SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION | 12 Months Ended |
Dec. 31, 2013 |
Summary Of Significant Accounting Policies And Organization | ' |
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION | ' |
(A) Organization |
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VizConnect, Inc. (the "Company") was formed as a corporation under the laws of the State of Nevada on October 15, 2010. The Company, through its wholly-owned subsidiary, VizConnect LLC, a Massachusetts limited liability company which was formed on April 5, 2011, provides cloud based marketing services using a combination of mobile video marketing, video storage, and cloud computing in one easy to access system for a monthly fee. |
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On February 13, 2013, VizConnect, Inc. consummated a share exchange with VizConnect LLC. Under the terms of the share exchange, the members of VizConnect LLC received 25,000,000 shares of the common stock of VizConnect, Inc. for 100% of the issued and outstanding member’s interest of VizConnect LLC. As a result of the transaction, the members of VizConnect LLC became the majority owners of VizConnect, Inc. and VizConnect LLC became a wholly-owned subsidiary. |
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The reverse merger is deemed a capital transaction and the net assets of VizConnect LLC (the accounting acquirer) are carried forward to the VizConnect, Inc. (the legal acquirer and the reporting entity) at their carrying value before the combination. The acquisition process utilizes the capital structure of VizConnect, Inc. and the assets and liabilities of VizConnect LLC, which are recorded at historical cost. The equity of VizConnect, Inc. is the historical equity of VizConnect LLC retroactively restated to reflect the number of shares issued by the Company in the transaction. In connection with this transaction, the historical shareholders of VizConnect, Inc. were deemed to have been issued 15,680,000 shares of common stock upon completion of the reverse merger. |
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On February 23, 2013, VizConnect, Inc., concluded a 4-for-1 stock split, following which there were 40,680,000 shares of common stock issued and outstanding. |
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On October 29, 2013, the Company formed a majority owned subsidiary to conduct business solely in Canada. The majority owned subsidiary is included in the consolidated financial statements of the Company at its formation. The non-controlling investors have contributed $100,000 into the subsidiary, which represents a 20% ownership. The Company owns the remaining 80% of the subsidiary. |
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(B) Basis of consolidation |
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The accompanying 2013 consolidated financial statements include the accounts of VizConnect, Inc., Vizconnect LLC and its 80% owned subsidy VizConnect Canada from the date of incorporation (October 29, 2013). The accompanying 2012 financial statements include Vizconnect, LLC. Intercompany accounts and transactions have been eliminated. |
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(C) Use of estimates |
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In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include the calculation of deferred revenue during the period and determinations of fair values of certain financial instruments. |
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(D) Cash and cash equivalents |
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The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At December 31, 2013 and 2012, the Company had no cash equivalents. |
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(E) Income Taxes |
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The Company accounts for income taxes in accordance with FASB ASC 740 "Accounting for Income Taxes". Under this approach, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and their liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. The U.S. federal statute of limitations remains open for the tax years 2011 to 2013. |
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(F) Advertising Costs |
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Advertising Costs are expensed in the period when the advertisements have reached their intended users. Advertising expense for the years ended December 31, 2013 and 2012 were $403 and $1,115 respectively. |
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(G) Software Development Costs |
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The Company expenses software development costs to be marketed to external users, before technological feasibility of such products is reached. The Company has determined that technological feasibility is reached shortly before the release of those products and as a result, the development costs incurred after the establishment of technological feasibility and before the release of those products were not material, and accordingly, were expensed as incurred. Software development costs totaled $102,809 and $108,834 for the years ended December 31, 2013 and 2012, respectively. |
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(H) Business Segments |
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The Company operates in one segment and therefore segment information is not presented. |
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(I) Selling Expenses |
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The Company incurs selling expenses under a “multi-level” compensation plan, which includes commissions for subscription sales made and bonuses for assisting associated distributors in closing initial subscription sales. Commissions are earned from direct sales as well as the sales made through the sales network they have developed. Accrued commissions payable was $42,057 and $6,436 for the years ended December 31, 2013 and 2012, respectively. |
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(J) Revenue Recognition |
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The Company recognizes revenue on arrangements in accordance with FASB ASC No. 605, “Revenue Recognition”. In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collection of the resulting receivable is reasonably assured. |
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The Company recognizes revenue from monthly subscriptions fees in the month in which services are provided. |
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The Company recognizes revenue from set up fees at the time the initial set up is complete and the fees are earned. |
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The Company recognizes revenue from distributor membership fees monthly over the one year membership period. Any fees collected in which the services are not provided are recorded as deferred revenue. |
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(K) Concentrations |
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As of December 31, 2013 and 2012, respectively, the Company has no customers whose sales account for more than 10% of total sales. |
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(L) Property and equipment |
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Property and equipment is recorded at cost. Additions and betterments are capitalized; maintenance and repairs are expensed as incurred. Depreciation is calculated using the straight-line method over the asset’s estimated useful life, which is 5 years for computers. Depreciation for the year ended December 31, 2013 and 2012 was $215 and $0, respectively. |
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(M) Derivatives |
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The Company’s capital structure includes the use of convertible debt features that are classified as derivative financial instruments. Derivative financial instruments are recognized as either assets or liabilities and are measured at fair value in accordance with FASB ASC 815 “Derivatives and Hedging”. ASC 815 requires that changes in fair value of derivative financial instruments with no hedging designation be recognized as gains (losses) in the earnings statement. Fair value measurement and disclosures are determined in accordance with FASB ASC 820 “Fair Value Measurements and Disclosures”. |
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(N) Fair Value Measurements |
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FASB ASC 820 establishes a framework for measuring fair value by creating a hierarchy for observable independent market inputs and unobservable market assumptions and expands disclosures about fair value measurements. Considerable judgment may be required in interpreting market data used to develop the estimates of fair value. Accordingly, the estimates present herein are not necessarily indicative of the amounts that could be realized in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value. |
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(O) Re-classifications |
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Certain amounts from prior periods have been reclassified to conform to the current period presentation. These reclassifications had no impact on the Company’s net loss or cash flows. |
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(P) Loss per share |
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The Company computes net loss per share in accordance with FASB ASC 260 “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. |
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The following summarizes potential anti-dilutive shares: |
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| | December | | | December | |
31, 2013 | 31, 2012 |
(number of shares) | | | | | | |
Convertible notes | | | 41,400,862 | | | | - | |
Total | | | 41,400,862 | | | | - | |
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(Q) New accounting pronouncements |
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Recent accounting pronouncements issued by the Financial Accounting Standards Board (FASB) (including its Emerging Issues Task Force), the AICPA, and the SEC, did not, or are not believed by management, to have a material impact on the Company’s present or future financial statements. |
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