Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended |
Mar. 31, 2015 | |
Document And Entity Information | |
Entity Registrant Name | INFORMATION SYSTEMS ASSOCIATES, INC. |
Entity Central Index Key | 1396536 |
Document Type | 10-Q |
Document Period End Date | 31-Mar-15 |
Amendment Flag | FALSE |
Current Fiscal Year End Date | -19 |
Is Entity a Well-known Seasoned Issuer? | No |
Is Entity a Voluntary Filer? | No |
Is Entity's Reporting Status Current? | Yes |
Entity Filer Category | Smaller Reporting Company |
Entity Common Stock, Shares Outstanding | 138,155,740 |
Document Fiscal Period Focus | Q1 |
Document Fiscal Year Focus | 2015 |
Condensed_Balance_Sheets
Condensed Balance Sheets (USD $) | Mar. 31, 2015 | Mar. 31, 2014 |
Current Assets | ||
Cash and cash equivalents | $3,094 | $166 |
Accounts receivable, net allaowance of $5,490 at June 30,1014 and December 31, 2014 | 22 | 26,696 |
Other current assets | 0 | |
Prepaid expenses | 800 | 29,792 |
Total Current Assets | 3,916 | 56,654 |
Property and Equipment, net | 8,928 | 12,591 |
Other assets | 1,200 | 1,690 |
TOTAL ASSETS | 14,044 | 70,935 |
Current Liabilities | ||
Accounts payable | 231,253 | 246,528 |
Accrued expense | 88,245 | 31,646 |
Note payable - shareholder | 50,000 | 50,000 |
Note payable (Convertible OID), net discounts - related parties | 66,000 | 66,000 |
Note payable (OID), net of discounts - shareholder | 144,293 | 142,684 |
Note payable (Third Party) net of discount | 93,548 | 45,000 |
Line of credit | 40,411 | 39,979 |
Deferred revenue | 15,631 | 31,182 |
Accrued interest | 15,926 | 20,380 |
Total Current Liabilities | 1,055,345 | 1,003,486 |
Stockholders' Equity | ||
Preferred stock $0.001 par value, 1,000,000 shares authorized, no shares and outstanding at September 30, 2014 and Decemeber 31, 2013, repectively | ||
Common Stock - Class A, $.001 par value, 450,000,000 shares authorized, 114,725,189, and 79,442,019, issued and outstanding at September 30, 2014 and December 31, 2013 | 114,725 | 79,442 |
Common Stock - Class B, $.001 par value, 50,000,000 shares authorized, 6,500,000 and 11,500,000 issued and outstanding at September 30, 2014 and December 31, 2013 | 6,500 | 11,500 |
Additional paid in capital | 4,764,625 | 4,420,460 |
Common Stock to be Issued - Class A Stock, 1,000,000 and 8,332,500 shares as of September 30, 2014 and December 31, 2013 | 8,333 | |
Subscription receiveable | -100,000 | |
Accumulated deficit | -5,928,193 | -5,352,286 |
Total Stockholders' Equity | -1,041,301 | -932,551 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $14,044 | $70,935 |
Condensed_Balance_Sheets_Paren
Condensed Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Mar. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock A, par value | $0.00 | $0.00 |
Common stock - Class A, shares authorized | 450,000,000 | 450,000,000 |
Common stock - Class A, shares issued | 114,725,189 | 79,442,019 |
Common stock - Class A, shares outstanding | 114,725,189 | 79,442,019 |
Common stock - Class A, shares to be issued | 1,000,000 | 8,332,500 |
Common stock B, par value | $0.00 | $0.00 |
Common stock - Class B, shares authorized | 50,000,000 | 50,000,000 |
Common stock - Class B, shares issued | 6,500,000 | 11,500,000 |
Common stock - Class B,shares outstanding | 6,500,000 | 11,500,000 |
Condensed_Statements_of_Cash_F
Condensed Statements of Cash Flows (Unaudited) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2013 | |
Cash Flows from Operating Activities | |||
Net (Loss) | ($534,099) | ($252,047) | |
Adjustments to reconcile net (loss) to net cash provided from operating activities: | |||
Depreciation | -3,388 | 1,429 | |
Amortization of prepaid shares issued for services | 14,875 | ||
Amortization of discounts | -142,447 | 3,099 | |
Other | 50,000 | 608 | |
Options issued for services | 38,010 | ||
Changes in operating assets and liabilities | |||
Accounts receivable | 39,289 | -27,894 | |
Accounts payable | -21,999 | -595 | |
Accrued Payroll | 28,013 | 0 | 54,682 |
Accrued expenses | 5,756 | ||
Accrued interest | 21,868 | 17,510 | |
Deferred revenue | -5,071 | -8,705 | |
Net Cash (Used in) Operating Activities | -567,834 | -207,954 | |
Cash Flows from Investing Activities | |||
Proceeds from line of credit facility | 2,255 | 39,847 | |
Repayments made on line of credit facility | -39,979 | ||
Insurance premium repayments | 0 | 0 | |
Repayment for checks written in excess of cash balances | 0 | 0 | |
Proceeds from Sale of Common Stock and Warrants | 397,550 | 190,001 | |
Repayment to stockholders | -9,600 | 0 | |
Proceeds from notes payable related parties | 171,166 | 61,000 | |
Repayments from notes payable related parties | -675 | -42,427 | |
Net Cash Provided by Financing Activities | 560,696 | 208,441 | |
Net Change in Cash and Cash Equivalents | -2,132 | 487 | |
Cash and Cash Equivalents at End of Period | 1,346 | 733 | |
Suplemental disclosure of non-cash and cash investing and financing activities: | |||
Cash paid for interest | 3,258 | 20,183 | |
Cash paid for taxes | 0 | 0 | |
Non-cash investing and financing activity: | |||
Subscription Receivable | $20,000 |
Condensed_Statements_of_Operat
Condensed Statements of Operations (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Revenue | ||
Software and Hardware Sales | $93,968 | $72,085 |
Services | 189,426 | 515,433 |
Total Revenue | 283,394 | 587,518 |
Cost of Goods Sold | ||
Software and Hardware | 66,579 | 7,441 |
Services | 60,109 | 248,191 |
Total Cost of Revenue | 126,688 | 255,632 |
Gross Profit | 156,706 | 331,886 |
Operating Expenses | ||
Administrative and General | 182,821 | 195,114 |
Salaries and Employee Benefits | 308,428 | 402,680 |
Professional Fees | 51,344 | 72,329 |
Total Operating Expenses | 543,592 | 670,123 |
Loss from Operations | -385,887 | -338,237 |
Finance Fee earned on sales | 9,230 | |
Gain on settlement | 5,200 | |
Factoring Fees and other interests | -12,776 | -24,190 |
Loss on Fixed Asset Disposal | -305 | |
Interest expense | -182,098 | -141,988 |
Total Other Income (Expense), net | -189,979 | 156,948 |
Net (Loss) | ($534,099) | ($252,047) |
Basic and fully diluted | $0 | ($0.01) |
Weighted average common shares outstanding | 111,737,040 | 72,316,560 |
NOTE_1_NATURE_OF_OPERATIONS_BA
NOTE 1 - NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFCANT ACCTG POLICIES | 3 Months Ended | ||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||
Note 1 - Nature Of Operations Basis Of Presentation And Summary Of Signifcant Acctg Policies | |||||||||||||||||||||||
NOTE 1 - NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFCANT ACCTG POLICIES | NOTE 1 – NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||||||||||||
Nature of Operations | |||||||||||||||||||||||
Information Systems Associates, Inc. (“ISA” or the “Company”) was incorporated in Florida on May 31, 1994 to engage in the business of developing software for the financial and asset management industries. ISA developed a methodology for the efficient data collection of assets contained within large data centers and was awarded a patent in 2010. ISA’s original mission was to develop, market and implement software and professional services to the world’s largest data centers in the area of IT Asset Management (ITAM). From the Company’s inception, ISA’s strategy included expanding its technology base through organic development efforts and strategic partnerships. | |||||||||||||||||||||||
On April 1, 2015, the Company completed the previously announced reverse triangular merger (the “Merger”) among Duos Technologies, Inc., a Florida corporation (“Duos”), the Company and Duos Acquisition Corporation, a Florida corporation and wholly owned subsidiary of the Company (“Merger Sub”), pursuant to which Duos became a wholly owned subsidiary of the Company. In connection with the Merger, the Company filed on March 31, 2015 an amendment to its certificate of incorporation effecting a reverse stock split of its outstanding common stock at a ratio of 1-for-200 shares (the “Reverse Split”). The Reverse Split became effective on April 9, 2015 and has been reflected in these unaudited consolidated financial statements, except where otherwise noted. (See Note 13) | |||||||||||||||||||||||
Basis of Presentation | |||||||||||||||||||||||
The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (all of which are of a normal recurring nature) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2015 are not indicative of the results that may be expected for the year ending December 31, 2015 or for any other future period. These unaudited condensed financial statements and the unaudited notes thereto should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K/A for the year ended December 31, 2014 filed with the Securities and Exchange Commission (the “SEC”) on April 17, 2015 (our “10-K”). | |||||||||||||||||||||||
Principles of Consolidation | |||||||||||||||||||||||
The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, TrueVue 360 Inc. All significant inter-company transactions and balances are eliminated in consolidation. | |||||||||||||||||||||||
Use of Estimates | |||||||||||||||||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures 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 may differ from these estimates. Most significant estimates in the accompanying financial statements include the allowance on accounts receivable, valuation of deferred tax assets, valuation of warrants issued with debt, valuation of beneficial conversion features in convertible debt, valuation of stock-settled debt and valuation of stock-based awards. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. | |||||||||||||||||||||||
Share-Based Compensation | |||||||||||||||||||||||
We follow the fair value recognition provisions of ASC 718, “Compensation – Stock Compensation”. The fair values of share-based payments are estimated on the date of grant using the Black-Scholes option pricing model, based on weighted average assumptions. Expected volatility is based on historical volatility of our common stock. We have elected to use the simplified method described in the Securities and Exchange Commission Staff Accounting Bulletin Topic 14C to estimate the expected term of employee stock options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. Compensation expense is recognized on a straight-line basis over the requisite service period of the award. | |||||||||||||||||||||||
The assumptions used in calculating the fair value of stock-based awards represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future. | |||||||||||||||||||||||
Cash and Cash Equivalents: | |||||||||||||||||||||||
For the purposes of the Statement of Cash Flows, the Company considers liquid investments with an original maturity of three months or less to be a cash equivalent. | |||||||||||||||||||||||
Concentrations | |||||||||||||||||||||||
Cash Concentrations: | |||||||||||||||||||||||
Cash and cash equivalents are maintained at financial institutions and at times, balances may exceed federally insured limits. We have not experienced any losses related to these balances. There were no amounts on deposit in excess of federally insured limits at the date of this report. | |||||||||||||||||||||||
Significant Customers and Concentration of Credit Risk: | |||||||||||||||||||||||
A significant portion of revenues is derived from certain customer relationships. The following is a summary of customers that each represents greater than 10% of total revenues in 2015 and 2014 and total accounts receivable at March 31, 2015 and December 31, 2014, respectively: | |||||||||||||||||||||||
31-Mar-15 | 31-Mar-14 | 31-Dec-14 | |||||||||||||||||||||
Revenue | Accounts Receivable | Revenue | Accounts Receivable | ||||||||||||||||||||
Customer A | 100 | % | Customer A | 0 | % | Customer A | 48 | % | Customer A | 100 | % | ||||||||||||
Customer B | 42 | % | |||||||||||||||||||||
Fair Value of Financial Instruments and Fair Value Measurements | |||||||||||||||||||||||
We measure our financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amounts approximate fair value due to their short maturities. Amounts recorded for notes payable, net of discount, and loans payable also approximate fair value because current interest rates available to us for debt with similar terms and maturities are substantially the same. | |||||||||||||||||||||||
We follow accounting guidance for financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). | |||||||||||||||||||||||
The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: | |||||||||||||||||||||||
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. | |||||||||||||||||||||||
Level 2: Inputs, other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. | |||||||||||||||||||||||
Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. | |||||||||||||||||||||||
Earnings (Loss) Per Share | |||||||||||||||||||||||
Basic earnings per share (EPS) are computed by dividing net loss by the weighted average number of common shares outstanding. The dilutive EPS adds the dilutive effect of stock options, warrants and other stock equivalents. For the three months ended March 31, 2015, outstanding warrants to purchase an aggregate of 82,875 shares of common stock and outstanding options to purchase 0 shares of common stock and 130,721 shares of common stock issuable upon conversion of convertible debt were excluded from the computation of dilutive earnings per share because the inclusion would have been anti-dilutive. | |||||||||||||||||||||||
Recent Issued Accounting Standards | |||||||||||||||||||||||
Financial Accounting Standards Board, Accounting Standard Updates which are not effective until after March 31, 2015 are not expected to have a significant effect on the Company’s consolidated financial position or results of operations. | |||||||||||||||||||||||
In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-15, “Presentation of Financial Statements – Going Concern (Topic 205-40)”, which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard will be effective for the Company for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company does not expect the implementation of this standard to have a material effect on its disclosures. |
NOTE_2_GOING_CONCERN
NOTE 2 - GOING CONCERN | 3 Months Ended |
Mar. 31, 2015 | |
Note 2 - Going Concern | |
NOTE 2 - GOING CONCERN | NOTE 2 – GOING CONCERN |
As reflected in the accompanying unaudited financial statements, the Company had a net loss and cash used in operations for the three months ended March 31, 2015 of $534,100 and $61,158 respectively, and the working capital deficit, stockholders’ deficit and accumulated deficit as of March 31, 2015 was $1,184,887, $1,184,887 and $6,621,609, respectively. These matters raise substantial doubt about the Company’s ability to continue as a going concern. | |
The ability of the Company to continue as a going concern is dependent on the Company’s ability to further implement its business plan and raise capital. The Company needs to raise additional funds and/or generate sufficient revenue to continue to meet its liquidity needs and realize its business plan and maintain operations. Management of the Company is continuing its efforts to secure funds through equity and/or debt instruments for its operations. At the present time, the Company has no financing commitments from any person, and there can be no assurance that additional capital will be available to the Company on commercially acceptable terms or at all. The Company reduced expenses from existing operations as a result of the merger. | |
These unaudited, consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
NOTE_3_NOTES_PAYABLE_RELATED_P
NOTE 3 - NOTES PAYABLE - RELATED PARTY | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Note 3 - Notes Payable - Related Party | |||||||||||||||||
NOTE 3 - NOTES PAYABLE - RELATED PARTY | NOTE 3 – NOTES PAYABLE – RELATED PARTIES | ||||||||||||||||
The Company’s notes payable to related parties classified as current liabilities consist of the following as of March 31, 2015 and December 31, 2014: | |||||||||||||||||
31-Mar-15 | 31-Dec-14 | ||||||||||||||||
Notes Payable | Principal | Interest* | Principal | Interest* | |||||||||||||
Related party | $ | 244,520 | 2.5 | % | $ | 241,915 | 2.5 | % | |||||||||
Related party | 15,000 | 1.5 | % | 15,000 | 1.5 | % | |||||||||||
Related party | 10,593 | N/A | 9,843 | N/A | |||||||||||||
CEO, Related Party | 30,378 | — | 26,326 | 0 | % | ||||||||||||
President, CFO | 8,783 | — | — | 0 | % | ||||||||||||
Board Director | 856 | — | — | — | |||||||||||||
Total | $ | 310,130 | $ | 293,084 | |||||||||||||
——————— | |||||||||||||||||
* | interest rate per month | ||||||||||||||||
On August 30, 2012 a company that is majority owned by a foreign investor and personal friend of the Company’s Chief Financial Officer (CFO), entered into an arrangement with the Company to loan up to $100,000 (subsequently increased to $300,000) based on purchase orders or invoices that have not been previously factored on a revolving basis at a rate of 2.5% per month (1.5% interest plus 1% penalty fee on the outstanding balance when interest is accrued). The initial deposit for this loan originated from the Company’s CFO pursuant to the investor, who is a foreign national, setting up an appropriate entity to handle further transactions. Further, the Company’s CFO continues to personally guarantee the loan. On May 14, 2014, the investor agreed and the Board voted by unanimous consent, to convert the original note of $100,000 to stock and warrants based on the Company’s existing PPM based on converting the amount in to shares of common stock, par value $0.001 per share (the “Common Stock”), at the rate of $2.40 per share for 41,667 shares and receiving five-year warrants to purchase 31,250 shares of Common Stock, based on 75% of the amount of shares to be issued at a per share price of $2.40. The investor agreed to this conversion on the condition that the shares would be issued without a restrictive legend and that the investor was able to deposit them in a brokerage account within 90 days. On August 1, 2014, the investor notified the Company that they were successful in depositing the shares into a brokerage account and the Company was credited a principal and interest payment of $100,000 allocated $47,445 and $57,555 respectively. Between November 7 and November 20, 2014, part of the outstanding principal of $58,059 and accrued interest of $21,986 were converted into 84,653 shares of the Company’s Common Stock, the fair value of which were $152,322, resulting in loss on debt conversion in amount of $72,277. On December 21, 2014, the Company issued a note in total amount of $28,040, consisting of principal of $25,000 plus $3,040 additional advance. The note bears interest at a rate of 18% per annum and due 30 days from the date of the note. It can be extended each time for a further 30 days on payment of a 1% extension fee which can be accrued. At March 31, 2015 and December 31, 2014 there was outstanding principal balance of $244,520 and $241,915, based on the above mentioned activity respectively. Accrued interest and fees at March 31, 2015 and December 31, 2014 was $27,497, and $7,157 respectively. | |||||||||||||||||
On June 27, 2012 an individual over whom the Company’s CFO has significant influence, loaned the Company $10,000 at an interest rate of 1.5% per month payable monthly. Between July 13, 2012 and July 24, 2012 the related party advanced an additional $15,000 (the 2012 advances) due on demand. On January 1, 2013, the Company received $19,400 from this related party in exchange for forty-five day original issue discount note with a face value of $20,000 and a maturity date of February 15, 2013 (the 2013 note). The original discount interest rate was 2% per month. On May 30, 2014 a principal payment was made to the related party in the amount of $5,000. As of March 31, 2015 and December 31, 2014 there was an outstanding principal balance of $15,000 and $15,000, respectively. Accrued interest at March 31, 2015 and December 31, 2014 was $675 and $0. | |||||||||||||||||
On October 14, 2014, the Company issued a note of $10,000 with OID in amount of $750. At March 31, 2015 the balance of the note was $10,593, including accrued interest of $593. | |||||||||||||||||
During the second quarter of 2012, the Company reclassified $30,265 of accounts payable balances due to the CEO, to Notes payable – related parties. These balances were a result of Company expenses charged to the CEO’s personal credit cards. The Company was previously paying the credit card companies directly for these expenses incurred. During the third quarter 2012 the company recorded accrued payroll of $54,682 for this officer. These amounts are non-interest bearing and are on demand. The Company pays these loans as sufficient funds become available. At March 31, 2015 and December 31, 2014 this officer had an outstanding loan balance of $30,378 and $26,326, respectively. | |||||||||||||||||
During the first quarter of 2015, the Company’s CFO advanced monies in the amount of $8,783 to cover company expenses related to the Merger. These advances do not incur any interest and will be paid by the Company when sufficient funds are available. At March 31, 2015 and December 31, 2014 this officer had an outstanding loan balance of $8,783 and $0, respectively. | |||||||||||||||||
Also, during the first quarter of 2015, one of the Company’s directors advanced monies in the amount of $856 to cover company expenses related to the Merger. These advances do not incur any interest and will be paid by the Company when sufficient funds are available. At March 31, 2015 and December 31, 2014 this director had an outstanding loan balance of $856 and $0, respectively. |
NOTE_4_NOTE_PAYABLE_Stockholde
NOTE 4 - NOTE PAYABLE - Stockholder | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Note 4 - Note Payable - Stockholder | |||||||||||||||||
NOTE 4 - NOTE PAYABLE - SHAREHOLDER | NOTE 4 – NOTE PAYABLE – Stockholder | ||||||||||||||||
The Company’s notes payable to stockholder classified as current liability at March 31, 2015 and December 31, 2014 consists of the following: | |||||||||||||||||
31-Mar-15 | 31-Dec-14 | ||||||||||||||||
Notes Payable | Principal | Interest* | Principal | Interest* | |||||||||||||
Stockholder | $ | 50,000 | 2.5 | % | $ | 50,000 | 2.5 | % | |||||||||
——————— | |||||||||||||||||
* | interest rate per month | ||||||||||||||||
On January 11, 2012 a stockholder loaned the Company $35,000 at 3% interest per month for one year. On April 13, 2012, the stockholder loaned additional principal to the Company in the aggregate amount $25,000. On June 28, 2012, the Company made a $10,000 principal payment on the note. On January 1, 2013, the Company entered into a new agreement with the stockholder to rollover an existing line of credit in the amount of $50,000. The original line of credit was for a total of $60,000 and the Company repaid $10,000 of that obligation during 2012. The new note maintains similar terms and conditions but with a reduction in the monthly fee from 3% to 2.5%. At March 31, 2015 and December 31, 2014 the principal balance on the note was $50,000. At March 31, 2015 and December 31, 2014 the accrued interest on the note balance was $10,000 and $6,250 respectively. |
NOTE_5_NOTE_PAYABLE_CONVERTIBL
NOTE 5 - NOTE PAYABLE, CONVERTIBLE OID - RELATED PARTY AND/OR SHARE HOLDER | 3 Months Ended | ||||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||||
Note 5 - Note Payable Convertible Oid - Related Party Andor Share Holder | |||||||||||||||||||||||||
NOTE 5 - NOTE PAYABLE, CONVERTIBLE OID - RELATED PARTY | NOTE 5 – NOTE PAYABLE, CONVERTIBLE OID – Related Party and/or Shareholder | ||||||||||||||||||||||||
31-Mar-15 | 31-Dec-14 | ||||||||||||||||||||||||
Notes Payable - Convertible | Principal | Premium | Principal, | Principal | Premium | Principal, | |||||||||||||||||||
Net of | Net of | ||||||||||||||||||||||||
Premium | Premium | ||||||||||||||||||||||||
Related Party Affiliate | $ | 19,108 | — | $ | 19,108 | $ | 66,000 | — | $ | 66,000 | |||||||||||||||
Shareholder | $ | 50,000 | 50,000 | 100,000 | $ | — | — | — | |||||||||||||||||
Total | $ | 69,108 | 50,000 | $ | 119,108 | $ | 66,000 | — | $ | 66,000 | |||||||||||||||
In June 2012, a related party who is an affiliate of the CFO, made a non interest bearing short-term loan to the Company in the amount of $60,000. On August 15, 2012, this loan was exchanged for a one year original issue discount convertible note with detachable warrants. The face value of the note is $66,000. The $6,000 original issue discount was expensed as interest over the term of the note which matured in August 2013. The convertible note payable is convertible into 19,800 shares of the Company’s Common Stock at a conversion rate of $3.34 per share. The Company valued the beneficial conversion feature attached to the note using the intrinsic value method at a relative fair value of $28,571. The five-year warrants to purchase 19,800 shares of the Company’s common stock at an exercise price of $6.60 were valued at a relative fair value of $31,429 based on using the Black-Scholes pricing model assuming a dividend yield of 0%, an expected volatility of 462.61%, and a risk free interest rate of .102%. The beneficial conversion feature and the relative fair value of the warrants were recorded as an increase to additional paid in capital and a discount to the note to be amortized to interest expense over the term of the note. The Company was technically in default though no written notice has been received from the related party. On February 18, 2015, the related party agreed to $92,933 as settlement of the outstanding note including accrued interest and penalties where they accepted an offer to convert $73,825 of that amount into 87,125 shares of Common Stock with the balance of the note reduced to $19,108. The Company recorded a loss on conversion of $30,725 based on the $1.20 per share exercise price at the date of conversion. The convertible note holder also agreed to exchange 19,800 warrants to purchase Common Stock for 8,929 fully paid and non-assessable shares of Common Stock. No modification expense was recorded as the warrant values exceeded the value of shares received. This exchange was executed pursuant to a closing condition of the Duos Technologies reverse merger whereby all warrants and options would be converted prior to closing. The net carrying value of the note at March 31, 2015 and December 31, 2014 was $19,108 and $66,000 respectively. | |||||||||||||||||||||||||
On March 16, 2015, the Company entered into a convertible note with a shareholder and service provider in the amount of $50,000 with interest accruing at the rate of 12% per annum not compounded. The note is convertible into the Company’s stock at a 50% discount of the average closing bid prices for the 5 days immediately prior to the conversion date. The net carrying value of the note at March 31, 2015 and December 31, 2014 was $50,000 and $0 respectively. The Company recorded a premium of $50,000 as the note is considered stock settled debt which was charged to interest expense during the three months ended March 31, 2015. |
NOTE_6_NOTES_PAYABLE_CONVERTIB
NOTE 6 - NOTES PAYABLE, CONVERTIBLE OID - STOCKHOLDER | 3 Months Ended | ||||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||||
Note 6 - Notes Payable Convertible Oid - Stockholder | |||||||||||||||||||||||||
NOTE 6 - NOTES PAYABLE, CONVERTIBLE OID - STOCKHOLDER | NOTE 6 – NOTE PAYABLE – OID– STOCKHOLDER | ||||||||||||||||||||||||
31-Mar-15 | 31-Dec-14 | ||||||||||||||||||||||||
Notes Payable - OID | Unamort | Principal, | Principal | Unamort | Principal, | ||||||||||||||||||||
Principal | Discounts | Net of | Discounts | Net of | |||||||||||||||||||||
Discount | Discount | ||||||||||||||||||||||||
Stockholder | $ | 165,000 | $ | (7,312 | ) | $ | 157,688 | $ | 165,000 | $ | (13,969 | ) | $ | 151,031 | |||||||||||
——————— | |||||||||||||||||||||||||
* | 2011 Note Payable – Convertible, OID | ||||||||||||||||||||||||
On July 15th, 2011 the Company received $125,000 from a stockholder in exchange for a one year original issue discount convertible note with detachable warrants. The face value of the note was $137,500. The $12,500 original issue discount was recorded as debt discount and expensed as interest over the term of the note which matured in July 2012. The convertible note payable was convertible into 20,625 shares of the Company’s Common Stock at a conversion rate of $6.60 per share. The Company valued the beneficial conversion feature attached to the note using the intrinsic value method at $62,500. The five-year warrants to purchase 18,750 shares of the Company’s common stock at an exercise price of $6.60 were valued at the relative fair value of $62,500 based on using the Black-Scholes pricing model assuming a dividend yield of 0%, an expected volatility of 347.62%, and a risk free interest rate of 1.46%. The beneficial conversion feature and the relative fair value of the warrants were recorded as an increase to additional paid in capital and a discount to the note. On July 15, 2012, the maturity date, the $137,500 note was exchanged for a new two year original discount secured note with no conversion rights. The note is secured by the Company’s intellectual property, notably the patent for OSPI. In exchange for the security the investor agreed to waive the conversion rights and cancel the warrants issued with the original note. The $27,500 original issue discount was expensed as interest over the term of the note. On February 8, 2013, the Company entered into an Inter-creditor Agreement with Liquid Capital Exchange, Inc. (the Company’s factor) and the stockholder The Inter-creditor Agreement resolved a definition dispute concerning UCC’s filed by both parties to protect their collateral. A part of this agreement called for the stockholder to receive 5% of all factor advances to the Company until such time the stockholder loan is paid in full. Additionally, until the loan is paid, if there is a trigger notice (loan is due or is called), the factor will pay to the stockholder all factor holdback amounts after collection of the related accounts receivable, less any factor fees. On July 17, 2014, the Company entered into a forbearance agreement whereby the note, now with a face value of 150,068 (after deduction of principal payments) was extended for a further 12 months. The face value of the note is $165,000 which includes $14,932 in additional interest through end of the new term, amortized quarterly. As a condition for entering into this agreement the company granted the stockholder 7,500 5-year warrants in September 2014 which were exchanged for 6,662 shares on February 25, 2015 and the Company also agreed to a 25% penalty payment if the note is not paid on the due date. No modification expense was recorded for the warrant exchange for shares as the warrant values exceeded the value of shares received. The net carry value of the note at March 31, 2015 and December 31, 2014 is $157,688 and $151,031, respectively, net of unamortized original issue discount of $7,312 and $13,969, respectively. |
NOTE_7_NOTES_PAYABLE_THIRD_PAR
NOTE 7 - NOTES PAYABLE - THIRD PARTY | 3 Months Ended |
Mar. 31, 2015 | |
Note 7 - Notes Payable - Third Party | |
NOTE 7 - NOTES PAYABLE - THIRD PARTY | NOTE 7 – NOTES PAYABLE – THIRD PARTIES |
On May 7, 2013, a third party loaned the Company $45,000 at 1.5% interest per month for six months. On November 8, 2013, this note was extended for a further 3 months with the same terms and conditions. On February 8, 2014 this note was extended for an additional three months with the same terms and conditions. On May 8, 2014 this note was extended for an additional three months with the same terms and conditions. On August 8, the note holder requested repayment of 50% of the note by November 30, 2014 and the note was further extended until that time at the same terms and conditions. The company did not make the 50% payment but agreed that the note would be paid in full as part of the debt reduction in conjunction with the Merger. The noteholder gave 30 day notice to the Company on May 1st, for the note to be repaid in full plus any interest due. As of March 31, 2015 and December 31, 2014 the balance on the note was $44,325 and $45,000 respectively. | |
On August 8, 2014, a deposit of $50,000 was received by ISA on behalf of its wholly owned subsidiary TrueVue 360 Inc., which had entered into a 1-year funding agreement with a Third Party beginning on September 1, 2014 for an advance of $50,000 against future receivables of $62,400. The agreement calls for thirteen payments of $4,800 every four weeks until the total due of $62,400 is paid to the party advancing the funds. The company is amortizing the original issue discount over the term of debt. The unamortized discount at March 31, 2015 and December 31, 2014 was $6,677 and $8,548 respectively. The principal due at March 31, 2015 and December 31, 2014 was $33,600 and $43,200 respectively. | |
NOTE_8_LINE_OF_CREDIT
NOTE 8 - LINE OF CREDIT | 3 Months Ended |
Mar. 31, 2015 | |
Note 8 - Line Of Credit | |
NOTE 8 - LINE OF CREDIT | NOTE 8 – LINE OF CREDIT |
Line of Credit: | |
The Company has a line of credit with Wells Fargo Bank. The line of credit provides for borrowings up to $40,000. The balance as of March 31, 2015 and December 31, 2014 was $40,251 and $37,996 respectively. This line of credit has no maturity date. The annual interest rate is the Prime Rate plus 8%. The CEO of the Company is the personal guarantor. |
NOTE_9_COMMITMENTS_AND_CONTING
NOTE 9 - COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2015 | |
Note 9 - Commitments And Contingencies | |
NOTE 9- COMMITMENTS AND CONTINGENCIES | NOTE 9 – COMMITMENTS AND CONTINGENCIES |
Operating lease | |
The office lease was terminated due to the relocation of our office to Jacksonville, FL as a result of the completion of reverse triangular merger. | |
Legal Proceedings | |
From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of December 31, 2014, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations. | |
In early 2015, the Company elected to cancel its software development with FacilityTeam of Ontario, Canada. This cancellation was based primarily on a lack of deliverables against pre-agreed project milestones. FacilityTeam elected to file a suit for breach of contract in Palm Beach county Florida which both had no merit and was in direct contravention of the agreed resolution for disputes being mediation and, if necessary, Arbitration. The Company’s counsel is currently working to resolve this issue without incurring undue legal expense and the Company believes there is no merit to their claims. |
NOTE_10_RELATED_PARTIES
NOTE 10 - RELATED PARTIES | 3 Months Ended |
Mar. 31, 2015 | |
Related Party Transactions [Abstract] | |
NOTE 10 - RELATED PARTIES | NOTE 10 – RELATED PARTIES |
As of March 31, 2015 and December 31, 2014 there were various notes and loans payable to related parties (see Notes 3 and 5). |
NOTE_11_STOCKHOLDERS_DEFICIT
NOTE 11 - STOCKHOLDERS' DEFICIT | 3 Months Ended |
Mar. 31, 2015 | |
Note 11 - Stockholders Deficit | |
NOTE 11 - STOCKHOLDERS' DEFICIT | NOTE 11 – STOCKHOLDERS’ DEFICIT |
Common stock issued for services and settlements | |
On February 20, 2015, the Company issued 25,000 shares of common stock valued at the quoted trading price of $1.20 per share to a financial services company in exchange for services or $30,000, related to assistance with the Company’s regulatory filings. | |
On March 1, 2015, the Company entered into an agreement with its Investor Relation firm to exchange $57,000 worth of outstanding invoices for 71,250 shares at $0.80 per share which was also the fair market value of the common stock based on the quoted trading price. The agreement calls for a further $33,000 of services that will be invoiced and become due in the second quarter of 2015 to also be exchanged for shares at the same terms and conditions. | |
On March 12, 2015, the Company entered into an agreement with its regulatory filing services firm to exchange $25,000 worth of services related to assisting with the merger and filing requirements for 100,000 shares of common stock. The shares were valued at the quoted trading price of $0.70 and thus the Company recorded an expense of $70,000. | |
On March 31, 2015 the Company’s Board of Directors approved the issuance of 170,000 vested shares with a value of $136,000 based on the quoted trading price to be issued to two officers and three board members as compensation for services provided. The expense was recognized immediately. | |
On March 31, 2015 the Company’s Board of Directors approved the issuance of 82,966 shares in exchange for the surrender of certain warrants and a further 14,750 shares in exchange for the surrender of all options. Since the value of the warrants and options exceeded the value of the shares issued, there was no further compensation or other expense resulting from the exchange. | |
Common stock – Convertible Note | |
On February 18, 2015, a settlement agreement was reached to convert $46,892 of a $66,000 convertible note plus default penalty and interest of $26,933 which was expensed, into 87,125 shares of common stock. The shares were valued at $1.20 per share based on the quoted trading price on the settlement date resulting in a value of $104,550. This resulted in a loss on conversion of $30,725. The Company also committed to pay the remaining balance of $19,108 after the merger of Duos Technologies. The conversion occurred at $0.85 per share. (See Note 6). |
NOTE_12_COMMON_STOCK_PURCHASE_
NOTE 12 - COMMON STOCK PURCHASE WARRANTS AND OPTIONS | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Other Liabilities Disclosure [Abstract] | |||||||||||
NOTE 12 - COMMON STOCK PURCHASE WARRANTS AND OPTIONS | NOTE 12 – COMMON STOCK PURCHASE WARRANTS AND OPTIONS | ||||||||||
Warrants | |||||||||||
Following is a summary of activity for warrants to purchase common stock for the three months ending March 31, 2015. | |||||||||||
31-Mar-15 | |||||||||||
Shares | Weighted | ||||||||||
Avg | |||||||||||
Exercise | |||||||||||
Price | |||||||||||
Outstanding at beginning of period | 196,170 | $ | 4 | ||||||||
Converted to common shares under settlement agreements | 82,966 | $ | — | ||||||||
Cancelled | 30,329 | $ | 4 | ||||||||
Outstanding at end of period | 82,875 | $ | 4 | ||||||||
Exercisable at end of period | 82,875 | $ | 4 | ||||||||
On March 31, 2015, the Board of Directors approved the exchange of warrants to purchase 196,170 shares of the Company’s common stock for 127,366 shares of common stock. The Company developed a formula for the exchange which was based on the time value remaining and ascribed a value even though at the time of the approval, all of the warrants were “out of the money”. This formula was applied equitably across all warrant holders with a percentage conversion to calculate the number of shares to be exchanged for the warrants that were cancelled. The Company also applied a 40% floor to the exchange ratio. As of the date of this report, the Company had received agreements from six of the warrant holders who agreed to exchange 113,295 warrants for 82,966 shares. (See Note 11).The Company has verbal commitments from the remaining warrant holders and will execute the balance of the exchange within the following quarter. The Company revalued the warrants just prior to and after the modification and applied ASC 718 for the recognition of any incremental expense for which none existed. | |||||||||||
Options | |||||||||||
Following is a summary of stock option activity for the three months ending March 31, 2015. | |||||||||||
31-Mar-15 | |||||||||||
Shares | Weighted | ||||||||||
Avg | |||||||||||
Exercise | |||||||||||
Price | |||||||||||
Outstanding at beginning of period | 20,750 | $ | 3.8 | ||||||||
Converted into common shares under settlement agreements | 14,750 | $ | 0 | ||||||||
Cancelled | 6,000 | $ | 3.8 | ||||||||
Outstanding at end of period | 0 | $ | — | ||||||||
On March 31, 2015, the Board of Directors approved the exchange of options to purchase 20,750 shares of the Company’s common stock for 14,750 shares of common stock. (See Note 11) The Company originally granted options as compensation for Officers and Directors in lieu of stock in all cases except one, the Board elected to exchange options on a 1 for 1 basis to comply with a covenant in the Duos merger agreement that no options will survive the merger. This was applied uniformly with two exceptions; one was related to a consultant that was terminated early from a contract and where only a portion of the options granted were converted into stock (40% as per similar treatment for the warrant exchange described above) and the other was the cancellation in entirety of an option grant for a former officer who did not vest in the option grant by remaining employed with the Company. | |||||||||||
The Company revalued the warrants just prior to and after the modification and applied ASC 718 for the recognition of any incremental expense for which none existed. | |||||||||||
NOTE_13_SUBSEQUENT_EVENTS
NOTE 13 - SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
NOTE 13 - SUBSEQUENT EVENTS | NOTE 13 – SUBSEQUENT EVENTS |
On April 1, 2015, the Company completed the reverse triangular merger, pursuant to the previously disclosed Agreement and Plan of Merger (among Duos, the Company and Merger Sub, whereby Duos became a wholly owned subsidiary of the Company. Following the Merger, there were outstanding 62,500,000 shares of the Company’s Common Stock (on a post-split basis). The merger is being treated as a reverse merger with the Information System Associates, Inc. deemed to be the acquired company for accounting purposes since Duos shareholders obtained voting and management control of the combined entity. | |
On March 31, 2015 the Company filed an amendment to its certificate of incorporation effecting a 1-for-200 reverse stock-split of its outstanding common stock at a ratio of 1-for-200 shares (the “Reverse Split”). The Reverse Split became effective on April 9, 2015. All share and per share data in these unaudited consolidated statements are retroactively restated herein to give effect to the post-split except where noted. |
NOTE_1_NATURE_OF_OPERATIONS_BA1
NOTE 1 - NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFCANT ACCTG POLICIES (Policies) | 3 Months Ended | ||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||
Note 1 - Nature Of Operations Basis Of Presentation And Summary Of Signifcant Acctg Policies | |||||||||||||||||||||||
Nature of Operartions | Nature of Operations | ||||||||||||||||||||||
Information Systems Associates, Inc. (Company) was incorporated in Florida on May 31, 1994 to engage in the business of developing software for the financial and asset management industries under the laws of the State of Florida on May 31, 1994. The Company currently derives the majority of its revenue from Mobile Data Center Management™ systems and turnkey data center management solutions to customers primarily located within the United States specializing in various industries. Our products and services include data center asset/inventory management, data center management software and data center data collection. | |||||||||||||||||||||||
We are currently engaged and plan to continue in the sale of asset management software for corporate information technology data centers and networks. ISA is a "solution provider" positioned to develop and deliver comprehensive asset management systems large data center assets. As part of a long term reorganization of the entity, the Company announced the formation of a new wholly owned subsidiary, TrueVue 360, Inc. TrueVue 360’s mission is to develop and market a new Software as a Service (SaaS) offering for IT asset management. TrueVue 360 will operate independently of the parent company, ISA, which will now focus exclusively on providing independent consulting and professional services through its partners to large data centers worldwide. ISA continues to receive excellent ratings for quality and efficiency. | |||||||||||||||||||||||
In addition, the Company continues to evaluate other related technology offerings and has entered into discussions with a new venture whose mission is to develop and market a new platform for “collaborative consumption”, a rapidly growing industry aimed at connecting individuals to services and products. The Company signed a term sheet with the entity pending further collaboration on certain technologies owned by ISA and is anticipating signing definitive agreements in the fourth quarter as part of a larger restructuring of ISA. | |||||||||||||||||||||||
Basis of Presentation | Basis of Presentation | ||||||||||||||||||||||
The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (all of which are of a normal recurring nature) considered necessary for a fair presentation have been included. Operating results for the periods presented are not indicative of the results that may be expected for the year ending December 31, 2014 or for any other future period. These unaudited condensed financial statements and the unaudited notes thereto should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2014 (our “10-K”). | |||||||||||||||||||||||
Principled of Consolidation | Principled of Consolidation | ||||||||||||||||||||||
The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary TrueVue 360 Inc. All significant inter-company transactions and balances are eliminated in consolidation. | |||||||||||||||||||||||
Use of Estimates | Use of Estimates | ||||||||||||||||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures 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 may differ from these estimates. Most significant estimates in the accompanying financial statements include the allowance on accounts receivable, valuation of deferred tax assets, valuation of warrants issued with debt, valuation of beneficial conversion features in convertible debt and valuation of stock-based awards. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. | |||||||||||||||||||||||
Share-Based Compensation | Share-Based Compensation We follow the fair value recognition provisions of ASC 718, “Compensation – Stock Compensation”. The fair values of share-based payments are estimated on the date of grant using the Black-Scholes option pricing model, based on weighted average assumptions. Expected volatility is based on historical volatility of our common stock. We have elected to use the simplified method described in the Securities and Exchange Commission Staff Accounting Bulletin Topic 14C to estimate the expected term of employee stock options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. Compensation expense is recognized on a straight-line basis over the requisite service period of the award. The assumptions used in calculating the fair value of stock-based awards represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future. | ||||||||||||||||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents | ||||||||||||||||||||||
For the purposes of the Statement of Cash Flows, the Company considers liquid investments with an original maturity of three months or less to be a cash equivalent. | |||||||||||||||||||||||
Concentrations | Concentrations | ||||||||||||||||||||||
Cash Concentrations: | |||||||||||||||||||||||
Cash and cash equivalents are maintained at financial institutions and at times, balances may exceed federally insured limits. We have not experienced any losses related to these balances. There were no amounts on deposit in excess of federally insured limits at the date of this report. | |||||||||||||||||||||||
Significant Customers and Concentration of Credit Risk: | |||||||||||||||||||||||
A significant portion of revenues is derived from certain customer relationships. The following is a summary of customers that each represents greater than 10% of total revenues in 2015 and 2014 and total accounts receivable at March 31, 2015 and December 31, 2014, respectively: | |||||||||||||||||||||||
31-Mar-15 | 31-Mar-14 | 31-Dec-14 | |||||||||||||||||||||
Revenue | Accounts Receivable | Revenue | Accounts Receivable | ||||||||||||||||||||
Customer A | 100 | % | Customer A | 0 | % | Customer A | 48 | % | Customer A | 100 | % | ||||||||||||
Customer B | 42 | % | |||||||||||||||||||||
Fair Value Financial Instruments and Fair Value Measurements | Fair Value of Financial Instruments and Fair Value Measurements | ||||||||||||||||||||||
We measure our financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amounts approximate fair value due to their short maturities. Amounts recorded for notes payable, net of discount, and loans payable also approximate fair value because current interest rates available to us for debt with similar terms and maturities are substantially the same. | |||||||||||||||||||||||
We follow accounting guidance for financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). | |||||||||||||||||||||||
The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: | |||||||||||||||||||||||
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. | |||||||||||||||||||||||
Level 2: Inputs, other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. | |||||||||||||||||||||||
Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. | |||||||||||||||||||||||
Earnings (Loss) Per Share | Earnings (Loss) Per Share | ||||||||||||||||||||||
Basic earnings per share (EPS) are computed by dividing net loss by the weighted average number of common shares outstanding. The dilutive EPS adds the dilutive effect of stock options, warrants and other stock equivalents. For the three months ended March 31, 2015, outstanding warrants to purchase an aggregate of 82,875 shares of common stock and outstanding options to purchase 0 shares of common stock and 130,721 shares of common stock issuable upon conversion of convertible debt were excluded from the computation of dilutive earnings per share because the inclusion would have been anti-dilutive. | |||||||||||||||||||||||
Recent Issued Accounting Standards | Recent Issued Accounting Standards | ||||||||||||||||||||||
Financial Accounting Standards Board, Accounting Standard Updates which are not effective until after March 31, 2015 are not expected to have a significant effect on the Company’s consolidated financial position or results of operations. | |||||||||||||||||||||||
In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-15, “Presentation of Financial Statements – Going Concern (Topic 205-40)”, which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard will be effective for the Company for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company does not expect the implementation of this standard to have a material effect on its disclosures. |
NOTE_3_NOTES_PAYABLE_RELATED_P1
NOTE 3 - NOTES PAYABLE - RELATED PARTY (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Note 3 - Notes Payable - Related Party | |||||||||||||||||
Schedule of Notes Payable Related Parties, Current | |||||||||||||||||
31-Mar-15 | 31-Dec-14 | ||||||||||||||||
Notes Payable | Principal | Interest* | Principal | Interest* | |||||||||||||
Related party | $ | 244,520 | 2.5 | % | $ | 241,915 | 2.5 | % | |||||||||
Related party | 15,000 | 1.5 | % | 15,000 | 1.5 | % | |||||||||||
Related party | 10,593 | N/A | 9,843 | N/A | |||||||||||||
CEO, Related Party | 30,378 | — | 26,326 | 0 | % | ||||||||||||
President, CFO | 8,783 | — | — | 0 | % | ||||||||||||
Board Director | 856 | — | — | — | |||||||||||||
Total | $ | 310,130 | $ | 293,084 |
Recovered_Sheet1
NOTE 4 - NOTE PAYABLE - STOCKHOLDER (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Notes to Financial Statements | |||||||||||||||||
Note Payable - Stockholder | 31-Mar-15 | 31-Dec-14 | |||||||||||||||
Notes Payable | Principal | Interest* | Principal | Interest* | |||||||||||||
Stockholder | $ | 50,000 | 2.5 | % | $ | 50,000 | 2.5 | % | |||||||||
——————— | |||||||||||||||||
* | interest rate per month |
NOTE_5_NOTE_PAYABLE_CONVERTIBL1
NOTE 5 - NOTE PAYABLE, CONVERTIBLE OID - RELATED PARTY AND/OR SHARE HOLDER (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||
NOTES PAYABLE OID | |||||||||||||||||||||||||
31-Mar-15 | 31-Dec-14 | ||||||||||||||||||||||||
Notes Payable - Convertible | Principal | Premium | Principal, | Principal | Premium | Principal, | |||||||||||||||||||
Net of | Net of | ||||||||||||||||||||||||
Premium | Premium | ||||||||||||||||||||||||
Related Party Affiliate | $ | 19,108 | — | $ | 19,108 | $ | 66,000 | — | $ | 66,000 | |||||||||||||||
Shareholder | $ | 50,000 | 50,000 | 100,000 | $ | — | — | — | |||||||||||||||||
Total | $ | 69,108 | 50,000 | $ | 119,108 | $ | 66,000 | — | $ | 66,000 |
NOTE_6_NOTES_PAYABLE_CONVERTIB1
NOTE 6 - NOTES PAYABLE, CONVERTIBLE OID - STOCKHOLDER (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||
NOTES PAYABLE OID | |||||||||||||||||||||||||
31-Mar-15 | 31-Dec-14 | ||||||||||||||||||||||||
Notes Payable - OID | Unamort | Principal, | Principal | Unamort | Principal, | ||||||||||||||||||||
Principal | Discounts | Net of | Discounts | Net of | |||||||||||||||||||||
Discount | Discount | ||||||||||||||||||||||||
Stockholder | $ | 165,000 | $ | (7,312 | ) | $ | 157,688 | $ | 165,000 | $ | (13,969 | ) | $ | 151,031 | |||||||||||
NOTE_12_COMMON_STOCK_PURCHASE_1
NOTE 12 - COMMON STOCK PURCHASE WARRANTS AND OPTIONS (Tables) | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Note 12 - Common Stock Purchase Warrants And Options Tables | |||||||||||
Warrants | |||||||||||
31-Mar-15 | |||||||||||
Shares | Weighted | ||||||||||
Avg | |||||||||||
Exercise | |||||||||||
Price | |||||||||||
Outstanding at beginning of period | 196,170 | $ | 4 | ||||||||
Converted to common shares under settlement agreements | 82,966 | $ | — | ||||||||
Cancelled | 30,329 | $ | 4 | ||||||||
Outstanding at end of period | 82,875 | $ | 4 | ||||||||
Exercisable at end of period | 82,875 | $ | 4 | ||||||||
Options | |||||||||||
31-Mar-15 | |||||||||||
Shares | Weighted | ||||||||||
Avg | |||||||||||
Exercise | |||||||||||
Price | |||||||||||
Outstanding at beginning of period | 20,750 | $ | 3.8 | ||||||||
Converted into common shares under settlement agreements | 14,750 | $ | 0 | ||||||||
Cancelled | 6,000 | $ | 3.8 | ||||||||
Outstanding at end of period | 0 | $ |
NOTE_1_NATURE_OF_OPERATIONS_BA2
NOTE 1 - NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFCANT ACCTG POLICIES (Details Narratives) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Note 1 - Nature Of Operations Basis Of Presentation And Summary Of Signifcant Acctg Policies | ||
Shares excluded from computation of dilutive earings per share (Class A common stock) | 39,234,063 | 4,150,000 |
Shares excluded from computation of dilutive earnings per share(Class B common stock) | 4,459,921 |
NOTE_2_GOING_CONCERN_Details_N
NOTE 2 - GOING CONCERN (Details Narrative) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Note 2 - Going Concern | ||
Net (loss) income | ($534,099) | ($252,047) |
Net cash used in operations | 272,578 | |
Working capital deficit | 1,057,429 | |
Stockholder's deficit | 1,041,301 | |
Accumulated deficit | $5,928,152 |
NOTE_3_NOTES_PAYABLE_RELATED_P2
NOTE 3 - NOTES PAYABLE - RELATED PARTY (Detail Narrative) (USD $) | 0 Months Ended | 3 Months Ended | ||||||||||
Jul. 24, 2012 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2013 | Jun. 30, 2012 | 30-May-14 | 13-May-14 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Aug. 30, 2012 | Jun. 27, 2012 | |
Amount of revolving note payable, minumum | $100,000 | |||||||||||
Amount of revolving note payable, maximum | 300,000 | |||||||||||
Original note converted | 100,000 | |||||||||||
Interest rate | 2.5 | 1.5 | ||||||||||
Stock rate for conversion | $0.01 | |||||||||||
Shares for conversion | 8,333,333 | |||||||||||
Shares received | 6,250,000 | |||||||||||
Accrued interest | 6,250 | 2,485 | ||||||||||
Proceeds from notes payable related parties | 15,000 | 5,000 | 20,000 | 19,400 | 10,000 | |||||||
Proceeds from notes payable related parties | 15,000 | |||||||||||
Reclassifed amount to notes payable related party | 30,265 | |||||||||||
Accrued payroll | $28,013 | $0 | $54,682 |
NOTE_4_NOTE_PAYABLE_STOCKHOLDE1
NOTE 4 - NOTE PAYABLE - STOCKHOLDER (Details Narrative) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Jan. 02, 2013 | Jun. 28, 2012 | Apr. 13, 2012 | Jan. 11, 2012 |
Notes to Financial Statements | ||||||||
Notes payable - Shareholders | $50,000 | $50,000 | $50,000 | $50,000 | $50,000 | $25,000 | $35,000 | |
revolving rate - Interest | 3.00% | |||||||
interest rate payable | 150.00% | |||||||
penalty fee rate | 150.00% | |||||||
Principal payment made | 10,000 | |||||||
Reduction of penalty fee maximum | 150.00% | |||||||
Reduction of penalty fee minimum | 100.00% | |||||||
Accrued interest | $6,250 | $2,485 |
NOTE_5_NOTE_PAYABLE_CONVERTIBL2
NOTE 5 - NOTE PAYABLE - CONVERTIBLE OID - RELATED PARTY AND/OR SHARE HOLDER (Details Narrative) (USD $) | 1 Months Ended | ||||||
Aug. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2015 | Mar. 16, 2015 | Feb. 18, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | |
Interger | |||||||
Note 5 - Note Payable Convertible Oid - Related Party Andor Share Holder | |||||||
Principle amount of loan | $66,000 | $66,000 | |||||
Convertible note related parties | 60,000 | ||||||
Original note discount | 6,000 | ||||||
Shares amount for convertible note | 3,959,921 | ||||||
Conversion price, common stock | $0.06 | $73,825 | |||||
Term for Warrants | 5 | ||||||
Exercise price of warrants | $6.60 | ||||||
Fair value of warrants | 28,571 | ||||||
Expected dividend yields | 0.00% | ||||||
Expected volatility | 462.61% | ||||||
Risk free interest rate | 0.10% | ||||||
Settlement of the outstanding note including accrued interest and penalties | 92,933 | ||||||
Shares of common stock | 87,125 | ||||||
Reduced balance of the note | 19,108 | ||||||
Loss on conversion amount | 30,725 | ||||||
Exercise price | $1.20 | ||||||
Exchange of warrants | 19,800 | ||||||
Purchase of Common Stock fully paid | 8,292 | ||||||
Net carrying value of the note | 19,108 | 66,000 | |||||
Convertible note | $50,000 | ||||||
Interest accruring at a rate of | 0.12 | ||||||
The note is convertible into Company'a stock discount percentage | 0.5 |
NOTE_6_NOTES_PAYABLE_CONVERTIB2
NOTE 6 - NOTES PAYABLE - CONVERTIBLE OID - STOCKHOLDER (Details Narrative) (USD $) | Jul. 14, 2015 | Mar. 31, 2015 | Sep. 08, 2014 | Mar. 31, 2014 | Jul. 15, 2011 |
Y | Y | ||||
Interger | |||||
Note 6 - Notes Payable Convertible Oid - Stockholder | |||||
Shareholders investment | $125,000 | ||||
Term of convertible note | 1 | 1 | |||
Original value of note | 165,000 | 137,500 | |||
Original issued discount | 14,932 | 12,500 | |||
Convertible notes payable shares issued (common stock) | 4,125,000 | ||||
Rate of conversion per share | $0.33 | ||||
Value of beneficial converstion opton | 62,500 | ||||
Warrant terms | 5 | ||||
warrants to purchase | 3,750,000 | ||||
Exercise price of warrants | $0.33 | ||||
Dividend yield using Black- Scholes pricing | 0.00% | ||||
Expected volatitity | 34762.00% | ||||
Risk free interest rate | 1.46 | ||||
Carrying value of notes | 144,293 | 142,684 | |||
Net of unamortized issued discount | 11,782 | 7,384 | |||
Rate of penalty for outstanding balance | 25.00% | ||||
Warrants purchase | 1,500,000 | ||||
Warrant discount | 8,925 | ||||
Excercise price | $0.01 | ||||
Relative fair value | $11,905 | ||||
Dividend yield | 0.00% | ||||
Expected volatility | 236.31% | ||||
Risk free interest rate | 1.65% |
NOTE_7_NOTE_PAYABLE_THIRD_PART
NOTE 7 - NOTE PAYABLE - THIRD PARTY (Details Narratives) (USD $) | 3 Months Ended | |||
Oct. 01, 2014 | Mar. 31, 2015 | Aug. 31, 2014 | Aug. 08, 2014 | |
Interger | ||||
Note 7 - Note Payable - Third Party Details Narratives | ||||
Subsidiary deposit | $50,000 | |||
Term of agreement | 1 | |||
Advance from third party | 50,000 | |||
Future receivable amount | 62,400 | |||
Number of payments | 13 | |||
Payment arrangement amount | 4,800 | |||
Advance to assist in funding True Vue 360 | 3,069 | |||
Unamortized discount | 11,446 | |||
Principal due after first payment | $57,600 |
NOTE_8_LINE_OF_CREDIT_Detail_N
NOTE 8 - LINE OF CREDIT (Detail Narrative) (USD $) | Mar. 31, 2015 | Mar. 31, 2014 |
Note 8 - Line Of Credit | ||
Line of Credit - Wells Fargo Bank | $40,411 | $39,979 |
Interest Rate | 0.03% | 0.03% |
NOTE_9_COMMITMENTS_AND_CONTING1
NOTE 9 - COMMITMENTS AND CONTINGENCIES (Detail Narrative) (USD $) | 3 Months Ended | 12 Months Ended | |||||||
Mar. 31, 2015 | Dec. 31, 2014 | Jul. 31, 2016 | Jul. 31, 2015 | Jul. 31, 2014 | Jul. 31, 2013 | Jul. 31, 2012 | 9-May-14 | Apr. 25, 2011 | |
Interger | |||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||
Lease term | 3 | ||||||||
Area of leased premises | 1,352 | ||||||||
Monthy rent fee | $2,040 | $1,920 | $1,800 | ||||||
Lease termination | 6,091 | ||||||||
Note for settlement agreement | 4,401 | ||||||||
Installment payment plan | 600 | ||||||||
Number of monthly payments | 7 | ||||||||
Security deposit | 1,200 | ||||||||
Rent Expense | $20,342 | $20,436 | $1,260 | $1,200 |
NOTE_11_STOCKHOLDERS_DEFICIT_D
NOTE 11 - STOCKHOLDERS' DEFICIT (Details Narrative) (USD $) | Aug. 02, 2014 | 5-May-14 | Apr. 22, 2014 | Mar. 19, 2014 | Feb. 14, 2014 | Feb. 10, 2014 | Jan. 27, 2014 | Jan. 04, 2014 |
Note 11 - Stockholders Deficit Details Narrative | ||||||||
Common stock issued for cash, value | $100,000 | |||||||
Common stock issued for cash, shares | 8,332,500 | |||||||
Common stock class A issued for cash, value | 50,000 | 60,000 | ||||||
Common stock A issued for cash, shares | 3,750,000 | 4,166,250 | 5,000,000 | |||||
Common stock A issued for cash, price per shares | $0.01 | $0.01 | $0.01 | $0.01 | ||||
Common stock B converted to A for cash, shares | 5,000,000 | |||||||
Common stock issued for warrants, shares | 4,451,087 | |||||||
Exercise of warrants 1 | 3,750,000 | |||||||
Exercise of warrants 2 | 4,125,000 | |||||||
Exercisable price per share | $0.01 | |||||||
Market value per share | $0.02 | |||||||
Interest payment converted | 100,000 | |||||||
Amount of shares converted into (common stock) | 8,333,000 | |||||||
Conversion of stock shares, value | 12,000 | |||||||
Conversion of stock, shares converted | 1,000,000 | |||||||
Conversion of stock, value per share | $0.01 | |||||||
Proceeds of converted shares | $5,200 |
NOTE_12_COMMON_STOCK_PURCHASE_2
NOTE 12 - COMMON STOCK PURCHASE WARRANTS AND OPTIONS (Details Narrative) | Mar. 31, 2015 |
Note 12 - Common Stock Purchase Warrants And Options Details Narrative | |
Exchange of warrants to purchase shares | 176,170 |
Warrants exchanged | 113,295 |
Number of shares after the exchange | 82,966 |
NOTE_12_STOCK_PURCHASE_WARRANT
NOTE 12 - STOCK PURCHASE WARRANTS AND OPTIONS (Details Narrative) (USD $) | Aug. 02, 2014 | Mar. 26, 2014 | Jan. 22, 2014 | Jan. 02, 2014 |
Interger | Interger | Interger | Interger | |
Modification of warrants 1 | 3,750,000 | |||
Modification of warrants 2 | 4,125,000 | |||
Exercise price per share 1 | $0.03 | |||
Exercise per share 2 | $0.03 | |||
Reduced excercise price | $0.01 | |||
Divident rate | 0 | 0 | 0 | |
Volatility | 280 | 294 | 294 | |
Risk free interest rate | 1.65 | 0.76 | 0.76 | |
Terms | 5 | 5 | 5 | |
Options issued | 1,000,000 | |||
Options exercise price per share | $0.01 | $0.01 | $0.02 | |
Common stock class A options, shares | 6,250,000 | 150,000 | ||
Value per option, shares | $0.01 | |||
Total option amount | $77,997 | $1,800 | ||
President and CFO | ||||
Divident rate | 0 | |||
Volatility | 294 | |||
Risk free interest rate | 0.76 | |||
Terms | 5 | |||
Options issued | 1,000,000 | |||
Chief Operating Officer | ||||
Divident rate | 0 | |||
Volatility | 294 | |||
Risk free interest rate | 0.76 | |||
Terms | 5 | |||
Options issued | 1,000,000 |
NOTE_4_NOTE_PAYABLE_STOCKHOLDE2
NOTE 4 - NOTE PAYABLE - STOCKHOLDER - (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Notes to Financial Statements | ||
Stockholder Notes Payable (principal) | $50,000 | $50,000 |
Interest on notes | 250.00% | 250.00% |
NOTE_8_NOTE_PAYABLE_THIRD_PART
NOTE 8 - NOTE PAYABLE - THIRD PARTY (Details) (USD $) | Mar. 31, 2015 | Mar. 31, 2014 | 7-May-13 |
Interger | |||
Note 7 - Notes Payable - Third Party | |||
Third party loan | $44,325 | $45,000 | $45,000 |
Interest rate | 1.50% | ||
Term of loan | 3 |
NOTE_12_COMMON_STOCK_PURCHASE_3
NOTE 12 - COMMON STOCK PURCHASE WARRANTS AND OPTIONS (Details) (USD $) | Mar. 31, 2015 |
Note 12 - Common Stock Purchase Warrants And Options Details | |
Outstanding at begining of period, shares | 196,170 |
Outstanding at begining of period, weighted avg exercise price | $4 |
Converted to common shares under settlement agreements, shares | 82,966 |
Converted to common shares under settlement agreements, weighted avg exercise price | |
Cancelled, shares | 30,329 |
Cancelled, weighted avg exercise price | $4 |
Outstanding at end of period, shares | 82,875 |
Outstanding at end of period, weighted avg exercise price | $4 |
Exercisable at end of period, shares | 82,875 |
Exercisable at end of period, weighted avg exercise price | $4 |
NOTE_14_SUBSEQUENT_EVENTS_Deta
NOTE 14 - SUBSEQUENT EVENTS (Details Narrative) | Apr. 01, 2015 |
Subsequent Events [Abstract] | |
Outstanding shares following the Merger | 62,500,000 |