SCHEDULE
14C
Information Required in Proxy Statement
Pursuant to Section 14(a) of the Securities Exchange Act of
1934
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Preliminary Information Statement
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Definitive Information Statement
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Zerify, Inc.
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(Name of Company As
Specified In Charter)
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(formally known as
StrikeForce Technologies, Inc.)
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Not Applicable
(Name of Person(s) Filing the Information Statement if
other than Company)
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Fee computed on table below per Exchange Act Rules 14c-5(g)
and 0-11.
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Title of each class of securities to which transaction
applies:
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Common Stock, par value $0.0001 per share
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Aggregate number of securities to which transaction
applies:
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414,175,948 Common Stock; 3 Class A Preferred Stock; 36,667 Class B
Preferred Stock
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Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
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Proposed maximum aggregate value of
transaction:
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Act Rule 0-11(a)(2) and identify the filing for which the
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registration statement number, or the Form or Schedule and the date
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1)
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Form, Schedule or Registration
Statement No.:
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INFORMATION STATEMENT
PURSUANT TO SECTION 14 OF THE SECURITIES EXCHANGE ACT OF
1934,
AS AMENDED, AND REGULATION 14C AND SCHEDULE 14C
THEREUNDER
Zerify, Inc.
(Formally known as StrikeForce Technologies,
Inc.)
1090 King Georges Post Road
Suite #603
Edison, NJ 08837
(732) 661 9641
Facsimile: (732) 661-9647
Email: marklkay@strikeforcetech.com
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
INTRODUCTION
This notice and information statement (the “Information Statement”)
will be mailed on or about June 27, 2022 to the stockholders of
record, a Wyoming corporation (the “Company”) pursuant to:
Section 14(c) of the Exchange Act of 1934, as amended.
This Information Statement is circulated to advise the
shareholders of action already approved and taken without a meeting
by written consent of three stockholders (management) holding a
total of three Series A Preferred Shares (The three shares
of Series A Preferred Shares held by management equals 80% of the
current and outstanding preferred shares, (which are converted to
common shares strictly for voting rights purposes only and are
calculated by multiplying the number of current outstanding
preferred and common shares times four. Pursuant to Rule 14c-2
under the Securities Exchange Act of 1934, as amended, the
corporate actions described in this Notice can be taken no sooner
than 20 calendar days after the accompanying Information Statement
is first sent or given to the Company’s stockholders.
Please review the Information Statement included with this Notice
for a more complete description of this matter. This Information
Statement is being sent to you for informational purposes only.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT
TO SEND US A PROXY.
The actions to be effective twenty days after the mailing of this
Information Statement are as follows:
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(1)
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To elect three members to the Company’s Board
of Directors to hold office until the Company’s next Annual Meeting
of Stockholders in 2023 or until each Director’s successor is duly
elected and qualified; and
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(2)
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To ratify the appointment of Weinberg and
Company, PA, as the Company’s independent certified public
accountants; and
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(3)
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To change the name of the Company to Zerify,
Inc.
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The Reduction in Authorized described in the accompanying
Information Statement, will be effective as of the filing of
amendment to the Company’s Certificate of Incorporation with the
Wyoming Secretary of State, have been duly authorized and approved
by the written consent of the holders of a majority of the voting
capital shares of the Company’s issued and outstanding voting
securities, your vote or consent is not requested or required. The
accompanying Information Statement is provided solely for your
information. The accompanying Information Statement also serves as
the notice required by the Section 17-16-724 of the Wyoming
Statutes of the taking of a corporate action without a meeting by
less than unanimous written consent of the Company’s
stockholders.
By order of the Board of Directors,
Mark L. Kay
Chief Executive Officer
June 17th, 2022
The elimination of the need for a meeting of stockholders to
approve this action is made possible by Wyoming Statutes which
provides that the written consent of the holders of outstanding
shares of voting capital stock, having not less than the minimum
number of votes which would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon
were present and voted, may be substituted for such a meeting. In
order to eliminate the costs involved in holding a special meeting
of our stockholders, our Board of Directors voted to utilize the
written consent of the holders of a majority in interest of our
voting securities. This Information Statement is circulated
to advise the shareholders of action already approved by written
consent of the shareholders who collectively hold a majority of the
voting power of our capital stock.
The Board of Directors determined to forgo a “live” annual
meeting in lieu of a permissible annual meeting by written consent
as a precautionary measure as a consequence of the current
pandemic.
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 PROVIDES A
“SAFE HARBOR” FOR FORWARD LOOKING STATEMENTS.
This Information Statement contains statements that are not
historical facts. These statements are called “forward-looking
statements” within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These statements involve important known and
unknown risks, uncertainties and other factors and can be
identified by phrases using “estimate,” “anticipate,” “believe,”
“project,” “expect,” “intend,” “predict,” “potential,” “future,”
“may,” “should” and similar expressions or words. Our future
results, performance or achievements may differ materially from the
results, performance or achievements discussed in the
forward-looking statements. There are numerous factors that could
cause actual results to differ materially from the results
discussed in forward-looking statements, including:
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Changes in relationships and market
for the development of the business of the Company that would
affect our earnings and financial position. |
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Considerable financial
uncertainties that could impact the profitability of our
business. |
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Factors that we have discussed in
previous public reports and other documents filed with the
Securities and Exchange Commission. |
This list provides examples of factors that could affect the
results described by forward-looking statements contained in this
Information Statement. However, this list is not intended to be
exhaustive; many other factors could impact our business and it is
impossible to predict with any accuracy which factors could result
in which negative impacts. Although we believe that the
forward-looking statements contained in this Information Statement
are reasonable, we cannot provide you with any guarantee that the
anticipated results will be achieved. All forward-looking
statements in this Information Statement are expressly qualified in
their entirety by the cautionary statements contained in this
section and you are cautioned not to place undue reliance on the
forward-looking statements contained in this Information Statement.
In addition to the risks listed above, other risks may arise in the
future, and we disclaim any obligation to update information
contained in any forward-looking statement.
TABLE OF CONTENTS
STRIKEFORCE TECHNOLOGIES, INC.
1090 King Georges Post Road
Suite #603
Edison, NJ 08837
(732) 661-9641
Facsimile: (732) 661-9647
Email: marklkay@strikeforcetech.com
This Information Statement is being furnished by StrikeForce
Technologies, Inc., a Wyoming corporation (“we,” “us,” “our” or the
“Company”), in connection with action taken by the holders of a
majority of the voting power of the Company’s issued and
outstanding voting securities. By written consent dated June 14,
2022, the holders of a majority of the voting power approved (i)
the re-election of the members of our Board of Directors, (ii) the
ratification of the appointment of Weinberg and Company, PA, as the
Company’s independent certified public accountants, (iii) to amend
our Articles of Incorporation to change our name to Zerify, Inc. We
are first sending or giving this Information Statement on or after
June 27, 2022 to our stockholders of record as of the close of
business on or about June 14, 2022 (the “Record Date”). Our
principal executive offices are located at 1090 King Georges Post
Road, Suite #603, Edison, NJ 08837 and our main telephone number is
(732) 661-9641.
BOARD AND SHAREHOLDER APPROVAL OF THE NAME
CHANGE
On June 14, 2022, the Board of Directors and holders of a majority
of the voting power approved a resolution to change our name from
StrikeForce Technologies, Inc. to Zerify, Inc.
SUMMARY OF THE NAME CHANGE
The Board of Directors believes that the reason for the name
change, among other reasons, is that it will better reflect the
business plans of the Company reflected in the current cyber
security software and in the name Zerify which emphasizes the
Company’s mission to ensure Zero-Trust for the most secure
collaborative communications and that every participant is verified
prior to entering a video conference. Learn more
at www.zerify.com (which website is expressly not
incorporated into this Information Statement)
On April 26, 2022, the Company applied for the Zerify trademark.
ZERIFY™ trademark registration is intended to cover the categories
of downloadable or recorded computer software for encryption;
downloadable or recorded computer software for cyber security
assessment and protection; anti-spyware software; downloadable or
recorded computer application software for mobile devices, namely,
software for protecting people from identity theft; downloadable or
recorded computer software for guarding users of computers and
remote access devices from identity theft, featuring various
software tools, namely, anti-keyboard logger and keyboard stroke
encryption.
Following this filing, the Company will notify FINRA and is await
formal acknowledgment. The symbol may be changed to reflect the new
name.
Zerify, Inc.
Zerify developed a video conferencing solution that uses no desktop
client and is entirely web-based, offering a five-level meeting
security control approach designed to protect valuable information.
Features include keystroke protection, anti-screen capture, push
and biometric authentication to keep businesses secure. The
technology also offers protection for cameras, microphones and
speakers, keeping computers and confidential data secure even when
one is offline and not on a video conference. No other video
conferencing service on the market, to our knowledge, such as Zoom,
Webex, LogMeIn, MS Teams or BlueJeans, offers these
protections.
The five levels of security prioritization were described in a
research-driven whitepaper (which in expressly not incorporated by
reference into this Information Statement)
(riven whitepaper by industry analyst firm AITE
Novarica in collaboration with Zerify. Each classification level is
mapped to recognized control frameworks (PCI, HIPAA, NIST, CISA,
GDPR) as well as an organization’s unique policies, standards, and
guidelines for the protection of sensitive information.
We changed our name to Zerify to highlight the prioritization of
its secure video conferencing solutions.
The name Zerify emphasizes the company’s mission to ensure
Zero-Trust for secure collaboration & communications and that
every participant is verified prior to entering a video conference.
The Zerify products include:
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Zerify Meet – The
industry’s only zero-trust video conferencing platform, which
authenticates every user prior to joining a meeting |
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Zerify
Defender – Locks down one’s desktop camera, microphone,
speakers, keyboard, and clipboard and prevents screen scraping
malware. It protects all video conferencing platforms, including
Zoom, MS teams and Webex (formally known as PrivacyLok™)
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Zerify API –
Enables businesses of any size to easily integrate secure video
conferencing into all types of applications: CRM, EPR’s and legacy
applications |
The
Action by Written Consent
On June 14, 2022, along with the above name change, the holders of
a majority of the voting power approved the following:
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the re-election of the members of our Board
of Directors,
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the ratification of the appointment of
Weinberg and Company, PA, as the Company’s independent certified
public accountants,
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The holders of a majority of the votes of the Company’s outstanding
voting securities are comprised of three shares of Series A
Preferred Shares which equals 80% of the current and outstanding
preferred shares (calculated by multiplying the number of current
outstanding preferred and common shares by four (4)), for voting
purposes only, held by management, added to the current outstanding
common and preferred shares; thus, combined with
the 1,010,647,831 issued and outstanding shares of common
stock and preferred shares, there would be a total 5,053,239,155
voting capital shares of which 4,042,591,324 have voted in favor of
the action. These Preferred Series ‘A’ Shares are not convertible
to shares of Common Stock. The Reverse Stock Split will not affect
any convertible securities currently outstanding (including the
Series B Preferred Shares), other than a few Convertible Promissory
notes with fixed convertible prices, as such securities convert for
the most part based on a percentage calculation related to stock
price alone.
No
Further Voting Required
We are not seeking consent, authorizations, or proxies from you.
Section 17-16-724 of the Wyoming Statutes and our bylaws provide
that actions requiring a vote of the stockholders may be approved
by written consent of the holders of outstanding shares of voting
capital stock having not less than the minimum number of votes
which would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present
and voted. The approval by at least a majority of the outstanding
voting power of our voting securities is required to approve the
Reverse Stock Split and the decrease in the authorized shares of
common stock.
Notice Pursuant to the Wyoming Statutes
Pursuant to the Wyoming Statutes, we are required to provide prompt
notice of the taking of corporate action by written consent to our
stockholders who have not consented in writing to such action. This
Information Statement serves as the notice required by the Wyoming
Statutes.
Dissenters’ Rights of Appraisal
The Wyoming Statutes does not provide dissenters’ rights of
appraisal to our stockholders in connection with the matters
approved by the Written Consent.
SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This Information Statement and any documents incorporated by
reference herein or therein contain forward-looking statements and
are subject to risks and uncertainties. All statements other than
statements of historical fact or relating to present facts or
current conditions included in this Information Statement and any
documents incorporated by reference are forward-looking statements.
Forward-looking statements give the Company’s current reasonable
expectations and projections relating to its financial condition,
results of operations, plans, objectives, future performance and
business. You can identify forward-looking statements by the fact
that they do not relate strictly to historical or current facts.
These statements may include words such as ‘‘anticipate,’’
‘‘estimate,’’ ‘‘expect,’’ ‘‘project,’’ ‘‘plan,’’ ‘‘intend,’’
‘‘believe,’’ ‘‘may,’’ ‘‘should,’’ ‘‘can have,’’ ‘likely’’ and other
words and terms of similar, meaning in connection with any
discussion of the timing or nature of future operating or financial
performance or other events. The forward-looking statements
contained in this Information Statement and any documents
incorporated by reference herein or therein are based on reasonable
assumptions the Company has made in light of its industry
experience, perceptions of historical trends, current conditions,
expected future developments and other factors it believes are
appropriate under the circumstances. As you read and consider this
Information Statement and any documents incorporated by reference,
you should understand that these statements are not guarantees of
performance or results. They involve risks, uncertainties (many of
which are beyond the Company’s control) and assumptions. Although
the Company believes that these forward-looking statements are
based on reasonable assumptions, you should be aware that many
factors could affect its actual operating and financial performance
and cause its performance to differ materially from the performance
anticipated in the forward-looking statements. Should one or more
of these risks or uncertainties materialize or should any of these
assumptions prove incorrect or change, the Company’s actual
operating and financial performance may vary in material respects
from the performance projected in these forward- looking
statements. Any forward-looking statement made by the Company in
this Information Statement or any documents incorporated by
reference herein speaks only as of the date of this Information
Statement or any documents incorporated by reference herein.
Factors or events that could cause our actual operating and
financial performance to differ may emerge from time to time, and
it is not possible for the Company to predict all of them. The
Company undertakes no obligation to update any forward-looking
statement, whether as a result of new information, future
developments or otherwise, except as may be required by law.
Although the forward-looking statements in this Information
Statement are based on our beliefs, assumptions and expectations,
taking into account all information currently available to us, we
cannot guarantee future transactions, results, performance,
achievements or outcomes. No assurance can be made to any investor
by anyone that the expectations reflected in our forward-looking
statements will be attained, or that deviations from them will not
be material and adverse. We undertake no obligation, other than as
maybe be required by law, to re-issue this Information Statement or
otherwise make public statements updating our forward-looking
statements.
In March 2020, the World Health Organization declared the spread of
COVID-19 a pandemic. This outbreak continues to spread throughout
the U.S. and around the world. As a result, authorities
continue to implement numerous measures to try to contain the
virus, including restrictions on travel, quarantines,
shelter-in-place orders, business restrictions and complete
shutdowns. We are not considered an “essential business” due to the
industries and customers we serve. As of, and subsequent to, March
31, 2022, we have been following the recommendations of the CDC and
state/local health authorities to minimize exposure risk for our
team members during the pandemic, including the temporary closure
of our corporate office and having our team members work remotely.
During the second quarter of 2021, we reopened our corporate office
while continuing to adhere to the guidelines issued by health
authorities. Many customers and vendors have transitioned to
electronic submission of invoices and payments. The COVID-19
pandemic has resulted in longer response times from potential new
customers and certain existing customers. We cannot anticipate the
effect that the impairments caused by the COVID-19 pandemic will
have on our fiscal 2022 or 2023 results, or the effectiveness and
distributions of vaccines, boosters, and their distribution in 2022
and 2023, changes to mask mandate policies and to transitioning
from a pandemic to an endemic. The pandemic has significantly
impacted the economic conditions both in the United States and
worldwide, with accelerated effects through the date of this
report, as federal, state and local governments react to the public
health crisis, creating significant uncertainties in both the
worldwide and the United States economies. The situation is rapidly
changing, including the onset of the ongoing subsequent waves of
the virus caused by the possibility of various variants over time,
and additional impacts to our business may arise that we are not
aware of currently. We cannot predict whether, when or the manner
in which, the conditions surrounding COVID-19 will change
including the timing of lifting any restrictions or office closure
requirements. We will continue to evaluate the nature and extent of
COVID-19’s impact to our business, consolidated results of
operations, financial condition and liquidity, and our results
presented herein are not necessarily indicative of the results to
be expected for future periods.
During the three months ended March 31, 2022, we believe the
COVID-19 pandemic did impact our operating results as sales to
customers were down 30% as compared from the three months ended
March 31, 2021. However, we have not observed any impairments of
our assets or a significant change in the fair value of our assets
due to the COVID-19 pandemic. At this time, it is not possible for
us to predict the duration or magnitude of the adverse results of
the outbreak and its effects on our business or results of
operations, financial condition, or liquidity.
We have been following the recommendations of health authorities to
minimize exposure risk for our team members, including the
temporary closure of our corporate office and having team members
work remotely. Most customers and vendors have transitioned to
electronic submission of invoices and payments.
Additional information concerning these and other risks and
uncertainties is contained in our filings with the Securities and
Exchange Commission, including the section entitled “Risk Factors”
in our Annual Report on Form 10-K for the year ended December 31,
2021.
Unless otherwise noted, references in this Information Statement to
“Company,” “our company,” “us,” “SFT,” “StrikeForce,”`Zerify` “we”
and “our” refer to StrikeForce Technologies, Inc. (also now known
as Zerify, Inc.) unless the context requires otherwise
OUR BUSINESS
We are a software development and services company that offers a
suite of integrated computer network security products using
proprietary technology. StrikeForce Technical Services Corporation
was incorporated in August 2001 under the laws of the State of New
Jersey. On September 3, 2004, we changed our name to StrikeForce
Technologies, Inc. On November 15, 2010, we redomiciled under the
laws of the State of Wyoming. We initially conducted operations as
an integrator and reseller of computer hardware and
telecommunications equipment and services until December 2002. In
December 2002, and formally memorialized in September 2003, we
acquired certain intellectual property rights and patent pending
technology from NetLabs.com, Inc. (“NetLabs”) including the rights
to further develop and sell their principal technology. In
addition, certain officers of NetLabs joined our company as
officers and directors of our company. Our ongoing strategy is
developing and marketing our suite of network security products to
the corporate, financial, healthcare, legal, government,
technology, insurance, e-commerce and consumer sectors. We plan to
continue to grow our business primarily through our globally
expanding sales channel and internally generated sales, rather than
by acquisitions. We hold a 49% interest in BlockSafe Technologies,
Inc., and, as of April 2021, we hold a 100% interest in
Cybersecurity Risk Solutions, LLC. We conduct our operations from
our corporate office in Edison, New Jersey.
We began our operations in 2001 as a reseller and integrator of
computer hardware and iris biometric technology. From the time we
started our operations through the first half of 2003, we derived
the majority of our revenues as an integrator. In December 2002,
upon the acquisition of the licensing rights to certain
intellectual property and patent pending technology from NetLabs,
we shifted the focus of our business to developing and marketing
our own suite of security products. Based upon our acquired
licensing rights and additional research and development, we have
developed various identification protection software products to
protect computer networks from unauthorized access and to protect
users from identity theft.
We completed the development of our ProtectID® platform at the end
of June 2006, we completed the core development of our keyboard
encryption and anti-keylogger product, GuardedID®, in December 2006
and commenced deployment of our new mobile product, MobileTrust®
into the mobile stores in 2015. We finished development of our
SafeVchat™ Secure Video Conferencing and PrivacyLoK™ products at
the end of 2020 and deployed SafeVchat™ beta testing by some by our
clients and individuals through our resellers. SafeVchat™, in
management’s estimation, is one of the most secure video
conferencing products on the market. PrivacyLoK™ adds security to
all video conferencing tools and runs in conjunction with other
applications on the same computer. We anticipate, but cannot
guarantee, increased revenues from SafeVchat™ and PrivacyLoK™ in
2022, and beyond.
All are currently being sold and distributed. ProtectID® patent
titled “Multi-Channel Device Utilizing a Centralized Out-of-Band
Authentication System” is protected by three patents. The keystroke
encryption technology we developed and use in our GuardedID®
product is protected by three patents. MobileTrust® has a patent
throughout Europe, as of June 2020.
Our suite of products is targeted to the financial, e-commerce,
corporate, government, healthcare, legal, insurance, technology and
retail markets. We seek to locate customers in a variety of ways.
These primarily include contracts with value added resellers and
distributors (both inside the United States and internationally),
direct sales calls initiated by our internal staff, exhibitions at
security and technology trade shows, through the media, through
consulting agreements, and through our agent relationships. Our
sales generate revenue either as an Original Equipment Manufacturer
(“OEM”) model, through a Hosting/License agreement, bundled with
other company’s products or through direct purchase by distributors
and resellers. We price our products for cloud consumer
transactions based on the number of transactions in which our
software products are utilized. We also price our products for
business applications based on the number of users. These pricing
models provide our company with one-time, monthly, quarterly and
annual recurring revenues with volume discounts.
We generated all of our revenues of $193,000 for the year ended
December 31, 2021 (compared to $207,000 for the year ended December
31, 2020), from the sales of our security products. The decrease in
revenues was primarily due to a reduction in the sales of our
products with impairments caused by the adverse economic conditions
resulting from the ongoing COVID-19 pandemic.
We market our products globally to financial service firms,
healthcare related companies, legal services companies, e-commerce
companies, automotive, government agencies, multi-level marketing
groups, the enterprise market in general, and with virtual private
network companies, as well as technology service companies and
retail distributors that service all the above markets. We seek
such sales through our own direct efforts, with emphasis on retail,
through distributors, resellers and third-party agents
internationally. We are also seeking to license the technology as
original equipment with computer hardware and software
manufacturers. We are engaged in multiple production installations
and pilot projects with various distributors, resellers and direct
customers primarily in the United States. Our GuardedID® product is
also being sold directly to consumers, primarily through the
Internet as well as distributors, resellers, third party agents,
affiliates and potential OEM agreements by bundling GuardedID® with
their products (providing a value-add and competitive advantage to
their own products and offerings). Currently this is the most
active market for us with multiple programs in production. We
anticipate, but cannot guarantee, increases in revenues in fiscal
2022 and/or 2023 (subject to the impairments to the economy caused
by the ongoing COVID-19 pandemic and the degree to which the
economy rebounds post-pandemic, and any domestic economic impact
from the war in Ukraine), from these programs.
We have incurred substantial losses since our inception. Our
management believes that our products provide a cost-effective and
technologically competitive solution to address the problems of
network security and identity theft in general. Guidance for the
Federal Financial Institutions Examination Council
(“FFIEC”) regulations include the requirement for solutions that
have Two-Factor Out-of-Band Authentication and products that stop
keylogging malware, real time, which our management believes our
proprietary products uniquely and directly address. This guidance
went into effect as of January 1, 2012. Based on this requirement
in the FFIEC update (published in June 2011 with enforcement
commencing in January 2012), we have experienced a growing increase
in sales orders and inquiries every year. However, there can be no
assurance that our products will continue to gain acceptance and
continue to grow in the commercial marketplace or that one of our
competitors will not introduce technically superior products.
Because we are now experiencing a continual growing market demand
(with the growth temporarily, in our opinion, curtailed by the
economic consequences of the ongoing COVID-19 pandemic), we are
developing a reseller and distribution channel as a strategy to
generate, manage and fulfill demand for our products across market
segments, minimizing the requirement for an increase in our staff
as we grow our distributor market. We have minimized the
concentration on our initial direct sales efforts as our
distribution and reseller channels continue to grow internationally
and will require appropriate levels of support.
In March 2020, the World Health Organization declared the spread of
COVID-19 a pandemic. This outbreak continues to spread throughout
the U.S. and around the world. As a result, authorities continue to
implement numerous measures to try to contain the virus, including
restrictions on travel, quarantines, shelter-in-place orders,
business restrictions and complete shutdowns. We are not considered
an “essential business” due to the industries and customers we
serve. As of, and subsequent to, September 30, 2021, we have been
following the recommendations of the CDC and state/local health
authorities to minimize exposure risk for our team members during
the pandemic, including the temporary closure of our corporate
office and having our team members work remotely. During the second
quarter of 2021, we reopened our corporate office while continuing
to adhere to the guidelines issued by health authorities. Many
customers and vendors have transitioned to electronic submission of
invoices and payments. The COVID-19 pandemic has resulted in longer
response times from potential new customers and certain existing
customers. We cannot anticipate the effect that the impairments
caused by the COVID-19 pandemic will have on our year end fiscal
2022 results or 2023 results, or the effectiveness and
distributions of vaccines, boosters, and their distribution in 2022
and 2023 and changes to mask mandate policies or the shift from a
pandemic to an endemic. The pandemic has significantly impacted the
economic conditions both in the United States and worldwide, with
accelerated effects through the date of this Information Statement,
as federal, state and local governments react to the public health
crisis, creating significant uncertainties in both the worldwide
and the United States economies. The situation is rapidly changing,
including the onset of the ongoing most recent and anticipated wave
of the virus caused by the B2 Omicron variant and the possibility
of other variants over time, and additional impacts to our business
may arise that we are not aware of currently. We cannot predict
whether, when or the manner in which, the conditions surrounding
COVID-19 will change including the timing of lifting any
restrictions or office closure requirements. We will continue to
evaluate the nature and extent of COVID-19’s impact to our
business, consolidated results of operations, financial condition
and liquidity, and our results presented herein are not necessarily
indicative of the results to be expected for future periods in
2022, 2023, or beyond.
Management believes that cyber security is a growing requirement as
the pandemic continues and more people are working remotely as well
as using digital forms on a regular basis. Consequently, the market
demand, in our estimation, is increasing. However, our Company is
also experiencing the impact of the pandemic. Currently our
management has limited business operating from our office location
and this impedes our ability to take full advantage of the
increasing market demand. Many of our current clients have
experienced a dramatic slowdown in their business, limiting their
ability to have the resources to pay for our services. We still
produce revenues and we anticipate, but cannot guarantee, our video
conferencing tool, SafeVchat™, which provides authentication and
security (using our existing products), will have gained acceptance
in the market. Currently, we have companies doing beta testing.
During the year ended December 31, 2021, we earned revenues of
$74,000 from SafeVchat™ and PrivacyLoK™ and overall revenues of
$193,000. We believe, but cannot guarantee, that our sales, partly
as a consequence of the new work environment created by the ongoing
pandemic and the need for our products, will significantly increase
in fiscal 2022 and continue that substantial growth in 2023. We
also are encouraged by the $65 billion dollars provided for
broadband access to improve internet services that is in the
recently enacted federal Infrastructure Bill of 2021, but cannot
provide assurance as to how, or if, that will impact our products
and services.
On November 13, 2020, our filing of an Offering Circular on Form
1-A, pursuant to Regulation A (File Number: 024-11267) was
qualified by the Securities and Exchange Commission. We registered
668,449,198 shares of common stock for maximum proceeds of
$2,315,000 (after deducting the maximum broker discount and costs
of the offering). As of September 30, 2021, the offering was fully
subscribed as we accepted the subscriptions for an aggregate of
474,453,653 shares of common stock for full satisfaction of the
entire offering of $2,500,000 (of which we received $2,315,000). We
announced the closing of the offering on our Current Report on Form
8-K as filed on February 8, 2021.
On May 11, 2021, our filing of an Offering Circular on Form 1-A,
pursuant to Regulation A (File Number: 024-11512) was qualified by
the Securities and Exchange Commission. We registered 150,000,000
shares of common stock for maximum proceeds of $7,065,000 (after
deducting the maximum broker discount and costs of the offering).
During the year ended December 31, 2021, we issued 119,666,450
shares of common stock to investors for cash proceeds of
$5,602,158, net of fees and commission, pursuant to the May 2021
Offering Circular. In September 2021, we sold 50,000,000 warrant
shares for $50,000 to two investors who purchased subscriptions
through the Offering Circular. We also awarded 5,000,000 warrant
shares to the broker who facilitated the Offering Circular. The
warrants vest immediately and have a 5-year term with an exercise
price of $0.05 per share.
Effective June 25, 2020, we completed a 1:500 reverse stock split
of our issued and outstanding shares of common stock and all
fractional shares were rounded up. All share and per share amounts
in this Information Statement have been adjusted retroactively to
reflect the reverse stock split as if it had occurred at the
beginning of the earliest period presented.
Our executive office is located at 1090 King Georges Post Road,
Suite 603, Edison, NJ 08837. Our telephone number is (732)
661-9641. Our Company’s website is www.strikeforcetech.com (we are
not including the information contained in our website as part of,
nor should the information be relied upon or incorporated by
reference into, this Information Statement).
Our Products (see above for our newest product,
Zerify)
StrikeForce is a software development and services company. We own
and are seeking to commercially market various identification
protection software products that we developed to protect computer
networks from unauthorized access, real time, and to protect
network owners and users from cyber security attacks and data
breaches. Our principal products ProtectID®, GuardedID®, inclusive
of our unique CryptoColor® technology and MobileTrust®, are
proprietary authentication and keystroke encryption technologies
that are intended to eliminate unauthorized access to computer
networks and all mobile devices, and to prevent unauthorized
individuals from copying (logging) keystrokes. Our newest products,
SafeVchat™ Secure Video Conferencing and PrivacyLoK™, are in beta
testing and management intends to market them after the beta
testing is complete. We already earned revenues from SafeVchat™ and
PrivacyLoK™ in 2021. We are increasing our market for our suite of
products in the financial services, e-commerce, corporate,
healthcare, government and consumer sectors. Our cyber security
products are as follows:
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ProtectID® is our
multi-patented authentication platform that uses “Out-of-Band”
multi-factor in-house installation, cloud service technology, a
hybrid to authenticate computer network users by a variety of
methods including traditional passwords combined with a telephone,
iPhone, Droid, Blackberry, PDA, multiple computer secure sessions,
or a Push Authentication method which was implemented in the fourth
quarter of 2017, biometric identification and encrypted devices
such as tokens or smartcards as examples. The authentication
procedure separates authentication information such as usernames
from the pin/passwords or biometric information, which are then
provided to or from the network’s host server across separate
communication channels. The platform allows for corporate control
and client choices, per their company’s security policies, which
evolves over time with newly available and customer requested
technologies.
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GuardedID® creates a
256-bit AES encrypted real time separate pathway for information
delivery from a keyboard to a targeted application on a local
computer, preventing the use of spyware/malware to collect user
information. This product provides keyboard encryption and helps
prevent keylogging from occurring in real time, which helps prevent
the number one threat to consumers and businesses in today’s
market: keylogging software, which is stealth software embedded in
web sites, emails, pictures, MP3 files, videos, USB’s or other
software and hardware that, once unknowingly launched, secretly
monitors and records all of a user’s keystrokes on the computer and
sends the data to the cyber thief without the user’s awareness.
Keylogging has been reported as the one of the major causes of
major data breaches that occurred from 2010 to 2016, as reported in
the 2010-2016 Verizon Data Breach Reports. (Patent No: 8,566,608,
8,732,483 and 8,973,107).
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MobileTrust® is an
advanced iPhone/iPad and Android device password vault that
includes a strong password generator. MobileTrust® also provides
for Mobile Multi-Factor One Time Password authentication, a secured
browser and keystroke encryption between its virtual keyboard and
secured browser, which is critical to all confidential online
transactions and other features, which is now in production. This
new feature for mobile devices, which helps prevent data breaches
and stolen credentials is a critical and vital addition to all
enterprise mobile users, as enterprises transition to “Bring Your
Own Devices” (BYOD). (International European Patent No: Application
#14763895.1)
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GuardedID® Mobile SDK is a
software development kit that provides developers our patent
protected keystroke encryption protection for all Apple and Android
mobile device’s secure keyboards, allowing our keystroke encryption
software to be embedded in any mobile applications, utilizing DES
256 Encryption.
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SafeVchat™ is, in our
estimation, one of the best and most secure video conferencing
products in the marketplace and we believe at a time when it is
most needed due to the remote workplace environment brought on by
the work conditions arising from the consequences of the COVID-19
pandemic. The product is a two-factor authentication application,
with out-of-band authentication capability, including push
transactions to cell phones or a one-time passcode, and only
invitees to the conference will gain access. The application also
runs on any Apple or Android device. and operates on any browser
because it does not require an application. SafeVchat™ also has a
premium version available which utilizes PrivacyLok™ for added
security.
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PrivacyLok™ offers
protective mechanisms that are far more encompassing than what
other video conferencing platforms currently provide, such as
camera locking, keyboard protection, clipboard protection,
microphone protection and audio input/output locking. The
application also runs on the user’s computer and protects all
applications, not just video conferencing. The application is
offered a part of the of SafeVchat™ Premium, or as a separate
standalone application.
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Our products sometimes include software and hardware that we
contractually license from other vendors. These products include
additional authentication and telecommunication software
devices.
The ProtectID® Cloud Service can be hosted by our service provider
(we have a strategic arrangement with a third party SAS70 hosting
service) as well as the ProtectID® Out-of-Band and Multi-Factor
Platform, which can be installed internally in a customer’s
infrastructure or as a hybrid implementation, with the exception of
our free redistributable Microsoft software components.
Factors that are considered important to our success include, but
are not limited to, the following:
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Our products address the
needs of a broad variety of customers for authentication and cyber
security overall. One of the biggest problems facing the world is
Cyber Theft, the effects of which, our management contends, total
an estimated $221 billion per year in business losses and more
recently, based on anecdotal evidence provided to management,
stated to be in the trillions going forward (with the full effect
of the increased use in remote access due to COVID-19 still
undeterminable).
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For illustration (while historic), in 2011, it was reported that
RSA Security’s data was breached from which Lockheed Martin and
others were affected and lost millions of dollars. This event
caused many companies to look to other means of two-factor
authentication, such as Out-of-Band. The RSA Data Breach started
with a keylogging virus which our GuardedID® product, management
believes, would most likely have prevented.
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The 2017 Verizon Data Breach report, published in April 2018,
stated that 80% of all the data breaches they reported would not
have occurred if the corporations used two factor
authentications.
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In
February 2015, the New York Times reported that a Global Bank heist
occurred in banks around the globe from a keylogger. This was the
first known time that a large hack was reported that included a
keylogger, which our management believes GuardedID® would have
prevented. The article was noted as caused by keystroke encryption
in a picture on the front page of the New York Times.
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The Effectiveness of Our Products: Our products have been designed
to provide, we believe, a high available level of security for
computer networks and individual users. In particular, we believe
that the now Patented “Out-of-Band” authentication process is an
innovative technology that will greatly prevent unauthorized access
to computer networks and will provide effective security products
to drastically reduce the incidence of identity fraud for our
customers. We have contractually commenced implementation of our
products on a large global scale, yet there can be no assurance
that they will function in all aspects as intended. Likewise, a
high level of innovation characterizes the software industry and
there can be no assurance that our competitors will not develop and
introduce a superior product. The effective functioning of our
products once deployed is an important factor in our future
success.
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Ability to Integrate our Software with Customer Environments:There
are numerous operating systems that are used by computer networks.
The ability of a software product to integrate with multiple
operating systems is likely to be a significant factor in customer
acceptance of particular products. Our ProtectID® operates on an
independent Cloud Service platform and is also able to integrate
with multiple operating systems and user interfaces for an in-house
implementation. ProtectID® has been designed to use multiple
authentication devices that are currently on the market (including,
but not limited to, biometrics, key-fob tokens, iPhones, iPads,
Androids, PDA’s, smart cards, face biometric, fingerprint and other
mobile devices). Our ability to integrate our products with
multiple existing and future technologies is currently a key factor
in the growth of our product’s acceptance and is demonstrated by
our success with recent clients and installations. Our GuardedID®
product currently operates with Windows Internet Explorer (IE),
Firefox, Chrome and Safari browsers and our upgraded Premium
version works with almost all applications running on a Windows
desktop platform, inclusive of Microsoft Office and the MAC. New
features and functions for both products continue to be developed
via our research and development. We continue to be live with our
MobileTrust® and GuardedID® Mobile SDK products, which work on all
Apple and Android devices.
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Relative Cost: We have attempted to design our products to provide
a cost-effective suite of products for financial services,
e-commerce, commercial, healthcare, government and direct-consumer
customers. Our ability to offer our products at a competitive price
is likely in our opinion, to be a key factor in the acceptance of
our product as we have seen with many of our clients.
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Business Model
We are focusing primarily on developing sales through “channel”
relationships in which our products are offered by other
manufacturers, distributors, value-added resellers and agents,
internationally. In 2016, we added and publicly announced additions
to our global distribution sales channel, which provides additional
presence for us in the United States, Canada, Europe and Africa. We
continue to add additional channel partners, especially on the
consumer side and developed a new retail business. We also sell our
suite of security products directly from our Edison, New Jersey
office, which also augments our channel partner relationships. It
is our strategy that these “channel” relationships will provide the
greater percentage of our revenues ongoing, as was the case in the
past two years. Examples of the channel relationships that we are
seeking include already established original equipment manufacturer
(“OEM”) and bundled relationships with other security technology
and software providers that would integrate or bundle the enhanced
security capabilities of ProtectID®, GuardedID® and/or MobileTrust®
into their own product lines, including SafeVchat™ and PrivacyLoK™
and our SafeVchat™ API’s, thereby providing greater value to their
clients. These would include providers of networking software and
manufacturers of computer and telecommunications hardware and
software that provide managed services, and multi-level marketing
groups, as well as all markets interested in increasing the value
of their products and packages, such as financial services
software, anti-virus, government integrators and identity theft
product companies. We contracted with various new distributors
during 2020 and 2021, and we anticipate, but cannot guarantee, an
increase in revenues in 2022 and/or 2023 (subject to the
impairments caused by the ongoing COVID-19 pandemic and the degree
to which the economy rebounds post-pandemic).
We believe, but cannot guarantee, the revenues of SafeVchat™, our
secure Video Conferencing Tool, and PrivacyLok™, which adds five
levels of security for SafeVchat™, should be profitable during 2022
and beyond, although we cannot guarantee such profitability. While
the full effect of the increased use in remote access in employment
due to COVID-19 is still undeterminable, it has become evident, in
managements estimation, clear that people will be working remotely
for a long time, perhaps with some hybrid level of permanence. In a
February 2021 New York Times article, Google announced that they
will no longer require that their employees to come into the
attainment office, as stated in the New York Times, Video
conference sales are projected to be over $100 billion, more than
double of what was originally projected. We believe that SafeVchat™
and PrivacyLok™ are perfectly timed for introduction into the
market and we anticipate, but cannot guarantee, our market share
will grow over the next several years.
From our MobileTrust® security application, built with our sCloud
registration process, we created and announced two additional
products in 2020: our ProtectID® Mobile OTP (One Time Password) to
be used with ProtectID®; and our GuardedID® Mobile keystroke
encryption software development kit (SDK). Both products are now in
production. With the creation of GuardedID® Mobile SDK, we now
focus the sales of this software product to the development groups
of our target markets for it to be added to their mobile
applications. We are in discussions with many large-scale parties
that are interested in this software, although no assurances can be
provided as to acceptance and profitability. Management has already
received requests for this software, as keystroke encryption
malware grows and remains a major problem for the mobile-cyber
security market, particularly with anti-virus products being viewed
as non-effective against malware threats.
Our primary target markets include financial services such as banks
and insurance companies, healthcare providers, legal services,
government agencies through integrators, technology platforms,
e-commerce-based services companies, telecommunications and
cellular carriers, technology software companies, government
agencies and consumers, especially for our mobile and keystroke
encryption products. We are focusing our concentration on cyber
security and data breach strategic problem areas, such as where
compliance with financial, healthcare, legal and government
regulations are key and stolen passwords are used to acquire
private information illegally. In 2020 and 2021, several of our
channel partners had pilots and client implementations in place
that are expected, although no assurances can be provided, to
increase our revenues in 2022 and/or 2023 (subject to the
impairments caused by the ongoing COVID-19 pandemic and the degree
to which the economy rebounds post-pandemic). There is no guarantee
as to the timing and continued success of these efforts.
Because we are now expecting a continual, recurring growing market
demand, especially in the mobility and encryption retail markets,
we continue to develop a reseller and distribution channel as a
strategy to generate, manage and fulfill demand for our products
across market segments, minimizing the requirement for an increase
in our staff as we grow our distributor market. We continue to
minimize the concentration on our initial direct sales efforts as
our distribution and reseller channels continue to grow
internationally and provide appropriate levels of sales and support
to the growing Cyber Security market.
We seek to generate revenues through recurring fees for SafeVchat™,
PrivacyLok™, GuardedID® and ProtectID® based on client consumer
usage in the financial, healthcare services and legal services
markets, as well as enterprises in general. We provide our clients
a choice of operating our ProtectID® software internally by
licensing it or through our hosted Cloud Service or a hybrid that
some clients have implemented and none of our competitors presently
offer. GuardedID® requires a download on each and every computer it
protects, whether for employees or consumers. We have four
GuardedID® products, (i) a standard version which protects browser
data entry only, (ii) a premium version which protects almost all
the applications running under Microsoft Windows on the desktop,
including Microsoft Office Suite and almost all applications
running on the desktop, (iii) an Enterprise version which, in
addition, provides the Enterprise administrative rights and the use
of Microsoft’s Enterprise tools for the product’s deployment, and
(iv) an Apple version for all the latest MAC operating systems and
for the browsers and entire desktop. Our GuardedID® Mobile SDK
(software development kit) is priced for the consumer through the
appropriate mobile phone stores, as well as direct, distribution
and OEM sales for higher volume enterprises, including volume
discounts to the degree allowed by the telecommunications
providers. We anticipate, but cannot guarantee, steadily increasing
revenues from these product offerings.
Our management believes that our products provide a cost-effective
and technologically competitive solution to address the increasing
problems of network security and cyber security in general.
Marketing
Our multi-channel marketing strategy includes:
1. The addition of resellers, agents & distributors (our
strategic sales channel) who distribute and resell our products and
services to enterprise and commercial customers globally
(technology and software product distributors, systems integrators,
managed service companies, other security technology and software
vendors, telecom companies, cyber security related product
companies, etc.).
2. Application Service Provider (ASP) Partners: Our third-party
service provides a hosting platform that facilitates faster
implementations at competitive prices for our Cloud Service
option
3. Original Equipment Manufacturers (OEM): SFT products are sold to
other security technology vendors that integrate ProtectID®,
GuardedID® and, now, GuardedID® Mobile SDK into their products
(bundling) and services providing for monthly/annual increasing
recurring revenues. They are also now able to sell and bundle
SafeVchat™ and PrivacyLok™.
4. Technology and other providers and resellers, agents and
distributors are interested in purchasing and or selling our new
SafeVchat™ and PrivacyLok™ products as secure video conferencing
products
5. Outside Independent consultants selling our products for
commission only, focusing on the video conferencing, healthcare,
legal, travel and consumer markets
Intellectual Property
In November 2010, we received notice that the United States Patent
and Trademark Office (“USPTO”) had issued an official Notice of
Allowance for the patent application for the technology relating to
our ProtectID® product, titled “Multi-Channel Device Utilizing a
Centralized Out-of-Band Authentication System”. In January 2011, we
received notice that the USPTO issued to us Patent No. 7,870,599.
This “Out-of-Band” Patent went through a USPTO Re-Examination
process starting on August 16, 2011 and concluded on December 27,
2011, with all of our patent claims remaining intact and eight
additional patent claims being added. Since 2011, we submitted
additional continuation patents on the “Out-of-Band” Patent. The
keystroke encryption technology we developed and use in our
GuardedID® product is protected by three patents and one
continuation pending.
In January 2013, we were assigned the entire right, title and
interest in the “Out-of-Band” Patent from NetLabs, with the
agreement of the developer, and the assignment was recorded with
the USPTO.
In February 2013, we executed a retainer agreement with our patent
attorneys to aggressively enforce our patent rights as “Out-of-Band
Authentication” was becoming the standard for authenticating
consumers in the financial market and for many SaaS application
users (e.g., SalesForce, Quickbooks, etc.). In February 2013, our
patent attorneys submitted a new “Out-of-Band” Patent continuation,
which was granted.
In March 2013, our patent attorneys submitted a new “Methods and
Apparatus for securing user input in a mobile device” Patent, which
is now patent pending. Our MobileTrust® product is the invention
supporting the patent pending.
In July 2013, we received notice that the USPTO had added 54
additional patent claims for our Out-of-Band patent we received in
January 2011, by issuing to us Patent No. 8,484,698 thereby
strengthening our position with clients and our current and
potential lawsuits.
In October 2013, we received notice that the USPTO issued to us
Patent No. 8,566,608 “Methods and apparatus for securing keystrokes
from being intercepted between the keyboard and a browser.” This
protects our GuardedID® product and the keystroke encryption
portion of our MobileTrust® products.
In February 2014, we received a Notice of Allowance from the USPTO
for our third patent relating to our “Multi-Channel Device
Utilizing a Centralized Out-of-Band Authentication System” Patent
No. 7,870,599. Upon receipt of this Out-of-Band patent we filed
another continuation patent.
In March 2014, we received Notice of Allowance from the USPTO for
our second patent and first continuation of our Keystroke
Encryption patent, which only furthers our protection for all
mobile devices when utilizing any keyboard for data entry. Upon
receipt of this Notice, we also filed another continuation patent
for Patent No. 8,566,608.
In April 2014, we were granted our third patent relating to our
“Multi-Channel Device Utilizing a Centralized Out-of-Band
Authentication System” Patent No. 8,713,701.
In September 2014, we filed an International Patent for
MobileTrust® (PCT/US20114/029905).
In March 2015, we received our third patent from the USPTO, Patent
No. 8,973,107, of our Keystroke Encryption patent. This enhances
our position for our Keystroke Encryption product, GuardedID®, and
our MobileTrust® product.
On March 28, 2013, the Company initiated patent litigation against
PhoneFactor, Inc., a subsidiary of Microsoft Corporation, for
alleged infringement of United States Patent No. 7,870,599 (the
“‘599 Patent”). The Company filed a separate action against
Microsoft Corporation based on its alleged infringement of the ‘599
Patent and two additional patents for out-of-band user
authentication (U.S. Patent Nos.: 8,484,698 & 8,713,701). Both
actions were filed in the U.S. District Court for the District of
Delaware. On January 15, 2016, the litigation was settled and the
parties executed a settlement agreement in the form of a Release
and License Agreement. The terms and conditions of the Release and
License Agreement are confidential except under limited conditions.
As a consequence of the Release and License Agreement, the parties
have moved to dismiss the action with prejudice, the Company has
licensed the patents to Microsoft Corporation, and the Company
received a non-disclosable one-time lump sum payment.
In June 2020, we were awarded an International European Patent,
Application #14763895.1, for MobileTrust®. While the MobileTrust®
International Patent was granted in Europe, the patent application
in the United States was rejected.
Our patent attorneys filed our fourth, fifth and sixth “Out of
Band” continuation patents. We currently have three patents granted
to us for Out-of-Band ProtectID® (Patent Nos.: 7,870,599, 8,484,698
and 8,713,701). MobileTrust® is also covered by our GuardedID®
patents. We cannot provide assurances that the latter patents will
be granted in fiscal 2022.
We plan to continue our strategy to aggressively enforce the patent
rights relating to our granted Keystroke Encryption patents that
help protect our GuardedID® and MobileTrust® products. We were
granted three related keystroke encryption patents for which we
received the most recent patent on March 3, 2015 (Patent Nos.:
8,566,608, 8,732,483 and 8,973,107). In June 2020, we also received
an International Patent in Europe for MobileTrust® (Patent
Approved: Application #14763895.1).
We have four trademarks that have been approved and registered:
GuardedID®, MobileTrust® and CryptoColor®. Also, BlockSafe
Technologies, Inc. has one registered trademark: CyberDefender®. A
portion of our software is licensed from third parties and the
remainder is developed by our own team of developers while
leveraging some external consultant expertise as necessitated. We
rely upon confidentiality agreements signed by our employees,
consultants, and third parties to protect the intellectual property
rights.
Business Strategy
Our primary strategy throughout 2022 is to focus on the growth and
support of our channel partners, including distributors, resellers
and original equipment manufacturers (OEMs) (subject to the
impairments caused by COVID-19). Our internal sales team targets
potential direct sales in industries that management believes
provides the greatest potential for short term sales. These include
small to medium sized financial institutions, government agencies,
e-commerce, healthcare, legal and enterprise businesses. We are
also executing agreements with strategic resellers and distributors
for marketing, selling and supporting our products internationally.
We primarily work with distributors, resellers and agents to
generate the bulk of our sales internationally, realizing that this
strategy takes longer to nurture, however it is progressing well.
We are starting to realize positive results, however slowly, with
our sales channel and anticipate, but cannot guarantee, a
successful fiscal 2022, through the sales channel and from our new
mobile and GuardedID® MAC, SafeVchat™ and PrivacyLoK™ products with
a concentration of sales already contracted. There can be no
assurances, however, that we will succeed in implementing our sales
strategy. Although management believes that there is an
increasingly strong market for our products as the need for cyber
security solutions increases globally, we have not generated
substantial revenue from the sale of our products and there is no
assurance we can secure a market sufficient to permit us to achieve
profitability in fiscal 2022 (subject to the impairments caused by
the ongoing COVID-19 pandemic and the degree to which the economy
rebounds post-pandemic).
Most of the costs that we incur are related to salaries,
professional fees, marketing, sales and research & design. Our
operations presently require funding of approximately $235,000 per
month based on the hiring of four additional sales staff members in
2022. We expect that our monthly cash usage for operations will
increase slightly due to contracted and anticipated increased
volumes and adding some targeted channel marketing programs. We
anticipate that the areas in which we will experience the greatest
increase in operating expenses is in marketing, selling, product
support, product research and new technology development in the
growing cyber security market. We are committed to maintaining our
current level of operating costs until we reach the level of
revenues needed to absorb any potential increase in costs.
Competition
The software development and services market is characterized by
innovation and competition. There are several well-established
companies within the authentication market that offer network
security systems in our product market and newer companies with
emerging technologies. We believe that our multi-patented
“Out-of-Band” multi-factor identity authentication platform is an
innovative, secure, adaptable, competitively priced, integrated
network authentication platform. The main features of ProtectID®
include: an open architecture “Out-of-Band” platform for user
authentication; operating system independence; biometric layering;
soft mobile tokens; mobile authentication; secure website logon;
Virtual Private Network (“VPN”) access; domain authentication;
newly added Office 365 authentication and multi-level
authentication. Unlike other techniques for increased network
security, ProtectID® does not rely on a specific authentication
device or method (e.g., phone, tokens, smart cards, digital
certificates, soft mobile tokens, or biometrics, such as a retinal
or fingerprint scan). Rather ProtectID® has been developed as an
“open platform” that incorporates an unlimited number of
authentication devices and methods. For example, once a user has
been identified to a computer network, a system deploying our
ProtectID® authentication system permits the “Out-of-Band”
authentication of that user by a telephone, iPhone, iPad, PDA,
email, hard token, SSL client software, a biometric device such as
a voice biometric, or others, before that user is permitted to
access the network. By using “Out-of-Band” authentication methods,
management believes that ProtectID®, now protected through our
ongoing litigation, with plans for additional litigation, provides
a competitive product for customers with security requirements
greater than typical name and password schemes for virtual private
networks and computer systems with multiple users at remote
locations, as examples. We also believe that our multi-patented
keystroke encryption product, GuardedID®, offers an additional
competitive edge for network security and e-commerce applications
that should provide greater levels of security and the ability to
evolve over time based on newer technologies when made available.
There is less competition for the keystroke encryption product and
there are no well-established companies in this space, which
explains our current growth in pilots and sales for GuardedID®,
especially relating to bundled channel partner programs. GuardedID®
is critical to help prevent key logging viruses, one of the largest
sources of cyberattacks and data breaches. GuardedID® also is
protected with three patents.
Our patented technologies are used in SafeVchat™, our secure Video
Conferencing Tool and PrivacyLok™, which adds five levels of
security for SafeVchat™ Premium, which we believe are more secure
than Zoom, Teams and other competitors’ products available in the
growing marketplace.
Although we believe that our suite of products offers competitive
advantages, there is no assurance that any of these products will
continue to increase its market share in the marketplace. Our
competitors include established software and hardware companies
that are likely to be better financed and to have established sales
channels. Due to the high level of innovation in the software
development industry, it is also possible that a competitor will
introduce a product that provides a higher level of security than
our products or which can be offered at prices that are more
advantageous to the customer.
BlockSafe Technologies, Inc.
BlockSafe Technologies, Inc. (“BlockSafe”) was formed on December
1, 2017 in the State of Wyoming. BlockSafe is in the business of
providing total cyber security solutions and has the licensee from
our company of our desktop anti-malware product called
“GuardedID®” and our one of a kind mobile application
called “MobileTrust®”. BlockSafe is intended to be developed as an
enterprise focused on using our licensed technology in the field of
cryptocurrency and its use of blockchains. Small revenues have been
generated to date, primarily due to the effects of the ongoing
COVID-19 pandemic. There can be no assurances on the success of
this project or any profitability arising from BlockSafe.
As of March 31, 2022, no tokens have been developed or issued.
There is no assurance as to whether, or at what amount, or on what
terms, tokens will be available. Moreover, there can be no
assurance how such technology will function, which could expose us
to legal and regulatory issues. Cryptocurrency and its use of
blockchains is still in the development stage and receiving mixed
results. The Securities and Exchange Commission has, in its
dissemination of information to the public, expressed that tokens
in the United States would be treated as securities pursuant to
the Howey Test. This standard has been adopted,
in various forms, in numerous other jurisdictions. The European
Union and China are contemplating their own form of cryptocurrency
and Facebook Libra cryptocurrency recently lost the support of
PayPal (see https://www.independent.co.uk/topic/cryptocurrency,
which article is not incorporated by reference to this filing). On
March 30, 2022, the Securities and Exchange Commission’s Division
of Examinations announced its 2022 examination priorities which
included the review of the use of crypto-assets as one of its top
five priorities for review. This review and any regulatory rules
and regulations arising from this review may impact the BlockSafe
business. In addition, legal and regulatory developments could
render the technology impermissible, which could have a material
adverse effect on BlockSafe and us.
As of March 31, 2022, noncontrolling interests represents 51% of
BlockSafe that we do not directly own. The Company and BlockSafe
have a management agreement pursuant to which BlockSafe shall remit
a management fee of $36,000 per month to the Company, and when
BlockSafe reaches a milestone of $1,000,000 in financing, an
additional management fee of $5,000,000 shall be owed to the
Company, payable monthly over three years. The management fee is
eliminated in consolidation. At December 31, 2021 and 2020, the
amount of VIE cash on the accompanying consolidated balance sheets
can be used only to settle obligations of BlockSafe, and the
amounts of VIE accounts payable, VIE Notes Payable, VIE Accrued
Interest, and VIE Financing Obligation have no recourse to the
general credit of the Company.
In June 2018, two members of our management team, George Waller,
our Executive Vice President and Ramarao Pemmaraju, our Chief
Technical Officer, were appointed to BlockSafe to serve as the
Chief Executive Officer and Chief Technical Officer, respectively.
Additionally, our Chief Executive Officer of StrikeForce, Mark L.
Kay, also an appointee to the Board of Directors of BlockSafe, was
appointed as Chairman and President of BlockSafe.
In 2018, the Company’s consolidated subsidiary BlockSafe issued
promissory notes to investors in the aggregate of $775,500. As part
of each promissory note agreement BlockSafe agreed to pay a
financing obligation to the note holders equal to the note
principal in tokens, as defined, to be issued by BlockSafe. In
December 2018, BlockSafe agreed to issue 200,000 cryptocurrency
tokens to an unrelated party for receipt of $50,000. In February
2019, the agreement was amended and the unrelated party is to
receive an additional 100,000 tokens. No such tokens have been
developed or issued as of December 31, 2021.
From February 2019 to March 2019, BlockSafe agreed to issue 450,000
cryptocurrency tokens and 56,250 restricted shares of BlockSafe
common stock to four unrelated parties for receipt of $122,500. The
tokens or restricted stock of BlockSafe have not been issued as of
December 31, 2021.
From March to April 2019, five of the BlockSafe noteholders agreed
to convert $295,500 of principal and $19,700 of accrued interest
into 1,845,041 cryptocurrency tokens to be issued by BlockSafe. The
tokens have not been issued as of December 31, 2021.
We have used the funds received from investors pursuant to the
promissory notes for the efforts mentioned below to develop the
Tokens and to develop an additional product and prepare it for
sale. We currently do not require additional funds for the
development efforts.
The steps we have taken to date in our efforts to develop tokens
include completing a formal plan for the Tokens, obtaining
professional advice regarding the legal implications of developing
tokens, and we have a blockchain for our Tokens (BSAFE®). We have
not yet finalized a budget for the development of Tokens, we have
not yet hired a full development team, we have not yet completed
the development of Tokens, and we have not yet developed any
payment, trading, or custody platform or infrastructure related to
the Tokens. The failure to develop or issue these Tokens as of
December 31, 2021 does not constitute an event of default under the
promissory notes. It should be noted however that the promissory
notes were not repaid pursuant to their terms and are currently in
default.
At December 31, 2021, the Company’s consolidated subsidiary,
BlockSafe, had recorded a financing obligation of $1,263,000 to be
paid in tokens, as defined. At December 31, 2021 and through the
date of this filing, BlockSafe. has not completed the development
or issued any tokens. At December 31, 2021, as the development of
the tokens has not been completed and tokens do not exist, and any
amounts received for tokens are not considered equity or revenue,
management determined that 100% of the obligation of $1,263,000 is
a liability to be settled by BlockSafe., through the issuance of
tokens, or through other means if tokens are never issued.
We have stated to the note holders that once StrikeForce has the
funds or BlockSafe sells the Tokens, the intent is to satisfy the
outstanding balances as soon as possible. In the event that we are
unable to satisfy the outstanding balances of the Notes, it could
have a material adverse effect on our business, financial condition
and results of operations.
In March 2019, an increase of the authorized shares of BlockSafe’s
common stock from one thousand (1,000) to one hundred million
(100,000,000), $0.0001 par value, was ratified, effective upon the
filing of an amendment to BlockSafe’s Certificate of Incorporation
with the Wyoming Secretary of State. The amendment was adopted in
March 2019.
In March 2019, a 1:15,000 forward stock split of BlockSafe’s issued
and outstanding shares of common stock was ratified, effective upon
the filing of an amendment to BlockSafe’s Certificate of
Incorporation with the Wyoming Secretary of State. The amendment
was adopted in March 2019.
Cybersecurity Risk Solutions, LLC
On April 15, 2021, StrikeForce formally closed a Member Interest
Purchase Agreement in which StrikeForce acquired the entire Member
Interests of Cybersecurity Risk Solutions, LLC, a New Jersey
limited liability company. In April 2021, we issued 500,000 shares
of common stock with a fair value of $36,000, for the purchase of
Cybersecurity Risk Solutions, LLC. At the date of acquisition,
Cybersecurity Risk Solutions, LLC had nominal assets and
liabilities, no revenues and limited operating history.
Furthermore, the Company also determined that the acquisition did
not meet the requirement of a significant acquisition pursuant to
the regulations of the Securities and Exchange Commission.
Cybersecurity Risk Solutions, LLC is a cybersecurity firm offering
cyber, privacy & data protection services including a personal
cyber risk assessment, the industry’s first cyber health score,
report and custom action plan, as well as ongoing vulnerability
scanning, hack monitoring and dark web intelligence monitoring. For
more information, go
to https://SecureCyberID.com (which website is
expressly not included in this filing). Will Lynch, the prior sole
member of Cybersecurity Risk Solutions, LLC was hired by
StrikeForce as the Director of Channel Distribution and not as a
Named Executive Officer. A Director of Channel Distribution
develops, services, and grows relationships with clients. Mr. Lynch
has an annual salary of $100,000 and will also receive 2% net of
all Channel sales. Mr. Lynch reports to our Executive Vice
President and Marketing Director.
Employees
As of fiscal year ended December 31, 2021, we had 10 employees and
our relations with employees are good.
DESCRIPTION OF PROPERTY
We operate from leased offices located at 1090 King Georges Post
Road, Suite #603, Edison, New Jersey 08837. We do not hold any
material investments in other real or personal property other than
office equipment. We paid a monthly base rent of $4,409 from
February 2019 thru January 2020, $4,542 from February 2020 through
January 2021 and $4,678 from February 2021 through January 2022. We
will pay a monthly base rent of $4,818 from February 2022 thru
January 2023 and $4,963 from February 2023 thru January 2024.
Operating lease right-of-use (“ROU”) assets and liabilities are
recognized at commencement date based on the present value of lease
payments over the lease term. ROU assets represent our right to use
an underlying asset for the lease term and lease liabilities
represent our obligation to make lease payments arising from the
lease. Generally the implicit rate of interest in arrangements is
not readily determinable and we utilize our incremental borrowing
rate in determining the present value of lease payments. The
operating lease ROU asset includes any lease payments made and
excludes lease incentives.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Forward-Looking Statements
The following is management’s discussion and analysis (|MD&A”)
of certain significant factors that have affected our financial
position and operating results during the periods included in the
accompanying financial statements, as well as information relating
to the plans of our current management. This report includes
forward-looking statements. Generally, the words “believes,”
“anticipates,” “may,” “will,” “should,” “expect,” “intend,”
“estimate,” “continue,” and similar expressions or the negative
thereof or comparable terminology are intended to identify
forward-looking statements. Such statements are subject to certain
risks and uncertainties, including the matters set forth in this
report or other reports or documents we file with the Securities
and Exchange Commission from time to time, which could cause actual
results or outcomes to differ materially from those projected.
Undue reliance should not be placed on these forward-looking
statements which speak only as of the date hereof. We undertake no
obligation to update these forward-looking statements.
The following discussion and analysis should be read in conjunction
with our financial statements and the related notes thereto and
other financial information contained elsewhere in this Annual
Meeting Consent.
Our MD&A is comprised of significant accounting estimates made
in the normal course of its operations, overview of our business
conditions, results of operations, liquidity and capital resources
and contractual obligations. We did not have any off balance sheet
arrangements as of September 30, 2019 or 2020.
The discussion and analysis of our financial condition and results
of operations is based upon its financial statements, which have
been prepared in accordance with generally accepted accounting
principles generally accepted in the United States (or “GAAP”). The
preparation of those financial statements requires us to make
estimates and judgments that affect the reported amount of assets
and liabilities at the date of its financial statements. Actual
results may differ from these estimates under different assumptions
or conditions.
Background
We are a software development and services company that offers a
suite of integrated computer network security products using
proprietary technology. Our ongoing strategy is developing and
marketing our suite of network security products to the corporate,
financial, healthcare, legal, government, technology, insurance,
e-commerce and consumer sectors. We plan to continue to grow our
business primarily through our expanding sales channel and
internally generated sales, rather than by acquisitions. Apart from
our 49% holding in BlockSafe Technologies, Inc., we have no other
subsidiaries.
Our executive office is located at 1090 King Georges Post Road,
Suite 603, Edison, NJ 08837. Our telephone number is (732)
661-9641. We have 9 employees. Our Company’s website is
www.strikeforcetech.com (we are not including the
information contained in our website as part of, nor should the
information be relied upon or incorporated by reference into, this
Annual Meeting Consent).
Results of Operations
FOR THE THREE MONTHS ENDED MARCH 31, 2022 COMPARED TO THE
THREE MONTHS ENDED MARCH 31, 2021
Revenues for the three months ended March 31, 2022 were $32,000
compared to $46,000 for the three months ended March 31, 2021, a
decrease of $14,000 or 30.4%. The decrease in revenues was
primarily due to a decrease in revenues relating to our ProtectID®,
GuardedID® and MobileTrust® products, offset by an increase in
revenues relating to our SafeVchat™ product, despite the
impairments related to the economic consequences of the COVID-19
pandemic. Revenues are derived from software and services.
Cost of revenues for the three months ended March 31, 2022 was
$10,000 compared to $3,000 for the three months ended March 31,
2021, an increase of $7,000 or 233%. The increase in cost of
revenues was primarily due to an increase in the fees related to
our product offerings. Cost of revenues are fees and key fobs
related to our revenues, and as a percentage of total revenues for
the three months ended March 31, 2022 was 31.3% compared to 6.5%
for the three months ended March 31, 2021.
Research and development expenses for the three months ended March
31, 2022 were $154,000 compared to $145,000 for the three months
ended March 31, 2021, an increase of $9,000 or 6.2%. The increase
was primarily due to the overall increase in salaries and benefits
of the personnel conducting research and development. The salaries,
benefits and overhead costs of personnel conducting research and
development of our software products primarily comprises our
research and development expenses.
Compensation, professional fees, and selling, general and
administrative (collectively, “SGA”) expenses for the three months
ended March 31, 2022 were $2,636,000 compared to $5,628,000 for the
three months ended March 31, 2021, a decrease of $2,992,000 or
53.2%. The decrease was due primarily to a decrease in employee
stock-based compensation, offset by an increase in compensation
expenses and professional fees. SG&A expenses consist primarily
of salaries, benefits and overhead costs for executive and
administrative personnel, insurance, fees for professional
services, including consulting, legal, and accounting fees, plus
travel costs and non-cash stock compensation expense for the
issuance of stock options to employees and other general corporate
expenses.
For the three months ended March 31, 2022, other expense was
$99,000 as compared to other expense of $4,216,000 for the three
months ended March 31, 2021, a decrease in other expense of
$4,117,000, or 9.8%. The decrease was primarily due to decreases in
financing expense, interest expense, debt discount amortization,
and the change in the fair value of derivative liabilities. The
Company’s derivative liabilities were fully extinguished in fiscal
2021.
Our net loss for the three months ended March 31, 2022 was
$2,867,000 compared to $9,946,000 for the three months ended March
31, 2021, a decrease of $7,079,000, or 71.2%. The decrease was
primarily due to decreases in employee stock-based compensation,
financing expense, interest expense, debt discount amortization,
and the change in the fair value of derivative liabilities, offset
by an increase in compensation expenses and professional fees.
Liquidity and Capital Resources
Our total current assets at March 31, 2022 were $990,000, which
included cash of $974,000, as compared with $2,121,000 in total
current assets at December 31, 2021, which included cash of
$2,084,000. Additionally, we had a stockholders’ deficit in the
amount of $12,814,000 at March 31, 2022 compared to a stockholders’
deficit of $11,589,000 at December 31, 2021. We have historically
incurred recurring losses and have financed our operations through
loans, principally from affiliated parties such as our directors,
and from the proceeds of debt and equity financing. We financed our
operations during the three months ended March 31, 2022 primarily
from the cash balance from the year ended December 31, 2021.
Results of Operations
FOR THE YEAR ENDED DECEMBER 31, 2021 COMPARED TO THE YEAR
ENDED DECEMBER 31, 2020
Revenues for the year ended December 31, 2021 were $193,000
compared to $207,000 for the year ended December 31, 2020, a
decrease of $14,000 or 6.8%. The decrease in revenues was primarily
due to a reduction in the sales of our products with impairments
related to the economic consequences of the COVID-19 pandemic.
Revenues are derived from software and services.
Cost of revenues for the year ended December 31, 2021 was $27,000
compared to $13,000 for the year ended December 31, 2020, an
increase of $14,000, or 108%. The increase resulted from the
increased fees related to certain revenues. Cost of revenues are
fees related to our revenues, and as a percentage of total revenues
for the year ended December 31, 2021 was 14.0% compared to 6.2% for
the year ended December 31, 2020.
Research and development expenses for the year ended December 31,
2021 were $566,000 compared to $520,000 for the year ended December
31, 2020, an increase of $46,000 or 8.8%. The increase was
primarily due to the increase in salaries and benefits of the
personnel conducting research and development. The salaries,
benefits and overhead costs of personnel conducting research and
development of our software products primarily comprises our
research and development expenses.
Compensation, professional fees, and selling, general and
administrative (collectively, “SGA”) expenses for the year ended
December 31, 2021 were $9,448,000 compared to $2,350,000 for the
year ended December 31, 2020, an increase of $7,098,000 or 302%.
The increase was due primarily to an increase in employee
stock-based compensation and professional fees. SG&A expenses
consist primarily of salaries, benefits and overhead costs for
executive and administrative personnel, insurance, fees for
professional services, including consulting, legal, and accounting
fees, plus travel costs and non-cash stock compensation expense for
the issuance of stock options to employees and other general
corporate expenses.
For the year ended December 31, 2021, other expense was $7,397,000
as compared to other expense of $7,412,000 for the year ended
December 31, 2020, representing a decrease in other expense of
($15,000), or 0.2%. The decrease was primarily due to decreases in
the loss on extinguishment of debt, the change in the fair value of
derivative liabilities and debt discount amortization, offset by
increases in financing costs.
Our net loss for the year ended December 31, 2021 was $17,245,000
compared to $10,088,000 for the year ended December 31, 2020, an
increase of $7,157,000, or 70.9%. The increase was primarily due to
the decrease in revenues, increases in employee stock-based
compensation, professional fees and financing costs, offset by
decreases in the loss on extinguishment of debt, the change in the
fair value of derivative liabilities and debt discount
amortization.
Liquidity and Capital Resources
Our total current assets at December 31, 2021 were $2,121,000,
which included cash of $2,084,000, as compared with $203,000 in
total current assets at December 31, 2020, which included cash of
$162,000. Additionally, we had a stockholders’ deficit in the
amount of $11,589,000 at December 31, 2021 compared to a
stockholders’ deficit of $14,342,000 at December 31, 2020. We have
historically incurred recurring losses and have financed our
operations through loans, principally from affiliated parties such
as our directors, and from the proceeds of debt and equity
financing. We financed our operations during the year ended
December 31, 2021 primarily from the sale of common shares for cash
for net proceeds of $5,368,000 under the offering pursuant to
Regulation A, and we received the second draw SBA Paycheck
Protection assistance loan for $177,000.
Subsequent to December 31, 2021, we issued 134,853 shares of common
stock for services with a fair value of $6,000.
Subsequent to December 31, 2021, we repaid convertible notes,
secured notes payable and accrued interest in the aggregate of
$26,000.
Going Concern
We have yet to establish any history of profitable operations.
During the three months ended March 31, 2022, the Company incurred
a net loss of $2,867,000 and used cash in operating activities of
$1,060,000, and at March 31, 2022, the Company had a stockholders’
deficit of $12,814,000. In addition, we are in default on notes
payable and convertible notes payable in the aggregate amount of
$2,861,000. These factors raise substantial doubt about our ability
to continue as a going concern within one year after the date the
financial statements are issued. In addition, the Company’s
independent registered public accounting firm, in its report
published on our December 31, 2021 year-end financial statements,
and Note 1 in our unaudited financial statements, raised
substantial doubt about the Company’s ability to continue as a
going concern. The Company’s financial statements do not include
any adjustments that might result from the outcome of this
uncertainty should we be unable to continue as a going concern.
Management estimates that the current funds on hand will be
sufficient to continue operations through the next six months.
Our ability to continue as a going concern is dependent upon our
ability to continue to implement our business plan. Currently,
management is attempting to increase revenues by selling through a
channel of distributors, value added resellers, strategic partners
and original equipment manufacturers. While we believe in the
viability of its strategy to increase revenues, there can be no
assurances to that effect. Our ability to continue as a going
concern is dependent upon our ability to increase our customer base
and realize increased revenues. No assurance can be given that any
future financing, if needed, will be available or, if available,
that it will be on terms that are satisfactory to us. Even if we
are able to obtain additional financing, if needed, it may contain
undue restrictions on our operations, in the case of debt
financing, or cause substantial dilution for our stockholders, in
the case of equity financing.
Changes in Authorized Shares and Forward Split of BlockSafe
Shares
In April 2020, an increase of the authorized shares of the
Company’s common stock from twelve billion (12,000,000,000) to
seventeen billion (17,000,000,000), $0.0001 par value, was
ratified, effective upon the filing of an amendment to our
Certificate of Incorporation with the Wyoming Secretary of State.
The amendment was adopted in April 2020.
In April 2020, our Board of Directors and the holders of a majority
of the voting power approved a resolution to effectuate a 500:1
Reverse Stock Split resolution for a reduction in the authorized
common stock from seventeen billion (17,000,000,000) to fourteen
billion (14,000,000,000), $0.0001 par value, of the Company. The
amendment was adopted in June 2020.
In December 2020, a decrease of the authorized shares of the
Company’s common stock from fourteen billion (14,000,000,000) to
four billion (4,000,000,000), $0.0001 par value, was ratified,
effective upon the filing of an amendment to our Certificate of
Incorporation with the Wyoming Secretary of State. The amendment
was adopted in December 2020.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that are
reasonably likely to have a current or future effect on our
financial condition, revenues, result of operations, liquidity or
capital expenditures.
Critical Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Significant estimates include those related to accounting
for financing obligations, assumptions used in valuing stock
instruments issued for services, assumptions used in valuing
derivative liabilities, the valuation allowance for deferred tax
assets, and the accrual of potential liabilities. Actual results
could differ from those estimates.
Revenue Recognition
The Company follows the guidance of Accounting Standards
Codification (ASC) 606, Revenue from Contracts with
Customers. ASC 606 creates a five-step model that requires
entities to exercise judgment when considering the terms of
contracts, which includes (1) identifying the contracts or
agreements with a customer, (2) identifying our performance
obligations in the contract or agreement, (3) determining the
transaction price, (4) allocating the transaction price to the
separate performance obligations, and (5) recognizing revenue as
each performance obligation is satisfied. The Company only applies
the five-step model to contracts when it is probable that the
Company will collect the consideration it is entitled to in
exchange for the services it transfers to its clients.
The Company’s revenue consists of revenue from sales and support of
our software products. Revenue primarily consists of sales of
software licenses and subscriptions of our ProtectID®, GuardedID®,
MobileTrust®, PrivacyLoK™ and SafeVchat™ products. We recognize
revenue from these arrangements ratably over the contractual
service period. For service contracts, the Company’s performance
obligations are satisfied, and the related revenue is recognized,
as services are rendered.
The Company offers no discounts, rebates, rights of return, or
other allowances to clients which would result in the establishment
of reserves against service revenue. Additionally, to date, the
Company has not incurred incremental costs in obtaining a client
contract.
Cost of revenue includes direct costs and fees related to the sale
of our products.
Share-Based Payments
The Company periodically issues stock options, warrants, and shares
of common stock as share-based compensation to employees and
non-employees in non-capital raising transactions for services and
for financing costs. The Company accounts for such grants issued
and vesting based on FASB ASC 718, Compensation – Stock
Compensation (Topic 718) whereby the value of the award is measured
on the date of grant and recognized as compensation expense on the
straight-line basis over the vesting period. The Company recognizes
the fair value of stock-based compensation within its Statements of
Operations with classification depending on the nature of the
services rendered.
Additional Information
You are advised to read our Form 10-Q in conjunction with other
reports and documents that we file from time to time with the SEC.
In particular, please read our Quarterly Reports on Form 10-Q,
Annual Reports on Form 10-K, and Current Reports on Form 8-K that
we file from time to time. You may obtain copies of these reports
directly from us or from the SEC at the SEC’s Public Reference Room
at 100 F. Street, N.E. Washington, D.C. 20549, and you may obtain
information about obtaining access to the Reference Room by calling
the SEC at 1-800-SEC-0330. In addition, the SEC maintains
information for electronic filers at its website
http://www.sec.gov.
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT
EMPLOYEES
The following sets forth our executive officers and/or Directors,
their ages, and all offices and positions held with us.
|
Name
|
|
Age
|
|
Position
|
|
Mark L. Kay
|
|
73
|
|
Chief Executive Officer and Chairman of the
Board of Directors
|
|
Philip E. Blocker
|
|
65
|
|
Chief Financial Officer
|
|
Ramarao Pemmaraju
|
|
61
|
|
Chief Technical Officer and Director
|
|
George Waller
|
|
64
|
|
Executive Vice President and Marketing
Director
|
Our Directors hold their offices until the next annual meeting of
the shareholders and until their successors have been duly elected
and qualified or until their earlier resignation, removal of office
or death. Our executive officers are elected by the Board of
Directors to serve until their successors are elected and
qualified.
The following is a brief description of the business experience of
our executive officers who are also the Directors and significant
employees:
Mark L. Kay, Chief Executive Officer and Chairman of the Board of
Directors
Mr. Kay joined StrikeForce as our CEO in May 2003 following his
retirement at JPMorganChase & Co. In December 2008, a majority
of the Board of Directors, by written consent, eliminated the
position of our President, with those responsibilities being
assumed by Mr. Kay. A majority of the Board of Directors also
appointed Mr. Kay as the Chairman of the Board in December 2008.
Prior to joining StrikeForce Mr. Kay was employed by JPMorganChase
& Co. from August of 1977 until his retirement in December
2002, at which time he was a Managing Director of the firm. During
his tenure with JPMorganChase & Co. Mr. Kay led strategic and
corporate business groups with global teams up to approximately
1,000 people. His responsibilities also included Chief Operations
Officer, Chief Information Officer, and Global Technology Auditor.
Mr. Kay’s business concentrations were in securities (fixed income
and equities), proprietary trading and treasury, global custody
services, audit, cash management, corporate business services and
web services. Prior to his employment with JPMorganChase & Co.,
Mr. Kay was a systems engineer at Electronic Data Services (EDS)
for approximately five years from September 1972 through to August
1977. He holds a B.A. in Mathematics from CUNY.
Philip E. Blocker, Chief Financial Officer
Mr. Blocker was CFO of MediaServ, a NYC based Internet software
development company, in 2001. Prior to MediaServ, Mr. Blocker was a
partner in POLARIS, a $25 million technology reseller, specializing
in storage and high availability solutions. He is a Certified
Public Accountant and has practical experience with taking private
companies public.
Ramarao Pemmaraju, Chief Technology Officer
Mr. Pemmaraju Joined StrikeForce in July 2002 as our Chief
Technology Officer (CTO) and the inventor of the ProtectID®
product. In May 1999 Mr. Pemmaraju co-founded NetLabs, which
developed security software products. Mr. Pemmaraju concentrated
his time on NetLabs from July 2001 through to July 2002. From June
2000 to July 2001 Mr. Pemmaraju was a systems architect and project
leader for Coreon, an operations service provider in
telecommunications. From October 1998 through May 2000, Mr.
Pemmaraju was a systems engineer with Nexgen systems, an
engineering consulting firm. Mr. Pemmaraju has over eighteen years’
experience in systems engineering and telecommunications. His
specific expertise is in systems architecture, design and product
development. Mr. Pemmaraju holds a M.S.E.E. from Rutgers University
and a B.E. from Stevens Tech.
George Waller, Executive Vice President and Head of Marketing
Mr. Waller joined StrikeForce in June 2002 as a Vice President in
charge of sales and marketing. In July 2002, Mr. Waller became the
CEO of StrikeForce, a position he held until Mr. Kay joined us in
May 2003. Since May 2003, Mr. Waller has been the Executive Vice
President overseeing Sales, Marketing, Business Development and
product development. From 2000 through June 2002, Mr. Waller was
Vice President of business development for Infopro, an outsourcing
software development firm. From 1999 to 2001, Mr. Waller was Vice
President of sales and Marketing for Teachmeit.com-Incubation
systems, Inc., a multifaceted computer company and sister company
to Infopro. From 1997 through 1999, Mr. Waller was the Vice
President of Internet Marketing for RX Remedy, an aggregator of
medical content for online services. Previously, Mr. Waller was a
Vice President of Connexus Corporation, a software integrator.
Family Relationships
There are no family relationships between any two or more of our
directors or executive officers. There is no arrangement or
understanding between any of our directors or executive officers
and any other person pursuant to which any director or officer was
or is to be selected as a director or officer, and there is no
arrangement, plan or understanding as to whether non-management
shareholders will exercise their voting rights to continue to elect
the current board of directors. There are also no arrangements,
agreements or understandings to our knowledge between
non-management shareholders that may directly or indirectly
participate in or influence the management of our affairs.
Involvement in Certain Legal Proceedings
To the best of our knowledge, during the past five years, none of
the following occurred with respect to a present or former director
or executive officer of our Company: (1) any bankruptcy petition
filed by or against any business of which such person was a general
partner or executive officer either at the time of the bankruptcy
or within two years prior to that time; (2) any conviction in a
criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor offenses);
(3) being subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of any
competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in any
type of business, securities or banking activities; and (4) being
found by a court of competent jurisdiction (in a civil action), the
SEC or the commodities futures trading commission to have violated
a federal or state securities or commodities law, and the judgment
has not been reversed, suspended or vacated.
Board of Directors
Our By-laws provide that there must be no less than one and no more
than seven directors, as determined by the Board of Directors. Our
Board of Directors currently consists of three directors.
Directors need not be our stockholders or residents of the State of
Wyoming. Directors are elected for an annual term and generally
hold office until the next Directors have been duly elected and
qualified. A vacancy on the Board may be filled by the remaining
Directors even though less than a quorum remains. A Director
appointed to fill a vacancy remains a Director until his successor
is elected by the Stockholders at the next annual meeting of
Shareholder or until a special meeting is called to elect
Directors.
Our executive officers are appointed by the Board of Directors.
During fiscal 2021, our Board of Directors met twelve times. The
Board of Directors also uses written resolutions to deal with
certain matters and, during fiscal 2021, thirty-nine written
resolutions were signed by a majority of the Directors.
Compensation of Directors
Our bylaws provide that, unless otherwise restricted by our
certificate of incorporation, our Board of Directors has the
authority to fix the compensation of directors. The directors may
be paid their expenses, if any, related to attendance at each
meeting of the board of directors and may be paid a fixed sum for
attendance at each meeting of the board of directors or a stated
salary as our director. Our bylaws further provide that no such
payment will preclude any director from serving our company in any
other capacity and receiving compensation therefore. Further,
members of special or standing committees may be given compensation
for attending committee meetings.
Committees
We have two committees: the Audit Committee and the Compensation
Committee. At this time, there are no members of either Committee
and the Board of Directors performs the acts of the Committees.
None of our current directors are deemed “independent” directors as
that term is used by the national stock exchanges or have the
requisite public company accounting background or expertise to be
considered an “audit committee financial expert” as that term is
defined under Regulation S-K promulgated under the Securities Act
of 1933, as amended.
It is anticipated that the principal functions of the Audit
Committee will be to recommend the annual appointment of our
auditors, the scope of the audit and the results of their
examination, to review and approve any material accounting policy
changes affecting our operating results and to review our internal
control procedures.
It is anticipated that the Compensation Committee will develop a
Company-wide program covering all employees and that the goals of
such program will be to attract, maintain, and motivate our
employees. It is further anticipated that one of the aspects of the
program will be to link an employee’s compensation to his or her
performance, and that the grant of stock options or other awards
related to the price of the common shares will be used in order to
make an employee’s compensation consistent with shareholders’
gains. It is expected that salaries will be set competitively
relative to the technology development industry and that individual
experience and performance will be considered in setting
salaries.
At present, executive and director compensation matters are
determined by a majority vote of the board of directors.
We do not have a nominating committee. Historically our entire
Board has selected nominees for election as directors. The Board
believes this process has worked well thus far particularly since
it has been the Board’s practice to require unanimity of Board
members with respect to the selection of director nominees. In
determining whether to elect a director or to nominate any person
for election by our stockholders, the Board assesses the
appropriate size of the Board of Directors, consistent with our
bylaws, and whether any vacancies on the Board are expected due to
retirement or otherwise. If vacancies are anticipated, or otherwise
arise, the Board will consider various potential candidates to fill
each vacancy. Candidates may come to the attention of the Board
through a variety of sources, including from current members of the
Board, stockholders, or other persons. The Board of Directors has
not yet had the occasion to, but will, consider properly submitted
proposed nominations by stockholders who are not our directors,
officers, or employees on the same basis as candidates proposed by
any other person.
Section 16(a) Beneficial Ownership
Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and
executive officers, and persons who own more than ten percent (10%)
of our outstanding Common Stock, or the Reporting Persons, to file
with the SEC initial reports of ownership on Form 3 and
reports of changes in ownership of Common Stock on Forms 4 or 5.
Such persons are required by SEC regulation to furnish us with
copies of all such reports they file. Based solely on a review of
Forms 3 and 4 furnished to us by the Reporting Persons or
prepared on behalf of the Reporting Persons by the Company, the
Company believes that the Reporting Persons have complied with
reporting requirements applicable to them.
Involvement in Certain Legal Proceedings
None of the following events have occurred during the past ten
years and are material to an evaluation of the ability or integrity
of any director or officer of the Company:
|
|
1.
|
A petition under the
Federal bankruptcy laws or any state insolvency law was filed by or
against, or a receiver, fiscal agent or similar officer was
appointed by a court for the business or property of such person,
or any partnership in which he was a general partner at or within
two years before the time of such filing, or any corporation or
business association of which he was an executive officer at or
within two years before the time of such filing;
|
|
|
2.
|
Such person was convicted
in a criminal proceeding or is a named subject of a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
|
|
|
3.
|
Such person was the
subject of any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him from, or
otherwise limiting, the following activities:
|
|
|
a.
|
Acting as a futures
commission merchant, introducing broker, commodity trading advisor,
commodity pool operator, floor broker, leverage transaction
merchant, any other person regulated by the Commodity Futures
Trading Commission, or an associated person of any of the
foregoing, or as an investment adviser, underwriter, broker or
dealer in securities, or as an affiliated person, director or
employee of any investment company, bank, savings and loan
association or insurance company, or engaging in or continuing any
conduct or practice in connection with such activity;
|
|
|
b.
|
Engaging in any type of
business practice; or
|
|
|
c.
|
Engaging in any activity
in connection with the purchase or sale of any security or
commodity or in connection with any violation of Federal or State
securities laws or Federal commodities laws;
|
|
|
4.
|
Such person was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any Federal or
State authority barring, suspending or otherwise limiting for more
than 60 days the right of such person to engage in any activity
described in paragraph (f)(3)(i) of this section, or to be
associated with persons engaged in any such activity;
|
|
|
|
|
|
|
5.
|
Such person was found by a court of competent jurisdiction in a
civil action or by the Commission to have violated any Federal or
State securities law, and the judgment in such civil action or
finding by the Commission has not been subsequently reversed,
suspended, or vacated;
|
|
|
|
|
|
|
6.
|
Such person was found by a court of competent jurisdiction in a
civil action or by the Commodity Futures Trading Commission to have
violated any Federal commodities law, and the judgment in such
civil action or finding by the Commodity Futures Trading Commission
has not been subsequently reversed, suspended or vacated;
|
|
|
|
|
|
|
7.
|
Such person was the subject of, or a party to, any Federal or State
judicial or administrative order, judgment, decree, or finding, not
subsequently reversed, suspended or vacated, relating to an alleged
violation of:
|
|
|
a.
|
Any Federal or State
securities or commodities law or regulation; or
|
|
|
b.
|
Any law or regulation
respecting financial institutions or insurance companies including,
but not limited to, a temporary or permanent injunction, order of
disgorgement or restitution, civil money penalty or temporary or
permanent cease-and-desist order, or removal or prohibition order;
or
|
|
|
c.
|
Any law or regulation
prohibiting mail or wire fraud or fraud in connection with any
business entity; or
|
|
|
8.
|
Such person was the
subject of, or a party to, any sanction or order, not subsequently
reversed, suspended or vacated, of any self-regulatory organization
(as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C.
78c(a)(26))), any registered entity (as defined in Section 1(a)(29)
of the Commodity Exchange Act (7 U.S.C. 1(a)(29)), or any
equivalent exchange, association, entity or organization that has
disciplinary authority over its members or persons associated with
a member.
|
Code of Ethics
We have adopted a code of ethics that applies to our principal
executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions. Our code of ethics contains standards that are
reasonably designed to deter wrongdoing and to promote:
|
·
|
Honest and ethical conduct, including the
ethical handling of actual or apparent conflicts of interest
between personal and professional relationships;
|
|
·
|
Full, fair, accurate,
timely, and understandable disclosure in reports and documents that
we file with, or submits to, the Commission and in other public
communications made by us;
|
|
·
|
Compliance with applicable
governmental laws, rules and regulations;
|
|
·
|
The prompt internal
reporting of violations of the code to the board of directors or
another appropriate person or persons; and
|
|
·
|
Accountability for
adherence to the code.
|
Indemnification of Officers and Directors
As permitted by Wyoming law, our Articles of Incorporation provide
that we will indemnify our directors and officers against expenses
and liabilities they incur to defend, settle, or satisfy any civil
or criminal action brought against them on account of their being
or having been our directors or officers unless, in any such
action, they are adjudged to have acted with gross negligence or
willful misconduct.
Pursuant to the foregoing provisions, we have been informed that,
in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in that Act
and is, therefore, unenforceable.
Stockholder Communications with the Board
Stockholders who wish to communicate with the Board of Directors
should send their communications to the Chairman of the Board at
the address listed below. The Chairman of the Board is responsible
for forwarding communications to the appropriate Board members.
StrikeForce Technologies, Inc.
1090 King George’s Post Road
Suite #603
Edison, NJ 08837
Attn: Mark L. Kay, Chairman
Shareholder Recommendations for Board Nominees
There have been no material changes to the procedures by which
security holders may recommend nominees to the Company’s Board of
Directors.
COMPENSATION OF DIRECTORS AND EXECUTIVE
OFFICERS
Summary Compensation Table
The following information is related to the compensation paid,
distributed, or accrued by us for the fiscal years ended December
31, 2021 and 2020 to our Chief Executive Officer (principal
executive officer) during the last fiscal year and the two other
most highly compensated executive officers serving as of the end of
the last fiscal year whose compensation exceeded $100,000 (the
“Named Executive Officers”). The foregoing persons are collectively
referred to in this Information Statement as the “Named Executive
Officers.” Compensation information is shown for the years ended
December 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan
Option
|
|
|
Securities
|
|
|
Nonqualified
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Awards
|
|
|
Underlying
|
|
|
Compensation
|
|
|
All
Other
|
|
|
|
|
|
Name/ Principal
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
(Vested)
|
|
|
Options/SARs
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
|
|
Position
|
|
Year
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark L. Kay
|
|
2021
|
|
|
161,000 |
|
|
|
10,000 |
|
|
|
- |
|
|
|
662,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
833,000 |
|
|
Chief Executive Officer
|
|
2020
|
|
|
158,000 |
|
|
|
6,000 |
|
|
|
- |
|
|
|
51,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
215,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George Waller
|
|
2021
|
|
|
161,000 |
|
|
|
10,000 |
|
|
|
- |
|
|
|
662,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
833,000 |
|
|
Executive Vice President
|
|
2020
|
|
|
160,000 |
|
|
|
6,000 |
|
|
|
- |
|
|
|
51,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
217,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ramarao Pemmeraju
|
|
2021
|
|
|
161,000 |
|
|
|
10,000 |
|
|
|
- |
|
|
|
2,729,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,900,000 |
|
|
Chief Technology Officer
|
|
2020
|
|
|
161,000 |
|
|
|
6,000 |
|
|
|
- |
|
|
|
51,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
218,000 |
|
On July 31, 2010, Philip E. Blocker was appointed our Chief
Financial Officer. Mr. Blocker is not our employee. He received fee
payments of $2,000 in 2021 and $2,000 in 2020. Mr. Blocker received
no option awards in 2021 or 2020.
Outstanding Option Awards at Year End
The following table provides certain information regarding
unexercised options to purchase common stock, stock options that
have not vested, and equity-incentive plan awards outstanding at
December 31, 2021 for each Named Executive Officer and/or
Director:
|
Outstanding Equity Awards At Fiscal
Year-End Table
|
|
|
|
Option
Awards
|
|
|
|
|
Stock
Awards
|
|
|
Name
|
|
Number of
Securities Underlying Unexercised Options
(#)
Exercisable
|
|
|
Number of
Securities Underlying Unexercised Options
(#)
Unexercisable
|
|
|
Equity
Incentive
Plan
Awards:
Number of Securities Underlying Unexercised Unearned Options
(#)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option Expiration
Date
|
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(#)
|
|
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have
Not
Vested
(#)
|
|
|
Equity
Incentive
Plan
Awards: Market or
Payout
Value of Unearned
Shares,
Units or
Other
Rights That Have
Not Vested ($)
|
|
|
Mark L. Kay
|
|
|
1 |
|
|
|
- |
|
|
|
- |
|
|
$ |
1,121,250,000 |
|
|
01/03/23
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
72,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
3.125 |
|
|
09/28/26
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
20,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
2.85 |
|
|
12/21/27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
2.05 |
|
|
12/17/29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
546,448 |
|
|
|
9,453,552 |
|
|
|
- |
|
|
$ |
0.0375 |
|
|
12/22/31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
0.005 |
|
|
12/18/30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George Waller
|
|
|
1 |
|
|
|
- |
|
|
|
- |
|
|
$ |
1,121,250,000 |
|
|
01/03/23
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
72,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
3.125 |
|
|
09/28/26
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
20,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
2.85 |
|
|
12/21/27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
2.05 |
|
|
12/17/29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
546,448 |
|
|
|
9,453,552 |
|
|
|
- |
|
|
$ |
0.0375 |
|
|
12/22/31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ramarao Pemmaraju
|
|
|
1 |
|
|
|
- |
|
|
|
- |
|
|
$ |
1,121,250,000 |
|
|
01/03/23
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
72,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
3.125 |
|
|
09/28/26
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
20,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
2.85 |
|
|
12/21/27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
2.05 |
|
|
12/17/29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
546,448 |
|
|
|
9,453,552 |
|
|
|
- |
|
|
$ |
0.0375 |
|
|
12/22/31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Exercises and Stock Vested Table
None.
Pension Benefits Table
None.
Non-Qualified Deferred Compensation
Table
None.
All Other Compensation Table
None.
Perquisites Table
None.
Director Compensation
All three of our directors were also our executive officers through
December 31, 2021. Our directors did not receive any separate
compensation for serving as such during fiscal 2021.
Non-Director Compensation
In April 2021, Will Lynch was hired as the Director of Channel
Distribution and not as a Named Executive Officer. A Director of
Channel Distribution develops, services, and grows relationships
with clients. Mr. Lynch has an annual salary of $100,000 and will
also receive 2% net of all Channel sales. Mr. Lynch reports to our
Executive Vice President and Marketing Director.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Share Ownership of Certain Beneficial
Owners
The following table sets forth certain information as of June 17,
2022, with respect to the shares of common stock beneficially owned
by: (i) each director; (ii) each executive officer; (iii) all
current executive officers (regardless of salary and bonus level)
and directors as a group; and (iv) each person or entity known by
us to beneficially own more than 5% of our outstanding common
stock. The address for each director and executive officer is 1090
King Georges Post Road, Suite 603, Edison, New Jersey 08837. Unless
otherwise indicated, the shareholders listed in the table below
have sole voting and investment powers with respect to the shares
indicated:
This table is based upon information obtained from our stock
records.
|
NAME OF BENEFICIAL OWNER
|
|
AMOUNT OF
OWNERSHIP(1)
|
|
|
|
|
|
PERCENTAGE OF
CLASS(2) (excluding Preferred Stock (11)
|
|
|
Mark L. Kay
|
|
|
10,658,451 |
|
(3 |
),(13) |
|
|
0.9153 |
% |
|
Ramarao Pemmaraju
|
|
|
20,291,131 |
|
(4 |
),(5),(13) |
|
|
1.7426 |
% |
|
George Waller
|
|
|
12,120,803 |
|
(6 |
),(7),(13) |
|
|
1.0409 |
% |
|
All directors and executive officers as a
group (3 persons)
|
|
|
43,070,385 |
|
(8 |
) |
|
|
3.6989 |
% |
|
NetLabs.com, Inc.
|
|
|
2 |
|
(9 |
),(10) |
|
|
0.00000017 |
% |
|
|
(1)
|
A person is deemed to be
the beneficial owner of securities that can be acquired by such
person within 90 days from the date hereof.
|
|
|
(2)
|
Based on 1,010,611,161
shares of common stock outstanding as of May 27, 2022; also
including 21 shares of common stock available upon the conversion
of certain convertible loans, 2,294,394 shares of common stock
available upon the conversion of Series B Preferred stock,
83,133,001 shares of common stock underlying common stock purchase
options and 68,375,757 shares of common stock underlying
warrants.
|
|
|
(3)
|
Includes 1 share of common
stock available upon the conversion of certain convertible loans
valued at $4,875,000,000,000 per share for $240,000 of convertibles
and $3,656,250,000,000 per share for $28,000 of convertibles, 1
share of common stock underlying vested ten-year options valued at
$1,121,250,000 per share, 72,000 shares of common stock underlying
vested ten-year options valued at $3.125 per share, 20,000 shares
of common stock underlying vested ten-year options valued at $2.85
per share, 20,000 shares of common stock underlying vested ten-year
options valued at $2.05 per share, 10,000,000 shares of common
stock underlying vested ten-year options valued at $0.0375 per
share and 10,000,000 shares of common stock underlying vested
ten-year options valued at $0.005 per share. Mark L. Kay, along
with Ramarao Pemmaraju and George Waller each hold one share of
Series A Preferred Shares which, collectively, allow the holders to
vote up to 80% of the issued and outstanding shares of common and
preferred stock; Mark Kay, along with Ramarao Pemmaraju and George
Waller have irrevocably waived any conversion rights.
|
|
|
|
|
|
|
(4)
|
Includes 1 share of common
stock available upon the conversion of certain convertible loans
valued at $4,875,000,000,000 per share for $25,000 of convertibles
and $3,656,250,000,000 per share for $5,000 of convertibles, 2
shares of common stock underlying vested ten-year options valued at
$1,121,250,000 per share, 116,000 shares of common stock underlying
vested ten-year options valued at $3.125 per share, 30,000 shares
of common stock underlying vested ten-year options valued at $2.85
per share, 30,000 shares of common stock underlying vested ten-year
options valued at $2.05 per share and 15,000,000 shares of common
stock underlying vested ten-year options valued at $0.0375 per
share. Of the total shares, 64,002 shares, consisting of 1 share of
common stock available upon the conversion of certain convertible
loans valued at $4,875,000,000,000 per share for $25,000 of
convertibles and $3,656,250,000,000 per share for $5,000 of
convertibles, 1 share of common stock underlying vested ten-year
options valued at $1,121,250,000 per share, 44,000 shares of common
stock underlying vested ten-year options valued at $3.125 per
share, 10,000 shares of common stock underlying vested ten-year
options valued at $2.85 per share, 10,000 shares of common stock
underlying vested ten-year options valued at $2.05 per share and
5,000,000 shares of common stock underlying vested ten-year options
valued at $0.0375 per share are in the name of Sunita Pemmaraju who
is a family member of Ramarao Pemmaraju. Mark L. Kay, along with
Ramarao Pemmaraju and George Waller each hold one share of Series A
Preferred Shares which, collectively, allow the holders to vote up
to 80% of the issued and outstanding shares of common stock; Mark
Kay, along with Ramarao Pemmaraju and George Waller have
irrevocably waived any conversion rights.
|
|
|
(5)
|
Excludes shares owned by NetLabs.com, Inc.
which is controlled by Ramarao Pemmaraju and another
individual.
|
|
|
(6)
|
Includes 1 share listed in the name of
Katherine LaRosa who is a family member of George Waller.
|
|
|
(7)
|
Includes 1 share of common
stock underlying vested ten-year options valued at $1,121,250,000
per share, 72,000 shares of common stock underlying vested ten-year
options valued at $3.125 per share, 20,000 shares of common stock
underlying vested ten-year options valued at $2.85 per share,
20,000 shares of common stock underlying vested ten-year options
valued at $2.05 per share and 10,000,000 shares of common stock
underlying vested ten-year options valued at $0.0375 per share.
Mark Kay, along with Ramarao Pemmaraju and George Waller each hold
one share of Series A Preferred Shares which, collectively, allow
the holders to vote up to 80% of the issued and outstanding shares
of common stock; Mark Kay, along with Ramarao Pemmaraju and George
Waller have irrevocably waived any conversion rights.
|
|
|
(8)
|
Includes 2 shares of
common stock available upon the conversion of certain convertible
loans valued at $4,875,000,000,000 per share for $265,000 of
convertibles and $3,656,250,000,000 per share for $33,000 of
convertibles, 4 shares of common stock underlying vested ten-year
options valued at $1,121,250,000 per share, 260,000 shares of
common stock underlying vested ten-year options valued at $3.125
per share, 70,000 shares of common stock underlying vested ten-year
options valued at $2.85 per share, 70,000 shares of common stock
underlying vested ten-year options valued at $2.05 per share,
35,000,000 shares of common stock underlying vested ten-year
options valued at $0.0375 per share and 10,000,000 shares of common
stock underlying vested ten-year options valued at $0.005 per
share. Excludes the Series A Preferred Shares: Mark L. Kay, along
with Ramarao Pemmaraju and George Waller, each hold one share of
Series A Preferred Shares which, collectively, allow the holders to
vote up to 80% of the issued and outstanding shares of common
stock; Mark Kay, along with Ramarao Pemmaraju and George Waller,
have irrevocably waived any conversion rights.
|
|
|
|
|
|
|
(9)
|
Ramarao Pemmaraju controls
NetLabs.com, Inc. along with another individual.
|
|
|
(10)
|
Includes 1 share of common stock underlying
vested ten-year options valued at $975,000,000 per share.
|
|
|
(11)
|
Mark Kay, along with
Ramarao Pemmaraju and George Waller hold 3 shares of preferred
stock. The Series A Preferred Stock collectively has voting rights
equal to eighty percent of the total current issued and outstanding
shares of common stock.
|
DESCRIPTION OF SECURITIES
Equity Incentive Plan Information
The following table sets forth as of December 31, 2021, the total
number of shares of our common stock which may be issued upon the
exercise of outstanding stock options and other rights under
compensation plans approved by the shareholders, and under
compensation plans not approved by the shareholders. The table also
sets forth the weighted average purchase price per share of the
shares subject to those options, and the number of shares available
for future issuance under those plans.
|
Plan Category
|
|
Number of
securities to be issued upon exercise of outstanding
options
|
|
|
Weighted-average
exercise price of outstanding options
|
|
|
Number of
securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
|
|
|
Equity compensation plans approved by
security holders
|
|
|
20,236,826 |
|
|
$ |
0.0274 |
|
|
|
379,763,174 |
|
|
Equity compensation plans not approved by
security holders
|
|
|
N/A |
|
|
$ |
N/A |
|
|
|
N/A |
|
|
Total
|
|
|
20,236,826 |
|
|
$ |
0.0274 |
|
|
|
379,763,174 |
|
2012 Stock Option Plan
In November 2012, the stockholders approved the 2012 Stock Option
Plan for our employees, effective January 3, 2013. The number of
shares authorized for issuance under the plan was 100,000,000.
The number of shares authorized for issuance under the Incentive
Plan was increased to 200,000,000 in September 2016 by unanimous
consent of the Board of Directors.
The number of shares authorized for issuance under the Incentive
Plan was increased to 400,000,000 in November 2017 by unanimous
consent of the Board of Directors.
In December 2020, we awarded options to purchase 57,500,000 shares
of our common stock to our management team and employees,
exercisable at $0.005 per share, expiring ten (10) years from the
date of grant and vesting over a six-month period.
In February 2021, 12,250,000 unvested options granted in fiscal
2020 were modified and such options became fully vested. Pursuant
to current accounting guidelines, we remeasured the fair value of
these options and determined their fair value to be $3,675,000 and
was recorded as stock compensation expense. We also recorded
additional stock compensation expense of $2,712,000 to account for
options granted in the prior year that vested. In addition, we also
issued 17,208,335 shares of the Company’s common stock upon
cashless exercise of 17,500,000 options.
In July 2021, we issued 13,557,693 shares of the Company’s common
stock upon cashless exercise of 15,000,000 options.
In September 2021, we issued 9,189,627 shares of the Company’s
common stock upon cashless exercise of 10,000,000 options.
In October 2021, we awarded options to purchase 2,500,000 shares of
our common stock to our management team and employees, exercisable
at $0.005 per share, expiring ten (10) years from the date of grant
and vesting over a six-month period.
In December 2021, we awarded options to purchase 65,000,000 shares
of our common stock to our management team and employees,
exercisable at $0.0375 per share, expiring ten (10) years from the
date of grant and vesting over a six-month period.
The 2012 Stock Option Plan will terminate on October 5, 2022, the
ten-year anniversary of its effective date (ratified by the
shareholders on November 16, 2012). However, awards granted before
the termination of the 2012 Stock Option Plan may extend beyond
that date in accordance with their terms. The Board of Directors
intend to approve a 2022 Stock Option Plan and will look to have
the shareholders ratify the new 2022 Stock Option Plan, in whatever
form, in the next annual meeting following its approval by the
Board of Directors..
General
Common Stock
The shares of our common stock presently outstanding, and any
shares of our common stock issues upon exercise of stock options
and/or common stock purchase warrants, will be fully paid and
non-assessable. Each holder of common stock is entitled to one vote
for each share owned on all matters voted upon by shareholders, and
a majority vote is required for all actions to be taken by
shareholders. In the event we liquidate, dissolve or wind-up our
operations, the holders of the common stock are entitled to share
equally and ratably in our assets, if any, remaining after the
payment of all our debts and liabilities and the liquidation
preference of any shares of preferred stock that may then be
outstanding. The common stock has no preemptive rights, no
cumulative voting rights, and no redemption, sinking fund, or
conversion provisions. Since the holders of common stock do not
have cumulative voting rights, holders of more than 50% of the
outstanding shares can elect all of our Directors, and the holders
of the remaining shares by themselves cannot elect any Directors.
Holders of common stock are entitled to receive dividends, if and
when declared by the Board of Directors, out of funds legally
available for such purpose, subject to the dividend and liquidation
rights of any preferred stock that may then be outstanding.
In April 2020, an increase of the authorized shares of the
Company’s common stock from twelve billion (12,000,000,000) to
seventeen billion (17,000,000,000), $0.0001 par value, was
ratified, effective upon the filing of an amendment to our
Certificate of Incorporation with the Wyoming Secretary of State.
The amendment was adopted in April 2020.
On April 13, 2020, our Board of Directors and the holders of a
majority of the voting power approved a resolution to effectuate a
500:1 Reverse Stock Split a resolution for a Reduction in
Authorized from seventeen billion (17,000,000,000) Common Stock
down to fourteen billion (14,000.000.000) Common Stock, $0.0001 par
value, of the Company. The amendment was adopted in June 2020.
On November 13, 2020, the Company’s filing of an Offering Circular
on Form 1-A, pursuant to Regulation A (File Number: 024-11267)
was qualified by the Securities and Exchange Commission. The
Company registered 668,449,198 shares of common stock maximum
proceeds of $2,315,000 (after deducting the maximum broker discount
and costs of the offering).
In December 2020, a decrease of the authorized shares of the
Company’s common stock from fourteen billion (14,000,000,000) to
four billion (4,000,000,000), $0.0001 par value, was ratified,
effective upon the filing of an amendment to our Certificate of
Incorporation with the Wyoming Secretary of State. The amendment
was adopted in December 2020.
Preferred Stock
On October 21, 2010, the Company amended its Articles of
Incorporation in New Jersey to authorize 10,000,000 shares of
preferred stock, par value $0.10. The designations, rights, and
preferences of such preferred stock are to be determined by the
Board of Directors. On November 15, 2010, the Company changed its
domicile from the State of New Jersey to the State of Wyoming.
In addition to the 10,000,000 shares of preferred stock authorized
on October 21, 2010, on January 10, 2011, 100 shares of preferred
stock were designated as Series A Preferred Stock and 100,000,000
shares were designated as Series B Preferred Stock. The bylaws
under the Wyoming Incorporation were amended to reflect the rights
and preferences of each additional new designation.
The Series A Preferred Stock collectively has voting rights equal
to eighty percent of the total current issued and outstanding
shares of common stock. If at least one share of Series A Preferred
Stock is outstanding, the aggregate shares of Series A Preferred
Stock shall have voting rights equal to the number of shares of
common stock equal to four times the sum of the total number of
shares of common stock issued and outstanding, plus the number of
shares of Series B Preferred Stock (or other designated preferred
stock) which are issued and outstanding.
The Series B Preferred Stock has preferential liquidation rights in
the event of any liquidation, dissolution or winding up of the
Company, such liquidation rights to be paid from the assets of the
Company not delegated to parties with greater priority at $1.00 per
share or, in the event an aggregate subscription by a single
subscriber of the Series B Preferred Stock is greater than
$100,000,000, $0.997 per share. The Series B Preferred Stock shall
be convertible to a number of shares of common stock equal to the
price of the Series B Preferred Stock divided by the par value of
the Series B Preferred Stock. The option to convert the shares of
Series B Preferred Stock may not be exercised until three months
following the issuance of the Series B Preferred Stock to the
recipient shareholder. The Series B Preferred Stock shall have ten
votes on matters presented to the shareholders of the Company for
one share of Series B Preferred Stock held. The initial price of
the Series B Preferred Stock shall be $2.50, (subject to adjustment
by the Company’s Board of Directors) until such time, if ever, the
Series B Preferred Stock are listed on a secondary and/or public
exchange.
In February 2014, the Company’s Board of Directors amended the
conversion feature of the Series B Preferred Stock, to permit
conversion to common shares at a 40% market discount to current
market value at the time the Company receives a conversion request.
Current market value is defined as the average of the immediately
prior five trading day’s closing prices. Additionally, when Series
B Preferred Stock shares convert to the Company’s common stock, the
minimum price discount floor level is set at $0.005, as decided by
the Company’s Board of Directors.
Series A Preferred Stock
In 2011, the Company issued three shares of non-convertible Series
A Preferred Stock valued at $329,000 per share, or $987,000 in
aggregate to three members of the management team. The Series A
Preferred Stock are convertible into four times the total number of
common shares plus the total number of shares of Series B preferred
stock issued and outstanding at the time of conversion and have
voting rights equal to eighty percent of the total issued and
outstanding shares of the Company’s common stock. This effectively
provided the management team, upon retention of their Series A
Preferred Stock, voting control on matters presented to the
shareholders of the Company. The shareholders of the Series A
Preferred Stock have each irrevocably waived their conversion
rights relating to the Series A Preferred Stock issued.
Series B Preferred Stock
The Series B Preferred Stock has preferential liquidation rights in
the event of any liquidation, dissolution or winding up of the
Company, such liquidation rights to be paid from the assets of the
Company not delegated to parties with greater priority at $1.00 per
share or, in the event an aggregate subscription by a single
subscriber of the Series B Preferred Stock is greater than
$100,000,000, $0.997 per share. The Series B Preferred Stock shall
be convertible to a number of shares of common stock equal to the
price of the Series B Preferred Stock divided by the par value of
the Series B Preferred Stock. The option to convert the shares of
Series B Preferred Stock may not be exercised until three months
following the issuance of the Series B Preferred Stock to the
recipient shareholder. The Series B Preferred Stock shall have ten
votes on matters presented to the shareholders of the Company for
one share of Series B Preferred Stock held. The initial price of
the Series B Preferred Stock shall be $2.50, (subject to adjustment
by the Company’s Board of Directors) until such time, if ever, the
Series B Preferred Stock are listed on a secondary and/or public
exchange.
As of December 31, 2021, there were 36,667 shares of Series B
Preferred Stock issued and outstanding, 20,000 of which convert to
common shares at a 25% market discount and 16,667 of which convert
to common shares at a 30% market discount.
In May 2022, a warrant holder agreed to extinguish a total of
605,476 warrant shares, relating to warrant agreements dated
November 21, 2019 and July 27, 2020, in exchange for a one-time
payment from the Company in the amount of $165,000.
All of the above offerings and sales, except the afore-mentioned
shares issued pursuant to a conversion of convertible notes, were
made in reliance upon the exemption from registration under Rule
506 of Regulation D promulgated under the Securities Act of 1933
and/or Section 4(2) of the Securities Act of 1933, based on the
following: (a) the investors confirmed to us that they were
“accredited investors,” as defined in Rule 501 of Regulation D
promulgated under the Securities Act of 1933 and had such
background, education and experience in financial and business
matters as to be able to evaluate the merits and risks of an
investment in the securities; (b) there was no public offering
or general solicitation with respect to the offering; (c) the
investors were provided with certain disclosure materials and all
other information requested with respect to our company;
(d) where applicable, the investors acknowledged that all
securities being purchased were “restricted securities” for
purposes of the Securities Act of 1933, and agreed to transfer such
securities only in a transaction registered under the Securities
Act of 1933 or exempt from registration under the Securities Act;
and (e) where applicable, a legend was placed on the
certificates representing each such security stating that it was
restricted and could only be transferred if subsequent registered
under the Securities Act of 1933or transferred in a transaction
exempt from registration under the Securities Act of 1933.
Voting Rights
Each holder of Common Stock is entitled to one vote for each share
of Common Stock held on all matters submitted to a vote of
stockholders.
The three shares of the issued and outstanding shares of the Series
A preferred stock have voting rights equal to eighty percent of the
total issued and outstanding shares of our common stock.
Dividends
Subject to preferences that may be applicable to any
then-outstanding shares of Preferred Stock, if any, and any other
restrictions, holders of Common Stock are entitled to receive
ratably those dividends, if any, as may be declared from time to
time by our board of directors out of legally available funds. We
and our predecessors have not declared any dividends in the past.
Further, we do not presently contemplate that there will be any
future payment of any dividends on Common Stock.
Amendment of our Bylaws
Our bylaws may be adopted, amended or repealed by the affirmative
vote of a majority of our outstanding shares. Subject to applicable
law, our bylaws also may be adopted, amended or repealed by our
Board of Directors.
Transfer Agent
Our transfer agent is Worldwide Stock Transfer, LLC. Their address
is One University Plaza, Suite 505, Hackensack, NJ 07601.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE.
None of the following parties has, since our date of incorporation,
had any material interest, direct or indirect, in any transaction
with us or in any presently proposed transaction that has or will
materially affect us:
|
·
|
Any of our directors or officers, except as
described below;
|
|
·
|
Any person proposed as a nominee for election
as a director;
|
|
·
|
Any person who beneficially owns, directly or
indirectly, shares carrying more than 5% of the voting rights
attached to our outstanding shares of common stock;
|
|
·
|
Any relative or spouse of any of the
foregoing persons who has the same house address as such
person.
|
BlockSafe Technologies, Inc.
BlockSafe Technologies, Inc. (“BlockSafe”) was formed on December
1, 2017 in the State of Wyoming. BlockSafe is in the business of
providing total cyber security solutions and is the licensee from
our company of our desktop anti-malware product called
“GuardedID®” and a one of a kind mobile application
called “MobileTrust®”. BlockSafe is intended to be developed as an
enterprise focusing on using our licensed technology in the field
of cryptocurrency and its use of blockchains. Small revenues have
been generated to date as BlockSafe is still in the developmental
stage. There can be no assurances on the success of this project or
any profitability arising from BlockSafe.
As of December 31, 2021, no tokens have been developed or issued.
There is no assurance as to whether, or at what amount, or on what
terms, tokens will be available. Moreover, there can be no
assurance how such technology will function, which could expose us
to legal and regulatory issues. Cryptocurrency and its use of
blockchains is still in the development stage and receiving mixed
results. The Securities and Exchange Commission has, in its
dissemination of information to the public, expressed that tokens
in the United States would be treated as securities pursuant to the
Howey Test. This standard has been adopted, in various
forms, in numerous other jurisdictions. The European Union and
China are contemplating their own form of cryptocurrency and
Facebook Libra cryptocurrency recently lost the support of PayPal
(see https://www.independent.co.uk/topic/cryptocurrency, which
article is not incorporated by reference to this filing). On March
30, 2022, the Securities and Exchange Commission’s Division of
Examinations announced its 2022 examination priorities which
included the review of the use of crypto-assets as one of its top
five priorities for review. This review and any regulatory rules
and regulations arising from this review may impact the BlockSafe
business. In addition, legal and regulatory developments could
render the technology impermissible, which could have a material
adverse effect on BlockSafe and us.
In June 2018, two members of our management team, George Waller,
our Executive Vice President and Ramarao Pemmaraju, our Chief
Technical Officer, were appointed to BlockSafe to serve as the
Chief Executive Officer and Chief Technical Officer, respectively.
Additionally, our Chief Executive Officer of StrikeForce, Mark L.
Kay, also an appointee to the Board of Directors of BlockSafe, was
appointed as Chairman and President of BlockSafe.
BlockSafe is owned 49% by the Company and 31% by three executive
officers of the Company. BlockSafe meets the definition of a
variable interest entity (“VIE”) and based on the determination
that we are the primary beneficiary of BlockSafe, BlockSafe’s
operating results, assets and liabilities are consolidated by the
Company. Intercompany balances and transactions have been
eliminated in consolidation. At December 31, 2021, noncontrolling
interests represents 51% of BlockSafe that we do not directly own.
The Company and BlockSafe have a management agreement pursuant to
which BlockSafe shall remit a management fee of $36,000 per month
to the Company, and when BlockSafe reaches a milestone of
$1,000,000 in financing, an additional management fee of $5,000,000
shall be owed to the Company, payable monthly over three years. The
management fee is currently eliminated in consolidation. At
December 31, 2021 and 2020, the amount of VIE cash on the
accompanying consolidated balance sheets can be used only to settle
obligations of BlockSafe, and the amounts of VIE accounts payable,
VIE Notes Payable, VIE Accrued Interest, and VIE Financing
Obligation have no recourse to the general credit of the
Company.
Cybersecurity Risk Solutions, LLC
On April 15, 2021, StrikeForce formally closed a Member Interest
Purchase Agreement in which StrikeForce acquired the entire Member
Interests of Cybersecurity Risk Solutions, LLC, a New Jersey
limited liability company. In April 2021, we issued 500,000 shares
of common stock with a fair value of $36,000, for the purchase of
Cybersecurity Risk Solutions, LLC. At the date of acquisition,
Cybersecurity Risk Solutions, LLC had nominal assets and
liabilities, no revenues and limited operating history.
Furthermore, the Company also determined that the acquisition did
not meet the requirement of a significant acquisition pursuant to
the regulations of the Securities and Exchange Commission.
Cybersecurity Risk Solutions, LLC is a cybersecurity firm offering
cyber, privacy & data protection services including a personal
cyber risk assessment, the industry’s first cyber health score,
report and custom action plan, as well as ongoing vulnerability
scanning, hack monitoring and dark web intelligence monitoring. For
more information, go
to https://SecureCyberID.com (which website is
expressly not included in this filing). Will Lynch, the prior sole
member of Cybersecurity Risk Solutions, LLC was hired by
StrikeForce as the Director of Channel Distribution and not as a
Named Executive Officer. A Director of Channel Distribution
develops, services, and grows relationships with clients. Mr. Lynch
has an annual salary of $100,000 and will also receive 2% net of
all Channel sales. Mr. Lynch reports to our Executive Vice
President and Marketing Director.
RELATED PARTY CONVERTIBLE NOTES
In previous years, the Company issued convertible notes to related
parties/officers in exchange for cash and/or services rendered. The
notes are unsecured and were due on December 31, 2021. As of
December 31, 2020, the outstanding balance of the notes payable
amounted to $298,000.
During the year ended December 31, 2021, notes payable aggregating
$30,000 were repaid. In addition, the remaining noteholder also
agreed to extend the maturity date to December 31, 2022 with no
changes to the other terms of the notes payable.
At December 31, 2020, accrued interest due for the convertible
notes – related parties was $625,000. During the year ended
December 31, 2021, interest of $68,000 was accrued, and accrued
interest of $64,000 was repaid. At December 31, 2021, accrued
interest due for the convertible notes – related parties was
$629,000.
RELATED PARTY PROMISSORY NOTES
Notes payable-related parties notes represent notes payable to the
Company’s Chief Executive Officer ranging in interest rates of 0%
per annum to 8% per annum. The notes are unsecured and have
extended due dates of December 31, 2021. As of December 31, 2020,
the outstanding balance of the notes payable amounted to
$952,000.
During the year ended December 31, 2021, notes payable aggregating
$259,000 were repaid. In addition, the noteholder also agreed to
change the maturity date of notes payable issued in previous years
with an aggregate balance of $693,000 to December 31, 2022 with no
changes to the other original term of the notes payable.
At December 31, 2021, the balance of notes payable-related parties
totaled $693,000 which are all due to the Company’s Chief Executive
Officer.
At December 31, 2020, accrued interest due for the notes payable –
related parties was $823,000. During the year ended December 31,
2021, interest of $53,000 was accrued, accrued interest of $6,000
was repaid and accrued interest of $2,000 was written off. At
December 31, 2021, accrued interest due for the notes payable –
related parties was $868,000.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES
Wyoming corporation law provides that:
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a corporation may
indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the
corporation, by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust
or other enterprise, against expenses, including attorneys’ fees,
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with the action, suit or
proceeding if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful;
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a corporation may
indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit
by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses, including amounts paid in
settlement and attorneys’ fees actually and reasonably incurred by
him in connection with the defense or settlement of the action or
suit if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim, issue
or matter as to which such a person has been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom,
to be liable to the corporation or for amounts paid in settlement
to the corporation, unless and only to the extent that the court in
which the action or suit was brought or other court of competent
jurisdiction determines upon application that in view of all the
circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper;
and
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to the extent that a
director, officer, employee or agent of a corporation has been
successful on the merits or otherwise in defense of any action,
suit or proceeding, or in defense of any claim, issue or matter
therein, the corporation shall indemnify him against expenses,
including attorneys’ fees, actually and reasonably incurred by him
in connection with the defense.
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Our articles of incorporation require us to indemnify our directors
and officers against all damages incurred in connection with our
business to the fullest extent provided or allowed by law.
Our bylaws provide that we will advance all expenses incurred to
any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suite or
proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was our director
or officer, or is or was serving at our request as a director or
executive officer of another company, partnership, joint venture,
trust or other enterprise, prior to the final disposition of the
proceeding, promptly following request. This advancement of
expenses is to be made upon receipt of an undertaking by or on
behalf of such person to repay said amounts should it be ultimately
determined that the person was not entitled to be indemnified under
our bylaws or otherwise.
Our bylaws also provide that no advance shall be made by us to any
officer in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, if a determination is reasonably
and promptly made: (a) by the board of directors by a majority vote
of a quorum consisting of directors who were not parties to the
proceeding; or (b) if such quorum is not obtainable, or, even if
obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, that the facts
known to the decision-making party at the time such determination
is made demonstrate clearly and convincingly that such person acted
in bad faith or in a manner that such person did not believe to be
in or not opposed to our best interests.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers or
controlling persons pursuant to the foregoing provisions, or
otherwise, we have been advised that in the opinion of the
Commission this indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable.
INFORMATION ON CONSENTING STOCKHOLDERS
Pursuant to the Company’s Bylaws and the Wyoming Articles of
Incorporation, a vote by the holders of at least a majority of the
outstanding shares of the Company entitled to vote (the “Voting
Shares”) is required to effect the action described herein. The
Company’s Articles of Incorporation does not authorize cumulative
voting for this matter. As of the Record Date, the Company had
1,010,611,161 issued and outstanding shares of common stock, 3
shares of Series A preferred shares and 36,667 Series B preferred
shares, with a total of 5,053,239,155voting shares (4,042,591,324
voting shares representing, for voting purposes the Series A
preferred shares which equate to 80% of the total voting shares and
is entitled to one vote per share). The consenting stockholders are
the record and beneficial owners of 4,042,591,324 shares of the
Company’s preferred and common stock, which represents
approximately 80% of the total number of Voting Shares. Pursuant to
Section 17-16-724 of the Wyoming Statutes, the consenting
stockholders voted in favor of the actions described herein in a
written consent, dated December 16, 2020. No consideration was paid
for the consent. The consenting stockholder’s names, affiliations
with the Company and their beneficial holdings are as follows:
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Name
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Affiliation
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Voting
Shares
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Percentage
(4)
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Mark L. Kay (1)
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Director, Officer and
Stockholder
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26.66 |
% |
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Ram Pemmaraju (2)
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Director, Officer and
Stockholder
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26.66 |
% |
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George Waller (3)
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Director, Officer and
Stockholder
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26.67 |
% |
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TOTAL (4)
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80 |
% |
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(1)
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Mr. Mark L. Kay is the Chief Executive
Officer, Chairman of the Board of Directors and a director of the
Company.
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(2)
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Mr. Ram Pemmaraju is Chief Technical Officer,
Secretary and a director of the Company.
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(3)
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Mr. George Waller is Executive Vice President
and a director of the Company.
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(4)
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Based upon 1,010,611,161
issued and outstanding shares of common stock and 3 shares of
Series A preferred shares and 36,667 Series B preferred shares
(5,053,239,155, “Voting Shares” outstanding as of December 16th,
2020). Includes shares of common stock held by the consenting
shareholders as the preferred shares represented the voting
majority of capital shares.
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DELIVERY OF INFORMATION STATEMENT
To reduce the expenses of delivering duplicate materials to our
stockholders, we are taking advantage of householding rules that
permit us to deliver only one Information Statement to stockholders
who share the same address unless otherwise requested.
If you share an address with another stockholder and have received
only one Information Statement, you may write or call us to request
a separate copy at no cost to you. For future mailings, you may
request separate materials or, if you are receiving multiple copies
you may request that we only send one set of materials, by writing
to us at StrikeForce Technologies, Inc., 1090 King Georges Post
Road, Suite #603, Edison, NJ 08837.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read or copy any document
we file at the public reference room maintained by the SEC at
100 F Street, N.E., Washington, D.C. 20549. Copies
of this information may also be obtained by mail from the SEC’s
Public Reference Branch at 100 F Street, N.E.,
Washington, D.C. 20549. In addition, our filings with the SEC
are also available to the public on the SEC’s internet website at
http://www.sec.gov.
INFORMATION INCORPORATED BY REFERENCE
The following documents are incorporated herein by reference and
are deemed to be a part hereof from the date of filing of such
documents:
Annual Report on Form 10-K for the fiscal year ended December 31,
2021.
Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2021,
September 30, 2021,
June 30, 2021, and
March 31, 2022
Reports on Form 8-K
All documents filed by the Company with the SEC pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this Information Statement and prior to the effective date
of the action taken described herein.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Information Statement to the extent
that a statement contained herein, or in any other subsequently
filed document that also is, or is deemed to be, incorporated by
reference herein, modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as
so modified or superseded, to constitute a part of this Information
Statement.
This Information Statement incorporates, by reference, certain
documents that are not presented herein or delivered herewith.
Copies of any such documents, other than exhibits to such documents
which are not specifically incorporated by reference herein, are
available without charge to any person, including any stockholder,
to whom this proxy statement is delivered, upon written or oral
request to our Secretary at our address and telephone number set
forth herein.
DISTRIBUTION OF INFORMATION
STATEMENT
The cost of distributing this Information Statement has been borne
by us and certain shareholders that consented to the action taken
herein. The distribution will be made by mail.
Pursuant to the requirements of the Exchange Act of 1934, as
amended, the Registrant has duly caused this Information Statement
to be signed on its behalf by the undersigned hereunto
authorized.
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STRIKEFORCE TECHNOLOGIES, INC.
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By
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/s/ Mark L Kay
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Mark L Kay, Chief Executive Officer
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June 17th, 2022
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