Document and Entity Information
Document and Entity Information - USD ($) | 9 Months Ended | ||
Sep. 30, 2016 | Nov. 21, 2016 | Jun. 30, 2015 | |
Document and Entity Information: | |||
Entity Registrant Name | iGambit, Inc. | ||
Document Type | 10-Q | ||
Document Period End Date | Sep. 30, 2016 | ||
Trading Symbol | igmb | ||
Amendment Flag | false | ||
Entity Central Index Key | 1,479,681 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 39,683,990 | ||
Entity Public Float | $ 0 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | Q3 |
IGAMBIT INC CONSOLIDATED BALANC
IGAMBIT INC CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2016 AND DECEMBER 31 2015 - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Assets, Current | ||
Cash and Cash Equivalents, at Carrying Value | $ 21,829 | $ 131,987 |
Accounts Receivable, Net, Current | 545,873 | 230,182 |
Inventory, Net | 1,160 | 21,160 |
Prepaid Expense, Current | 141,995 | 244,592 |
Assets from discontinued operations | 53,389 | 262,765 |
Assets, Current | 764,246 | 890,686 |
Assets, Noncurrent | ||
Property, Plant and Equipment, Gross | 24,432 | 40,433 |
Goodwill | 6,705,157 | 6,705,157 |
Deposits Assets, Noncurrent | 1,720 | 1,720 |
Assets, Noncurrent | 6,731,309 | 6,747,310 |
Assets | 7,495,555 | 7,637,996 |
Liabilities, Current | ||
Accounts Payable, Current | 745,725 | 636,633 |
Notes Payable, Accured Interest Current | 454,854 | 291,107 |
Notes Payable, Accrued interest related party | 39,353 | 11,171 |
Other Long-term Debt, Current | 82,923 | 74,871 |
Deferred Revenue and Credits, Current | 385,396 | 811,227 |
Notes Payable, Current | 786,624 | 779,750 |
Notes Payable, related party | 156,566 | 156,566 |
Notes, Net, | 79,459 | |
Other Liabilities, Noncurrent | 15,557 | 127,353 |
Liabilities, Current | 2,746,457 | 2,888,678 |
Liabilities, Noncurrent | ||
Deferred Revenue and Credits, Noncurrent | 497,088 | 379,052 |
Notes Payable, Noncurrent | 2,339,251 | 2,339,251 |
Due to Related Parties, Noncurrent | 469,699 | 469,699 |
Liabilities, Noncurrent | 3,306,038 | 3,188,002 |
Liabilities | 6,052,495 | 6,076,680 |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | ||
Common Stock, Value, Outstanding | 39,684 | 39,684 |
Additional Paid in Capital, Common Stock | 4,320,022 | 4,320,022 |
Retained Earnings (Accumulated Deficit) | (2,916,646) | (2,798,390) |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | 1,443,060 | 1,561,316 |
Stockholders' Equity, Number of Shares, Par Value and Other Disclosures | ||
Liabilities and Equity | $ 7,495,555 | $ 7,637,996 |
IGAMBIT INC STATEMENT OF INCOME
IGAMBIT INC STATEMENT OF INCOME THREE AND NINE MONTHS JANUARY 1ST TO SEPTEMBER 30TH 2016 AND 2015 - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenues | ||||
Sales Revenue, Goods, Net | $ 200,506 | $ 442,800 | ||
Sales Revenue, Services, Net | 597,311 | 1,348,718 | ||
Sales Revenue, Net | 797,817 | 1,791,518 | ||
Cost of Sales | 7,667 | 36,121 | ||
Cost of Revenue | ||||
Gross Profit | 790,150 | 1,755,397 | ||
Amortization of Deferred Charges | ||||
General and Administrative Expense | 458,686 | $ 121,833 | 1,598,461 | $ 348,840 |
Operating Income (Loss) | 331,464 | (121,833) | 156,936 | (348,840) |
Investment Income, Nonoperating | ||||
Interest Expense | (115,348) | (635) | (279,060) | (2,136) |
Nonoperating Income (Expense) | (115,348) | (635) | (279,060) | (2,136) |
Interest and Debt Expense | ||||
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest | 216,116 | (122,468) | (122,124) | (350,976) |
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest | 550 | 47,619 | 3,868 | 79,584 |
Net Income (Loss) Attributable to Parent | $ 216,666 | $ (74,849) | $ (118,256) | $ (271,392) |
Earnings Per Share | ||||
Continuing operations | $ 0.01 | $ 0 | $ 0 | $ (0.01) |
Discontinued operations, net of tax | 0 | 0 | 0 | 0 |
Earnings Per Share, Basic and Diluted | $ 0.01 | $ 0 | $ 0 | $ (0.01) |
Weighted Average Number of Shares Outstanding, Basic | 39,683,990 | 27,825,294 | 39,683,990 | 27,099,008 |
IGAMBIT INC CONSOLIDATED STATEM
IGAMBIT INC CONSOLIDATED STATEMENTS OF CASH FLOWS JANUARY 1ST TO SEPTEMBER 30TH 2016 AND 2015 - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Net Cash Provided by (Used in) Operating Activities | ||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ (118,256) | $ (271,392) |
Adjustments, Noncash Items, to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities | ||
Depreciation | 17,196 | 496 |
Income from discontinued operations | (3,868) | (79,584) |
Stock-based compensation expense | 331,998 | |
Increase (Decrease) in Operating Assets | ||
Increase (Decrease) in Receivables | (315,691) | |
Increase (Decrease) in Inventories | 20,000 | |
Increase (Decrease) in Prepaid Expense and Other Assets | 102,597 | (187,434) |
Increase (Decrease) in Operating Liabilities | ||
Increase (Decrease) in Accounts Payable | 109,092 | 34,004 |
Increase (Decrease) in Deferred Liabilities | 191,929 | |
Increase (Decrease) in Deferred Revenue | (307,795) | |
Net cash used by continuing operating activities | (304,796) | (171,912) |
Net cash used by discontinued operating activities | 106,947 | 23,920 |
Net Cash Provided by (Used in) Operating Activities | (197,849) | (147,992) |
Net Cash Provided by (Used in) Investing Activities | ||
Payments to Acquire Property, Plant, and Equipment | (1,194) | |
Net cash provided (used) by continuing investing activities | (1,194) | |
Net cash provided (used) by discontinued investing activities | (5,026) | |
Net Cash Provided by (Used in) Investing Activities | (1,194) | (5,026) |
Net Cash Provided by (Used in) Financing Activities | ||
Proceeds from (Repayments of) Related Party Debt | 21,400 | |
Proceeds from (Repayments of) Notes Payable | 86,333 | |
Proceeds from (Repayments of) Other Debt | 8,052 | |
Net Cash Provided by (Used in) Financing Activities | 88,885 | 38,336 |
Cash and Cash Equivalents, Period Increase (Decrease) | (110,158) | (114,682) |
Cash Beginning of Period | 131,987 | 133,436 |
Cash End of period | 21,829 | 18,754 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Cash paid during the period for Interest | $ 13,427 | $ 7,147 |
Note 1 - Organization and Basis
Note 1 - Organization and Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
Notes | |
Note 1 - Organization and Basis of Presentation | Note 1 - Organization and Basis of Presentation The consolidated financial statements presented are those of iGambit Inc., (the Company) and its wholly-owned subsidiaries, Wala, Inc. doing business as Arcmail Technology (ArcMail) and Gotham Innovation Lab Inc. (Gotham). The Company was incorporated under the laws of the State of Delaware on April 13, 2000. The Company was originally incorporated as Compusations Inc. under the laws of the State of New York on October 2, 1996. The Company changed its name to BigVault.com Inc. upon changing its state of domicile on April 13, 2000. The Company changed its name again to bigVault Storage Technologies Inc. on December 21, 2000 before changing to iGambit Inc. on April 5, 2006. Gotham was incorporated under the laws of the state of New York on September 23, 2009. The Company is a holding company which seeks out acquisitions of operating companies in technology markets. ArcMail provides email archive solutions to domestic and international businesses through hardware and software sales, support, and maintenance. Gotham is in the business of providing media technology services to real estate agents and brokers in the New York metropolitan area. Interim Financial Statements The following (a) condensed consolidated balance sheet as of December 31, 2015, which has been derived from audited financial statements, and (b) the unaudited condensed consolidated interim financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2016 are not necessarily indicative of results that may be expected for the year ending December 31, 2016. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2015 included in the Companys Annual Report on Form 10-K, filed with the Securities and Exchange Commission (SEC) on April 14, 2016. Business Acquisition On November 4, 2015, the Company acquired Wala, Inc. doing business as ArcMail Technology in accordance with a stock purchase agreement. Pursuant to the stock purchase agreement, the total consideration paid for the outstanding capital stock of Wala was 11,500,000 shares of iGambit common stock, valued at $.10 per share. The following table presents the allocation of the value of the common shares issued for ArcMail to the acquired identifiable assets, liabilities assumed and goodwill: Common shares issued, valued at $.10 per share $ 1,150,000 Cash $ 10,198 Accounts receivable, net 205,208 Inventories 21,160 Prepaid expenses 276 Fixed assets 41,235 Total identifiable assets 278,077 Accounts payable and accrued expenses (442,300) Accrued interest (254,718) Deferred revenue (1,254,865) Note payable (3,881,351) Total liabilities assumed (5,833,234) Excess of liabilities assumed over identifiable assets 5,555,157 Total goodwill $ 6,705,157 |
Note 3 - Summary of Significant
Note 3 - Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Notes | |
Note 3 - Summary of Significant Accounting Policies | Note 3 Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Wala, Inc. and Gotham Innovation Lab, Inc. All intercompany accounts and transactions have been eliminated. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles 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 consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Fair Value of Financial Instruments For certain of the Companys financial instruments, including cash, accounts receivable, prepaid expenses, accounts payable, accrued interest, deferred revenue, and amounts due to related parties, the carrying amounts approximate fair value due to their short maturities. Additionally, there are no assets or liabilities for which fair value is remeasured on a recurring basis. Revenue Recognition The Company recognizes revenue from product sales when the following four revenue recognition criteria are met: persuasive evidence of an arrangement exists, an equipment order has been placed with the vendor, the selling price is fixed or determinable, and collectability is reasonably assured. Revenues from maintenance contracts covering multiple future periods are recognized during the current periods and deferred revenue is recorded for future periods and classified as current or noncurrent, depending on the terms of the contracts. Gothams revenues were derived primarily from the sale of products and services rendered to real estate brokers. Gotham recognized revenues when the services or products have been provided or delivered, the fees charged are fixed or determinable, Gotham and its customers understood the specific nature and terms of the agreed upon transactions, and collectability was reasonably assured. Advertising Costs The Company expenses advertising costs as incurred. Advertising costs for the nine months ended September 30, 2016 and 2015 were $208,662 and $3,352, respectively. Advertising costs for the three months ended September 30, 2016 and 2015 were $45,079 and $33,333, respectively. Accounts Receivable The Company analyzes the collectability of accounts receivable from continuing operations each accounting period and adjusts its allowance for doubtful accounts accordingly. A considerable amount of judgment is required in assessing the realization of accounts receivables, including the creditworthiness of each customer, current and historical collection history and the related aging of past due balances. The Company evaluates specific accounts when it becomes aware of information indicating that a customer may not be able to meet its financial obligations due to deterioration of its financial condition, lower credit ratings, bankruptcy or other factors affecting the ability to render payment. Allowance for doubtful accounts was $8,345 at September 30, 2016 and December 31, 2015, respectively. There was no bad debt expense charged to operations for the nine months ended September 30, 2016 and 2015, respectively. Inventories Inventories consisting of finished products are stated at the lower of cost or market. Cost is determined on an average cost basis. Property and equipment and depreciation Property and equipment are stated at cost. Maintenance and repairs are charged to expense when incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and any gain or loss is credited or charged to income. Depreciation for both financial reporting and income tax purposes is computed using combinations of the straight line and accelerated methods over the estimated lives of the respective assets as follows: Office equipment and fixtures 5 - 7 years Computer hardware 5 years Computer software 3 years Development equipment 5 years Goodwill Goodwill represents the excess of liabilities assumed over assets acquired of ArcMail and the fair market value of the common shares issued by the Company for the acquisition of ArcMail. In accordance with ASC Topic No. 350 Intangibles Goodwill and Other), the goodwill is not being amortized, but instead will be subject to an annual assessment of impairment by applying a fair-value based test, and will be reviewed more frequently if current events and circumstances indicate a possible impairment. An impairment loss is charged to expense in the period identified. If indicators of impairment are present and future cash flows are not expected to be sufficient to recover the assets carrying amount, an impairment loss is charged to expense in the period identified. A lack of projected future operating results from ArcMails operations may cause impairment. As the acquisition of ArcMail occurred on November 4, 2015, it is too early for management to evaluate whether goodwill has been impaired. No impairment was recorded during the nine months ended September 30, 2016. Long-Lived Assets The Company assesses the valuation of components of its property and equipment and other long-lived assets whenever events or circumstances dictate that the carrying value might not be recoverable. The Company bases its evaluation on indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and other external market conditions or factors that may be present. If such factors indicate that the carrying amount of an asset or asset group may not be recoverable, the Company determines whether an impairment has occurred by analyzing an estimate of undiscounted future cash flows at the lowest level for which identifiable cash flows exist. If the estimate of undiscounted cash flows during the estimated useful life of the asset is less than the carrying value of the asset, the Company recognizes a loss for the difference between the carrying value of the asset and its estimated fair value, generally measured by the present value of the estimated cash flows. Deferred Revenue Deposits from customers are not recognized as revenues, but as liabilities, until the following conditions are met: revenues are realized when cash or claims to cash (receivable) are received in exchange for goods or services or when assets received in such exchange are readily convertible to cash or claim to cash or when such goods/services are transferred. When such income item is earned, the related revenue item is recognized, and the deferred revenue is reduced. To the extent revenues are generated from the Companys support and maintenance services, the Company recognizes such revenues when services are completed and billed. The Company has received deposits from its various customers that have been recorded as deferred revenue in the amount of $882,484 and $1,190,279 as of September 30, 2016 and December 31, 2015, respectively. Stock-Based Compensation The Company accounts for its stock-based awards granted under its employee compensation plan in accordance with ASC Topic No. 718-20, Awards Classified as Equity, Income Taxes The Company accounts for income taxes using the asset and liability method in accordance with ASC Topic No. 740, Income Taxes The Company applies the provisions of ASC Topic No. 740 for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the Companys financial statements . Recent Accounting Pronouncements FASB ASC 606 ASU 2014-09 - Revenue from contracts with customers: In May 2014, the FASB issued amended guidance on contracts with customers to transfer goods or services or contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). The guidance requires an entity to recognize revenue on contracts with customers to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance requires that an entity depict the consideration by applying the following steps: Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. This amendment is to be either retrospectively adopted to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this ASU recognized at the date of initial application. Adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements. FASB ASC 718 ASU 2014-12 Compensation Stock Compensation: In June 2014, the FASB issued ASU No. 2014-12, "Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period," ("ASU 2014-12"). The amendments in ASU 2014-12 require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in ASC Topic No. 718, "Compensation - Stock Compensation" as it relates to awards with performance conditions that affect vesting to account for such awards. The amendments in ASU 2014-12 are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted. Entities may apply the amendments in ASU 2014-12 either: (a) prospectively to all awards granted or modified after the effective date; or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The Company does not anticipate that the adoption of ASU 2014-12 will have a material impact on its consolidated financial statements. FASB ASC 740 ASU 2015-17 - Balance Sheet Classification of Deferred Taxes: In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (ASU 2015-17). The FASB issued this ASU as part of its ongoing Simplification Initiative, with the objective of reducing complexity in accounting standards. The amendments in ASU 2015-17 require entities that present a classified balance sheet to classify all deferred tax liabilities and assets as a noncurrent amount. This guidance does not change the offsetting requirements for deferred tax liabilities and assets, which results in the presentation of one amount on the balance sheet. Additionally, the amendments in this ASU align the deferred income tax presentation with the requirements in International Accounting Standards (IAS) 1, Presentation of Financial Statements. The amendments in ASU 2015-17 are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company does not anticipate that the adoption of this standard will have a material impact on its consolidated financial statements. FASB ASC 842 ASU 2016-02 Leases: In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases. The ASU will also require new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating ASU 2016-02 and its impact on its consolidated financial statements. |
Note 5 - Earnings Per Common Sh
Note 5 - Earnings Per Common Share | 9 Months Ended |
Sep. 30, 2016 | |
Notes | |
Note 5 - Earnings Per Common Share | Note 5 - Earnings (Loss) Per Common Share The Company calculates net earnings (loss) per common share in accordance with ASC 260 Earnings Per Share Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Stock options 1,422,000 1,718,900 1,422,000 1,718,900 Stock warrants 275,000 275,000 275,000 275,000 Total shares excluded from calculation 1,697,000 1,993,900 1,697,000 1,993,900 |
Note 6-stock Based Compensation
Note 6-stock Based Compensation | 9 Months Ended |
Sep. 30, 2016 | |
Notes | |
Note 6-stock Based Compensation | Note 6 Stock Based Compensation Stock-based compensation expense for all stock-based award programs, including grants of stock options and warrants, is recorded in accordance with " CompensationStock Compensation Options In 2006, the Company adopted the 2006 Long-Term Incentive Plan (the "2006 Plan"). Awards granted under the 2006 Plan have a ten-year term and may be incentive stock options, non-qualified stock options or warrants. The awards are granted at an exercise price equal to the fair market value on the date of grant and generally vest over a three or four year period. The Plan expired on December 31, 2009, therefore as of September 30, 2016, there was no unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the 2006 plan. The 2006 Plan provided for the granting of options to purchase up to 10,000,000 shares of common stock. 8,146,900 options have been issued under the plan to date of which 7,157,038 have been exercised and 692,962 have expired to date. There were 296,900 options outstanding under the 2006 Plan on its expiration date of December 31, 2009. All options issued subsequent to this date were not issued pursuant to any plan and vested upon issuance. Stock option activity during the nine months ended September 30, 2016 and 2015 follows: Weighted Average Weighted Remaining Weighted Average Average Contractual Options Outstanding Exercise Price Grant-Date Fair Value Life (Years) Options outstanding at December 31, 2014 1,518,900 $ 0.03 $ 0.10 4.51 Options granted 200,000 0.01 0.40 4.48 Options outstanding at September 30, 2015 1,718,900 $ 0.03 0.13 4.07 Options outstanding at December 31, 2015 1,718,900 $ 0.03 0.13 3.82 Options expired (296,900) 0.01 -- Options outstanding at September 30, 2016 1,422,000 $ 0.03 $ 0.13 5.85 Options outstanding at September 30, 2016 consist of: Date Number Number Exercise Expiration Issued Outstanding Exercisable Price Date June 9, 2014 213,000 213,000 $0.03 June 9, 2024 June 9, 2014 159,000 159,000 $0.03 June 9, 2024 June 9, 2014 600,000 600,000 $0.03 June 9, 2024 June 6, 2014 250,000 250,000 $0.05 June 6, 2019 March 24, 2015 200,000 200,000 $0.01 March 24, 2020 Total 1,422,000 1,422,000 Warrants In addition to our 2006 Long Term Incentive Plan, we have issued and outstanding compensatory warrants to two consultants entitling the holders to purchase a total of 275,000 shares of our common stock at an average exercise price of $0.94 per share. Warrants to purchase 25,000 shares of common stock vest upon 6 months after the Company engages in an IPO, have an exercise price of $3.00 per share, and expire 2 years after the Company engages in an IPO. Warrants to purchase 250,000 shares of common stock vest 100,000 shares on issuance (June 1, 2009), and 50,000 shares on each of the following three anniversaries of the date of issuance, have exercise prices ranging from $0.50 per share to $1.15 per share, and expire on June 1, 2019. The issuance of the compensatory warrants was not submitted to our shareholders for their approval. Warrant activity during the nine months ended September 30, 2016 and 2015 follows: Weighted (1)Weighted Weighted Average Grant-Date Average Remaining Warrants Outstanding Average Exercise Price Fair Value Contractual Life (Years) Warrants outstanding at December 31, 2014 275,000 $ 0.94 $ 0.10 4.17 No warrant activity -- -- -- Warrants outstanding at September 30, 2015 275,000 $ 0.94 $ 0.10 3.67 Warrants outstanding at December 31, 2015 275,000 $ 0.94 $ 0.10 3.42 No warrant activity -- -- -- Warrants outstanding at September 30, 2016 275,000 $ 0.94 $ 0.10 2.67 (1) Exclusive of 25,000 warrants expiring 2 years after initial IPO. Warrants outstanding at September 30, 2016 consist of: Date Number Number Exercise Expiration Issued Outstanding Exercisable Price Date April 1, 2000 25,000 25,000 $3.00 2 years after IPO June 1, 2009 100,000 100,000 $0.50 June 1, 2019 June 1, 2009 50,000 50,000 $0.65 June 1, 2019 June 1, 2009 50,000 50,000 $0.85 June 1, 2019 June 1, 2009 50,000 50,000 $1.15 June 1, 2019 Total 275,000 275,000 Note 7 Deferred Revenue Deferred revenue represents sales of maintenance contracts that extend to and will be realized in future periods. Deferred revenue at September 30, 2016 will be realized in the following years ended December 31, 2016 $ 385,396 2017 243,139 2018 119,890 2019 111,956 2020 20,403 2021 1,700 $ 882,484 |
Note 8 - Convertible Note Payab
Note 8 - Convertible Note Payable | 9 Months Ended |
Sep. 30, 2016 | |
Notes | |
Note 8 - Convertible Note Payable | Note 8 Notes Payable Notes payable at September 30, 2016 consist of various notes payable in annual installments totaling $779,750 through September 2019. The notes include interest at 7% and are secured by the assets of ArcMail. Principal amounts due on notes payable for the years ended December 31, are as follows: 2016 $ 786,624 2017 779,750 2018 779,750 2019 779,751 $ 3,125,875 During the nine months ended September 30, 2016, Arcmail entered into merchant financing agreements with two lenders for proceeds totaling $281,000 payable in daily amounts based on various percentages of future collections of accounts receivable, which were assigned to the lenders. The obligations will be satisfied upon total payments of $358,400 and will mature in January 2017. The outstanding balance of notes payable - other was $79,459 at September 30, 2016. |
Note 11 - Retirement Plan
Note 11 - Retirement Plan | 9 Months Ended |
Sep. 30, 2016 | |
Notes | |
Note 11 - Retirement Plan | Note 11 - Retirement Plan ArcMail has a defined contribution 401(k) plan, which covers substantially all employees. Under the terms of the Plan, Arcmail is currently not required to match employee contributions. The Company did not make any employer contributions to the Plan during the nine months ended September 30, 2016. |
Note 12 - Concentrations and Cr
Note 12 - Concentrations and Credit Risk | 9 Months Ended |
Sep. 30, 2016 | |
Notes | |
Note 12 - Concentrations and Credit Risk | Note 12 Concentrations and Credit Risk Sales and Accounts Receivable No customer accounted for more than 10% of sales or accounts receivable for the nine months ended September 30, 2016 and 2015, respectively. Cash Cash is maintained at a major financial institution. Accounts held at U.S. financial institutions are insured by the FDIC up to $250,000. Cash balances could exceed insured amounts at any given time, however, the Company has not experienced any such losses. The Company did not have any interest-bearing accounts at September 30, 2016 and December 31, 2015, respectively. |
Note 13 - Related Party Transac
Note 13 - Related Party Transactions | 9 Months Ended |
Sep. 30, 2016 | |
Notes | |
Note 13 - Related Party Transactions | Note 13 - Related Party Transactions Note Payable Related Party ArcMail issued a promissory note to the president of ArcMail on June 30, 2015 for funds advanced. The note is payable in annual installments of $156,566 through December 2019. The notes include interest at 6% and are subordinated to the notes payable (see Note 8). Principal amounts due on notes payable for the years ended December 31, are as follows: 2016 $ 156,566 2017 156,566 2018 156,566 2019 156,567 $ 626,265 Amounts Due to Related Parties Amounts due to related parties with balances of $82,923 and $74,871 at September 30, 2016 and December 31, 2015, respectively, consist of cash advances from two stockholders/officers. These advances do not bear interest and are payable on demand. |
Note 3 - Summary of Significa13
Note 3 - Summary of Significant Accounting Policies: Principles of Consolidation (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Policies | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Wala, Inc. and Gotham Innovation Lab, Inc. All intercompany accounts and transactions have been eliminated. |
Note 3 - Summary of Significa14
Note 3 - Summary of Significant Accounting Policies: Use of Estimates in The Preparation of Financial Statements (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Policies | |
Use of Estimates in The Preparation of Financial Statements | Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles 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 consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. |
Note 3 - Summary of Significa15
Note 3 - Summary of Significant Accounting Policies: Fair Value of Financial Instruments (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Policies | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments For certain of the Companys financial instruments, including cash, accounts receivable, prepaid expenses, accounts payable, accrued interest, deferred revenue, and amounts due to related parties, the carrying amounts approximate fair value due to their short maturities. Additionally, there are no assets or liabilities for which fair value is remeasured on a recurring basis. |
Note 3 - Summary of Significa16
Note 3 - Summary of Significant Accounting Policies: Revenue Recognition (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Policies | |
Revenue Recognition | Revenue Recognition The Company recognizes revenue from product sales when the following four revenue recognition criteria are met: persuasive evidence of an arrangement exists, an equipment order has been placed with the vendor, the selling price is fixed or determinable, and collectability is reasonably assured. Revenues from maintenance contracts covering multiple future periods are recognized during the current periods and deferred revenue is recorded for future periods and classified as current or noncurrent, depending on the terms of the contracts. Gothams revenues were derived primarily from the sale of products and services rendered to real estate brokers. Gotham recognized revenues when the services or products have been provided or delivered, the fees charged are fixed or determinable, Gotham and its customers understood the specific nature and terms of the agreed upon transactions, and collectability was reasonably assured. |
Note 3 - Summary of Significa17
Note 3 - Summary of Significant Accounting Policies: Advertising Costs (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Policies | |
Advertising Costs | Advertising Costs The Company expenses advertising costs as incurred. Advertising costs for the nine months ended September 30, 2016 and 2015 were $208,662 and $3,352, respectively. Advertising costs for the three months ended September 30, 2016 and 2015 were $45,079 and $33,333, respectively. |
Note 3 - Summary of Significa18
Note 3 - Summary of Significant Accounting Policies: Property and Equipment and Depreciation (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Policies | |
Property and Equipment and Depreciation | Property and equipment and depreciation Property and equipment are stated at cost. Maintenance and repairs are charged to expense when incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and any gain or loss is credited or charged to income. Depreciation for both financial reporting and income tax purposes is computed using combinations of the straight line and accelerated methods over the estimated lives of the respective assets as follows: Office equipment and fixtures 5 - 7 years Computer hardware 5 years Computer software 3 years Development equipment 5 years |
Note 3 - Summary of Significa19
Note 3 - Summary of Significant Accounting Policies: Recent Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements FASB ASC 606 ASU 2014-09 - Revenue from contracts with customers: In May 2014, the FASB issued amended guidance on contracts with customers to transfer goods or services or contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). The guidance requires an entity to recognize revenue on contracts with customers to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance requires that an entity depict the consideration by applying the following steps: Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. This amendment is to be either retrospectively adopted to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this ASU recognized at the date of initial application. Adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements. FASB ASC 718 ASU 2014-12 Compensation Stock Compensation: In June 2014, the FASB issued ASU No. 2014-12, "Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period," ("ASU 2014-12"). The amendments in ASU 2014-12 require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in ASC Topic No. 718, "Compensation - Stock Compensation" as it relates to awards with performance conditions that affect vesting to account for such awards. The amendments in ASU 2014-12 are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted. Entities may apply the amendments in ASU 2014-12 either: (a) prospectively to all awards granted or modified after the effective date; or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The Company does not anticipate that the adoption of ASU 2014-12 will have a material impact on its consolidated financial statements. FASB ASC 740 ASU 2015-17 - Balance Sheet Classification of Deferred Taxes: In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (ASU 2015-17). The FASB issued this ASU as part of its ongoing Simplification Initiative, with the objective of reducing complexity in accounting standards. The amendments in ASU 2015-17 require entities that present a classified balance sheet to classify all deferred tax liabilities and assets as a noncurrent amount. This guidance does not change the offsetting requirements for deferred tax liabilities and assets, which results in the presentation of one amount on the balance sheet. Additionally, the amendments in this ASU align the deferred income tax presentation with the requirements in International Accounting Standards (IAS) 1, Presentation of Financial Statements. The amendments in ASU 2015-17 are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company does not anticipate that the adoption of this standard will have a material impact on its consolidated financial statements. FASB ASC 842 ASU 2016-02 Leases: In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases. The ASU will also require new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating ASU 2016-02 and its impact on its consolidated financial statements. |
Note 6-stock Based Compensati20
Note 6-stock Based Compensation: Options (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Policies | |
Options | Options In 2006, the Company adopted the 2006 Long-Term Incentive Plan (the "2006 Plan"). Awards granted under the 2006 Plan have a ten-year term and may be incentive stock options, non-qualified stock options or warrants. The awards are granted at an exercise price equal to the fair market value on the date of grant and generally vest over a three or four year period. The Plan expired on December 31, 2009, therefore as of September 30, 2016, there was no unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the 2006 plan. The 2006 Plan provided for the granting of options to purchase up to 10,000,000 shares of common stock. 8,146,900 options have been issued under the plan to date of which 7,157,038 have been exercised and 692,962 have expired to date. There were 296,900 options outstanding under the 2006 Plan on its expiration date of December 31, 2009. All options issued subsequent to this date were not issued pursuant to any plan and vested upon issuance. Stock option activity during the nine months ended September 30, 2016 and 2015 follows: Weighted Average Weighted Remaining Weighted Average Average Contractual Options Outstanding Exercise Price Grant-Date Fair Value Life (Years) Options outstanding at December 31, 2014 1,518,900 $ 0.03 $ 0.10 4.51 Options granted 200,000 0.01 0.40 4.48 Options outstanding at September 30, 2015 1,718,900 $ 0.03 0.13 4.07 Options outstanding at December 31, 2015 1,718,900 $ 0.03 0.13 3.82 Options expired (296,900) 0.01 -- Options outstanding at September 30, 2016 1,422,000 $ 0.03 $ 0.13 5.85 Options outstanding at September 30, 2016 consist of: Date Number Number Exercise Expiration Issued Outstanding Exercisable Price Date June 9, 2014 213,000 213,000 $0.03 June 9, 2024 June 9, 2014 159,000 159,000 $0.03 June 9, 2024 June 9, 2014 600,000 600,000 $0.03 June 9, 2024 June 6, 2014 250,000 250,000 $0.05 June 6, 2019 March 24, 2015 200,000 200,000 $0.01 March 24, 2020 Total 1,422,000 1,422,000 |
Note 6-stock Based Compensati21
Note 6-stock Based Compensation: Warrants (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Policies | |
Warrants | Warrants In addition to our 2006 Long Term Incentive Plan, we have issued and outstanding compensatory warrants to two consultants entitling the holders to purchase a total of 275,000 shares of our common stock at an average exercise price of $0.94 per share. Warrants to purchase 25,000 shares of common stock vest upon 6 months after the Company engages in an IPO, have an exercise price of $3.00 per share, and expire 2 years after the Company engages in an IPO. Warrants to purchase 250,000 shares of common stock vest 100,000 shares on issuance (June 1, 2009), and 50,000 shares on each of the following three anniversaries of the date of issuance, have exercise prices ranging from $0.50 per share to $1.15 per share, and expire on June 1, 2019. The issuance of the compensatory warrants was not submitted to our shareholders for their approval. Warrant activity during the nine months ended September 30, 2016 and 2015 follows: Weighted (1)Weighted Weighted Average Grant-Date Average Remaining Warrants Outstanding Average Exercise Price Fair Value Contractual Life (Years) Warrants outstanding at December 31, 2014 275,000 $ 0.94 $ 0.10 4.17 No warrant activity -- -- -- Warrants outstanding at September 30, 2015 275,000 $ 0.94 $ 0.10 3.67 Warrants outstanding at December 31, 2015 275,000 $ 0.94 $ 0.10 3.42 No warrant activity -- -- -- Warrants outstanding at September 30, 2016 275,000 $ 0.94 $ 0.10 2.67 (1) Exclusive of 25,000 warrants expiring 2 years after initial IPO. Warrants outstanding at September 30, 2016 consist of: Date Number Number Exercise Expiration Issued Outstanding Exercisable Price Date April 1, 2000 25,000 25,000 $3.00 2 years after IPO June 1, 2009 100,000 100,000 $0.50 June 1, 2019 June 1, 2009 50,000 50,000 $0.65 June 1, 2019 June 1, 2009 50,000 50,000 $0.85 June 1, 2019 June 1, 2009 50,000 50,000 $1.15 June 1, 2019 Total 275,000 275,000 |