Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Jun. 30, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | SPINDLE, INC. | |
Document Type | 10-K | |
Document Period End Date | Dec. 31, 2016 | |
Amendment Flag | false | |
Entity Central Index Key | 1,403,802 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 70,596,285 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | FY | |
Entity Public Float | $ 12,486,788 | |
Trading Symbol | spdl |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 3,642 | $ 161,226 |
Accounts receivable, net | 82,913 | 105,096 |
Prepaid expenses and deposits | 160,280 | 1,789,547 |
Inventory | 10,579 | |
Total current assets | 246,835 | 2,066,448 |
Other assets | ||
Property and equipment, net | 14,284 | 16,921 |
Goodwill, net | 4,636,212 | |
Intangible assets, net | 134,758 | 1,422,750 |
Total other assets | 149,042 | 6,075,883 |
Total assets | 395,877 | 8,142,331 |
Current liabilities | ||
Accounts payable and accrued liabilities | 396,237 | 342,201 |
Advances | 10,000 | 190,000 |
Accrued liabilities - related party | 414,327 | 14,437 |
Notes payable - related party, net | 64,053 | 66,053 |
Total current liabilities | 884,617 | 612,691 |
Non-current liabilities | ||
Convertible notes payable, net | 38,526 | |
Convertible notes payable - related party, net | 79,498 | |
Total non-current liabilities | 118,024 | |
Total liabilities | 1,002,641 | 612,691 |
Stockholders' equity | ||
Preferred stock, value | ||
Common stock, value | 70,596 | 64,297 |
Common stock payable | 250 | 697 |
Additional paid-in capital | 27,516,362 | 26,576,761 |
Accumulated deficit | (28,193,972) | (19,112,115) |
Total stockholders' equity | (606,764) | 7,529,640 |
Total liabilities and stockholders' equity | $ 395,877 | $ 8,142,331 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Balance Sheets | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 70,596,285 | 64,296,519 |
Common stock, shares outstanding | 70,596,285 | 64,296,519 |
Common shares payable, unissued | 250,449 | 696,853 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement | ||
Sales income | $ 589,000 | $ 521,037 |
Cost of sales | 69,901 | 211,941 |
Gross profit | 519,099 | 309,096 |
Expenses: | ||
Depreciation and amortization | 428,494 | 546,785 |
Promotional and marketing | 19,446 | 49,485 |
Consulting | 506,146 | 436,529 |
Salaries and wages | 1,447,009 | 1,601,751 |
Director fees | 160,115 | 203,900 |
Professional fees | 455,139 | 374,021 |
General and administrative expenses | 462,462 | 261,984 |
Bad debt expense | 267,118 | |
Loss on impairment of goodwill | 4,636,212 | 669,993 |
Loss on impairment of long-lived asset | 1,077,405 | 254,940 |
Total operating expenses | 9,459,546 | 4,399,388 |
Net operating income (loss) | (8,940,447) | (4,090,292) |
Other income (expense) | ||
Gain (loss) on sale of assets | 269,817 | |
Gain (loss) on legal settlement | (115,000) | |
Other income | 63,824 | |
Other expense | 10,138 | 37,610 |
Interest expense, net | 61,119 | 1,558 |
Interest expense - related party | 18,977 | 55 |
Total other income (expense) | (141,410) | 230,594 |
Loss before provision for income taxes | (9,081,857) | (3,859,698) |
Provision for income taxes | ||
Net (loss) | $ (9,081,857) | $ (3,859,698) |
Weighted average number of common shares outstanding - basic and diluted | 67,454,703 | 47,564,687 |
Net (loss) per share - basic and diluted | $ (0.13) | $ (0.08) |
Statement of Stockholders' Equi
Statement of Stockholders' Equity - USD ($) | Common Stock | Additional Paid-in Capital | Common Stock Payable | Accumulated (Deficit) | Total |
Beginning Balance, shares at Dec. 31, 2014 | 42,068,773 | ||||
Beginning Balance, amount at Dec. 31, 2014 | $ 42,069 | $ 21,470,580 | $ 108 | $ (15,252,417) | $ 6,260,340 |
Shares issued for services, shares | 14,206,080 | ||||
Shares issued for services, value | $ 14,206 | 2,607,357 | 565 | 2,622,128 | |
Shares issued for cash, shares | 350,000 | ||||
Shares issued for cash, value | $ 350 | 174,650 | 175,000 | ||
Shares issued for compensation, shares | 371,666 | ||||
Shares issued for compensation, value | $ 372 | 68,894 | 24 | 69,290 | |
Shares issued for other events, shares | 7,000,000 | ||||
Shares issued for other events, value | $ 7,000 | 1,603,000 | 1,610,000 | ||
Shares issued for purchase of assets, shares | 300,000 | ||||
Shares issued for purchase of assets, value | $ 300 | 74,700 | 75,000 | ||
Amortization effect on additional paid-in capital | 577,580 | 577,580 | |||
Net loss for the period | (3,859,698) | (3,859,698) | |||
Ending Balance, shares at Dec. 31, 2015 | 64,296,519 | ||||
Ending Balance, amount at Dec. 31, 2015 | $ 64,297 | 26,576,761 | 697 | (19,112,115) | 7,529,640 |
Shares issued for services, shares | 3,745,766 | ||||
Shares issued for services, value | $ 3,495 | 635,811 | (447) | 638,859 | |
Shares issued for cash, shares | 9,504,449 | ||||
Shares issued for cash, value | $ 9,504 | 1,273,603 | 1,283,107 | ||
Shares returned, shares | (6,700,000) | ||||
Shares returned, value | $ (6,700) | (1,588,300) | (1,595,000) | ||
Amortization effect on additional paid-in capital | 618,487 | 618,487 | |||
Net loss for the period | (9,081,857) | (9,081,857) | |||
Ending Balance, shares at Dec. 31, 2016 | 70,846,734 | ||||
Ending Balance, amount at Dec. 31, 2016 | $ 70,596 | $ 27,516,362 | $ 250 | $ (28,193,972) | $ (606,764) |
Statements of Stockholders' Equ
Statements of Stockholders' Equity (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Shares issued for services, value | $ 638,859 | $ 2,622,128 |
Shares returned, value | (1,595,000) | |
Amortization effect on additional paid-in capital | $ 618,487 | 577,580 |
To Related parties | ||
Shares issued for services, shares | 2,488,993 | |
Shares issued for services, value | $ 422,472 | |
For prepaid expenses | ||
Shares issued for services, shares | 458,337 | |
Shares issued for services, value | $ 93,959 | |
For amortization of discount on notes | ||
Amortization effect on additional paid-in capital | 215,333 | |
For stock option amortization | ||
Amortization effect on additional paid-in capital | $ 403,154 | $ 577,580 |
For HWW License | ||
Shares issued for services, shares | 7,000,000 | |
Shares issued for services, value | $ 1,610,000 | |
Shares returned, shares | (6,700,000) | |
Shares returned, value | $ (1,595,000) |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Operating activities | ||
Net (loss) | $ (9,081,857) | $ (3,859,698) |
Adjustments to reconcile net loss to net cash (used) by operating activities: | ||
Shares issued for services | 122,428 | 471,351 |
Shares issued for services - related party | 422,476 | 200,663 |
Share based compensation expense | 403,154 | 577,579 |
Depreciation and amortization | 428,494 | 546,785 |
Gain (loss) on sale of assets | 269,817 | |
Amortization of debt discounts | 66,357 | 55 |
Goodwill impairment | 4,636,212 | 669,993 |
Impairment of long-lived assets | 1,077,405 | 254,940 |
Gain on forgiveness of bad debt | 63,824 | |
Bad debt expense | 267,118 | |
Gain (loss) on legal settlement | (115,000) | |
Changes in operating assets and liabilities: | ||
(Increase) decrease in accounts receivable | (244,935) | 55,620 |
(Increase) decrease in prepaid expenses | 113,222 | (88,737) |
(Increase) in inventory | 90,068 | |
Increase (decrease) in advances | (25,000) | |
Increase in accounts payable and accrued expenses | 117,860 | 68,966 |
(Decrease) increase in expenses - related party | 499,890 | 946,702 |
Net cash (used in) operating activities | (1,121,000) | (360,530) |
Cash flows from investing activities | ||
Purchase of fixed assets | 3,613 | |
Sale of fixed assets | 678,366 | |
Additions to capitalized software development | 201,078 | 515,417 |
Net cash provided by (used in) investing activities | (204,691) | 162,949 |
Cash flows from financing activities | ||
Payment for share repurchase | 100,000 | |
Payments on notes payable | 32,500 | |
Payments on advances - related party | 8,000 | 6,000 |
Proceeds from advances and notes | 25,500 | |
Proceeds from restricted cash account | 20,000 | |
Proceeds from sale of common stock | 1,283,107 | 175,000 |
Net cash provided by (used in) financing activities | 1,168,107 | 189,000 |
Net increase (decrease) in cash | (157,584) | (8,581) |
Cash - beginning of the period | 161,226 | 169,807 |
Cash - ending of the period | $ 3,642 | $ 161,226 |
Organization of The Company and
Organization of The Company and Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Organization of The Company and Significant Accounting Policies | NOTE 1 - ORGANIZATION OF THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES Organization Spindle, Inc. is an innovator of merchant and consumer-facing commerce solutions focused on the Small and Medium-sized Business (“SMB”) market. We were originally incorporated in the State of Nevada on January 8, 2007 as “Coyote Hills Golf, Inc.” We were previously an online retailer of golf-related apparel, equipment and supplies. Prior to the acquisition of the assets of Spindle Mobile, Inc. (“Spindle Mobile”), as described below, we generated minimal revenues from the golf-related business. On December 2, 2011, we acquired certain assets and intellectual property from Spindle Mobile, a Delaware corporation in the business of data processing, mobile payments fields and other related fields, in exchange for approximately 80% of the issued and outstanding common stock of the Company, which shares were distributed to the stockholders of Spindle Mobile, pursuant to the terms and conditions of an Asset Purchase Agreement (the "Spindle Mobile Agreement"). Concurrent with the closing of the Spindle Mobile Agreement, we amended our articles of incorporation to change our name from "Coyote Hills Golf, Inc." to "Spindle, Inc." Additionally, we changed our authorized capital from 100,000,000 shares of common stock and 100,000,000 shares of preferred stock, $0.001 par value to 300,000,000 shares of common stock, $0.001 par value, and 50,000,000 preferred stock, $0.001 par value. The actions were approved on November 11, 2011, by the consent of the majority stockholders who represented 90% of our issued and outstanding common stock, and were effective on of December 2, 2011. On December 31, 2012 (the “Parallel Acquisition Closing Date”), pursuant to that certain Asset Purchase Agreement (the “Parallel Agreement”) by and between the Company and Parallel Solutions Inc., a Nevada corporation (“Parallel”), the Company acquired substantially all of Parallel’s assets used in connection with its business of facilitating electronic payment processing services to merchants (the “Parallel Assets”), assumed certain specified liabilities and hired seven employees of Parallel in exchange for 538,570 unregistered shares of common stock, of which 53,857 shares (the "Parallel Indemnification Escrow") and 100,000 shares (the "Parallel Deferred Consent Escrow”) were deposited in escrow with our transfer agent. The Parallel Indemnification Escrow was released on January 23, 2014. On October 29, 2013, the Parallel Deferred Consent Escrow was released to Parallel after certain specified contract assignments and residual revenue streams were assigned to the Company pursuant to the Parallel Agreement. In June of 2015, the Parallel Assets were sold. On March 20, 2013 (the “MeNetwork Closing Date”), the Company assumed certain liabilities and acquired substantially all the assets of MeNetwork, Inc., a Delaware corporation (“MeNetwork”), used in connection with its business of developing, marketing and licensing a mobile marketing platform for use by merchants and consumers (the “MeNetwork Assets”), pursuant to an Asset Purchase Agreement dated March 1, 2013 by and between Spindle and MeNetwork (the “MeNetwork Agreement”). As consideration for the assumption of the liabilities and the acquisition of the MeNetwork Assets, the Company issued an aggregate of 2,750,000 shares of common stock to the stockholders of MeNetwork, of which 350,000 were deposited in escrow with our transfer agent for the purposes of satisfying any indemnification claims. The MeNetwork Indemnification Escrow was released pursuant to the MeNetwork Agreement. On October 7, 2013, the Company issued an additional 750,000 shares of common stock to Ashton Craig Page, the former director and Chief Operating Officer of MeNetwork and a former director of the Company, pursuant to the terms and conditions of the MeNetwork Agreement. On December 12, 2014, the Company, and Ashton Craig Page, in his capacity as the representative of MeNetwork and the MeNetwork Stockholders (the “Representative”), entered into an Amendment and Waiver to Asset Purchase Agreement (the "Amendment), pursuant to which the Company agreed to issue and the Representative agreed to accept on behalf of MeNetwork and the MeNetwork Stockholders an acceleration of the issuance of up to an aggregate of 1,000,000 Earnout Shares on or before December 31, 2014 in full satisfaction of all obligations of the Company to issue the Earnout Shares pursuant to the Purchase Agreement during the Earnout Period. These shares were issued on December 23, 2014. On January 3, 2014 (the “Closing Date”), the Company acquired substantially all of the assets of Yowza International Inc. (renamed Y Dissolution, Inc.) (“Yowza!!) used in connection with its business of providing retail coupons through a mobile application (the “Yowza Assets”), and assumed certain liabilities of Yowza!! in an amount equal to $15,000 for consideration equal to (1) $500,000 in cash paid to Yowza!! and certain creditors and holders of outstanding promissory notes issued by Yowza!! and (2) an aggregate of 1,642,000 unregistered shares of our common stock (the “Aggregate Share Consideration”), issuable to the holders of Yowza!!’s outstanding capital stock. Ten percent of the Aggregate Share Consideration is issuable to certain executive management members and advisors of Yowza!! in accordance with consulting or employment agreements and subject to certain vesting provisions. In addition, an aggregate of 197,052 shares of common stock (the “Indemnification Escrow”), representing approximately 12% of the Aggregate Share Consideration, was deposited in escrow for a period of one year from the Closing Date. The Yowza!! Indemnification Escrow was released on January 12, 2015. The Indemnification Escrow is available to compensate Spindle pursuant to the indemnification obligations of Yowza!! under the Asset Purchase Agreement, and for any necessary accounts receivable adjustment after the Closing Date in the event Spindle is unable to collect the acquired outstanding accounts receivable of Yowza!! within 120 days after the Closing Date. On October 23, 2015 (the “Closing Date”) the Company completed the acquisition of specific assets of Catalyst Business Development, Inc. (“Catalyst”) pursuant to an Asset Purchase Agreement, dated September 14, 2015, by and between the Company and Catalyst in exchange for 300,000 unregistered shares of the Company’s common stock issued to the holders of Catalyst stock. The consideration amounted to $75,000 using a fair value of $0.25 per share at the Closing Date. The assets acquired included a white-labeled license of the Merchant Partners solution and various assets related to branding, marketing and sales. Spindle will continue to operate the gateway under the Catalyst brand. Reclassifications Certain reclassifications have been made to the prior years’ financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations or retained earnings. Summary of significant accounting policies Cash and cash equivalents The Company considers cash and cash equivalents to include all stable, highly liquid investments with an original maturity of three months or less from the date of purchase. Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“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 materially from those estimates. Revenue recognition Revenue is derived on a per transaction basis through the Company’s gateway and payments platforms. The Company also earns revenue for services, account establishment fees and licensure on Software as a Service (“SaaS”) basis, and on a performance basis, such as when a client acquires a new customer through our platform. Revenue is recognized in accordance with Staff Accounting Bulletin (“SAB”) No. 101, “Revenue Recognition in Financial Statements,” as revised by SAB No. 104. As such, the Company recognizes revenue when persuasive evidence of an arrangement exists, title transfer has occurred, the price is fixed or readily determinable, and collectability is probable. Sales are recorded net of sales discounts. Accounts receivable, net Accounts receivable is reported at the customers’ outstanding balances, less any allowance for doubtful accounts. An allowance for doubtful accounts on accounts receivable is charged to operations in amounts sufficient to maintain the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses. Management determines the adequacy of the allowance based on historical write-off percentages and information collected from individual customers. Accounts receivable are charged off against the allowance when collectability is determined to be permanently impaired. Interest is not accrued on overdue accounts receivable. Inventory Inventories consist of merchandise held for sale in the ordinary course of business, including cost of freight and other miscellaneous acquisition costs, and are stated at the lower of cost or market on a FIFO basis. The Company records a write-down for inventories which have become obsolete or are more than anticipated demand or net realizable value. We periodically perform a detailed review of inventory that considers multiple factors including demand forecasts, market conditions, product life cycle status, product development plans and current sales levels. If actual demand or market conditions for the Company’s products are less favorable than forecasted or if unforeseen changes negatively affect the utility of the Company’s inventory, additional inventory write-downs may be required. In the fourth quarter of 2016, management’s review determined that the carrying value of inventory consisted of items that were obsolete or would never be used by the Company. In this respect, equipment in inventory with a total cost of $10,579 was written off and a loss recorded to impairment expense. Property and equipment Property and equipment are stated at cost. Major renewals and improvements are charged to the asset accounts. Replacements, maintenance and repairs that do not improve or extend the lives of the respective assets are expensed. At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are credited or charged to income. Depreciation is computed on the straight-line and accelerated methods for financial reporting and income tax reporting purposes based upon the following estimated useful lives: Computer Software 3 years Computer Equipment 5 years Office furniture and equipment 7 years Long-lived assets The Company accounts for its long-lived assets in accordance with ASC Topic 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” “ASC Topic 360-10-05” requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value. The Company recorded an impairment to its intellectual property for the year ended December 31, 2016 as further discussed in Note 6. Goodwill The Company accounts for goodwill in accordance with ASC Topic 805-30-25, “Accounting for Business Combinations” (“ASC Topic 805-30”) and “Accounting for Goodwill - Subsequent Measurement” (“ASC Topic 350-20-35”). ASC Topic 805-30 requires that the acquirer shall recognize goodwill as of the acquisition date as the excess of the fair value of the consideration transferred over the fair value of the net acquisition-date amounts of the identifiable assets and liabilities assumed. ASC Topic 350-20-35 requires that goodwill acquired in a purchase and determined to have an indefinite useful life is not amortized, but instead tested for impairment annually or more frequently when events or circumstances indicates that the carrying value of a reporting unit more likely than not exceeds its fair value. The Company’s annual goodwill impairment testing date is December 31 of each year. The Company first assesses qualitative factors to determine whether it’s necessary to perform the two-step goodwill impairment test. Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value. If the qualitative assessment results in an indication that it’s more likely than not that the fair value of a reporting unit is less than its carrying amount, then a quantitative assessment must be performed. Management has determined that the Company has one reporting unit for purposes of testing goodwill. The quantitative analysis involves estimating the fair value of its reporting unit utilizing a combination of valuation methods including market capitalization, the income approach and cash flows. Income and cash flow forecasts were used in the evaluation of goodwill based on management’s estimate of future performance. If goodwill is determined to be impaired because of this analysis, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value. The Company recorded impairment to its goodwill for each of the years ended December 31, 2016 and December 31, 2015 as further discussed in Note 8. Capitalized software development costs The Company capitalizes software development costs after establishing technological feasibility of a software application. Capitalized software development costs represent the costs associated with the development of the Company’s software applications used to generate revenue from our customers. Amortization of such costs is recorded on a software application-by-application basis, based on the greater of the proportion of current year sales to the total of current and estimated future sales for the applications or the straight-line method over the remaining estimated useful life of the software application. We continually evaluate the recoverability of capitalized software costs and will charge to operations amounts that are deemed unrecoverable for projects we may abandon. The Company recorded an impairment to its software development costs for the years ended December 31, 2016 and December 31, 2015 of $1,059,099 and $254,940, respectively. Beneficial Conversion Feature If the conversion features of conventional convertible debt provide for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 “Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method. Debt Discount The Company determines if the convertible debenture should be accounted for as liability or equity under ASC 480, Liabilities - Distinguishing Liabilities from Equity (“ASC 480”). ASC 480, applies to certain contracts involving a company’s own equity, and requires that issuers classify the following freestanding financial instruments as liabilities. Mandatorily redeemable financial instruments, obligations that require or may require repurchase of the issuer’s equity shares by transferring assets (e.g., written put options and forward purchase contracts), and certain obligations where at inception the monetary value of the obligation is based solely or predominantly on: - A fixed monetary amount known at inception, for example, a payable settleable with a variable number of the issuer’s equity shares with an issuance date fair value equal to a fixed dollar amount, - Variations in something other than the fair value of the issuer’s equity shares, for example, a financial instrument indexed to the S&P 500 and settleable with a variable number of the issuer’s equity shares, or - Variations inversely related to changes in the fair value of the issuer’s equity shares, for example, a written put that could be net share settled. If the entity determined the instrument meets the guidance under ASC 480 the instrument is accounted for as a liability with a respective debt discount. The Company records debt discounts in connection with raising funds through the issuance of promissory notes (see Notes 9 and 10). These costs are amortized to non-cash interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed. Stock-based compensation The Company accounts for stock-based payments to employees in accordance with ASC 718, “Stock Compensation” (“ASC 718”). Stock-based payments to employees include grants of stock, grants of stock options and issuance of warrants that are recognized in the statement of operations based on their fair values at the date of grant. The Company accounts for stock-based payments to non-employees in accordance with ASC 505-50, “Equity-Based Payments to Non-Employees.” (“ASC 505-50”) Stock-based payments to non-employees include grants of stock, grants of stock options and issuances of warrants that are recognized in the statement of operations based on the value of the vested portion of the award over the requisite service period as measured at its then-current fair value as of each financial reporting date. The Company calculates the fair value of option grants and warrant issuances utilizing the Black-Scholes pricing model. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. ASC 718 requires forfeitures to be estimated at the time stock options are granted and warrants are issued to employees and non-employees, and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered stock option or warrant. The Company estimates forfeiture rates for all unvested awards when calculating the expense for the period. In estimating the forfeiture rate, the Company monitors both stock option and warrant exercises as well as employee termination patterns. The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on compensation under ASC 505-50, In accordance with ASC 505-50, the cost of stock-based compensation is measured at the grant date based on the value of the award and is recognized over the vesting period. The value of the stock-based award is determined using the Black-Scholes option-pricing models, whereby compensation cost is the excess of the fair value of the award as determined by the pricing model at the grant date or other measurement date over the amount that must be paid to acquire the stock. Loss per share The Company reports earnings (loss) per share in accordance with ASC Topic 260-10, "Earnings per Share." Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings (loss) per share has not been presented since the effect of the assumed conversion of warrants and debt to purchase common shares would have an anti-dilutive effect. Potential common shares as of December 31, 2016 that have been excluded from the computation of diluted net loss per share amounted to 2,830,920 shares, which includes 1,283,420 warrants and 1,547,500 options. Of the 2,830,920 potential common shares at December 31, 2016, 215,834 had not vested. Potential common shares as of December 31, 2015 that have been excluded from the computation of diluted net loss per share amounted to 3,440,000 shares which includes 600,000 warrants and 2,840,000 options. Of the 2,840,000 potential common shares at December 31, 2015, 1,245,833 had not vested. See Note 12 for more information regarding our warrants and options. The Company also has two notes payable that have conversion features. Were the holders to exercise such features, an additional 31,000 shares could be issued based on the note balances at December 31, 2016. Income taxes The Company accounts for its income taxes under the provisions of “Income Taxes” (“ASC 740”). The method of accounting for income taxes under ASC 740 is the asset and liability method. The asset and liability method requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between tax bases and financial reporting bases of other assets and liabilities. Fair value of financial instruments We account for non-recurring fair value measurements of our non-financial assets and liabilities in accordance with ASC 820-10 Fair Value Measurement. This guidance defines fair value, establishes a framework for measuring fair value and addresses required disclosures about fair value measurements. This standard establishes a three-level hierarchy for fair value measurements based upon the significant inputs used to determine fair value. Observable inputs are those which are obtained from market participants external to the Company while unobservable inputs are generally developed internally, utilizing management’s estimates, assumptions and specific knowledge of the assets/liabilities and related markets. The three levels are defined as follows: Level 1 - Valuation is based on quoted prices in active markets for identical assets and liabilities. Level 2 - Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, or by model-based techniques in which all significant inputs are observable in the market. Level 3 - Valuation is derived from model-based techniques in which at least one significant input is unobservable and based on the company’s own estimates about the assumptions that market participants would use to value the asset or liability. If the only observable inputs are from inactive markets or for transactions which the Company evaluates as “distressed”, the use of Level 1 inputs should be modified by the company to properly address these factors, or the reliance of such inputs may be limited, with a greater weight attributed to Level 3 inputs. Due to the short-term nature of our financial assets and liabilities, we consider their carrying amounts to approximate fair value. Recent Accounting Standards The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financials properly reflect the change. In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04 Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business In October 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-16 Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory In August 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In March 2016, the FASB issued ASU No. 2016-09, “ Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting |
Going Concern
Going Concern | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Going Concern | NOTE 2 - GOING CONCERN The accompanying financial statements have been prepared assuming we will continue as a going concern. As shown in the accompanying financial statements, the Company has incurred a net loss of ($9,081,857) and ($3,859,698) for the fiscal years ended December 31, 2016 and 2015, respectively and at December 31, 2016, has an accumulated deficit of ($28,193,972). To continue as a going concern, the Company may need, among other things, additional capital resources. There are no assurances that without generating new revenue in 2017 that the Company will be successful without additional financing. Should revenues not grow sufficiently and the company will not be able to secure additional financing through the sale of it securities or debt, it would be unlikely for us to continue as a going concern for one year from the issuance of the financial statements. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence. These conditions raise substantial doubt about our ability to continue as a going concern. These financial statements do not include any adjustments that might arise from this uncertainty. |
Accounts Receivable, Net, Discl
Accounts Receivable, Net, Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Accounts Receivable, Net, Disclosure | NOTE 3 - ACCOUNTS RECEIVABLE, NET Accounts receivable consist of the following at: December 31, December 31, 2016 2015 Due from customers and vendors $ 32,913 $ 26,773 Due from sale of residual assets -- 75,374 Due from processing activity 50,000 2,949 Total accounts receivable, net $ 82,913 $ 105,096 With the recent transition of management, the Company has undertaken various analyses with respect to the recorded balances and the underlying assets for the receivables and intangibles. Management analyzed amounts recorded as receivable from processing activity and the likelihood of receiving the full amount due the Company. Recent general interaction and the relationship with one of the processors has indicated that the full amount may not be collected and $267,118 was recorded to bad debt expense in 2016. The Company continues to pursue payment of all remaining receivables. |
Prepaid Expenses and Deposits D
Prepaid Expenses and Deposits Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Prepaid Expenses and Deposits Disclosure | NOTE 4 - PREPAID EXPENSES AND DEPOSITS Prepaid expenses and deposits consist of the following at: December 31, December 31, 2016 2015 Prepaid insurance $ 46,489 $ 44,275 Prepaid license and trademark fees -- 1,610,000 Prepaid consulting fees 113,791 129,751 Other prepaid expenses -- 5,521 Total prepaid expenses and deposits $ 160,280 $ 1,789,547 On May 26, 2015, the Company entered into a loyalty agreement with Help Worldwide, Inc. (“HWW”), which provided that, upon the terms and subject to the conditions set forth therein, the Company will join the HWW network and become a licensed Loyalty Program Operator (“LPO”) to enable the delivery of a Yowza!! Points program for consumers and merchants in the Yowza!! program. HWW was also to build a Yowza!! branded Rewards Mall for the redemption of Yowza!! Points. Consideration paid to HWW for the LPO was 3,000,000 unregistered shares of the Company's common stock, which was issued directly to HWW. Pursuant to the Agreement, the Company and HWW were to bundle their respective products to create a package that was to combine and co-brand the features of both parties' products (the “Bundled Package”). HWW was to promote the Bundled Package including the co-branded mobile application to 30 million consumers. The consideration paid to HWW for the Bundled Package (“Trademark”) was 4,000,000 unregistered shares of the Company's Common Stock which was issued directly to HWW. The $690,000 value of the LPO license and the $920,000 value of the Trademark were reported as prepaid expenses at December 31, 2015. On March 28, 2016, a settlement agreement was signed between the Company and HWW, terminating the LPO license agreement executed in May 2015. The settlement agreement stipulated that HWW was to return 6,500,000 of the 7,000,000 shares of Spindle restricted common stock issued to HWW for the license fee. An additional 200,000 warrant shares were returned by a party related to the HWW transaction at a cost of $100,000 to the Company. Spindle received these shares in April of 2016. The LPO license agreement was terminated amicably and not due to default or breach by any party. |
Property and Equipment, Net, Di
Property and Equipment, Net, Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Property and Equipment, Net, Disclosure | NOTE 5 - PROPERTY AND EQUIPMENT, NET Property and equipment, net consist of the following at: December 31, December 31, 2016 2015 Office furniture & equipment $ 34,425 $ 31,847 Less: accumulated depreciation (20,141) (14,926) Total fixed assets, net $ 14,284 $ 16,921 During the years ended December 31, 2016 and December 31, 2015, we recorded depreciation expense of $5,600 and $5,225, respectively. |
Other Intangible Assets, Net, D
Other Intangible Assets, Net, Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Other Intangible Assets, Net, Disclosure | NOTE 6 - OTHER INTANGIBLE ASSETS, NET Other intangible assets, net consist of the following at: DECEMBER 31, ACCUMULATED DECEMBER 31, 2016 GROSS AMORTIZATION 2016 NET Capitalized software costs $ 25,000 $ -- $ 25,000 License agreements and contracts 75,000 (10,000) 65,000 Domain names 75,000 (30,242) 44,758 $ 175,000 $ (40,242) $ 134,758 DECEMBER 31, ACCUMULATED DECEMBER 31, 2015 GROSS AMORTIZATION 2015 NET Capitalized software costs $ 2,048,998 $ (763,684) $ 1,285,314 License agreements and contracts 75,000 -- 75,000 Domain names 85,000 (22,564) 62,436 $ 2,208,998 $ (786,248) $ 1,422,750 During the year ended December 31, 2016, management reviewed the carrying amount of the assets and determined because of diversification in the CompanyÂ’s business model due to its acquisitions, the license agreements previously recorded no longer yielded a net future cash flow. Because of this analysis, the Company recorded, to other expense, an impairment loss of $1,077,405 in accordance with ASC Topic 360. During the year ended December 31, 2015, management reviewed the carrying amount of the assets and determined because of changes in the focus of the CompanyÂ’s current direction, certain costs that had been capitalized to software development would not be used and no longer had value to the Company. As a result of this analysis, $542,771 which was mainly related to the Yowza!! transaction, was recorded as an impairment loss. |
Residual Contracts Disclosure
Residual Contracts Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Residual Contracts Disclosure | NOTE 7 - RESIDUAL CONTRACTS During the year ended December 31, 2014, management reviewed the carrying amount of the residual income stream purchased from Parallel Solutions, Inc. (“PSI”) in 2012. It was determined that because of diversification in the Company’s business model due to its acquisitions, that the previously estimated indefinite life of the asset be revised to reflect the Company’s future business development goals. The Company estimated a finite remaining useful life of forty-eight months and had recorded amortization expense of $147,324 as of December 31, 2014. On June 4, 2015, the Company entered into an agreement to sell the PSI residual income stream for a purchase price of $753,740. As part of this transaction, $373,124 was recorded as a gain on sale of assets for the year ended December 31, 2015. As of December 31, 2015, the Company had received $678,366 of the purchase price and the balance of $78,323 was recorded as a receivable on the Company’s balance sheet. The money was to be received by Spindle upon the satisfaction of certain conditions set forth in the agreement. In 2016, it was determined that Spindle would not be entitled to the remaining funds due to performance of the portfolio and other factors. The $75,374 was written off as a loss and is included in the $267,118 total bad debt expense recorded in 2016. |
Goodwill Disclosure
Goodwill Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Goodwill Disclosure | NOTE 8 - GOODWILL December 31, December 31, 2016 2015 Goodwill $ 5,976,198 $ 5,976,198 Less: accumulated impairment loss (5,976,198) (1,339,986) Total goodwill, net $ -- $ 4,636,212 In connection with the MeNetwork acquisition (as further described in Note 13) on March 20, 2013, the Company assumed certain liabilities and acquired substantially all the assets of MeNetwork. The Company recorded goodwill related to this acquisition of $2,679,970. During its 2015 annual evaluation of goodwill, the Company determined that the carrying amount of goodwill related to MeNetwork, exceeded its fair value. Thus, the Company recorded an impairment loss, to other expense, of $669,993 during the year ended December 31, 2015. This charge reflects the impact of partially sun-setting assets acquired from MeNetwork in conjunction with its integration of Yowza!! The Company again evaluated the carrying amount of goodwill in 2016. From this analysis based future cash flows and the value of the asset in relation to CompanyÂ’s new business direction, the Company determined that the MeNetwork goodwill has no value and recorded an additional impairment loss of $1,339,984 to other expense for the year ended December 31, 2016. In connection with the acquisition (as further described in Note 13) on January 3, 2014, the Company assumed certain liabilities and acquired substantially all the assets of Yowza!! The Company recorded goodwill related to this acquisition of $3,296,228. During its annual evaluations of goodwill for both 2015, the Company determined that the fair value of goodwill exceeded its carrying amount and thus no impairment charge was recorded. During its annual evaluation of goodwill for 2016, the Company determined that due to the change in strategic direction, the carrying amount of goodwill had no value and an impairment charge for the full amount of $3,296,228 was recorded. The Company first assesses qualitative factors to determine whether itÂ’s necessary to perform the two-step goodwill impairment test. Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value. If the qualitative assessment results in an indication that itÂ’s more likely than not that the fair value of a reporting unit is less than its carrying amount, then a quantitative assessment must be performed. Management has determined that the Company has one reporting unit for purposes of testing goodwill. The quantitative analysis involves estimating the fair value of its reporting unit utilizing a combination of valuation methods including market capitalization, the income approach and cash flows. Income and cash flow forecasts were used in the evaluation of goodwill based on managementÂ’s estimate of future performance. If goodwill is determined to be impaired as a result of this analysis, an impairment loss is recorded equal to the difference between the assetÂ’s carrying value and fair value. |
Notes Payable and Convertible N
Notes Payable and Convertible Notes Payable, Net of Unamortized Discount | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Notes Payable and Convertible Notes Payable, Net of Unamortized Discount | NOTE 9 - NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE, NET OF UNAMORTIZED DISCOUNT In December 2016, we entered into a $10,500 Bridge Note Agreement with one of our directors and a $5,000 Bridge Note Agreement with one of our investors. Both Bridge Notes are secured by the Company’s assets and include warrants to purchase two shares of the Company’s common stock for each dollar loaned to Spindle. At December 31, 2016, no payments had been made on these Bridge Loans, nor had the related warrants been exercised. On December 15, 2011, we issued a Promissory Grid Note (“Grid Note”) to a former director of the Company which formalized various advances previously received from the former director in the amount of $51,300 and allowed for future advances of up to $250,000. The Grid Note is non-interest bearing, unsecured and matured on December 15, 2014. We imputed interest at a rate of 2% per annum and recorded a discount in the amount of $10,640. In connection with one of the previous advances in the amount of $25,000, we issued warrants to purchase up to 250,000 shares of our common stock at a price per share of $1.00 resulting in an additional discount of $17,709. The total discount attributable to the Grid Note totaled $28,349 and was amortized to interest expense over the term of the Grid Note. During the twelve months ended December 31, 2015, interest expense of $54 related to the discount on the unpaid note balance was recorded, and in 2016, interest expense of $1,527 was recorded. During the years ended December 31, 2016, and December 31, 2015, the Company repaid $17,500 and $6,000 of the principal balance of the Grid Note, respectively. During the year ended December 31, 2014, the Company recorded a $100,000 note payable to a director of the Company. The note was non-interest bearing and unsecured. The Company imputed interest at a rate of 2% per annum and recorded a discount in the amount of $110. This note was paid in full with shares of the Company’s common stock at December 31, 2015. |
Long Term Notes Payable Disclos
Long Term Notes Payable Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Long Term Notes Payable Disclosure | NOTE 10 - LONG TERM CONVERTIBLE NOTES PAYABLE - RELATED PARTY, NET OF UNAMORTIZED DISCOUNT On March 25, 2016, we entered into an agreement with a 12% stockholder of the Company. This agreement is for a $100,000 promissory note, convertible to stock under certain circumstances. The note bears an interest rate of 6% per annum and has a maturity date of March 25, 2018. The total value of the note, if converted to stock, would be $133,333 and therefore a discount in the amount of $33,333 was recorded. This amount is amortized to interest expense - related party over the term of the note. During the twelve months ended December 31, 2016, interest expense of 4,619 and interest expense related to amortization of the discount on the unpaid note of $12,831 was recorded. The balance of the unamortized discount at December 31, 2016 was $20,502. On May 18, 2016, we converted a $182,000 payable to an investor and entered into a Convertible Promissory Note (“Note”) with an investor in the Company. The note bears an interest rate of 6% per annum and has a maturity date of May 18, 2018. The total value of the note, if converted to stock, would be $404,444 and therefore a discount in the amount of $182,000 was recorded, as the conversion feature cannot be greater than the amount of the debt. This amount is amortized to interest expense over the term of the note. During the twelve months ended December 31, 2016, interest expense of $6,423 and interest expense related to amortization of the discount on the unpaid notes of $53,526 was recorded. The balance of the unamortized discount at December 31, 2016 was $128,474. During the twelve months ended December 31, 2016, the Company repaid $15,000 of the Note’s principal balance. This Note is presented as a Long term note payable on our Balance Sheets. |
Stockholders' Equity Disclosure
Stockholders' Equity Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Stockholders' Equity Disclosure | NOTE 11 - STOCKHOLDERS’ (DEFICIT) EQUITY The Company is authorized to issue up to 300,000,000 shares of common stock, par value $0.001. During the year ended December 31, 2016, the Company: · · · · Also, in accordance with a settlement agreement signed between the Company and Help Worldwide, Inc. (“HWW”) that terminated the license agreement between the two entities, HWW returned 6,500,000 of the 7,000,000 shares of Spindle restricted common stock issued to HWW for the license fee in May 2015. The LPO license agreement was terminated amicably and not due to default or breach by any party. In conjunction with the settlement agreement, 200,000 shares of Spindle stock were returned to the Company by one of the principals of HWW, and the associated warrants were cancelled. The entire transaction resulted in a loss to the Company of $115,000. We also recorded amortization of discounts on notes payable of $215,333 to additional paid-in capital. During the year ended December 31, 2015, the Company: · · · · · |
Options and Warrants Disclosure
Options and Warrants Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Options and Warrants Disclosure | NOTE 12 - OPTIONS AND WARRANTS On October 29, 2012, our stockholders approved the 2012 Stock Incentive Plan (the “Plan”) that governs equity awards to our management, employees, directors and consultants. On November 7, 2013, our stockholders approved an amendment to the Plan which increased the total authorized amount of common stock issuable under the Plan from 3,000,000 to 6,000,000 shares. Options During 2015, the Company granted 91,250 options to employees to purchase shares of common stock at an exercise price of $0.50 per share, with grant date fair values of $0.18 to $0.35. The options vest ratably on an annual basis over three years, and expire ten years from grant date. In 2015, 1,462,084 of these shares were cancelled. Also in 2015, options for the purchase of 900,000 shares were granted to directors of the Company at an exercise price of $0.13 per share, with grant date fair values of $0.13. These options vest in full one year from grant date, have a ten-year expiration, and were granted outside of the Company’s 2012 Stock Plan. No options to purchase shares of Spindle common stock were granted during 2016. The following is a summary of the status of the Company’s stock options as of December 31, 2016 and 2015: Number of Options Weighted- Average Exercise Price Weighted Average Remaining Contractual Life (in years) Outstanding at December 31, 2014 3,460,834 -- Granted 991,250 -- Exercised -- -- Forfeited/Cancelled (1,462,084) -- Outstanding at December 31, 2015 2,990,000 $ 0.426 8.10 Exercisable at December 31, 2015 1,944,167 $ 0.561 7.03 Outstanding at December 31, 2015 2,990,000 Granted -- -- Exercised -- -- Forfeited/Cancelled (1,442,500) -- Outstanding at December 31, 2016 1,547,500 $ 0.357 7.56 Exercisable at December 31, 2016 1,331,666 $ 0.345 7.44 The estimated fair values of options granted during 2016, 2015 and 2014 were calculated using the following assumptions: 2016 2015 2014 Dividend yield -- 0.00% 0.00% Expected volatility -- 94.42% to 188.60% 76.71% to 86.26% Risk free interest rate -- 1.43% to 1.74% 1.49% to 1.78% Expected term, in years -- 6.0 6.0 Warrants On March 11, 2015, the Board of Directors approved a private placement offering (the “Offering”) comprised of a unit (the “Unit”). Each Unit consists of one share of the Company’s common stock and one three-year warrant to purchase one share of the Company’s common stock. During the twelve months ended December 31, 2015, the Company sold 350,000 units under this offering. In conjunction with the Stock Purchase Agreements in the third and fourth quarters of the year ended December 31, 2016 (“SPA”), the Company issued common stock purchase warrants. These warrants entitle the holder to purchase additional shares of Spindle common stock at a price of $0.135 per share. The holder may exercise his purchase rights at any time up to the third anniversary of the agreement. In conjunction with the Bridge Loan Agreements in December of 2016, the Company granted common stock purchase warrants that entitle the holder to purchase additional shares of Spindle at a price of $0.135 per share. The holder may exercise his purchase rights at any time up to the third anniversary of the agreement. The following is a summary of the status of the Company’s stock warrants as of December 31, 2016: Number of Warrants Weighted- Average Exercise Price Weighted Average Remaining Contractual Life (in years) Outstanding at December 31, 2014 250,000 Granted 350,000 -- Exercised -- -- Forfeited/Cancelled -- -- Outstanding at December 31, 2015 600,000 $ 0.500 1.85 Exercisable at December 31, 2015 250,000 $ 0.500 1.47 Outstanding at December 31, 2015 600,000 Granted 883,420 -- Exercised -- -- Forfeited/Cancelled (200,000) -- Outstanding at December 31, 2016 1,283,420 $ 0.249 2.99 Exercisable at December 31, 2016 1,183,420 $ 0.228 3.12 |
Business Acquisitions Disclosur
Business Acquisitions Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Business Acquisitions Disclosure | NOTE 13 - BUSINESS ACQUISITIONS On March 20, 2013 (the “MeNetwork Closing Date”), the Company assumed certain liabilities and acquired substantially all the assets of MeNetwork used in connection with its business of developing, marketing and licensing a mobile marketing platform for use by merchants and consumers (the “MeNetwork Assets”), pursuant to an Asset Purchase Agreement dated March 1, 2013 by and between Spindle and MeNetwork (the “MeNetwork Agreement”). As consideration for the assumption of the liabilities and the acquisition of the MeNetwork Assets, the Company issued an aggregate of 2,750,000 shares of common stock to the stockholders of MeNetwork, of which 350,000 shares are being held in escrow for a period of one year from the MeNetwork Closing Date for the purposes of satisfying any indemnification claims. In addition, on October 7, 2013, the Company issued an additional 750,000 shares of common stock to Ashton Craig Page, the former director and Chief Operating Officer of MeNetwork and a former director of the Company, pursuant to the terms and conditions of the MeNetwork Agreement. On December 12, 2014, the Company, and Ashton Craig Page, in his capacity as the representative of MeNetwork and the MeNetwork Stockholders (the “Representative”), entered into an Amendment and Waiver to Asset Purchase Agreement (the "Amendment), pursuant to which the Company agreed to issue and the Representative agreed to accept on behalf of MeNetwork and the MeNetwork Stockholders an acceleration of the issuance of up to an aggregate of 1,000,000 Earnout Shares on or before December 31, 2014 in full satisfaction of all obligations of the Company to issue the Earnout Shares pursuant to the Purchase Agreement during the Earnout Period. These shares were issued on December 23, 2014. Yowza!! Transaction As described in Note 1, “Organization of the Company and Significant Accounting Policies” the Company completed the Yowza!! Transaction on January 3, 2014. This transaction was accounted for as a business combination. As such, the Company has allocated the purchase price in accordance with ASC Topic 850-30 as previously described in the Company’s significant accounting policies. Consideration was determined as follows: Fair Value of Consideration Transferred Cash paid to Yowza!!, net of cash acquired $ 500,000 Fair value of Company's shares issued 3,004,860 Cash paid to extinguish debt, net of cash acquired (13,632) $ 3,491,228 The fair value of our 1,642,000 shares issued in connection with the Yowza!! Transaction was determined to be $1.83, which was the fair value of the shares on the closing date of the acquisition. The Company’s allocation of the purchase price is as follows: Net assets acquired: Cash $ 1,368 Accounts receivable 2,928 Software development costs 200,000 Trademarks 10,000 Net liabilities assumed: Accounts payable (15,000) Goodwill 3,291,932 Total purchase price $ 3,491,228 Catalyst Transaction As described in Note 1, “Organization of the Company and Significant Accounting Policies” the Company completed the Catalyst Transaction on October 23, 2015. This transaction was accounted for as a purchase of assets. The fair value of our shares issued in connection with the Catalyst Transaction was determined to be $0.25, which was the fair value of the shares on the closing date of the acquisition. The total consideration of $75,000, which consists of the Catalyst Gateway license bundled with other contracts is reported on our balance sheet in “Other intangible assets, net. |
Income Taxes Disclosure
Income Taxes Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Income Taxes Disclosure | NOTE 14 - INCOME TAXES FASB ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates currently in effect. FASB ASC 740 requires the reduction of deferred tax assets by a valuation allowance, if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the CompanyÂ’s opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance equal to the deferred tax asset has been recorded. The total deferred tax asset is $5,618,625, which is calculated by multiplying a 35% estimated tax rate by the cumulative net operating loss (NOL) adjusted or the following items: For the periods ended December 31, 2016 2015 Book loss for the year $ (9,081,857) $ (3,859,698) Adjustments: Amortization -- 33,638 Impairment charges 5,713,617 1,212,763 Non-deductible stock compensation 555,656 1,249,590 Tax loss for the year $ (2,807,702) $ (1,363,707) Net operating loss carryforward 13,245,511 11,881,804 Cumulative net operating loss carryforward 16,053,213 13,245,511 Estimated effective tax rate 35% 35% Deferred tax asset $ 5,618,625 $ 4,635,929 Details for the last two periods follow: For the period ended December 31, 2016 2015 Deferred tax asset $ 5,618,625 $ 4,635,929 Valuation allowance (5,618,625) (4,635,929) Current taxes payable -- -- Income tax expense $ -- $ -- The Company has net operating loss carryforwards for tax purposes of approximately $16,053,213 that begins to expire in the year 2027. The estimated corporate federal net operating loss (NOL) is presented below: Year Amount 2016 16,053,213 2015 13,245,511 |
Supplemental Disclosure of Cash
Supplemental Disclosure of Cash Flow Information | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Supplemental Disclosure of Cash Flow Information | NOTE 15 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION The following table presents certain supplemental cash flow information: Years ended December 31, 2016 2015 Cash paid during the year for: Interest $ 1,112 $ 1,557 Income taxes -- -- |
Commitments and Contingencies D
Commitments and Contingencies Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Commitments and Contingencies Disclosure | NOTE 16 - COMMITMENTS AND CONTINGENCIES Lease Agreements We lease office facilities under two operating lease agreements. We are obligated to make payments under one of the lease agreements for a property we no longer occupy, and are pursuing options to reduce this commitment. Approximate future minimum lease payments for non-cancellable operating leases as of December 31, 2016, are as follows (in thousands): Years ended December 31, Total 2017 $ 131,018 2018 152,905 2019 157,117 2020 46,052 2021 -- Thereafter -- $ 487,093 Rent expense was $72,699 and $70,290 in 2016 and 2015, respectively, and is included within general and administrative expense on our statements of operations. Legal proceedings On May 26, 2015, the Company entered into a loyalty agreement with Help Worldwide, Inc. (“HWW”) which provided that the Company would join the HWW network and become a licensed Loyalty Program Operator (“LPO”) to enable delivery of a Yowza!! Points program for consumers and merchants in the Yowza!! program. HWW was also to build a Yowza!! branded Rewards Mall for the redemption of Yowza!! Points. On March 28, 2016, a settlement agreement was signed between the Company and HWW, terminating the LPO license agreement executed in May 2015. Per the settlement agreement HWW returned 6,500,000 of the 7,000,000 shares of Spindle restricted common stock issued to HWW for the license fee. The LPO license agreement was terminated amicably and not due to default or breach by any party. On August 4, 2016, the Company filed a complaint in the District of Arizona (the “Complaint”) against William Clark, Justin Clark and Sean Tate as individuals, and Phasive, Inc., an Arizona corporation (collectively, the “Defendants”), containing 42 Claims for Relief for, among other claims, breach of contract, breach of fiduciary duty, unfair competition, misappropriation of trade secrets, and tortious interference. The Defendants have filed a counter-claim again the Company for breach of contract, tortious interference and other claims. There is a risk that we may be unable to achieve the results we desire from such litigation, and we anticipate that these legal proceedings may continue for several years and may require significant expenditures for legal fees and other expenses, which would require us to devote our limited financial, managerial and other resources to support litigation that may be disproportionate to the anticipated recovery. There are no other material pending legal proceedings, to which the Company or any director, officer or affiliate of the registrant, any owner of record or beneficially of more than five percent of any class of voting securities of the Company, or any associate of any such director, officer, affiliate of the registrant, or security holder is a party or any of its subsidiaries is a party or of which any of their property is the subject. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Subsequent Events | NOTE 17 - SUBSEQUENT EVENTS From January 1, 2017 to the date of this report, the Company issued a total of 1,707,500 shares of unregistered stock to the members of our board of directors as compensation for 2016 board fees, 127,500 previously accrued shares were issued to our former interim CEO in accordance with terms of his consulting agreement and 2,096 previously accrued shares were issued as payment for legal fees incurred in 2016. We also issued 40,407 unregistered shares were issued to our former CFO as a part of his termination agreement, 167,120 shares were issued to employees for compensation and we issued 397,148 shares for cash proceeds. There were also 387,143 shares issued for consulting agreements and 2,500,000 shares were issued for the sale of Spindle assets. Yowza!! Sale Because of change in management in January 2017 and subsequent change in strategy, on March 3, 2017, the Company sold all the assets associated with Yowza!! for $25,000. The assets were sold to iOT Broadband LLC, an LLC owned by Michael Kelly, a previously reported 5% shareholder of the CompanyÂ’s common stock. On January 3, 2014, the Company had acquired substantially all the assets of Yowza International Inc. and assumed certain liabilities of Yowza!! for cash and stock consideration. In the subsequent periods the Company also allocated development resources to the enhancement of the Yowza!! product and capitalized expenses as internal use software. The $25,000 consideration received on March 3, 2017 is less than the carrying value of internal use software, domain name, and goodwill on the balance sheet as of December 31, 2016. Because of the sale on March 3, 2017, the Company has impaired the value of the Yowza!! assets to $25,000, recording impairment for the remaining amount of carrying value effective December 31, 2016. |
Organization of The Company a25
Organization of The Company and Significant Accounting Policies: Cash and Cash Equivalents, Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Cash and Cash Equivalents, Policy | Cash and cash equivalents The Company considers cash and cash equivalents to include all stable, highly liquid investments with an original maturity of three months or less from the date of purchase. |
Organization of The Company a26
Organization of The Company and Significant Accounting Policies: Use of Estimates Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Use of Estimates Policy | Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“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 materially from those estimates. |
Organization of The Company a27
Organization of The Company and Significant Accounting Policies: Revenue Recognition Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Revenue Recognition Policy | Revenue recognition Revenue is derived on a per transaction basis through the Company’s gateway and payments platforms. The Company also earns revenue for services, account establishment fees and licensure on Software as a Service (“SaaS”) basis, and on a performance basis, such as when a client acquires a new customer through our platform. Revenue is recognized in accordance with Staff Accounting Bulletin (“SAB”) No. 101, “Revenue Recognition in Financial Statements,” as revised by SAB No. 104. As such, the Company recognizes revenue when persuasive evidence of an arrangement exists, title transfer has occurred, the price is fixed or readily determinable, and collectability is probable. Sales are recorded net of sales discounts. |
Organization of The Company a28
Organization of The Company and Significant Accounting Policies: Accounts Receivable Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Accounts Receivable Policy | Accounts receivable, net Accounts receivable is reported at the customersÂ’ outstanding balances, less any allowance for doubtful accounts. An allowance for doubtful accounts on accounts receivable is charged to operations in amounts sufficient to maintain the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses. Management determines the adequacy of the allowance based on historical write-off percentages and information collected from individual customers. Accounts receivable are charged off against the allowance when collectability is determined to be permanently impaired. Interest is not accrued on overdue accounts receivable. |
Organization of The Company a29
Organization of The Company and Significant Accounting Policies: Inventory Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Inventory Policy | Inventory Inventories consist of merchandise held for sale in the ordinary course of business, including cost of freight and other miscellaneous acquisition costs, and are stated at the lower of cost or market on a FIFO basis. The Company records a write-down for inventories which have become obsolete or are more than anticipated demand or net realizable value. We periodically perform a detailed review of inventory that considers multiple factors including demand forecasts, market conditions, product life cycle status, product development plans and current sales levels. If actual demand or market conditions for the CompanyÂ’s products are less favorable than forecasted or if unforeseen changes negatively affect the utility of the CompanyÂ’s inventory, additional inventory write-downs may be required. In the fourth quarter of 2016, managementÂ’s review determined that the carrying value of inventory consisted of items that were obsolete or would never be used by the Company. In this respect, equipment in inventory with a total cost of $10,579 was written off and a loss recorded to impairment expense. |
Organization of The Company a30
Organization of The Company and Significant Accounting Policies: Property and Equipment Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Property and Equipment Policy | Property and equipment Property and equipment are stated at cost. Major renewals and improvements are charged to the asset accounts. Replacements, maintenance and repairs that do not improve or extend the lives of the respective assets are expensed. At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are credited or charged to income. Depreciation is computed on the straight-line and accelerated methods for financial reporting and income tax reporting purposes based upon the following estimated useful lives: Computer Software 3 years Computer Equipment 5 years Office furniture and equipment 7 years |
Organization of The Company a31
Organization of The Company and Significant Accounting Policies: Long-lived Assets Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Long-lived Assets Policy | Long-lived assets The Company accounts for its long-lived assets in accordance with ASC Topic 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” “ASC Topic 360-10-05” requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value. The Company recorded an impairment to its intellectual property for the year ended December 31, 2016 as further discussed in Note 6. |
Organization of The Company a32
Organization of The Company and Significant Accounting Policies: Goodwill Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Goodwill Policy | Goodwill The Company accounts for goodwill in accordance with ASC Topic 805-30-25, “Accounting for Business Combinations” (“ASC Topic 805-30”) and “Accounting for Goodwill - Subsequent Measurement” (“ASC Topic 350-20-35”). ASC Topic 805-30 requires that the acquirer shall recognize goodwill as of the acquisition date as the excess of the fair value of the consideration transferred over the fair value of the net acquisition-date amounts of the identifiable assets and liabilities assumed. ASC Topic 350-20-35 requires that goodwill acquired in a purchase and determined to have an indefinite useful life is not amortized, but instead tested for impairment annually or more frequently when events or circumstances indicates that the carrying value of a reporting unit more likely than not exceeds its fair value. The Company’s annual goodwill impairment testing date is December 31 of each year. The Company first assesses qualitative factors to determine whether it’s necessary to perform the two-step goodwill impairment test. Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value. If the qualitative assessment results in an indication that it’s more likely than not that the fair value of a reporting unit is less than its carrying amount, then a quantitative assessment must be performed. Management has determined that the Company has one reporting unit for purposes of testing goodwill. The quantitative analysis involves estimating the fair value of its reporting unit utilizing a combination of valuation methods including market capitalization, the income approach and cash flows. Income and cash flow forecasts were used in the evaluation of goodwill based on management’s estimate of future performance. If goodwill is determined to be impaired because of this analysis, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value. The Company recorded impairment to its goodwill for each of the years ended December 31, 2016 and December 31, 2015 as further discussed in Note 8. |
Organization of The Company a33
Organization of The Company and Significant Accounting Policies: Capitalized Software Development Costs Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Capitalized Software Development Costs Policy | Capitalized software development costs The Company capitalizes software development costs after establishing technological feasibility of a software application. Capitalized software development costs represent the costs associated with the development of the CompanyÂ’s software applications used to generate revenue from our customers. Amortization of such costs is recorded on a software application-by-application basis, based on the greater of the proportion of current year sales to the total of current and estimated future sales for the applications or the straight-line method over the remaining estimated useful life of the software application. We continually evaluate the recoverability of capitalized software costs and will charge to operations amounts that are deemed unrecoverable for projects we may abandon. The Company recorded an impairment to its software development costs for the years ended December 31, 2016 and December 31, 2015 of $1,059,099 and $254,940, respectively. |
Organization of The Company a34
Organization of The Company and Significant Accounting Policies: Debt Discount Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Debt Discount Policy | Debt Discount The Company determines if the convertible debenture should be accounted for as liability or equity under ASC 480, Liabilities - Distinguishing Liabilities from Equity (“ASC 480”). ASC 480, applies to certain contracts involving a company’s own equity, and requires that issuers classify the following freestanding financial instruments as liabilities. Mandatorily redeemable financial instruments, obligations that require or may require repurchase of the issuer’s equity shares by transferring assets (e.g., written put options and forward purchase contracts), and certain obligations where at inception the monetary value of the obligation is based solely or predominantly on: - A fixed monetary amount known at inception, for example, a payable settleable with a variable number of the issuer’s equity shares with an issuance date fair value equal to a fixed dollar amount, - Variations in something other than the fair value of the issuer’s equity shares, for example, a financial instrument indexed to the S&P 500 and settleable with a variable number of the issuer’s equity shares, or - Variations inversely related to changes in the fair value of the issuer’s equity shares, for example, a written put that could be net share settled. If the entity determined the instrument meets the guidance under ASC 480 the instrument is accounted for as a liability with a respective debt discount. The Company records debt discounts in connection with raising funds through the issuance of promissory notes (see Notes 9 and 10). These costs are amortized to non-cash interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed. |
Organization of The Company a35
Organization of The Company and Significant Accounting Policies: Stock-based Compensation, Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Stock-based Compensation, Policy | Stock-based compensation The Company accounts for stock-based payments to employees in accordance with ASC 718, “Stock Compensation” (“ASC 718”). Stock-based payments to employees include grants of stock, grants of stock options and issuance of warrants that are recognized in the statement of operations based on their fair values at the date of grant. The Company accounts for stock-based payments to non-employees in accordance with ASC 505-50, “Equity-Based Payments to Non-Employees.” (“ASC 505-50”) Stock-based payments to non-employees include grants of stock, grants of stock options and issuances of warrants that are recognized in the statement of operations based on the value of the vested portion of the award over the requisite service period as measured at its then-current fair value as of each financial reporting date. The Company calculates the fair value of option grants and warrant issuances utilizing the Black-Scholes pricing model. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. ASC 718 requires forfeitures to be estimated at the time stock options are granted and warrants are issued to employees and non-employees, and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered stock option or warrant. The Company estimates forfeiture rates for all unvested awards when calculating the expense for the period. In estimating the forfeiture rate, the Company monitors both stock option and warrant exercises as well as employee termination patterns. The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on compensation under ASC 505-50, In accordance with ASC 505-50, the cost of stock-based compensation is measured at the grant date based on the value of the award and is recognized over the vesting period. The value of the stock-based award is determined using the Black-Scholes option-pricing models, whereby compensation cost is the excess of the fair value of the award as determined by the pricing model at the grant date or other measurement date over the amount that must be paid to acquire the stock. |
Organization of The Company a36
Organization of The Company and Significant Accounting Policies: Loss Per Share Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Loss Per Share Policy | Loss per share The Company reports earnings (loss) per share in accordance with ASC Topic 260-10, "Earnings per Share." Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings (loss) per share has not been presented since the effect of the assumed conversion of warrants and debt to purchase common shares would have an anti-dilutive effect. Potential common shares as of December 31, 2016 that have been excluded from the computation of diluted net loss per share amounted to 2,830,920 shares, which includes 1,283,420 warrants and 1,547,500 options. Of the 2,830,920 potential common shares at December 31, 2016, 215,834 had not vested. Potential common shares as of December 31, 2015 that have been excluded from the computation of diluted net loss per share amounted to 3,440,000 shares which includes 600,000 warrants and 2,840,000 options. Of the 2,840,000 potential common shares at December 31, 2015, 1,245,833 had not vested. See Note 12 for more information regarding our warrants and options. The Company also has two notes payable that have conversion features. Were the holders to exercise such features, an additional 31,000 shares could be issued based on the note balances at December 31, 2016. |
Organization of The Company a37
Organization of The Company and Significant Accounting Policies: Income Taxes Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Income Taxes Policy | Income taxes The Company accounts for its income taxes under the provisions of “Income Taxes” (“ASC 740”). The method of accounting for income taxes under ASC 740 is the asset and liability method. The asset and liability method requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between tax bases and financial reporting bases of other assets and liabilities. |
Organization of The Company a38
Organization of The Company and Significant Accounting Policies: Fair Value of Financial Instruments Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Fair Value of Financial Instruments Policy | Fair value of financial instruments We account for non-recurring fair value measurements of our non-financial assets and liabilities in accordance with ASC 820-10 Fair Value Measurement. This guidance defines fair value, establishes a framework for measuring fair value and addresses required disclosures about fair value measurements. This standard establishes a three-level hierarchy for fair value measurements based upon the significant inputs used to determine fair value. Observable inputs are those which are obtained from market participants external to the Company while unobservable inputs are generally developed internally, utilizing management’s estimates, assumptions and specific knowledge of the assets/liabilities and related markets. The three levels are defined as follows: Level 1 - Valuation is based on quoted prices in active markets for identical assets and liabilities. Level 2 - Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, or by model-based techniques in which all significant inputs are observable in the market. Level 3 - Valuation is derived from model-based techniques in which at least one significant input is unobservable and based on the company’s own estimates about the assumptions that market participants would use to value the asset or liability. If the only observable inputs are from inactive markets or for transactions which the Company evaluates as “distressed”, the use of Level 1 inputs should be modified by the company to properly address these factors, or the reliance of such inputs may be limited, with a greater weight attributed to Level 3 inputs. Due to the short-term nature of our financial assets and liabilities, we consider their carrying amounts to approximate fair value. |
Organization of The Company a39
Organization of The Company and Significant Accounting Policies: Recent Accounting Pronouncements (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Recent Accounting Pronouncements | Recent Accounting Standards The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financials properly reflect the change. In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04 Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business In October 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-16 Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory In August 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In March 2016, the FASB issued ASU No. 2016-09, “ Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting |
Accounts Receivable, Net, Dis40
Accounts Receivable, Net, Disclosure: Schedule of Accounts Receivable (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Accounts Receivable | December 31, December 31, 2016 2015 Due from customers and vendors $ 32,913 $ 26,773 Due from sale of residual assets -- 75,374 Due from processing activity 50,000 2,949 Total accounts receivable, net $ 82,913 $ 105,096 |
Prepaid Expenses and Deposits41
Prepaid Expenses and Deposits Disclosure: Schedule of Prepaid Expenses and Deposits (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Prepaid Expenses and Deposits | December 31, December 31, 2016 2015 Prepaid insurance $ 46,489 $ 44,275 Prepaid license and trademark fees -- 1,610,000 Prepaid consulting fees 113,791 129,751 Other prepaid expenses -- 5,521 Total prepaid expenses and deposits $ 160,280 $ 1,789,547 |
Property and Equipment, Net, 42
Property and Equipment, Net, Disclosure: Schedule of Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Property and Equipment | December 31, December 31, 2016 2015 Office furniture & equipment $ 34,425 $ 31,847 Less: accumulated depreciation (20,141) (14,926) Total fixed assets, net $ 14,284 $ 16,921 |
Other Intangible Assets, Net,43
Other Intangible Assets, Net, Disclosure: Schedule of Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Intangible Assets | DECEMBER 31, ACCUMULATED DECEMBER 31, 2016 GROSS AMORTIZATION 2016 NET Capitalized software costs $ 25,000 $ -- $ 25,000 License agreements and contracts 75,000 (10,000) 65,000 Domain names 75,000 (30,242) 44,758 $ 175,000 $ (40,242) $ 134,758 DECEMBER 31, ACCUMULATED DECEMBER 31, 2015 GROSS AMORTIZATION 2015 NET Capitalized software costs $ 2,048,998 $ (763,684) $ 1,285,314 License agreements and contracts 75,000 -- 75,000 Domain names 85,000 (22,564) 62,436 $ 2,208,998 $ (786,248) $ 1,422,750 |
Goodwill Disclosure_ Schedule o
Goodwill Disclosure: Schedule of Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Goodwill | December 31, December 31, 2016 2015 Goodwill $ 5,976,198 $ 5,976,198 Less: accumulated impairment loss (5,976,198) (1,339,986) Total goodwill, net $ -- $ 4,636,212 |
Options and Warrants Disclosu45
Options and Warrants Disclosure: Schedule of Stock Options (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Stock Options | Number of Options Weighted- Average Exercise Price Weighted Average Remaining Contractual Life (in years) Outstanding at December 31, 2014 3,460,834 -- Granted 991,250 -- Exercised -- -- Forfeited/Cancelled (1,462,084) -- Outstanding at December 31, 2015 2,990,000 $ 0.426 8.10 Exercisable at December 31, 2015 1,944,167 $ 0.561 7.03 Outstanding at December 31, 2015 2,990,000 Granted -- -- Exercised -- -- Forfeited/Cancelled (1,442,500) -- Outstanding at December 31, 2016 1,547,500 $ 0.357 7.56 Exercisable at December 31, 2016 1,331,666 $ 0.345 7.44 |
Options and Warrants Disclosu46
Options and Warrants Disclosure: Schedule of Stock Options, Valuation Assumptions (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Stock Options, Valuation Assumptions | 2016 2015 2014 Dividend yield -- 0.00% 0.00% Expected volatility -- 94.42% to 188.60% 76.71% to 86.26% Risk free interest rate -- 1.43% to 1.74% 1.49% to 1.78% Expected term, in years -- 6.0 6.0 |
Options and Warrants Disclosu47
Options and Warrants Disclosure: Schedule of Stock Warrants (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Stock Warrants | Number of Warrants Weighted- Average Exercise Price Weighted Average Remaining Contractual Life (in years) Outstanding at December 31, 2014 250,000 Granted 350,000 -- Exercised -- -- Forfeited/Cancelled -- -- Outstanding at December 31, 2015 600,000 $ 0.500 1.85 Exercisable at December 31, 2015 250,000 $ 0.500 1.47 Outstanding at December 31, 2015 600,000 Granted 883,420 -- Exercised -- -- Forfeited/Cancelled (200,000) -- Outstanding at December 31, 2016 1,283,420 $ 0.249 2.99 Exercisable at December 31, 2016 1,183,420 $ 0.228 3.12 |
Business Acquisitions Disclos48
Business Acquisitions Disclosure: Schedule of Business Acquisitions Consideration (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Business Acquisitions Consideration | Fair Value of Consideration Transferred Cash paid to Yowza!!, net of cash acquired $ 500,000 Fair value of Company's shares issued 3,004,860 Cash paid to extinguish debt, net of cash acquired (13,632) $ 3,491,228 |
Business Acquisitions Disclos49
Business Acquisitions Disclosure: Allocation of purchase price (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Allocation of purchase price | Net assets acquired: Cash $ 1,368 Accounts receivable 2,928 Software development costs 200,000 Trademarks 10,000 Net liabilities assumed: Accounts payable (15,000) Goodwill 3,291,932 Total purchase price $ 3,491,228 |
Income Taxes Disclosure_ Schedu
Income Taxes Disclosure: Schedule of Deferred Tax Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Deferred Tax Assets | For the periods ended December 31, 2016 2015 Book loss for the year $ (9,081,857) $ (3,859,698) Adjustments: Amortization -- 33,638 Impairment charges 5,713,617 1,212,763 Non-deductible stock compensation 555,656 1,249,590 Tax loss for the year $ (2,807,702) $ (1,363,707) Net operating loss carryforward 13,245,511 11,881,804 Cumulative net operating loss carryforward 16,053,213 13,245,511 Estimated effective tax rate 35% 35% Deferred tax asset $ 5,618,625 $ 4,635,929 |
Income Taxes Disclosure_ Sche51
Income Taxes Disclosure: Schedule of Income Tax Expense (Benefit) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Income Tax Expense (Benefit) | For the period ended December 31, 2016 2015 Deferred tax asset $ 5,618,625 $ 4,635,929 Valuation allowance (5,618,625) (4,635,929) Current taxes payable -- -- Income tax expense $ -- $ -- |
Income Taxes Disclosure_ Summar
Income Taxes Disclosure: Summary of Operating Loss Carryforwards (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Summary of Operating Loss Carryforwards | Year Amount 2016 16,053,213 2015 13,245,511 |
Supplemental Disclosure of Ca53
Supplemental Disclosure of Cash Flow Information: Schedule of Supplemental Cash Flow Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Supplemental Cash Flow Information | Years ended December 31, 2016 2015 Cash paid during the year for: Interest $ 1,112 $ 1,557 Income taxes -- -- |
Commitments and Contingencies54
Commitments and Contingencies Disclosure: Schedule of Future Minimum Lease Payments for Operating Leases (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Future Minimum Lease Payments for Operating Leases | Years ended December 31, Total 2017 $ 131,018 2018 152,905 2019 157,117 2020 46,052 2021 -- Thereafter -- $ 487,093 |
Organization of The Company a55
Organization of The Company and Significant Accounting Policies: Capitalized Software Development Costs Policy (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Details | ||
Impairment of software development costs | $ 1,059,099 | $ 254,940 |
Organization of The Company a56
Organization of The Company and Significant Accounting Policies: Loss Per Share Policy (Details) - shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Details | ||
Potential common shares excluded from the computation of diluted earnings per share | 2,830,920 | 3,440,000 |
Going Concern (Details)
Going Concern (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Details | ||
Net loss incurred | $ 9,081,857 | $ 3,859,698 |
Accumulated deficit at end of period | $ 28,193,972 | $ 19,112,115 |
Accounts Receivable, Net, Dis58
Accounts Receivable, Net, Disclosure: Schedule of Accounts Receivable (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Accounts receivable, net | $ 82,913 | $ 105,096 |
Due from customers and vendors | ||
Accounts receivable, gross | 32,913 | 26,773 |
Due from sale of residual assets | ||
Accounts receivable, gross | 75,374 | |
Due from processing activity | ||
Accounts receivable, gross | $ 50,000 | $ 2,949 |
Accounts Receivable, Net, Dis59
Accounts Receivable, Net, Disclosure (Details) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Details | |
Bad debt expense | $ 267,118 |
Prepaid Expenses and Deposits60
Prepaid Expenses and Deposits Disclosure: Schedule of Prepaid Expenses and Deposits (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Prepaid expenses and other assets | $ 160,280 | $ 1,789,547 |
Prepaid insurances | ||
Prepaid expenses and other assets | 46,489 | 44,275 |
Prepaid license and trademark fees | ||
Prepaid expenses and other assets | 1,610,000 | |
Prepaid consulting fees | ||
Prepaid expenses and other assets | $ 113,791 | 129,751 |
Other prepaid expenses | ||
Prepaid expenses and other assets | $ 5,521 |
Prepaid Expenses and Deposits61
Prepaid Expenses and Deposits Disclosure (Details) | 12 Months Ended |
Dec. 31, 2016shares | |
HWW license agreement | |
Common stock returned to the Company | 6,500,000 |
HWW principals | |
Common stock returned to the Company | 200,000 |
Property and Equipment, Net, 62
Property and Equipment, Net, Disclosure: Schedule of Property and Equipment (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Details | ||
Office furniture & equipment | $ 34,425 | $ 31,847 |
Less, accumulated depreciation | (20,141) | (14,926) |
Total property and equipment, net | $ 14,284 | $ 16,921 |
Property and Equipment, Net, 63
Property and Equipment, Net, Disclosure (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Details | ||
Depreciation expense | $ 5,600 | $ 5,225 |
Other Intangible Assets, Net,64
Other Intangible Assets, Net, Disclosure: Schedule of Intangible Assets (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Intangible assets, gross | $ 175,000 | $ 2,208,998 |
Intangible assets, net | 134,758 | 1,422,750 |
Accumulated amortization of intangible assets | (40,242) | (786,248) |
Capitalized software costs | ||
Intangible assets, gross | 25,000 | 2,048,998 |
Intangible assets, net | 25,000 | 1,285,314 |
Accumulated amortization of intangible assets | (763,684) | |
License agreements and contracts | ||
Intangible assets, gross | 75,000 | 75,000 |
Intangible assets, net | 65,000 | 75,000 |
Accumulated amortization of intangible assets | (10,000) | |
Domain names | ||
Intangible assets, gross | 75,000 | 85,000 |
Intangible assets, net | 44,758 | 62,436 |
Accumulated amortization of intangible assets | $ (30,242) | $ (22,564) |
Other Intangible Assets, Net,65
Other Intangible Assets, Net, Disclosure (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Loss on impairment of long-lived asset | $ 1,077,405 | $ 254,940 |
Yowza!! transaction | ||
Loss on impairment of long-lived asset | $ 542,771 |
Residual Contracts Disclosure (
Residual Contracts Disclosure (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Proceeds from sale of assets | $ 678,366 | ||
Accounts receivable, net | $ 82,913 | 105,096 | |
Bad debt expense | 267,118 | ||
PSI Residual Income Stream | |||
Amortization expense | $ 147,324 | ||
Proceeds from sale of assets | 373,124 | ||
Accounts receivable, net | $ 78,323 | ||
Bad debt expense | $ 75,374 |
Goodwill Disclosure_ Schedule67
Goodwill Disclosure: Schedule of Goodwill (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Details | ||
Goodwill, gross | $ 5,976,198 | $ 5,976,198 |
(Less) accumulated impairment loss on goodwill | $ (5,976,198) | (1,339,986) |
Goodwill, net | $ 4,636,212 |
Goodwill Disclosure (Details)
Goodwill Disclosure (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Loss on impairment of goodwill | $ 4,636,212 | $ 669,993 |
MeNetwork goodwill | ||
Loss on impairment of goodwill | 1,339,984 | |
Yowza!! Goodwill | ||
Loss on impairment of goodwill | $ 3,296,228 |
Notes Payable and Convertible69
Notes Payable and Convertible Notes Payable, Net of Unamortized Discount (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Bridge Note Agreement - director | ||
Proceeds from notes and advances, short term | $ 10,500 | |
Bridge Note Agreement - shareholder | ||
Proceeds from notes and advances, short term | 5,000 | |
Promissory Grid Note - Dec 15, 2011 | ||
Debt discount attributed to note | 28,349 | |
Payments of notes and advances, short term | $ 17,500 | $ 6,000 |
Long Term Notes Payable Discl70
Long Term Notes Payable Disclosure (Details) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Related party promissory note - March 25, 2016 | |
Proceeds from notes and advances, long term | $ 100,000 |
Debt discount attributed to note | 20,502 |
Convertible promissory note - shareholder | |
Debt discount attributed to note | 128,474 |
Payments of notes and advances, short term | $ 15,000 |
Stockholders' Equity Disclosu71
Stockholders' Equity Disclosure (Details) - USD ($) | 4 Months Ended | 12 Months Ended | |
Apr. 18, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Common stock authorized to be issued | 300,000,000 | 300,000,000 | |
Par value of common stock | $ 0.001 | $ 0.001 | |
Value of stock issued for services | $ 638,859 | $ 2,622,128 | |
Common stock issued for cash | 397,148 | ||
Proceeds from stock issued for cash | 1,283,107 | 175,000 | |
Gain (loss) on legal settlement | 115,000 | ||
Amortization of discount on notes payable | $ 618,487 | 577,580 | |
Value of stock issued for agreement | 1,610,000 | ||
Value of stock issued for purchase of assets | 75,000 | ||
Value of stock issued for compensation | $ 69,290 | ||
For legal services | |||
Common stock issued for services | 798,436 | ||
Value of stock issued for services | $ 122,428 | ||
Common stock sold for cash | |||
Common stock issued for cash | 9,504,449 | 350,000 | |
Proceeds from stock issued for cash | $ 1,283,107 | $ 175,000 | |
Board of Directors, consultants and members of advisory board for services | |||
Common stock issued for services | 2,488,993 | ||
Value of stock issued for services | $ 422,472 | ||
Consultant as compensation for services | |||
Common stock issued for services | 458,337 | ||
Value of stock issued for services | $ 93,959 | ||
HWW license agreement | |||
Common stock returned to the Company | 6,500,000 | ||
Gain (loss) on legal settlement | $ 115,000 | ||
Amortization of discount on notes payable | $ 215,333 | ||
Common stock issued for agreement | 7,000,000 | ||
Value of stock issued for agreement | $ 1,610,000 | ||
HWW principals | |||
Common stock returned to the Company | 200,000 | ||
Consultants, directors and other parties for services and repayment | |||
Common stock issued for services | 14,206,080 | ||
Value of stock issued for services | $ 2,622,128 | ||
Catalyst Acquisition | |||
Common stock issued in purchase of assets | 300,000 | ||
Value of stock issued for purchase of assets | $ 75,000 | ||
Employees for compensation and bonuses | |||
Common stock issued for compensation | 371,666 | ||
Value of stock issued for compensation | $ 69,290 |
Options and Warrants Disclosu72
Options and Warrants Disclosure (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | |
Authorized amount of common stock under 2012 Stock Option Plan | 6,000,000 | |
Number of options granted in period | 991,250 | |
Options to employees | ||
Number of options granted in period | 91,250 | |
Option exercise price | $ 0.50 | |
Options to directors | ||
Number of options granted in period | 900,000 | |
Option exercise price | $ 0.13 |
Options and Warrants Disclosu73
Options and Warrants Disclosure: Schedule of Stock Options (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Details | |||
Number of options outstanding | 1,547,500 | 2,990,000 | 3,460,834 |
Number of options granted in period | 991,250 | ||
Number of options cancelled during the period | (1,442,500) | (1,462,084) | |
Weighted average exercise price (options outstanding) | $ 0.357 | $ 0.426 | |
Number of options exercisable | 1,331,666 | 1,944,167 | |
Weighted average exercise price (options exercisable) | $ 0.345 | $ 0.561 |
Options and Warrants Disclosu74
Options and Warrants Disclosure: Schedule of Stock Warrants (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Details | |||
Number of warrants outstanding | 1,283,420 | 600,000 | 250,000 |
Number of warrants granted | 883,420 | 350,000 | |
Weighted-Average Exercise Price (Warrants outstanding) | $ 0.249 | $ 0.500 | |
Number of warrants forfeited/cancelled | (200,000) |
Business Acquisitions Disclos75
Business Acquisitions Disclosure (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Oct. 07, 2013 | Mar. 20, 2013 | |
MeNetwork Assets | |||
Authorized issuance of common stock | 750,000 | 2,750,000 | |
Amount of shares to be issued held in escrow | 350,000 | ||
Catalyst Transaction | |||
Fair value of consideration transferred | $ 75,000 |
Business Acquisitions Disclos76
Business Acquisitions Disclosure: Schedule of Business Acquisitions Consideration (Details) - Yowza!! Acquisition | 12 Months Ended |
Dec. 31, 2014USD ($) | |
Cash paid for acquisition, net | $ 500,000 |
Fair value of shares issued | 3,004,860 |
Cash paid to extinguish debt, net | (13,632) |
Fair value of consideration transferred | $ 3,491,228 |
Income Taxes Disclosure_ Sche77
Income Taxes Disclosure: Schedule of Deferred Tax Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Net (loss) | $ (9,081,857) | $ (3,859,698) |
Tax loss for the year | (2,807,702) | (1,363,707) |
Net operating loss carryforward | 13,245,511 | 11,881,804 |
Cumulative operating loss carryforward | $ 16,053,213 | $ 13,245,511 |
Estimated effective tax rate | 35.00% | 35.00% |
Deferred tax assets | $ 5,618,625 | $ 4,635,929 |
Amortization adjustment | ||
Allowable credits | 33,638 | |
Impairment charges | ||
Allowable credits | 5,713,617 | 1,212,763 |
Non-deductible stock compensation | ||
Allowable credits | $ 555,656 | $ 1,249,590 |
Income Taxes Disclosure_ Sche78
Income Taxes Disclosure: Schedule of Income Tax Expense (Benefit) (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Details | ||
*Valuation allowance on deferred tax assets | $ (5,618,625) | $ (4,635,929) |
Supplemental Disclosure of Ca79
Supplemental Disclosure of Cash Flow Information: Schedule of Supplemental Cash Flow Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Details | ||
Cash paid for interest | $ 1,112 | $ 1,557 |
Commitments and Contingencies80
Commitments and Contingencies Disclosure: Schedule of Future Minimum Lease Payments for Operating Leases (Details) | Dec. 31, 2016USD ($) |
Details | |
Future minimum lease payments for non-cancellable operating leases (2017) | $ 131,018 |
Future minimum lease payments for non-cancellable operating leases (2018) | 152,905 |
Future minimum lease payments for non-cancellable operating leases (2019) | 157,117 |
Future minimum lease payments for non-cancellable operating leases (2020) | 46,052 |
Future minimum lease payments for non-cancellable operating leases (Total) | $ 487,093 |
Commitments and Contingencies81
Commitments and Contingencies Disclosure (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Rent expense | $ 72,699 | $ 70,290 |
HWW license agreement | ||
Common stock returned to the Company | 6,500,000 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 3 Months Ended | 4 Months Ended |
Mar. 31, 2017 | Apr. 18, 2017 | |
Common stock issued for cash | 397,148 | |
Consideration for sale of Yowza!! assets | $ 25,000 | |
Board of directors as compensation for 2016 board fees | ||
Common stock issued for services | 1,707,500 | |
CEO consulting agreement | ||
Common stock issued for services | 127,500 | |
Legal fees incurred in 2016 | ||
Common stock issued for services | 2,096 | |
Former CFO as a part of termination agreement | ||
Common stock issued for agreement | 40,407 | |
To employees for compensation | ||
Common stock issued for services | 167,120 | |
For consulting agreements | ||
Common stock issued for services | 387,143 | |
For the sale of Spindle assets | ||
Common stock issued in purchase of assets | 2,500,000 |