| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis
of Presentation The
accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America ("U.S. GAAP"). These unaudited condensed consolidated financial
statements should be read in conjunction with the audited financial statements and footnotes for the year ended December 31, 2018
included on the Company's Form 10-K. The results of the three and six months ended June 30, 2019 are not necessarily indicative
of the results to be expected for the full year ending December 31, 2019. In
the opinion of management, all adjustments necessary to present fairly the financial position as of June 30, 2019 and the results
of operations and cash flows presented herein have been included in the financial statements. All such adjustments are of a normal
and recurring nature. Interim results are not necessarily indicative of results of operations for the full year. Use
of Estimates The
preparation of financial statements in conformity with U.S. GAAP 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. Actual results could differ from
those estimates. The Company's accounting estimates include the collectability of receivables, useful lives of long lived
assets and recoverability of those assets, valuation allowances for income taxes, stock based compensation and estimates made
for business combinations. Net
Loss per Share Basic
net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding
during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of shares
of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares
for the three and six months ended June 30, 2019 does not include warrants and options to acquire 1,200,000 and 6,697,467 shares
of common stock, respectively. Basic net loss per share does include the weighted average effect of vested options to acquire
1,657,701 shares of commons stock as their exercise prices are nominal. There were no other potentially dilutive shares for the
three and six months ended June 30, 2018. Revenue
Recognition and Cost of Revenues The
Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable
and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has
been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability
is reasonably assured. The
Company receives a percentage of recurring monthly transaction related fees comprised of credit and debit card fees charged to
merchants, net of association fees, otherwise known as Interchange, as well as certain service charges and convenience fees, for
payment processing services, including authorization, capture, clearing, settlement and information reporting of electronic transactions.
Fees are calculated on either a percentage of the dollar volume of the transaction or a fixed fee or a hybrid of the two and are
recognized at the time of the transaction. In the case of "wholesale" residual revenue in which the Company has a
direct contractual relationship with the merchant, bears risk of chargebacks and performs underwriting on the merchants, the Company
records the full discount charged to the merchant as revenue and the related interchange and other processing fees as expenses.
In cases of residual revenue where the Company is not responsible for merchant underwriting and has no chargeback liability and
has no or limited contractual relationship with the merchant, the Company records the amount it receives from the processor net
of interchange and other processing fees as revenue. Principles
of Consolidation The
accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, eVance,
Securus, Crowdpay.US, and OMNISOFT, Inc. All significant intercompany transactions and balances have been eliminated. Segments Operating
segments are defined as components of an enterprise about which separate financial information is available that is evaluated
regularly by the chief operating decision maker, or decision–making group in deciding how to allocate resources and in assessing
performance. Our chief operating decision–making group is composed of the chief executive officer. We currently operate
in one segment surrounding our ISO operations. Recent
Accounting Standards In
February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) In
May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09, Revenue from Contracts with Customers, to establish
ASC Topic 606, (ASC 606). ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition
and most industry-specific guidance throughout the Industry Topics of the Codification. The core principle of the guidance is
that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance includes
a five-step framework that requires an entity to: (i) identify the contract(s) with a customer, (ii) identify the performance
obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance
obligations in the contract, and (v) recognize revenue when the entity satisfies a performance obligation. In addition,
the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts
with customers. In
August 2015, the FASB issued ASU 2015-14, Deferral of the Effective Date, which amended the effective date for nonpublic entities
to annual reporting periods beginning after December 15, 2018. In March 2016, the FASB issued an update (ASU 2016-08)
to ASC 606, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies the guidance on principal
versus agent considerations. In April 2016, the FASB issued an update (ASU 2016-10) to ASC 606, Identifying Performance Obligations
and Licensing, which provides clarification related to identifying performance obligations and licensing implementation guidance
under ASU 2014-09. In May 2016, the FASB issued an update (ASU 2016-12) to ASC 606, Narrow-Scope Improvements and Practical Expedients,
which amends guidance on transition, collectability, noncash consideration and the presentation of sales and other similar taxes.
In December 2016, the FASB issued an update (ASU 2016-20) to ASC 606, Technical Corrections and Improvements, which outlines technical
corrections to certain aspects of the new revenue recognition standard such as provisions for losses on construction type contracts
and disclosure of remaining performance obligations, among other aspects. The effective date and transition requirements are the
same as those in ASU 2014-09 for all subsequent clarifying guidance discussed herein. The
guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method),
or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application
(modified retrospective method). As an Emerging Growth Company, the standard is effective for the Company's 2019 annual
reporting period and for interim periods after 2019. The Company is currently in the initial phase of analyzing the potential
impact this standard will have on its consolidated financial position and results of operations. The Company expects to apply
the modified retrospective method upon adoption. The
Company has reviewed other recently issued accounting pronouncements and plans to adopt those that are applicable to it. The Company
does not expect the adoption of any other pronouncements to have an impact on its results of operations or financial position. | NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis
of Presentation The
Company's financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America ("U.S. GAAP"). Use
of Estimates The
preparation of financial statements in conformity with U.S. GAAP 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. Actual results could differ from
those estimates. The Company's accounting estimates include the collectability of receivables, useful lives of long lived
assets and recoverability of those assets, valuation allowances for income taxes, stock based compensation and estimates made
for business combinations. Principles
of Consolidation The
accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, eVance,
Securus, Crowdpay.US, and OMNISOFT, Inc. All significant intercompany transactions and balances have been eliminated. Segments Operating
segments are defined as components of an enterprise about which separate financial information is available that is evaluated
regularly by the chief operating decision maker, or decision–making group in deciding how to allocate resources and in assessing
performance. Our chief operating decision–making group is composed of the chief executive officer. We currently operate
in one segment surrounding our ISO operations. Cash
and Cash Equivalents The
Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and all highly liquid debt
instruments purchased with a maturity of three months or less as cash and cash equivalents. The carrying amount of financial instruments
included in cash and cash equivalents approximates fair value because of the short maturities for the instruments held. The
Company had no cash equivalents as of December 31, 2018 and 2017. Concentration
of Credit Risk Financial
instruments that potentially expose the Company to concentration of credit risk consist primarily of cash and accounts
receivable. The Company's cash is deposited with major
financial institutions. At times, such deposits may be in excess of the Federal Deposit Insurance Corporation insurable
amount. Accounts
Receivable Accounts
receivable represent contractual residual payments due from the Company's processing partners or other customers.
Residual payments are determined based on transaction fees and revenues from the credit and debit card processing activity of
merchants for which the Company's processing partners pay the Company. Based on collection experience and periodic reviews
of outstanding receivables, management considers all accounts receivable for our residual payments to be fully collectible and
accordingly, no allowance for doubtful accounts is required; however, Crowdpay has a recorded an allowance of $38,113 and $0,
as of December 31, 2018 and 2017, respectively. Reserve
for Chargeback Losses Disputes between a cardholder and a merchant
periodically arise as a result of, among other things, cardholder dissatisfaction with merchandise quality or merchant services.
Such disputes may not be resolved in the merchant's favor. In these cases, the transaction is "charged back"
to the merchant, which means the purchase price is refunded to the customer through the merchant's bank and charged to the
merchant. If the merchant has inadequate funds, the Company must bear the credit risk for the full amount of the transaction. The
Company evaluates the risk for such transactions and estimates the potential loss for chargebacks based primarily on historical
experience and records a loss reserve accordingly. For the years ended December 31, 2018 and 2017, respectively, chargebacks were
immaterial. Property
and Equipment Property and equipment is stated at cost
less accumulated depreciation and amortization. Depreciation of property and equipment is calculated using the straight-line method
over the estimated useful lives of the assets, which range from three to seven years. Leasehold improvements are amortized over
the lesser of the remaining term of the lease or the estimated useful life of the asset. Expenditures for repairs and maintenance
are expensed as incurred. Impairment
of Long–Lived Assets The
Company periodically reviews the carrying value of its long-lived assets held and used at least annually or when events and circumstances
warrant such a review. If significant events or changes in circumstances indicate that the carrying value of an asset or asset
group may not be recoverable, the Company performs a test of recoverability by comparing the carrying value of the asset or asset
group to its undiscounted expected future cash flows. Cash flow projections are sometimes based on a group of assets, rather than
a single asset. If cash flows cannot be separately and independently identified for a single asset, the Company determines whether
impairment has occurred for the group of assets for which it can identify the projected cash flows. If the carrying values are
in excess of undiscounted expected future cash flows, it measures any impairment by comparing the fair value of the asset group
to its carrying value. If the fair value of an asset or asset group is determined to be less than the carrying amount of the asset
or asset group, impairment in the amount of the difference is recorded. Merchant Portfolios Merchant portfolios are valued at fair value
of merchant customers on the date of acquisition and are amortized over their estimated useful lives (7 years). Goodwill The Company accounts for business combinations
under the acquisition method of accounting in accordance with Accounting Standards Codification ("ASC") 805, "Business
Combinations," where the total purchase price is allocated to the tangible and identified intangible assets acquired and
liabilities assumed based on their estimated fair values. The purchase price is allocated using the information currently available,
and may be adjusted, up to one year from acquisition date, after obtaining more information regarding, among other things, asset
valuations, liabilities assumed and revisions to preliminary estimates. The purchase price in excess of the fair value of the tangible
and identified intangible assets acquired less liabilities assumed is recognized as goodwill. The
Company tests for indefinite lived intangibles and goodwill impairment in the fourth quarter of each year and whenever events or
circumstances indicate that the carrying amount of the asset exceeds its fair value and may not be recoverable. In accordance with
its policies, the Company performed a qualitative assessment of indefinite lived intangibles and goodwill at December 31, 2018
and determined there was no impairment of indefinite lived intangibles and goodwill. For
the year ended December 31, 2017, during the annual assessment of goodwill, management determined
that goodwill had been fully impaired. Due to this impairment the Company recorded an impairment charge of $7.9 million. The impairment
charge resulted from the default of the loan with GACP Finance Co. LLC. Business
Combinations Acquisitions
are accounted for using the acquisition method of accounting. The purchase price of an acquisition is allocated to the assets
acquired and liabilities assumed using the estimated fair values at the acquisition date. Transaction costs are expensed as incurred. The
Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible
assets acquired and identified based on their estimated fair values. The excess of the fair value of purchase consideration over
the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make
significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain
intangible assets include, but are not limited to, future expected cash flows from acquired customer lists, acquired technology,
and trade names from a market participant perspective, useful lives and discount rates. Management's estimates of fair value
are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual
results may differ from estimates. During the measurement period, which is one year from the acquisition date, we may record adjustments
to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement
period, any subsequent adjustments are recorded to earnings. Stock-based
Compensation We
account for equity-based transactions with nonemployees under the provisions of ASC Topic No. 505-50, Equity-Based Payments
to Non-Employees We
account for employee stock-based compensation in accordance with the guidance of Financial Accounting Standards Board ("FASB")
ASC Topic 718, Compensation—Stock Compensation, Net
Loss per Share Basic
net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding
during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of shares
of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares
for the year ended December 31, 2018 does not include warrants to acquire 1,200,000 shares of common stock because of their anti-dilutive
effect. There were no potentially dilutive shares as of December 31, 2017. Revenue
Recognition and Cost of Revenues The
Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable
and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has
been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability
is reasonably assured. The
Company receives a percentage of recurring monthly transaction related fees comprised of credit and debit card fees charged to
merchants, net of association fees, otherwise known as Interchange, as well as certain service charges and convenience fees, for
payment processing services, including authorization, capture, clearing, settlement and information reporting of electronic transactions.
Fees are calculated on either a percentage of the dollar volume of the transaction or a fixed fee or a hybrid of the two and are
recognized at the time of the transaction. In the case of "wholesale" residual revenue in which the Company has a
direct contractual relationship with the merchant, bears risk of chargebacks and performs underwriting on the merchants, the Company
records the full discount charged to the merchant as revenue and the related interchange and other processing fees as expenses.
In cases of residual revenue where the Company is not responsible for merchant underwriting and has no chargeback liability and
has no or limited contractual relationship with the merchant, the Company records the amount it receives from the processor net
of interchange and other processing fees as revenue. Income
Taxes Income
taxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently
due plus deferred taxes related primarily to tax net operating loss carryforwards. The deferred tax assets and liabilities represent
the future tax return consequences of these differences, which will either be taxable or deductible when assets and liabilities
are recovered or settled, as well as operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date. A valuation allowance is established against deferred tax assets when in the judgment of management,
it is more likely than not that such deferred tax assets will not become available. Because the judgment about the level of future
taxable income is dependent to a great extent on matters that may, at least in part, be beyond the Company's control, it
is at least reasonably possible that management's judgment about the need for a valuation allowance for deferred taxes could
change in the near term. Tax
benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities.
The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon
settlement. A liability for "unrecognized tax benefits" is recorded for any tax benefits claimed in the Company's
tax returns that do not meet these recognition and measurement standards. As of December 31, 2018, and 2017, no liability for
unrecognized tax benefits was required to be reported. Fair
Value Measurements Fair
value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in
the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on
the measurement date. ASC Topic No. 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques
used to measure fair value into three broad levels, as described below: Level
1: Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. Level
2: Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly.
Level 2 inputs include quoted prices for similar assets, quoted prices in markets that are not considered to be active, and observable
inputs other than quoted prices such as interest rates. Level
3: Level 3 inputs are unobservable inputs. The
following required disclosure of the estimated fair value of financial instruments has been determined by the Company using available
market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data
to develop the estimates of fair value. Accordingly, the use of different market assumptions and/or estimation methodologies may
have a material effect on the estimated fair value amounts. The
methods and assumptions used to estimate the fair values of each class of financial instruments are as follows: Cash and Cash
Equivalents, Accounts Receivable, and Accounts Payable. The items are generally short-term in nature, and accordingly, the carrying
amounts reported on the consolidated balance sheets are reasonable approximations of their fair values. The
carrying amounts of Notes Receivable and Notes Payable approximate the fair value as the notes bear interest rates that are consistent
with current market rates. Subsequent
Events Management
evaluates events that have occurred after the balance sheet date and through the date the financial statements are issued. Based
upon the review, management did not identify any recognized or non-recognized subsequent events which would have required an adjustment
or disclosure in the financial statements, except as described in Note 17 Subsequent Events Recently
Adopted Accounting Standards In
November 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")
No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes In
March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based
Payment Accounting In
August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Clarification of Certain Cash Receipts and Cash Payments ("ASU
2016-15"), which eliminates the diversity in practice related to classification of certain cash receipts and payments in
the statement of cash flows, by adding or clarifying guidance on eight specific cash flow issues. This new guidance will be effective
for annual reporting periods beginning after December 15, 2017, and interim periods within those fiscal years and early adoption
is permitted, including adoption in an interim period. The adoption of this ASU has had no material impact on the Company's
consolidated financial statements and disclosures. In
November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash In
January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. In January 2017, the FASB issued ASU 2017-04,
Intangibles—Goodwill and Other (Topic 350) In
May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting. In July 2017, the FASB issued ASU 2017-11,
Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part
I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for
Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests
with a Scope Exception Earnings Per Share Recent
Accounting Standards In
February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) In May 2014, the Financial Accounting Standards
Board (FASB) issued ASU 2014-09, Revenue from Contracts with Customers, to establish ASC Topic 606, (ASC 606). ASU 2014-09
supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition and most industry-specific guidance throughout
the Industry Topics of the Codification. The core principle of the guidance is that an entity should recognize revenue to depict
the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. The guidance includes a five-step framework that requires an entity
to: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine
the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize
revenue when the entity satisfies a performance obligation. In addition, the standard requires disclosure of the nature,
amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14,
Deferral of the Effective Date, which amended the effective date for nonpublic entities to annual reporting periods beginning after
December 15, 2018. In March 2016, the FASB issued an update (ASU 2016-08) to ASC 606, Principal versus Agent Considerations
(Reporting Revenue Gross versus Net), which clarifies the guidance on principal versus agent considerations. In April 2016, the
FASB issued an update (ASU 2016-10) to ASC 606, Identifying Performance Obligations and Licensing, which provides clarification
related to identifying performance obligations and licensing implementation guidance under ASU 2014-09. In May 2016, the FASB issued
an update (ASU 2016-12) to ASC 606, Narrow-Scope Improvements and Practical Expedients, which amends guidance on transition, collectability,
noncash consideration and the presentation of sales and other similar taxes. In December 2016, the FASB issued an update (ASU 2016-20)
to ASC 606, Technical Corrections and Improvements, which outlines technical corrections to certain aspects of the new revenue
recognition standard such as provisions for losses on construction type contracts and disclosure of remaining performance obligations,
among other aspects. The effective date and transition requirements are the same as those in ASU 2014-09 for all subsequent clarifying
guidance discussed herein. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented
(full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the
date of initial application (modified retrospective method). The Company has elected to apply the modified retrospective method.
Accordingly, the new revenue standard will be applied prospectively in the Company's financial statements from January 1,
2019 forward and reported financial information for historical comparable periods will not be revised and will continue to be reported
under the accounting standards in effect during those historical periods. The
Company has reviewed other recently issued accounting pronouncements and plans to adopt those that are applicable to it. The Company
does not expect the adoption of any other pronouncements to have an impact on its results of operations or financial position. |
