comprehensive loss within shareholders’ equity. Gains and losses from foreign currency transactions are included in net loss for the period.

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company has incurred net operating loss for financial-reporting and tax-reporting purposes. Accordingly, for Federal and state income tax purposes, the benefit for income taxes has been offset entirely by a valuation allowance against the related federal and state deferred tax asset for the three months ended March 31, 2020 and 2019.

Comprehensive Loss

Comprehensive loss consists of consolidated net loss and foreign currency translation adjustments. Foreign currency translation adjustments included in comprehensive loss were not tax-effected as investments in international affiliates are deemed to be permanent.

Distinguishing Liabilities from Equity

The Company relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from Equity, to classify certain redeemable and/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. The Company will determine the liability classification if the financial instrument is mandatorily redeemable, or if the financial instrument, other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number of its equity shares.

Once the Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financial instrument should be presented between the liability section and the equity section of the balance sheet (“temporary equity”). The Company will determine temporary equity classification if the redemption of the financial instrument is outside the control of the Company (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity.

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Initial Measurement

The Company records its financial instruments classified as liability, temporary equity or permanent equity at issuance at the fair value, or cash received.

Subsequent Measurement – Financial instruments classified as liabilities

The Company records the fair value of its financial instruments classified as liabilities at each subsequent measurement date. The changes in fair value of its financial instruments classified as liabilities are recorded as other expense/income.

Beneficial Conversion Feature

If the conversion features of conventional convertible debt provide for a rate of conversion that is below market value, this feature is characterized as a Beneficial Conversion Feature (“BCF”). A beneficial conversion feature is recorded by the Company as a debt discount pursuant to ASC 470-20, Debt with Conversion and Other Options. In those circumstances, the convertible debt is recorded net of the discount related to the beneficial conversion feature and the Company amortizes the discount to interest expense over the life of the debt.

The Company accounts for the beneficial conversion feature on its convertible preferred stock in accordance with ASC 470-20, Debt with Conversion and Other Options. The BCF of convertible preferred stock is normally characterized as the convertible portion or feature that provides a rate of conversion that is below market value or in-the-money when issued. The Company records a BCF related to the issuance of convertible preferred stock when issued. Beneficial conversion features that are contingent upon the occurrence of a future event are recorded when the contingency is resolved.

To determine the effective conversion price, the Company first allocates the proceeds received to the convertible preferred stock and then uses those allocated proceeds to determine the effective conversion price. If the convertible instrument is issued in a basket transaction (i.e., issued along with other freestanding financial instruments), the proceeds should first be allocated to the various instruments in the basket. Any amounts paid to the investor when the transaction is consummated (e.g., origination fees, due diligence costs) represent a reduction in the proceeds received by the issuer. The intrinsic value of the conversion option should be measured using the effective conversion price for the convertible preferred stock on the proceeds allocated to that instrument. The effective conversion price represents proceeds allocable to the convertible preferred stock divided by the number of shares into which it is convertible. The effective conversion price is then compared to the per share fair value of the underlying shares on the commitment date.

The accounting for a BCF requires that the BCF be recognized by allocating the intrinsic value of the conversion option to additional paid-in capital, resulting in a discount on the convertible preferred stock. This discount should be accreted from the date on which the BCF is first recognized through the earliest conversion date for instruments that do not have a stated redemption date. The intrinsic value of the BCF is recognized as a deemed dividend on convertible preferred stock over a period specified in the guidance.

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Share-based Compensation

The Company accounts for stock-based compensation to employees in conformity with the provisions of ASC Topic 718, Stock Based Compensation. Stock-based compensation to employees consist of stock option grants and restricted shares that are recognized in the statement of operations based on their fair values at the date of grant.

The Company accounts for equity instruments issued to non-employees in accordance with the provisions of ASC Topic 718, based upon the fair-value of the underlying instrument. The equity instruments are valued using the Black-Scholes valuation model. The measurement of stock-based compensation is subject to periodic adjustments as the underlying equity instruments vest and is recognized as an expense over the period which services are received.

The Company calculates the fair value of option grants utilizing the Black-Scholes pricing model and estimates the fair value of the stock based upon the estimated fair value of the common stock. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest.

The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight- line basis over the requisite service period of the award.

Fair Value of Financial Instruments

ASC Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”) provides a framework for measuring fair value in accordance with generally accepted accounting principles.

ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).

The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC Topic 820 are described as follows:

● Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.

● Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

● Level 3 – Inputs that are unobservable for the asset or liability.

Certain assets and liabilities of the Company are required to be recorded at fair value either on a recurring or non-recurring basis. Fair value is determined based on the price that would be received for an asset or paid to transfer a liability in an orderly transaction based on market participants. The following section describes the valuation methodologies that the Company used to measure, for disclosure purposes, its financial instruments at fair value.

Convertible notes payable

The fair value of the Company’s convertible notes payable, approximated the carrying value as of March 31, 2020 and December 31, 2019. Factors that the Company considered when estimating the fair value of its debt included market conditions and the term of the debt. The level of the debt would be considered as Level 2.

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Additional Disclosures Regarding Fair Value Measurements

The carrying value of cash, accounts receivable, prepaid expenses, deposits, accounts payable and accrued liabilities, advances from shareholders and obligation pursuant to acquisition approximate their fair value due to the short-term maturity of those items.

Earnings (Loss) per Share

The Company follows ASC 260, Earnings Per Share, which requires presentation of basic and diluted earnings per share (“EPS”) on the face of the income statement for all entities with complex capital structures. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options and warrants, using the treasury stock method, and convertible debt and convertible securities, using the if-converted method.

For the three months ended March 31, 2020 and 2019, potential common shares includable in the computation of fully-diluted per share results are not presented in the condensed consolidated financial statements as their effect would be anti-dilutive.

The anti-dilutive shares of common stock outstanding for the three months ended March 31, 2020 and 2019 were as follows:

	For the Three Months Ended March 31,
	2020		2019
Potentially dilutive securities:
Convertible notes payable		18,889,749		2,340,936
Convertible Preferred A Stock		1,000,000		1,000,000
Convertible Preferred B Stock		13,784,201		13,784,201
Warrants		5,248,193		4,842,225
Stock options		11,072,711		9,560,534

Reclassifications

Certain reclassifications have been made to the prior period financial statements to conform to the current period financial statement presentation. These reclassifications had no effect on net earnings or cash flows as previously reported.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-.02, Leases (Topic 842) (“Topic 842”) which requires the recognition of right-of-use assets and lease liabilities on the balance sheet. The most prominent of the changes in the standard is the recognition of right-of-use (“ROU”) assets and lease liabilities by lessees for those leases classified as operating leases.

The Company adopted the new standard on January 1, 2019 and used the modified retrospective approach with the effective date as the date of initial application. Consequently, prior period balances and disclosures have not been restated. The Company elected certain practical expedients, which among other things, allowed us to carry forward prior conclusions about lease identification and classification.

Adoption of the standard resulted in the balance sheet recognition of additional lease assets and lease liabilities of approximately $1,500,000. The new standard also provides practical expedients for an entity’s ongoing accounting. The Company currently has elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, the Company will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in separate lease and non-lease components for all our leases. For additional information regarding the Company’s leases, see Note 18 in the notes to condensed consolidated financial statements.

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In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company adopted this ASU as of January 1, 2019. The amendments in this ASU did not have a material impact on the Company’s consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220); Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this ASU allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Act and will improve the usefulness of information reported to financial statement users. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted in any interim period after issuance of the ASU. The Company adopted this ASU as of January 1, 2019. The amendments in this ASU did not have a material impact on the Company’s consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (ASC 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of ASC 718 to include share-based payment transactions for acquiring goods and services from nonemployees and applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. ASC 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC 606. This update is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company adopted this ASU as of January 1, 2019. The amendments in this ASU did not have a material impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (ASC 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 removes certain disclosures, modifies certain disclosures and adds additional disclosures. The ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted. The Company is evaluating the effect that this update will have on its financial statements and related disclosures.

Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on the Company’s consolidated financial statements and related disclosures.

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4. Revenue Recognition

Disaggregation of revenue 

	For the Three Months Ended March 31,
	2020		2019
Types of Revenues:
Security and Guarding	$	1,593,449	$	1,204,711
Systems Installation		174,946		28,541
Software		2,784,036		2,137,855
Total revenues	$	4,552,431	$	3,371,107

The following is a description of the principal activities from which we generate our revenue.

Security and Guarding Revenue

Helix provides armed and unarmed guards, monitoring of security alarms and cameras, as well as armed transportation services. The guards are charged out at an hourly rate, as are the monitoring services, with invoices typically sent to clients shortly after each month-end for the previous month, with revenue being recognized over time. The customer simultaneously receives and consumes benefits provided by the Helix performance. Transportation services are typically invoiced on a per-run basis, with revenue being recognized at a point in time once the service has been completed.

Systems Installation Revenue

Security systems, including Internet Protocol camera, intrusion alarm systems, perimeter alarm systems, and access controls are installed for clients. Installation jobs are estimated based on the cost of the equipment, the number of man hours expected to complete the work, supplies, travel, and any other ancillary costs. The installation is typically invoiced with 60% of the total price immediately after signing and the balance upon completion of the installation service. The timing of these contracts is short-term in nature and less than 12 months in duration, and revenue is recognized over the term of the contracts, utilizing the cost-to-cost method.

Software

The Company generates revenue from developing and licensing seed to sale cannabis compliance software to both private-sector and public-sector (government agencies) clients that are involved in cannabis related operations. The Company also generates revenue from on-going training, support and software customization services.

The private-sector software entails cultivation tracking, inventory management, point of sale and analytic reporting to assist businesses in meeting their compliance requirements and effectively managing their businesses. Customers within the private sector business are charged an initial one-time installation fee and the revenues associated with these services are recognized upon completion of installation and configuration at a point in time. After the installation and configuration of the software is completed, the customer is invoiced monthly and revenues associated with these services are recognized monthly over a period of time in which the customer continues to use the software and related services.

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The public-sector software assists government agencies in efficient oversight of cannabis related business under their jurisdiction. Revenues associated with governmental contracts are longer-term in nature and recognized upon completion of certain milestones over a period of time or on a completed-contract basis at a point in time. The Company considers the contract to be complete when all significant costs have been incurred and the customer accepts the project. Costs incurred prior to the customer accepting the project are deferred and reflected on the condensed consolidated balance sheets as prepaid expenses and other current assets.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in accordance with ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.  Generally, the Company’s contracts include a single performance obligation that is separately identifiable, and therefore, distinct. Under ASC 606, the allocation of transaction price is not necessary if only one performance obligation is identified.

Significant Judgments

Accounting for long-term contracts involves the use of various techniques to estimate total contract revenue, costs and satisfaction of performance obligation. The Company satisfies its performance obligations and subsequently recognizes revenue, over time, as security and installation services are performed. There were no changes to the significant judgments used by the Company to determine the timing of satisfaction of the performance obligations under ASC 606.

Costs to Obtain or Fulfill Contract

The Company’s costs to fulfill or obtain contracts with customers primarily consist of commissions and legal costs. The Company provides sales team members with commissions at 0-6%. Although sales commissions are incremental in nature and are only incurred when a contract is obtained, there is no up-front commission paid on the satisfactory obtainment of a contract, resulting in no sales commissions being capitalized at March 31, 2020 and December 31, 2019. The Company also incurs legal costs relating to the drafting and negotiating of contracts with select customers. Because legal costs are not incremental in nature and are incurred regardless of whether a contract is ultimately obtained, there were no legal costs capitalized as of March 31, 2020 and December 31, 2019. The Company did not record amortization of costs incurred to obtain the contract or any impairment losses for the period ending March 31, 2020 and 2019.

5. Business Combinations

Engeni SA Acquisition

On the Engeni Closing Date, the Company and its wholly owned subsidiary, Engeni Merger Sub, entered into the Engeni Merger Agreement with Engeni US, Engeni SA, the members of Engeni US, and Scott Zienkewicz as the representative of the Engeni US members. Pursuant to the Engeni Merger Agreement, Engeni Merger Sub merged with and into Engeni US, with Engeni US surviving the merger as a wholly-owned subsidiary of the Company. On the Engeni Closing Date, in connection with closing the Engeni Merger Agreement, the Company issued 366,700 shares of Company common stock to Engeni US members. Furthermore, the Company may also issue Engeni US members 366,700 and 366,600 shares of Parent common stock upon the achievement of specific objectives. If applicable, the Company will pay Engeni US members the aggregate amount of $100,000, on a pro rata basis, if Engeni SA reaches financial breakeven on or before December 31, 2018, as determined by the Company’s Chief Financial Officer and Scott Zienkewicz.

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The Engeni Merger is being accounted for as a business combination in accordance with ASC 805. The Company has determined fair values of the assets acquired and liabilities assumed in the Engeni Merger. These values are subject to change as we perform additional reviews of our assumptions utilized.

During the first quarter of 2019, it was determined Engeni SA did not reach financial breakeven and therefore the contingent consideration of $100,000 was deemed by the Company not to be payable and was reduced to zero. In accordance with ASC 805-30-35-1, the Company recognized the change in the fair value of contingent consideration subsequent to the acquisition date in general and administrative expenses. The Company’s allocation of the purchase price was calculated as follows:

	As Adjusted
Base Price - Common Stock	$	388,702
Contingent Consideration - Common Stock		777,298
Contingent Consideration - Cash		-
Total Purchase Price	$	1,166,000

			Weighted Average Useful Life
Description	Fair Value		(in years)
Assets acquired:
Cash	$	5,609
Accounts receivable and other assets		30,479
Property, plant and equipment, net		57,830
Software		449,568		3.3
Goodwill		778,552
Total assets acquired	$	1,322,038
Liabilities assumed:
Accounts payable	$	56,038
Total liabilities assumed		56,038
Estimated fair value of net assets acquired	$	1,266,000

The Company determined the fair value of the contingent consideration to be $777,298 at August 3, 2018 and recorded it as a liability in its unaudited condensed consolidated balance sheets. On April 2, 2019, the Company satisfied their contingent consideration liability and issued 733,300 shares of the Company’s common stock to Engeni US members.

Tan’s International Security

On the Tan Security Closing Date, the Company entered into the Tan Security Acquisition Agreement. Pursuant to the Tan Security Acquisition Agreement, Helix purchased all membership interests and capital stock of Tan Security and collectively holds 100% of the interests of Tan Security. The purchase price of $100,000 in cash plus 250,000 shares of the Company’s restricted common stock will be paid to Rocky Tan as follows:

● 250,000 shares of Helix Stock at closing.

● $25,000 at closing

● $25,000 on the 4-month anniversary of the Tan Security Closing Date

● $25,000 on the 8-month anniversary of the Tan Security Closing Date

● $25,000 on the 12-month anniversary of the Tan Security Closing Date

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The Tan Security Acquisition is being accounted for as a business combination in accordance with ASC 805. The Company has determined preliminary fair values of the assets acquired and liabilities assumed in the Tan Security Acquisition. These values are subject to change as we perform additional reviews of our assumptions utilized.

The Company has made a provisional allocation of the purchase price of the Tan Security transaction to the assets acquired and the liabilities assumed as of the purchase date. The following table summarizes the provisional purchase price allocations relating to the Tan Security Acquisition:

Base Price – Cash at closing	$	25,000
Base Price – Deferred cash payment (including $25,000 to be made on the 4,8 and 12-month anniversaries of closing)		75,000
Base Price – Common Stock		710,000
Total Purchase Price	$	810,000

Description	Fair Value
Assets acquired:
Cash	$	2,940
Accounts receivable		7,635
Goodwill		821,807
Total assets acquired	$	832,382
Liabilities assumed:
Accounts payable	$	12,526
Other liabilities		9,856
Total liabilities assumed		22,382
Estimated fair value of net assets acquired	$	810,000

Green Tree International, Inc.

On February 5, 2019, the Company and its wholly owned subsidiary, Merger Sub, entered into the Amercanex Merger Agreement with GTI and Steve Janjic, as the representative of the GTI shareholders, pursuant to which Merger Sub merged with and into GTI (the “Merger”).

Pursuant to the Amercanex Merger Agreement, at the effective time of the Merger (the “Effective Time”), the Company will issue to the GTI stockholders an amount of unregistered shares of the Company’s common stock equal to $15 million, based on the average closing price of the Company’s common stock over the forty-five (45) trading day period ending three (3) trading days prior to the Closing Date. If the Closing occurs and revenues of GTI in the second 12 month period following the Closing Date exceed $5 million and are less than or equal to $10 million, Parent shall issue to the Company Shareholders a number of unregistered Parent Shares (whether issued or reserved for issuance) equal to the quotient of (a) $5 million divided by (b) the Parent Share Price multiplied by the quotient of (c) the revenues of the Company in the second 12 month period following the Closing Date less $5 million divided by (d) $5 million.

To secure the indemnification obligations of the GTI shareholders to the Company under the Merger Agreement, 4,140,274 of the Company shares to be issued to the GTI shareholders will be held back and the Company will be entitled to retain such number of the holdback shares as necessary to satisfy those indemnification obligations. 50% of the holdback shares that remain after satisfaction of any indemnification obligations will be released 12 months after the closing date of the merger, and the remainder 24 months after the closing date of the merger. Additionally, if in the first 12 months following the closing GTI generates less than $1.5 million of revenues, 100% of the holdback shares shall be returned to the Company.

In connection with closing the Merger on September 10, 2019, the Company issued 16,765,727 unregistered shares of its common stock to GTI stockholders. In connection with the Merger, Steve Janjic joined the board of directors of the Company.

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The Merger is being accounted for as a business combination in accordance with ASC 805. The Company has determined preliminary fair values of the assets acquired and liabilities assumed in the GTI merger. These values are subject to change as we perform additional reviews of our assumptions utilized.

The Company has made a provisional allocation of the purchase price of the GTI transaction to the assets acquired and the liabilities assumed as of the purchase date. The following table summarizes the provisional purchase price allocations relating to the GTI transaction:

Base Price - Common Stock	$	12,909,611
Total Purchase Price	$	12,909,611

Description	Fair Value		Weighted Average Useful Life (Years)
Assets acquired:
Note Receivable, net	$	135,000
Property, Plant and Equipment, Net		12,142
Software		452,002	4.5
Goodwill		12,980,840
Total assets acquired	$	13,579,984
Liabilities assumed:
Accounts Payable		43,717
Notes Payable		400,000
Other Liabilities		226,656
Total liabilities assumed:		670,373
Estimated fair value of net assets acquired:	$	12,909,611

The Company has not completed the valuation studies necessary to finalize the acquisition fair values of the assets acquired and liabilities assumed and related allocation of purchase price for GTI. Accordingly, the type and value of the intangible assets amounts set forth above are preliminary. Once the valuation process is finalized for GTI, there could be changes to the reported values of the assets acquired and liabilities assumed, including goodwill and intangible assets and those changes could differ materially from what is presented above.

6. Property and Equipment, Net

At March 31, 2020 and December 31, 2019, property and equipment consisted of the following:

	March 31, 2020			December 31, 2019
Furniture and equipment	$	271,276		$	262,167
Software equipment		755,276			561,964
Vehicles		201,750			201,066
Total		1,228,302			1,025,197
Less: Accumulated depreciation		(249,290	)		(219,518	)
Property and equipment, net	$	979,012		$	805,679

Depreciation expense for the three months ended March 31, 2020 and 2019 was $29,772 and $17,713, respectively.

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7. Intangible Assets, Net and Goodwill

The following table summarizes the Company’s intangible assets as of March 31, 2020 and December 31, 2019:

				March 31, 2020 (1)
	Estimated Useful Life (Years)	Gross Carrying Amount		Assets Acquired Pursuant to Business Combination		Accumulated Amortization and Impairment			Net Book Value
Database	5	$	93,427	$	-	$	(74,189	)	$	19,238
Trade names and trademarks	5 - 10		591,081		-		(236,544	)		354,537
Web addresses	5		130,000		-		(102,089	)		27,911
Customer list	5		8,304,449		-		(3,043,977	)		5,260,472
Software	4.5		10,224,822		-		(4,069,327	)		6,155,495
Domain Name	5		20,231		-		(3,044	)		17,187
		$	19,364,010	$	-	$	(7,529,170	)	$	11,834,840

					December 31, 2019
	Estimated Useful Life (Years)		Gross Carrying Amount at December 31, 2018		Assets Acquired Pursuant to Business Combination (2)		Accumulated Amortization			Net Book Value
Database		5	$	93,427	$	-	$	(69,533	)	$	23,894
Trade names and trademarks		5 - 10		591,081		-		(207,525	)		383,556
Web addresses		5		130,000		-		(95,611	)		34,389
Customer list		5		11,459,027		-		(4,256,070	)		7,202,957
Software		4.5		9,771,195		453,627		(3,492,525	)		6,732,297
Domain Name		5		-		20,231		(2,037	)		18,194
			$	22,044,730	$	473,858	$	(8,123,301	)	$	14,395,287

(1) The Company wrote off the remaining unamortized balance of $1,369,978 related to the customer list intangible asset from the Security Grade Protective Services transaction as of March 31, 2020.

(2) On September 10, 2019 the Company acquired various assets of GTI (see Note 5).

The Company uses the straight-line method to determine the amortization expense for its definite lived intangible assets. Amortization expense related to the purchased intangible assets was $1,192,820 and $1,147,928 for the three months ended March 31, 2020 and 2019. 

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The following table summarizes the Company’s Goodwill as of March 31, 2020 and December 31, 2019:

	Total Goodwill
Balance at December 31, 2018	$	39,913,559
Goodwill attributable to Tan Security acquisition		821,807
Goodwill attributable to Green Tree acquisition		12,980,840
Balance at December 31, 2019	$	53,716,206
Balance at March 31, 2020	$	53,716,206

8. Costs, Estimated Earnings and Billings

Costs, estimated earnings and billings on uncompleted contracts are summarized as follows as of March 31, 2020 and December 31, 2019:

	March 31, 2020			December 31, 2019
Costs incurred on uncompleted contracts	$	453,999		$	444,344
Estimated earnings		156,791			150,355
Cost and estimated earnings earned on uncompleted contracts		610,790			594,699
Billings to date		424,696			501,543
Costs and estimated earnings in excess of billings on uncompleted contracts		186,094			93,156
Costs in excess of billings	$	260,895		$	257,819
Billings in excess of cost		(74,801	)		(164,663	)
	$	186,094		$	93,156

9. Accounts Payable and Accrued Liabilities

As of March 31, 2020 and December 31, 2019, accounts payable and accrued liabilities consisted of the following:

	March 31, 2020		December 31, 2019
Accounts payable	$	489,809	$	895,785
Accrued compensation and related expenses		398,475		260,280
Accrued expenses		1,681,152		1,733,371
Lease obligation - current		299,118		373,710
Total	$	2,868,554	$	3,263,146

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10. Convertible Notes Payable, net of discount

	March 31, 2020			December 31, 2019
Note Ten, 25% convertible promissory note, fixed secured, maturing March 1, 2020, net of debt discount for warrants		-			143,630
Note Eleven, 10% convertible promissory note, fixed secured, maturing May 15, 2020, net of debt discount for warrants and legal fees		301,555			185,313
Note Twelve, 10% convertible promissory note, fixed secured, maturing June 16, 2020, net of debt discount for warrants and legal fees		483,524			205,363
Note Thirteen, 10% convertible promissory note, fixed secured, maturing July 11, 2020, net of debt discount for warrants and legal fees		44,864			206,091
Note Fourteen, 12% convertible promissory note, fixed secured, maturing September 26, 2020, net of debt discount for warrants and legal fees		16,620			92,095
Note Fifteen, 12% convertible promissory note, fixed secured, maturing November 15, 2021		385,000			385,000
		1,231,563			1,217,492
Less: Current portion		(846,563	)		(832,492	)
Long-term portion	$	385,000		$	385,000

On March 1, 2019, the Company entered into a $450,000 Secured Convertible Promissory Note (“Note Ten”) with an independent investor (the “investor”). The investor provided the Company with $450,000 in cash proceeds, which was received by the Company during the period ended June 30, 2019. Note Ten will mature on March 1, 2020 and bear interest at a rate of 25% per annum, payable by the Company half in cash and half in kind on a quarterly basis. The principal balance of Note Ten is convertible at the election of the investor, in whole or in part, at any time or from time to time, into the Company’s common stock at the lower of $0.90 per share or a 30% discount to the Company’s 30-day weighted average listed price per share immediately before the date of conversion. In conjunction with Note Ten, the Company issued a warrant to the investor to purchase 160,715 shares of the Company’s common stock at $1.40 per share.

The Company evaluated Note Ten in accordance with ASC 480, Distinguishing Liabilities from Equity and determined Note Ten will be accounted for as a liability initially measured at fair value and subsequently at fair value with changes in fair value recognized in earnings. During 2019, the investor elected their option to partially convert $280,000 in principal of Note Ten into 875,894 shares of the Company’s common stock. As of December 31, 2019, the fair value of Note Ten was $202,125. Accordingly, the Company recorded a change in fair value of $32,125 related to Note Ten for the year ended December 31, 2019. During the three months ended March 31, 2020 the investor converted the remaining $170,000 in principal of Note ten into 564,420 shares of the Company’s common stock. As of March 31, 2020, Note Ten had been fully repaid via the conversion into shares of the Company’s common stock.

In addition, the company recorded a debt discount relating to the warrants issued in the amount of $355,847 based on the relative fair value of the warrants at inception of Note Ten. Debt discounts amortized to interest expense was $297,352 for the year ended December 31, 2019. The unamortized discount balance at December 31, 2019 was $58,495. In May, September, and December 2019, the Company issued 15,625, 16,568 and 19,401 restricted shares of common stock as paid-in-kind (“PIK”) interest payments in the amount of $14,062, $14,063, and $12,029, respectively. Accrued interest expense associated with Note Ten was $3,542 as of December 31, 2019, which includes PIK interest payable. Debt discount amortized to interest expense was $58,495 for the three months ended March 31, 2020.

On August 15, 2019, the Company entered into a $400,000 Fixed Convertible Promissory Note (“Note Eleven”) with the investor. The investor provided the Company with $380,000 in cash proceeds, which was received by the Company during the period ended September 30, 2019. The additional $20,000 was retained by the investor for due diligence and legal bills for the transaction and recorded as a debt discount. Note Eleven will mature on May 15, 2020 and bear interest at a rate of 10% per annum, payable by the Company in cash. The principal balance of Note Eleven is convertible at the election of the investor, in whole or in part, at any time or from time to time, into the Company’s common stock at $0.90 per share for the first 6 months and thereafter at the lower of $0.90 per share or at 70% of the average of the five lowest daily VWAPs of the Company’s common stock during the 15 consecutive trading days prior to the date on which the investor elects to convert all or part of Note Eleven. In conjunction with Note Eleven, the Company issued a warrant to the investor to purchase 25,000 shares of the Company’s common stock at $1.00 per share.

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The Company evaluated Note Eleven in accordance with ASC 480, Distinguishing Liabilities from Equity and determined Note Eleven will be accounted for as a liability initially measured at fair value and subsequently at fair value with changes in fair value recognized in earnings. As of December 31, 2019, the fair value of Note Eleven was $204,444. Accordingly, the Company recorded a change in fair value of $195,556 related to Note Eleven for the year ended December 31, 2019. During the three months ended March 31, 2020, the investor elected their option to partially convert $120,000 in principal of Note Eleven into 1,084,186 shares of the Company’s common stock. As of March 31, 2020, the fair value of the remaining principal of Note Eleven was $307,885. Accordingly, the Company recorded a change in fair value of $164,774 related to the remaining principal balance of Note Eleven for the three months ended March 31, 2020.

In addition, the company recorded a debt discount of $38,543 relating to the warrants issued in the amount of $18,543 based on the relative fair value of the warrants themselves at inception of Note Eleven and $20,000 relating to legal fees. Debt discounts amortized to interest expense were $19,412 for the year ended December 31, 2019. The unamortized discount balance at December 31, 2019 was $19,131. Accrued interest expense associated with Note Eleven was $17,460 as of December 31, 2019. Debt discounts amortized to interest expense were $12,801 for the three months ended March 31, 2020. The unamortized discount balance at March 31, 2020 was $6,330. Accrued interest expense associated with Note Eleven was $33,401 as of March 31, 2020.

On September 16, 2019, the Company entered into a $450,000 Fixed Convertible Promissory Note (“Note Twelve”) with the investor. The investor provided the Company with $427,500 in cash proceeds, which was received by the Company during the period ended December 31, 2019. The additional $22,500 was retained by the investor for due diligence and legal bills for the transaction and was recorded as a debt discount. Note Twelve will mature on June 16, 2020 and bear interest at a rate of 10% per annum, payable by the Company in cash. The principal balance of Note Twelve is convertible at the election of the investor, in whole or in part, at any time or from time to time, into the Company’s common stock at $0.90 per share for the first 6 months and thereafter at the lower of $0.90 per share or at 70% of the average of the five lowest daily VWAPs of the Company’s common stock during the 15 consecutive trading days prior to the date on which the investor elects to convert all or part of Note Twelve. In conjunction with Note Twelve, the Company issued a warrant to the investor to purchase 25,000 shares of the Company’s common stock at $1.00 per share.

The Company evaluated Note Twelve in accordance with ASC 480, Distinguishing Liabilities from Equity and determined Note Twelve will be accounted for as a liability initially measured at fair value and subsequently at fair value with changes in fair value recognized in earnings. As of December 31, 2019, the fair value of Note Twelve was $230,000. Accordingly, the Company recorded a change in fair value of ($220,000) related to Note Twelve for the year ended December 31, 2019. As of March 31, 2020, the fair value of Note Twelve was $494,815. Accordingly, the Company recorded a change in fair value of $264,815 related to Note Twelve for the three months ended March 31, 2020.

In addition, the company recorded a debt discount of $40,183 relating to the warrants issued in the amount of $17,683 based on the residual fair value of the warrants themselves at inception of Note Twelve and $22,500 relating to legal fees. Debt discounts amortized to interest expense were $15,545 for the year ended December 31, 2019. The unamortized discount balance at December 31, 2019 was $24,638. Accrued interest expense associated with Note Twelve was $18,285 as of December 31, 2019. Debt discounts amortized to interest expense were $13,346 for the three months ended March 31, 2020. The unamortized discount balance at March 31, 2020 was $11,292. Accrued interest expense associated with Note Twelve was $36,219 as of March 31, 2020.

On October 11, 2019, the Company entered into a $450,000 Fixed Convertible Promissory Note (“Note Thirteen”) with the investor. The investor provided the Company with $427,500 in cash proceeds, which was received by the Company during the period ended December 31, 2019. The additional $22,500 was retained by the investor for due diligence and legal bills for the transaction and was recorded as a debt discount. Note Thirteen will mature on July 11, 2020 and bear interest at a rate of 10% per annum, payable by the Company in cash. The principal balance of Note Thirteen is convertible at the election of the investor, in whole or in part, at any time or from time to time, into the Company’s common stock at $0.90 per share for the first 6 months and thereafter at the lower of $0.90 per share or at 70% of the average of the five lowest daily VWAPs of the Company’s common stock during the 15 consecutive trading days prior to the date on which the investor elects to convert all or part of Note Thirteen. In conjunction with Note Thirteen, the Company issued a warrant to the investor to purchase 25,000 shares of the Company’s common stock at $1.00 per share.

The Company evaluated Note Thirteen in accordance with ASC 480, Distinguishing Liabilities from Equity and determined Note Thirteen will be accounted for as a liability initially measured at fair value and subsequently at fair value with changes in fair value recognized in earnings. As of December 31, 2019, the fair value of Note Thirteen was $230,000. Accordingly, the Company recorded a change in fair value of ($220,000) related to Note Thirteen for the year ended December 31, 2019. As of March 31, 2020, the fair value of Note Thirteen was $57,500. Accordingly, the Company recorded a change in fair value of ($172,500) related to Note Thirteen for the three months ended March 31, 2020.

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In addition, the company recorded a debt discount of $33,943 relating to the warrants issued in the amount of $11,443 based on the residual fair value of the warrants themselves at inception of Note Thirteen and $22,500 relating to legal fees. Debt discounts amortized to interest expense were $10,034 for the year ended December 31, 2019. The unamortized discount balance at December 31, 2019 was $23,909. Accrued interest expense associated with Note Thirteen was $16,022 as of December 31, 2019. Debt discounts amortized to interest expense were $11,273 for the three months ended March 31, 2020. The unamortized discount balance at March 31, 2020 was $12,636. Accrued interest expense associated with Note Thirteen was $33,956 as of March 31, 2020.

On December 26, 2019, the Company entered into a $210,526 Fixed Convertible Promissory Note (“Note Fourteen”) with the investor. The investor provided the Company with $200,000 in cash proceeds, which was received by the Company during the period ended December 31, 2019. The additional $10,526 was retained by the investor for due diligence and legal bills for the transaction and was recorded as a debt discount. Note Fourteen will mature on September 26, 2020 and bear interest at a rate of 12% per annum, payable by the Company in cash. The principal balance of Note Fourteen is convertible at the election of the investor, in whole or in part, at any time or from time to time, into the Company’s common stock at $0.90 per share for the first 6 months and thereafter at the lower of $0.90 per share or at 70% of the average of the five lowest daily VWAPs of the Company’s common stock during the 15 consecutive trading days prior to the date on which the investor elects to convert all or part of Note Fourteen. In conjunction with Note Fourteen, the Company issued a warrant to the investor to purchase 12,500 shares of the Company’s common stock at $1.00 per share.

The Company evaluated Note Fourteen in accordance with ASC 480, Distinguishing Liabilities from Equity and determined Note Fourteen will be accounted for as a liability initially measured at fair value and subsequently at fair value with changes in fair value recognized in earnings. As of December 31, 2019, the fair value of Note Fourteen was $107,602. Accordingly, the Company recorded a change in fair value of $102,924 related to Note Fourteen for the year ended December 31, 2019. As of March 31, 2020, the fair value of Note Fourteen was $26,901. Accordingly, the Company recorded a change in fair value of ($80,701) related to Note Fourteen for the three months ended March 31, 2020.

In addition, the company recorded a debt discount of $15,794 relating to the warrants issued in the amount of $5,268 based on the residual fair value of the warrants themselves at inception of Note Fourteen and $10,526 relating to legal fees. Debt discounts amortized to interest expense were $287 for the year ended December 31, 2019. The unamortized discount balance at December 31, 2019 was $15,507. Accrued interest expense associated with Note Fourteen was $463 as of December 31, 2019. Debt discounts amortized to interest expense were $5,226 for the three months ended March 31, 2020. The unamortized discount balance at March 31, 2020 was $10,281. Accrued interest expense associated with Note Fourteen was $8,884 as of March 31, 2020.

On November 15, 2019, the Company entered into a $5,000,000 Unsecured Convertible Promissory Note (“Note Fifteen”) with the investor. The investor provided the Company with $385,000 in cash proceeds, which was received by the Company during the period ended December 31, 2019. Note Fifteen will mature on November 15, 2021 and bear interest at a rate of 12% per annum, payable by the Company in cash. The principal balance of Note Fifteen is convertible at the election of the investor, in whole or in part, at any time or from time to time, into the Company’s common stock at 70% of the average of the five lowest daily VWAPs of the Company’s common stock during the 15 consecutive trading days prior to the date on which the investor elects to convert all or part of Note Fifteen. As of March 31, 2020 and December 31, 2019, the balance of Note Fifteen was $385,000. Accrued interest expense associated with Note Fifteen was $16,966 and $5,239 as of March 31, 2020 and December 31, 2019, respectively.

11. Related Party Transactions

On March 1, 2019, the Company entered into a $1,500,000 Secured Convertible Promissory Note (“Note Nine”) with Rose Capital Fund I, LP (the Related Party Holder”). A Managing Member of the Related Party Holder is also a Director of the Company. The Related Party Holder provided the Company with $1,475,000 in cash proceeds, which was received by the Company during the period ended September 30, 2019. The additional $25,000 was retained by the Related Party Holder for legal bills for the transaction. Note Nine will mature on March 1, 2020 and bear interest at a rate of 25% per annum, payable by the Company half in cash and half in kind on a quarterly basis. The principal balance of Note Nine is convertible at the election of the Related Party Holder, in whole or in part, at any time or from time to time, into the Company’s common stock at the lower of $0.90 per share or a 30% discount to the Company’s 30-day weighted average listed price per share immediately before the date of conversion. In conjunction with Note Nine, the Company issued a warrant to the Related Party Holder to purchase 535,715 shares of the Company’s common stock at $1.40 per share.

The Company evaluated Note Nine in accordance with ASC 480, Distinguishing Liabilities from Equity and determined Note Nine will be accounted for as a liability initially measured at fair value and subsequently at fair value with changes in fair value recognized in earnings. As of March 31, 2020, the fair value of Note Nine was $1,285,221. Accordingly, the Company recorded a change in fair value of ($498,233) related to Note Nine for the three months ended March 31, 2020, respectively.

In addition, the company recorded a debt discount relating to the warrants issued in the amount of $1,186,153 based on the relative fair value of the warrants at inception of Note Nine. The additional $25,000 retained by the fourth investor for legal bills for the transaction will be recorded as a debt discount. Debt discount amortized to interest expense was $199,094 for the three months ended March 31, 2020. The unamortized discount balance at March 31, 2020 was $0. On May 31, 2019, the Company issued 52,083 restricted shares of common stock as PIK interest payments in the amount of $46,875. On February 24, 2020, the Company issued 167,891 restricted shares of common stock as PIK interest payments in the amount of $93,750. Accrued interest expense associated with Note Nine was $29,795 as of March 31, 2020, which includes PIK interest payable. As of March 31, 2020, the balance of Note Nine, net of debt discount for warrants and legal bills was $1,285,220. The Company and the Related Party Holder are negotiating a potential extension of Note Nine.

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Warrants

On March 1, 2019, in connection with the issuance of Note Nine, the Company issued warrants, of which the value was derived and based off the fair value of Note Nine, to the investor to purchase 535,715 shares of the Company’s common stock at $1.40 per share. Exercise of the purchase rights represented by the warrant may be made, in whole or in part, at any time or times on or after March 1, 2019 and on or before March 1, 2024, by delivery to the Company of the Notice of Exercise.

The Company determined that the warrants associated with Note Nine are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. The Company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. In accordance with the accounting guidance, the outstanding warrants are recognized as a warrant liability on the balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income in the statement of operations. At inception, March 1, 2019, the fair value of the warrant liability was $1,186,153 while as of March 31, 2020, the fair value of the warrant liability was $0. Accordingly, the Company recorded a change in fair value of approximately $182,000 during the three months ended March 31, 2020, which is reflected in the unaudited condensed consolidated statements of operations. 

Promissory Note

On January 3, 2019, the Company entered into an unsecured promissory note with the Related Party Holder in the amount of $280,000. The unsecured promissory note has a fixed interest rate of 10% and is due and payable on March 31, 2019. On March 2, 2019, the unsecured promissory note was paid off in full.

On July 29, 2019, the Company entered into an unsecured promissory note with the Related Party Holder in the amount of $300,000. The unsecured promissory note has a fixed interest rate of 12% and is due and payable on January 29, 2020. The Company and the Related Party Holder mutually agreed to defer payment of interest and repayment of principal until July 29, 2020.

12. Notes Payable

As of March 31, 2020 and December 31, 2019 Notes payable consisted of the following:

	March 31, 2020			December 31, 2019
Vehicle financing loans payable, between 4.7% and 7.0% interest and maturing between June 2022 and July 2022	$	48,123		$	52,507
Loans Payable - Credit Union		4,936			5,385
Convertible Note Payable and financing arrangement		827,000			400,000
Less: Current portion of loans payable		(450,977	)		(24,805	)
Long-term portion of loans payable	$	429,082		$	433,087

The interest expense associated with the notes payable was $58,340 and $1,791 for the three months ended March 31, 2020 and 2019, respectively.

In connection with the GTI Merger, the Company assumed a $400,000 Senior Secured Convertible Debenture (the “Convertible Debenture”) (See Note 5). The Convertible Debenture will mature on July 31, 2021 and bears interest at a rate of 10% per annum, payable by the Company to the Lender. In the event that Lender elects to convert the Convertible Debenture into Helix Common Stock or in the event Helix required the Lender to convert the Convertible Debenture into its Common Stock, the number of shares that shall be issuable upon full Conversion of the Convertible Debenture at any time shall be equal to the outstanding principal of the Convertible Debenture divided by $1.00. Pursuant to the terms of the Convertible Debenture, Helix Common Stock can be transferred to the Lender from Steve Janjic, as a shareholder of the Company who receives shares of Helix Common Stock at the Closing, instead of via a new issuance of shares of Helix Common Stock by Helix to Lender, and Lender agrees to accept such transfer of shares from Mr. Janjic as the issuance of Helix Common Stock.

In addition, the Company shall have the right to require the Lender to convert the Convertible Debenture into Helix Common Stock at any time provided its Common Stock is listed on a stock exchange other than the U.S. OTCQB, the Common Stock would be fully traded up on conversion and the trading price of its Common Stock closes above $1.15 for 20 consecutive trading days on such exchange. The Convertible Debenture will be secured by a general security interest over all of the assets of the GTI, however does not apply to those assets owned by Helix or Merger Sub prior to the closing of the Merger.

On February 7, 2020, the Company and its subsidiary Bio-Tech Medical Software Inc. entered into an agreement for the purchase and sale of future receipts with Advantage Capital Funding. $485,000 was actually funded to the Company with a promise to pay $15,000 per week for 8 weeks and $20,000 per week for the next 27 weeks until a total of $660,000 is paid. $427,000 of principal remained outstanding as of March 31, 2020.

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13. Shareholders’ Equity

Common Stock

Other Common Stock Issuances

In January 2020, the Company issued 270,270 shares of common stock as part of an investment unit purchase agreement.

During the three months ended March 31, 2020, the Company issued 167,891 restricted shares of common stock as PIK interest payment in the amount of $93,750 (see Note 11).

In January 2019, the Company issued 20,000 shares of restricted common stock to a consultant per a consulting agreement and recorded shared based compensation expense of $27,400.

In March 2019, the Company issued 1,255,222 shares of common stock as part of investment unit purchase agreements.

In March 2019, certain option holders exercised their rights under the BioTrackTHC Stock Plan and were issued 62,847 shares of common stock for no cash proceeds.

In March 2019, certain option holders exercised their rights under the BioTrackTHC Stock Plan and were issued 6,082 shares of common stock for total proceeds of $4,805.

Conversion of Convertible Note to Common Stock

During the three months ended March 31, 2020, the holders of Note Ten and Note Eleven elected to convert $170,000 and $120,000 in principal of the respective convertible notes into 564,420 and 1,084,186 shares of the Company’s common stock, respectively (See Note 11).

On March 7, 2019 and March 28, 2019, the holder of a 10% fixed secured convertible promissory note issued by the Company elected its option to fully convert $75,882 and $42,055 in principal of the convertible note into 100,000 and 55,421 shares of the Company’s common stock.

2017 Omnibus Incentive Plan

The table below reflects shares issued under the 2017 Omnibus Incentive Plan during the three months period ended March 31, 2020:

Date of Issuance	Number of Shares Issued		Total Share Based Compensation
January 2020		350,000	$	220,500
		350,000	$	220,500

The table below reflects shares issued under the 2017 Omnibus Incentive Plan during the three months period ended March 31, 2019:

Date of Issuance	Number of Shares Issued		Total Share Based Compensation
March 2019		250,000	$	320,000
		250,000	$	320,000

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Series A convertible preferred stock

In October 2015, the Company issued a total of 1,000,000 shares of its Class A Preferred Stock. The Class A Preferred Stock included super majority voting rights and were convertible into 60% of the Company’s common stock. During the third quarter of 2017, the Company modified the conversion rate on the Class A Preferred Stock to a 1:1 ratio. This modification reduced the amount of potentially dilutive Convertible Series A Stock by 15,746,127 shares to a total of 1,000,000 at September 30, 2017.

Series B convertible preferred stock

Series B Preferred Stock Purchase Agreement

On May 17, 2017, the Company sold to accredited investors an aggregate of 5,781,426 Series B Preferred Shares for gross proceeds of $1,875,000 and converted a $500,000 Unsecured Convertible Promissory Note into 1,536,658 Series B Preferred Shares. This tranche of Series B Preferred Shares are convertible into 7,318,084 shares of common stock based on the current conversion price, at a purchase price of $0.325 per share.

In connection with the Series B Preferred Stock Purchase Agreement, the Company is obligated to issue warrants to a third-party for services to purchase 462,195 shares of common stock at $0.325 per share. These warrants have been accounted for as an obligation to issue because as of the balance sheet date the Company did not deliver the warrants though incurred the obligation; accordingly, they were recognized as a liability on the unaudited condensed consolidated balance sheet and cost of issuance of Series B preferred shares on the unaudited condensed consolidated statement of shareholders’ equity.

In accordance with the Certificate of Incorporation, there were 9,000,000 authorized Series B Preferred Stock at a par value of $ 0.001. On August 23, 2017 the Certificate of Designations was amended and restated to increase the number of shares of Series B Preferred Stock authorized to be 17,000,000.

Conversion:

Each Series B Preferred Share is convertible at the option of the holder into such number of shares of the Company’s common stock equal to the number of Series B Preferred Shares to be converted, multiplied by the Preferred Conversation Rate. The Preferred Conversion Rate shall be the quotient obtained by dividing the Preferred Stock Original Issue Price ($0.3253815) by the Preferred Stock Conversation Price in effect at the time of the conversion (the initial conversion price will be equal to the Preferred Stock Original Issue Price, subject to adjustment in the event of stock splits, stock dividends, and fundamental transactions). Based on the current conversion price, the Series B Preferred Shares are convertible into 13,784,201 shares of common stock. A fundamental transaction means: (i) our merger or consolidation with or into another entity, (ii) any sale of all or substantially all of our assets in one transaction or a series of related transactions, (iii) any reclassification of our Common Stock or any compulsory share exchange by which Common Stock is effectively converted into or exchanged for other securities, cash or property; or (iv) sale of shares below the preferred stock conversion price. Each Series B Preferred Share will automatically convert into common stock upon the earlier of (i) notice by the Company to the holders that the Company has elected to convert all outstanding Series B Preferred Shares at any time on or after May 12, 2018; or (ii) immediately prior to the closing of a firmly underwritten initial public offering (involving the listing of the Company’s Common Stock on an Approved Stock Exchange) pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer and sale of the Common Stock for the account of the Company in which the net cash proceeds to the Company (before underwriting discounts, commissions and fees) are at least fifty million dollars ($50,000,000).

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Dividends, Voting Rights and Liquidity Value:

Pursuant to the Certificate of Designations, the Series B Preferred Shares shall bear no dividends, except that if the Board shall declare a dividend payable upon the then-outstanding shares of the Company’s common stock. The Series B Preferred Shares vote together with the common stock and all other classes and series of stock of the Company as a single class on all actions to be taken by the stockholders of the Company including, but not limited to, actions amending the certificate of incorporation of the Company to increase the number of authorized shares of the common stock. Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series B Preferred Shares are entitled to (i) first receive distributions out of our assets in an amount per share equal to the Stated Value plus all accrued and unpaid dividends, whether capital or surplus before any distributions shall be made on any shares of common stock and (ii) second, on an as-converted basis alongside the common stock.

Classification:

These Series B Preferred Shares are classified within permanent equity on the Company’s consolidated balance sheet as they do not meet the criteria that would require presentation outside of permanent equity under ASC 480, Distinguishing Liabilities from Equity.

14. Stock Options

On February 21, 2020 the Company awarded the Chief Financial Officer, an option to purchase a total of 200,000 shares of the Company’s common stock at a price of $0.385 per share. These options vested immediately upon grant and expire on February 21, 2025.

On March 31, 2020 the Company awarded an employee (who is also a board member), two options to purchase a total of 800,000 shares of the Company’s common stock at a price of $0.115 per share. Out of the 800,000 total, 100,000 options vested immediately upon grant, 100,000 vest on 8/15/2020 and the remaining 600,000 have milestone performance vests through December 31 2020. As of March 31, 2020, none of the milestone performance awards had vested. These options expire on March 31, 2025.

During the three months ended March 31, 2020 the Company awarded certain consultants options to purchase 165,000 shares of the Company’s common stock at process ranging from $0.20 to $0.46 per share. These options vested immediately and expire three years from issuance.

On February 29, 2020, the former President of the Company’s BioTrackTHC subsidiary forfeited 1,430,306 BioTrackTHC Management Awards and 204,364 Bio-Tech Medical Software, Inc. 2014 Stock Incentive Plan stock options as a result of his termination (See Note 16).

During the three months ended March 31, 2020, 75,000 employee options grants were forfeited as they had not yet vested prior to the employees’ separation from the Company.

On February 6, 2019 the Company awarded an executive an option to purchase a total of 100,000 shares of the Company’s common stock at an exercise price $1.51 per share. These options vested on May 6, 2019 and have an expiration date of February 6, 2024.

On March 19, 2019 the Company awarded the Chief Financial Officer, two options to purchase a total of 300,000 shares of the Company’s common stock at prices ranging from $2.35 to $2.59 per share. These options shall vest over a three-year period from March 2020 to March 2022 and have expiration dates ranging from March 2024 to March 2029.

On March 19, 2019 the Company awarded the Chief Executive Officer, two options to purchase a total of 500,000 shares of the Company’s common stock at prices ranging from $2.35 to $2.59 per share. These options shall vest over a three-year period from March 2020 to March 2022 and have expiration dates ranging from March 2024 to March 2029.

Stock option activity for the period ended March 31, 2020 is as follows:

	Shares Underlying Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Outstanding at January 1, 2020		11,617,381		$	0.807		3.21
Granted		1,165,000		$	0.186		4.68
Exercised		-		$	-		-
Forfeited and expired		(1,709,670	)	$	0.697		0.70
Outstanding at March 31, 2020		11,072,711		$	0.759		3.75
Vested options at March 31, 2020		8,441,877		$	0.728		1.99

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15. Warrant Liability 

On March 1, 2019, in connection with the issuance of Note Ten, the Company issued warrants, of which the value was derived and based off the fair value of Note Ten, to the investor to purchase 160,715 shares of the Company’s common stock at $1.40 per share. Exercise of the purchase rights represented by the warrant may be made, in whole or in part, at any time or times on or after March 1, 2019 and on or before March 1, 2024, by delivery to the Company of the Notice of Exercise.

The Company determined that the warrants associated with Note Ten are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. The Company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. In accordance with ASC 480, the outstanding warrants are recognized as a warrant liability on the balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income in the statement of operations. At inception, March 1, 2019, the fair value of the warrant liability was $355,847 while as of March 31, 2020, the fair value of the warrant liability was $32,833. Accordingly, the Company recorded a change in fair value of the warrant liability of ($21,787) related to Note Ten for the three months ended March 31, 2020.

On January 10, 2019, the Company entered into an Investment Unit Purchase Agreement (the “First Investment Agreement”) to issue and sell investment units to an investor, in which the investment units consist of one share of the common stock of the Company, and a warrant exercisable for one half share of common stock of the Company at an Exercise Price of $1.25 per share for cash at a price per investment unit of $0.90.

On March 5, 2019, the Company sold an aggregate of 1,255,222 units of the Company’s securities to an investor at a purchase price of $0.90 per unit for total proceeds of $1,129,700. In connection with the First Investment Agreement, the investor is entitled to purchase from the Company, at the Exercise Price, at any time on or after 90 days from the issuance date, 627,611 shares of the Company’s common stock (the “March Warrant Shares”).

The Company determined that the warrants are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. The Company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. In accordance with the accounting guidance, the outstanding warrants are recognized as a warrant liability on the balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income in the statement of operations.

The fair value of the March Warrant Shares at issuance on January 10, 2019 is in excess of the proceeds received, the warrant liability is required to be recorded at fair value with the excess of the fair value over the proceeds received recognized as a loss in earnings. The gross proceeds from the 1,255,222 investment units at $0.90 was $1,129,700.  The fair value of the March Warrant Shares at issuance was $1,717,506. The amount to be recognized as a loss in earnings is calculated as follows:

Proceeds from January investment units	$	1,129,700
Par value of common stock issues	$	(1,255	)
Fair value of warrants	$	(1,717,506	)
Loss on issuance of warrants (January 10, 2019 issuance)	$	(589,061	)
Loss on issuance of warrants (March 11, 2019 issuance)	$	(198,148	)
Total loss on issuance of warrants	$	(787,209	)

As of March 31, 2020, the fair value of the warrant liability was $160 and the Company recorded a change in fair value of the warrant liability of ($193,593) for the three months ended March 31, 2020.

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On March 11, 2019, the Company issued warrants to an investment bank to purchase a total of 100,000 restricted shares of the Company’s common stock at a per share purchase price of $0.90. The warrants are exercisable at any time nine months after the issuance date within three years of issuance.

The Company determined that the warrants are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. The Company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. In accordance with the accounting guidance, the outstanding warrants are recognized as a warrant liability on the condensed consolidated balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income in the condensed consolidated statement of operations. At inception, March 11, 2019, the fair value of the warrant liability was $198,148 while as of March 31, 2020, the fair value of the warrant liability was $42,058. Accordingly, the Company recorded a change in fair value of the warrant liability of ($17,554) and related to the warrants for the three months ended March 31, 2020.

On June 14, 2019, the Company entered into another Investment Unit Purchase Agreement (the “Second Investment Agreement”) to issue and sell investment units to an investor (the “investor”), in which the investment units consist of one share of the common stock of the Company, and a warrant exercisable for one half share of common stock of the Company at an exercise price of $1.25 per share for cash at a price per investment unit of $0.90.

On June 24, 2019, the Company sold an aggregate of 166,667 units of the Company’s securities to an investor at a purchase price of $0.90 per unit for total proceeds of $150,000. In connection with the Second Investment Agreement, the investor is entitled to purchase from the Company, at the exercise price, at any time on or after 90 days from the issuance date, 83,333 shares of the Company’s common stock (the “June Warrant Shares”).

The gross proceeds from the 166,667 investment units at $0.90 was $150,000.  The fair value of the June Warrant Shares at issuance was $83,586 while as of March 31, 2020, the fair value of the warrant liability was $5,402. Accordingly, the Company recorded a change in fair value of the warrant liability of ($21,479) related to the warrants for the three months ended March 31, 2020.

On August 15, 2019, in connection with the issuance of Note Eleven, the Company issued warrants, of which the value was derived and based off the fair value of Note Eleven, to the investor to purchase 25,000 shares of the Company’s common stock at $1.00 per share. Exercise of the purchase rights represented by the warrant may be made, in whole or in part, at any time or times on or after August 15, 2019 and on or before August 15, 2024, by delivery to the Company of the Notice of Exercise.

The Company determined that the warrants associated with Note Eleven are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. The Company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. In accordance with ASC 480, the outstanding warrants are recognized as a warrant liability on the balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income in the statement of operations. At inception, August 15, 2019, the fair value of the warrant liability was $18,542 while as of March 31, 2020, the fair value of the warrant liability was $1,999. Accordingly, the Company recorded a change in fair value of the warrant liability of ($7,131) related to Note Eleven for the three months ended March 31, 2020.

On September 16, 2019, in connection with the issuance of Note Twelve, the Company issued warrants, of which the value was derived and based off the fair value of Note Twelve, to the investor to purchase 25,000 shares of the Company’s common stock at $1.00 per share. Exercise of the purchase rights represented by the warrant may be made, in whole or in part, at any time or times on or after September 16, 2019 and on or before September 16, 2024, by delivery to the Company of the Notice of Exercise.

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The Company determined that the warrants associated with Note Twelve are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. The Company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. In accordance with ASC 480, the outstanding warrants are recognized as a warrant liability on the balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income in the statement of operations. At inception, September 16, 2019, the fair value of the warrant liability was $17,683 while as of March 31, 2020, the fair value of the warrant liability was $2,024. Accordingly, the Company recorded a change in fair value of the warrant liability of ($7,170) related to Note Twelve for the three months ended March 31, 2020.

On October 11, 2019, in connection with the issuance of Note Thirteen, the Company issued warrants, of which the value was derived and based off the fair value of Note Thirteen, to the investor to purchase 25,000 shares of the Company’s common stock at $1.00 per share. Exercise of the purchase rights represented by the warrant may be made, in whole or in part, at any time or times on or after October 11, 2019 and on or before October 11, 2024, by delivery to the Company of the Notice of Exercise.

The Company determined that the warrants associated with Note Thirteen are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. The Company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. In accordance with ASC 480, the outstanding warrants are recognized as a warrant liability on the balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income in the statement of operations. At inception, October 11, 2019, the fair value of the warrant liability was $11,443 while as of March 31, 2020, the fair value of the warrant liability was $2,040. Accordingly, the Company recorded a change in fair value of the warrant liability of $(7,196) related to Note Thirteen for the three months ended March 31, 2020. 

On November 1, 2019, the Company issued warrants to an institution to purchase a total of 100,000 restricted shares of the Company’s common stock at a per share purchase price of $0.435. The warrants are exercisable at any time after the issuance date within five years of issuance.

The Company determined that the warrants are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. The Company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. In accordance with the accounting guidance, the outstanding warrants are recognized as a warrant liability on the consolidated balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income in the consolidated statement of operations. At inception, November 1, 2019, the fair value of the warrant liability was $37,889, which was recognized as a loss in earnings for the year ended December 31, 2019. As of March 31, 2020, the fair value of the warrant liability was $9,123 and the Company recorded a change in fair value of the warrant liability of ($30,940) related to the warrants for the three months ended March 31, 2020.

On December 26, 2019, in connection with the issuance of Note Fourteen, the Company issued warrants, of which the value was derived and based off the fair value of Note Fourteen, to the investor to purchase 12,500 shares of the Company’s common stock at $1.00 per share. Exercise of the purchase rights represented by the warrant may be made, in whole or in part, at any time or times on or after December 26, 2019 and on or before December 26, 2024, by delivery to the Company of the Notice of Exercise.

The Company determined that the warrants associated with Note Fourteen are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. The Company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. In accordance with ASC 480, the outstanding warrants are recognized as a warrant liability on the balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income in the statement of operations. At inception, December 26, 2019, the fair value of the warrant liability was $5,268 while as of March 31, 2020, the fair value of the warrant liability was $1,048. Accordingly, the Company recorded a change in fair value of the warrant liability of $(3,639) related to Note Fourteen for the three months ended March 31, 2020.

On January 28, 2020, the Company entered into a subscription agreement with an investor for the purchase of 270,270 shares of the Company’s common stock and 135,135 warrants to purchase shares of the Company’s common stock at $0.40 per share for total gross proceeds of $100,000.

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The Company determined that the warrants are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. The Company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. In accordance with the accounting guidance, the outstanding warrants are recognized as a warrant liability on the condensed consolidated balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income in the condensed consolidated statement of operations. At inception, January 28, 2020, the fair value of the warrant liability was $56,208 while as of March 31, 2020, the fair value of the warrant liability was $11,846. Accordingly, the Company recorded a change in fair value of the warrant liability of ($44,363) and related to the warrants for the three months ended March 31, 2020.

A summary of warrant activity is as follows:

For the Three Months Ended March 31, 2020
	Warrant Shares		Weighted Average Exercise Price
Balance at January 1, 2020		5,113,058	$	0.53
Warrants granted		135,135	$	0.40
Balance at March 31, 2020		5,248,193	$	0.52

The fair value of the Company’s warrant liability was calculated using the Black-Scholes model and the following assumptions:

	As of March 31, 2020			As of December 31, 2019
Fair value of company’s common stock	$	0.115		$	0.60
Dividend yield		0	%		0	%
Expected volatility		37% - 148%			45% - 140	%
Risk Free interest rate		0.11% - 0.36%			1.55% - 1.79	%
Expected life (years)		2.66			2.83
Fair value of financial instruments - warrants	$	113,942		$	715,259

The change in fair value of the financial instruments – warrants is as follows:

	Amount
Balance as of January 1, 2020	$	715,259
Fair value of warrants issued	$	56,208
Change in fair value of liability to issue warrants	$	(657,525	)
Balance as of March 31, 2020	$	113,942

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16. Stock-Based Compensation

2017 Omnibus Incentive Plan

The Company’s 2017 Omnibus Incentive Plan (the “2017 Plan”) was adopted by our Board of Directors and a majority of our voting securities on October 17, 2017. The 2017 Plan permits the granting of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards and dividend equivalent rights to eligible employees, directors and consultants. We grant options to purchase shares of common stock under the 2017 Plan at no less than the fair value of the underlying common stock as of the date of grant. Options granted under the Plan have a maximum term of ten years. Under the Plan, a total of 5,000,000 shares of common stock are reserved for issuance, of which options to purchase 4,114,945 and 2,599,945 shares of common stock were granted as of March 31, 2020 and December 31, 2019, respectively.

Bio-Tech Medical Software, Inc. 2014 Stock Incentive Plan

On October 22, 2014, BioTrackTHC approved and adopted the BioTrackTHC Stock Plan. The BioTrackTHC Stock Plan set aside and reserved 600,000 shares of BioTrackTHC’s common stock for grant and issuance in accordance with its terms and conditions. Persons eligible to receive awards from the BioTrackTHC Stock Plan include employees (including officers and directors) of BioTrackTHC or its affiliates and consultants who provide significant services to BioTrackTHC or its affiliates (the “Grantees”). The BioTrackTHC Stock Plan permits BioTrackTHC to issue to Grantees qualified and/or non-qualified options to purchase BioTrackTHC’s common stock, restricted common stock, performance units, and performance shares. The term of each award under the BioTrackTHC Stock Plan shall be no more than ten years from the date of grant thereof. BioTrackTHC’s Board of Directors or a committee designated by the Board of Directors is responsible for administration of the BioTrackTHC Stock Plan and has the sole discretion to determine which Grantees will be granted awards and the terms and conditions of the awards granted. On February 29, 2020, the former Chief Executive Officer of the Company’s BioTrackTHC subsidiary forfeited 204,364 Bio-Tech Medical Software, Inc. 2014 Stock Incentive Plan stock options as a result of his termination (See Note 14).

BioTrackTHC Management Awards

On September 1, 2015 and November 1, 2015, BioTrackTHC’s Board approved individual employee option grants (the “Executive Grants”) for three executives (the “Executives”). Pursuant to the Executive Grants, the Executives were each granted stock options to purchase 146,507 shares (totaling 439,521 shares) of BioTrackTHC’s common stock (the “Option”) at an exercise price equal to approximately $7.67. The options vest as to 25% of the shares subject to the Options, one year after the date of grant and then in equal quarterly installments for the three years thereafter, subject to the Executive’s continued employment with BioTrackTHC (see Notes 1 and 5). On February 29, 2020, the former President of the Company’s BioTrackTHC subsidiary forfeited 1,430,306 BioTrackTHC Management Awards (See Note 14).

17. Income Taxes

No provision for U.S. federal or state income taxes has been recorded as the Company has incurred net operating losses since inception. Significant components of the Company’s net deferred income tax assets for the three months ended March 31, 2020 and 2019 consist of income tax loss carryforwards. These amounts are available for carryforward for use in offsetting taxable income of future years through 2035. Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carry-forward period. Utilization of the net operating loss carry-forwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. Due to the Company’s history of operating losses, these deferred tax assets arising from the future tax benefits are currently not likely to be realized and are thus reduced to zero by an offsetting valuation allowance. As a result, there is no provision for income taxes. 

For the three months ended March 31, 2020 and 2019, the Company has a net operating loss carry forward of approximately $19,200,000 and $13,800,000, respectively. Utilization of these net loss carry forwards is subject to the limitations of Internal Revenue Code Section 382. The Company applied a 100% valuation reserve against the deferred tax benefit as the realization of the benefit is not certain.

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18. Commitments and Contingencies

Under Topic 842, operating lease expense is generally recognized evenly on a straight-line basis. The Company has operating leases primarily consisting of facilities with remaining lease terms of one year to five years. The lease term represents the period up to the early termination date unless it is reasonably certain that the Company will not exercise the early termination option. Certain leases include rental payments that are adjusted periodically based on changes in consumer price and other indices.

Leases with an initial term of twelve months or less are not recorded on the condensed consolidated balance sheet. For lease agreements entered into or reassessed after the adoption of Topic 842, the Company combines the lease and non-lease components in determining the lease liabilities and ROU assets.

Activity related to the Company’s leases was as follows:

	Three Months Ended March 31, 2020
Operating lease expense	$	95,740
Cash paid for amounts included in the measurement of operating lease liabilities	$	101,217
ROU assets obtained in exchange for operating lease obligations	$	301,396

The Company’s lease agreements generally do not provide an implicit borrowing rate, therefore an internal incremental borrowing rate is determined based on information available at lease commencement date for purposes of determining the present value of lease payments. The Company used the incremental borrowing rate on December 31, 2018 for all leases that commenced prior to that date.

ROU lease assets and lease liabilities for the Company’s operating leases were recorded in the condensed consolidated balance sheet as follows:

	As of March 31, 2020
Other assets	$	1,322,433
Accounts payable and accrued liabilities	$	299,118
Other long-term liabilities		1,077,834
Total lease liabilities	$	1,376,952
Weighted average remaining lease term (in years)		4.01
Weighted average discount rate		7.85	%

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Future lease payments included in the measurement of lease liabilities on the condensed consolidated balance sheet as of March 31, 2020, for the following five fiscal years and thereafter were as follows:

	As of March 31, 2020
2020 - Remaining		275,455
2021		337,346
2022		307,280
2023		287,578
2024		294,186
Thereafter		106,075
Total future minimum lease payments	$	1,607,920
Less imputed interest		(230,968	)
Total	$	1,376,952

As of March 31, 2020, the Company had additional operating lease obligations for a lease with a future effective date of approximately $600,000. This operating lease will commence during the first quarter of fiscal 2022 with a lease term of three years.

19. Segment Results

FASB ASC 280-10-50 requires use of the “management approach” model for segment reporting. The management approach is based on the way a company’s management organized segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision–making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision–making group is composed of the Chief Executive Officer and the Chief Financial Officer. The Company operates in three segments, Security and guarding, Systems installation and Software.

Asset information by operating segment is not presented below since the chief operating decision maker does not review this information by segment. The reporting segments follow the same accounting policies used in the preparation of the Company’s unaudited condensed consolidated financial statements.

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The following represents selected information for the Company’s reportable segments:

	For the Three Months Ended March 31,
	2020			2019
Security and guarding
Revenue	$	1,593,449		$	1,204,711
Cost of revenue		1,315,744			940,586
Gross profit		277,705			264,125
Total operating expenses		3,308,124			1,733,707
Loss from operations		(3,030,419	)		(1,469,582	)
Total other (expense) income		406,993			(8,244,950	)
Total net loss	$	(2,623,426	)	$	(9,714,532	)
Adjusted EBITDA	$	(726,434	)	$	(878,146	)
Systems installation
Revenue	$	174,946		$	28,541
Cost of revenue		127,701			161,758
Gross profit		47,245			(133,217	)
Total operating expenses		180,088			32,631
Loss from operations		(132,843	)		(165,848	)
Total other income (expense)		(185	)		(80	)
Total net loss	$	(133,028	)	$	(165,928	)
Adjusted EBITDA	$	(132,843	)	$	(165,848	)
Software
Revenue	$	2,784,036		$	2,137,855
Cost of revenue		823,234			822,875
Gross profit		1,960,802			1,314,980
Total operating expenses		2,213,567			2,276,213
Loss from operations		(252,765	)		(961,233	)
Total other expense		(57,005	)		(8	)
Total net loss	$	(309,770	)	$	(961,241	)
Adjusted EBITDA	$	779,882		$	21,907

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The chief operating decision making group uses net loss before interest, taxes and depreciation and amortization and adjusted for non-core or certain items that have a disproportionate impact on our results for a particular period (“Adjusted EBITDA”) as a non-GAAP measure to evaluate the Company’s operating performance. Adjusted EBITDA does not represent, and should not be considered an alternative to, net loss, loss from operations, or cash flow from operations as those terms are defined by GAAP, and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. From time to time, we may exclude from Adjusted EBITDA the impact of certain events, gains, losses or other charges that affect the period-to-period comparability of the Company’s operating performance. The Company believes that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our chief operating decision maker. Net loss is reconciled to Adjusted EBITDA as follows:

	For the Three Months Ended March 31
	2020			2019
Net Loss	$	(3,066,224	)	$	(10,841,701	)
Interest expense		503,842			176,201
Depreciation and amortization		1,222,592			1,165,641
Loss on impairment of intangible assets		1,369,978			-
Share based compensation expense		744,062			408,935
Change in fair value of convertible note		339,620			987,963
Change in fair value of convertible note - related party		(498,233	)		3,524,009
Change in fair value of warrant liability		(657,525	)		1,632,956
Change in fair value of contingent consideration		-			1,136,700
Loss on issuance of warrants		-			787,209
Other income		(37,507	)		-
Adjusted EBITDA (1)	$	(79,395	)	$	(1,022,087	)

⁽¹⁾ See “Non-GAAP Financial Measures” within Part I, Item 2, Management’s Discussion and Analysis.

20. Subsequent Events

On April 13, 2020, the Company executed a settlement agreement in the matter of Baker and Gill v. Helix TCS et. al. whereby the Company will pay $400,000 plus interest to the named plaintiffs, the class members, and the counsel of the named plaintiffs. Such payments will be made on the later of (1) Sixty days after Exhaustion of the Federal Appeal or (2) Sixty days after court approval of the settlement agreement.

On April 3, 2020, April 13, 2020, April 23, 2020, April 29, 2020, and May 12, 2020, the holder of a 12% convertible promissory note issued by the Company elected its option to partially convert $25,000, $30,000, $30,000 , $30,000, and $35,000 in principal of the convertible note into 316,857, 395,778, 395,778, 360,577, and 409,836 shares of the Company’s common stock.

On April 22, 2020, stockholders of the Company holding a majority of the voting power of the Company approved the following corporate actions of the Company: (1) Amendment of the Company’s certificate of incorporation to provide for an increase in the authorized shares of the Company’s common stock, $0.001 par value per share, from 200,000,000 shares to 275,000,000 shares; (2) Amendment of the Company’s 2017 Omnibus Stock Incentive Plan (the “2017 Plan”) to increase the number of shares authorized for issuance under the 2017 Plan from 5,000,000 to 11,000,000; and (3) Amendment of the Company’s Certificate of Incorporation to change the Company’s name from Helix TCS, Inc. to Helix Technologies, Inc. It is anticipated that these changes will take effect at the end of May 2020, or early June 2020, after requisite notice has been given to the Company’s stockholders of record as of April 22, 2020.

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

Forward-Looking Statements

The following discussion of our financial condition and results of operations for the three months ended March 31, 2020 and 2019 should be read in conjunction with our unaudited condensed consolidated financial statements and the notes to those statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under Item 1A. Risk Factors appearing in our Annual Report on Form 10-K for the year ended December 31, 2019, as filed on March 30, 2020 with the SEC. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

Unless expressly indicated or the context requires otherwise, the terms “Helix”, the “Company”, “we”, “us”, and “our” refer to Helix TCS, Inc.

Overview

Helix TCS, Inc. provides critical infrastructure solutions to the legal cannabis industry. Our mission is to provide clients with the best-in-class critical infrastructure services through a single integrated platform which enables them to run their businesses more safely, efficiently, and profitably. As we increase our platform’s scale and scope, clients will be able to realize greater cost savings and operating advantages.

Our team is composed of former military, law enforcement, and technology professionals with deep experience in security and law enforcement, intelligence, technology design and development, strategic partnerships, data aggregation, venture capital, private equity, risk-management, banking, and finance.

Technology is a cornerstone of Helix’s service offering. Our technology platform allows clients to manage their business in a compliant manner with BioTrackTHC’s seed-to-sale software, as well as managing inventory and supply costs through Cannabase. We also provide bespoke monitoring and transport solutions. We focus on utilizing technology as an operations multiplier, bringing in and managing unique partnerships across the technology and operations spectrum to tailor and create desired outcomes for our clients.

Within the cannabis industry, no other activity carries as much potential for unforeseen negative impact as a lapse in compliance operations. Helix brings a broad range of compliance services to firms in the cannabis industry, safeguarding their ability to operate while increasing their access to services that offer them a competitive edge.

We have largely completed the financial and operational integrations of the previous 24 months, namely the acquisitions of BioTrackTHC, Engeni, Tan Security and Amercanex. BioTrackTHC specializes in providing cannabis software services, ranging from monitoring of plant inventory to point-of-sale solutions. BioTrackTHC’s software is used by 9 government entities and more than 2,000 commercial client locations across 34 U.S. states and 6 countries. Engeni provides a turnkey and comprehensive digital presence solution for small businesses. The Engeni Growth solution includes an optimized web page, a fully paid Google pay-per-click campaign, lead capture& lead delivery and ubiquitous directory/map listings. Engeni has also become the Company’s organic offshore software development platform, and has delivered the second generation of the BioTrackTHC software. These strategic acquisitions will help field the growing demand in the Legal Cannabis Industry. Tan Security, a licensed security company, provided the Company a platform with which to expand security operations in the state of California. Amercanex is a business to business wholesale marketplace that leverages blockchain technology and is capable of facilitating wholesale cannabis and hemp transactions between licensed businesses on a global scale. The Company has integrated Amercanex’s technology with BioTrackTHC’s software platforms. Integration of the previously announced acquisitions has already yielded the operational and financial results that the management team sought, evidenced by strongly improved cash flows from operations, growing market share, and a greatly accelerated software development time with increased market responsiveness. These integrations still have room to yield more financial and operational leverage, which will be welcome in the unprecedented operating environment that now confronts the industry. Further, the turnaround of the BioTrackTHC unit is well advanced, with strategic restructuring in operations and personnel nearly complete, having been initiated in 2019. The transition of BioTrackTHC from an operation with negative $800,000 of Adjusted EBITDA in 2018 (while still better than competitors) into an operation that generated nearly $800,000 in Adjusted EBITDA in Q1 2020 is a transformational success.

Today, the leadership team is focused on keeping our employees and clients as safe as possible as we continue to execute our strategy in the face of the emergence of the Covid-19 pandemic. As a former military officer with training in Nuclear, Biological, and Chemical operations, Helix’s CEO is focused on not only the Company’s strategic and operational results, but on the evolution of the pandemic threat to the business and our lives.

While we continue to grow, our client service and development operations have had to adapt to the new realities of working from home and travel restrictions. We believe that the economic impacts of the pandemic are not well understood in terms of scope, scale and duration, and so we continue to focus on accelerating our execution timeline while using our technology and data resources to deliver greater reliability and profitability to our customers.

39

Results of Operations for the three months ended March 31, 2020 and 2019

The following table shows our results of operations for the three months ended March 31, 2020 and 2019. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.

	For the Three Months Ended March 31,						Change
	2020			2019			Dollars			Percentage
Revenue	$	4,552,431		$	3,371,107		$	1,181,324			35	%
Cost of revenue		2,266,679			1,925,219			341,460			18	%
Gross margin		2,285,752			1,445,888			839,864			58	%
Operating expenses		5,701,779			4,042,551			1,659,228			41	%
Loss from operations		(3,416,027	)		(2,596,663	)		(819,364	)		32	%
Other income (expense), net		349,803			(8,245,038	)		8,594,841			(104	%)
Net loss	$	(3,066,224	)	$	(10,841,701	)	$	7,775,477			(72	%)
Changes in foreign currency translation adjustment	$	21,077		$	4,247		$	16,830			396	%
Net loss attributable to common shareholders	$	(3,045,147	)	$	(10,837,454	)	$	7,792,307			(72	%)

Revenue

Total revenue for the three-month period ended March 31, 2020 was $4,552,431, which represented an increase of $1,181,324 compared to total revenue of $3,371,107 for the three months ended March 31, 2019. The increase resulted from additional revenue resulting from growth in the client base of BioTrackTHC as well as the expansion of security guarding operations into California.

Cost of Revenues

Cost of revenues for the three months ended March 31, 2020 and 2019 primarily consisted of hourly compensation for security personnel and employees involved in the creation and development of licensing software. Cost of revenues increased by $341,460 for the three months ended March 31, 2020, to $2,266,679 as compared to $1,925,219 for the three months ended March 31, 2019. The increase resulted from the cost of servicing additional clients of BioTrackTHC and the California security guarding business.

40

Operating Expenses

Our operating expenses encompass selling, general and administrative expenses, salaries and wages, professional and legal fees and depreciation. Selling, general and administrative expenses consist primarily of rent/moving expenses, advertising and travel expenses. Salaries and wages is composed of non-revenue generating employees. Professional services are principally comprised of outside legal, audit, information technology consulting, marketing and outsourcing services as well as the costs related to being a publicly traded company. Our operating expenses during the three months ended March 31, 2020 and 2019 were $5,701,779 and $4,042,551, respectively. The overall $1,659,228 increase in operating expenses was attributable to the following increases/(decreases) in operating expenses of:

● Selling, general and administrative – ($33,147)

● Salaries and wages – $479,484

● Professional and legal fees – ($214,038)

● Depreciation and amortization – $56,951

● Loss on impairment of intangible assets - $1,369,978

The $33,147 decrease in selling, general, and administrative expenses resulted from a decrease in advertising costs. The $479,484 increase in salaries and wages resulted from an increase in stock compensation expense. The $214,038 decrease in professional and legal fees primarily resulted from a decrease in legal fees and costs associated with fundraising as well as lobbying expenses. The $56,951 increase in depreciation and amortization was due to amortization of intangible assets acquired in the BioTrackTHC, Engeni and GTI acquisitions. The $1,369,978 loss on impairment of intangible assets relates to the full impairment of the Security Grade Protective Services customer list.

Other Income (Expense), net

Other income (expense), net consisted of a change in the fair value of convertible notes, change in the fair value of convertible notes – related party, change in fair value of warrant liability, change in fair value of contingent consideration, gain on reduction of obligation pursuant to acquisition and interest (expense) income. Other income (expense), net during the three months ended March 31, 2020 and 2019 was $349,803 and ($8,245,038), respectively. The $8,594,841 increase in other income (expense), net was primarily attributable to a gain on the change in fair value of convertible notes – related party of $498,223 during the three months ended March 31, 2020 as compared to a loss of 3,524,009 in the prior period, gain on the change in fair value of warrant liability of $657,525 during the three months ended March 31, 2020 as compared to a loss of $1,632,956 in the prior period, as well as a change in fair value of contingent consideration of ($1,136,700) in the prior period.

Net loss

For the foregoing reasons, we had net loss of $(3,066,224) for the three months ended March 31, 2020, or $(0.03) per basic share, compared to a net loss of $(10,841,701) for the three months ended March 31, 2019, or $(0.15) net loss per common share – basic and diluted.

Net loss attributable to common shareholders

For the foregoing reasons, we had a net loss attributable to common shareholders of $(3,045,147) for the three months ended March 31, 2020, or $(0.03) per basic share attributable to common shareholders, compared to net loss attributable to common shareholders of $(10,837,454) for the three months ended March 31, 2019, or $(0.15) net loss per share attributable to common shareholders – basic and diluted.

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Liquidity, Capital Resources and Cash Flows

Going Concern

Management believes that we will continue to incur losses for the immediate future. Therefore, we may either need additional equity or debt financing until we can achieve profitability and positive cash flows from operating activities, if ever. These conditions raise substantial doubt about our ability to continue as a going concern. Our condensed consolidated financial statements do not include any adjustments relating to the recovery of assets or the classification of liabilities that may be necessary should we be unable to continue as a going concern. For the three months ended March 31, 2020, we have generated revenue and are trying to achieve positive cash flows from operations.

As of March 31, 2020, we had a cash balance of $616,837, accounts receivable, net of $1,504,765 and $5,990,057 in current liabilities. At the current cash consumption rate, we may need to consider additional funding sources during fiscal 2020. We are taking proactive measures to reduce operating expenses, drive growth in revenue and expeditiously resolve any remaining legal matters.

The successful outcome of future activities cannot be determined at this time and there is no assurance that, if achieved, we will have sufficient funds to execute our intended business plan or generate positive operating results.

The condensed consolidated financial statements do not include any adjustments related to this uncertainty and as to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should we be unable to continue as a going concern.

Capital Resources 

The following table summarizes total current assets, liabilities and working capital for the periods indicated: 

	March 31, 2020			December 31, 2019			Change
Current assets	$	3,256,831		$	3,518,224		$	(261,393	)
Current liabilities		5,990,057			6,934,725			(944,668	)
Working capital deficit	$	(2,733,226	)	$	(3,416,501	)	$	683,275

As of March 31, 2020, and December 31, 2019, we had a cash balance of $616,837 and $652,524, respectively.

Summary of Cash Flows

	For the Three Months Ended March 31,
	2020			2019
Net cash used in operating activities	$	(362,296	)	$	(1,175,875	)
Net cash (used in) provided by investing activities		(205,456	)		(35,862	)
Net cash provided by financing activities		522,167			3,005,640

Net cash used in operating activities. Net cash used in operating activities for the three months ended March 31, 2020 was $(362,296). This included a net loss of $(3,066,224), non-cash charge related to depreciation and amortization of $1,222,592 non-cash charge related to amortization of debt discounts of $300,234, non-cash charge related to provision for doubtful accounts of $229,720, non-cash charge related to share-based compensation of $744,062, non-cash (gains) losses due to changes in fair value of convertible notes, fair value of warrant liability, fair value of convertible notes – related party, $339,620, $(657,525), and $(498,233), respectively, loss on impairment of intangible assets of $1,369,978, and changes in accounts receivable, deposits and other assets, costs in excess of billings, billings in excess of costs, deferred rent, accounts payable and accrued expenses, prepaid expenses and other current assets, due to related party, other long-term liabilities, and right of use assets and liabilities of $(346,520).

Net cash (used in) provided by investing activities. Net cash used in investing activities for the three months ended March 31, 2020 was $(205,456), which consisted of capital expenditures of $(205,456).

Net cash provided by financing activities. Net cash provided by financing activities for the three months ended March 31, 2020 was $522,167, which resulted from the entry into a financing arrangement of $500,000, payments pursuant to notes payable and financing arrangements of $(77,833), and proceeds from the issuance of common stock and warrants of $100,000.

Off-Balance Sheet Arrangements

None. 

Critical Accounting Policies and Estimates

Critical accounting policies and estimates are further discussed in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on March 30, 2020.

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Related Party Transactions

On March 1, 2019, we entered into a $1,500,000 Secured Convertible Promissory Note (“Note Nine”) with Rose Capital Fund I, LP (the Related Party Holder”). A Managing Member of the Related Party Holder is also one our Directors. The Related Party Holder provided us with $1,475,000 in cash proceeds, which we received during the period ended September 30, 2019. The additional $25,000 was retained by the Related Party Holder for legal bills for the transaction. Note Nine will mature on March 1, 2020 and bears interest at a rate of 25% per annum, payable by us half in cash and half in kind on a quarterly basis. The principal balance of Note Nine is convertible at the election of the Related Party Holder, in whole or in part, at any time or from time to time, and at maturity based on the available cash balance of the Company, into our common stock at the lower of $0.90 per share or a 30% discount to our 30-day weighted average listed price per share immediately before the date of conversion, or at the Maturity Date. The Company and the Related Party Holder are negotiating a potential extension of Note Nine. In conjunction with Note Nine, we issued a warrant to the Related Party Holder to purchase 535,715 shares of our common stock at $1.40 per share.

We evaluated Note Nine in accordance with ASC 480, Distinguishing Liabilities from Equity and determined Note Nine will be accounted for as a liability initially measured at fair value and subsequently at fair value with changes in fair value recognized in earnings. As of March 31, 2020, the fair value of Note Nine was $1,285,221. Accordingly, we recorded a change in fair value of ($498,233) related to Note Nine for the three months ended March 31, 2020, respectively.

In addition, we recorded a debt discount relating to the warrants issued in the amount of $1,186,153 based on the relative fair value of the warrants at inception of Note Nine. The additional $25,000 retained by the fourth investor for legal bills for the transaction will be recorded as a debt discount. Debt discount amortized to interest expense was $199,094 for the three months ended March 31, 2020. The unamortized discount balance at March 31, 2020 was $0. On May 31, 2019, we issued 52,083 restricted shares of common stock as PIK interest payments in the amount of $46,875. On February 24, 2020, we issued 167,891 restricted shares of common stock as PIK interest payments in the amount of $93,750. Accrued interest expense associated with Note Nine was $29,795 as of March 31, 2020, which includes PIK interest payable. As of March 31, 2020, the balance of Note Nine, net of debt discount for warrants and legal bills was $1,285,220. 

 On March 1, 2019, in connection with the issuance of Note Nine, we issued warrants, of which the value was derived and based off the fair value of Note Nine, to the investor to purchase 535,715 shares of our common stock at $1.40 per share. Exercise of the purchase rights represented by the warrant may be made, in whole or in part, at any time or times on or after March 1, 2019 and on or before March 1, 2024, by delivery to us of the Notice of Exercise.

We determined that the warrants associated with Note Nine are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. We have no plans to consummate a fundamental transaction and do not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. In accordance with the accounting guidance, the outstanding warrants are recognized as a warrant liability on the balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income in the statement of operations. At inception, March 1, 2019, the fair value of the warrant liability was $1,186,153 while as of March 31, 2020, the fair value of the warrant liability was $0. Accordingly, we recorded a change in fair value of approximately $182,000 during the three months ended March 31, 2020, which is reflected in the unaudited condensed consolidated statements of operations. 

On July 29, 2019, we entered into an unsecured promissory note with the Related Party Holder in the amount of $300,000. The unsecured promissory note has a fixed interest rate of 12% and is due and payable on January 29, 2020. We and the Related Party Holder mutually agreed to defer payment of interest and repayment of principal until July 29, 2020.

Non-GAAP Financial Measures

Consolidated Adjusted EBITDA (“Adjusted EBITDA”) is a non-GAAP financial measure and is the primary basis used to measure the operational strength and performance of our businesses as well as to assist in the evaluation of underlying trends in our businesses. This measure eliminates the significant level of non-cash depreciation and amortization expense that results primarily from intangible assets recognized in business combinations and significant non-cash expense related to share based compensation. It is also unaffected by our capital and tax structures. Our management and Board of Directors use this financial measure to evaluate our consolidated operating performance and the operating performance of our operating segments and to allocate resources and capital to our operating segments. Additionally, we believe that Adjusted EBITDA is useful to investors because it is one of the bases for comparing our operating performance with that of other companies in our industries, although our measure of Adjusted EBITDA may not be directly comparable to similar measures used by other companies. We define Adjusted EBITDA as net loss before income tax expense, other income (loss), interest expense, depreciation and amortization expense, share based compensation expense, other operating gains and losses (such as impairment charges related to fixed and intangible assets and gains or losses on the sale of long-lived assets), if any, and other gains and losses associated with the mark to market of our convertible notes, contingent liabilities and warrant liabilities. From time to time, we may exclude from Adjusted EBITDA the impact of certain events, gains, losses or other charges that affect the period-to-period comparability of our operating performance. We reconcile consolidated Adjusted EBITDA to net loss. This measure should not be considered a substitute for operating loss, net loss, or net cash provided by operating activities that we have reported in accordance with GAAP.

	For the Three Months Ended March 31,
	2020			2019
Net Loss	$	(3,066,224	)	$	(10,841,701	)
Interest expense		503,842			176,201
Depreciation and amortization		1,222,592			1,165,641
Loss on impairment of intangible assets		1,369,978			-
Share based compensation expense		744,062			408,935
Change in fair value of convertible note		339,620			987,963
Change in fair value of convertible note - related party		(498,233	)		3,524,009
Change in fair value of warrant liability		(657,525	)		1,632,956
Change in fair value of contingent consideration		-			1,136,700
Loss on issuance of warrants		-			787,209
Other income		(37,507	)		-
Adjusted EBITDA	$	(79,395	)	$	(1,022,087	)

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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable for a smaller reporting company.

ITEM 4. Controls and Procedures 

Disclosure Controls and Procedures

 
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (who is our Principal Executive Officer) and our Chief Financial Officer (who is our Principal Financial Officer), to allow timely decisions regarding required disclosures. Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control problems or acts of fraud, if any, within the Company have been detected.

These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer has concluded that as of March 31, 2020, our disclosure controls and procedures were effective.

Changes in internal control over financial reporting

During the three months ended March 31, 2020, there was no change in our internal control over financial reporting or in other factors that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. Legal Proceedings

Occasionally, we may be involved in claims and legal proceedings arising from the ordinary course of our business. We record a provision for a liability when we believe that it is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on our consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.

There is currently no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self- regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or of our Company’s or our Company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material effect on the Company, with the exception of:

Baker, et al. v. Helix TCS, Inc.

On March 8, 2017, two former employees filed a lawsuit in the United States District Court for the District of Colorado alleging violations of the Fair Labor Standards Act and the Colorado Wage Act on behalf of themselves and other employees. The plaintiffs seek damages for our alleged failure to compensate them appropriately for the overtime hours they worked as purported “non-exempt” employees. As of March 31, 2020, the parties have outlined a settlement agreement pending the outcome of the Kenney, et. al. case. As described in the Subsequent Events section above, the parties executed the settlement agreement in April 2020. The Company previously accrued a $440,000 liability related to this matter.

Kenney, et al. v. Helix TCS, Inc.

On July 20, 2017 one former employee filed a lawsuit in the United States District Court for the District of Colorado alleging violations of the Fair Labor Standards Act on behalf of themselves and other employees. The plaintiffs seek damages for our alleged failure to compensate them appropriately for the overtime hours they worked as purported “non-exempt” employees. As of March 31, 2020, the claim is currently in the process of appeal.

Audet v. Green Tree International, et. al.

On February 14, 2020 John Audet filed a complaint in 15th Judicial Circuit in and for Palm Beach County, Florida against multiple parties, including Green Tree International (“GTI”), claiming that he owned 10% of GTI. The Company believes the lawsuit is wholly without merit and will defend itself from these claims vigorously.

ITEM 1A. Risk Factors

Smaller reporting companies such as us 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 March 31, 2020, we issued 2,436,767 shares of common stock. 1,648,606 shares of common stock were issued upon the conversion of convertible notes, 350,000 shares were issued as stock compensation expense, 270,270 shares were issued under a subscription agreement for gross proceeds of $100,000, and 167,981 shares were issued as PIK interest of $93,750.

ITEM 3. Defaults upon Senior Securities

None.

ITEM 4. Mine Safety Disclosure

Not applicable.

ITEM 5. Other Information

None. 

45

ITEM 6. Exhibits

Exhibit No.	Description
2.3	Agreement and Plan of Merger, dated February 5, 2019, by and among Helix TCS, Inc., Helix Acquisition Sub, Inc., Green Tree International, Inc. and the Securityholder Representative (incorporated by reference to Exhibit 2.3 of the Company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on September 16, 2019).
2.4	Addendum No. 1, dated as of September 10, 2019, to the Agreement and Plan of Merger, dated February 5, 2019, by and among Helix TCS, Inc., Helix Acquisition Sub, Inc., Green Tree International, Inc. and the Securityholder Representative (incorporated by reference to Exhibit 2.4 of the Company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on September 16, 2019).
31.1	Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)). *
31.2	Certification by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)). *
32.1	Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
32.2	Certification by the Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
101.INS	XBRL Instance Document *
101.SCH	XBRL Taxonomy Extension Schema *
101.CAL	XBRL Taxonomy Extension Calculation Linkbase *
101.DEF	XBRL Taxonomy Extension Definition Linkbase *
101.LAB	XBRL Taxonomy Extension Label Linkbase *
101.PRE	XBRL Taxonomy Extension Presentation Linkbase *

* Filed herewith

# Management contract or compensatory plan.

46

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 15, 2020	By:	/s/ Zachary L. Venegas
		Zachary L. Venegas
		Chief Executive Officer (Principal Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Zachary L. Venegas	Chief Executive Officer	May 15, 2020
Zachary L. Venegas*	(Principal Executive Officer)
/s/ Scott Ogur	Chief Financial Officer	May 15, 2020
Scott Ogur	(Principal Financial Officer)
/s/ Paul Hodges	Director	May 15, 2020
Paul Hodges*
/s/ Steve Janjic	Director	May 15, 2020
Steve Janjic*
/s/ Garvis Toler III	Director	May 15, 2020
Garvis Toller III*
/s/ Andrew Schweibold	Director	May 15, 2020
Andrew Schweibold*
/s/ Satyavrat Joshi	Director	May 15, 2020
Satyavrat Joshi*

* By: Scott Ogur, as Attorney in Fact, pursuant to the Power of Attorney dated May 15, 2020 and filed herewith.

47

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Zachary L. Venegas, certify that:

1. I have reviewed this Quarterly report on Form 10-Q of Helix TCS, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its 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 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.

Date: May 15, 2020	By:	/s/ Zachary L. Venegas
		Zachary L. Venegas
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Scott Ogur, certify that:

1. I have reviewed this Quarterly report on Form 10-Q of Helix TCS, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its 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 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.

Date: May 15, 2020	By:	/s/ Scott Ogur
		Scott Ogur
		Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with this Quarterly Report on Form 10-Q of Helix TCS, Inc. (the “Company”) for the period ended March 31, 2020 (the “Report”), as filed with the U.S. Securities and Exchange Commission on the date hereof, I, Zachary L. Venegas, Chief Executive Officer of the Company, certify to the best of my knowledge, 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 Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition of the Company at the end of the period covered by the Report and the results of operations of the Company for the periods covered by the Report.

Date: May 15, 2020	By:	/s/ Zachary L. Venegas
		Zachary L. Venegas
		Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with this Quarterly Report on Form 10-Q of Helix TCS, Inc. (the “Company”) for the period ended March 31, 2020 (the “Report”), as filed with the U.S. Securities and Exchange Commission on the date hereof, I, Scott Ogur, Chief Financial Officer of the Company, certify to the best of my knowledge, 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 Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition of the Company at the end of the period covered by the Report and the results of operations of the Company for the periods covered by the Report.

Date: May 15, 2020	By:	/s/ Scott Ogur
		Scott Ogur
		Chief Financial Officer

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Revenue Recognition

3 Months Ended

Mar. 31, 2020

Revenue Recognition [Abstract]

Revenue Recognition

4. Revenue Recognition

Disaggregation of revenue 

	For the Three Months Ended March 31,
	2020		2019
Types of Revenues:
Security and Guarding	$	1,593,449	$	1,204,711
Systems Installation		174,946		28,541
Software		2,784,036		2,137,855
Total revenues	$	4,552,431	$	3,371,107

The following is a description of the principal activities from which we generate our revenue.

Security and Guarding Revenue

Helix provides armed and unarmed guards, monitoring of security alarms and cameras, as well as armed transportation services. The guards are charged out at an hourly rate, as are the monitoring services, with invoices typically sent to clients shortly after each month-end for the previous month, with revenue being recognized over time. The customer simultaneously receives and consumes benefits provided by the Helix performance. Transportation services are typically invoiced on a per-run basis, with revenue being recognized at a point in time once the service has been completed.

Systems Installation Revenue

Security systems, including Internet Protocol camera, intrusion alarm systems, perimeter alarm systems, and access controls are installed for clients. Installation jobs are estimated based on the cost of the equipment, the number of man hours expected to complete the work, supplies, travel, and any other ancillary costs. The installation is typically invoiced with 60% of the total price immediately after signing and the balance upon completion of the installation service. The timing of these contracts is short-term in nature and less than 12 months in duration, and revenue is recognized over the term of the contracts, utilizing the cost-to-cost method.

Software

The Company generates revenue from developing and licensing seed to sale cannabis compliance software to both private-sector and public-sector (government agencies) clients that are involved in cannabis related operations. The Company also generates revenue from on-going training, support and software customization services.

The private-sector software entails cultivation tracking, inventory management, point of sale and analytic reporting to assist businesses in meeting their compliance requirements and effectively managing their businesses. Customers within the private sector business are charged an initial one-time installation fee and the revenues associated with these services are recognized upon completion of installation and configuration at a point in time. After the installation and configuration of the software is completed, the customer is invoiced monthly and revenues associated with these services are recognized monthly over a period of time in which the customer continues to use the software and related services.

The public-sector software assists government agencies in efficient oversight of cannabis related business under their jurisdiction. Revenues associated with governmental contracts are longer-term in nature and recognized upon completion of certain milestones over a period of time or on a completed-contract basis at a point in time. The Company considers the contract to be complete when all significant costs have been incurred and the customer accepts the project. Costs incurred prior to the customer accepting the project are deferred and reflected on the condensed consolidated balance sheets as prepaid expenses and other current assets.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in accordance with ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.  Generally, the Company’s contracts include a single performance obligation that is separately identifiable, and therefore, distinct. Under ASC 606, the allocation of transaction price is not necessary if only one performance obligation is identified.

Significant Judgments

Accounting for long-term contracts involves the use of various techniques to estimate total contract revenue, costs and satisfaction of performance obligation. The Company satisfies its performance obligations and subsequently recognizes revenue, over time, as security and installation services are performed. There were no changes to the significant judgments used by the Company to determine the timing of satisfaction of the performance obligations under ASC 606.

Costs to Obtain or Fulfill Contract

The Company’s costs to fulfill or obtain contracts with customers primarily consist of commissions and legal costs. The Company provides sales team members with commissions at 0-6%. Although sales commissions are incremental in nature and are only incurred when a contract is obtained, there is no up-front commission paid on the satisfactory obtainment of a contract, resulting in no sales commissions being capitalized at March 31, 2020 and December 31, 2019. The Company also incurs legal costs relating to the drafting and negotiating of contracts with select customers. Because legal costs are not incremental in nature and are incurred regardless of whether a contract is ultimately obtained, there were no legal costs capitalized as of March 31, 2020 and December 31, 2019. The Company did not record amortization of costs incurred to obtain the contract or any impairment losses for the period ending March 31, 2020 and 2019.

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Costs, Estimated Earnings and Billings

3 Months Ended

Mar. 31, 2020

Costs in Excess of Billings on Uncompleted Contracts or Programs [Abstract]

Costs, Estimated Earnings and Billings

8. Costs, Estimated Earnings and Billings

Costs, estimated earnings and billings on uncompleted contracts are summarized as follows as of March 31, 2020 and December 31, 2019:

	March 31, 2020			December 31, 2019
Costs incurred on uncompleted contracts	$	453,999		$	444,344
Estimated earnings		156,791			150,355
Cost and estimated earnings earned on uncompleted contracts		610,790			594,699
Billings to date		424,696			501,543
Costs and estimated earnings in excess of billings on uncompleted contracts		186,094			93,156
Costs in excess of billings	$	260,895		$	257,819
Billings in excess of cost		(74,801	)		(164,663	)
	$	186,094		$	93,156

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Notes Payable

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Notes Payable

12. Notes Payable

As of March 31, 2020 and December 31, 2019 Notes payable consisted of the following:

	March 31, 2020			December 31, 2019
Vehicle financing loans payable, between 4.7% and 7.0% interest and maturing between June 2022 and July 2022	$	48,123		$	52,507
Loans Payable - Credit Union		4,936			5,385
Convertible Note Payable and financing arrangement		827,000			400,000
Less: Current portion of loans payable		(450,977	)		(24,805	)
Long-term portion of loans payable	$	429,082		$	433,087

The interest expense associated with the notes payable was $58,340 and $1,791 for the three months ended March 31, 2020 and 2019, respectively.

In connection with the GTI Merger, the Company assumed a $400,000 Senior Secured Convertible Debenture (the "Convertible Debenture") (See Note 5). The Convertible Debenture will mature on July 31, 2021 and bears interest at a rate of 10% per annum, payable by the Company to the Lender. In the event that Lender elects to convert the Convertible Debenture into Helix Common Stock or in the event Helix required the Lender to convert the Convertible Debenture into its Common Stock, the number of shares that shall be issuable upon full Conversion of the Convertible Debenture at any time shall be equal to the outstanding principal of the Convertible Debenture divided by $1.00. Pursuant to the terms of the Convertible Debenture, Helix Common Stock can be transferred to the Lender from Steve Janjic, as a shareholder of the Company who receives shares of Helix Common Stock at the Closing, instead of via a new issuance of shares of Helix Common Stock by Helix to Lender, and Lender agrees to accept such transfer of shares from Mr. Janjic as the issuance of Helix Common Stock.

In addition, the Company shall have the right to require the Lender to convert the Convertible Debenture into Helix Common Stock at any time provided its Common Stock is listed on a stock exchange other than the U.S. OTCQB, the Common Stock would be fully traded up on conversion and the trading price of its Common Stock closes above $1.15 for 20 consecutive trading days on such exchange. The Convertible Debenture will be secured by a general security interest over all of the assets of the GTI, however does not apply to those assets owned by Helix or Merger Sub prior to the closing of the Merger.

On February 7, 2020, the Company and its subsidiary Bio-Tech Medical Software Inc. entered into an agreement for the purchase and sale of future receipts with Advantage Capital Funding. $485,000 was actually funded to the Company with a promise to pay $15,000 per week for 8 weeks and $20,000 per week for the next 27 weeks until a total of $660,000 is paid. $427,000 of principal remained outstanding as of March 31, 2020.

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Shareholders' Equity (Tables)

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Schedule of number of shares issued under 2017 omnibus incentive plan

Date of Issuance	Number of Shares Issued		Total Share Based Compensation
January 2020		350,000	$	220,500
		350,000	$	220,500

Date of Issuance	Number of Shares Issued		Total Share Based Compensation
March 2019		250,000	$	320,000
		250,000	$	320,000

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Costs, Estimated Earnings and Billings (Tables)

3 Months Ended

Mar. 31, 2020

Costs in Excess of Billings on Uncompleted Contracts or Programs [Abstract]

Schedule of costs, estimated earnings and billings on uncompleted contracts

	March 31, 2020			December 31, 2019
Costs incurred on uncompleted contracts	$	453,999		$	444,344
Estimated earnings		156,791			150,355
Cost and estimated earnings earned on uncompleted contracts		610,790			594,699
Billings to date		424,696			501,543
Costs and estimated earnings in excess of billings on uncompleted contracts		186,094			93,156
Costs in excess of billings	$	260,895		$	257,819
Billings in excess of cost		(74,801	)		(164,663	)
	$	186,094		$	93,156

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Property and Equipment, Net (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 29,772	$ 17,713

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Costs, Estimated Earnings and Billings (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Costs in Excess of Billings on Uncompleted Contracts or Programs [Abstract]
Costs incurred on uncompleted contracts	$ 453,999	$ 444,344
Estimated earnings	156,791	150,355
Cost and estimated earnings earned on uncompleted contracts	610,790	594,699
Billings to date	424,696	501,543
Costs and estimated earnings in excess of billings on uncompleted contracts	186,094	93,156
Costs in excess of billings	260,895	257,819
Billings in excess of cost	(74,801)	(164,663)
Total	$ 186,094	$ 93,156

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Commitments and Contingencies (Details Textual)	3 Months Ended
	Mar. 31, 2020 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Lease agreement expires date	Mar. 31, 2022
Additional operating lease obligations	$ 600,000
Lease term	3 years

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Income Taxes (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Tax Disclosure [Abstract]
Tax carryforward, description	These amounts are available for carryforward for use in offsetting taxable income of future years through 2035
Percentage of valuation reserve deferred tax benefit	100.00%
Net operating loss carry forward	$ 19,200,000	$ 13,800,000

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Segment Results (Details 1) - USD ($)		3 Months Ended
		Mar. 31, 2020	Mar. 31, 2019
Segment Reporting [Abstract]
Net Loss		$ (3,066,224)	$ (10,841,701)
Interest expense		(503,842)	(176,201)
Depreciation and amortization		1,222,592	1,165,641
Loss on Impairment of intangible assets		1,369,978
Share based compensation expense		744,062	408,935
Change in fair value of convertible note		339,620	987,963
Change in fair value of convertible note - related party		(498,233)	3,524,009
Change in fair value of warrant liability		(657,525)	1,632,956
Change in fair value of contingent consideration			1,136,700
Loss on issuance of warrants			787,209
Other income		37,507
Adjusted EBITDA	[1]	$ (79,395)	$ (1,022,087)

[1] See "Non-GAAP Financial Measures" within Part I, Item 2, Management's Discussion and Analysis.

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Warrant Liability (Details 2) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Fair value of company's common stock	$ 0.115	$ 0.60
Dividend yield	0.00%	0.00%
Expected volatility		175.00%
Expected life (years)	2 years 7 months 28 days	2 years 9 months 29 days
Fair value of financial instruments - warrants	$ 113,942	$ 715,259
Maximum [Member]
Expected volatility	148.00%	140.00%
Risk free interest rate	0.36%	1.79%
Minimum [Member]
Expected volatility	37.00%	45.00%
Risk free interest rate	0.11%	1.55%

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Revenue Recognition (Details Textual)	3 Months Ended
	Mar. 31, 2020
Revenue Recognition [Abstract]
System installation invoice, percentage	60.00%
Sales team members commissions, description	The Company provides sales team members with commissions at 0-6%.

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Going Concern Uncertainty, Financial Condition and Management's Plans (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Going Concern Uncertainty Financial Condition And Managements Plans [Abstract]
Working capital deficit	$ 2,733,226	$ 3,416,501
Decrease of working capital	$ 683,275

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Related Party Transactions (Details) - USD ($)				1 Months Ended		3 Months Ended
	Jul. 29, 2019	May 31, 2019	Jan. 03, 2019	Feb. 24, 2020	May 31, 2019	Mar. 31, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Promissory note, description			The Company entered into an unsecured promissory note with the Related Party Holder in the amount of $280,000. The unsecured promissory note has a fixed interest rate of 10% and is due and payable on March 31, 2019. On March 2, 2019, the unsecured promissory note was paid off in full.
Common stock per share						$ 0.52	$ 0.53
Warrants to purchase shares						5,248,193	5,113,058
Note Nine [Member]
Debt Instrument [Line Items]
Principal amount						$ 1,500,000
Maturity date						Mar. 01, 2020
Annual rate of interest						25.00%
Change in fair value of convertible note - related party						$ (498,233)
Interest expense						29,795
Total proceeds						$ 1,475,000
Common stock per share						$ 1.40
Warrants to purchase shares						535,715
Fair value of liability after period end						$ 1,285,221
Net of debt discount for warrants and legal bills						1,285,220
Restricted shares of common stock				167,891	52,083
Restricted shares of common stock value				$ 93,750	$ 46,875
Legal fees						25,000
Debt discounts amortized to interest expense						199,094
Unamortized discount						25,000
Unsecured Promissory Note [Member] | Related Party Holder [Member]
Debt Instrument [Line Items]
Principal amount	$ 300,000
Maturity date	Jan. 29, 2020
Annual rate of interest	12.00%
Warrant [Member] | Note Nine [Member]
Debt Instrument [Line Items]
Principal amount						1,186,153
Fair value of liability						0
Change in fair value of convertible note - related party						$ 182,000
Common stock per share						$ 1.40
Warrants to purchase shares						535,715
Fair value of liability after period end						$ 1,186,153
Restricted shares of common stock		52,083
Unamortized discount						$ 0

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Shareholders' Equity (Details Textual) - USD ($)	1 Months Ended											3 Months Ended	12 Months Ended
	Feb. 24, 2020	Jan. 31, 2020	Sep. 30, 2019	Aug. 31, 2019	May 31, 2019	May 31, 2019	Apr. 30, 2019	Apr. 30, 2019	Mar. 31, 2019	Mar. 28, 2019	Jan. 31, 2019	Mar. 31, 2020	Mar. 07, 2020	Dec. 31, 2019	Mar. 07, 2019
Note Ten [Member]
Subsidiary or Equity Method Investee [Line Items]
Shares of restricted common stock			16,568		15,625									19,401
Restricted shares of common stock value			$ 14,063		$ 14,062									$ 12,029
Note Nine [Member]
Subsidiary or Equity Method Investee [Line Items]
Shares of restricted common stock	167,891					52,083
Restricted shares of common stock value	$ 93,750					$ 46,875
Principal amount												$ 1,500,000
Other Common Stock Issuances [Member]
Subsidiary or Equity Method Investee [Line Items]
Common stock, shares issued												167,891
Interest payments												$ 93,750
Other Common Stock Issuances [Member]
Subsidiary or Equity Method Investee [Line Items]
Restricted shares of common stock value												16,568
Common stock, shares issued									1,255,222
Interest payments												$ 14,063
Other Common Stock Issuances [Member] | Note Ten [Member]
Subsidiary or Equity Method Investee [Line Items]
Shares of restricted common stock						15,625
Restricted shares of common stock value						$ 14,062
Other Common Stock Issuances [Member] | Note Nine [Member]
Subsidiary or Equity Method Investee [Line Items]
Shares of restricted common stock						52,083
Restricted shares of common stock value						$ 46,875
Other Common Stock Issuances [Member] | Investor [Member]
Subsidiary or Equity Method Investee [Line Items]
Shares of restricted common stock		270,270									20,000
Common stock, shares issued									62,847			47,084
Shared based compensation expense											$ 27,400
Other Common Stock Issuances [Member] | Engeni Contingent Consideration [Member]
Subsidiary or Equity Method Investee [Line Items]
Common stock, shares issued							733,300
Other Common Stock Issuances [Member] | Biotrack Acquisition [Member]
Subsidiary or Equity Method Investee [Line Items]
Common stock, shares issued				16,765,727
Stock exercised during period, shares							57,461		6,082
Proceeds from stock options exercised							$ 21,808		$ 4,805
Other Common Stock Issuances [Member] | Rocky Tan International Security [Member]
Subsidiary or Equity Method Investee [Line Items]
Stock issued during period, shares, acquisitions								250,000
Other Common Stock Issuances [Member] | Security Grade Acquisition [Member]
Subsidiary or Equity Method Investee [Line Items]
Stock exercised during period, shares							15,101
Convertible Note to Common Stock [Member]
Subsidiary or Equity Method Investee [Line Items]
Principal amount										$ 42,055					$ 75,882
Convertible note into conversion shares common stock										55,421			100,000
Convertible note, percentage										10.00%
Convertible Note to Common Stock [Member] | Note Ten [Member]
Subsidiary or Equity Method Investee [Line Items]
Principal amount												$ 170,000
Convertible note into conversion shares common stock												564,420
Convertible Note to Common Stock [Member] | Note Eleven [Member]
Subsidiary or Equity Method Investee [Line Items]
Principal amount												$ 120,000
Convertible note into conversion shares common stock												1,084,186

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Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Mar. 31, 2020		Dec. 31, 2019
Current assets:
Cash	$ 616,837		$ 652,524
Accounts receivable, net	1,504,765		1,870,722
Prepaid expenses and other current assets	874,334		737,159
Costs & earnings in excess of billings	260,895		257,819
Total current assets	3,256,831		3,518,224
Property and equipment, net	979,012		805,679
Intangible assets, net	11,834,840	[1]	14,395,287
Goodwill	53,716,206		53,716,206
Deposits and other assets	1,392,680		1,172,601
Promissory note receivable	75,000		75,000
Total assets	71,254,569		73,682,997
Current liabilities:
Accounts payable and accrued liabilities	2,868,554		3,263,146
Billings in excess of costs	74,801		164,663
Notes payable and financing arrangements, current portion	450,977		24,805
Obligation pursuant to acquisition	50,000		50,000
Convertible notes payable, net of discount	846,563		832,492
Convertible notes payable, net of discount - related party	1,285,220		1,584,360
Warrant liability	113,942		715,259
Promissory notes	300,000		300,000
Total current liabilities	5,990,057		6,934,725
Long-term liabilities:
Notes payable and financing arrangements, net of current portion	429,082		433,087
Convertible notes payable, net of discount	385,000		385,000
Other long-term liabilities	1,077,834		783,230
Total long-term liabilities	1,891,916		1,601,317
Total liabilities	7,881,973		8,536,042
Shareholders' equity:
Common stock; par value $0.001; 200,000,000 shares authorized; 96,045,386 shares issued and outstanding as of March 31, 2020; 93,608,619 shares issued and outstanding as of December 31, 2019	96,045		93,608
Additional paid-in capital	102,174,494		100,906,143
Accumulated other comprehensive income	(58,824)		(79,901)
Accumulated deficit	(38,853,903)		(35,787,679)
Total shareholders' equity	63,372,596		65,146,955
Total liabilities and shareholders' equity	71,254,569		73,682,997
Preferred Stock (Class A) [Member]
Shareholders' equity:
Preferred stock value	1,000		1,000
Total shareholders' equity	1,000		1,000
Preferred Stock (Class B) [Member]
Shareholders' equity:
Preferred stock value	13,784		13,784
Total shareholders' equity	$ 13,784		$ 13,784

[1] The Company wrote off the remaining unamortized balance of $1,369,978 related to the customer list intangible asset from the Security Grade Protective Services transaction as of March 31, 2020.

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Stock Options (Details Textual) - $ / shares			1 Months Ended							3 Months Ended
	Aug. 15, 2020	Feb. 06, 2019	Dec. 31, 2020	Feb. 29, 2020	Mar. 19, 2019	Mar. 19, 2019	Mar. 19, 2019	Mar. 19, 2019	Feb. 21, 2019	Mar. 31, 2020
Option Indexed to Issuer's Equity [Line Items]
Options to purchase on shares		100,000								165,000
Common stock at price per share		$ 1.51
Options term, description		These options vested on May 6, 2019 and have an expiration date of February 6, 2024.								These options vested immediately and expire three years from issuance.
Options grants were forfeited as not yet vested										75,000
Minimum [Member]
Option Indexed to Issuer's Equity [Line Items]
Common stock at price per share										$ 0.20
Maximum [Member]
Option Indexed to Issuer's Equity [Line Items]
Common stock at price per share										$ 0.46
Chief Financial Officer [Member]
Option Indexed to Issuer's Equity [Line Items]
Options to purchase on shares								300,000	200,000
Common stock at price per share									$ 0.385
Options term, description								These options shall vest over a three-year period from March 2020 to March 2022 and have expiration dates ranging from March 2024 to March 2029.	These options vested immediately upon grant and expire on February 21, 2025.
Stock Incentive Plan stock options, description				The former President of the Company’s BioTrackTHC subsidiary forfeited 1,430,306 BioTrackTHC Management Awards and 204,364 Bio-Tech Medical Software, Inc. 2014 Stock Incentive Plan stock options as a result of his termination (See Note 16).
Chief Financial Officer [Member] | Minimum [Member]
Option Indexed to Issuer's Equity [Line Items]
Common stock at price per share					$ 2.35
Chief Financial Officer [Member] | Maximum [Member]
Option Indexed to Issuer's Equity [Line Items]
Common stock at price per share						$ 2.59
Board [Member]
Option Indexed to Issuer's Equity [Line Items]
Options to purchase on shares										800,000
Common stock at price per share										$ 0.115
Options term, description										These options expire on March 31, 2025.
Options vested										100,000
Board [Member] | Subsequent Event [Member]
Option Indexed to Issuer's Equity [Line Items]
Options vested	100,000		600,000
Zachary Venegas [Member]
Option Indexed to Issuer's Equity [Line Items]
Options to purchase on shares							500,000
Options term, description							These options shall vest over a three-year period from March 2020 to March 2022 and have expiration dates ranging from March 2024 to March 2029.
Zachary Venegas [Member] | Minimum [Member]
Option Indexed to Issuer's Equity [Line Items]
Common stock at price per share						2.35
Zachary Venegas [Member] | Maximum [Member]
Option Indexed to Issuer's Equity [Line Items]
Common stock at price per share						$ 2.59

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Condensed Consolidated Statements Of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (3,066,224)	$ (10,841,701)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,222,592	1,165,641
Accretion of debt discounts	300,234	128,794
Loss on issuance of warrants		787,209
Provision for doubtful accounts	229,720	69,896
Share-based compensation expense	744,062	408,935
Change in fair value of convertible notes, net of discount	339,620	987,963
Change in fair value of warrant liability	(657,525)	1,632,956
Change in fair value of convertible notes, net of discount - related party	(498,233)	3,524,009
Change in fair value of contingent consideration		1,136,700
Loss on impairment of intangible assets	1,369,978
Gain on reduction of contingent consideration		(100,000)
Change in operating assets and liabilities:
Accounts receivable	141,822	(73,040)
Prepaid expenses and other current assets	(136,543)	99,205
Deposits and other assets	11,289
Due to related party		(32,489)
Costs & earnings in excess of billings	(3,076)	22,702
Accounts payable and accrued expenses	(258,794)	(139,956)
Deferred rent		(2,937)
Billings in excess of costs	(89,862)	1,806
Right of use assets and liabilities	(11,356)	48,432
Net cash used in operating activities	(362,296)	(1,175,875)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(205,456)	(9,195)
Payments for business combination, net of cash acquired		(26,667)
Net cash (used in) provided by investing activities	(205,456)	(35,862)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments pursuant to advances from related parties		(42,000)
Payments pursuant to notes payable and financing arrangements	(77,833)	(7,060)
Payments pursuant to a promissory note		(280,000)
Proceeds from notes payable and financing arrangements	500,000
Proceeds from the issuance of a promissory note		280,000
Proceeds from the issuance of convertible notes payable		1,925,000
Proceeds from the issuance of common stock and warrants	100,000	1,129,700
Net cash provided by financing activities	522,167	3,005,640
Effect of foreign exchange rate changes on cash	9,898	41,120
Net change in cash	(35,687)	1,835,023
Cash, beginning of period	652,524	285,761
Cash, end of period	616,837	2,120,784
Supplemental disclosure of cash and non-cash transactions:
Cash paid for interest	63,740
Common stock issued pursuant to convertible notes payable	426,690	117,936
Debt discount for warrant liability		(1,542,001)
PIK interest payment of common stock	56,244
Supplemental non-cash amounts of lease liabilities arising from obtaining right of use assets	$ 301,396	$ 1,485,511

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

16. Stock-Based Compensation

2017 Omnibus Incentive Plan

The Company's 2017 Omnibus Incentive Plan (the "2017 Plan") was adopted by our Board of Directors and a majority of our voting securities on October 17, 2017. The 2017 Plan permits the granting of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards and dividend equivalent rights to eligible employees, directors and consultants. We grant options to purchase shares of common stock under the 2017 Plan at no less than the fair value of the underlying common stock as of the date of grant. Options granted under the Plan have a maximum term of ten years. Under the Plan, a total of 5,000,000 shares of common stock are reserved for issuance, of which options to purchase 4,114,945 and 2,599,945 shares of common stock were granted as of March 31, 2020 and December 31, 2019, respectively.

Bio-Tech Medical Software, Inc. 2014 Stock Incentive Plan

On October 22, 2014, BioTrackTHC approved and adopted the BioTrackTHC Stock Plan. The BioTrackTHC Stock Plan set aside and reserved 600,000 shares of BioTrackTHC's common stock for grant and issuance in accordance with its terms and conditions. Persons eligible to receive awards from the BioTrackTHC Stock Plan include employees (including officers and directors) of BioTrackTHC or its affiliates and consultants who provide significant services to BioTrackTHC or its affiliates (the "Grantees"). The BioTrackTHC Stock Plan permits BioTrackTHC to issue to Grantees qualified and/or non-qualified options to purchase BioTrackTHC's common stock, restricted common stock, performance units, and performance shares. The term of each award under the BioTrackTHC Stock Plan shall be no more than ten years from the date of grant thereof. BioTrackTHC's Board of Directors or a committee designated by the Board of Directors is responsible for administration of the BioTrackTHC Stock Plan and has the sole discretion to determine which Grantees will be granted awards and the terms and conditions of the awards granted. On February 29, 2020, the former Chief Executive Officer of the Company's BioTrackTHC subsidiary forfeited 204,364 Bio-Tech Medical Software, Inc. 2014 Stock Incentive Plan stock options as a result of his termination (See Note 14).

BioTrackTHC Management Awards

On September 1, 2015 and November 1, 2015, BioTrackTHC's Board approved individual employee option grants (the "Executive Grants") for three executives (the "Executives"). Pursuant to the Executive Grants, the Executives were each granted stock options to purchase 146,507 shares (totaling 439,521 shares) of BioTrackTHC's common stock (the "Option") at an exercise price equal to approximately $7.67. The options vest as to 25% of the shares subject to the Options, one year after the date of grant and then in equal quarterly installments for the three years thereafter, subject to the Executive's continued employment with BioTrackTHC (see Notes 1 and 5). On February 29, 2020, the former President of the Company's BioTrackTHC subsidiary forfeited 1,430,306 BioTrackTHC Management Awards (See Note 14).

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Subsequent Events

3 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

20. Subsequent Events

On April 13, 2020, the Company executed a settlement agreement in the matter of Baker and Gill v. Helix TCS et. al. whereby the Company will pay $400,000 plus interest to the named plaintiffs, the class members, and the counsel of the named plaintiffs. Such payments will be made on the later of (1) Sixty days after Exhaustion of the Federal Appeal or (2) Sixty days after court approval of the settlement agreement.

On April 3, 2020, April 13, 2020, April 23, 2020, April 29, 2020, and May 12, 2020, the holder of a 12% convertible promissory note issued by the Company elected its option to partially convert $25,000, $30,000, $30,000 , $30,000, and $35,000 in principal of the convertible note into 316,857, 395,778, 395,778, 360,577, and 409,836 shares of the Company's common stock.

On April 22, 2020, stockholders of the Company holding a majority of the voting power of the Company approved the following corporate actions of the Company: (1) Amendment of the Company's certificate of incorporation to provide for an increase in the authorized shares of the Company's common stock, $0.001 par value per share, from 200,000,000 shares to 275,000,000 shares; (2) Amendment of the Company's 2017 Omnibus Stock Incentive Plan (the "2017 Plan") to increase the number of shares authorized for issuance under the 2017 Plan from 5,000,000 to 11,000,000; and (3) Amendment of the Company's Certificate of Incorporation to change the Company's name from Helix TCS, Inc. to Helix Technologies, Inc. It is anticipated that these changes will take effect at the end of May 2020, or early June 2020, after requisite notice has been given to the Company's stockholders of record as of April 22, 2020.

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Revenue Recognition (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Total revenues	$ 4,552,431	$ 3,371,107
Security And Guarding [Member]
Total revenues	1,593,449	1,204,711
Systems Installation [Member]
Total revenues	174,946	28,541
Software [Member]
Total revenues	$ 2,784,036	$ 2,137,855

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Description of Business (Details Narrative) - shares				1 Months Ended
	Sep. 10, 2019	Aug. 03, 2018	Oct. 01, 2015	Jun. 01, 2018	Apr. 02, 2019
Business Acquisition [Line Items]
Exchanged percentage of Helix TCS			100.00%
Business acquisition, description			Effective October 1, 2015, for accounting purposes, as part of an acquisition amounting to a reorganization dated December 21, 2015, Helix Opportunities LLC exchanged 100% of Helix TCS, LLC and its wholly-owned subsidiaries, Security Consultants Group, LLC and Boss Security Solutions, Inc. to the Company in exchange for 20 million common shares and 1 million convertible preferred shares of the Company.	The Company issued 38,184,985 unregistered shares of its common stock to BioTrackTHC stockholders, of which 1,852,677 shares were held back to satisfy indemnification obligations in the BioTrackTHC Merger Agreement, if necessary. The Company also assumed the Bio-Tech Medical Software, Inc. 2014 Stock Incentive Plan (“BioTrackTHC Stock Plan”), pursuant to which options exercisable in the amount of 8,132,410 shares of common stock are outstanding. As a result, BioTrackTHC stockholders owned approximately 48% of the Company on a fully diluted basis as of the BioTrackTHC Closing Date.
Merger Agreement		In connection with closing the Engeni Merger Agreement, the Company issued 366,700 shares of Company common stock to Engeni US members. Furthermore, the Company subsequently issued Engeni US members 733,300 shares of Company common stock on April 2, 2019.
Amercanex Merger Agreement [Member] | GTI Shareholders [Member]
Business Acquisition [Line Items]
Number of unregistered shares issued	16,765,727
Number of shares repurchased during the year	4,140,274
Tan Acquisition Agreement [Member]
Business Acquisition [Line Items]
Exchanged percentage of Helix TCS					100.00%

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	96,045,386	93,608,619
Common stock, shares outstanding	96,045,386	93,608,619
Preferred Stock (Class A) [Member]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	3,000,000	3,000,000
Preferred stock, shares issued	1,000,000	1,000,000
Preferred stock, shares outstanding	1,000,000	1,000,000
Preferred Stock (Class B) [Member]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	17,000,000	17,000,000
Preferred stock, shares issued	13,784,201	13,784,201
Preferred stock, shares outstanding	13,784,201	13,784,201

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Warrant Liability (Details) - USD ($)		3 Months Ended
	Jan. 10, 2019	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Par value of common stock issues		$ 0.001		$ 0.001
Total loss on issuance of warrants			$ (787,209)
Warrant [Member]
Proceeds from January investment units	$ 1,129,700
Par value of common stock issues	$ (1,255)
Fair value of warrants	$ (1,717,506)
Total loss on issuance of warrants	(787,209)
Warrant [Member] | January 10, 2019 Issuance [Member]
Total loss on issuance of warrants	(589,061)
Warrant [Member] | March 10, 2019 Issuance [Member]
Total loss on issuance of warrants	$ (198,148)

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Description of Business

3 Months Ended

Mar. 31, 2020

Description Of Business [Abstract]

Description of Business

1. Description of Business

Helix TCS, Inc. (the “Company” or “Helix”) was incorporated in Delaware on March 13, 2014. Pursuant to the acquisition of the assets of Helix TCS, LLC, as discussed below, we changed our name from Jubilee4 Gold, Inc. to Helix TCS, Inc. effective October 25, 2015.

Effective October 25, 2015, we entered into an acquisition and exchange agreement with Helix TCS, LLC. We closed the transaction contemplated under the acquisition and exchange agreement on December 23, 2015 and Helix TCS, LLC was merged into and with Helix. 

Effective October 1, 2015, for accounting purposes, as part of an acquisition amounting to a reorganization dated December 21, 2015, Helix Opportunities LLC exchanged 100% of Helix TCS, LLC and its wholly-owned subsidiaries, Security Consultants Group, LLC and Boss Security Solutions, Inc. to the Company in exchange for 20 million common shares and 1 million convertible preferred shares of the Company.

The acquisition of Helix was treated as a recapitalization for financial accounting purposes. Jubilee4 Gold, Inc. is considered the acquiree for accounting purposes and their historical financial statements before the Acquisition Agreement were replaced with the historical financial statements of the Company. The common stock account of the Company continues post-merger, while the retained earnings of the acquiree is eliminated. Furthermore, on April 11, 2016, the Company acquired the assets of Revolutionary Software, LLC (“Revolutionary”).

On March 3, 2018, Helix TCS, Inc. and its wholly owned subsidiary, Helix Acquisition Sub, Inc. (“BioTrackTHC Merger Sub”), entered into an Agreement and Plan of Merger (the “BioTrackTHC Merger Agreement”) with Bio-Tech Medical Software, Inc. (“BioTrackTHC”) and Terence J. Ferraro, as the representative of the BioTrackTHC stockholders, pursuant to which BioTrackTHC Merger Sub merged with and into BioTrackTHC (the “BioTrackTHC Merger”).

On June 1, 2018 (the “BioTrackTHC Closing Date”), in connection with closing the BioTrackTHC Merger, the Company issued 38,184,985 unregistered shares of its common stock to BioTrackTHC stockholders, of which 1,852,677 shares were held back to satisfy indemnification obligations in the BioTrackTHC Merger Agreement, if necessary. The Company also assumed the Bio-Tech Medical Software, Inc. 2014 Stock Incentive Plan (“BioTrackTHC Stock Plan”), pursuant to which options exercisable in the amount of 8,132,410 shares of common stock are outstanding. As a result, BioTrackTHC stockholders owned approximately 48% of the Company on a fully diluted basis as of the BioTrackTHC Closing Date.

On August 3, 2018 (the “Engeni Closing Date”), the Company and its wholly owned subsidiary, Engeni Merger Sub, LLC (“Engeni Merger Sub”), entered into an Agreement and Plan of Merger (the “Engeni Merger Agreement”) with Engeni LLC (“Engeni US”), Engeni S.A (“Engeni SA”), Scott Zienkewicz, Nicolas Heller and Alberto Pardo Saleme (the Engeni US members), and Scott Zienkewicz, as the representative of the Engeni US members. Pursuant to the Engeni Merger Agreement, Engeni Merger Sub merged with and into Engeni US, with Engeni US surviving the merger as a wholly-owned subsidiary of the Company (the “Engeni Merger”).

On the Engeni Closing Date, in connection with closing the Engeni Merger Agreement, the Company issued 366,700 shares of Company common stock to Engeni US members. Furthermore, the Company subsequently issued Engeni US members 733,300 shares of Company common stock on April 2, 2019.

On April 1, 2019 (“Tan Security Closing Date”), the Company entered into a Membership Interest and Stock Purchase Agreement (the “Tan Security Acquisition Agreement”) with Tan’s International Security and Tan’s International LLC (collectively, “Tan Security”). Pursuant to the Tan Security Acquisition Agreement, the Company purchased all membership interests and capital stock of Tan Security and collectively holds 100% of the interests of Tan Security (the “Tan Security Acquisition”).

On February 5, 2019, the Company and its wholly owned subsidiary, Merger Sub, entered into an Agreement and Plan of Merger (the “Amercanex Merger Agreement”) with Green Tree International, Inc. (“GTI”) and Steve Janjic, as the representative of the GTI shareholders, pursuant to which Merger Sub merged with and into GTI (the “GTI Merger”).

On September 10, 2019 (the “GTI Closing Date”), the Company closed the GTI Merger and entered into an Addendum No. 1 to the Amercanex Merger Agreement acknowledging and approving certain events that occurred since signing as well as implementing various related amendments to the Amercanex Merger Agreement. In connection with closing the GTI Merger, the Company issued 16,765,727 unregistered shares of Company common stock to GTI shareholders, of which 4,140,274 shares were held back to satisfy indemnification obligations in the Amercanex Merger Agreement, if necessary.

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Notes Payable (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Loans Payable - Credit Union	$ 4,936	$ 5,385
Convertible Note Payable and financing arrangement	300,000	300,000
Less: Current portion of loans payable	(450,977)	(24,805)
Long-term portion of loans payable	429,082	433,087
Vehicle Financing Loans Payable [Member]
Vehicle financing loans payable, between 4.7% and 7.0% interest and maturing between June 2022 and July 2022	$ 48,123	$ 52,507

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Shareholders' Equity (Details Textual 1) - USD ($)	1 Months Ended	3 Months Ended
	May 17, 2017	Mar. 31, 2020
Series B Preferred Stock Purchase Agreement [Member]
Subsidiary or Equity Method Investee [Line Items]
Price, per share	$ 0.325
Warrants issue	462,195
Series B Preferred Shares [Member]
Subsidiary or Equity Method Investee [Line Items]
Preferred conversion, description		Based on the current conversion price, the Series B Preferred Shares are convertible into 13,784,201 shares of common stock. A fundamental transaction means: (i) our merger or consolidation with or into another entity, (ii) any sale of all or substantially all of our assets in one transaction or a series of related transactions, (iii) any reclassification of our Common Stock or any compulsory share exchange by which Common Stock is effectively converted into or exchanged for other securities, cash or property; or (iv) sale of shares below the preferred stock conversion price. Each Series B Preferred Share will automatically convert into common stock upon the earlier of (i) notice by the Company to the holders that the Company has elected to convert all outstanding Series B Preferred Shares at any time on or after May 12, 2018; or (ii) immediately prior to the closing of a firmly underwritten initial public offering (involving the listing of the Company's Common Stock on an Approved Stock Exchange) pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer and sale of the Common Stock for the account of the Company in which the net cash proceeds to the Company (before underwriting discounts, commissions and fees) are at least fifty million dollars ($50,000,000).
Gross proceeds from sold on shares	$ 1,875,000
Unsecured convertible promissory note	$ 500,000
Convertible preferred shares	1,536,658
Preferred shares are convertible into common stock	7,318,084
Price, per share	$ 0.325
Accredited investors an aggregate shares	5,781,426
Class A Preferred Stock [Member]
Subsidiary or Equity Method Investee [Line Items]
Preferred conversion, description		The Company issued a total of 1,000,000 shares of its Class A Preferred Stock. The Class A Preferred Stock included super majority voting rights and were convertible into 60% of the Company's common stock. During the third quarter of 2017, the Company modified the conversion rate on the Class A Preferred Stock to a 1:1 ratio. This modification reduced the amount of potentially dilutive Convertible Series A Stock by 15,746,127 shares to a total of 1,000,000 at September 30, 2017.

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Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

17. Income Taxes

No provision for U.S. federal or state income taxes has been recorded as the Company has incurred net operating losses since inception. Significant components of the Company's net deferred income tax assets for the three months ended March 31, 2020 and 2019 consist of income tax loss carryforwards. These amounts are available for carryforward for use in offsetting taxable income of future years through 2035. Realization of the future tax benefits is dependent on the Company's ability to generate sufficient taxable income within the carry-forward period. Utilization of the net operating loss carry-forwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. Due to the Company's history of operating losses, these deferred tax assets arising from the future tax benefits are currently not likely to be realized and are thus reduced to zero by an offsetting valuation allowance. As a result, there is no provision for income taxes. 

For the three months ended March 31, 2020 and 2019, the Company has a net operating loss carry forward of approximately $19,200,000 and $13,800,000, respectively. Utilization of these net loss carry forwards is subject to the limitations of Internal Revenue Code Section 382. The Company applied a 100% valuation reserve against the deferred tax benefit as the realization of the benefit is not certain.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation 

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, which include Helix TCS, LLC ("Helix TCS"), Security Consultants Group, LLC ("Security Consultants"), Boss Security Solutions, Inc. ("Boss Security"), Security Grade, BioTrackTHC (since June 1, 2018), Engeni US (since August 3, 2018), Tan Security (since April 1, 2019) and Green Tree International, Inc. (since September 10, 2019). These interim statements should be read in conjunction with the Company's consolidated financial statements for the year ended December 31, 2019. 

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Changes in estimates and assumptions are reflected in reported results in the period in which they become known. Use of estimates includes the following: 1) allowance for doubtful accounts, 2) estimated useful lives of property, equipment and intangible assets, 3) intangibles impairment, 4) valuation of convertible notes payable and 5) revenue recognition. Actual results could differ from estimates.

Cash

Cash

Cash consists of checking accounts. The Company considers all highly-liquid investments purchased with a maturity of three months or less at the time of purchase to be cash equivalents. The Company has no cash equivalents as of March 31, 2020 or December 31, 2019.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and the customer's current credit worthiness, as determined by the review of their current credit information; and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and economic conditions.

Management charges balances off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company determines when receivables are past due, or delinquent based on how recently payments have been received.

Outstanding account balances are reviewed individually for collectability. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses in the Company's existing accounts receivable. Allowance for doubtful accounts was $348,068 and $273,138 at March 31, 2020 and December 31, 2019, respectively.

Long-Lived Assets, Including Definite Lived Intangible Assets

Long-Lived Assets, Including Definite Lived Intangible Assets

Long-lived assets, other than goodwill and other indefinite-lived intangibles, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows derived from such assets. Definite-lived intangible assets primarily consist of non-compete agreements and customer relationships. For long-lived assets used in operations, impairment losses are only recorded if the asset's carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. The Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value. When an impairment exists, the related assets are written down to fair value.

Goodwill

Goodwill

Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. Goodwill is not amortized; rather, it is subject to a periodic assessment for impairment by applying a fair value-based test. Helix reviews goodwill for possible impairment annually during the fourth quarter, or whenever events or circumstances indicate that the carrying amount may not be recoverable.

The impairment model prescribes a two-step method for determining goodwill impairment. However, an entity is permitted to first assess qualitative factors to determine whether the two-step goodwill impairment test is necessary. The qualitative factors considered by Helix may include, but are not limited to, general economic conditions, Helix's outlook, market performance of Helix's industry and recent and forecasted financial performance. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that a reporting unit's fair value is less than its carrying amount. Otherwise, no further impairment testing is required. In the first step, Helix determines the fair value of its reporting unit using a discounted cash flow analysis. If the net book value of the reporting unit exceeds its fair value, Helix then performs the second step of the impairment test, which requires allocation of the reporting unit's fair value to all of its assets and liabilities using the acquisition method prescribed under authoritative guidance for business combinations with any residual fair value being allocated to goodwill. An impairment charge is recognized when the implied fair value of Helix's goodwill is less than its carrying amount.

Assumptions and estimates used in the evaluation of impairment may affect the carrying value of long-lived assets, which could result in impairment charges in future periods. Such assumptions include projections of future cash flows and the current fair value of the asset.

Accounting for Acquisitions

Accounting for Acquisitions

In accordance with the guidance for business combinations, the Company determines whether a transaction or other event is a business combination, which requires that the assets acquired, and liabilities assumed constitute a business. Each business combination is then accounted for by applying the acquisition method. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. The Company capitalizes acquisition-related costs and fees associated with asset acquisitions and immediately expense acquisition-related costs and fees associated with business combinations.

Business Combinations

Business Combinations

The Company accounts for its business combinations under the provisions of Accounting Standards Codification ("ASC") Topic 805-10, Business Combinations ("ASC 805-10"), which requires that the purchase method of accounting be used for all business combinations. Assets acquired and liabilities assumed, including non-controlling interests, are recorded at the date of acquisition at their respective fair values. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. Acquisition-related expenses are recognized separately from the business combinations and are expensed as incurred. If the business combination provides for contingent consideration, the Company records the contingent consideration at fair value at the acquisition date and any changes in fair value after the acquisition date are accounted for as measurement-period adjustments. Changes in fair value of contingent consideration resulting from events after the acquisition date, such as earn-outs, are recognized as follows: 1) if the contingent consideration is classified as equity, the contingent consideration is not re-measured and its subsequent settlement is accounted for within equity, or 2) if the contingent consideration is classified as a liability, the changes in fair value are recognized in earnings.

The estimated fair value of net assets acquired, including the allocation of the fair value to identifiable assets and liabilities, was determined using established valuation techniques. The estimated fair value of the net assets acquired was determined using the income approach to valuation based on the discounted cash flow method. Under this method, expected future cash flows of the business on a stand-alone basis are discounted back to a present value. The estimated fair value of identifiable intangible assets, consisting of software and trade name acquired were determined using the relief from royalty method.

The most significant assumptions under the relief from royalty method used to value software and trade names include: estimated remaining useful life, expected revenue, royalty rate, tax rate, discount rate and tax amortization benefit. The discounted cash flow method used to value non-compete agreements includes assumptions such as: expected revenue, term of the non-compete agreements, probability and ability to compete, operating margin, tax rate and discount rate. Management has developed these assumptions on the basis of historical knowledge of the business and projected financial information of the Company. These assumptions may vary based on future events, perceptions of different market participants and other factors outside the control of management, and such variations may be significant to estimated values.

Revenue Recognition

Revenue Recognition

Under FASB Topic 606, Revenue from Contacts with Customers ("ASC 606"), the Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration which is expected to be received in exchange for those goods or services. The Company recognizes revenue following the five-step model prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenues when (or as) the Company satisfies a performance obligation.

The security services revenue is generated from performing armed and unarmed guarding which is contracted for on an hourly basis. Revenues associated with these contracted services are recognized under time-based arrangements as services are provided.

Additionally, the Company provides transportation security services, which are generally contracted for on a per-run basis and sometimes additional fees and surcharges are also billed to the client depending on the length of the run. Revenues associated with these services are recognized as the transportation service is provided.

The Company also generates revenue from developing and licensing seed to sale cannabis compliance software to both private-sector and public-sector (government agencies) businesses that are involved in cannabis related operations. The Company also generates revenue from on-going training, support and software customization services.

Occasionally, the Company will enter into systems installation arrangements. Installation jobs are estimated based on the cost of equipment to be installed, the number of hours expected to be incurred to complete the job and other ancillary costs. Revenue associated with these services are recognized over the arrangement period.

Lastly, the Company generates monthly recurring revenues from Cannalytics, its business intelligence and data tool for commercial customers. Revenue is recognized monthly.

Segment Information

Segment Information

Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company's chief operating decision-making group is composed of the Chief Executive Officer and the Chief Financial Officer, which reviews the financial performance and the results of operations of the segments prepared in accordance with GAAP when making decisions about allocating resources and assessing performance of the Company.

Asset information by operating segment is not presented since the chief operating decision maker does not review this information by segment. The reporting segments follow the same accounting policies used in the preparation of the Company's consolidated financial statements.

Expenses

Expenses

Cost of Revenue

The cost of revenues is the total cost incurred to obtain a sale and the cost of the goods or services sold. Cost of revenues primarily consisted of hourly compensation for security personnel and employees involved in the creation and development of licensing software.

Operating Expenses

Operating expenses encompass selling general and administrative expenses, salaries and wages, professional and legal fees and depreciation and amortization. Selling, general and administrative expenses consist primarily of rent/moving expenses, advertising and travel expenses. Salaries and wages is composed of non-revenue generating employees. Professional services are principally comprised of outside legal, audit, information technology consulting, marketing and outsourcing services as well as the costs related to being a publicly traded company.

Other Income

Other income consisted of a gain on the change in fair value of convertible notes, gain on the change in the fair value of warrant liability, loss on the change in fair value of convertible notes – related party, loss on the change in fair value of contingent consideration, loss on issuance of warrants and interest expense.

Property and Equipment

Property and Equipment

Property and equipment are stated at cost and depreciated on a straight-line basis over their estimated useful lives. Useful lives are 3 years for vehicles and 5 years for furniture and equipment. Maintenance and repairs are expensed as incurred and major improvements are capitalized. When assets are sold, or retired, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included in loss from operations.

Contingencies

Contingencies

Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company's consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.

Advertising

Advertising

Advertising costs are expensed as incurred and included in selling, general and administrative expenses and amounted to $5,420 and $69,271 for the three months ended March 31, 2020 and 2019, respectively.

Foreign Currency

Foreign Currency

The local currency is the functional currency for one entity's operations outside the United States. Assets and liabilities of these operations are translated to U.S. dollars at the exchange rate in effect at the end of each period. Income statement accounts are translated at the average exchange rate prevailing during the period. Translation adjustments arising from the use of differing exchange rates from period to period are included as a component of other comprehensive loss within shareholders' equity. Gains and losses from foreign currency transactions are included in net loss for the period.

Income Taxes

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company has incurred net operating loss for financial-reporting and tax-reporting purposes. Accordingly, for Federal and state income tax purposes, the benefit for income taxes has been offset entirely by a valuation allowance against the related federal and state deferred tax asset for the three months ended March 31, 2020 and 2019.

Comprehensive Loss

Comprehensive Loss

Comprehensive loss consists of consolidated net loss and foreign currency translation adjustments. Foreign currency translation adjustments included in comprehensive loss were not tax-effected as investments in international affiliates are deemed to be permanent.

Distinguishing Liabilities from Equity

Distinguishing Liabilities from Equity

The Company relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from Equity, to classify certain redeemable and/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. The Company will determine the liability classification if the financial instrument is mandatorily redeemable, or if the financial instrument, other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number of its equity shares.

Once the Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financial instrument should be presented between the liability section and the equity section of the balance sheet ("temporary equity"). The Company will determine temporary equity classification if the redemption of the financial instrument is outside the control of the Company (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity.

Initial Measurement

The Company records its financial instruments classified as liability, temporary equity or permanent equity at issuance at the fair value, or cash received.

Subsequent Measurement – Financial instruments classified as liabilities

The Company records the fair value of its financial instruments classified as liabilities at each subsequent measurement date. The changes in fair value of its financial instruments classified as liabilities are recorded as other expense/income.

Beneficial Conversion Feature

Beneficial Conversion Feature

If the conversion features of conventional convertible debt provide for a rate of conversion that is below market value, this feature is characterized as a Beneficial Conversion Feature ("BCF"). A beneficial conversion feature is recorded by the Company as a debt discount pursuant to ASC 470-20, Debt with Conversion and Other Options. In those circumstances, the convertible debt is recorded net of the discount related to the beneficial conversion feature and the Company amortizes the discount to interest expense over the life of the debt.

The Company accounts for the beneficial conversion feature on its convertible preferred stock in accordance with ASC 470-20, Debt with Conversion and Other Options. The BCF of convertible preferred stock is normally characterized as the convertible portion or feature that provides a rate of conversion that is below market value or in-the-money when issued. The Company records a BCF related to the issuance of convertible preferred stock when issued. Beneficial conversion features that are contingent upon the occurrence of a future event are recorded when the contingency is resolved.

To determine the effective conversion price, the Company first allocates the proceeds received to the convertible preferred stock and then uses those allocated proceeds to determine the effective conversion price. If the convertible instrument is issued in a basket transaction (i.e., issued along with other freestanding financial instruments), the proceeds should first be allocated to the various instruments in the basket. Any amounts paid to the investor when the transaction is consummated (e.g., origination fees, due diligence costs) represent a reduction in the proceeds received by the issuer. The intrinsic value of the conversion option should be measured using the effective conversion price for the convertible preferred stock on the proceeds allocated to that instrument. The effective conversion price represents proceeds allocable to the convertible preferred stock divided by the number of shares into which it is convertible. The effective conversion price is then compared to the per share fair value of the underlying shares on the commitment date.

The accounting for a BCF requires that the BCF be recognized by allocating the intrinsic value of the conversion option to additional paid-in capital, resulting in a discount on the convertible preferred stock. This discount should be accreted from the date on which the BCF is first recognized through the earliest conversion date for instruments that do not have a stated redemption date. The intrinsic value of the BCF is recognized as a deemed dividend on convertible preferred stock over a period specified in the guidance.

Share-based Compensation

Share-based Compensation

The Company accounts for stock-based compensation to employees in conformity with the provisions of ASC Topic 718, Stock Based Compensation. Stock-based compensation to employees consist of stock option grants and restricted shares that are recognized in the statement of operations based on their fair values at the date of grant.

The Company accounts for equity instruments issued to non-employees in accordance with the provisions of ASC Topic 718, based upon the fair-value of the underlying instrument. The equity instruments are valued using the Black-Scholes valuation model. The measurement of stock-based compensation is subject to periodic adjustments as the underlying equity instruments vest and is recognized as an expense over the period which services are received.

The Company calculates the fair value of option grants utilizing the Black-Scholes pricing model and estimates the fair value of the stock based upon the estimated fair value of the common stock. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest.

The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight- line basis over the requisite service period of the award.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

ASC Topic 820, Fair Value Measurements and Disclosures ("ASC Topic 820") provides a framework for measuring fair value in accordance with generally accepted accounting principles.

ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).

The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC Topic 820 are described as follows:

● Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.

● Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

● Level 3 – Inputs that are unobservable for the asset or liability.

Certain assets and liabilities of the Company are required to be recorded at fair value either on a recurring or non-recurring basis. Fair value is determined based on the price that would be received for an asset or paid to transfer a liability in an orderly transaction based on market participants. The following section describes the valuation methodologies that the Company used to measure, for disclosure purposes, its financial instruments at fair value.

Convertible notes payable

The fair value of the Company's convertible notes payable, approximated the carrying value as of March 31, 2020 and December 31, 2019. Factors that the Company considered when estimating the fair value of its debt included market conditions and the term of the debt. The level of the debt would be considered as Level 2.

Additional Disclosures Regarding Fair Value Measurements

The carrying value of cash, accounts receivable, prepaid expenses, deposits, accounts payable and accrued liabilities, advances from shareholders and obligation pursuant to acquisition approximate their fair value due to the short-term maturity of those items.

Earnings (Loss) per Share

Earnings (Loss) per Share

The Company follows ASC 260, Earnings Per Share, which requires presentation of basic and diluted earnings per share ("EPS") on the face of the income statement for all entities with complex capital structures. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options and warrants, using the treasury stock method, and convertible debt and convertible securities, using the if-converted method.

For the three months ended March 31, 2020 and 2019, potential common shares includable in the computation of fully-diluted per share results are not presented in the condensed consolidated financial statements as their effect would be anti-dilutive.

The anti-dilutive shares of common stock outstanding for the three months ended March 31, 2020 and 2019 were as follows:

	For the Three Months Ended March 31,
	2020		2019
Potentially dilutive securities:
Convertible notes payable		18,889,749		2,340,936
Convertible Preferred A Stock		1,000,000		1,000,000
Convertible Preferred B Stock		13,784,201		13,784,201
Warrants		5,248,193		4,842,225
Stock options		11,072,711		9,560,534

Reclassifications

Reclassifications

Certain reclassifications have been made to the prior period financial statements to conform to the current period financial statement presentation. These reclassifications had no effect on net earnings or cash flows as previously reported.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-.02, Leases (Topic 842) ("Topic 842") which requires the recognition of right-of-use assets and lease liabilities on the balance sheet. The most prominent of the changes in the standard is the recognition of right-of-use ("ROU") assets and lease liabilities by lessees for those leases classified as operating leases.

The Company adopted the new standard on January 1, 2019 and used the modified retrospective approach with the effective date as the date of initial application. Consequently, prior period balances and disclosures have not been restated. The Company elected certain practical expedients, which among other things, allowed us to carry forward prior conclusions about lease identification and classification.

Adoption of the standard resulted in the balance sheet recognition of additional lease assets and lease liabilities of approximately $1,500,000. The new standard also provides practical expedients for an entity's ongoing accounting. The Company currently has elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, the Company will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in separate lease and non-lease components for all our leases. For additional information regarding the Company's leases, see Note 18 in the notes to condensed consolidated financial statements.

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company adopted this ASU as of January 1, 2019. The amendments in this ASU did not have a material impact on the Company's consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220); Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this ASU allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Act and will improve the usefulness of information reported to financial statement users. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted in any interim period after issuance of the ASU. The Company adopted this ASU as of January 1, 2019. The amendments in this ASU did not have a material impact on the Company's consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (ASC 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of ASC 718 to include share-based payment transactions for acquiring goods and services from nonemployees and applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor's own operations by issuing share-based payment awards. ASC 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC 606. This update is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company adopted this ASU as of January 1, 2019. The amendments in this ASU did not have a material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (ASC 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 removes certain disclosures, modifies certain disclosures and adds additional disclosures. The ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted. The Company is evaluating the effect that this update will have on its financial statements and related disclosures.

Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on the Company's consolidated financial statements and related disclosures.

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Shareholders' Equity

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Shareholders' Equity

13. Shareholders’ Equity

Common Stock

Other Common Stock Issuances

In January 2020, the Company issued 270,270 shares of common stock as part of an investment unit purchase agreement.

During the three months ended March 31, 2020, the Company issued 167,891 restricted shares of common stock as PIK interest payment in the amount of $93,750 (see Note 11).

In January 2019, the Company issued 20,000 shares of restricted common stock to a consultant per a consulting agreement and recorded shared based compensation expense of $27,400.

In March 2019, the Company issued 1,255,222 shares of common stock as part of investment unit purchase agreements.

In March 2019, certain option holders exercised their rights under the BioTrackTHC Stock Plan and were issued 62,847 shares of common stock for no cash proceeds.

In March 2019, certain option holders exercised their rights under the BioTrackTHC Stock Plan and were issued 6,082 shares of common stock for total proceeds of $4,805.

Conversion of Convertible Note to Common Stock

During the three months ended March 31, 2020, the holders of Note Ten and Note Eleven elected to convert $170,000 and $120,000 in principal of the respective convertible notes into 564,420 and 1,084,186 shares of the Company’s common stock, respectively (See Note 11).

On March 7, 2019 and March 28, 2019, the holder of a 10% fixed secured convertible promissory note issued by the Company elected its option to fully convert $75,882 and $42,055 in principal of the convertible note into 100,000 and 55,421 shares of the Company’s common stock.

2017 Omnibus Incentive Plan

The table below reflects shares issued under the 2017 Omnibus Incentive Plan during the three months period ended March 31, 2020:

Date of Issuance	Number of Shares Issued		Total Share Based Compensation
January 2020		350,000	$	220,500
		350,000	$	220,500

The table below reflects shares issued under the 2017 Omnibus Incentive Plan during the three months period ended March 31, 2019:

Date of Issuance	Number of Shares Issued		Total Share Based Compensation
March 2019		250,000	$	320,000
		250,000	$	320,000

Series A convertible preferred stock

In October 2015, the Company issued a total of 1,000,000 shares of its Class A Preferred Stock. The Class A Preferred Stock included super majority voting rights and were convertible into 60% of the Company’s common stock. During the third quarter of 2017, the Company modified the conversion rate on the Class A Preferred Stock to a 1:1 ratio. This modification reduced the amount of potentially dilutive Convertible Series A Stock by 15,746,127 shares to a total of 1,000,000 at September 30, 2017.

Series B convertible preferred stock

Series B Preferred Stock Purchase Agreement

On May 17, 2017, the Company sold to accredited investors an aggregate of 5,781,426 Series B Preferred Shares for gross proceeds of $1,875,000 and converted a $500,000 Unsecured Convertible Promissory Note into 1,536,658 Series B Preferred Shares. This tranche of Series B Preferred Shares are convertible into 7,318,084 shares of common stock based on the current conversion price, at a purchase price of $0.325 per share.

In connection with the Series B Preferred Stock Purchase Agreement, the Company is obligated to issue warrants to a third-party for services to purchase 462,195 shares of common stock at $0.325 per share. These warrants have been accounted for as an obligation to issue because as of the balance sheet date the Company did not deliver the warrants though incurred the obligation; accordingly, they were recognized as a liability on the unaudited condensed consolidated balance sheet and cost of issuance of Series B preferred shares on the unaudited condensed consolidated statement of shareholders’ equity.

In accordance with the Certificate of Incorporation, there were 9,000,000 authorized Series B Preferred Stock at a par value of $ 0.001. On August 23, 2017 the Certificate of Designations was amended and restated to increase the number of shares of Series B Preferred Stock authorized to be 17,000,000.

Conversion:

Each Series B Preferred Share is convertible at the option of the holder into such number of shares of the Company’s common stock equal to the number of Series B Preferred Shares to be converted, multiplied by the Preferred Conversation Rate. The Preferred Conversion Rate shall be the quotient obtained by dividing the Preferred Stock Original Issue Price ($0.3253815) by the Preferred Stock Conversation Price in effect at the time of the conversion (the initial conversion price will be equal to the Preferred Stock Original Issue Price, subject to adjustment in the event of stock splits, stock dividends, and fundamental transactions). Based on the current conversion price, the Series B Preferred Shares are convertible into 13,784,201 shares of common stock. A fundamental transaction means: (i) our merger or consolidation with or into another entity, (ii) any sale of all or substantially all of our assets in one transaction or a series of related transactions, (iii) any reclassification of our Common Stock or any compulsory share exchange by which Common Stock is effectively converted into or exchanged for other securities, cash or property; or (iv) sale of shares below the preferred stock conversion price. Each Series B Preferred Share will automatically convert into common stock upon the earlier of (i) notice by the Company to the holders that the Company has elected to convert all outstanding Series B Preferred Shares at any time on or after May 12, 2018; or (ii) immediately prior to the closing of a firmly underwritten initial public offering (involving the listing of the Company’s Common Stock on an Approved Stock Exchange) pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer and sale of the Common Stock for the account of the Company in which the net cash proceeds to the Company (before underwriting discounts, commissions and fees) are at least fifty million dollars ($50,000,000).

Dividends, Voting Rights and Liquidity Value:

Pursuant to the Certificate of Designations, the Series B Preferred Shares shall bear no dividends, except that if the Board shall declare a dividend payable upon the then-outstanding shares of the Company’s common stock. The Series B Preferred Shares vote together with the common stock and all other classes and series of stock of the Company as a single class on all actions to be taken by the stockholders of the Company including, but not limited to, actions amending the certificate of incorporation of the Company to increase the number of authorized shares of the common stock. Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series B Preferred Shares are entitled to (i) first receive distributions out of our assets in an amount per share equal to the Stated Value plus all accrued and unpaid dividends, whether capital or surplus before any distributions shall be made on any shares of common stock and (ii) second, on an as-converted basis alongside the common stock.

Classification:

These Series B Preferred Shares are classified within permanent equity on the Company’s consolidated balance sheet as they do not meet the criteria that would require presentation outside of permanent equity under ASC 480, Distinguishing Liabilities from Equity.

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Business Combinations

3 Months Ended

Mar. 31, 2020

Business Combinations [Abstract]

Business Combinations

5. Business Combinations

Engeni SA Acquisition

On the Engeni Closing Date, the Company and its wholly owned subsidiary, Engeni Merger Sub, entered into the Engeni Merger Agreement with Engeni US, Engeni SA, the members of Engeni US, and Scott Zienkewicz as the representative of the Engeni US members. Pursuant to the Engeni Merger Agreement, Engeni Merger Sub merged with and into Engeni US, with Engeni US surviving the merger as a wholly-owned subsidiary of the Company. On the Engeni Closing Date, in connection with closing the Engeni Merger Agreement, the Company issued 366,700 shares of Company common stock to Engeni US members. Furthermore, the Company may also issue Engeni US members 366,700 and 366,600 shares of Parent common stock upon the achievement of specific objectives. If applicable, the Company will pay Engeni US members the aggregate amount of $100,000, on a pro rata basis, if Engeni SA reaches financial breakeven on or before December 31, 2018, as determined by the Company’s Chief Financial Officer and Scott Zienkewicz.

The Engeni Merger is being accounted for as a business combination in accordance with ASC 805. The Company has determined fair values of the assets acquired and liabilities assumed in the Engeni Merger. These values are subject to change as we perform additional reviews of our assumptions utilized.

During the first quarter of 2019, it was determined Engeni SA did not reach financial breakeven and therefore the contingent consideration of $100,000 was deemed by the Company not to be payable and was reduced to zero. In accordance with ASC 805-30-35-1, the Company recognized the change in the fair value of contingent consideration subsequent to the acquisition date in general and administrative expenses. The Company’s allocation of the purchase price was calculated as follows:

	As Adjusted
Base Price - Common Stock	$	388,702
Contingent Consideration - Common Stock		777,298
Contingent Consideration - Cash		-
Total Purchase Price	$	1,166,000

			Weighted Average Useful Life
Description	Fair Value		(in years)
Assets acquired:
Cash	$	5,609
Accounts receivable and other assets		30,479
Property, plant and equipment, net		57,830
Software		449,568		3.3
Goodwill		778,552
Total assets acquired	$	1,322,038
Liabilities assumed:
Accounts payable	$	56,038
Total liabilities assumed		56,038
Estimated fair value of net assets acquired	$	1,266,000

The Company determined the fair value of the contingent consideration to be $777,298 at August 3, 2018 and recorded it as a liability in its unaudited condensed consolidated balance sheets. On April 2, 2019, the Company satisfied their contingent consideration liability and issued 733,300 shares of the Company’s common stock to Engeni US members.

Tan’s International Security

On the Tan Security Closing Date, the Company entered into the Tan Security Acquisition Agreement. Pursuant to the Tan Security Acquisition Agreement, Helix purchased all membership interests and capital stock of Tan Security and collectively holds 100% of the interests of Tan Security. The purchase price of $100,000 in cash plus 250,000 shares of the Company’s restricted common stock will be paid to Rocky Tan as follows:

● 250,000 shares of Helix Stock at closing.

● $25,000 at closing

● $25,000 on the 4-month anniversary of the Tan Security Closing Date

● $25,000 on the 8-month anniversary of the Tan Security Closing Date

● $25,000 on the 12-month anniversary of the Tan Security Closing Date

The Tan Security Acquisition is being accounted for as a business combination in accordance with ASC 805. The Company has determined preliminary fair values of the assets acquired and liabilities assumed in the Tan Security Acquisition. These values are subject to change as we perform additional reviews of our assumptions utilized.

The Company has made a provisional allocation of the purchase price of the Tan Security transaction to the assets acquired and the liabilities assumed as of the purchase date. The following table summarizes the provisional purchase price allocations relating to the Tan Security Acquisition:

Base Price – Cash at closing	$	25,000
Base Price – Deferred cash payment (including $25,000 to be made on the 4,8 and 12-month anniversaries of closing)		75,000
Base Price – Common Stock		710,000
Total Purchase Price	$	810,000

Description	Fair Value
Assets acquired:
Cash	$	2,940
Accounts receivable		7,635
Goodwill		821,807
Total assets acquired	$	832,382
Liabilities assumed:
Accounts payable	$	12,526
Other liabilities		9,856
Total liabilities assumed		22,382
Estimated fair value of net assets acquired	$	810,000

Green Tree International, Inc.

On February 5, 2019, the Company and its wholly owned subsidiary, Merger Sub, entered into the Amercanex Merger Agreement with GTI and Steve Janjic, as the representative of the GTI shareholders, pursuant to which Merger Sub merged with and into GTI (the “Merger”).

Pursuant to the Amercanex Merger Agreement, at the effective time of the Merger (the “Effective Time”), the Company will issue to the GTI stockholders an amount of unregistered shares of the Company’s common stock equal to $15 million, based on the average closing price of the Company’s common stock over the forty-five (45) trading day period ending three (3) trading days prior to the Closing Date. If the Closing occurs and revenues of GTI in the second 12 month period following the Closing Date exceed $5 million and are less than or equal to $10 million, Parent shall issue to the Company Shareholders a number of unregistered Parent Shares (whether issued or reserved for issuance) equal to the quotient of (a) $5 million divided by (b) the Parent Share Price multiplied by the quotient of (c) the revenues of the Company in the second 12 month period following the Closing Date less $5 million divided by (d) $5 million.

To secure the indemnification obligations of the GTI shareholders to the Company under the Merger Agreement, 4,140,274 of the Company shares to be issued to the GTI shareholders will be held back and the Company will be entitled to retain such number of the holdback shares as necessary to satisfy those indemnification obligations. 50% of the holdback shares that remain after satisfaction of any indemnification obligations will be released 12 months after the closing date of the merger, and the remainder 24 months after the closing date of the merger. Additionally, if in the first 12 months following the closing GTI generates less than $1.5 million of revenues, 100% of the holdback shares shall be returned to the Company.

In connection with closing the Merger on September 10, 2019, the Company issued 16,765,727 unregistered shares of its common stock to GTI stockholders. In connection with the Merger, Steve Janjic joined the board of directors of the Company.

The Merger is being accounted for as a business combination in accordance with ASC 805. The Company has determined preliminary fair values of the assets acquired and liabilities assumed in the GTI merger. These values are subject to change as we perform additional reviews of our assumptions utilized.

The Company has made a provisional allocation of the purchase price of the GTI transaction to the assets acquired and the liabilities assumed as of the purchase date. The following table summarizes the provisional purchase price allocations relating to the GTI transaction:

Base Price - Common Stock	$	12,909,611
Total Purchase Price	$	12,909,611

Description	Fair Value		Weighted Average Useful Life (Years)
Assets acquired:
Note Receivable, net	$	135,000
Property, Plant and Equipment, Net		12,142
Software		452,002	4.5
Goodwill		12,980,840
Total assets acquired	$	13,579,984
Liabilities assumed:
Accounts Payable		43,717
Notes Payable		400,000
Other Liabilities		226,656
Total liabilities assumed:		670,373
Estimated fair value of net assets acquired:	$	12,909,611

The Company has not completed the valuation studies necessary to finalize the acquisition fair values of the assets acquired and liabilities assumed and related allocation of purchase price for GTI. Accordingly, the type and value of the intangible assets amounts set forth above are preliminary. Once the valuation process is finalized for GTI, there could be changes to the reported values of the assets acquired and liabilities assumed, including goodwill and intangible assets and those changes could differ materially from what is presented above.

XML

Accounts Payable and Accrued Liabilities

3 Months Ended

Mar. 31, 2020

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities

9. Accounts Payable and Accrued Liabilities

As of March 31, 2020 and December 31, 2019, accounts payable and accrued liabilities consisted of the following:

	March 31, 2020		December 31, 2019
Accounts payable	$	489,809	$	895,785
Accrued compensation and related expenses		398,475		260,280
Accrued expenses		1,681,152		1,733,371
Lease obligation - current		299,118		373,710
Total	$	2,868,554	$	3,263,146

XML

Notes Payable (Tables)

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Schedule of notes payable

	March 31, 2020			December 31, 2019
Vehicle financing loans payable, between 4.7% and 7.0% interest and maturing between June 2022 and July 2022	$	48,123		$	52,507
Loans Payable - Credit Union		4,936			5,385
Convertible Note Payable and financing arrangement		827,000			400,000
Less: Current portion of loans payable		(450,977	)		(24,805	)
Long-term portion of loans payable	$	429,082		$	433,087

XML

Intangible Assets, Net and Goodwill (Tables)

3 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of intangible assets, net and goodwill

				March 31, 2020 (1)
	Estimated Useful Life (Years)	Gross Carrying Amount		Assets Acquired Pursuant to Business Combination		Accumulated Amortization and Impairment			Net Book Value
Database	5	$	93,427	$	-	$	(74,189	)	$	19,238
Trade names and trademarks	5 - 10		591,081		-		(236,544	)		354,537
Web addresses	5		130,000		-		(102,089	)		27,911
Customer list	5		8,304,449		-		(3,043,977	)		5,260,472
Software	4.5		10,224,822		-		(4,069,327	)		6,155,495
Domain Name	5		20,231		-		(3,044	)		17,187
		$	19,364,010	$	-	$	(7,529,170	)	$	11,834,840

					December 31, 2019
	Estimated Useful Life (Years)		Gross Carrying Amount at December 31, 2018		Assets Acquired Pursuant to Business Combination (2)		Accumulated Amortization			Net Book Value
Database		5	$	93,427	$	-	$	(69,533	)	$	23,894
Trade names and trademarks		5 - 10		591,081		-		(207,525	)		383,556
Web addresses		5		130,000		-		(95,611	)		34,389
Customer list		5		11,459,027		-		(4,256,070	)		7,202,957
Software		4.5		9,771,195		453,627		(3,492,525	)		6,732,297
Domain Name		5		-		20,231		(2,037	)		18,194
			$	22,044,730	$	473,858	$	(8,123,301	)	$	14,395,287

(1) The Company wrote off the remaining unamortized balance of $1,369,978 related to the customer list intangible asset from the Security Grade Protective Services transaction as of March 31, 2020.

(2) On September 10, 2019 the Company acquired various assets of GTI (see Note 5).

Schedule of goodwill

	Total Goodwill
Balance at December 31, 2018	$	39,913,559
Goodwill attributable to Tan Security acquisition		821,807
Goodwill attributable to Green Tree acquisition		12,980,840
Balance at December 31, 2019	$	53,716,206
Balance at March 31, 2020	$	53,716,206

XML

Intangible Assets, Net and Goodwill (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2020	[1]	Dec. 31, 2019
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 19,364,010		$ 22,044,730
Assets Acquired Pursuant to Business Combination			473,858	[2]
Accumulated Amortization and Impairment	(7,529,170)		(8,123,301)
Net Book Value	$ 11,834,840		$ 14,395,287
Database [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life (Years)	5 years		5 years
Gross Carrying Amount	$ 93,427		$ 93,427
Assets Acquired Pursuant to Business Combination				[2]
Accumulated Amortization and Impairment	(74,189)		(69,533)
Net Book Value	19,238		23,894
Trade names and trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	591,081		591,081
Assets Acquired Pursuant to Business Combination				[2]
Accumulated Amortization and Impairment	(236,544)		(207,525)
Net Book Value	$ 354,537		$ 383,556
Trade names and trademarks [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life (Years)	5 years		5 years
Trade names and trademarks [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life (Years)	10 years		10 years
Web addresses [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life (Years)	5 years		5 years
Gross Carrying Amount	$ 130,000		$ 130,000
Assets Acquired Pursuant to Business Combination				[2]
Accumulated Amortization and Impairment	(102,089)		(95,611)
Net Book Value	$ 27,911		$ 34,389
Customer list [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life (Years)	5 years		5 years
Gross Carrying Amount	$ 8,304,449		$ 11,459,027
Assets Acquired Pursuant to Business Combination				[2]
Accumulated Amortization and Impairment	(3,043,977)		(4,256,070)
Net Book Value	$ 5,260,472		$ 7,202,957
Software [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life (Years)	4 years 6 months		4 years 6 months
Gross Carrying Amount	$ 10,224,822		$ 9,771,195
Assets Acquired Pursuant to Business Combination			453,627	[2]
Accumulated Amortization and Impairment	(4,069,327)		(3,492,525)
Net Book Value	$ 6,155,495		$ 6,732,297
Domain Name [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life (Years)	5 years		5 years
Gross Carrying Amount	$ 20,231
Assets Acquired Pursuant to Business Combination			20,231	[2]
Accumulated Amortization and Impairment	(3,044)		(2,037)
Net Book Value	$ 17,187		$ 18,194

[1] The Company wrote off the remaining unamortized balance of $1,369,978 related to the customer list intangible asset from the Security Grade Protective Services transaction as of March 31, 2020.

[2] On September 10, 2019 the Company acquired various assets of GTI (see Note 5).

XML

Accounts Payable and Accrued Liabilities (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Payables and Accruals [Abstract]
Accounts payable	$ 489,809	$ 895,785
Accrued compensation and related expenses	398,475	260,280
Accrued expenses	1,681,152	1,733,371
Lease obligation - current	299,118	373,710
Total	$ 2,868,554	$ 3,263,146

XML

Stock-Based Compensation (Details) - shares			1 Months Ended	3 Months Ended	12 Months Ended
	Nov. 01, 2015	Sep. 01, 2015	Oct. 22, 2014	Mar. 31, 2020	Dec. 31, 2019	Oct. 17, 2017
Defined Benefit Plan Disclosure [Line Items]
Granted, weighted average remaining contractual term (in years)				4 years 8 months 5 days
Stock options granted				1,165,000
Biotrackthc [Member]
Defined Benefit Plan Disclosure [Line Items]
Reserved for issuance of common stock			600,000
Stock option, description	BioTrackTHC’s Board approved individual employee option grants (the “Executive Grants”) for three executives (the “Executives”). Pursuant to the Executive Grants, the Executives were each granted stock options to purchase 146,507 shares (totaling 439,521 shares) of BioTrackTHC’s common stock (the “Option”) at an exercise price equal to approximately $7.67. The options vest as to 25% of the shares subject to the Options, one year after the date of grant and then in equal quarterly installments for the three years thereafter, subject to the Executive’s continued employment with BioTrackTHC (see Notes 1 and 5). On February 29, 2020, the former Chief Executive Officer of the Company’s BioTrackTHC subsidiary forfeited 1,430,306 BioTrackTHC Management Awards (See Note 14).	BioTrackTHC’s Board approved individual employee option grants (the “Executive Grants”) for three executives (the “Executives”). Pursuant to the Executive Grants, the Executives were each granted stock options to purchase 146,507 shares (totaling 439,521 shares) of BioTrackTHC’s common stock (the “Option”) at an exercise price equal to approximately $7.67. The options vest as to 25% of the shares subject to the Options, one year after the date of grant and then in equal quarterly installments for the three years thereafter, subject to the Executive’s continued employment with BioTrackTHC (see Notes 1 and 5). On February 29, 2020, the former President of the Company’s BioTrackTHC subsidiary forfeited 1,430,306 BioTrackTHC Management Awards (See Note 14).	BioTrackTHC approved and adopted the BioTrackTHC Stock Plan. The BioTrackTHC Stock Plan set aside and reserved 600,000 shares of BioTrackTHC’s common stock for grant and issuance in accordance with its terms and conditions. Persons eligible to receive awards from the BioTrackTHC Stock Plan include employees (including officers and directors) of BioTrackTHC or its affiliates and consultants who provide significant services to BioTrackTHC or its affiliates (the “Grantees”). The BioTrackTHC Stock Plan permits BioTrackTHC to issue to Grantees qualified and/or non-qualified options to purchase BioTrackTHC’s common stock, restricted common stock, performance units, and performance shares. The term of each award under the BioTrackTHC Stock Plan shall be no more than ten years from the date of grant thereof. BioTrackTHC’s Board of Directors or a committee designated by the Board of Directors is responsible for administration of the BioTrackTHC Stock Plan and has the sole discretion to determine which Grantees will be granted awards and the terms and conditions of the awards granted. On February 29, 2020, the former Chief Executive Officer of the Company’s BioTrackTHC subsidiary forfeited 204,364 Bio-Tech Medical Software, Inc. 2014 Stock Incentive Plan stock options as a result of his termination (See Note 14).
2017 Omnibus Incentive Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Reserved for issuance of common stock						5,000,000
Stock options granted				4,114,945	2,599,945

XML

Segment Results (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cost of revenue	$ 2,266,679	$ 1,925,219
Gross profit	2,285,752	1,445,888
Total operating expenses	5,701,779	4,042,551
Total other (expense) income	349,803	(8,245,038)
Total net loss	(3,066,224)	(10,841,701)
Security and guarding [Member]
Revenue	1,593,449	1,204,711
Cost of revenue	1,315,744	940,586
Gross profit	277,705	264,125
Total operating expenses	3,308,124	1,733,707
Loss from operations	(3,030,419)	(1,469,582)
Total other (expense) income	406,993	(8,244,950)
Total net loss	(2,623,426)	(9,714,532)
Adjusted EBITDA	(726,434)	(878,146)
Systems installation [Member]
Revenue	174,946	28,541
Cost of revenue	127,701	161,758
Gross profit	47,245	(133,217)
Total operating expenses	180,088	32,631
Loss from operations	(132,843)	(165,848)
Total other (expense) income	(185)	(80)
Total net loss	(133,028)	(165,928)
Adjusted EBITDA	(132,843)	(165,848)
Software [Member]
Revenue	2,784,036	2,137,855
Cost of revenue	823,234	822,875
Gross profit	1,960,802	1,314,980
Total operating expenses	2,213,567	2,276,213
Loss from operations	(252,765)	(961,233)
Total other (expense) income	(57,005)	(8)
Total net loss	(309,770)	(961,241)
Adjusted EBITDA	$ 779,882	$ 21,907

XML

Warrant Liability (Details 1)	3 Months Ended
	Mar. 31, 2020 $ / shares shares
Summary of warrant activity
Warrant Shares, Balance | shares	5,113,058
Warrant Shares, Warrants granted | shares	135,135
Warrant Shares, Balance | shares	5,248,193
Weighted Average Exercise Price, Balance at beginning | $ / shares	$ 0.53
Weighted Average Exercise Price, Warrants granted | $ / shares	0.40
Weighted Average Exercise Price, Balance at ending | $ / shares	$ 0.52

XML

Commitments and Contingencies (Details 2)	Mar. 31, 2020 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2020 - Remaining	$ 275,455
2021	337,346
2022	307,280
2023	287,578
2024	294,186
Thereafter	106,075
Total future minimum lease payments	1,607,920
Less imputed interest	(230,968)
Total	$ 1,376,952

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	May 12, 2020
Document and Entity Information [Abstract]
Entity Registrant Name	Helix TCS, Inc.
Entity Central Index Key	0001611277
Document Type	10-Q
Document Period End Date	Mar. 31, 2020
Amendment Flag	false
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2020
Current Fiscal Year End Date	--12-31
Entity Shell Company	false
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		97,924,212
Entity File Number	000-55722
Entity Incorporation State Country Code	DE

XML

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) - USD ($)	Common Stock	Additional Paid- In Capital	Accumulated Other Comprehensive Income	Accumulated Deficit	Preferred Stock (Class A)	Preferred Stock (Class B)	Total
Balance Beginning at Dec. 31, 2018	$ 72,660	$ 82,831,014	$ 17,991	$ (26,207,510)	$ 1,000	$ 13,784	$ 56,728,939
Balance Beginning (in shares) at Dec. 31, 2018	72,660,825				1,000,000	13,784,201
Issuance of common stock per stock subscription agreements	$ 1,255						1,255
Issuance of common stock per stock subscription agreements (in shares)	1,255,222
Issuance of common stock resulting from convertible note conversion	$ 156	117,781					117,937
Issuance of common stock resulting from convertible note conversion (in shares)	155,421
Issuance of common stock to employees under Stock Incentive Plan	$ 250	319,750					320,000
Issuance of common stock to employees under Stock Incentive Plan (in shares)	250,000
Issuance of common stock resulting from inducement of consulting agreement	$ 20	27,380					27,400
Issuance of common stock resulting from inducement of consulting agreement (in shares)	20,000
Grant of an option to purchase common stock		56,667					56,667
Issuance of common stock resulting from exercise of stock options	$ 6	4,799					4,805
Issuance of common stock resulting from exercise of stock options (in shares)	6,082
Issuance of common stock resulting from cashless exercise of stock options	$ 63						63
Issuance of common stock resulting from cashless exercise of stock options (in shares)	62,847
Share-based compensation expense							408,935
Foreign currency translation			4,247				4,247
Net loss				(10,841,701)			(10,841,701)
Balance Ending at Mar. 31, 2019	$ 74,410	83,357,391	22,238	(37,049,211)	$ 1,000	$ 13,784	46,419,612
Balance Ending (in shares) at Mar. 31, 2019	74,410,397				1,000,000	13,784,201
Balance Beginning at Dec. 31, 2019	$ 93,608	100,906,143	(79,901)	(35,787,679)	$ 1,000	$ 13,784	65,146,955
Balance Beginning (in shares) at Dec. 31, 2019	93,608,619				1,000,000	13,784,201
Issuance of common stock per investment unit agreements	$ 270	43,522					43,792
Issuance of common stock per investment unit agreements, shares	270,270
Issuance of common stock resulting from convertible note conversion	$ 1,649	425,041					426,690
Issuance of common stock resulting from convertible note conversion (in shares)	1,648,606
Share-based compensation expense	$ 350	743,712					744,062
Share-based compensation expense (in shares)	350,000
Issuance of common stock resulting from convertible note PIK interest (paid)	$ 168	56,076					56,244
Issuance of common stock resulting from convertible note PIK interest (paid) (in shares)	167,891
Foreign currency translation			21,077				21,077
Net loss				(3,066,024)			(3,066,224)
Balance Ending at Mar. 31, 2020	$ 96,045	$ 102,174,494	$ (58,824)	$ (38,853,903)	$ 1,000	$ 13,784	$ 63,372,596
Balance Ending (in shares) at Mar. 31, 2020	96,045,386				1,000,000	13,784,201

XML

Shareholders' Equity (Details) - Omnibus Incentive Plan [Member] - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Class of Stock [Line Items]
Number of Shares Issued	350,000	250,000
Total Share Based Compensation	$ 220,500	$ 320,000
January 2020 [Member]
Class of Stock [Line Items]
Number of Shares Issued	350,000
Total Share Based Compensation	$ 220,500
March 2019 [Member]
Class of Stock [Line Items]
Number of Shares Issued		250,000
Total Share Based Compensation		$ 320,000

XML

Stock Options (Details)	3 Months Ended
	Mar. 31, 2020 $ / shares shares
Shares Underlying Options
Beginning Outstanding, Shares Underlying Options | shares	11,617,381
Granted, Shares Underlying Options | shares	1,165,000
Exercised, Shares Underlying Options | shares
Forfeited and expired, Shares Underlying Options | shares	(1,709,670)
Ending Outstanding, Shares Underlying Options | shares	11,072,711
Vested options, Shares Underlying Options | shares	8,441,877
Weighted Average Exercise Price
Beginning Outstanding, Weighted Average Exercise Price | $ / shares	$ 0.807
Granted, Weighted Average Exercise Price | $ / shares	0.186
Exercised, Weighted Average Exercise Price | $ / shares
Forfeited and expired, Weighted Average Exercise Price | $ / shares	0.697
Ending Outstanding, Weighted Average Exercise Price | $ / shares	0.759
Vested options, Weighted Average Exercise Price | $ / shares	$ 0.728
Weighted Average Remaining Contractual Term
Outstanding, Weighted Average Remaining Contractual Term (in years)	3 years 2 months 16 days
Granted, Weighted Average Remaining Contractual Term (in years)	4 years 8 months 5 days
Exercised, Weighted Average Remaining Contractual Term (in years)
Outstanding, Weighted Average Remaining Contractual Term (in years)	3 years 9 months
Vested options, Weighted Average Remaining Contractual Term (in years)	1 year 11 months 26 days

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

3. Summary of Significant Accounting Policies

Principles of Consolidation 

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, which include Helix TCS, LLC ("Helix TCS"), Security Consultants Group, LLC ("Security Consultants"), Boss Security Solutions, Inc. ("Boss Security"), Security Grade, BioTrackTHC (since June 1, 2018), Engeni US (since August 3, 2018), Tan Security (since April 1, 2019) and Green Tree International, Inc. (since September 10, 2019). These interim statements should be read in conjunction with the Company's consolidated financial statements for the year ended December 31, 2019. 

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Changes in estimates and assumptions are reflected in reported results in the period in which they become known. Use of estimates includes the following: 1) allowance for doubtful accounts, 2) estimated useful lives of property, equipment and intangible assets, 3) intangibles impairment, 4) valuation of convertible notes payable and 5) revenue recognition. Actual results could differ from estimates.

Cash

Cash consists of checking accounts. The Company considers all highly-liquid investments purchased with a maturity of three months or less at the time of purchase to be cash equivalents. The Company has no cash equivalents as of March 31, 2020 or December 31, 2019.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and the customer's current credit worthiness, as determined by the review of their current credit information; and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and economic conditions.

Management charges balances off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company determines when receivables are past due, or delinquent based on how recently payments have been received.

Outstanding account balances are reviewed individually for collectability. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses in the Company's existing accounts receivable. Allowance for doubtful accounts was $348,068 and $273,138 at March 31, 2020 and December 31, 2019, respectively.

Long-Lived Assets, Including Definite Lived Intangible Assets

Long-lived assets, other than goodwill and other indefinite-lived intangibles, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows derived from such assets. Definite-lived intangible assets primarily consist of non-compete agreements and customer relationships. For long-lived assets used in operations, impairment losses are only recorded if the asset's carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. The Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value. When an impairment exists, the related assets are written down to fair value.

Goodwill

Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. Goodwill is not amortized; rather, it is subject to a periodic assessment for impairment by applying a fair value-based test. Helix reviews goodwill for possible impairment annually during the fourth quarter, or whenever events or circumstances indicate that the carrying amount may not be recoverable.

The impairment model prescribes a two-step method for determining goodwill impairment. However, an entity is permitted to first assess qualitative factors to determine whether the two-step goodwill impairment test is necessary. The qualitative factors considered by Helix may include, but are not limited to, general economic conditions, Helix's outlook, market performance of Helix's industry and recent and forecasted financial performance. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that a reporting unit's fair value is less than its carrying amount. Otherwise, no further impairment testing is required. In the first step, Helix determines the fair value of its reporting unit using a discounted cash flow analysis. If the net book value of the reporting unit exceeds its fair value, Helix then performs the second step of the impairment test, which requires allocation of the reporting unit's fair value to all of its assets and liabilities using the acquisition method prescribed under authoritative guidance for business combinations with any residual fair value being allocated to goodwill. An impairment charge is recognized when the implied fair value of Helix's goodwill is less than its carrying amount.

Assumptions and estimates used in the evaluation of impairment may affect the carrying value of long-lived assets, which could result in impairment charges in future periods. Such assumptions include projections of future cash flows and the current fair value of the asset.

/p>

Accounting for Acquisitions

In accordance with the guidance for business combinations, the Company determines whether a transaction or other event is a business combination, which requires that the assets acquired, and liabilities assumed constitute a business. Each business combination is then accounted for by applying the acquisition method. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. The Company capitalizes acquisition-related costs and fees associated with asset acquisitions and immediately expense acquisition-related costs and fees associated with business combinations.

Business Combinations

The Company accounts for its business combinations under the provisions of Accounting Standards Codification ("ASC") Topic 805-10, Business Combinations ("ASC 805-10"), which requires that the purchase method of accounting be used for all business combinations. Assets acquired and liabilities assumed, including non-controlling interests, are recorded at the date of acquisition at their respective fair values. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. Acquisition-related expenses are recognized separately from the business combinations and are expensed as incurred. If the business combination provides for contingent consideration, the Company records the contingent consideration at fair value at the acquisition date and any changes in fair value after the acquisition date are accounted for as measurement-period adjustments. Changes in fair value of contingent consideration resulting from events after the acquisition date, such as earn-outs, are recognized as follows: 1) if the contingent consideration is classified as equity, the contingent consideration is not re-measured and its subsequent settlement is accounted for within equity, or 2) if the contingent consideration is classified as a liability, the changes in fair value are recognized in earnings.

The estimated fair value of net assets acquired, including the allocation of the fair value to identifiable assets and liabilities, was determined using established valuation techniques. The estimated fair value of the net assets acquired was determined using the income approach to valuation based on the discounted cash flow method. Under this method, expected future cash flows of the business on a stand-alone basis are discounted back to a present value. The estimated fair value of identifiable intangible assets, consisting of software and trade name acquired were determined using the relief from royalty method.

The most significant assumptions under the relief from royalty method used to value software and trade names include: estimated remaining useful life, expected revenue, royalty rate, tax rate, discount rate and tax amortization benefit. The discounted cash flow method used to value non-compete agreements includes assumptions such as: expected revenue, term of the non-compete agreements, probability and ability to compete, operating margin, tax rate and discount rate. Management has developed these assumptions on the basis of historical knowledge of the business and projected financial information of the Company. These assumptions may vary based on future events, perceptions of different market participants and other factors outside the control of management, and such variations may be significant to estimated values.

Revenue Recognition

Under FASB Topic 606, Revenue from Contacts with Customers ("ASC 606"), the Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration which is expected to be received in exchange for those goods or services. The Company recognizes revenue following the five-step model prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenues when (or as) the Company satisfies a performance obligation.

The security services revenue is generated from performing armed and unarmed guarding which is contracted for on an hourly basis. Revenues associated with these contracted services are recognized under time-based arrangements as services are provided.

Additionally, the Company provides transportation security services, which are generally contracted for on a per-run basis and sometimes additional fees and surcharges are also billed to the client depending on the length of the run. Revenues associated with these services are recognized as the transportation service is provided.

The Company also generates revenue from developing and licensing seed to sale cannabis compliance software to both private-sector and public-sector (government agencies) businesses that are involved in cannabis related operations. The Company also generates revenue from on-going training, support and software customization services.

Occasionally, the Company will enter into systems installation arrangements. Installation jobs are estimated based on the cost of equipment to be installed, the number of hours expected to be incurred to complete the job and other ancillary costs. Revenue associated with these services are recognized over the arrangement period.

Lastly, the Company generates monthly recurring revenues from Cannalytics, its business intelligence and data tool for commercial customers. Revenue is recognized monthly.

Segment Information

Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company's chief operating decision-making group is composed of the Chief Executive Officer and the Chief Financial Officer, which reviews the financial performance and the results of operations of the segments prepared in accordance with GAAP when making decisions about allocating resources and assessing performance of the Company.

Asset information by operating segment is not presented since the chief operating decision maker does not review this information by segment. The reporting segments follow the same accounting policies used in the preparation of the Company's consolidated financial statements.

Expenses

Cost of Revenue

The cost of revenues is the total cost incurred to obtain a sale and the cost of the goods or services sold. Cost of revenues primarily consisted of hourly compensation for security personnel and employees involved in the creation and development of licensing software.

Operating Expenses

Operating expenses encompass selling general and administrative expenses, salaries and wages, professional and legal fees and depreciation and amortization. Selling, general and administrative expenses consist primarily of rent/moving expenses, advertising and travel expenses. Salaries and wages is composed of non-revenue generating employees. Professional services are principally comprised of outside legal, audit, information technology consulting, marketing and outsourcing services as well as the costs related to being a publicly traded company.

Other Income

Other income consisted of a gain on the change in fair value of convertible notes, gain on the change in the fair value of warrant liability, loss on the change in fair value of convertible notes – related party, loss on the change in fair value of contingent consideration, loss on issuance of warrants and interest expense.

Property and Equipment

Property and equipment are stated at cost and depreciated on a straight-line basis over their estimated useful lives. Useful lives are 3 years for vehicles and 5 years for furniture and equipment. Maintenance and repairs are expensed as incurred and major improvements are capitalized. When assets are sold, or retired, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included in loss from operations.

Contingencies

Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company's consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.

Advertising

Advertising costs are expensed as incurred and included in selling, general and administrative expenses and amounted to $5,420 and $69,271 for the three months ended March 31, 2020 and 2019, respectively.

Foreign Currency

The local currency is the functional currency for one entity's operations outside the United States. Assets and liabilities of these operations are translated to U.S. dollars at the exchange rate in effect at the end of each period. Income statement accounts are translated at the average exchange rate prevailing during the period. Translation adjustments arising from the use of differing exchange rates from period to period are included as a component of other comprehensive loss within shareholders' equity. Gains and losses from foreign currency transactions are included in net loss for the period.

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company has incurred net operating loss for financial-reporting and tax-reporting purposes. Accordingly, for Federal and state income tax purposes, the benefit for income taxes has been offset entirely by a valuation allowance against the related federal and state deferred tax asset for the three months ended March 31, 2020 and 2019.

Comprehensive Loss

Comprehensive loss consists of consolidated net loss and foreign currency translation adjustments. Foreign currency translation adjustments included in comprehensive loss were not tax-effected as investments in international affiliates are deemed to be permanent.

Distinguishing Liabilities from Equity

The Company relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from Equity, to classify certain redeemable and/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. The Company will determine the liability classification if the financial instrument is mandatorily redeemable, or if the financial instrument, other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number of its equity shares.

Once the Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financial instrument should be presented between the liability section and the equity section of the balance sheet ("temporary equity"). The Company will determine temporary equity classification if the redemption of the financial instrument is outside the control of the Company (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity.

Initial Measurement

The Company records its financial instruments classified as liability, temporary equity or permanent equity at issuance at the fair value, or cash received.

Subsequent Measurement – Financial instruments classified as liabilities

The Company records the fair value of its financial instruments classified as liabilities at each subsequent measurement date. The changes in fair value of its financial instruments classified as liabilities are recorded as other expense/income.

Beneficial Conversion Feature

If the conversion features of conventional convertible debt provide for a rate of conversion that is below market value, this feature is characterized as a Beneficial Conversion Feature ("BCF"). A beneficial conversion feature is recorded by the Company as a debt discount pursuant to ASC 470-20, Debt with Conversion and Other Options. In those circumstances, the convertible debt is recorded net of the discount related to the beneficial conversion feature and the Company amortizes the discount to interest expense over the life of the debt.

The Company accounts for the beneficial conversion feature on its convertible preferred stock in accordance with ASC 470-20, Debt with Conversion and Other Options. The BCF of convertible preferred stock is normally characterized as the convertible portion or feature that provides a rate of conversion that is below market value or in-the-money when issued. The Company records a BCF related to the issuance of convertible preferred stock when issued. Beneficial conversion features that are contingent upon the occurrence of a future event are recorded when the contingency is resolved.

To determine the effective conversion price, the Company first allocates the proceeds received to the convertible preferred stock and then uses those allocated proceeds to determine the effective conversion price. If the convertible instrument is issued in a basket transaction (i.e., issued along with other freestanding financial instruments), the proceeds should first be allocated to the various instruments in the basket. Any amounts paid to the investor when the transaction is consummated (e.g., origination fees, due diligence costs) represent a reduction in the proceeds received by the issuer. The intrinsic value of the conversion option should be measured using the effective conversion price for the convertible preferred stock on the proceeds allocated to that instrument. The effective conversion price represents proceeds allocable to the convertible preferred stock divided by the number of shares into which it is convertible. The effective conversion price is then compared to the per share fair value of the underlying shares on the commitment date.

The accounting for a BCF requires that the BCF be recognized by allocating the intrinsic value of the conversion option to additional paid-in capital, resulting in a discount on the convertible preferred stock. This discount should be accreted from the date on which the BCF is first recognized through the earliest conversion date for instruments that do not have a stated redemption date. The intrinsic value of the BCF is recognized as a deemed dividend on convertible preferred stock over a period specified in the guidance.

Share-based Compensation

The Company accounts for stock-based compensation to employees in conformity with the provisions of ASC Topic 718, Stock Based Compensation. Stock-based compensation to employees consist of stock option grants and restricted shares that are recognized in the statement of operations based on their fair values at the date of grant.

The Company accounts for equity instruments issued to non-employees in accordance with the provisions of ASC Topic 718, based upon the fair-value of the underlying instrument. The equity instruments are valued using the Black-Scholes valuation model. The measurement of stock-based compensation is subject to periodic adjustments as the underlying equity instruments vest and is recognized as an expense over the period which services are received.

The Company calculates the fair value of option grants utilizing the Black-Scholes pricing model and estimates the fair value of the stock based upon the estimated fair value of the common stock. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest.

The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight- line basis over the requisite service period of the award.

Fair Value of Financial Instruments

ASC Topic 820, Fair Value Measurements and Disclosures ("ASC Topic 820") provides a framework for measuring fair value in accordance with generally accepted accounting principles.

ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).

The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC Topic 820 are described as follows:

● Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.

● Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

● Level 3 – Inputs that are unobservable for the asset or liability.

Certain assets and liabilities of the Company are required to be recorded at fair value either on a recurring or non-recurring basis. Fair value is determined based on the price that would be received for an asset or paid to transfer a liability in an orderly transaction based on market participants. The following section describes the valuation methodologies that the Company used to measure, for disclosure purposes, its financial instruments at fair value.

Convertible notes payable

The fair value of the Company's convertible notes payable, approximated the carrying value as of March 31, 2020 and December 31, 2019. Factors that the Company considered when estimating the fair value of its debt included market conditions and the term of the debt. The level of the debt would be considered as Level 2.

Additional Disclosures Regarding Fair Value Measurements

The carrying value of cash, accounts receivable, prepaid expenses, deposits, accounts payable and accrued liabilities, advances from shareholders and obligation pursuant to acquisition approximate their fair value due to the short-term maturity of those items.

Earnings (Loss) per Share

The Company follows ASC 260, Earnings Per Share, which requires presentation of basic and diluted earnings per share ("EPS") on the face of the income statement for all entities with complex capital structures. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options and warrants, using the treasury stock method, and convertible debt and convertible securities, using the if-converted method.

For the three months ended March 31, 2020 and 2019, potential common shares includable in the computation of fully-diluted per share results are not presented in the condensed consolidated financial statements as their effect would be anti-dilutive.

The anti-dilutive shares of common stock outstanding for the three months ended March 31, 2020 and 2019 were as follows:

	For the Three Months Ended March 31,
	2020		2019
Potentially dilutive securities:
Convertible notes payable		18,889,749		2,340,936
Convertible Preferred A Stock		1,000,000		1,000,000
Convertible Preferred B Stock		13,784,201		13,784,201
Warrants		5,248,193		4,842,225
Stock options		11,072,711		9,560,534

Reclassifications

Certain reclassifications have been made to the prior period financial statements to conform to the current period financial statement presentation. These reclassifications had no effect on net earnings or cash flows as previously reported.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-.02, Leases (Topic 842) ("Topic 842") which requires the recognition of right-of-use assets and lease liabilities on the balance sheet. The most prominent of the changes in the standard is the recognition of right-of-use ("ROU") assets and lease liabilities by lessees for those leases classified as operating leases.

The Company adopted the new standard on January 1, 2019 and used the modified retrospective approach with the effective date as the date of initial application. Consequently, prior period balances and disclosures have not been restated. The Company elected certain practical expedients, which among other things, allowed us to carry forward prior conclusions about lease identification and classification.

Adoption of the standard resulted in the balance sheet recognition of additional lease assets and lease liabilities of approximately $1,500,000. The new standard also provides practical expedients for an entity's ongoing accounting. The Company currently has elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, the Company will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in separate lease and non-lease components for all our leases. For additional information regarding the Company's leases, see Note 18 in the notes to condensed consolidated financial statements.

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company adopted this ASU as of January 1, 2019. The amendments in this ASU did not have a material impact on the Company's consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220); Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this ASU allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Act and will improve the usefulness of information reported to financial statement users. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted in any interim period after issuance of the ASU. The Company adopted this ASU as of January 1, 2019. The amendments in this ASU did not have a material impact on the Company's consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (ASC 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of ASC 718 to include share-based payment transactions for acquiring goods and services from nonemployees and applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor's own operations by issuing share-based payment awards. ASC 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC 606. This update is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company adopted this ASU as of January 1, 2019. The amendments in this ASU did not have a material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (ASC 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 removes certain disclosures, modifies certain disclosures and adds additional disclosures. The ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted. The Company is evaluating the effect that this update will have on its financial statements and related disclosures.

Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on the Company's consolidated financial statements and related disclosures.

XML

Business Combinations (Details)	3 Months Ended
	Mar. 31, 2020 USD ($)
Tan’s International Security [Member]
Business Acquisition [Line Items]
Base Price - Cash	$ 25,000
Base Price - Deferred cash payment (including $25,000 to be made on the 4,8 and 12-month anniversaries of closing)	75,000
Base Price - Common Stock	710,000
Total Purchase Price	810,000
Engeni SA Acquisition [Member]
Business Acquisition [Line Items]
Base Price - Common Stock	388,702
Contingent Consideration - Common Stock	777,298
Contingent Consideration - Cash
Total Purchase Price	1,166,000
Green Tree International,Inc [Member]
Business Acquisition [Line Items]
Base Price - Common Stock	12,909,611
Total Purchase Price	$ 12,909,611

XML

Summary of Significant Accounting Policies (Details) - shares	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Accounting Policies [Abstract]
Convertible notes payable	18,889,749	2,340,936
Convertible Preferred A Stock	1,000,000	1,000,000
Convertible Preferred B Stock	13,784,201	13,784,201
Warrants	5,248,193	4,842,225
Stock options	11,072,711	9,560,534

XML

Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Schedule of activity related to the Company's leases

	Three Months Ended March 31, 2020
Operating lease expense	$	95,740
Cash paid for amounts included in the measurement of operating lease liabilities	$	101,217
ROU assets obtained in exchange for operating lease obligations	$	301,396

Schedule of ROU lease assets and lease liabilities

	As of March 31, 2020
Other assets	$	1,322,433
Accounts payable and accrued liabilities	$	299,118
Other long-term liabilities		1,077,834
Total lease liabilities	$	1,376,952
Weighted average remaining lease term (in years)		4.01
Weighted average discount rate		7.85	%

Schedule of future lease payments included in the measurement of lease liabilities

	As of March 31, 2020
2020 - Remaining		275,455
2021		337,346
2022		307,280
2023		287,578
2024		294,186
Thereafter		106,075
Total future minimum lease payments	$	1,607,920
Less imputed interest		(230,968	)
Total	$	1,376,952

XML

Warrant Liability

3 Months Ended

Mar. 31, 2020

Warrants and Rights Note Disclosure [Abstract]

Warrant Liability

15. Warrant Liability 

On March 1, 2019, in connection with the issuance of Note Ten, the Company issued warrants, of which the value was derived and based off the fair value of Note Ten, to the investor to purchase 160,715 shares of the Company's common stock at $1.40 per share. Exercise of the purchase rights represented by the warrant may be made, in whole or in part, at any time or times on or after March 1, 2019 and on or before March 1, 2024, by delivery to the Company of the Notice of Exercise.

The Company determined that the warrants associated with Note Ten are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. The Company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. In accordance with ASC 480, the outstanding warrants are recognized as a warrant liability on the balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income in the statement of operations. At inception, March 1, 2019, the fair value of the warrant liability was $355,847 while as of March 31, 2020, the fair value of the warrant liability was $32,833. Accordingly, the Company recorded a change in fair value of the warrant liability of ($21,787) related to Note Ten for the three months ended March 31, 2020.

On January 10, 2019, the Company entered into an Investment Unit Purchase Agreement (the "First Investment Agreement") to issue and sell investment units to an investor, in which the investment units consist of one share of the common stock of the Company, and a warrant exercisable for one half share of common stock of the Company at an Exercise Price of $1.25 per share for cash at a price per investment unit of $0.90.

On March 5, 2019, the Company sold an aggregate of 1,255,222 units of the Company's securities to an investor at a purchase price of $0.90 per unit for total proceeds of $1,129,700. In connection with the First Investment Agreement, the investor is entitled to purchase from the Company, at the Exercise Price, at any time on or after 90 days from the issuance date, 627,611 shares of the Company's common stock (the "March Warrant Shares").

The Company determined that the warrants are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. The Company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. In accordance with the accounting guidance, the outstanding warrants are recognized as a warrant liability on the balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income in the statement of operations.

The fair value of the March Warrant Shares at issuance on January 10, 2019 is in excess of the proceeds received, the warrant liability is required to be recorded at fair value with the excess of the fair value over the proceeds received recognized as a loss in earnings. The gross proceeds from the 1,255,222 investment units at $0.90 was $1,129,700.  The fair value of the March Warrant Shares at issuance was $1,717,506. The amount to be recognized as a loss in earnings is calculated as follows:

Proceeds from January investment units	$	1,129,700
Par value of common stock issues	$	(1,255	)
Fair value of warrants	$	(1,717,506	)
Loss on issuance of warrants (January 10, 2019 issuance)	$	(589,061	)
Loss on issuance of warrants (March 11, 2019 issuance)	$	(198,148	)
Total loss on issuance of warrants	$	(787,209	)

As of March 31, 2020, the fair value of the warrant liability was $160 and the Company recorded a change in fair value of the warrant liability of ($193,593) for the three months ended March 31, 2020.

On March 11, 2019, the Company issued warrants to an investment bank to purchase a total of 100,000 restricted shares of the Company's common stock at a per share purchase price of $0.90. The warrants are exercisable at any time nine months after the issuance date within three years of issuance.

The Company determined that the warrants are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. The Company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. In accordance with the accounting guidance, the outstanding warrants are recognized as a warrant liability on the condensed consolidated balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income in the condensed consolidated statement of operations. At inception, March 11, 2019, the fair value of the warrant liability was $198,148 while as of March 31, 2020, the fair value of the warrant liability was $42,058. Accordingly, the Company recorded a change in fair value of the warrant liability of ($17,554) and related to the warrants for the three months ended March 31, 2020.

On June 14, 2019, the Company entered into another Investment Unit Purchase Agreement (the "Second Investment Agreement") to issue and sell investment units to an investor (the "investor"), in which the investment units consist of one share of the common stock of the Company, and a warrant exercisable for one half share of common stock of the Company at an exercise price of $1.25 per share for cash at a price per investment unit of $0.90.

On June 24, 2019, the Company sold an aggregate of 166,667 units of the Company's securities to an investor at a purchase price of $0.90 per unit for total proceeds of $150,000. In connection with the Second Investment Agreement, the investor is entitled to purchase from the Company, at the exercise price, at any time on or after 90 days from the issuance date, 83,333 shares of the Company's common stock (the "June Warrant Shares").

The gross proceeds from the 166,667 investment units at $0.90 was $150,000.  The fair value of the June Warrant Shares at issuance was $83,586 while as of March 31, 2020, the fair value of the warrant liability was $5,402. Accordingly, the Company recorded a change in fair value of the warrant liability of ($21,479) related to the warrants for the three months ended March 31, 2020.

On August 15, 2019, in connection with the issuance of Note Eleven, the Company issued warrants, of which the value was derived and based off the fair value of Note Eleven, to the investor to purchase 25,000 shares of the Company's common stock at $1.00 per share. Exercise of the purchase rights represented by the warrant may be made, in whole or in part, at any time or times on or after August 15, 2019 and on or before August 15, 2024, by delivery to the Company of the Notice of Exercise.

The Company determined that the warrants associated with Note Eleven are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. The Company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. In accordance with ASC 480, the outstanding warrants are recognized as a warrant liability on the balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income in the statement of operations. At inception, August 15, 2019, the fair value of the warrant liability was $18,542 while as of March 31, 2020, the fair value of the warrant liability was $1,999. Accordingly, the Company recorded a change in fair value of the warrant liability of ($7,131) related to Note Eleven for the three months ended March 31, 2020.

On September 16, 2019, in connection with the issuance of Note Twelve, the Company issued warrants, of which the value was derived and based off the fair value of Note Twelve, to the investor to purchase 25,000 shares of the Company's common stock at $1.00 per share. Exercise of the purchase rights represented by the warrant may be made, in whole or in part, at any time or times on or after September 16, 2019 and on or before September 16, 2024, by delivery to the Company of the Notice of Exercise.

The Company determined that the warrants associated with Note Twelve are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. The Company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. In accordance with ASC 480, the outstanding warrants are recognized as a warrant liability on the balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income in the statement of operations. At inception, September 16, 2019, the fair value of the warrant liability was $17,683 while as of March 31, 2020, the fair value of the warrant liability was $2,024. Accordingly, the Company recorded a change in fair value of the warrant liability of ($7,170) related to Note Twelve for the three months ended March 31, 2020.

On October 11, 2019, in connection with the issuance of Note Thirteen, the Company issued warrants, of which the value was derived and based off the fair value of Note Thirteen, to the investor to purchase 25,000 shares of the Company's common stock at $1.00 per share. Exercise of the purchase rights represented by the warrant may be made, in whole or in part, at any time or times on or after October 11, 2019 and on or before October 11, 2024, by delivery to the Company of the Notice of Exercise.

The Company determined that the warrants associated with Note Thirteen are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. The Company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. In accordance with ASC 480, the outstanding warrants are recognized as a warrant liability on the balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income in the statement of operations. At inception, October 11, 2019, the fair value of the warrant liability was $11,443 while as of March 31, 2020, the fair value of the warrant liability was $2,040. Accordingly, the Company recorded a change in fair value of the warrant liability of $(7,196) related to Note Thirteen for the three months ended March 31, 2020. 

On November 1, 2019, the Company issued warrants to an institution to purchase a total of 100,000 restricted shares of the Company's common stock at a per share purchase price of $0.435. The warrants are exercisable at any time after the issuance date within five years of issuance.

The Company determined that the warrants are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. The Company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. In accordance with the accounting guidance, the outstanding warrants are recognized as a warrant liability on the consolidated balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income in the consolidated statement of operations. At inception, November 1, 2019, the fair value of the warrant liability was $37,889, which was recognized as a loss in earnings for the year ended December 31, 2019. As of March 31, 2020, the fair value of the warrant liability was $9,123 and the Company recorded a change in fair value of the warrant liability of ($30,940) related to the warrants for the three months ended March 31, 2020.

On December 26, 2019, in connection with the issuance of Note Fourteen, the Company issued warrants, of which the value was derived and based off the fair value of Note Fourteen, to the investor to purchase 12,500 shares of the Company's common stock at $1.00 per share. Exercise of the purchase rights represented by the warrant may be made, in whole or in part, at any time or times on or after December 26, 2019 and on or before December 26, 2024, by delivery to the Company of the Notice of Exercise.

The Company determined that the warrants associated with Note Fourteen are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. The Company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. In accordance with ASC 480, the outstanding warrants are recognized as a warrant liability on the balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income in the statement of operations. At inception, December 26, 2019, the fair value of the warrant liability was $5,268 while as of March 31, 2020, the fair value of the warrant liability was $1,048. Accordingly, the Company recorded a change in fair value of the warrant liability of $(3,639) related to Note Fourteen for the three months ended March 31, 2020.

On January 28, 2020, the Company entered into a subscription agreement with an investor for the purchase of 270,270 shares of the Company's common stock and 135,135 warrants to purchase shares of the Company's common stock at $0.40 per share for total gross proceeds of $100,000.

The Company determined that the warrants are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. The Company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. In accordance with the accounting guidance, the outstanding warrants are recognized as a warrant liability on the condensed consolidated balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income in the condensed consolidated statement of operations. At inception, January 28, 2020, the fair value of the warrant liability was $56,208 while as of March 31, 2020, the fair value of the warrant liability was $11,846. Accordingly, the Company recorded a change in fair value of the warrant liability of ($44,363) and related to the warrants for the three months ended March 31, 2020.

A summary of warrant activity is as follows:

For the Three Months Ended March 31, 2020
	Warrant Shares		Weighted Average Exercise Price
Balance at January 1, 2020		5,113,058	$	0.53
Warrants granted		135,135	$	0.40
Balance at March 31, 2020		5,248,193	$	0.52

The fair value of the Company's warrant liability was calculated using the Black-Scholes model and the following assumptions:

	As of March 31, 2020			As of December 31, 2019
Fair value of company's common stock	$	0.115		$	0.60
Dividend yield		0	%		0	%
Expected volatility		37% - 148%			45% - 140	%
Risk Free interest rate		0.11% - 0.36%			1.55% - 1.79	%
Expected life (years)		2.66			2.83
Fair value of financial instruments - warrants	$	113,942		$	715,259

The change in fair value of the financial instruments – warrants is as follows:

	Amount
Balance as of January 1, 2020	$	715,259
Fair value of warrants issued	$	56,208
Change in fair value of liability to issue warrants	$	(657,525	)
Balance as of March 31, 2020	$	113,942

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Segment Results

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Segment Results

19. Segment Results

FASB ASC 280-10-50 requires use of the "management approach" model for segment reporting. The management approach is based on the way a company's management organized segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision–making group, in deciding how to allocate resources and in assessing performance. The Company's chief operating decision–making group is composed of the Chief Executive Officer and the Chief Financial Officer. The Company operates in three segments, Security and guarding, Systems installation and Software.

Asset information by operating segment is not presented below since the chief operating decision maker does not review this information by segment. The reporting segments follow the same accounting policies used in the preparation of the Company's unaudited condensed consolidated financial statements.

The following represents selected information for the Company's reportable segments:

	For the Three Months Ended March 31,
	2020			2019
Security and guarding
Revenue	$	1,593,449		$	1,204,711
Cost of revenue		1,315,744			940,586
Gross profit		277,705			264,125
Total operating expenses		3,308,124			1,733,707
Loss from operations		(3,030,419	)		(1,469,582	)
Total other (expense) income		406,993			(8,244,950	)
Total net loss	$	(2,623,426	)	$	(9,714,532	)
Adjusted EBITDA	$	(726,434	)	$	(878,146	)
Systems installation
Revenue	$	174,946		$	28,541
Cost of revenue		127,701			161,758
Gross profit		47,245			(133,217	)
Total operating expenses		180,088			32,631
Loss from operations		(132,843	)		(165,848	)
Total other income (expense)		(185	)		(80	)
Total net loss	$	(133,028	)	$	(165,928	)
Adjusted EBITDA	$	(132,843	)	$	(165,848	)
Software
Revenue	$	2,784,036		$	2,137,855
Cost of revenue		823,234			822,875
Gross profit		1,960,802			1,314,980
Total operating expenses		2,213,567			2,276,213
Loss from operations		(252,765	)		(961,233	)
Total other expense		(57,005	)		(8	)
Total net loss	$	(309,770	)	$	(961,241	)
Adjusted EBITDA	$	779,882		$	21,907

The chief operating decision making group uses net loss before interest, taxes and depreciation and amortization and adjusted for non-core or certain items that have a disproportionate impact on our results for a particular period ("Adjusted EBITDA") as a non-GAAP measure to evaluate the Company's operating performance. Adjusted EBITDA does not represent, and should not be considered an alternative to, net loss, loss from operations, or cash flow from operations as those terms are defined by GAAP, and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. From time to time, we may exclude from Adjusted EBITDA the impact of certain events, gains, losses or other charges that affect the period-to-period comparability of the Company's operating performance. The Company believes that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our chief operating decision maker. Net loss is reconciled to Adjusted EBITDA as follows:

	For the Three Months Ended March 31
	2020			2019
Net Loss	$	(3,066,224	)	$	(10,841,701	)
Interest expense		503,842			176,201
Depreciation and amortization		1,222,592			1,165,641
Loss on impairment of intangible assets		1,369,978			-
Share based compensation expense		744,062			408,935
Change in fair value of convertible note		339,620			987,963
Change in fair value of convertible note - related party		(498,233	)		3,524,009
Change in fair value of warrant liability		(657,525	)		1,632,956
Change in fair value of contingent consideration		-			1,136,700
Loss on issuance of warrants		-			787,209
Other income		(37,507	)		-
Adjusted EBITDA (1)	$	(79,395	)	$	(1,022,087	)

⁽¹⁾ See "Non-GAAP Financial Measures" within Part I, Item 2, Management's Discussion and Analysis.

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Business Combinations (Tables)

3 Months Ended

Mar. 31, 2020

Engeni Acquisition Member [Member]

Schedule of allocation of the purchase price

	As Adjusted
Base Price - Common Stock	$	388,702
Contingent Consideration - Common Stock		777,298
Contingent Consideration - Cash		-
Total Purchase Price	$	1,166,000

Schedule of assets acquired and liabilities assumed

			Weighted Average Useful Life
Description	Fair Value		(in years)
Assets acquired:
Cash	$	5,609
Accounts receivable and other assets		30,479
Property, plant and equipment, net		57,830
Software		449,568		3.3
Goodwill		778,552
Total assets acquired	$	1,322,038
Liabilities assumed:
Accounts payable	$	56,038
Total liabilities assumed		56,038
Estimated fair value of net assets acquired	$	1,266,000

Tan's International Security [Member]

Schedule of allocation of the purchase price

Base Price – Cash at closing	$	25,000
Base Price – Deferred cash payment (including $25,000 to be made on the 4,8 and 12-month anniversaries of closing)		75,000
Base Price – Common Stock		710,000
Total Purchase Price	$	810,000

Schedule of assets acquired and liabilities assumed

Description	Fair Value
Assets acquired:
Cash	$	2,940
Accounts receivable		7,635
Goodwill		821,807
Total assets acquired	$	832,382
Liabilities assumed:
Accounts payable	$	12,526
Other liabilities		9,856
Total liabilities assumed		22,382
Estimated fair value of net assets acquired	$	810,000

Green Tree International,Inc [Member]

Schedule of allocation of the purchase price

Base Price - Common Stock	$	12,909,611
Total Purchase Price	$	12,909,611

Schedule of assets acquired and liabilities assumed

Description	Fair Value		Weighted Average Useful Life (Years)
Assets acquired:
Note Receivable, net	$	135,000
Property, Plant and Equipment, Net		12,142
Software		452,002	4.5
Goodwill		12,980,840
Total assets acquired	$	13,579,984
Liabilities assumed:
Accounts Payable		43,717
Notes Payable		400,000
Other Liabilities		226,656
Total liabilities assumed:		670,373
Estimated fair value of net assets acquired:	$	12,909,611

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Stock Options (Tables)

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

Schedule of stock option activity

	Shares Underlying Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Outstanding at January 1, 2020		11,617,381		$	0.807		3.21
Granted		1,165,000		$	0.186		4.68
Exercised		-		$	-		-
Forfeited and expired		(1,709,670	)	$	0.697		0.70
Outstanding at March 31, 2020		11,072,711		$	0.759		3.75
Vested options at March 31, 2020		8,441,877		$	0.728		1.99

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Accounts Payable and Accrued Liabilities (Tables)

3 Months Ended

Mar. 31, 2020

Payables and Accruals [Abstract]

Schedule of accounts payable and accrued liabilities

	March 31, 2020		December 31, 2019
Accounts payable	$	489,809	$	895,785
Accrued compensation and related expenses		398,475		260,280
Accrued expenses		1,681,152		1,733,371
Lease obligation - current		299,118		373,710
Total	$	2,868,554	$	3,263,146

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Revenue Recognition (Tables)

3 Months Ended

Mar. 31, 2020

Revenue Recognition [Abstract]

Schedule of disaggregation of revenue

	For the Three Months Ended March 31,
	2020		2019
Types of Revenues:
Security and Guarding	$	1,593,449	$	1,204,711
Systems Installation		174,946		28,541
Software		2,784,036		2,137,855
Total revenues	$	4,552,431	$	3,371,107

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Intangible Assets, Net and Goodwill

3 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets, Net and Goodwill

7. Intangible Assets, Net and Goodwill

The following table summarizes the Company's intangible assets as of March 31, 2020 and December 31, 2019:

				March 31, 2020 (1)
	Estimated Useful Life (Years)	Gross Carrying Amount		Assets Acquired Pursuant to Business Combination		Accumulated Amortization and Impairment			Net Book Value
Database	5	$	93,427	$	-	$	(74,189	)	$	19,238
Trade names and trademarks	5 - 10		591,081		-		(236,544	)		354,537
Web addresses	5		130,000		-		(102,089	)		27,911
Customer list	5		8,304,449		-		(3,043,977	)		5,260,472
Software	4.5		10,224,822		-		(4,069,327	)		6,155,495
Domain Name	5		20,231		-		(3,044	)		17,187
		$	19,364,010	$	-	$	(7,529,170	)	$	11,834,840

					December 31, 2019
	Estimated Useful Life (Years)		Gross Carrying Amount at December 31, 2018		Assets Acquired Pursuant to Business Combination (2)		Accumulated Amortization			Net Book Value
Database		5	$	93,427	$	-	$	(69,533	)	$	23,894
Trade names and trademarks		5 - 10		591,081		-		(207,525	)		383,556
Web addresses		5		130,000		-		(95,611	)		34,389
Customer list		5		11,459,027		-		(4,256,070	)		7,202,957
Software		4.5		9,771,195		453,627		(3,492,525	)		6,732,297
Domain Name		5		-		20,231		(2,037	)		18,194
			$	22,044,730	$	473,858	$	(8,123,301	)	$	14,395,287

(1) The Company wrote off the remaining unamortized balance of $1,369,978 related to the customer list intangible asset from the Security Grade Protective Services transaction as of March 31, 2020.

(2) On September 10, 2019 the Company acquired various assets of GTI (see Note 5).

The Company uses the straight-line method to determine the amortization expense for its definite lived intangible assets. Amortization expense related to the purchased intangible assets was $1,192,820 and $1,147,928 for the three months ended March 31, 2020 and 2019. 

The following table summarizes the Company's Goodwill as of March 31, 2020 and December 31, 2019:

	Total Goodwill
Balance at December 31, 2018	$	39,913,559
Goodwill attributable to Tan Security acquisition		821,807
Goodwill attributable to Green Tree acquisition		12,980,840
Balance at December 31, 2019	$	53,716,206
Balance at March 31, 2020	$	53,716,206

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Related Party Transactions

3 Months Ended

Mar. 31, 2020

Related Party Transactions [Abstract]

Related Party Transactions

11. Related Party Transactions

On March 1, 2019, the Company entered into a $1,500,000 Secured Convertible Promissory Note (“Note Nine”) with Rose Capital Fund I, LP (the Related Party Holder”). A Managing Member of the Related Party Holder is also a Director of the Company. The Related Party Holder provided the Company with $1,475,000 in cash proceeds, which was received by the Company during the period ended September 30, 2019. The additional $25,000 was retained by the Related Party Holder for legal bills for the transaction. Note Nine will mature on March 1, 2020 and bear interest at a rate of 25% per annum, payable by the Company half in cash and half in kind on a quarterly basis. The principal balance of Note Nine is convertible at the election of the Related Party Holder, in whole or in part, at any time or from time to time, into the Company’s common stock at the lower of $0.90 per share or a 30% discount to the Company’s 30-day weighted average listed price per share immediately before the date of conversion. In conjunction with Note Nine, the Company issued a warrant to the Related Party Holder to purchase 535,715 shares of the Company’s common stock at $1.40 per share.

The Company evaluated Note Nine in accordance with ASC 480, Distinguishing Liabilities from Equity and determined Note Nine will be accounted for as a liability initially measured at fair value and subsequently at fair value with changes in fair value recognized in earnings. As of March 31, 2020, the fair value of Note Nine was $1,285,221. Accordingly, the Company recorded a change in fair value of ($498,233) related to Note Nine for the three months ended March 31, 2020, respectively.

In addition, the company recorded a debt discount relating to the warrants issued in the amount of $1,186,153 based on the relative fair value of the warrants at inception of Note Nine. The additional $25,000 retained by the fourth investor for legal bills for the transaction will be recorded as a debt discount. Debt discount amortized to interest expense was $199,094 for the three months ended March 31, 2020. The unamortized discount balance at March 31, 2020 was $0. On May 31, 2019, the Company issued 52,083 restricted shares of common stock as PIK interest payments in the amount of $46,875. On February 24, 2020, the Company issued 167,891 restricted shares of common stock as PIK interest payments in the amount of $93,750. Accrued interest expense associated with Note Nine was $29,795 as of March 31, 2020, which includes PIK interest payable. As of March 31, 2020, the balance of Note Nine, net of debt discount for warrants and legal bills was $1,285,220. The Company and the Related Party Holder are negotiating a potential extension of Note Nine.

Warrants

On March 1, 2019, in connection with the issuance of Note Nine, the Company issued warrants, of which the value was derived and based off the fair value of Note Nine, to the investor to purchase 535,715 shares of the Company’s common stock at $1.40 per share. Exercise of the purchase rights represented by the warrant may be made, in whole or in part, at any time or times on or after March 1, 2019 and on or before March 1, 2024, by delivery to the Company of the Notice of Exercise.

The Company determined that the warrants associated with Note Nine are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. The Company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. In accordance with the accounting guidance, the outstanding warrants are recognized as a warrant liability on the balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income in the statement of operations. At inception, March 1, 2019, the fair value of the warrant liability was $1,186,153 while as of March 31, 2020, the fair value of the warrant liability was $0. Accordingly, the Company recorded a change in fair value of approximately $182,000 during the three months ended March 31, 2020, which is reflected in the unaudited condensed consolidated statements of operations. 

Promissory Note

On January 3, 2019, the Company entered into an unsecured promissory note with the Related Party Holder in the amount of $280,000. The unsecured promissory note has a fixed interest rate of 10% and is due and payable on March 31, 2019. On March 2, 2019, the unsecured promissory note was paid off in full.

On July 29, 2019, the Company entered into an unsecured promissory note with the Related Party Holder in the amount of $300,000. The unsecured promissory note has a fixed interest rate of 12% and is due and payable on January 29, 2020. The Company and the Related Party Holder mutually agreed to defer payment of interest and repayment of principal until July 29, 2020.

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Commitments and Contingencies (Details)	3 Months Ended
	Mar. 31, 2020 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Operating lease expense	$ 95,740
Cash paid for amounts included in the measurement of operating lease liabilities	101,217
ROU assets obtained in exchange for operating lease obligations	$ 301,396

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Subsequent Events (Details) - USD ($)	Apr. 22, 2020	Apr. 13, 2020	May 12, 2020	Apr. 29, 2020	Apr. 23, 2020	Apr. 03, 2020	Mar. 31, 2020	Dec. 31, 2019
Issuance of common stock							96,045,386	93,608,619
Subsequent Event [Member]
Payment for plaintiffs settlement		$ 400,000
Corporate actions description	The Company holding a majority of the voting power of the Company approved the following corporate actions of the Company: (1) Amendment of the Company’s certificate of incorporation to provide for an increase in the authorized shares of the Company’s common stock, $0.001 par value per share, from 200,000,000 shares to 275,000,000 shares; (2) Amendment of the Company’s 2017 Omnibus Stock Incentive Plan (the “2017 Plan”) to increase the number of shares authorized for issuance under the 2017 Plan from 5,000,000 to 11,000,000; and (3) Amendment of the Company’s Certificate of Incorporation to change the Company’s name from Helix TCS, Inc. to Helix Technologies, Inc. It is anticipated that these changes will take effect at the end of May 2020, or early June 2020, after requisite notice has been given to the Company’s stockholders of record as of April 22, 2020.
Subsequent Event [Member] | Convertible Promissory Note [Member]
Issuance of common stock		395,778	409,836	360,577	395,778	316,857
Principal amount		$ 30,000	$ 35,000	$ 30,000	$ 30,000	$ 25,000
Fixed secured interest		12.00%	12.00%	12.00%	12.00%	12.00%

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Warrant Liability (Details 3) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Summary of warrants
Beginning Balance	$ 715,259
Fair value of warrants issued	56,208
Change in fair value of liability to issue warrants	(657,525)	$ 1,632,956
Ending Balance	$ 113,942

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Property and Equipment, Net (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Total	$ 1,228,302	$ 1,025,197
Less: Accumulated depreciation	(249,290)	(219,518)
Property and equipment, net	979,012	805,679
Furniture and Equipment [Member]
Property, Plant and Equipment [Line Items]
Total	271,276	262,167
Software Equipment [Member]
Property, Plant and Equipment [Line Items]
Total	755,276	561,964
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Total	$ 201,750	$ 201,066

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Intangible Assets, Net and Goodwill (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense related to intangible assets	$ 1,192,820	$ 1,147,928
Unamortized balance related to intangible asset	$ 1,369,978

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Convertible Notes Payable, Net of Discount (Details Textual)	1 Months Ended			3 Months Ended		6 Months Ended	12 Months Ended
	Sep. 30, 2019 USD ($) shares	Sep. 30, 2019 USD ($)	May 31, 2019 USD ($) shares	Mar. 31, 2020 USD ($) TradingDays $ / shares shares	Mar. 31, 2019 USD ($) shares	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 26, 2019 USD ($)	Nov. 15, 2019 USD ($)	Oct. 11, 2019 USD ($)	Sep. 16, 2019 USD ($)	Aug. 15, 2019 USD ($)	Mar. 02, 2019 USD ($)
Short-term Debt [Line Items]
Warrants exercise price | $ / shares				$ 0.52			$ 0.53
Gain to change in fair value				$ (339,620)	$ (987,963)
Note Ten [Member]
Short-term Debt [Line Items]
Interest expense on convertible debt							$ 3,542
Unamortized discount							58,495
Warrants issued amount				355,847
Debt discounts amortized to interest expense				58,495			297,352
Principal amount of notes				$ 170,000	$ 280,000
Fair value of notes							202,125
Gain to change in fair value							$ 32,125
Restricted shares of common stock | shares	16,568		15,625				19,401
Restricted shares of common stock value	$ 14,063		$ 14,062				$ 12,029
Converted into shares of common stock | shares				564,420	875,894
Note Ten [Member] | Investor [Member]
Short-term Debt [Line Items]
Discount on debt conversion, description				30% discount
Trading days related to conversion of debt | TradingDays				30
Conversion rate, per share | $ / shares				$ 0.90
Cash proceeds from investors						$ 450,000
Principal amount of notes													$ 450,000
Maturity date				Mar. 01, 2020
Interest rate				25.00%
Note Ten [Member] | Investor [Member] | Common Stock [Member]
Short-term Debt [Line Items]
Warrant issued to purchase shares of common stock | shares				160,715
Warrants exercise price | $ / shares				$ 1.40
Note Eleven [Member] | Investor [Member]
Short-term Debt [Line Items]
Fair value of liability							18,543
Convertible preferred stock, terms of conversion, description				Common stock at $0.90 per share for the first 6 months and thereafter at the lower of $0.90 per share or at 70% of the average of the five lowest daily VWAPs of the Company’s common stock during the 15 consecutive trading days prior to the date on which the investor elects to convert all or part of Note Eleven.
Warrant issued to purchase shares of common stock | shares				25,000
Warrants exercise price | $ / shares				$ 1.00
Unamortized discount				$ 6,330			19,131
Warrants issued amount							38,543
Value of debt				33,401			17,460
Debt discounts amortized to interest expense				12,801			19,412
Cash proceeds from investors		$ 380,000
Principal amount of notes				120,000								$ 400,000
Fair value of notes				307,885			204,444
Gain to change in fair value				$ 164,774			195,556
Maturity date				May 15, 2020
Interest rate				10.00%
Due diligence and legal bills				$ 20,000
Legal fees							20,000
Converted into shares of common stock | shares				1,084,186
Note Twelve [Member] | Investor [Member] | Common Stock [Member]
Short-term Debt [Line Items]
Fair value of liability							17,683
Conversion rate, per share | $ / shares				$ 0.90
Convertible preferred stock, terms of conversion, description				Common stock at $0.90 per share for the first 6 months and thereafter at the lower of $0.90 per share or at 70% of the average of the five lowest daily VWAPs of the Company’s common stock during the 15 consecutive trading days prior to the date on which the investor elects to convert all or part of Note Twelve.
Warrant issued to purchase shares of common stock | shares				25,000
Warrants exercise price | $ / shares				$ 1.00
Unamortized discount				$ 11,292			24,638
Warrants issued amount							40,183
Value of debt				36,219			18,285
Debt discounts amortized to interest expense				13,346			15,545
Cash proceeds from investors							427,500
Principal amount of notes											$ 450,000
Fair value of notes				494,815			230,000
Gain to change in fair value				$ 264,815			(220,000)
Maturity date				Jun. 16, 2020
Interest rate				10.00%
Due diligence and legal bills				$ 22,500
Legal fees							22,500
Note Thirteen [Member] | Investor [Member] | Common Stock [Member]
Short-term Debt [Line Items]
Fair value of liability							11,443
Conversion rate, per share | $ / shares				$ 0.90
Convertible preferred stock, terms of conversion, description				Common stock at $0.90 per share for the first 6 months and thereafter at the lower of $0.90 per share or at 70% of the average of the five lowest daily VWAPs of the Company's common stock during the 15 consecutive trading days prior to the date on which the investor elects to convert all or part of Note Thirteen.
Warrant issued to purchase shares of common stock | shares				25,000
Warrants exercise price | $ / shares				$ 1.00
Unamortized discount				$ 12,636			23,909
Warrants issued amount							33,943
Value of debt				33,956			16,022
Debt discounts amortized to interest expense				11,273			10,034
Cash proceeds from investors							427,500
Principal amount of notes										$ 450,000
Fair value of notes				57,500			230,000
Gain to change in fair value				$ (172,500)			(220,000)
Maturity date				Jul. 11, 2020
Interest rate				10.00%
Due diligence and legal bills				$ 22,500
Legal fees							22,500
Note Fourteen [Member] | Investor [Member] | Common Stock [Member]
Short-term Debt [Line Items]
Fair value of liability							5,268
Conversion rate, per share | $ / shares				$ 0.90
Convertible preferred stock, terms of conversion, description				Common stock at $0.90 per share for the first 6 months and thereafter at the lower of $0.90 per share or at 70% of the average of the five lowest daily VWAPs of the Company's common stock during the 15 consecutive trading days prior to the date on which the investor elects to convert all or part of Note Fourteen.
Warrant issued to purchase shares of common stock | shares				12,500
Warrants exercise price | $ / shares				$ 1.00
Unamortized discount				$ 10,281			15,507
Warrants issued amount							15,794
Value of debt				8,884			463
Debt discounts amortized to interest expense				5,226			287
Cash proceeds from investors							200,000
Principal amount of notes								$ 210,526
Fair value of notes				26,901			107,602
Gain to change in fair value				$ (80,701)			102,924
Maturity date				Sep. 26, 2020
Interest rate				12.00%
Due diligence and legal bills				$ 10,526
Legal fees							10,526
Unsecured Convertible Promissory Note [Member] | Investor [Member] | Common Stock [Member]
Short-term Debt [Line Items]
Convertible preferred stock, terms of conversion, description				Common stock at 70% of the average of the five lowest daily VWAPs of the Company's common stock during the 15 consecutive trading days prior to the date on which the investor elects to convert all or part of Note Fifteen.
Value of debt				$ 16,966			5,239
Cash proceeds from investors							385,000
Principal amount of notes									$ 5,000,000
Fair value of notes				$ 385,000			$ 385,000
Maturity date				Nov. 15, 2021
Interest rate				12.00%

XML

Convertible Notes Payable, Net of Discount (Tables)

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Schedule of convertible note payable

	March 31, 2020			December 31, 2019
Note Ten, 25% convertible promissory note, fixed secured, maturing March 1, 2020, net of debt discount for warrants		-			143,630
Note Eleven, 10% convertible promissory note, fixed secured, maturing May 15, 2020, net of debt discount for warrants and legal fees		301,555			185,313
Note Twelve, 10% convertible promissory note, fixed secured, maturing June 16, 2020, net of debt discount for warrants and legal fees		483,524			205,363
Note Thirteen, 10% convertible promissory note, fixed secured, maturing July 11, 2020, net of debt discount for warrants and legal fees		44,864			206,091
Note Fourteen, 12% convertible promissory note, fixed secured, maturing September 26, 2020, net of debt discount for warrants and legal fees		16,620			92,095
Note Fifteen, 12% convertible promissory note, fixed secured, maturing November 15, 2021		385,000			385,000
		1,231,563			1,217,492
Less: Current portion		(846,563	)		(832,492	)
Long-term portion	$	385,000		$	385,000

XML

Property and Equipment, Net (Tables)

3 Months Ended

Mar. 31, 2020

Property, Plant and Equipment [Abstract]

Schedule of property and equipment, net

	March 31, 2020			December 31, 2019
Furniture and equipment	$	271,276		$	262,167
Software equipment		755,276			561,964
Vehicles		201,750			201,066
Total		1,228,302			1,025,197
Less: Accumulated depreciation		(249,290	)		(219,518	)
Property and equipment, net	$	979,012		$	805,679

XML

Warrant Liability (Tables)

3 Months Ended

Mar. 31, 2020

Warrants and Rights Note Disclosure [Abstract]

Schedule of recognized as a loss in earnings

Proceeds from January investment units	$	1,129,700
Par value of common stock issues	$	(1,255	)
Fair value of warrants	$	(1,717,506	)
Loss on issuance of warrants (January 10, 2019 issuance)	$	(589,061	)
Loss on issuance of warrants (March 11, 2019 issuance)	$	(198,148	)
Total loss on issuance of warrants	$	(787,209	)

Schedule of warrant activity

For the Three Months Ended March 31, 2020
	Warrant Shares		Weighted Average Exercise Price
Balance at January 1, 2020		5,113,058	$	0.53
Warrants granted		135,135	$	0.40
Balance at March 31, 2020		5,248,193	$	0.52

Schedule of fair value of the Company's warrant liability using the Black-Scholes model

	As of March 31, 2020			As of December 31, 2019
Fair value of company's common stock	$	0.115		$	0.60
Dividend yield		0	%		0	%
Expected volatility		37% - 148%			45% - 140	%
Risk Free interest rate		0.11% - 0.36%			1.55% - 1.79	%
Expected life (years)		2.66			2.83
Fair value of financial instruments - warrants	$	113,942		$	715,259

Schedule of fair value of the financial instruments - warrants

	Amount
Balance as of January 1, 2020	$	715,259
Fair value of warrants issued	$	56,208
Change in fair value of liability to issue warrants	$	(657,525	)
Balance as of March 31, 2020	$	113,942

XML

Property and Equipment, Net

3 Months Ended

Mar. 31, 2020

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

6. Property and Equipment, Net

At March 31, 2020 and December 31, 2019, property and equipment consisted of the following:

	March 31, 2020			December 31, 2019
Furniture and equipment	$	271,276		$	262,167
Software equipment		755,276			561,964
Vehicles		201,750			201,066
Total		1,228,302			1,025,197
Less: Accumulated depreciation		(249,290	)		(219,518	)
Property and equipment, net	$	979,012		$	805,679

Depreciation expense for the three months ended March 31, 2020 and 2019 was $29,772 and $17,713, respectively.

XML

Convertible Notes Payable, Net of Discount

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Convertible Notes Payable, net of discount

10. Convertible Notes Payable, net of discount

	March 31, 2020			December 31, 2019
Note Ten, 25% convertible promissory note, fixed secured, maturing March 1, 2020, net of debt discount for warrants		-			143,630
Note Eleven, 10% convertible promissory note, fixed secured, maturing May 15, 2020, net of debt discount for warrants and legal fees		301,555			185,313
Note Twelve, 10% convertible promissory note, fixed secured, maturing June 16, 2020, net of debt discount for warrants and legal fees		483,524			205,363
Note Thirteen, 10% convertible promissory note, fixed secured, maturing July 11, 2020, net of debt discount for warrants and legal fees		44,864			206,091
Note Fourteen, 12% convertible promissory note, fixed secured, maturing September 26, 2020, net of debt discount for warrants and legal fees		16,620			92,095
Note Fifteen, 12% convertible promissory note, fixed secured, maturing November 15, 2021		385,000			385,000
		1,231,563			1,217,492
Less: Current portion		(846,563	)		(832,492	)
Long-term portion	$	385,000		$	385,000

On March 1, 2019, the Company entered into a $450,000 Secured Convertible Promissory Note ("Note Ten") with an independent investor (the "investor"). The investor provided the Company with $450,000 in cash proceeds, which was received by the Company during the period ended June 30, 2019. Note Ten will mature on March 1, 2020 and bear interest at a rate of 25% per annum, payable by the Company half in cash and half in kind on a quarterly basis. The principal balance of Note Ten is convertible at the election of the investor, in whole or in part, at any time or from time to time, into the Company's common stock at the lower of $0.90 per share or a 30% discount to the Company's 30-day weighted average listed price per share immediately before the date of conversion. In conjunction with Note Ten, the Company issued a warrant to the investor to purchase 160,715 shares of the Company's common stock at $1.40 per share.

The Company evaluated Note Ten in accordance with ASC 480, Distinguishing Liabilities from Equity and determined Note Ten will be accounted for as a liability initially measured at fair value and subsequently at fair value with changes in fair value recognized in earnings. During 2019, the investor elected their option to partially convert $280,000 in principal of Note Ten into 875,894 shares of the Company's common stock. As of December 31, 2019, the fair value of Note Ten was $202,125. Accordingly, the Company recorded a change in fair value of $32,125 related to Note Ten for the year ended December 31, 2019. During the three months ended March 31, 2020 the investor converted the remaining $170,000 in principal of Note ten into 564,420 shares of the Company's common stock. As of March 31, 2020, Note Ten had been fully repaid via the conversion into shares of the Company's common stock.

In addition, the company recorded a debt discount relating to the warrants issued in the amount of $355,847 based on the relative fair value of the warrants at inception of Note Ten. Debt discounts amortized to interest expense was $297,352 for the year ended December 31, 2019. The unamortized discount balance at December 31, 2019 was $58,495. In May, September, and December 2019, the Company issued 15,625, 16,568 and 19,401 restricted shares of common stock as paid-in-kind ("PIK") interest payments in the amount of $14,062, $14,063, and $12,029, respectively. Accrued interest expense associated with Note Ten was $3,542 as of December 31, 2019, which includes PIK interest payable. Debt discount amortized to interest expense was $58,495 for the three months ended March 31, 2020.

On August 15, 2019, the Company entered into a $400,000 Fixed Convertible Promissory Note ("Note Eleven") with the investor. The investor provided the Company with $380,000 in cash proceeds, which was received by the Company during the period ended September 30, 2019. The additional $20,000 was retained by the investor for due diligence and legal bills for the transaction and recorded as a debt discount. Note Eleven will mature on May 15, 2020 and bear interest at a rate of 10% per annum, payable by the Company in cash. The principal balance of Note Eleven is convertible at the election of the investor, in whole or in part, at any time or from time to time, into the Company's common stock at $0.90 per share for the first 6 months and thereafter at the lower of $0.90 per share or at 70% of the average of the five lowest daily VWAPs of the Company's common stock during the 15 consecutive trading days prior to the date on which the investor elects to convert all or part of Note Eleven. In conjunction with Note Eleven, the Company issued a warrant to the investor to purchase 25,000 shares of the Company's common stock at $1.00 per share.

The Company evaluated Note Eleven in accordance with ASC 480, Distinguishing Liabilities from Equity and determined Note Eleven will be accounted for as a liability initially measured at fair value and subsequently at fair value with changes in fair value recognized in earnings. As of December 31, 2019, the fair value of Note Eleven was $204,444. Accordingly, the Company recorded a change in fair value of $195,556 related to Note Eleven for the year ended December 31, 2019. During the three months ended March 31, 2020, the investor elected their option to partially convert $120,000 in principal of Note Eleven into 1,084,186 shares of the Company's common stock. As of March 31, 2020, the fair value of the remaining principal of Note Eleven was $307,885. Accordingly, the Company recorded a change in fair value of $164,774 related to the remaining principal balance of Note Eleven for the three months ended March 31, 2020.

In addition, the company recorded a debt discount of $38,543 relating to the warrants issued in the amount of $18,543 based on the relative fair value of the warrants themselves at inception of Note Eleven and $20,000 relating to legal fees. Debt discounts amortized to interest expense were $19,412 for the year ended December 31, 2019. The unamortized discount balance at December 31, 2019 was $19,131. Accrued interest expense associated with Note Eleven was $17,460 as of December 31, 2019. Debt discounts amortized to interest expense were $12,801 for the three months ended March 31, 2020. The unamortized discount balance at March 31, 2020 was $6,330. Accrued interest expense associated with Note Eleven was $33,401 as of March 31, 2020.

On September 16, 2019, the Company entered into a $450,000 Fixed Convertible Promissory Note ("Note Twelve") with the investor. The investor provided the Company with $427,500 in cash proceeds, which was received by the Company during the period ended December 31, 2019. The additional $22,500 was retained by the investor for due diligence and legal bills for the transaction and was recorded as a debt discount. Note Twelve will mature on June 16, 2020 and bear interest at a rate of 10% per annum, payable by the Company in cash. The principal balance of Note Twelve is convertible at the election of the investor, in whole or in part, at any time or from time to time, into the Company's common stock at $0.90 per share for the first 6 months and thereafter at the lower of $0.90 per share or at 70% of the average of the five lowest daily VWAPs of the Company's common stock during the 15 consecutive trading days prior to the date on which the investor elects to convert all or part of Note Twelve. In conjunction with Note Twelve, the Company issued a warrant to the investor to purchase 25,000 shares of the Company's common stock at $1.00 per share.

The Company evaluated Note Twelve in accordance with ASC 480, Distinguishing Liabilities from Equity and determined Note Twelve will be accounted for as a liability initially measured at fair value and subsequently at fair value with changes in fair value recognized in earnings. As of December 31, 2019, the fair value of Note Twelve was $230,000. Accordingly, the Company recorded a change in fair value of ($220,000) related to Note Twelve for the year ended December 31, 2019. As of March 31, 2020, the fair value of Note Twelve was $494,815. Accordingly, the Company recorded a change in fair value of $264,815 related to Note Twelve for the three months ended March 31, 2020.

In addition, the company recorded a debt discount of $40,183 relating to the warrants issued in the amount of $17,683 based on the residual fair value of the warrants themselves at inception of Note Twelve and $22,500 relating to legal fees. Debt discounts amortized to interest expense were $15,545 for the year ended December 31, 2019. The unamortized discount balance at December 31, 2019 was $24,638. Accrued interest expense associated with Note Twelve was $18,285 as of December 31, 2019. Debt discounts amortized to interest expense were $13,346 for the three months ended March 31, 2020. The unamortized discount balance at March 31, 2020 was $11,292. Accrued interest expense associated with Note Twelve was $36,219 as of March 31, 2020.

On October 11, 2019, the Company entered into a $450,000 Fixed Convertible Promissory Note ("Note Thirteen") with the investor. The investor provided the Company with $427,500 in cash proceeds, which was received by the Company during the period ended December 31, 2019. The additional $22,500 was retained by the investor for due diligence and legal bills for the transaction and was recorded as a debt discount. Note Thirteen will mature on July 11, 2020 and bear interest at a rate of 10% per annum, payable by the Company in cash. The principal balance of Note Thirteen is convertible at the election of the investor, in whole or in part, at any time or from time to time, into the Company's common stock at $0.90 per share for the first 6 months and thereafter at the lower of $0.90 per share or at 70% of the average of the five lowest daily VWAPs of the Company's common stock during the 15 consecutive trading days prior to the date on which the investor elects to convert all or part of Note Thirteen. In conjunction with Note Thirteen, the Company issued a warrant to the investor to purchase 25,000 shares of the Company's common stock at $1.00 per share.

The Company evaluated Note Thirteen in accordance with ASC 480, Distinguishing Liabilities from Equity and determined Note Thirteen will be accounted for as a liability initially measured at fair value and subsequently at fair value with changes in fair value recognized in earnings. As of December 31, 2019, the fair value of Note Thirteen was $230,000. Accordingly, the Company recorded a change in fair value of ($220,000) related to Note Thirteen for the year ended December 31, 2019. As of March 31, 2020, the fair value of Note Thirteen was $57,500. Accordingly, the Company recorded a change in fair value of ($172,500) related to Note Thirteen for the three months ended March 31, 2020.

In addition, the company recorded a debt discount of $33,943 relating to the warrants issued in the amount of $11,443 based on the residual fair value of the warrants themselves at inception of Note Thirteen and $22,500 relating to legal fees. Debt discounts amortized to interest expense were $10,034 for the year ended December 31, 2019. The unamortized discount balance at December 31, 2019 was $23,909. Accrued interest expense associated with Note Thirteen was $16,022 as of December 31, 2019. Debt discounts amortized to interest expense were $11,273 for the three months ended March 31, 2020. The unamortized discount balance at March 31, 2020 was $12,636. Accrued interest expense associated with Note Thirteen was $33,956 as of March 31, 2020.

On December 26, 2019, the Company entered into a $210,526 Fixed Convertible Promissory Note ("Note Fourteen") with the investor. The investor provided the Company with $200,000 in cash proceeds, which was received by the Company during the period ended December 31, 2019. The additional $10,526 was retained by the investor for due diligence and legal bills for the transaction and was recorded as a debt discount. Note Fourteen will mature on September 26, 2020 and bear interest at a rate of 12% per annum, payable by the Company in cash. The principal balance of Note Fourteen is convertible at the election of the investor, in whole or in part, at any time or from time to time, into the Company's common stock at $0.90 per share for the first 6 months and thereafter at the lower of $0.90 per share or at 70% of the average of the five lowest daily VWAPs of the Company's common stock during the 15 consecutive trading days prior to the date on which the investor elects to convert all or part of Note Fourteen. In conjunction with Note Fourteen, the Company issued a warrant to the investor to purchase 12,500 shares of the Company's common stock at $1.00 per share.

The Company evaluated Note Fourteen in accordance with ASC 480, Distinguishing Liabilities from Equity and determined Note Fourteen will be accounted for as a liability initially measured at fair value and subsequently at fair value with changes in fair value recognized in earnings. As of December 31, 2019, the fair value of Note Fourteen was $107,602. Accordingly, the Company recorded a change in fair value of $102,924 related to Note Fourteen for the year ended December 31, 2019. As of March 31, 2020, the fair value of Note Fourteen was $26,901. Accordingly, the Company recorded a change in fair value of ($80,701) related to Note Fourteen for the three months ended March 31, 2020.

In addition, the company recorded a debt discount of $15,794 relating to the warrants issued in the amount of $5,268 based on the residual fair value of the warrants themselves at inception of Note Fourteen and $10,526 relating to legal fees. Debt discounts amortized to interest expense were $287 for the year ended December 31, 2019. The unamortized discount balance at December 31, 2019 was $15,507. Accrued interest expense associated with Note Fourteen was $463 as of December 31, 2019. Debt discounts amortized to interest expense were $5,226 for the three months ended March 31, 2020. The unamortized discount balance at March 31, 2020 was $10,281. Accrued interest expense associated with Note Fourteen was $8,884 as of March 31, 2020.

On November 15, 2019, the Company entered into a $5,000,000 Unsecured Convertible Promissory Note ("Note Fifteen") with the investor. The investor provided the Company with $385,000 in cash proceeds, which was received by the Company during the period ended December 31, 2019. Note Fifteen will mature on November 15, 2021 and bear interest at a rate of 12% per annum, payable by the Company in cash. The principal balance of Note Fifteen is convertible at the election of the investor, in whole or in part, at any time or from time to time, into the Company's common stock at 70% of the average of the five lowest daily VWAPs of the Company's common stock during the 15 consecutive trading days prior to the date on which the investor elects to convert all or part of Note Fifteen. As of March 31, 2020 and December 31, 2019, the balance of Note Fifteen was $385,000. Accrued interest expense associated with Note Fifteen was $16,966 and $5,239 as of March 31, 2020 and December 31, 2019, respectively.

XML

Commitments and Contingencies (Details 1) - Operating Lease [Member]	3 Months Ended
	Mar. 31, 2020 USD ($)
Other assets	$ 1,322,433
Accounts payable and accrued liabilities	299,118
Other long-term liabilities	1,077,834
Total lease liabilities	$ 1,376,952
Weighted average remaining lease term (in years)	4 years 4 days
Weighted average discount rate	7.85%

XML

Warrant Liability (Details Textual) - USD ($)								1 Months Ended				3 Months Ended			12 Months Ended
	Nov. 01, 2019	Sep. 16, 2019	Aug. 15, 2019	Jun. 14, 2019	Mar. 05, 2019	Mar. 02, 2019	Jan. 10, 2019	Jan. 28, 2020	Dec. 26, 2019	Jun. 24, 2019	Mar. 31, 2019	Mar. 31, 2020	Sep. 30, 2019	Mar. 31, 2019	Oct. 11, 2020	Dec. 31, 2019	Oct. 11, 2019
Debt Instrument [Line Items]
Warrants exercise price												$ 0.52				$ 0.53
Fair value of the warrant liability												$ 113,942				$ 715,259
Change in fair value of warrant liability												(657,525)		$ 1,632,956
Warrant [Member]
Debt Instrument [Line Items]
Fair value of the warrant liability	$ 37,889											9,123
Change in fair value of warrant liability												$ 30,940
Stock issued	$ 100,000
Purchase price per share	$ 0.435
Description of warrant exercise term												The warrants are exercisable at any time after the issuance date within five years of issuance.
Second Investment Agreement [Member]
Debt Instrument [Line Items]
Fair value of the warrant liability												$ 38,832
Change in fair value of warrant liability												44,754	$ 34,241
Investment unit purchase agreement, description										The investor is entitled to purchase from the Company, at the exercise price, at any time on or after 90 days from the issuance date, 83,333 shares of the Company’s common stock (the “June Warrant Shares”).
Stock issued										$ 150,000
Stock issued, shares										166,667
Purchase price per share										$ 0.90
Fair value warrant shares at issuance										$ 83,586
Investment Unit Purchase Agreement [Member]
Debt Instrument [Line Items]
Fair value of the warrant liability								$ 56,208				11,846
Change in fair value of warrant liability												44,363
Investment unit purchase agreement, description				The Company entered into another Investment Unit Purchase Agreement (the "Second Investment Agreement") to issue and sell investment units to an investor (the "investor"), in which the investment units consist of one share of the common stock of the Company, and a warrant exercisable for one half share of common stock of the Company at an exercise price of $1.25 per share for cash at a price per investment unit of $0.90.				The Company entered into a subscription agreement with an investor for the purchase of 270,270 shares of the Company's common stock and 135,135 warrants to purchase shares of the Company's common stock at $0.40 per share for total gross proceeds of $100,000.
Note Eleven [Member]
Debt Instrument [Line Items]
Fair value of the warrant liability			$ 18,542									1,999
Change in fair value of warrant liability												7,131
Stock issued			$ 25,000
Purchase price per share			$ 1.00
Description of warrant exercise term			Exercise of the purchase rights represented by the warrant may be made, in whole or in part, at any time or times on or after August 15, 2019 and on or before August 15, 2024, by delivery to the Company of the Notice of Exercise.
Note Twelve [Member]
Debt Instrument [Line Items]
Fair value of the warrant liability												2,024
Change in fair value of warrant liability												7,170
Stock issued		$ 25,000
Purchase price per share		$ 1.00
Description of warrant exercise term		Exercise of the purchase rights represented by the warrant may be made, in whole or in part, at any time or times on or after September 16, 2019 and on or before September 16, 2024, by delivery to the Company of the Notice of Exercise.
Note Thirteen [Member]
Debt Instrument [Line Items]
Fair value of the warrant liability												2,040			$ 11,443
Change in fair value of warrant liability												7,196
Stock issued															$ 25,000
Purchase price per share																	$ 1.00
Description of warrant exercise term															Exercise of the purchase rights represented by the warrant may be made, in whole or in part, at any time or times on or after October 11, 2019 and on or before October 11, 2024, by delivery to the Company of the Notice of Exercise.
Note Fourteen [Member]
Debt Instrument [Line Items]
Fair value of the warrant liability									$ 5,268			1,048
Change in fair value of warrant liability												$ 3,639
Stock issued									$ 12,500
Purchase price per share									$ 1.00
Description of warrant exercise term												Exercise of the purchase rights represented by the warrant may be made, in whole or in part, at any time or times on or after December 26, 2019 and on or before December 26, 2024, by delivery to the Company of the Notice of Exercise.
Warrant [Member]
Debt Instrument [Line Items]
Warrant exercisable, description							A warrant exercisable for one half share of common stock of the Company at an Exercise Price of $1.25 per share for cash at a price per investment unit of $0.90.
Warrants, description					The Company sold an aggregate of 1,255,222 units of the Company's securities to an investor at a purchase price of $0.90 per unit for total proceeds of $1,129,700. In connection with the First Investment Agreement, the investor is entitled to purchase from the Company, at the Exercise Price, at any time on or after 90 days from the issuance date, 627,611 shares of the Company's common stock (the "March Warrant Shares").		The warrant liability is required to be recorded at fair value with the excess of the fair value over the proceeds received recognized as a loss in earnings. The gross proceeds from the 1,255,222 investment units at $0.90 was $1,129,700. The fair value of the March Warrant Shares at issuance was $1,717,506.					At inception, March 11, 2019, the fair value of the warrant liability was $198,148 while as of March 31, 2020, the fair value of the warrant liability was $42,058. Accordingly, the Company recorded a change in fair value of the warrant liability of ($17,554) and related to the warrants for the three months ended March 31, 2020.
Issued warrants to purchase restricted shares											100,000
Warrant purchase price											$ 0.90
Fair value of the warrant liability											$ 198,148	$ 1,010,890
Change in fair value of warrant liability												3,462,745	1,224,601
Warrant [Member] | Note Ten [Member]
Debt Instrument [Line Items]
Warrant issued to purchase shares of common stock						160,715
Warrants exercise price						$ 1.40
Warrant [Member]
Debt Instrument [Line Items]
Fair value of the warrant liability												37,125
Change in fair value of warrant liability												$ 161,023	$ 45,037

XML

Convertible Notes Payable, Net of Discount (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Short-term Debt [Line Items]
Convertible note payable	$ 1,231,563	$ 1,217,492
Less: Current portion	(846,563)	(832,492)
Long-term portion	385,000	385,000
Note Ten, 25% convertible promissory note, fixed secured, maturing March 1, 2020, net of debt discount for warrants [Member]
Short-term Debt [Line Items]
Convertible note payable		143,630
Note Eleven, 10% convertible promissory note, fixed secured, maturing May 15, 2020, net of debt discount for warrants and legal fees [Member]
Short-term Debt [Line Items]
Convertible note payable	301,555	185,313
Note Twelve, 10% convertible promissory note, fixed secured, maturing June 16, 2020, net of debt discount for warrants and legal fees [Member]
Short-term Debt [Line Items]
Convertible note payable	483,524	205,363
Note Thirteen, 10% convertible promissory note, fixed secured, maturing July 11, 2020, net of debt discount for warrants and legal fees [Member]
Short-term Debt [Line Items]
Convertible note payable	44,864	206,091
Note Fourteen, 12% convertible promissory note, fixed secured, maturing September 26, 2020, net of debt discount for warrants and legal fees [Member]
Short-term Debt [Line Items]
Convertible note payable	16,620	92,095
Note Fifteen, 12% convertible promissory note, fixed secured, maturing November 15, 2021 [Member]
Short-term Debt [Line Items]
Convertible note payable	$ 385,000	$ 385,000

XML

Business Combinations (Details Textual) - USD ($)			1 Months Ended		3 Months Ended
	Sep. 10, 2019	Oct. 01, 2015	Apr. 02, 2019	Jun. 01, 2018	Mar. 31, 2020	Mar. 31, 2019	Aug. 03, 2018
Business Acquisition [Line Items]
Business acquisition, description		Effective October 1, 2015, for accounting purposes, as part of an acquisition amounting to a reorganization dated December 21, 2015, Helix Opportunities LLC exchanged 100% of Helix TCS, LLC and its wholly-owned subsidiaries, Security Consultants Group, LLC and Boss Security Solutions, Inc. to the Company in exchange for 20 million common shares and 1 million convertible preferred shares of the Company.		The Company issued 38,184,985 unregistered shares of its common stock to BioTrackTHC stockholders, of which 1,852,677 shares were held back to satisfy indemnification obligations in the BioTrackTHC Merger Agreement, if necessary. The Company also assumed the Bio-Tech Medical Software, Inc. 2014 Stock Incentive Plan (“BioTrackTHC Stock Plan”), pursuant to which options exercisable in the amount of 8,132,410 shares of common stock are outstanding. As a result, BioTrackTHC stockholders owned approximately 48% of the Company on a fully diluted basis as of the BioTrackTHC Closing Date.
Selling, general and administrative					$ 903,731	$ 936,878
Tan’s International Security [Member]
Business Acquisition [Line Items]
Business acquisition, description					Pursuant to the Tan Security Acquisition Agreement, Helix purchased all membership interests and capital stock of Tan Security and collectively holds 100% of the interests of Tan Security. The purchase price of $100,000 in cash plus 250,000 shares of the Company’s restricted common stock will be paid to Rocky Tan as follows: ● 250,000 shares of Helix Stock at closing. ● $25,000 at closing ● $25,000 on the 4-month anniversary of the Tan Security Closing Date ● $25,000 on the 8-month anniversary of the Tan Security Closing Date ● $25,000 on the 12-month anniversary of the Tan Security Closing Date
Deferred cash payment					$ 25,000
Engeni Acquisition Member [Member]
Business Acquisition [Line Items]
Business acquisition, description					The Company issued 366,700 shares of Company common stock to Engeni US members. Furthermore, the Company may also issue Engeni US members 366,700 and 366,600 shares of Parent common stock upon the achievement of specific objectives. If applicable, the Company will pay Engeni US members the aggregate amount of $100,000, on a pro rata basis, if Engeni SA reaches financial breakeven on or before December 31, 2018, as determined by the Company’s Chief Financial Officer and Scott Zienkewicz.
Fair value of contingent consideration							$ 777,298
Change in fair value of contingent consideration						$ 100,000
Common stock shares issued			733,300
Green Tree International, Inc. [Member] | Amercanex Merger Agreement [Member]
Business Acquisition [Line Items]
Business acquisition, description					Pursuant to the Amercanex Merger Agreement, at the effective time of the Merger (the “Effective Time”), the Company will issue to the GTI stockholders an amount of unregistered shares of the Company’s common stock equal to $15 million, based on the average closing price of the Company’s common stock over the forty-five (45) trading day period ending three (3) trading days prior to the Closing Date. If the Closing occurs and revenues of GTI in the second 12 month period following the Closing Date exceed $5 million and are less than or equal to $10 million, Parent shall issue to the Company Shareholders a number of unregistered Parent Shares (whether issued or reserved for issuance) equal to the quotient of (a) $5 million divided by (b) the Parent Share Price multiplied by the quotient of (c) the revenues of the Company in the second 12 month period following the Closing Date less $5 million divided by (d) $5 million. To secure the indemnification obligations of the GTI shareholders to the Company under the Merger Agreement, 30% of the Company shares to be issued to the GTI shareholders will be held back and the Company will be entitled to retain such number of the holdback shares as necessary to satisfy those indemnification obligations. 50% of the holdback shares that remain after satisfaction of any indemnification obligations will be released 12 months after the closing date of the merger, and the remainder 24 months after the closing date of the merger. Additionally, if in the first 12 months following the closing GTI generates less than $1.5 million of revenues, 100% of the holdback shares shall be returned to the Company.
Green Tree International, Inc. [Member] | Amercanex Merger Agreement [Member] | Unregistered Shares [Member]
Business Acquisition [Line Items]
Common stock shares issued	16,765,727

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Intangible Assets, Net and Goodwill (Details 1) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Balance	$ 53,716,206	$ 39,913,559
Goodwill attributable to Tan Security acquisition		821,807
Goodwill attributable to Green Tree acquisition		12,980,840
Balance	$ 53,716,206	$ 53,716,206

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Notes Payable (Details Textual) - USD ($)		3 Months Ended
	Feb. 07, 2020	Mar. 31, 2020	Mar. 31, 2019
Notes Payable [Line Items]
Interest expense associated with notes payable		$ 58,340	$ 1,791
Debt Description		In connection with the GTI Merger, the Company assumed a $400,000 Senior Secured Convertible Debenture (the "Convertible Debenture") (See Note 5). The Convertible Debenture will mature on July 31, 2021 and bears interest at a rate of 10% per annum, payable by the Company to the Lender. In the event that Lender elects to convert the Convertible Debenture into Helix Common Stock or in the event Helix required the Lender to convert the Convertible Debenture into its Common Stock, the number of shares that shall be issuable upon full Conversion of the Convertible Debenture at any time shall be equal to the outstanding principal of the Convertible Debenture divided by $1.00.
Bio-Tech Medical Software Inc [Member]
Notes Payable [Line Items]
Agreement of subsidiary	The Company and its subsidiary Bio-Tech Medical Software Inc. entered into an agreement for the purchase and sale of future receipts with Advantage Capital Funding. $485,000 was actually funded to the Company with a promise to pay $15,000 per week for 8 weeks and $20,000 per week for the next 27 weeks until a total of $660,000 is paid. $427,000 of principal remained outstanding as of March 31, 2020.
Vehicle Financing Loans Payable [Member] | Minimum [Member]
Notes Payable [Line Items]
Loans payable, interest rate		4.70%
Maturity date, description		June 2022
Vehicle Financing Loans Payable [Member] | Maximum [Member]
Notes Payable [Line Items]
Loans payable, interest rate		7.00%
Maturity date, description		July 2022

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Shareholders' Equity (Details Textual 2) - Series B Preferred Stock [Member] - USD ($)	Dec. 31, 2019	Aug. 23, 2017	May 12, 2017
Subsidiary or Equity Method Investee [Line Items]
Preferred stock, shares authorized		17,000,000	9,000,000
Preferred stock, par value			$ 0.001
Preferred stock original issue price	$ 0.3253815
Net cash proceeds	$ 50,000,000

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Going Concern Uncertainty, Financial Condition and Management's Plans

3 Months Ended

Mar. 31, 2020

Going Concern Uncertainty Financial Condition And Managements Plans [Abstract]

Going Concern Uncertainty, Financial Condition and Management's Plans

2. Going Concern Uncertainty, Financial Condition and Management’s Plans  

The Company believes that there is substantial doubt about the Company’s ability to continue as a going concern. The Company believes that its available cash balance as of the date of this filing will not be sufficient to fund its anticipated level of operations for at least the next 12 months. The Company believes that its ability to continue operations depends on its ability to sustain and grow revenue and results of operations as well as its ability to access capital markets when necessary to accomplish the Company’s strategic objectives. The Company believes that it will continue to incur losses for the immediate future. The Company expects to finance future cash needs from its results of operations and, depending on the results of operations, the Company may need additional equity or debt financing until it can achieve profitability and positive cash flows from operating activities, if ever. 

At March 31, 2020, the Company had a working capital deficit of $2,733,226, as compared to a working capital deficit of $3,416,501 at December 31, 2019. The decrease of $683,275 in the Company’s working capital deficit from December 31, 2019 to March 31, 2020 was primarily the result of a decrease in accounts payable and accrued expenses, a non-cash decrease in the fair market value of the Company’s convertible notes payable, net of discount – related party and a non-cash decrease in warrant liability, partially offset by an increase in notes payable and financing arrangements, current portion.

The Company’s future capital requirements for its operations will depend on many factors, including the profitability of its businesses, the number and cash requirements of other acquisition candidates that the Company pursues, and the costs of operations. The Company has been investing in expanding its operation in new states, its security service in Colorado and California, and upgrading the capabilities of BioTrackTHC. The Company’s management has taken several actions to ensure that it will have sufficient liquidity to meet its obligations for the next twelve months, including growing and diversifying its revenue streams, selectively reducing expenses, and considering additional funding. Additionally, if the Company’s actual revenues are less than forecasted, the Company anticipates that variable expenses will also decline, and the Company’s management can implement expense reduction as necessary. The Company is evaluating other measures to further improve its liquidity, including the sale of equity or debt securities. Lastly, the Company may elect to reduce certain related-party and third-party debt by converting such debt into common shares. The Company’s management believes that these actions will enable the Company to meet its liquidity requirements for the next twelve months. There is no assurance that the Company will be successful in any capital-raising efforts that it may undertake to fund operations during 2020 and beyond.  

The Company plans to generate positive cash flow from its Colorado and California security operations and BioTrackTHC to address some of the liquidity concerns. However, to execute the Company’s business plan, service existing indebtedness and implement its business strategy, the Company anticipates that it will need to obtain additional financing from time to time and may choose to raise additional funds through public or private equity or debt financings, borrowings from affiliates or other arrangements. The Company cannot be sure that any additional funding, if needed, will be available on terms favorable to the Company or at all. Furthermore, any additional capital raised through the sale of equity or equity-linked securities may dilute the Company’s current stockholders’ ownership and could also result in a decrease in the market price of the Company’s common stock. The terms of those securities issued by the Company in future capital transactions may be more favorable to new investors and may include the issuance of warrants or other derivative securities, which may have a further dilutive effect. The Company also may be required to recognize non-cash expenses in connection with certain securities it issues, such as convertible notes and warrants, which may adversely impact the Company’s operating results and financial condition. Furthermore, any debt financing, if available, may subject the Company to restrictive covenants and significant interest costs. There can be no assurance that the Company will be able to raise additional capital, when needed, to continue operations in their current form.

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenue:
Total revenues	$ 4,552,431	$ 3,371,107
Cost of revenue	2,266,679	1,925,219
Gross margin	2,285,752	1,445,888
Operating expenses:
Selling, general and administrative	903,731	936,878
Salaries and wages	1,731,061	1,251,577
Professional and legal fees	474,417	688,455
Depreciation and amortization	1,222,592	1,165,641
Loss on impairment of intangible assets	1,369,978
Total operating expenses	5,701,779	4,042,551
Loss from operations	(3,416,027)	(2,596,663)
Other income (expenses):
Change in fair value of convertible note	(339,620)	(987,963)
Change in fair value of convertible note - related party	498,233	(3,524,009)
Change in fair value of warrant liability	657,525	(1,632,956)
Change in fair value of contingent consideration		(1,136,700)
Loss on issuance of warrants		(787,209)
Interest (expense) income	(503,842)	(176,201)
Other income	37,507
Other income (expenses)	349,803	(8,245,038)
Net income (loss)	(3,066,224)	(10,841,701)
Other comprehensive (loss) income:
Changes in foreign currency translation adjustment	21,077	4,247
Total other comprehensive (loss) income	21,077	4,247
Total comprehensive income (loss)	(3,045,147)	(10,837,454)
Net income (loss) attributable to common shareholders	$ (3,045,147)	$ (10,837,454)
Net income (loss) per share attributable to common shareholders:
Basic	$ (0.03)	$ (0.15)
Diluted	$ (0.03)	$ (0.15)
Weighted average common shares outstanding:
Basic	94,694,656	73,163,893
Diluted	94,694,656	73,163,893
Security And Guarding [Member]
Revenue:
Total revenues	$ 1,593,449	$ 1,204,711
Systems Installation [Member]
Revenue:
Total revenues	174,946	28,541
Software [Member]
Revenue:
Total revenues	$ 2,784,036	$ 2,137,855

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Summary of Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Allowance for doubtful accounts	$ 348,068		$ 273,138
Lease agreements, description	Adoption of the standard resulted in the balance sheet recognition of additional lease assets and lease liabilities of approximately $1,500,000. The new standard also provides practical expedients for an entity’s ongoing accounting. The Company currently has elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, the Company will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in separate lease and non-lease components for all our leases.
Advertising expense	$ 5,420	$ 69,271
Furniture and equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment estimated useful lives	5 years
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Property and equipment estimated useful lives	3 years

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Segment Results (Tables)

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Schedule of represents selected information reportable segments

	For the Three Months Ended March 31,
	2020			2019
Security and guarding
Revenue	$	1,593,449		$	1,204,711
Cost of revenue		1,315,744			940,586
Gross profit		277,705			264,125
Total operating expenses		3,308,124			1,733,707
Loss from operations		(3,030,419	)		(1,469,582	)
Total other (expense) income		406,993			(8,244,950	)
Total net loss	$	(2,623,426	)	$	(9,714,532	)
Adjusted EBITDA	$	(726,434	)	$	(878,146	)
Systems installation
Revenue	$	174,946		$	28,541
Cost of revenue		127,701			161,758
Gross profit		47,245			(133,217	)
Total operating expenses		180,088			32,631
Loss from operations		(132,843	)		(165,848	)
Total other income (expense)		(185	)		(80	)
Total net loss	$	(133,028	)	$	(165,928	)
Adjusted EBITDA	$	(132,843	)	$	(165,848	)
Software
Revenue	$	2,784,036		$	2,137,855
Cost of revenue		823,234			822,875
Gross profit		1,960,802			1,314,980
Total operating expenses		2,213,567			2,276,213
Loss from operations		(252,765	)		(961,233	)
Total other expense		(57,005	)		(8	)
Total net loss	$	(309,770	)	$	(961,241	)
Adjusted EBITDA	$	779,882		$	21,907

Schedule of net loss is reconciled to adjusted EBITDA 

	For the Three Months Ended March 31
	2020			2019
Net Loss	$	(3,066,224	)	$	(10,841,701	)
Interest expense		503,842			176,201
Depreciation and amortization		1,222,592			1,165,641
Loss on impairment of intangible assets		1,369,978			-
Share based compensation expense		744,062			408,935
Change in fair value of convertible note		339,620			987,963
Change in fair value of convertible note - related party		(498,233	)		3,524,009
Change in fair value of warrant liability		(657,525	)		1,632,956
Change in fair value of contingent consideration		-			1,136,700
Loss on issuance of warrants		-			787,209
Other income		(37,507	)		-
Adjusted EBITDA (1)	$	(79,395	)	$	(1,022,087	)

⁽¹⁾ See "Non-GAAP Financial Measures" within Part I, Item 2, Management's Discussion and Analysis.

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Business Combinations (Details 1)	3 Months Ended
	Mar. 31, 2020 USD ($)
Green Tree International, Inc. [Member]
Assets acquired:
Note Receivable, net	$ 135,000
Property, plant and equipment, net	12,142
Goodwill	12,980,840
Software	452,002
Total assets acquired	13,579,984
Liabilities assumed:
Accounts payable	43,717
Notes Payable	400,000
Other liabilities	226,656
Total liabilities assumed	670,373
Estimated fair value of net assets acquired	$ 12,909,611
Green Tree International, Inc. [Member] | Trademarks [Member]
Liabilities assumed:
Weighted Average Useful Life (in years)	4 years 6 months
Tan International Security [Member]
Assets acquired:
Cash	$ 2,940
Accounts receivable	7,635
Goodwill	821,807
Total assets acquired	832,382
Liabilities assumed:
Accounts payable	12,526
Other liabilities	9,856
Total liabilities assumed	22,382
Estimated fair value of net assets acquired	810,000
Engeni SA Acquisition [Member]
Assets acquired:
Cash	5,609
Accounts receivable and other assets	30,479
Property, plant and equipment, net	57,830
Goodwill	778,552
Software	449,568
Total assets acquired	1,322,038
Liabilities assumed:
Accounts payable	56,038
Total liabilities assumed	56,038
Estimated fair value of net assets acquired	$ 1,266,000
Weighted Average Useful Life (in years)	3 years 3 months 19 days

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Schedule of anti-dilutive shares of common stock outstanding

	For the Three Months Ended March 31,
	2020		2019
Potentially dilutive securities:
Convertible notes payable		18,889,749		2,340,936
Convertible Preferred A Stock		1,000,000		1,000,000
Convertible Preferred B Stock		13,784,201		13,784,201
Warrants		5,248,193		4,842,225
Stock options		11,072,711		9,560,534

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Stock Options

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

Stock Options

14. Stock Options

On February 21, 2020 the Company awarded the Chief Financial Officer, an option to purchase a total of 200,000 shares of the Company's common stock at a price of $0.385 per share. These options vested immediately upon grant and expire on February 21, 2025.

On March 31, 2020 the Company awarded an employee (who is also a board member), two options to purchase a total of 800,000 shares of the Company's common stock at a price of $0.115 per share. Out of the 800,000 total, 100,000 options vested immediately upon grant, 100,000 vest on 8/15/2020 and the remaining 600,000 have milestone performance vests through December 31 2020. As of March 31, 2020, none of the milestone performance awards had vested. These options expire on March 31, 2025.

During the three months ended March 31, 2020 the Company awarded certain consultants options to purchase 165,000 shares of the Company's common stock at process ranging from $0.20 to $0.46 per share. These options vested immediately and expire three years from issuance.

On February 29, 2020, the former President of the Company's BioTrackTHC subsidiary forfeited 1,430,306 BioTrackTHC Management Awards and 204,364 Bio-Tech Medical Software, Inc. 2014 Stock Incentive Plan stock options as a result of his termination (See Note 16).

During the three months ended March 31, 2020, 75,000 employee options grants were forfeited as they had not yet vested prior to the employees' separation from the Company.

On February 6, 2019 the Company awarded an executive an option to purchase a total of 100,000 shares of the Company's common stock at an exercise price $1.51 per share. These options vested on May 6, 2019 and have an expiration date of February 6, 2024.

On March 19, 2019 the Company awarded the Chief Financial Officer, two options to purchase a total of 300,000 shares of the Company's common stock at prices ranging from $2.35 to $2.59 per share. These options shall vest over a three-year period from March 2020 to March 2022 and have expiration dates ranging from March 2024 to March 2029.

On March 19, 2019 the Company awarded the Chief Executive Officer, two options to purchase a total of 500,000 shares of the Company's common stock at prices ranging from $2.35 to $2.59 per share. These options shall vest over a three-year period from March 2020 to March 2022 and have expiration dates ranging from March 2024 to March 2029.

Stock option activity for the period ended March 31, 2020 is as follows:

	Shares Underlying Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Outstanding at January 1, 2020		11,617,381		$	0.807		3.21
Granted		1,165,000		$	0.186		4.68
Exercised		-		$	-		-
Forfeited and expired		(1,709,670	)	$	0.697		0.70
Outstanding at March 31, 2020		11,072,711		$	0.759		3.75
Vested options at March 31, 2020		8,441,877		$	0.728		1.99

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

18. Commitments and Contingencies

Under Topic 842, operating lease expense is generally recognized evenly on a straight-line basis. The Company has operating leases primarily consisting of facilities with remaining lease terms of one year to five years. The lease term represents the period up to the early termination date unless it is reasonably certain that the Company will not exercise the early termination option. Certain leases include rental payments that are adjusted periodically based on changes in consumer price and other indices.

Leases with an initial term of twelve months or less are not recorded on the condensed consolidated balance sheet. For lease agreements entered into or reassessed after the adoption of Topic 842, the Company combines the lease and non-lease components in determining the lease liabilities and ROU assets.

Activity related to the Company's leases was as follows:

	Three Months Ended March 31, 2020
Operating lease expense	$	95,740
Cash paid for amounts included in the measurement of operating lease liabilities	$	101,217
ROU assets obtained in exchange for operating lease obligations	$	301,396

The Company's lease agreements generally do not provide an implicit borrowing rate, therefore an internal incremental borrowing rate is determined based on information available at lease commencement date for purposes of determining the present value of lease payments. The Company used the incremental borrowing rate on December 31, 2018 for all leases that commenced prior to that date.

ROU lease assets and lease liabilities for the Company's operating leases were recorded in the condensed consolidated balance sheet as follows:

	As of March 31, 2020
Other assets	$	1,322,433
Accounts payable and accrued liabilities	$	299,118
Other long-term liabilities		1,077,834
Total lease liabilities	$	1,376,952
Weighted average remaining lease term (in years)		4.01
Weighted average discount rate		7.85	%

Future lease payments included in the measurement of lease liabilities on the condensed consolidated balance sheet as of March 31, 2020, for the following five fiscal years and thereafter were as follows:

	As of March 31, 2020
2020 - Remaining		275,455
2021		337,346
2022		307,280
2023		287,578
2024		294,186
Thereafter		106,075
Total future minimum lease payments	$	1,607,920
Less imputed interest		(230,968	)
Total	$	1,376,952

As of March 31, 2020, the Company had additional operating lease obligations for a lease with a future effective date of approximately $600,000. This operating lease will commence during the first quarter of fiscal 2022 with a lease term of three years.