Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Apr. 17, 2018 | Jun. 30, 2017 | |
Document and Entity Information | |||
Entity Registrant Name | SPINDLE, INC. | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Entity Central Index Key | 1,403,802 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 86,861,298 | ||
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 | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Entity Public Float | $ 14,204,291 | ||
Trading Symbol | spdl |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 11,753 | $ 3,642 |
Accounts receivable, net | 5,091 | 82,913 |
Prepaid expenses and deposits | 17,267 | 160,280 |
Total current assets | 34,111 | 246,835 |
Other assets | ||
Property and equipment, net | 9,245 | 14,284 |
Intangible assets, net | 134,758 | |
Total other assets | 9,245 | 149,042 |
Total assets | 43,356 | 395,877 |
Current liabilities | ||
Accounts payable and accrued liabilities | 520,282 | 396,237 |
Advances | 114,500 | 10,000 |
Accrued liabilities - related party | 373,050 | 414,327 |
Notes payable | 44,552 | 64,053 |
Convertible notes payable, net | 255,122 | 38,526 |
Convertible notes payable - related party, net | 126,706 | 79,498 |
Contingent liabilities | 297,312 | |
Derivative liability | 261,784 | |
Total current liabilities | 1,993,308 | 1,002,641 |
Total liabilities | 1,993,308 | 1,002,641 |
Stockholders' equity | ||
Preferred stock, value | ||
Common stock, value | 83,073 | 70,596 |
Common stock authorized and unissued | 139 | 250 |
Additional paid-in capital | 29,299,850 | 27,516,362 |
Accumulated deficit | (31,333,014) | (28,193,972) |
Total stockholders' equity | (1,949,952) | (606,764) |
Total liabilities and stockholders' equity | $ 43,356 | $ 395,877 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
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 | 83,073,798 | 70,846,734 |
Common stock, shares outstanding | 83,073,798 | 70,846,734 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement | ||
Sales income | $ 88,247 | $ 589,000 |
Cost of sales | 46,017 | 69,901 |
Gross profit | 42,230 | 519,099 |
Expenses: | ||
Depreciation and amortization | 38,172 | 428,494 |
Promotional and marketing | 16,557 | 19,446 |
Consulting | 735,012 | 506,146 |
Salaries and wages | 697,211 | 1,447,009 |
Director fees | 137,036 | 160,115 |
Professional fees | 381,670 | 455,139 |
General and administrative expenses | 398,512 | 462,462 |
Bad debt expense | 267,118 | |
Impairment on goodwill | 4,636,212 | |
Impairment on long-lived assets | 120,125 | 1,077,405 |
Total operating expenses | 2,524,295 | 9,459,546 |
Net operating income (loss) | (2,482,065) | (8,940,447) |
Other income (expense) | ||
Gain (loss) on sale of intangible assets | (496,814) | |
Gain (loss) on legal settlement | (115,000) | |
Gain (loss) on change of derivative liability | 49,341 | |
Gain (loss) on cancellation of shares | 8,250 | |
Other income | 273,905 | 63,824 |
Other expense | 10,138 | |
Interest expense, net | 242,053 | 61,119 |
Interest expense - related party | 249,606 | 18,977 |
Total other income (expense) | (656,977) | (141,410) |
Loss before provision for income taxes | (3,139,042) | (9,081,857) |
Provision for income taxes | ||
Net (loss) | $ (3,139,042) | $ (9,081,857) |
Weighted average number of common shares outstanding - basic and diluted | 79,553,017 | 67,454,703 |
Net (loss) per share - basic and diluted | $ (0.04) | $ (0.13) |
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, 2015 | 63,599,060 | 697,459 | |||
Beginning Balance, amount at Dec. 31, 2015 | $ 64,297 | $ 26,576,761 | $ 697 | $ (19,112,115) | $ 7,529,640 |
Shares issued for services, shares | 4,192,766 | (447,000) | |||
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 | ||
Beneficial conversion feature on convertible debt | 215,333 | 215,333 | |||
Shares returned, shares | (6,700,000) | ||||
Shares returned, value | $ (6,700) | (1,588,300) | (1,595,000) | ||
Amortization effect on additional paid-in capital | 403,154 | 403,154 | |||
Net loss for the period | (9,081,857) | (9,081,857) | |||
Ending Balance, shares at Dec. 31, 2016 | 70,596,275 | 250,459 | |||
Ending Balance, amount at Dec. 31, 2016 | $ 70,596 | 27,516,362 | $ 250 | (28,193,972) | (606,764) |
Shares issued for services, shares | 6,983,099 | (110,606) | |||
Shares issued for services, value | $ 6,983 | 883,685 | $ (111) | 890,557 | |
Shares issued for cash, shares | 1,212,980 | ||||
Shares issued for cash, value | $ 1,213 | 156,277 | 157,490 | ||
Beneficial conversion feature on convertible debt | 232,800 | 232,800 | |||
Amortization effect on additional paid-in capital | 43,987 | 43,987 | |||
Shares issued for exercise of warrants, shares | 112,000 | ||||
Shares issued for exercise of warrants, value | $ 112 | 15,008 | 15,120 | ||
Shares issued as inducement to purchase assets, shares | 1,870,000 | ||||
Shares issued as inducement to purchase assets, value | $ 1,870 | 185,130 | 187,000 | ||
Warrants issued as inducement to purchase assets | 6,900 | 6,900 | |||
Shares issued for purchase of assets, shares | 400,000 | ||||
Shares issued for purchase of assets, value | $ 400 | 56,100 | 56,500 | ||
Debt converted into stock, shares | 1,899,444 | ||||
Debt converted into stock, value | $ 1,899 | 203,601 | 205,500 | ||
Net loss for the period | (3,139,042) | (3,139,042) | |||
Ending Balance, shares at Dec. 31, 2017 | 83,073,798 | 139,853 | |||
Ending Balance, amount at Dec. 31, 2017 | $ 83,073 | $ 29,299,850 | $ 139 | $ (31,333,014) | $ (1,949,952) |
Statements of Stockholders' Equ
Statements of Stockholders' Equity (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Shares issued for services, value | $ 890,557 | $ 638,859 |
Shares returned, value | (1,595,000) | |
Amortization effect on additional paid-in capital | $ 43,987 | $ 403,154 |
To Related parties | ||
Shares issued for services, shares | 5,911,596 | 3,168,993 |
Shares issued for services, value | $ 690,667 | $ 422,472 |
Common Stock Payable - Related parties | ||
Shares issued for services, shares | (210,606) | (680,000) |
Common Stock Payable - Others | ||
Shares issued for services, shares | 100,000 | 233,000 |
For prepaid expenses | ||
Shares issued for services, shares | 458,337 | |
Shares issued for services, value | $ 93,959 | |
For stock option amortization | ||
Amortization effect on additional paid-in capital | $ 43,987 | $ 403,154 |
For HWW License | ||
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, 2017 | Dec. 31, 2016 | |
Operating activities | ||
Net (loss) | $ (3,139,042) | $ (9,081,857) |
Adjustments to reconcile net loss to net cash (used) by operating activities: | ||
Shares issued for services | 199,890 | 122,428 |
Shares issued for services - related party | 690,667 | 422,476 |
Share based compensation expense | 43,987 | 403,154 |
Depreciation and amortization | 38,172 | 428,494 |
Gain (loss) on sale of intangible assets | (496,814) | |
Amortization of debt discounts | 346,604 | 66,357 |
Gain (loss) on cancellation of shares | 8,250 | |
Gain (loss) on change of derivative liability | 49,341 | |
Impairment on goodwill | 4,636,212 | |
Impairment on long-lived assets | 120,125 | 1,077,405 |
Gain (loss) on forgiveness of bad debt | 63,824 | |
Bad debt expense | 267,118 | |
Gain (loss) on legal settlement | (115,000) | |
Non-cash interest expense | 92,125 | |
Changes in operating assets and liabilities: | ||
Decrease (increase) in accounts receivable | 74,328 | (244,935) |
(Decrease) increase in prepaid expenses | (140,859) | 113,222 |
Decrease in accrued compensation | (57,438) | |
Increase in accounts payable and accrued expenses | 160,533 | 117,860 |
Increase in accrued expenses | 66,814 | 499,890 |
Net cash (used in) operating activities | (1,064,871) | (1,121,000) |
Cash flows from investing activities | ||
Purchase of fixed assets | 3,613 | |
Sale of intangible assets | 293,872 | |
Additions to capitalized software development | 201,078 | |
Net cash provided by (used in) investing activities | 293,872 | (204,691) |
Cash flows from financing activities | ||
Payment for share repurchase | 100,000 | |
Proceeds from notes and advances | 391,000 | 25,500 |
Payments on notes and advances | 78,000 | 40,500 |
Proceeds from notes and advances - related parties | 319,000 | |
Payments on convertible notes payable | 10,500 | |
Payments on notes and advances - related parties | 15,000 | |
Proceeds from sale of common stock | 157,490 | 1,283,107 |
Proceeds from exercise of warrants | 15,120 | |
Net cash provided by (used in) financing activities | 779,110 | 1,168,107 |
Net increase (decrease) in cash | 8,111 | (157,581) |
Cash - beginning of the period | 3,642 | 161,226 |
Cash - ending of the period | $ 11,753 | $ 3,642 |
Organization of The Company and
Organization of The Company and Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
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 relating to 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 operates 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 accumulated deficit. 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 third-party 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. 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 impairments to its intellectual property for the years ended December 31, 2017 and 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 no impairment to goodwill during the twelve months ended December 31, 2017. Goodwill was fully impaired at December 31, 2016. Capitalized software development costs The Company sometimes capitalizes internal software development costs after establishing technological feasibility of a software application. Capitalized software development costs represent the costs associated with the development of our 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, if any, and charge to operations amounts that are deemed unrecoverable for abandoned projects. We had no capitalized software development costs during the twelve months ended December 31, 2017, and therefore no impairment of such cost for the periods was necessary. We recorded impairments to software development costs of $1,059,099 for the twelve months ended December 31, 2016. Capitalized software development costs were zero at December 31, 2017 and December 31, 2016. 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 a 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 relating to 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. Valuation of Derivative Instruments ASC 815-40 requires that embedded derivative instruments be bifurcated and assessed, along with free-standing derivative instruments such as warrants, on their issuance date and in accordance with ASC 815-40-15 to determine whether they should be considered a derivative liability and measured at their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Binomial option pricing formula and present value pricing. At December 31, 2017, we adjusted our derivative liability to its fair value, and reflected the change in fair value in our consolidated statements of operations. We had no derivative liabilities at December 31, 2016. 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 We report 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, 2017 that have been excluded from the computation of diluted net loss per share amounted to 1,847,500 shares, which includes 480,000 warrants and 1,367,500 options. Of the 1,847,500 potential common shares at December 31, 2017, 100,000 had not vested. 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. See Note 13 for more information regarding our options and warrants. The Company also has several notes payable that have conversion features. Were the holders to exercise such features, an additional 3,787,719 shares could be issued based on the note balances at December 31, 2017. 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. The Company did not recognize any deferred tax liabilities or assets at December 31, 2017 or December 31, 2016. 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 March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) |
Going Concern
Going Concern | 12 Months Ended |
Dec. 31, 2017 | |
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 $3,139,042 and $9,081,857 for the fiscal years ended December 31, 2017 and 2016, respectively. At December 31, 2017, the Company had an accumulated deficit of $31,333,014. At December 31, 2017 and December 31, 2016, the Company had a working capital deficit of $1,959,197 and $755,806, respectively. 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 2018 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 Disclo
Accounts Receivable, Net Disclosure | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
Accounts Receivable, Net Disclosure | NOTE 3 - ACCOUNTS RECEIVABLE, NET Accounts receivable consist of the following at: December 31, December 31, 2017 2016 Due from customers and vendors $ 91 $ 32,913 Due from sale of licenses 5,000 -- Due from processing activity -- 50,000 Total accounts receivable, net $ 5,091 $ 82,913 The Company has undertaken various analyses with respect to the recorded balances and the underlying assets for the receivables and intangibles. In 2016, Management analyzed amounts recorded as receivable from processing activity and the likelihood of receiving the full amount due the Company. $267,118 receivable from a processor was deemed uncollectible and recorded as 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, 2017 | |
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, 2017 2016 Prepaid insurance $ -- $ 46,489 Prepaid consulting fees - stock based 12,193 113,791 Deposits 5,074 -- Total prepaid expenses and deposits $ 17,267 $ 160,280 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 shares and 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 Dis
Property and Equipment, Net Disclosure | 12 Months Ended |
Dec. 31, 2017 | |
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, 2017 2016 Office furniture & equipment $ 33,225 $ 33,225 Software -- 1,200 Less: accumulated depreciation (23,980) (20,141) Total fixed assets, net $ 9,245 $ 14,284 During the years ended December 31, 2017 and December 31, 2016, we recorded depreciation expense of $5,039 and $5,600, respectively. |
Intangible Assets, Net Disclosu
Intangible Assets, Net Disclosure | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
Intangible Assets, Net Disclosure | NOTE 6 - INTANGIBLE ASSETS, NET Intangible assets, net consist of the following at: DECEMBER 31, ACCUMULATED DECEMBER 31, 2017 GROSS AMORTIZATION 2017 NET License agreements and contracts $ - $ - $ - Domain names - - - $ - $ - $ - 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 On July 31, 2017, the Company sold an unrestricted license to its payment service provider (“PSP”) software for a total of $30,000 to be paid in 3 tranches. $25,000 was paid by December 31, 2017, with the remainder to be paid in 2018. At December 31, 2017, the Company believed that this asset had little to no value as part of our ongoing strategy and was fully impaired. On April 18, 2017, the Company entered into an agreement to acquire specific digital marketing software assets from CoverCake, Inc., specifically, CoverCake's intelligent algorithms for data mining and consumer engagement. The transaction closed on May 30, 2017. The CoverCake software is expected to enhance both the sophistication and proprietary strengths of Spindle's Catalyst Marketing System. CoverCake's software capabilities include intelligent content aggregation; data mining on various social media data feed platforms, and a robust Content Management System (CMS) backend that will be a significant enhancement to the Catalyst Marketing System. CoverCake has been utilized in the past by enterprise level merchants as well as television and radio broadcast organizations. The purchase price was 300,000 shares of Spindle unregistered common stock valued at $43,500, and the software will be amortized over three years. As part of our purchase agreement, we may pay up to an additional $350,000 in share issuances if certain milestones are met. The range of potential milestone payments is from no payment if none of the milestones are achieved to an estimated maximum of $350,000 in shares if all milestones are achieved. The potential milestones consist launch of the CoverCake software and certain revenue benchmarks. When an acquisition involves contingent consideration, we recognize a liability equal to the fair value of the contingent consideration obligation at the acquisition date. The estimate of fair value of a contingent consideration obligation requires subjective assumptions to be made regarding future business results, discount rates and probabilities assigned to various potential business result scenarios. Based on current knowledge, after review of the marketplace and competitor products, and after taking into account necessary software development, management does not believe that CoverCake is economically viable. For the reasons stated above, management believes that the probability that any of the milestones that would trigger a milestone payment is more than remote. As a result, no contingent consideration is included in the Company’s financial statements. For similar reasons, as of December 31, 2017, the CoverCake software, including $8,456 of accumulated amortization, was fully impaired. On February 14, 2017, the Company sold a previously impaired patent license revenue stream pursuant to a License Agreement with goEmerchant, LLC (“goEmerchant”). The patents which were the subject of the revenue stream expired on or about February 5, 2016. On February 20, 2017, goEmerchant contacted the Company asking for repayment of $54,784 (the “Repayment Amount”). The Company disputes the amount owed and believes there are additional payment obligations owed from goEmerchant to the Company which more than offsets the Repayment Amount. The Company is reviewing its options to enforce all its rights under the License Agreement and collect any obligations owed to it. After learning the patents were expired, the purchasers of the assets agreed to treat the funds paid to Spindle as an advance, which would be repaid back to them in either cash or stock. As of December 31, 2017, $21,500 in cash and 215,000 shares of Spindle common stock with a value of $21,500 had been repaid to the purchasers, leaving $107,000 still due them. This amount is carried as an advance on our balance sheet. The purchasers were also issued a total of 1,500,000 shares of Company common stock with a value of $150,000 at the time of the asset purchase. A total loss on this transaction of $172,461 is included as a loss on the disposal of intangible assets on our Statement of Operations. At December 31, 2017, Management reviewed the value and projected cash flows of the remaining license and domain names and deemed them to have no value to the future direction of the Company, so were fully impaired. Because of change in management in January 2017 and subsequent change in strategy, on March 3, 2017, the Company sold all the remaining 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 Company’s common stock and a Director of Spindle from September 13, 2017 to January 26, 2018. As part of this transaction, 250,000 of the Company’s common stock valued at $25,000 and $6,900 warrant shares with a value of $6,900 were issued to the purchaser, resulting in a loss to the Company of $31,900. During the year ended December 31, 2016, management reviewed the carrying amount of the assets and determined because of diversification in the Company’s business model due to its acquisitions, capitalized software costs and 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 years ended December 31, 2017 and 2016, the Company recorded amortization expense of $33,133 and $422,894, respectively. Our loss on the impairment of long-lived assets follows: December 31, 2017 December 31, 2016 Capitalized software $ 35,044 $ 1,070,405 License agreements and contracts 50,000 7,000 Domain names 35,081 - Total loss on impairment $ 120,125 $ 1,077,405 The 2017 loss on the disposal of assets of $496,814 consists mainly of the contingent loss of $297,312 related to the sale for our residual portfolio, $172,461 related to the goEmerchant transaction, and various smaller items. See Note 7 for additional information. |
Residual Contracts Disclosure
Residual Contracts Disclosure | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
Residual Contracts Disclosure | NOTE 7 - RESIDUAL CONTRACTS To raise immediate cash, we sold our remaining merchant processing portfolio to a larger merchant processor (the “Purchaser”) at industry standard multiples. We were paid a percentage of the net revenues generated by each merchant. As with any type of portfolio, there is attrition, which can come from (1) the merchant processing fewer dollars in sales, or (2) the merchant closing its business (i.e. going out of business), or (3) the merchant taking its processing business to another ISO/processor. The sales agreement with the Purchaser, zero attrition is allowed. Since July 2017 to January 2018, the average monthly residual was less than half of the valuation of the original guaranteed portfolio monthly residual. Any uncured shortfall of the guaranteed residual may be requested by the Purchaser. The Agreement also stipulated that we board a minimum number of Merchant Accounts per year for two years with the Purchaser. The Purchaser may demand that we pay them a specific amount for the number of unacquired Merchant Accounts below the Minimum Requirement per month. From July 1, 2017 to April 1, 2018 (10 months) Spindle has not boarded any merchants on the Purchaser’s platform, and it is likely that we may not board a merchant in the remaining 14 months. As a result, as of December 31, 2017, Management recorded a contingent liability of $171,312 as a potential return for consideration received and $126,000 for not boarding merchants, totaling $297,312. This amount is included in other expenses on our statement of operations as a loss on disposal of intangible assets. In 2015 the Company entered into an agreement to sell one of its residual income streams 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, 2017 | |
Notes | |
Goodwill Disclosure | NOTE 8 - GOODWILL In connection with an acquisition in March 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 on 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 14) 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 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 because 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, 2017 | |
Notes | |
Notes Payable and Convertible Notes Payable, Net of Unamortized Discount | NOTE 9 - NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE, NET OF UNAMORTIZED DISCOUNT Notes Payable The following table provides a summary of the changes of the Company’s Promissory Notes liabilities as of December 31, 2017: Balance at December 31, 2015 $ 66,053 Repayments on notes (17,500) Issuance of notes 15,500 Balance at December 31, 2016 64,053 Repayments on notes (4,000) Reclassification to convertible notes (5,001) Reclassification to related party note (10,500) Balance at December 31, 2017 $ 44,552 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 original term of the Grid Note. During the twelve months ended December 31, 2017 and December 31, 2016, interest expense of $2,328 and $1,527 was recorded, respectively. During the years ended December 31, 2017 and December 31, 2016, the Company repaid $4,000 and $17,500 of the principal balance of the Grid Note, respectively. Convertible Notes Payable Convertible notes payable consists of the following: December 31, 2017 December 31, 2016 Convertible notes payable, interest free to annual interest rate of 6%, due date ranges from May 2018 to June 2018 and convertible into common stock at a price of $0.10 to $0.135 per share. $ 317,000 $ 167,000 Unamortized debt discount (61,878) (128,474) Balance at December 31, 2017 $ 255,122 $ 38,526 During the twelve months ended December 31, 2017, we entered into seven Bridge Note Agreements totaling $145,000 with one of our investors. The seven Bridge Notes were interest free, secured by the Company’s assets, convertible to shares of the Company’s restricted stock at $0.10 and $0.135 per share and had maturity dates ranging from June 30, 2017 to June 29, 2018. Three of the seven Bridge Notes included warrants to purchase two shares of the Company’s common stock, at an exercise price of $0.135 or $0.20 per share, for each dollar loaned to Spindle. The total discount attributable to the seven transactions was $98,457. During the twelve months ended December 31, 2017, interest expense related to the warrants and the amortization of the discount on the unpaid note balances totaled $81,553. The unamortized debt discount on these notes was $16,904 at December 31, 2017. During the three months ended March 31, 2017, we entered into three Bridge Note Agreements totaling $46,000 with one of our investors. The three Bridge Notes were interest free, secured by the Company’s assets, convertible to shares of the Company’s restricted stock at $0.10 per share and had maturity dates of April 30, 2017. The Bridge Notes also included warrants to purchase two shares of the Company’s common stock, at an exercise price of $0.135 per share, for each dollar loaned to Spindle. The total discount attributable to these transactions was $32,716. During the three months ended June 30, 2017, two of these Bridge Notes totaling $31,000 were paid in full through conversion to Spindle stock. The remaining $15,000 Bridge Note was repaid in cash during the three months ended September 30, 2017. In August of 2017, the holder of the Bridge Notes exercised the related warrants for 92,000 shares of restricted common stock at a price of $0.135 per share. During the twelve months ended December 31, 2017, interest expense related to the warrants and the beneficial conversion feature on these three Bridge Notes totaled $32,716. The debt discount on these Bridge Notes was fully amortized at December 31, 2017. In December 2016, we entered into a $5,000 Bridge Note Agreement with one of our investors. The Bridge Note is secured by the Company’s assets and includes warrants to purchase two shares of the Company’s common stock for each dollar loaned to Spindle. The total discount attributable to this transaction is $525. During the twelve months ended December 31, 2017, interest expense related to the warrants and the beneficial conversion feature totaled $525. At December 31, 2017, no payments had been made on the $5,000 Bridge Note. The holder of the $5,000 Bridge Note, which was due 45 days from the date of the note, waived the 45-day term. In August of 2017, the holder of the Note exercised the related warrants for 10,000 shares of restricted common stock at a price of $0.135 per share. On May 18, 2016, we converted a $182,000 payable to an investor in the Company and entered into a Convertible Promissory Note (the “Note”) with that investor. 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, 2017 and December 31, 2016, interest expense of $10,020 and $6,423 and interest expense related to amortization of the discount on the unpaid notes of $83,500 and $53,526 was recorded, respectively. The balance of the unamortized discount at December 31, 2017, was $44,974. The Company made no payments to the Note’s principal balance during 2017 and at December 31, 2017, the unpaid balance of the Note was $167,000. |
Convertible Notes Payable - Rel
Convertible Notes Payable - Related Party, Net of Unamortized Discount Disclosure | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
Convertible Notes Payable - Related Party, Net of Unamortized Discount Disclosure | NOTE 10 - CONVERTIBLE NOTES PAYABLE - RELATED PARTY, NET OF UNAMORTIZED DISCOUNT Convertible notes payable to related parties consists of the following: December 31, 2017 December 31, 2016 Convertible notes payable, annual interest rate of 6% to 10%, due date ranges from October 2018 to March 2019 and convertible into common stock at a price of $0.10 to $0.135 per share. $ 319,000 $ 100,000 Unamortized debt discount (192,294) (20,502) Balance at December 31, 2017 $ 126,706 $ 79,498 On October 17, 2017, we entered into a Convertible Note Agreement with a stockholder of over 5% of the Company. The Note was revised and amended on November 27, 2017 and is for a promissory note up to $359,000, convertible to stock under certain circumstances. At December 31, 2017, the Company had borrowed $219,000 under this agreement. The Note bears an interest rate of 10% per annum and has a maturity date of October 17, 2018. The total value of the Note balance, if converted to stock at December 31, 2017, would be $311,125 and therefore a discount up to the value of the note of $219,000 was recorded. The derivative liability recorded at issuance was $311,125. The Note discount is amortized to interest expense - related party over the term of the note and at December 31, 2017 has an unamortized balance of $188,458. During the twelve months ended December 31, 2017, interest expense of $3,170 and interest expense related to amortization of the discount on the unpaid note of $30,542 were recorded. On March 3, 2017, we entered into an $100,000 Bridge Note Agreement with a stockholder of over 5% of the Company. The Bridge Note was secured by the CompanyÂ’s assets, was convertible to shares of the CompanyÂ’s restricted stock at $0.10 per share and included warrants to purchase 200,000 shares of the CompanyÂ’s common stock, at an exercise price of $0.135 per share. This Bridge Note had no stated maturity date. The total discount attributable to this transaction was $100,000. The Bridge Note was converted to Spindle stock on March 3, 2017, and interest expense related to the warrants and the beneficial conversion feature totaling $100,000 was recorded. At December 31, 2017, no warrants related to this Bridge Note have been exercised. In December 2016, we entered into a $10,500 Bridge Note Agreement with one of our directors. The Bridge Note was secured by the CompanyÂ’s assets and included warrants to purchase two shares of the CompanyÂ’s common stock for each dollar loaned to Spindle. The total discount attributable to this transaction was $1,102. During the twelve months ended December 31, 2017, interest expense related to the warrants and the beneficial conversion factor totaled $1,102. At December 31, 2017, the $10,500 Bridge Note had been paid in full. No warrants related to this Bridge Note have been exercised. On March 25, 2016, we entered into an agreement with a stockholder of over 5% 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 had an original maturity date of March 25, 2018. On March 16, 2018, the holder of the note agreed to extend the maturity date to March 25, 2019. 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, 2017 and December 31, 2016, interest expense of $6,000 and $6,145, respectively, and interest expense related to amortization of the discount on the unpaid note of $16,666 and $12,831, respectively, were recorded. The balance of the unamortized discount at December 31, 2017 is $3,836. |
Derivative Liability Disclosure
Derivative Liability Disclosure | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
Derivative Liability Disclosure | NOTE 11 - DERIVATIVE LIABILITY The following table summarizes fair value measurements by level at December 31, 2017 for assets and liabilities measured at fair value on a recurring basis: Level I Level II Level III Total Derivative liability $ -- $ -- $ 261,78 4 $ 261,784 No financial assets or liabilities were measured on a recurring basis as of December 31, 2016. The Company issued a convertible promissory note during 2017. The convertible note requires us to record the value of the conversion feature as a liability, at fair value, pursuant to ASC 815, including provisions in the note that protects the holder from declines in the CompanyÂ’s stock price, which is considered outside the control of the Company. The derivative liability is marked-to-market each reporting period and changes in fair value are recorded as a non-operating gain or loss in our statement of operations, until they are completely settled. The fair value of the conversion feature is determined each reporting period using the Black-Scholes option pricing model and is affected by changes in inputs to that model including our stock price, expected stock price volatility, interest rates and expected term. The assumptions used in valuing the derivative liability during 2017 were as follows: December 31, 2017 Significant assumptions (weighted-average): Risk-free interest rate at grant date 1.41% - 1.76% Expected stock price volatility 187.14% - 198.52% Expected dividend payout - Expected option life (in years) 1 Expected forfeiture rate 0% The following is a reconciliation of the derivative liability for 2017: December 31, 2017 Value at December 31, 2016 $ - Initial value at debt issuance 311,125 Decrease in value (49,341) Value at December 31, 2017 $ 261,784 |
Stockholders' Equity Disclosure
Stockholders' Equity Disclosure | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
Stockholders' Equity Disclosure | NOTE 12 - STOCKHOLDERS’ DEFICIT The Company is authorized to issue up to 50,000,000 shares of preferred stock, par value $0.001. No preferred shares issued and outstanding as of December 31, 2017 and 2016 respectively. 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, 2017, the Company: · · · · · · · · We also recorded a beneficial conversion feature on convertible debt of $232,800 to additional paid-in capital. During the year ended December 31, 2016, 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 2016 loss to the Company of $115,000. 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 a beneficial conversion feature on convertible debt of $215,333 to additional paid-in capital. |
Options and Warrants Disclosure
Options and Warrants Disclosure | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
Options and Warrants Disclosure | NOTE 13 - 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 the three months ended September 30, 2017, the Company granted 100,000 employee options to purchase shares of common stock at an exercise price of $0.15 per share, with grant date fair values of $0.13, and granted 200,000 employee options to purchase shares of common stock at an exercise price of $0.18, with a grant date fair value of $0.156. The options vest ratably on an annual basis over three years and expire ten years from grant date. During the three months ended March 31, 2017, the Company granted 690,000 options to employees and consultants to purchase shares of common stock at an exercise price of $0.23 per share, with grant date fair values of $0.05. The options vest ratably on an annual basis over three years and expire ten years from grant date. 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, 2017 and 2016: Number of Options Weighted-Average Exercise Price Weighted Average Remaining Contractual Life (in years) Outstanding at December 31, 2015 2,990,000 $ 0.426 8.10 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 Outstanding at December 31, 2016 1,547,500 $ 0.357 7.56 Granted 990,000 $ 0.212 9.17 Exercised - - - Forfeited/Cancelled (470,000) $ 0.230 - Outstanding at December 31, 2017 2,067,500 $ 0.309 7.40 Exercisable at December 31, 2017 1,637,500 $ 0.350 6.68 The estimated fair values of options granted during 2017 and 2016 were calculated using the following assumptions: 2017 2016 Dividend yield 0.00% -- Expected volatility 144.1% to 172.0% -- Risk free interest rate 1.47% to 1.50% -- Expected term, in years 10.0 -- Warrants In conjunction with the Stock Purchase Agreements (“SPA”) in the third and fourth quarters of the year ended December 31, 2016, and in April of 2017, 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 August 2017, 10,000 of these warrants were exercised. 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. In August 2017, 10,000 of these warrants were exercised. In conjunction with the six of the Bridge Loan Agreements made in 2017, the Company granted common stock purchase warrants that entitle the holder to purchase additional shares of Spindle at prices of $0.135 and $0.20 per share. The holder may exercise his purchase rights at any time up to the third anniversary of the agreement. In August 2017, 92,000 of these warrants were exercised. The following is a summary of the status of the Company’s stock warrants as of December 31, 2017: Number of Warrants Weighted-Average Exercise Price Weighted Average Remaining Contractual Life (in years) Outstanding at December 31, 2015 600,000 $ 0.500 1.47 Granted 883,420 $ 0.135 2.79 Exercised - - - Forfeited/Cancelled (200,000) $ 0.500 - Outstanding at December 31, 2016 1,283,420 $ 0.249 2.99 Exercisable at December 31, 2016 1,183,420 $ 0.228 3.12 Outstanding at December 31, 2016 1,283,420 $ 0.249 2.99 Granted 500,519 $ 0.145 2.25 Exercised (112,000) $ 0.135 - Forfeited/Cancelled - - - Outstanding at December 31, 2017 1,671,939 $ 0.225 2.06 Exercisable at December 31, 2017 1,621,939 $ 0.217 2.35 |
Business Acquisitions Disclosur
Business Acquisitions Disclosure | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
Business Acquisitions Disclosure | NOTE 14 - BUSINESS ACQUISITIONS In September 2017 Spindle was introduced to a privately held, profitable, payment processing company (the “Target”) desiring to become part of an existing public company in the payment processing space. On October 2, 2017, we signed a binding term sheet to acquire the Target. On December 31, the term sheet was extended until March 31, 2018, and on March 31, 2018 it was subsequently extended to April 6, 2018. On April 6, 2018 we signed an Asset Purchase Agreement (“APA”) with the Target with a close date of May 15, 2018. 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 relating to 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 |
Income Taxes Disclosure
Income Taxes Disclosure | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
Income Taxes Disclosure | NOTE 15 - 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 Company’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 $3,988,592, which is calculated by multiplying a 21% estimated tax rate by the cumulative net operating loss (NOL) adjusted or the following items: For the periods ended December 31, 2017 2016 Book loss for the year $ (3,139,042) $ (9,081,857) Adjustments: Non-deductible portion - meals and entertainment 4,964 4,882 Impairment charges 120,125 5,713,617 Non-deductible stock compensation 73,870 555,656 Tax loss for the year $ (2,940,083) $ (2,807,702) Net operating loss carryforward 16,053,213 13,245,511 Cumulative net operating loss carryforward 18,993,296 16,053,213 Estimated effective tax rate 21% 35% Deferred tax asset $ 3,988,592 $ 5,618,625 Details for the last two periods follow: For the period ended December 31, 2017 2016 Deferred tax asset $ 3,988,592 $ 5,618,625 Valuation allowance (3,988,592) (5,618,625) Current taxes payable -- -- Income tax expense $ -- $ -- The Company has net operating loss carryforwards for tax purposes of approximately $18,993,296 that begins to expire in the year 2027. The estimated corporate federal net operating loss (NOL) is presented below: Year Amount 2017 18,993,296 2016 16,053,213 On December 22, 2017, President Trump signed into law the 2017 U.S. tax reform bill “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018,” Public Law 115-97 (the “Act”), formerly known as the “Tax Cuts & Jobs Act”, reducing the corporate tax rate from 35% to 21%. |
Supplemental Disclosure of Cash
Supplemental Disclosure of Cash Flow Information Disclosure | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
Supplemental Disclosure of Cash Flow Information Disclosure | NOTE 16 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION The following table presents certain supplemental cash flow information: Years ended December 31, 2017 2016 Supplemental disclosure Cash paid for interest $ 1,442 $ 1,147 Cash paid for income taxes -- -- Accounts receivable increase due to sale of assets 3,494 -- Increase in prepaid due to prepaid share-based compensation (340,580) 70,000 Shares issued for purchase of software (43,500) -- Repayment of advance in shares (21,500) -- Repayment of notes payable related party in lieu of shares (31,000) -- Initial BCF credited to paid-in-capital (232,800) -- Shares issued in relation to acquisition (13,000) -- Shares issued for conversion of debt (205,500) -- Shares returned for legal services -- (1,595,000) Conversion of advances to notes payable $ -- $ 282,000 |
Commitments and Contingencies D
Commitments and Contingencies Disclosure | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
Commitments and Contingencies Disclosure | NOTE 17 - 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 we are pursuing options to reduce this commitment. Approximate future minimum lease payments for non-cancellable operating leases as of December 31, 2017, are as follows (in thousands): Years ended December 31, Total 2018 $ 183,744 2019 188,945 2020 63,481 2021 -- 2022 -- Thereafter -- $ 436,170 Rent expense was $158,952 and $72,699 in 2017 and 2016, respectively, and is included within general and administrative expense on our statements of operations. Contingencies To raise immediate cash, we sold our merchant processing portfolio to a larger merchant processor (the “Purchaser”) at industry standard multiples. We were paid a percentage of the net revenues generated by each merchant. As with any type of portfolio, there is attrition, which can come from (1) the merchant processing fewer dollars in sales, or (2) the merchant closing its business (i.e. going out of business), or (3) the merchant taking its processing business to another ISO/processor. The sales agreement with the Purchaser, zero attrition is allowed. Since July 2017 to January 2018, the average monthly residual was less than half of the valuation of the original guaranteed portfolio monthly residual. Any uncured shortfall of the guaranteed residual may be requested by the Purchaser. The Agreement also stipulated that we board a minimum number of Merchant Accounts per year for two years with the Purchaser. The Purchaser may demand that we pay them a specific amount for the number of unacquired Merchant Accounts below the Minimum Requirement per month. From July 1, 2017 to April 1, 2018 (10 months) Spindle has not boarded any merchants on the Purchaser’s platform, and it is likely that we may not board a merchant in the remaining 14 months. As a result, as of December 31, 2017, Management recorded a contingent liability of $171,312 as a potential return for consideration received and $126,000 for not boarding merchants, totaling $297,312. 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. 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, 2017 | |
Notes | |
Subsequent Events | NOTE 18 - SUBSEQUENT EVENTS On April 2, 2018, we extended the closing dated for the acquisition of all the shares of a privately held payments processing company (the “Acquisition”) to April 6, 2018. A binding term sheet for the Acquisition was entered into on October 2, 2017. On March 8, 2018, John Devlin, one of our directors and Chairman of the Audit Committee, passed away. On April 3, 2018, Ronald McIntyre was appointed to our Board of Directors as a director and Chairman of the Audit Committee. On March 15, 2018, we entered into a Bridge Note Agreement (the “Convertible Note”) with one of our investors (the “Holder”). On January 8, 2018 and February 27, 2018, we entered into convertible promissory notes (the “Original Convertible Notes”) with the Holder in the principal amounts of $20,000 and $17,500, respectively. The Convertible Note is an amendment and restatement of the Original Convertible Notes and increases the principal amount to $55,000 based on an additional funding of $17,500. The Convertible Note is secured by a copy of the Company’s Payment Service Provider software code and is subordinate to our Amended and Restated convertible promissory note with Michael Kelly issued on October 17, 2017. The Convertible Note is convertible into shares of the Company’s common stock at a conversion price of $0.08 per share at any time prior to September 15, 2018. On April 16, 2018, this Note was converted to 687,500 shares of the Company’s common stock. On January 30, 2018, we signed a convertible promissory note with JSJ Investments, Inc. The Convertible Note is subordinate to the convertible note owed to Michael Kelly which the Company filed with its Current Report on Form 8-K on February 1, 2018 and amended on February 6, 2018. The principal amount of the Convertible Note is $152,000 and matures on January 30, 2019. This note bears an interest rate of 10% per annum, is secured by Company assets, is convertible to shares of the Company’s restricted stock at a 35% discount to the lowest trading price during the previous 20 trading days to the date of a conversion notice. From January 1, 2018 to the date of this report, the Company issued a total of 100,000 previously accrued shares of unregistered stock and 3,000,000 shares of unregistered stock under the terms of two consulting agreements. In September 2017, Spindle was introduced to a privately held, profitable, payment processing company (the “Target”) desiring to become part of an existing public company in the payment processing space. On October 2, 2017, we signed a binding term sheet to acquire the Target. On December 31, 2018, the term sheet was extended until March 31, 2018, and on March 31, 2018 it was subsequently extended to April 6, 2018. On April 6, 2018, we signed an Asset Purchase Agreement (“APA”) with the Target with a close date of May 15, 2018. |
Organization of The Company a26
Organization of The Company and Significant Accounting Policies: Cash and Cash Equivalents, Policy (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
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 a27
Organization of The Company and Significant Accounting Policies: Use of Estimates Policy (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
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 a28
Organization of The Company and Significant Accounting Policies: Revenue Recognition Policy (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policies | |
Revenue Recognition Policy | Revenue recognition Revenue is derived on a per transaction basis through the Company’s gateway and third-party 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 a29
Organization of The Company and Significant Accounting Policies: Accounts Receivable Policy (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
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 a30
Organization of The Company and Significant Accounting Policies: Inventory Policy (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
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. |
Organization of The Company a31
Organization of The Company and Significant Accounting Policies: Property and Equipment Policy (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
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 a32
Organization of The Company and Significant Accounting Policies: Long-lived Assets Policy (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
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 impairments to its intellectual property for the years ended December 31, 2017 and December 31, 2016 as further discussed in Note 6. |
Organization of The Company a33
Organization of The Company and Significant Accounting Policies: Goodwill Policy (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
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 no impairment to goodwill during the twelve months ended December 31, 2017. Goodwill was fully impaired at December 31, 2016. |
Organization of The Company a34
Organization of The Company and Significant Accounting Policies: Capitalized Software Development Costs Policy (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policies | |
Capitalized Software Development Costs Policy | Capitalized software development costs The Company sometimes capitalizes internal software development costs after establishing technological feasibility of a software application. Capitalized software development costs represent the costs associated with the development of our 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, if any, and charge to operations amounts that are deemed unrecoverable for abandoned projects. We had no capitalized software development costs during the twelve months ended December 31, 2017, and therefore no impairment of such cost for the periods was necessary. We recorded impairments to software development costs of $1,059,099 for the twelve months ended December 31, 2016. Capitalized software development costs were zero at December 31, 2017 and December 31, 2016. |
Organization of The Company a35
Organization of The Company and Significant Accounting Policies: Beneficial Conversion Feature Policy (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policies | |
Beneficial Conversion Feature Policy | 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. |
Organization of The Company a36
Organization of The Company and Significant Accounting Policies: Debt Discount Policy (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policies | |
Debt Discount Policy | Debt Discount The Company determines if a 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 relating to 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 a37
Organization of The Company and Significant Accounting Policies: Valuation of Derivative Instruments Policy (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policies | |
Valuation of Derivative Instruments Policy | Valuation of Derivative Instruments ASC 815-40 requires that embedded derivative instruments be bifurcated and assessed, along with free-standing derivative instruments such as warrants, on their issuance date and in accordance with ASC 815-40-15 to determine whether they should be considered a derivative liability and measured at their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Binomial option pricing formula and present value pricing. At December 31, 2017, we adjusted our derivative liability to its fair value, and reflected the change in fair value in our consolidated statements of operations. We had no derivative liabilities at December 31, 2016. |
Organization of The Company a38
Organization of The Company and Significant Accounting Policies: Stock-based Compensation, Policy (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
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 a39
Organization of The Company and Significant Accounting Policies: Loss Per Share Policy (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policies | |
Loss Per Share Policy | Loss per share We report 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, 2017 that have been excluded from the computation of diluted net loss per share amounted to 1,847,500 shares, which includes 480,000 warrants and 1,367,500 options. Of the 1,847,500 potential common shares at December 31, 2017, 100,000 had not vested. 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. See Note 13 for more information regarding our options and warrants. The Company also has several notes payable that have conversion features. Were the holders to exercise such features, an additional 3,787,719 shares could be issued based on the note balances at December 31, 2017. |
Organization of The Company a40
Organization of The Company and Significant Accounting Policies: Income Taxes Policy (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
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. The Company did not recognize any deferred tax liabilities or assets at December 31, 2017 or December 31, 2016. |
Organization of The Company a41
Organization of The Company and Significant Accounting Policies: Fair Value of Financial Instruments Policy (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
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 a42
Organization of The Company and Significant Accounting Policies: Recent Accounting Pronouncements (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
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 March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) |
Organization of The Company a43
Organization of The Company and Significant Accounting Policies: Property and Equipment Policy: Property and equipment estimated useful lives (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Property and equipment estimated useful lives | Computer Software 3 years Computer Equipment 5 years Office furniture and equipment 7 years |
Accounts Receivable, Net Disc44
Accounts Receivable, Net Disclosure: Schedule of Accounts Receivable (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Accounts Receivable | December 31, December 31, 2017 2016 Due from customers and vendors $ 91 $ 32,913 Due from sale of licenses 5,000 -- Due from processing activity -- 50,000 Total accounts receivable, net $ 5,091 $ 82,913 |
Prepaid Expenses and Deposits45
Prepaid Expenses and Deposits Disclosure: Schedule of Prepaid Expenses and Deposits (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Prepaid Expenses and Deposits | December 31, December 31, 2017 2016 Prepaid insurance $ -- $ 46,489 Prepaid consulting fees - stock based 12,193 113,791 Deposits 5,074 -- Total prepaid expenses and deposits $ 17,267 $ 160,280 |
Property and Equipment, Net D46
Property and Equipment, Net Disclosure: Schedule of Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Property and Equipment | December 31, December 31, 2017 2016 Office furniture & equipment $ 33,225 $ 33,225 Software -- 1,200 Less: accumulated depreciation (23,980) (20,141) Total fixed assets, net $ 9,245 $ 14,284 |
Intangible Assets, Net Disclo47
Intangible Assets, Net Disclosure: Schedule of Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Intangible Assets | DECEMBER 31, ACCUMULATED DECEMBER 31, 2017 GROSS AMORTIZATION 2017 NET License agreements and contracts $ - $ - $ - Domain names - - - $ - $ - $ - 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 |
Intangible Assets, Net Disclo48
Intangible Assets, Net Disclosure: Schedule of Impaired Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Impaired Intangible Assets | December 31, 2017 December 31, 2016 Capitalized software $ 35,044 $ 1,070,405 License agreements and contracts 50,000 7,000 Domain names 35,081 - Total loss on impairment $ 120,125 $ 1,077,405 |
Notes Payable and Convertible49
Notes Payable and Convertible Notes Payable, Net of Unamortized Discount: Schedule of promissory note liabilities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of promissory note liabilities | Balance at December 31, 2015 $ 66,053 Repayments on notes (17,500) Issuance of notes 15,500 Balance at December 31, 2016 64,053 Repayments on notes (4,000) Reclassification to convertible notes (5,001) Reclassification to related party note (10,500) Balance at December 31, 2017 $ 44,552 |
Notes Payable and Convertible50
Notes Payable and Convertible Notes Payable, Net of Unamortized Discount: Schedule of convertible notes payable (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of convertible notes payable | December 31, 2017 December 31, 2016 Convertible notes payable, interest free to annual interest rate of 6%, due date ranges from May 2018 to June 2018 and convertible into common stock at a price of $0.10 to $0.135 per share. $ 317,000 $ 167,000 Unamortized debt discount (61,878) (128,474) Balance at December 31, 2017 $ 255,122 $ 38,526 |
Convertible Notes Payable - R51
Convertible Notes Payable - Related Party, Net of Unamortized Discount Disclosure: Schedule of Related Party Convertible Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Related Party Convertible Notes Payable | December 31, 2017 December 31, 2016 Convertible notes payable, annual interest rate of 6% to 10%, due date ranges from October 2018 to March 2019 and convertible into common stock at a price of $0.10 to $0.135 per share. $ 319,000 $ 100,000 Unamortized debt discount (192,294) (20,502) Balance at December 31, 2017 $ 126,706 $ 79,498 |
Derivative Liability Disclosu52
Derivative Liability Disclosure: Schedule of Derivative Liabilities at Fair Value (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Derivative Liabilities at Fair Value | Level I Level II Level III Total Derivative liability $ -- $ -- $ 261,78 4 $ 261,784 |
Derivative Liability Disclosu53
Derivative Liability Disclosure: Schedule of Assumptions Used (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Assumptions Used | December 31, 2017 Significant assumptions (weighted-average): Risk-free interest rate at grant date 1.41% - 1.76% Expected stock price volatility 187.14% - 198.52% Expected dividend payout - Expected option life (in years) 1 Expected forfeiture rate 0% |
Derivative Liability Disclosu54
Derivative Liability Disclosure: Reconciliation of Derivative Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Reconciliation of Derivative Liabilities | December 31, 2017 Value at December 31, 2016 $ - Initial value at debt issuance 311,125 Decrease in value (49,341) Value at December 31, 2017 $ 261,784 |
Options and Warrants Disclosu55
Options and Warrants Disclosure: Schedule of Stock Options (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Stock Options | Number of Options Weighted-Average Exercise Price Weighted Average Remaining Contractual Life (in years) Outstanding at December 31, 2015 2,990,000 $ 0.426 8.10 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 Outstanding at December 31, 2016 1,547,500 $ 0.357 7.56 Granted 990,000 $ 0.212 9.17 Exercised - - - Forfeited/Cancelled (470,000) $ 0.230 - Outstanding at December 31, 2017 2,067,500 $ 0.309 7.40 Exercisable at December 31, 2017 1,637,500 $ 0.350 6.68 |
Options and Warrants Disclosu56
Options and Warrants Disclosure: Stock Options, Valuation Assumptions (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Stock Options, Valuation Assumptions | 2017 2016 Dividend yield 0.00% -- Expected volatility 144.1% to 172.0% -- Risk free interest rate 1.47% to 1.50% -- Expected term, in years 10.0 -- |
Options and Warrants Disclosu57
Options and Warrants Disclosure: Schedule of Stock Warrants (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Stock Warrants | Number of Warrants Weighted-Average Exercise Price Weighted Average Remaining Contractual Life (in years) Outstanding at December 31, 2015 600,000 $ 0.500 1.47 Granted 883,420 $ 0.135 2.79 Exercised - - - Forfeited/Cancelled (200,000) $ 0.500 - Outstanding at December 31, 2016 1,283,420 $ 0.249 2.99 Exercisable at December 31, 2016 1,183,420 $ 0.228 3.12 Outstanding at December 31, 2016 1,283,420 $ 0.249 2.99 Granted 500,519 $ 0.145 2.25 Exercised (112,000) $ 0.135 - Forfeited/Cancelled - - - Outstanding at December 31, 2017 1,671,939 $ 0.225 2.06 Exercisable at December 31, 2017 1,621,939 $ 0.217 2.35 |
Business Acquisitions Disclos58
Business Acquisitions Disclosure: Schedule of Business Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Business Acquisition | 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 Disclos59
Business Acquisitions Disclosure: Allocation of purchase price (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
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, 2017 | |
Tables/Schedules | |
Schedule of Deferred Tax Assets | For the periods ended December 31, 2017 2016 Book loss for the year $ (3,139,042) $ (9,081,857) Adjustments: Non-deductible portion - meals and entertainment 4,964 4,882 Impairment charges 120,125 5,713,617 Non-deductible stock compensation 73,870 555,656 Tax loss for the year $ (2,940,083) $ (2,807,702) Net operating loss carryforward 16,053,213 13,245,511 Cumulative net operating loss carryforward 18,993,296 16,053,213 Estimated effective tax rate 21% 35% Deferred tax asset $ 3,988,592 $ 5,618,625 |
Income Taxes Disclosure_ Sche61
Income Taxes Disclosure: Schedule of Income Tax Expense (Benefit) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Income Tax Expense (Benefit) | For the period ended December 31, 2017 2016 Deferred tax asset $ 3,988,592 $ 5,618,625 Valuation allowance (3,988,592) (5,618,625) Current taxes payable -- -- Income tax expense $ -- $ -- |
Income Taxes Disclosure_ Summar
Income Taxes Disclosure: Summary of Operating Loss Carryforwards (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Summary of Operating Loss Carryforwards | Year Amount 2017 18,993,296 2016 16,053,213 |
Supplemental Disclosure of Ca63
Supplemental Disclosure of Cash Flow Information Disclosure: Schedule of Cash Flow, Supplemental Disclosures (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Cash Flow, Supplemental Disclosures | Years ended December 31, 2017 2016 Supplemental disclosure Cash paid for interest $ 1,442 $ 1,147 Cash paid for income taxes -- -- Accounts receivable increase due to sale of assets 3,494 -- Increase in prepaid due to prepaid share-based compensation (340,580) 70,000 Shares issued for purchase of software (43,500) -- Repayment of advance in shares (21,500) -- Repayment of notes payable related party in lieu of shares (31,000) -- Initial BCF credited to paid-in-capital (232,800) -- Shares issued in relation to acquisition (13,000) -- Shares issued for conversion of debt (205,500) -- Shares returned for legal services -- (1,595,000) Conversion of advances to notes payable $ -- $ 282,000 |
Commitments and Contingencies64
Commitments and Contingencies Disclosure: Schedule of Future Minimum Lease Payments for Operating Leases (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Future Minimum Lease Payments for Operating Leases | Years ended December 31, Total 2018 $ 183,744 2019 188,945 2020 63,481 2021 -- 2022 -- Thereafter -- $ 436,170 |
Organization of The Company a65
Organization of The Company and Significant Accounting Policies: Property and Equipment Policy: Property and equipment estimated useful lives (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Software and Software Development Costs | |
Property, Plant and Equipment, Useful Life | 3 years |
Computer Equipment | |
Property, Plant and Equipment, Useful Life | 5 years |
Furniture and Fixtures | |
Property, Plant and Equipment, Useful Life | 7 years |
Organization of The Company a66
Organization of The Company and Significant Accounting Policies: Capitalized Software Development Costs Policy (Details) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Details | |
Impairment of software development costs | $ 1,059,099 |
Organization of The Company a67
Organization of The Company and Significant Accounting Policies: Loss Per Share Policy (Details) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Details | ||
Potential common shares excluded from the computation of diluted earnings per share | 1,847,500 | 2,830,920 |
Going Concern (Details)
Going Concern (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Details | ||
Net loss incurred | $ 3,139,042 | $ 9,081,857 |
Accumulated deficit at end of period | 31,333,014 | 28,193,972 |
Working capital deficit | $ 1,959,197 | $ 755,806 |
Accounts Receivable, Net Disc69
Accounts Receivable, Net Disclosure: Schedule of Accounts Receivable (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Accounts receivable, net | $ 5,091 | $ 82,913 |
Due from customers and vendors | ||
Accounts receivable, gross | 91 | 32,913 |
Due from sale of licenses | ||
Accounts receivable, gross | $ 5,000 | |
Due from processing activity | ||
Accounts receivable, gross | $ 50,000 |
Accounts Receivable, Net Disc70
Accounts Receivable, Net Disclosure (Details) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Details | |
Bad debt expense | $ 267,118 |
Prepaid Expenses and Deposits71
Prepaid Expenses and Deposits Disclosure: Schedule of Prepaid Expenses and Deposits (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Prepaid expenses and other assets | $ 17,267 | $ 160,280 |
Prepaid insurances | ||
Prepaid expenses and other assets | 46,489 | |
Prepaid consulting fees | ||
Prepaid expenses and other assets | 12,193 | $ 113,791 |
Deposits other | ||
Prepaid expenses and other assets | $ 5,074 |
Prepaid Expenses and Deposits72
Prepaid Expenses and Deposits Disclosure (Details) | 12 Months Ended |
Dec. 31, 2016shares | |
Termination of the LPO license agreement - HWW | |
Common stock returned to the Company | 6,500,000 |
Termination of the LPO license agreement - by related party | |
Common stock returned to the Company | 200,000 |
Property and Equipment, Net D73
Property and Equipment, Net Disclosure: Schedule of Property and Equipment (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Less, accumulated depreciation | $ (23,980) | $ (20,141) |
Total property and equipment, net | 9,245 | 14,284 |
Furniture and Fixtures | ||
Property, plant and equipment, gross | $ 33,225 | 33,225 |
Software and Software Development Costs | ||
Property, plant and equipment, gross | $ 1,200 |
Property and Equipment, Net D74
Property and Equipment, Net Disclosure (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Details | ||
Depreciation expense | $ 5,039 | $ 5,600 |
Intangible Assets, Net Disclo75
Intangible Assets, Net Disclosure: Schedule of Intangible Assets (Details) | Dec. 31, 2016USD ($) |
Intangible assets, gross | $ 175,000 |
Intangible assets, net | 134,758 |
Accumulated amortization of intangible assets | 4 |
Capitalized software costs | |
Intangible assets, gross | 75,000 |
Intangible assets, net | 25,000 |
License agreements and contracts | |
Intangible assets, gross | 75,000 |
Intangible assets, net | 65,000 |
Accumulated amortization of intangible assets | (10,000) |
Domain names | |
Intangible assets, net | 44,758 |
Accumulated amortization of intangible assets | $ (30,242) |
Intangible Assets, Net Disclo76
Intangible Assets, Net Disclosure (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Sale of intangible assets | $ 293,872 | |
Value of stock issued for assets | 56,500 | |
Gain (loss) on sale of intangible assets | 496,814 | |
Amortization expense related to capitalized software | $ 33,133 | $ 422,894 |
CoverCake software | ||
Common stock issued for purchase of assets | 300,000 | |
Value of stock issued for assets | $ 43,500 | |
Sale of the Company's license to its payment service provider software | ||
Sale of intangible assets | 25,000 | |
License Agreement with goEmerchant | ||
Gain (loss) on sale of intangible assets | 172,461 | |
Sale of Yowza!! assets | ||
Sale of intangible assets | $ 25,000 |
Intangible Assets, Net Disclo77
Intangible Assets, Net Disclosure: Schedule of Impaired Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Impairment on long-lived assets | $ 120,125 | $ 1,077,405 |
Capitalized software costs | ||
Impairment on long-lived assets | 35,044 | 1,070,405 |
License agreements and contracts | ||
Impairment on long-lived assets | 50,000 | $ 7,000 |
Domain names | ||
Impairment on long-lived assets | $ 35,081 |
Residual Contracts Disclosure (
Residual Contracts Disclosure (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2017 | |
Details | ||
Contingent liabilities | $ 297,312 | |
Bad debt expense | $ 267,118 |
Goodwill Disclosure (Details)
Goodwill Disclosure (Details) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Impairment on goodwill | $ 4,636,212 |
MeNetwork goodwill | |
Impairment on goodwill | 1,339,984 |
Yowza!! goodwill | |
Impairment on goodwill | $ 3,296,228 |
Notes Payable and Convertible80
Notes Payable and Convertible Notes Payable, Net of Unamortized Discount: Schedule of promissory note liabilities (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Details | ||
Notes payable | $ 44,552 | $ 64,053 |
Notes Payable and Convertible81
Notes Payable and Convertible Notes Payable, Net of Unamortized Discount (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Payments on notes and advances | $ 78,000 | $ 40,500 |
Proceeds from notes and advances | 391,000 | 25,500 |
Interest expense, net | 242,053 | 61,119 |
Payments on notes and advances - related parties | 15,000 | |
Promissory Grid Note - December 15, 2011 | ||
Payments on notes and advances | 4,000 | 17,500 |
Seven Bridge Note Agreements with an Investor - 2017 | ||
Proceeds from notes and advances | 145,000 | |
Interest expense, net | 81,553 | |
Unamortized debt discount | 16,904 | |
Three Bridge Note Agreements with Investors - 2017 | ||
Proceeds from notes and advances | 46,000 | |
Interest expense, net | 32,716 | |
Payments on notes and advances - related parties | 15,000 | |
Bridge Note Agreement - December 2016 - shareholder | ||
Interest expense, net | 525 | |
Convertible Promissory Note - May 18, 2016 | ||
Interest expense, net | 10,020 | 6,423 |
Unamortized debt discount | 44,974 | |
Notes and advances payable | 167,000 | |
Related to amortization of the discount on unpaid notes - May 18, 2016 Convertible note | ||
Interest expense, net | $ 83,500 | $ 53,526 |
Notes Payable and Convertible82
Notes Payable and Convertible Notes Payable, Net of Unamortized Discount: Schedule of convertible notes payable (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Convertible notes payable, net | $ 255,122 | $ 38,526 |
Convertible Notes Payable Entered into | ||
Payables | 317,000 | 167,000 |
Convertible Notes Payable Debt Discount | ||
Unamortized debt discount | $ (61,878) | $ (128,474) |
Convertible Notes Payable - R83
Convertible Notes Payable - Related Party, Net of Unamortized Discount Disclosure: Schedule of Related Party Convertible Notes Payable (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Convertible notes payable - related party, net | $ 126,706 | $ 79,498 |
Convertible Notes Payable Entered into - related party | ||
Payables | 319,000 | 100,000 |
Convertible Notes Payable Debt Discount - related party | ||
Unamortized debt discount | $ (192,294) | $ (20,502) |
Convertible Notes Payable - R84
Convertible Notes Payable - Related Party, Net of Unamortized Discount Disclosure (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Proceeds from notes and advances - related parties | $ 319,000 | |
Interest expense - related party | 249,606 | $ 18,977 |
Convertible Note Agreement - October 17, 2017 | ||
Proceeds from notes and advances - related parties | 219,000 | |
Interest expense - related party | 3,170 | |
Related to amortization of the discount on unpaid notes - October 17, 2017 | ||
Interest expense - related party | 30,542 | |
Bridge Note Agreement - March 3, 2017 - 7% stockholder | ||
Proceeds from notes and advances - related parties | 100,000 | |
Interest expense - related party | 100,000 | |
Bridge Note Agreement - December 2016 - director | ||
Interest expense - related party | 1,102 | |
Promissory Note Agreement - March 25, 2016 | ||
Interest expense - related party | 6,000 | 6,145 |
Related to amortization of the discount on unpaid notes - March 25, 2016 promissory note | ||
Interest expense - related party | $ 16,666 | $ 12,831 |
Derivative Liability Disclosu85
Derivative Liability Disclosure: Schedule of Derivative Liabilities at Fair Value (Details) | Dec. 31, 2017USD ($) |
Details | |
Derivative liability fair value measurement | $ 261,784 |
Stockholders' Equity Disclosu86
Stockholders' Equity Disclosure (Details) - USD ($) | 4 Months Ended | 12 Months Ended | 88 Months Ended | |
Apr. 18, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Apr. 18, 2018 | |
Preferred stock authorized to be issued | 50,000,000 | 50,000,000 | ||
Par value of preferred stock | $ 0.001 | $ 0.001 | ||
Common stock authorized to be issued | 300,000,000 | 300,000,000 | ||
Par value of common stock | $ 0.001 | $ 0.001 | ||
Proceeds from stock issued for cash | $ 157,490 | $ 1,283,107 | ||
Value of stock issued, other | 187,000 | |||
Common stock issued for debt conversion | 687,500 | |||
Amount of debt converted for common stock | $ 55,000 | 205,500 | ||
Value of stock issued for services | 890,557 | 638,859 | ||
Value of stock issued for exercise of warrants | 15,120 | |||
Value of stock issued for assets | 56,500 | |||
Beneficial conversion feature on convertible debt | $ 232,800 | $ 215,333 | ||
Bridge Note Agreements - 2017 Investor | ||||
Common stock issued for exercise of warrants | 112,000 | |||
Value of stock issued for exercise of warrants | $ 15,120 | |||
Common stock sold for cash | ||||
Common stock issued for cash | 1,212,980 | 9,504,449 | ||
Proceeds from stock issued for cash | $ 157,490 | $ 1,283,107 | ||
Incentive to purchase Company assets | ||||
Common stock issued, other | 2,170,000 | |||
Value of stock issued, other | $ 230,500 | |||
Repayment of debt | ||||
Common stock issued for debt conversion | 1,310,000 | |||
Amount of debt converted for common stock | $ 131,000 | |||
Stock compensation for services - consultants and others | ||||
Common stock issued for services | 1,171,503 | |||
Value of stock issued for services | $ 199,890 | |||
Stock compensation for services - directors and employees | ||||
Common stock issued for services | 5,700,990 | |||
Value of stock issued for services | $ 690,667 | |||
Related to a potential acquisition | ||||
Common stock issued for purchase of assets | 100,000 | |||
Value of stock issued for assets | $ 13,000 | |||
Termination of the LPO license agreement - HWW | ||||
Common stock returned to the Company | 6,500,000 | |||
Termination of the LPO license agreement - by related party | ||||
Common stock returned to the Company | 200,000 | |||
Stock compensation for services - attorneys | ||||
Common stock issued for services | 798,436 | |||
Value of stock issued for services | $ 122,428 | |||
Stock compensation for services - Directors, consultants and members of advisory board | ||||
Common stock issued for services | 2,488,993 | |||
Value of stock issued for services | $ 422,472 | |||
Stock compensation for services - consultants for prepaid expenses | ||||
Common stock issued for services | 458,337 | |||
Value of stock issued for services | $ 93,959 |
Options and Warrants Disclosu87
Options and Warrants Disclosure (Details) | Dec. 31, 2017shares |
Details | |
Authorized amount of common stock under 2012 Stock Option Plan | 6,000,000 |
Options and Warrants Disclosu88
Options and Warrants Disclosure: Schedule of Stock Options (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Details | |||
Number of options outstanding | 2,067,500 | 1,547,500 | 2,990,000 |
Weighted average exercise price (options outstanding) | $ 0.309 | $ 0.357 | $ 0.426 |
Number of options cancelled during the period | (470,000) | (1,442,500) | |
Number of options exercisable | 1,637,500 | 1,331,666 | |
Weighted average exercise price (options exercisable) | $ 0.350 | $ 0.345 | |
Number of options granted in period | 990,000 |
Options and Warrants Disclosu89
Options and Warrants Disclosure: Schedule of Stock Warrants (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Details | |||
Number of warrants outstanding | 1,671,939 | 1,283,420 | 600,000 |
Weighted-Average Exercise Price (Warrants outstanding) | $ 0.225 | $ 0.249 | $ 0.500 |
Number of warrants granted | 500,519 | 883,420 | |
Number of warrants forfeited/cancelled | (200,000) | ||
Warrants exercised | (112,000) |
Income Taxes Disclosure_ Sche90
Income Taxes Disclosure: Schedule of Deferred Tax Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Net (loss) | $ (3,139,042) | $ (9,081,857) |
Tax loss for the year | (2,940,083) | (2,807,702) |
Net operating loss carryforward | 16,053,213 | 13,245,511 |
Cumulative operating loss carryforward | $ 18,993,296 | $ 16,053,213 |
Estimated effective tax rate | 21.00% | 35.00% |
Deferred tax assets | $ 3,988,592 | $ 5,618,625 |
Non-deductible portion - meals and entertainment | ||
Allowable credits | 4,964 | 4,882 |
Impairment charges | ||
Allowable credits | 120,125 | 5,713,617 |
Non-deductible stock compensation | ||
Allowable credits | $ 73,870 | $ 555,656 |
Income Taxes Disclosure_ Sche91
Income Taxes Disclosure: Schedule of Income Tax Expense (Benefit) (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Details | ||
*Valuation allowance on deferred tax assets | $ (3,988,592) | $ (5,618,625) |
Supplemental Disclosure of Ca92
Supplemental Disclosure of Cash Flow Information Disclosure: Schedule of Cash Flow, Supplemental Disclosures (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash paid for interest | $ 1,442 | $ 1,147 |
Accounts receivable reduced due to sale of assets | ||
Noncash transaction, value recorded | 3,494 | |
Increase in prepaid due to prepaid share-based compensation | ||
Noncash transaction, value recorded | (340,580) | 70,000 |
Shares issued for purchase of software | ||
Noncash transaction, value recorded | (43,500) | |
Repayment of advance in shares | ||
Noncash transaction, value recorded | (21,500) | |
Repayment of notes payable related party in lieu of shares | ||
Noncash transaction, value recorded | (31,000) | |
Initial BCF credited to paid-in-capital | ||
Noncash transaction, value recorded | (232,800) | |
Stock issued in relation to acquisition | ||
Noncash transaction, value recorded | (13,000) | |
Stock issued for conversion of debts | ||
Noncash transaction, value recorded | $ (205,500) | |
Shares returned for legal settlement | ||
Noncash transaction, value recorded | (1,595,000) | |
Conversion of advances to notes payable | ||
Noncash transaction, value recorded | $ 282,000 |
Commitments and Contingencies93
Commitments and Contingencies Disclosure: Schedule of Future Minimum Lease Payments for Operating Leases (Details) | Dec. 31, 2017USD ($) |
Details | |
Future minimum lease payments for non-cancellable operating leases (2018) | $ 183,744 |
Future minimum lease payments for non-cancellable operating leases (2019) | 188,945 |
Future minimum lease payments for non-cancellable operating leases (2020) | 63,481 |
Future minimum lease payments for non-cancellable operating leases (Total) | $ 436,170 |
Commitments and Contingencies94
Commitments and Contingencies Disclosure (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Details | ||
Rent expense | $ 158,952 | $ 72,699 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 4 Months Ended | 12 Months Ended | 88 Months Ended | |
Apr. 18, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Apr. 18, 2018 | |
Proceeds from notes and advances | $ 391,000 | $ 25,500 | ||
Amount of debt converted for common stock | $ 55,000 | $ 205,500 | ||
Common stock issued for debt conversion | 687,500 | |||
Bridge Note Agreement - January 8, 2018 | ||||
Proceeds from notes and advances | 20,000 | |||
Bridge Note Agreement - February 27, 2018 | ||||
Proceeds from notes and advances | 17,500 | |||
Convertible Promissory Note - January 30, 2018 | ||||
Proceeds from notes and advances | $ 152,000 | |||
Previously accrued shares | ||||
Common stock issued for services | 100,000 | |||
Under the terms of two consulting agreements | ||||
Common stock issued for services | 3,000,000 |