| Summary of Significant Accounting Policies | Note
2. Summary of Significant Accounting Policies Going
Concern The accompanying
financial statements have been prepared in conformity with GAAP, which contemplates our continuation as a going concern. We have
incurred losses to date of $2,360,009. To date we have funded our operations through advances from a related party, issuance of
convertible debt, and the sale of our common stock. We intend to raise additional funding through third party equity or debt financing.
There is no certainty that funding will be available as needed. These factors raise substantial doubt about our ability to continue
operating as a going concern. Our ability to continue our operations as a going concern, realize the carrying value of our assets,
and discharge our liabilities in the normal course of business is dependent upon our ability to raise capital sufficient to fund
our commitments and ongoing losses, and ultimately generate profitable operations. Unaudited
Interim Financial Statements The accompanying
unaudited condensed consolidated financial statements of LifeApps Digital Media Inc. at June 30, 2015 and 2014 have been
prepared in accordance with generally accepted accounting principles (GAAP) for interim financial statements, instructions
to Form 10-Q, and Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements
prepared in accordance with GAAP have been condensed or omitted. These condensed consolidated financial statements should
be read in conjunction with the financial statements and notes thereto included in our annual report on Form 10-K for the year
ended December 31, 2014. In managements opinion, all adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation to make our financial statements not misleading have been included. The results of operations
for the periods ended June 30, 2015 and 2014 presented are not necessarily indicative of the results to be expected for the full
year. The December 31, 2014 balance sheet has been derived from our audited financial statements included in our annual report
on Form 10-K for the year ended December 31, 2014. Principles
of Consolidation The accompanying
consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries, LifeApps Inc. and Sports
One Group Inc. All material inter-company transactions and balances have been eliminated in consolidation. Use of
Estimates The preparation
of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may
differ from these estimates. Accounts
Receivable A significant
majority of our sales are through credit cards and other electronic payment methods. When we do grant credit to our customers
it is generally in the form of short term accounts receivables, normally due in 30 days. The credit worthiness of the customer
is evaluated prior to the sale. During the year ended December 31, 2014 we recorded a reserve for doubtful accounts of $5,109.
No adjustment to the reserve was deemed appropriate during the three months and six months ended June 30, 2015. Intangibles Intangibles,
which include websites and databases acquired, internet domain name costs, and customer lists, are being amortized over the expected
useful lives which we estimate to be three to five years. In accordance with ASC Topic 350 Intangibles Goodwill and
Other Fixed
Assets Fixed assets
are stated at cost less accumulated depreciation and accumulated impairment loss, if any. Depreciation is calculated on a straight
line basis over the estimated useful lives of the assets. The estimated useful lives used for financial statement purposes are: Furniture
and equipment: 3 years Revenue
Recognition Revenue
is derived primarily from the sale of sports and fitness apparel and equipment, and software applications designed for use on
mobile devices such as smart phones and tablets. Revenue is recognized only when persuasive evidence of an arrangement exists,
the fee is fixed or determinable, the product or service has been delivered, and collectability is probable. We sell
our software directly via Internet download through third party agents. We recognize revenue when payment is received from the
agent. Payment is received net of commission paid to the agent, usually 70% to us and 30% to the agent. We record the net amount
received as revenue. We also
publish and sell digital magazines through the internet. Magazines can be purchased as individual volumes or as a subscription.
To date we have not had any subscription sales. Cost
of Revenue Cost of
revenue includes the cost of amounts paid for articles, photography, editorial and production cost of the magazine and ongoing
web hosting costs. Cost of revenue related to product sales includes the direct cost of those products sold. Research
and development, Website Development Costs, and Software Development Costs All research
and development costs are expensed as incurred. Software development costs eligible for capitalization under ASC 350-50, Website
Development Cost, and ASC 985-20, Software-Costs of Software to be Sold, Leased or Marketed, were not material to our financial
statements for the three and six months ended June 30, 2015 and 2014. Research and development expenses amounted to $ - and $799
for the three months ended June 30, 2015 and 2014, respectively, and $7,797 and $2,561 for six months ended June 30, 2015 and
2014, respectively. Research and development expenses were included in general and administrative expenses. Advertising
Costs We recognize
advertising expense when incurred. Advertising expense was $912 and $0 for the three months ended June 30, 2015 and 2014, respectively,
and $2,851 and $919 for the six months ended June 30, 2015 and 2014, and, respectively. Rent
Expense We recognizes
rent expense on a straight-line basis over the reasonably assured lease term as defined in ASC Topic 840, Leases (ASC 840).
Our lease is short term and will be renewed on a month to month basis. Rent expense for the was $1,260 and $1,935 for the three
months ended June 30, 2015 and 2014, respectively, and for the six months ended June 30, 2015 and 2014, was $3,354 and $2,896. Equity-Based
Compensation Stock-based
compensation is presented in accordance with the guidance of ASC Topic 718, Compensation Stock Compensation In prior
periods we issued options to purchase our common stock to employees under our 2012 Equity Incentive Plan which is a qualified
stock option plan. We used
the Black-Scholes option-pricing model (Black-Scholes model) to determine fair value. The determination of fair value
of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions
regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our expected stock
price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. Although the
fair value of employee stock options is determined in accordance with ASC 718 using an option-pricing model, that value may not
be indicative of the fair value observed in a willing buyer/willing seller market transaction. There were
no options granted during the three months and six months ended June 30, 2015 or 2014. Total compensation
expense of all stock based compensation recognized under ASC 718 was $0 and $6,294 for the three months ended June 30, 2015 and
2014, respectively, and for the six months ended June 30, 2015 and 2014 was $0 and $14,876, respectively. Income
Taxes The provision
for income taxes is determined in accordance with the provisions of ASC Topic 740, Accounting for Income Taxes (ASC 740).
Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax
assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Any 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. ASC 740
prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements,
uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized
in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities.
Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50%
likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant
facts. For the
three and six months ended June 30, 2015 and 2014 we did not have any interest and penalties or any significant unrecognized
uncertain tax positions. Recent
Pronouncements From time
to time, new accounting pronouncements are issued that we adopt as of the specified effective date. We believe that the impact
of recently issued standards that are not yet effective may have an impact on our results of operations and financial position.
ASU Update 2014-15 Presentation of Financial Statements-Going Concern (Sub Topic 205-40) issued August 27, 2014 by FASB defines
managements responsibility to evaluate whether there is substantial doubt about an organizations ability to continue
as a going concern. The additional disclosure requirement is effective after December 15, 2016 and will be evaluated as to impact
and implemented accordingly. |
