Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 13, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | SPINDLE, INC. | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
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 | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | spdl |
Balance Sheets
Balance Sheets - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 5,881 | $ 11,753 |
Accounts receivable, net | 3,100 | 5,091 |
Prepaid expenses and deposits | 100,230 | 17,267 |
Total current assets | 109,211 | 34,111 |
Other assets | ||
Property and equipment, net | 7,694 | 9,245 |
Total other assets | 7,694 | 9,245 |
Total assets | 116,905 | 43,356 |
Current liabilities | ||
Accounts payable and accrued liabilities | 665,819 | 520,282 |
Advances | 114,500 | 114,500 |
Accrued liabilities - related party | 446,887 | 373,050 |
Notes payable | 44,552 | 44,552 |
Convertible notes payable, net | 361,676 | 255,122 |
Convertible notes payable - related party, net | 185,565 | 126,706 |
Contingent liabilities | 297,312 | 297,312 |
Derivative liability | 416,391 | 261,784 |
Total current liabilities | 2,532,702 | 1,993,308 |
Total liabilities | 2,532,702 | 1,993,308 |
Stockholders' equity | ||
Preferred stock, value | ||
Common stock, value | 83,173 | 83,073 |
Common stock authorized and unissued | 3,045 | 139 |
Additional paid-in capital | 29,546,677 | 29,299,850 |
Accumulated deficit | (32,048,692) | (31,333,014) |
Total stockholders' equity | (2,415,797) | (1,949,952) |
Total liabilities and stockholders' equity | $ 116,905 | $ 43,356 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
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 | 83,173,798 | 83,073,798 |
Common stock, shares outstanding | 83,173,798 | 83,073,798 |
Statements of Operations
Statements of Operations - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement | ||
Sales income | $ 3,043 | $ 32,222 |
Cost of sales | 1,382 | 16,494 |
Gross profit | 1,661 | 15,728 |
Expenses: | ||
Depreciation and amortization | 1,551 | 7,513 |
Promotional and marketing | 6,933 | |
Consulting | 260,035 | 56,234 |
Salaries and wages | 108,371 | 189,953 |
Director fees | 23,080 | 37,500 |
Professional fees | 71,285 | 104,467 |
General and administrative expenses | 100,231 | 99,686 |
Total operating expenses | 564,553 | 502,286 |
Net operating income (loss) | (562,892) | (486,558) |
Other income (expense) | ||
Gain (loss) on legal settlement | (7,100) | |
Gain (loss) on sale of intangible assets | (181,900) | |
Gain (loss) on change of derivative liability | 19,627 | |
Other income | 33 | |
Interest expense, net | 99,574 | 74,077 |
Interest expense - related party | 65,739 | 105,589 |
Total other income (expense) | (152,786) | (361,533) |
Loss before provision for income taxes | (715,678) | (848,091) |
Provision for income taxes | ||
Net (loss) | $ (715,678) | $ (848,092) |
Weighted average number of common shares outstanding - basic and diluted | 83,282,384 | 74,220,895 |
Net (loss) per share - basic and diluted | $ (0.01) | $ (0.01) |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Operating activities | ||
Net (loss) | $ (715,678) | $ (848,092) |
Adjustments to reconcile net loss to net cash (used) by operating activities: | ||
Shares issued for services | 240,200 | 9,584 |
Shares issued for services - related party | 580 | 53,271 |
Share based compensation expense | 865 | 23,710 |
Depreciation and amortization | 1,551 | 7,513 |
Non-cash interest expense | 22,234 | |
Gain (loss) on change of derivative liability | 19,627 | |
Gain (loss) on sale of intangible assets | (181,900) | |
Amortization of debt discounts | 128,601 | 144,898 |
Gain (loss) on legal settlement | (7,100) | |
Changes in operating assets and liabilities: | ||
Decrease (increase) in accounts receivable | (109) | (17,097) |
Decrease (increase) in prepaid expenses | 18,187 | 21,169 |
Increase (decrease) in accounts payable and accrued expenses | 39,387 | 43,243 |
Change in accrued compensation | 51,837 | 42,507 |
Net cash (used in) operating activities | (224,872) | (337,394) |
Cash flows from investing activities | ||
Sale of fixed assets | 25,000 | |
Net cash provided by (used in) investing activities | 25,000 | |
Cash flows from financing activities | ||
Proceeds from notes and advances | 207,000 | 196,000 |
Payments on notes and advances | 12,000 | |
Proceeds from notes and advances - related parties | 22,000 | 125,000 |
Payments on notes and advances - related parties | 10,000 | 2,000 |
Proceeds from sale of common stock | 47,490 | |
Net cash provided by (used in) financing activities | 219,000 | 354,490 |
Net increase (decrease) in cash | (5,872) | 42,096 |
Cash - beginning of the period | 11,753 | 3,642 |
Cash - ending of the period | $ 5,881 | $ 45,738 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Basis of Presentation | NOTE 1 - BASIS OF PRESENTATION The interim condensed financial statements included herein, presented in accordance with accounting principles generally accepted in the United States of America (GAAP), have been prepared by the Company, without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim condensed financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2018 and notes thereto included in the Company's Annual Report on Form 10-K/A. The Company follows the same accounting policies in the preparation of interim reports. Results of operations for the interim periods are not indicative of annual results. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Summary of Significant Accounting Policies | NOTE 2 - 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 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 We have analyzed our revenue transactions pursuant to ASU 2014-09, Revenue, and we have no material impact due to the transition from ASC 605 to ASU 2014-09. Our revenues are recognized when control of the promised services is transferred to a customer, in an amount that reflects the consideration that we expect to receive in exchange for those services. In discussion with management, we apply the following five steps to determine the appropriate amount of revenue to be recognized as we fulfill our obligations under each of our agreements: a) identify the contract with a customer; b) identify the performance obligations in the contract; c) determine the transaction price; d) allocate the transaction price to performance obligations in the contract; and e) recognize revenue as the performance obligation is satisfied. 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. Property and equipment Property and equipment are stated at cost. Major renewals and improvements are charged to the asset accounts while 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 hardware 5 years Office furniture 7 years Long-lived assets We account for long-lived assets in accordance with Accounting Standards Codification (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. We assess 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 assets carrying value and fair value or disposable value. 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). We record a BCF 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 we amortize 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 companys 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 issuers 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 issuers equity shares with an issuance date fair value equal to a fixed dollar amount, - Variations in something other than the fair value of the issuers equity shares, for example, a financial instrument indexed to the S&P 500 and settleable with a variable number of the issuers equity shares, or - Variations inversely related to changes in the fair value of the issuers equity shares, for example, a written put that could be net share settled. If the entity determined the instrument meets the guidance under ASC 480 the instrument is accounted for as a liability with a respective debt discount. The Company records debt discounts in connection with raising funds through the issuance of promissory notes (see Notes 9 and 10). These costs are amortized to non-cash interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed. 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 March 31, 2018, we adjusted our derivative liability to its fair value, and reflected the change in fair value in our consolidated statements of operations. 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. We account 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. We estimate 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 as compensation under ASC Topic 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 model, 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 March 31, 2018 that have been excluded from the computation of diluted net loss per share amounted to 3,414,439 shares comprised of 1,742,500 options and 1,671,939 warrants. At March 31, 2018, 130,000 of the 1,742,500 potential common shares that could be issued upon the exercise of the options had not vested, and 50,000 of the 1,671,939 common shares that could be issued upon the exercise of the warrants had not vested. Income taxes We account for income taxes under the provisions of Income Taxes (ASC 740). The method of accounting for income taxes under ASC 740 is an asset and liability method. The asset and liability method requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between tax bases and financial reporting bases of other assets and liabilities. Fair value of financial instruments We account for non-recurring fair value measurements of our non-financial assets and liabilities in accordance with ASC 820-10 Fair Value Measurement. This guidance defines fair value, establishes a framework for measuring fair value and addresses required disclosures about fair value measurements. This standard establishes a three-level hierarchy for fair value measurements based upon the significant inputs used to determine fair value. Observable inputs are those which are obtained from market participants external to the Company while unobservable inputs are generally developed internally, utilizing managements 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 companys 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 pronouncements 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 our financial reporting, we undertake 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 our 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 May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), |
Going Concern
Going Concern | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Going Concern | NOTE 3 - GOING CONCERN The accompanying financial statements have been prepared assuming we will continue as a going concern. As shown in the accompanying financial statements, we incurred a net loss of $715,678 for the three months ended March 31, 2018, and at March 31, 2018, the accumulated deficit was $32,048,692. 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 during 2018 that we will be successful without additional financing. Should revenues not grow sufficiently, and should we be unable to secure additional financing through the sale of our securities or debt, it would be unlikely for us to continue as a going concern for one year from the issuance of the financial statements. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence. These conditions raise substantial doubt about our ability to continue as a going concern. These financial statements do not include any adjustments that might arise from this uncertainty. |
Accounts Receivable, Net, Discl
Accounts Receivable, Net, Disclosure | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Accounts Receivable, Net, Disclosure | NOTE 4 - ACCOUNTS RECEIVABLE, NET Accounts receivable consist of the following at: March 31, December 31, 2018 2017 Due from customers and vendors $ 200 $ 91 Due from sale of licenses 2,900 5,000 Total accounts receivable, net $ 3,100 $ 5,091 |
Prepaid Expenses and Deposits D
Prepaid Expenses and Deposits Disclosure | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Prepaid Expenses and Deposits Disclosure | NOTE 5 - PREPAID EXPENSES AND DEPOSITS Prepaid expenses and deposits consist of the following at: March 31, December 31, 2018 2017 Prepaid insurance $ 90,000 $ -- Prepaid consulting fees - stock based 5,156 12,193 Deposits 5,074 5,074 Total prepaid expenses and deposits $ 100,230 $ 17,267 |
Property and Equipment, Net, Di
Property and Equipment, Net, Disclosure | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Property and Equipment, Net, Disclosure | NOTE 6 - PROPERTY AND EQUIPMENT, NET Property and equipment, net consist of the following at: March 31, December 31, 2018 2017 Office furniture & equipment $ 33,225 $ 33,225 Less: accumulated depreciation (25,531) (23,980) Total property and equipment, net $ 7,694 $ 9,245 During the three months ended March 31, 2018 and 2017, we recorded depreciation expense of $1,551 and $1,344, respectively. |
Residual Contracts Disclosure
Residual Contracts Disclosure | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Residual Contracts Disclosure | NOTE 7 - RESIDUAL CONTRACTS To raise immediate cash, in 2017, 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 allows zero attrition. From 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 May 1, 2018 (11 months) Spindle has not boarded any merchants on the Purchasers platform, and it is likely that we may not board a merchant in the remaining 13 months. 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. |
Notes Payable and Convertible N
Notes Payable and Convertible Notes Payable, Net of Unamortized Discount, Disclosure | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Notes Payable and Convertible Notes Payable, Net of Unamortized Discount, Disclosure | NOTE 8 - NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE, NET OF UNAMORTIZED DISCOUNT Notes Payable The following table is a summary of the changes of our Promissory Notes liabilities as of March 31, 2018: Balance at December 31, 2017 $ 44,552 Repayments on notes -- Balance at March 31, 2018 $ 44,552 On December 15, 2011, we issued a Promissory Grid Note (Grid Note) to a former director of the Company under various terms and at December 31, 2017, had a balance of $44,552. The Grid Note included warrants to purchase up to 250,000 shares of our common stock at a price per share of $1.00, none of which have been exercised as of March 31, 2018. During the three months ended March 31, 2018 and March 31, 2017, interest expense of $557 and $606 was recorded, respectively. No principal payments were made on the Grid Note during the three months ended March 31, 2018 and March 31, 2017. Convertible Notes Payable Convertible notes payable consists of the following: March 31, 2018 December 31, 2017 Convertible notes payable, interest free to annual interest rate of 10%, due date ranges from May 2018 to January 2019 and convertible into common stock at prices ranging from $0.046 to $0.135 per share. $ 514,000 $ 317,000 Unamortized debt discount (152,324) (61,878) Balance at end of period $ 361,676 $ 255,122 The following table is a summary of the changes of our Convertible Notes Payable as of March 31, 2018: Balance at December 31, 2017 $ 255,122 Issuance of notes 244,500 Repayment of notes (10,000) Replacement of notes (37,500) Increase in debt discount (160,188) Amortization of debt discount 69,742 Balance at March 31, 2018 $ 361,676 On January 30, 2018, we signed a convertible promissory note (Convertible Note) with a third party (Holder). 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. The Convertible Note bears an annual interest rate of ten percent and may be converted to stock under certain circumstances. The total value of the Convertible Note balance, if converted to stock at March 31, 2018, would be $154,499. The debt discount and derivative liability recorded at issuance were $152,000 and $174,234, respectively. The Convertible Note discount is amortized to interest expense - related party over the term of the note and at March 31, 2018 has an unamortized balance of $115,625. During the three months ended March 31, 2018, interest expense of $2,499 and interest expense related to amortization of the discount on the unpaid note of $36,375 were recorded. During the three months ended March 31, 2018, we entered into two Bridge Note Agreements totaling $37,500 with one of our investors. These Bridge Notes were rolled into a new Bridge Note (the New Note) with a total of $55,000. The New Note is secured by the Companys assets and is convertible to shares of the Companys restricted stock at a price of $0.08 per share. The discounts attributable to the two Bridge Notes that were rolled into the New Note totaled $8,188 which was expensed as interest at the date of the New Note. There is no discount attributable to the New Note, as the conversion price of $0.08 was the same as the share price on the date the New Note was issued. The New Note was converted into 687,500 shares of Spindle common stock in April 2018. 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 Companys assets, convertible to shares of the Companys 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 Companys 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 three months ended March 31, 2018, interest expense related to the warrants and the amortization of the discount on the unpaid note balances totaled $15,632. The unamortized debt discount on these notes was $1,272 at March 31, 2018. During the three months ended March 31, 2018, $5,000 was repaid on one of these notes. In December 2016, we entered into a $5,000 Bridge Note Agreement with one of our investors. The Bridge Note was secured by the Companys assets and includes warrants to purchase two shares of the Companys common stock for each dollar loaned to Spindle. The total discount attributable to this transaction was $525, which was expensed to interest during the three months ended March 31, 2017. At March 31, 2018, the $5,000 Bridge Note was paid in full. At March 31, 2018, none of the warrants related to this Note had been exercised. 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 three months ended March 31, 2018 and March 31, 2017, interest expense of $2,471 and $2,471 and interest expense related to amortization of the discount on the unpaid notes of $20,589 and $20,589 was recorded, respectively. The balance of the unamortized discount at March 31, 2018 was $24,395. The Company made no payments to the Notes principal balance during the three months ended March 31, 2018 and March 31, 2017, and at March 31, 201, the unpaid balance of the Note was $167,000. |
Convertible Notes Payable - Rel
Convertible Notes Payable - Related Party, Net of Unamortized Discount, Disclosure | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Convertible Notes Payable - Related Party, Net of Unamortized Discount, Disclosure | NOTE 9 -CONVERTIBLE NOTES PAYABLE - RELATED PARTY, NET OF UNAMORTIZED DISCOUNT Convertible notes payable to related parties consists of the following: March 31, 2018 December 31, 2017 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 $ 319,000 Unamortized debt discount (133,435) (192,294) Balance at end of period $ 185,565 $ 126,706 The following table is a summary of the changes of our Convertible Notes Payable - Related Party as of March 31, 2018: Balance at December 31, 2017 $ 126,706 Amortization of debt discount 58,859 Balance at March 31, 2018 $ 185,565 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 March 31, 2018, 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 March 31, 2018, would be $227,581. The discount and derivative liability recorded at issuance were $219,000 and $311,125, respectively. The Note discount is amortized to interest expense - related party over the term of the note and at March 31, 2018 has an unamortized balance of $133,435. During the three months ended March 31, 2018, interest expense of $5,400 and interest expense related to amortization of the discount on the unpaid note of $54,750 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 Companys assets, was convertible to shares of the Companys restricted stock and included warrants to purchase two shares of the Companys common stock for each dollar loaned to Spindle. 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 factor totaling $100,000 was recorded. At March 31, 2018, the warrants related to the Bridge Loan had not been exercised. On March 25, 2016, we entered into an agreement with a stockholder of over 5% of the Company. This agreement was for a $100,000 promissory note, convertible to stock under certain circumstances. The note bears an interest rate of 6% per annum and has a maturity date of March 25, 2018. The total value of the note, if converted to stock, would be $133,333 and therefore a discount in the amount of $33,333 was recorded. This amount is amortized to interest expense - related party over the term of the note. During the three months ended March 31, 2017, interest expense of $1,479 and interest expense related to amortization of the discount on the unpaid note of $4,110 was recorded. The discount was fully amortized at March 31, 2018. In December 2016, we entered into a $10,500 Bridge Note Agreement with one of our directors. The Bridge Note was secured by the Companys assets and included warrants to purchase two shares of the Companys common stock for each dollar loaned to Spindle. The total discount attributable to this transaction was $1,102 and was fully expensed to interest in the three months ended March 31, 2017. At December 31, 2017, the $10,500 Bridge Note had been paid in full. No warrants related to this Bridge Note have been exercised. |
Derivative Liabilities Disclosu
Derivative Liabilities Disclosure | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Derivative Liabilities Disclosure | NOTE 10 - DERIVATIVE LIABILITIES The following table summarizes fair value measurements by level at March 31, 2018 for assets and liabilities measured at fair value on a recurring basis: Level I Level II Level III Total Derivative liability on note payable $ -- $ -- $ 178,120 $ 178,120 Derivative liability on note payable - related party $ -- $ -- $ 238,271 $ 238,271 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 on note payable - related party $ -- $ -- $ 261,784 $ 261,784 The Company issued a convertible promissory note in January 2018 and a convertible promissory note to a related party in 2017. The convertible notes require us to record the value of the conversion features as liabilities, at fair value, pursuant to ASC 815, including provisions in the notes that protect the holder from declines in our stock price, which is considered outside the control of the Company. The derivative liabilities are 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 features are 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 liabilities at March 31, 2018 were as follows: March 31, 2018 December 31, 2017 Significant assumptions (weighted-average): Risk-free interest rate at grant date 2.09% 1.41% - 1.76% Expected stock price volatility 155.66% 187.14% - 198.52% Expected dividend payout -- -- Expected option life (in years) 1 1 Expected forfeiture rate 0% 0% The following is a reconciliation of the derivative liabilities at March 31, 2018 and December 31, 2017: Note Payable Note Payable Related Party Value at December 31, 2016 $ -- $ -- Initial value at debt issuance -- 311,125 Decrease in value -- (49,341) Value at December 31, 2017 $ -- $ 261,784 Initial value at debt issuance 174,234 -- Increase (decrease) in value 3,886 (23,513) Value at March 31, 2018 $ 178,120 $ 238,271 |
Stockholders' Equity Disclosure
Stockholders' Equity Disclosure | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Stockholders' Equity Disclosure | NOTE 11 - STOCKHOLDERS DEFICIT The Company is authorized to issue up to 300,000,000 shares of common stock, par value $0.001. During the three months ended March 31, 2018, the Company: · · · We also recorded a beneficial conversion feature on convertible debt of $8,188 to additional paid-in capital. |
Options and Warrants Disclosure
Options and Warrants Disclosure | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Options and Warrants Disclosure | NOTE 12 - OPTIONS AND WARRANTS On October 29, 2012, our stockholders approved the 2012 Stock Incentive Plan (the Plan) that governs equity awards to our management, employees, directors and consultants. On November 7, 2013, our stockholders approved an amendment to the Plan which increased the total authorized amount of common stock issuable under the Plan from 3,000,000 to 6,000,000 shares. Options: The following is a summary of the status of the Companys stock options as of March 31, 2018: Number of Options Weighted-Average Exercise Price Weighted Average Remaining Contractual Life (in years) Outstanding at December 31, 2017 2,067,500 $0.309 7.40 Granted -- -- -- Exercised -- -- -- Forfeited/Cancelled (325,000) $0.175 9.28 Outstanding at March 31, 2018 1,742,500 $0.342 6.59 Exercisable at March 31, 2018 1,612,500 $0.351 6.41 Stock-based compensation expense of $865 and $23,710 was recognized during the three months ended March 31, 2018 and March 31, 2017, respectively, as amortization of various options over the life of the related vesting periods. Warrants: The following is a summary of the status of the Companys stock warrants as of March 31, 2018: Number of Warrants Weighted-Average Exercise Price Weighted Average Remaining Contractual Life (in years) Exercisable at December 31, 2017 1,621,939 $0.217 2.35 Outstanding at December 31, 2017 1,671,939 $0.225 2.06 Granted -- -- -- Exercised -- -- -- Forfeited/Cancelled -- -- -- Outstanding at March 31, 2018 1,671,939 $0.225 1.82 Exercisable at March 31, 2018 1,621,939 $0.217 1.87 |
Supplemental Disclosure of Cash
Supplemental Disclosure of Cash Flow Information Disclosure | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Supplemental Disclosure of Cash Flow Information Disclosure | NOTE 13 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Three Months Ended March 31, 2018 2017 Supplemental disclosure Cash paid for interest $ 1,531 $ 818 Cash paid for income taxes $ -- $ -- Debt converted into common stock $ -- $ 100,000 Prepaid D&O insurance $ 101,150 $ -- Cash advances converted to common stock $ -- $ 12,000 Beneficial conversion feature on convertible notes $ 8,188 $ 100,000 Proceeds from convertible note payable from note replacement $ 37,500 $ -- Proceeds from convertible note payable from note replacement $ (37,500) $ -- |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Subsequent Events | NOTE 14 - SUBSEQUENT EVENTS On May 3, 2018, we entered into two Bridge Note Agreements totaling $22,500 with one of our investors. The two Bridge Notes are interest free, secured by the Companys assets, convertible to shares of the Companys restricted stock at $0.05 per share and have maturity dates of November 3, 2018. On April 23, 2018, the Board of Directors of the Company appointed Christopher Lank as a Director. Mr. Lank has over 25 years of Technology and Services sales experience. In 2002, he founded Ivis Technologies, LLC (Ivis) where he serves as CEO and Chairman of the Management Committee. Ivis provides a Software as a Service (SaaS) solution that helps companies implement, automate and execute on their day-to-day activities that revolve around the management of ethics and compliance programs and helps reduce the risk for organizations needing to comply with various regulations. Mr. Lank also serves on the Board of Directors of Autonet Mobile, Inc., a private company located in Scottdale, Arizona. On May 14, 2018, Mr. Lank resigned from the Companys Board of Directors. Mr. Lanks resignation was not due to any dispute with the Company. On April 13, 2018, we signed a convertible promissory note (the Convertible Note) with Labrys Fund, LP, a Delaware limited partnership (the Holder). The principal amount of the Convertible Note is $200,000 and matures on April 13, 2019. The Convertible Note carries an original issue discount of $20,000 and accrues interest at the rate of ten percent per annum. The Convertible Note may be prepaid by the Company with various redemption premiums applicable depending on when the Company prepays the principal balance. The Convertible Note is convertible into shares of the Companys common stock under certain circumstances. On April 13, 2018, one of our investors exercised the conversion feature of a $55,000 Note held. The conversion price was $0.08 per share, and 687,500 shares were issued to the investor on April 15, 2018. On April 11, 2018, we issued 3,000,000 shares of common stock to third-party consultants as payment for their services per an agreement signed on March 30, 2018. The estimated fair value of these shares totaled $200, and $240,000 was recorded as consulting expense. On April 6, 2018, we entered into an asset purchase agreement (the Agreement) whereby we will acquire substantially all of the assets of a privately held payments processing company (the Acquisition). In connection with the Acquisition, certain management of the target company would join the Company as the CEO and CTO upon closing. The Acquisition is scheduled to close on or before May 15, 2018. The purchase price for the scheduled assets will be paid in four installments. There are three conditions precedent to closing: (1) a third-party valuation of the assets must be conducted and result in a minimum threshold, (2) two key employees of the target company must agree to employment agreements with the Company, and (3) the Company must have sufficient funds to make the initial payment installment. A third party has a right of first refusal on certain assets to be purchased for a period of 30 days. On April 3, 2018, the Board of Directors of the Company elected Ronald S. McIntyre to be a Director and to be Chairman of the Audit Committee replacing John Devlin, who passed away in March of 2018. Mr. McIntyre has extensive management experience with technology companies and start-ups in the United States and Canada, and from 2009 to the present, has worked as an SEC compliance consultant providing securities law services to private and public companies. On April 2, 2018, the Company received notification from Habib Yunus, the Companys Chief Financial Officer, indicating that effective that date, Mr. Yunus will be taking a leave of absence for up to forty-five days due to personal reasons. Mr. Yunus remains on the Companys Board of Directors. On April 6, 2018, the Board of Directors elected Dr. Jack Scott to serve as interim Chief Financial Officer in Mr. Yunus absence. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies: Cash and Cash Equivalents, Policy (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
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. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies: Use of Estimates Policy (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Policies | |
Use of Estimates Policy | Use of estimates The preparation of financial statements in conformity with 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. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies: Revenue Recognition Policy (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Policies | |
Revenue Recognition Policy | Revenue recognition We have analyzed our revenue transactions pursuant to ASU 2014-09, Revenue, and we have no material impact due to the transition from ASC 605 to ASU 2014-09. Our revenues are recognized when control of the promised services is transferred to a customer, in an amount that reflects the consideration that we expect to receive in exchange for those services. In discussion with management, we apply the following five steps to determine the appropriate amount of revenue to be recognized as we fulfill our obligations under each of our agreements: a) identify the contract with a customer; b) identify the performance obligations in the contract; c) determine the transaction price; d) allocate the transaction price to performance obligations in the contract; and e) recognize revenue as the performance obligation is satisfied. |
Summary of Significant Accoun23
Summary of Significant Accounting Policies: Accounts Receivable Policy (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Policies | |
Accounts Receivable Policy | 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. |
Summary of Significant Accoun24
Summary of Significant Accounting Policies: Property and Equipment Policy (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
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 while 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 hardware 5 years Office furniture 7 years |
Summary of Significant Accoun25
Summary of Significant Accounting Policies: Long-lived Assets Policy (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Policies | |
Long-lived Assets Policy | Long-lived assets We account for long-lived assets in accordance with Accounting Standards Codification (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. We assess 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 assets carrying value and fair value or disposable value. |
Summary of Significant Accoun26
Summary of Significant Accounting Policies: Beneficial Conversion Feature Policy (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
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). We record a BCF 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 we amortize the discount to interest expense over the life of the debt using the effective interest method. |
Summary of Significant Accoun27
Summary of Significant Accounting Policies: Debt Discount Policy (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
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 companys 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 issuers 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 issuers equity shares with an issuance date fair value equal to a fixed dollar amount, - Variations in something other than the fair value of the issuers equity shares, for example, a financial instrument indexed to the S&P 500 and settleable with a variable number of the issuers equity shares, or - Variations inversely related to changes in the fair value of the issuers equity shares, for example, a written put that could be net share settled. If the entity determined the instrument meets the guidance under ASC 480 the instrument is accounted for as a liability with a respective debt discount. The Company records debt discounts in connection with raising funds through the issuance of promissory notes (see Notes 9 and 10). These costs are amortized to non-cash interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed. |
Summary of Significant Accoun28
Summary of Significant Accounting Policies: Valuation of Derivative Instruments Policy (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
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 March 31, 2018, we adjusted our derivative liability to its fair value, and reflected the change in fair value in our consolidated statements of operations. |
Summary of Significant Accoun29
Summary of Significant Accounting Policies: Stock-based Compensation, Policy (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
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. We account 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. We estimate 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 as compensation under ASC Topic 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 model, 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. |
Summary of Significant Accoun30
Summary of Significant Accounting Policies: Loss Per Share Policy (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
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 March 31, 2018 that have been excluded from the computation of diluted net loss per share amounted to 3,414,439 shares comprised of 1,742,500 options and 1,671,939 warrants. At March 31, 2018, 130,000 of the 1,742,500 potential common shares that could be issued upon the exercise of the options had not vested, and 50,000 of the 1,671,939 common shares that could be issued upon the exercise of the warrants had not vested. |
Summary of Significant Accoun31
Summary of Significant Accounting Policies: Income Taxes Policy (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Policies | |
Income Taxes Policy | Income taxes We account for income taxes under the provisions of Income Taxes (ASC 740). The method of accounting for income taxes under ASC 740 is an 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. |
Summary of Significant Accoun32
Summary of Significant Accounting Policies: Fair Value of Financial Instruments Policy (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
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 managements 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 companys 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. |
Summary of Significant Accoun33
Summary of Significant Accounting Policies: Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Policies | |
Recent Accounting Pronouncements | Recent accounting pronouncements 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 our financial reporting, we undertake 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 our 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 May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), |
Summary of Significant Accoun34
Summary of Significant Accounting Policies: Property and Equipment Policy: Property and equipment estimated useful lives (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Property and equipment estimated useful lives | Computer software 3 years Computer hardware 5 years Office furniture 7 years |
Accounts Receivable, Net, Dis35
Accounts Receivable, Net, Disclosure: Schedule of Accounts Receivable (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Schedule of Accounts Receivable | March 31, December 31, 2018 2017 Due from customers and vendors $ 200 $ 91 Due from sale of licenses 2,900 5,000 Total accounts receivable, net $ 3,100 $ 5,091 |
Prepaid Expenses and Deposits36
Prepaid Expenses and Deposits Disclosure: Schedule of Prepaid Expenses and Deposits (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Schedule of Prepaid Expenses and Deposits | March 31, December 31, 2018 2017 Prepaid insurance $ 90,000 $ -- Prepaid consulting fees - stock based 5,156 12,193 Deposits 5,074 5,074 Total prepaid expenses and deposits $ 100,230 $ 17,267 |
Property and Equipment, Net, 37
Property and Equipment, Net, Disclosure: Schedule of Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Schedule of Property and Equipment | March 31, December 31, 2018 2017 Office furniture & equipment $ 33,225 $ 33,225 Less: accumulated depreciation (25,531) (23,980) Total property and equipment, net $ 7,694 $ 9,245 |
Notes Payable and Convertible38
Notes Payable and Convertible Notes Payable, Net of Unamortized Discount, Disclosure: Schedule of promissory note liabilities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Schedule of promissory note liabilities | Balance at December 31, 2017 $ 44,552 Repayments on notes -- Balance at March 31, 2018 $ 44,552 |
Notes Payable and Convertible39
Notes Payable and Convertible Notes Payable, Net of Unamortized Discount, Disclosure: Schedule of convertible notes payable (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Schedule of convertible notes payable | March 31, 2018 December 31, 2017 Convertible notes payable, interest free to annual interest rate of 10%, due date ranges from May 2018 to January 2019 and convertible into common stock at prices ranging from $0.046 to $0.135 per share. $ 514,000 $ 317,000 Unamortized debt discount (152,324) (61,878) Balance at end of period $ 361,676 $ 255,122 |
Notes Payable and Convertible40
Notes Payable and Convertible Notes Payable, Net of Unamortized Discount, Disclosure: Summary of the changes of our Convertible Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Summary of the changes of our Convertible Notes Payable | Balance at December 31, 2017 $ 255,122 Issuance of notes 244,500 Repayment of notes (10,000) Replacement of notes (37,500) Increase in debt discount (160,188) Amortization of debt discount 69,742 Balance at March 31, 2018 $ 361,676 |
Convertible Notes Payable - R41
Convertible Notes Payable - Related Party, Net of Unamortized Discount, Disclosure: Schedule of Related Party Convertible Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Schedule of Related Party Convertible Notes Payable | March 31, 2018 December 31, 2017 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 $ 319,000 Unamortized debt discount (133,435) (192,294) Balance at end of period $ 185,565 $ 126,706 |
Convertible Notes Payable - R42
Convertible Notes Payable - Related Party, Net of Unamortized Discount, Disclosure: Summary of the changes of our Convertible Notes Payable - Related Party (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Summary of the changes of our Convertible Notes Payable - Related Party | Balance at December 31, 2017 $ 126,706 Amortization of debt discount 58,859 Balance at March 31, 2018 $ 185,565 |
Derivative Liabilities Disclo43
Derivative Liabilities Disclosure: Schedule of Derivative Liabilities at Fair Value (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Schedule of Derivative Liabilities at Fair Value | Level I Level II Level III Total Derivative liability on note payable $ -- $ -- $ 178,120 $ 178,120 Derivative liability on note payable - related party $ -- $ -- $ 238,271 $ 238,271 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 on note payable - related party $ -- $ -- $ 261,784 $ 261,784 |
Derivative Liabilities Disclo44
Derivative Liabilities Disclosure: Schedule of Assumptions Used (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Schedule of Assumptions Used | March 31, 2018 December 31, 2017 Significant assumptions (weighted-average): Risk-free interest rate at grant date 2.09% 1.41% - 1.76% Expected stock price volatility 155.66% 187.14% - 198.52% Expected dividend payout -- -- Expected option life (in years) 1 1 Expected forfeiture rate 0% 0% |
Derivative Liabilities Disclo45
Derivative Liabilities Disclosure: Reconciliation of Derivative Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Reconciliation of Derivative Liabilities | Note Payable Note Payable Related Party Value at December 31, 2016 $ -- $ -- Initial value at debt issuance -- 311,125 Decrease in value -- (49,341) Value at December 31, 2017 $ -- $ 261,784 Initial value at debt issuance 174,234 -- Increase (decrease) in value 3,886 (23,513) Value at March 31, 2018 $ 178,120 $ 238,271 |
Options and Warrants Disclosu46
Options and Warrants Disclosure: Schedule of Stock Options (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Schedule of Stock Options | Number of Options Weighted-Average Exercise Price Weighted Average Remaining Contractual Life (in years) Outstanding at December 31, 2017 2,067,500 $0.309 7.40 Granted -- -- -- Exercised -- -- -- Forfeited/Cancelled (325,000) $0.175 9.28 Outstanding at March 31, 2018 1,742,500 $0.342 6.59 Exercisable at March 31, 2018 1,612,500 $0.351 6.41 |
Options and Warrants Disclosu47
Options and Warrants Disclosure: Schedule of Stock Warrants (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Schedule of Stock Warrants | Number of Warrants Weighted-Average Exercise Price Weighted Average Remaining Contractual Life (in years) Exercisable at December 31, 2017 1,621,939 $0.217 2.35 Outstanding at December 31, 2017 1,671,939 $0.225 2.06 Granted -- -- -- Exercised -- -- -- Forfeited/Cancelled -- -- -- Outstanding at March 31, 2018 1,671,939 $0.225 1.82 Exercisable at March 31, 2018 1,621,939 $0.217 1.87 |
Supplemental Disclosure of Ca48
Supplemental Disclosure of Cash Flow Information Disclosure: Schedule of Cash Flow, Supplemental Disclosures (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Schedule of Cash Flow, Supplemental Disclosures | Three Months Ended March 31, 2018 2017 Supplemental disclosure Cash paid for interest $ 1,531 $ 818 Cash paid for income taxes $ -- $ -- Debt converted into common stock $ -- $ 100,000 Prepaid D&O insurance $ 101,150 $ -- Cash advances converted to common stock $ -- $ 12,000 Beneficial conversion feature on convertible notes $ 8,188 $ 100,000 Proceeds from convertible note payable from note replacement $ 37,500 $ -- Proceeds from convertible note payable from note replacement $ (37,500) $ -- |
Summary of Significant Accoun49
Summary of Significant Accounting Policies: Property and Equipment Policy: Property and equipment estimated useful lives (Details) | 3 Months Ended |
Mar. 31, 2018 | |
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 |
Summary of Significant Accoun50
Summary of Significant Accounting Policies: Loss Per Share Policy (Details) | 3 Months Ended |
Mar. 31, 2018shares | |
Potential common shares excluded from the computation of diluted earnings per share | 3,414,439 |
Compromised of Options | |
Potential common shares excluded from the computation of diluted earnings per share | 1,742,500 |
Compromised of Warrants | |
Potential common shares excluded from the computation of diluted earnings per share | 1,671,939 |
Going Concern (Details)
Going Concern (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Details | ||
Net loss incurred | $ 715,678 | |
Accumulated deficit at end of period | $ 32,048,692 | $ 31,333,014 |
Accounts Receivable, Net, Dis52
Accounts Receivable, Net, Disclosure: Schedule of Accounts Receivable (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Accounts receivable, net | $ 3,100 | $ 5,091 |
Due from customers and vendors | ||
Accounts receivable, gross | 200 | 91 |
Due from sale of licenses | ||
Accounts receivable, gross | $ 2,900 | $ 5,000 |
Prepaid Expenses and Deposits53
Prepaid Expenses and Deposits Disclosure: Schedule of Prepaid Expenses and Deposits (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Prepaid expenses and other assets | $ 100,230 | $ 17,267 |
Prepaid insurances | ||
Prepaid expenses and other assets | 90,000 | |
Prepaid consulting fees | ||
Prepaid expenses and other assets | 5,156 | 12,193 |
Deposits other | ||
Prepaid expenses and other assets | $ 5,074 | $ 5,074 |
Property and Equipment, Net, 54
Property and Equipment, Net, Disclosure: Schedule of Property and Equipment (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Less, accumulated depreciation | $ (25,531) | $ (23,980) |
Total property and equipment, net | 7,694 | 9,245 |
Furniture and Fixtures | ||
Property, plant and equipment, gross | $ 33,225 | $ 33,225 |
Property and Equipment, Net, 55
Property and Equipment, Net, Disclosure (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Details | ||
Depreciation expense | $ 1,551 | $ 1,344 |
Residual Contracts Disclosure (
Residual Contracts Disclosure (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Details | ||
Contingent liabilities | $ 297,312 | $ 297,312 |
Notes Payable and Convertible57
Notes Payable and Convertible Notes Payable, Net of Unamortized Discount, Disclosure: Schedule of promissory note liabilities (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Details | ||
Notes payable | $ 44,552 | $ 44,552 |
Notes Payable and Convertible58
Notes Payable and Convertible Notes Payable, Net of Unamortized Discount, Disclosure (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |
May 14, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | |
Interest expense, net | $ 99,574 | $ 74,077 | |
Proceeds from notes and advances - related parties | 22,000 | 125,000 | |
Proceeds from notes and advances | 207,000 | 196,000 | |
Payments on notes and advances | 12,000 | ||
Promissory Grid Note - December 15, 2011 | |||
Interest expense, net | 557 | 606 | |
Convertible Promissory Note - January 30, 2018 | |||
Interest expense, net | 2,499 | ||
Proceeds from notes and advances - related parties | 152,000 | ||
Convertible Promissory Note - January 30, 2018 - Unamortized discount | |||
Interest expense, net | 36,375 | ||
Two Bridge Note Agreements - 2018 Investors | |||
Proceeds from notes and advances | 37,500 | ||
Amount of debt converted for common stock | $ 55,000 | ||
Common stock issued for debt conversion | 687,500 | ||
Seven Bridge Note Agreements - 2017 Investors | |||
Interest expense, net | 15,632 | ||
Unamortized debt discount | 1,272 | ||
Payments on notes and advances | 5,000 | ||
Bridge Note Agreement - December 2016 - Investors | |||
Interest expense, net | 525 | ||
Payments on notes and advances | 5,000 | ||
Convertible Promissory Note - May 18, 2016 | |||
Interest expense, net | 2,471 | 2,471 | |
Unamortized debt discount | 24,395 | ||
Notes and advances payable | 167,000 | ||
Related to amortization of the discount on unpaid notes - May 18, 2016 Convertible note | |||
Interest expense, net | $ 20,589 | $ 20,589 |
Notes Payable and Convertible59
Notes Payable and Convertible Notes Payable, Net of Unamortized Discount, Disclosure: Schedule of convertible notes payable (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Convertible notes payable, net | $ 361,676 | $ 255,122 |
Convertible Notes Payable Entered into | ||
Payables | 514,000 | 317,000 |
Convertible Notes Payable Debt Discount | ||
Unamortized debt discount | $ (152,324) | $ (61,878) |
Convertible Notes Payable - R60
Convertible Notes Payable - Related Party, Net of Unamortized Discount, Disclosure: Schedule of Related Party Convertible Notes Payable (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Convertible notes payable - related party, net | $ 185,565 | $ 126,706 |
Convertible Notes Payable Entered into - related party | ||
Payables | 319,000 | 319,000 |
Convertible Notes Payable Debt Discount - related party | ||
Unamortized debt discount | $ (133,435) | $ (192,294) |
Convertible Notes Payable - R61
Convertible Notes Payable - Related Party, Net of Unamortized Discount, Disclosure (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Interest expense - related party | $ 65,739 | $ 105,589 |
Convertible Note Agreement - October 17, 2017 | ||
Interest expense - related party | 5,400 | |
Related to amortization of the discount on unpaid notes - October 17, 2017 | ||
Interest expense - related party | $ 54,750 | |
Bridge Note Agreement - March 3, 2017 - 5% stockholder | ||
Interest expense - related party | 100,000 | |
Promissory Note Agreement - March 25, 2016 | ||
Interest expense - related party | 1,479 | |
Related to amortization of the discount on unpaid notes - March 25, 2016 promissory note | ||
Interest expense - related party | 4,110 | |
Bridge Note Agreement - December 2016 - director | ||
Interest expense - related party | $ 1,102 |
Derivative Liabilities Disclo62
Derivative Liabilities Disclosure: Schedule of Derivative Liabilities at Fair Value (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Derivative liability on note payable | ||
Derivative liability fair value measurement | $ 178,120 | |
Derivative liability on note payable - related party | ||
Derivative liability fair value measurement | $ 238,271 | $ 261,784 |
Stockholders' Equity Disclosu63
Stockholders' Equity Disclosure (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
May 14, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Common stock authorized to be issued | 300,000,000 | 300,000,000 | ||
Par value of common stock | $ 0.001 | $ 0.001 | ||
Consulting expense | $ 260,035 | $ 56,234 | ||
Beneficial conversion feature on convertible debt | $ 8,188 | |||
Stock issued for services - consultants | ||||
Common stock issued for services | 3,000,000 | 100,000 | ||
Value of stock issued for services | $ 14,000 | |||
Issuance authorized for compensation of services - consultants | ||||
Value of stock issued for services | 200 | |||
Consulting expense | $ 240,000 | |||
Issuance authorized for compensation of services - employees and members of our Board of Directors | ||||
Common stock issued for services | 6,000 | |||
Value of stock issued for services | $ 580 |
Options and Warrants Disclosu64
Options and Warrants Disclosure (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Details | ||
Authorized amount of common stock under 2012 Stock Option Plan | 6,000,000 | |
Share based compensation expense | $ 865 | $ 23,710 |
Options and Warrants Disclosu65
Options and Warrants Disclosure: Schedule of Stock Options (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Details | ||
Number of options outstanding | 1,742,500 | 2,067,500 |
Weighted average exercise price (options outstanding) | $ 0.342 | $ 0.309 |
Number of options cancelled during the period | (325,000) | |
Number of options exercisable | 1,612,500 | |
Weighted average exercise price (options exercisable) | $ 0.351 |
Options and Warrants Disclosu66
Options and Warrants Disclosure: Schedule of Stock Warrants (Details) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Details | ||
Number of warrants outstanding | 1,671,939 | 1,671,939 |
Weighted-Average Exercise Price (Warrants outstanding) | $ 0.225 | $ 0.225 |
Supplemental Disclosure of Ca67
Supplemental Disclosure of Cash Flow Information Disclosure: Schedule of Cash Flow, Supplemental Disclosures (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash paid for interest | $ 1,531 | $ 818 |
Stock issued for conversion of debts | ||
Noncash transaction, value recorded | 100,000 | |
Prepaid D&O insurance | ||
Noncash transaction, value recorded | 101,150 | |
Repayment of advance in shares | ||
Noncash transaction, value recorded | 12,000 | |
Beneficial conversion feature on convertible notes | ||
Noncash transaction, value recorded | 8,188 | $ 100,000 |
Proceeds from convertible note payable from note replacement(1) | ||
Noncash transaction, value recorded | 37,500 | |
Proceeds from convertible note payable from note replacement(2) | ||
Noncash transaction, value recorded | $ (37,500) |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 4 Months Ended | |
May 14, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | Apr. 18, 2018 | |
Proceeds from notes and advances | $ 207,000 | $ 196,000 | ||
Stock issued for services - consultants | ||||
Common stock issued for services | 3,000,000 | 100,000 | ||
Two Bridge Note Agreements - 2018 Investors | ||||
Proceeds from notes and advances | $ 37,500 | |||
Amount of debt converted for common stock | $ 55,000 | |||
Common stock issued for debt conversion | 687,500 | |||
Two Bridge Note Agreements - May 3, 2018 | ||||
Proceeds from notes and advances | $ 22,500 | |||
Convertible Promissory Note - April 13, 2018 | ||||
Proceeds from notes and advances | $ 200,000 |