1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Apptigo International Inc. and its wholly-owned subsidiary (collectively Apptigo or the Company) designs, develops, markets and sells software applications. The Company sells its products worldwide through online stores. Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of the Company. Intercompany accounts and transactions have been eliminated. The preparation of these consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. The Companys year ends on December 31. Restatement The Company entered into Secured Convertible Debentures detailed in Note 3. The company assessed the fair value of the conversion option using the Black Scholes pricing model and recorded a derivative liability for the value. The adjustment for this valuation to the derivative liability is $831,706. An adjustment to change in fair value of derivative liability is a loss of $490,424 for the quarter ended March 31, 2015. During the first quarter 2015, the company recognized a change in derivative for the convertible debenture in amount of $641,598, the resulting derivative liability balance at March 31, 2015 of $1,307,706. During the first quarter 2015, there was a change in selling general and administrative expense in the amount of $11,998 related to stock based compensation recalculation. Additionally, there are changes to interest expense related party in the amount of $8,620 and interest expense in the amount of $1,342 based on recalculations related to the secured convertible debentures. The following table provides additional details regarding the changes to the balance sheet, statement of operations and statement of cash flows for the three months ended March 31, 2015. As Reported Change Restated March 31, March 31, Assets 2015 2015 Cash $ 2,060 2,060 Due from related party 7,618 7,618 Total current assets 9,678 9,678 Furniture and Fixtures net accumulated depreciation $6,028 and $4,019 43,692 43,692 Deposits 5,592 5,592 Total assets $ 58,962 58,962 Liabilities and Stockholders' Deficit Accounts payable and accrued liabilities $ 14,270 14,270 Payroll liabilities 26,876 26,876 Convertible debenture - related party - net of discount $3,178 and $4,419 8,350 8,350 Convertible debenture - net of discount $103,963 and $38,105 95,749 (76,030 ) 19,719 Derivative liability - short term 476,000 115,974 591,974 Total current liabilities 621,245 661,189 Long term convertible debenture 203,886 (147,471 ) 56,415 Derivative liability - long term 715,732 715,732 Total liabilities 825,131 1,433,336 Commitments and contingencies Stockholders' Deficit Preferred stock, $0.001 par value: 1,000,000 authorized 145,000 and 145,000 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively Common stock, $0.001 par value: 100,000,000 authorized; 29,225,000 and 29,225,000 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively Common stock payable 1,033 1,033 Additional paid in capital 1,808,806 (122,501 ) 1,686,305 Accumulated deficit (2,625,526 ) (466,861 ) (3,092,387 ) Total stockholders' deficit (785,012 ) (1,374,374 ) Total liability and stockholders' deficit $ 40,119 58,962 As Reported Change Restated For the For the three months three months ended ended March 31, March 31, 2015 2015 Revenue $ Operating expenses Selling, general and administrative expenses 260,255 (11,998 ) 248,257 Research and development expense 33,779 33,779 Depreciation expense 2,009 2,009 Total operating expenses 296,043 284,045 Loss from operation (296,043 ) (284,045 ) Other income (expense) Interest expense - related party (709 ) (8,620 ) (9,329 ) Interest expense (18,843 ) 1,342 (17,501 ) Derivative expense (151,174 ) (490,424 ) (641,598 ) Loss before income tax (466,769 ) (952,473 ) Provision for income tax Net Loss $ (466,769 ) $ (952,473 ) Net loss per share: basic and diluted $ (0.02 ) $ (0.03 ) Weighted averages shares outstanding: basic and diluted 30,258,000 30,258,000 As Reported Change Restated For the For the three months three months ended ended March 31, March 31, 2015 2015 Cash flows from operating activities Net loss $ (466,769 ) (485,704 ) (952,473 ) Adjustments to reconcile net loss to net cash used in operating activities Depreciation 2,009 2,009 Stock-based compensation 95,965 (11,998 ) 83,967 Changes in operating assets and liabilities Accrued interest - related party 709 8,620 9,329 Accrued interest 18,843 (1,342 ) 17,501 Accounts payable and accrued liabilities (22,717 ) (22,717 ) Payroll liabilities (3,049 ) (3,049 ) Derivative Liability 151,174 490,424 641,598 Due from related party (7,618 ) (7,618 ) Net cash used in operating activities (231,453 ) (231,453 ) Cash flows from investing activities Proceeds from loan from shareholder Net cash provided by investing activities Cash flow from financing activities Repayment of convertible debenture - related party (10,000 ) (10,000 ) Proceeds from convertible debenture 234,000 234,000 Net cash provided by financing activities 224,000 224,000 Net decrease in cash and cash equivalents (7,453 ) (7,453 ) Cash and cash equivalents at beginning of period 9,513 9,513 Cash and cash equivalents at end of period $ 2,060 $ 2,060 Supplemental disclosure of cash flow information Cash paid during period for Cash paid for interest $ $ Cash paid for income taxes $ $ Nature of Business Operations Organization and Description of Business The Company was originally incorporated under the laws of the State of Nevada on October 23, 2012 under the name of Balius Corp. (Inception). Effective April 15, 2014, we acquired Apptigo Inc., a Nevada corporation incorporated on October 31, 2012 ( Apptigo At closing of the acquisition transaction, Apptigo became the Companys wholly-owned subsidiary and the Company became Apptigos parent. Thereafter, the principal shareholder of the Company cancelled 10,000,000 shares of the Companys common stock owned by him. As a result of the closing of the acquisition transaction, the Company had 8,250,000 shares of common stock outstanding and 145,000 Series A Preferred Shares outstanding, which preferred shares are convertible into 4,550,000 common shares. Following the acquisition transaction, the Company filed Amended and Restated Articles of Incorporation to change its name to Apptigo International, Inc., increase the number of authorized common shares, authorize preferred shares, and approved a 3.5-for-1 forward split of the outstanding shares, including the shares issued at the closing of the acquisition transaction. The forward stock split was effective at the opening of business on April 30, 2014. The effect of the stock split has been applied retroactively. Also, in connection with the acquisition transaction the Company filed a Certificate of Designations, Preferences and Rights for Series A Convertible Preferred Stock. Going Concern The accompanying condensed consolidated financial statements have been prepared contemplating the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has reported a net loss of $952,473 for the three months ended March 31, 2015. The Company has a net negative working capital of $651,511 as of March 31 2015. We will need additional investments in order to continue operations. Additional investments are being sought, but we cannot guarantee that we will be able to obtain such investments. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. The trading price of our common stock could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, we may incur unexpected costs and expenses, or experience unexpected cash requirements that would force us to seek alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations. The ability to successfully resolve these factors raise substantial doubt about the Companys ability to continue as a going concern. The condensed consolidated financial statements of the Company do not include any adjustments that may result from the outcome of the aforementioned uncertainties. Fair Value of Financial Instruments The Company adopted the FASB standard related to fair value measurement at inception. The standard defines fair value, establishes a framework for measuring fair value and expands disclosure of fair value measurements. The standard applies under other accounting pronouncements that require or permit fair value measurements and, accordingly, does not require any new fair value measurements. The standard clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The recorded values of long-term debt approximate their fair values, as interest approximates market rates. As a basis for considering such assumptions, the standard established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows. · Level 1: Observable inputs such as quoted prices in active markets; · Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and · Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Share-based Compensation The Company recognizes share-based compensation, including stock option grants, warrants, restricted stock grants and stock appreciation rights, at their fair value on the grant date. Share based payment awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. Compensation expense is generally recognized on a straight-line basis over the service period. Dividends The payment of dividends by the Company in the future will be at the discretion of the Board of Directors and will depend on earnings, capital requirements and financial condition, as well as other relevant factors. The Company does not intend to pay any cash dividends in the foreseeable future but intend to retain all earnings, if any, for use in the business. Cash and Cash Equivalents For purposes of these financial statements, cash and cash equivalents includes highly liquid debt instruments with maturity of less than three months. Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the valuation allowance, which would reduce the provision for income taxes. The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Intellectual Property Intellectual property is stated at cost. When retired or otherwise disposed, the related carrying value and accumulated amortization are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. Minor additions and renewals are expensed in the year incurred. Major additions and renewals are capitalized. Amortization is recorded over the estimated useful lives of the assets, generally, 3 to 15 years. Software Development Costs Research and development costs are expensed as incurred. Development costs of computer software to be sold, leased, or otherwise marketed are subject to capitalization beginning when a products technological feasibility has been established and ending when a product is available for general release to customers. In most instances, the Companys products are released soon after technological feasibility has been established. Costs incurred for development are capitalized. Amortization is recorded over the estimated useful lives of the assets, generally, 5 years. For the three months ended March 31, 2015 the company expensed $33,779 compared to $0 for the three months ended March 31, 2014, for research and development. Recent Accounting Pronouncements In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates (ASU) 2014-15 requiring an entitys management to evaluate whether there are conditions or events, considered in aggregate, that raise substantial doubt about entitys ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. On June 10, 2014, the Financial Accounting Standards Board (FASB) issued a new accounting statement that reduces some of disclosures and reporting requirements for development stage companies. The change will be in effect for the interim and annual reporting periods beginning after December 15, 2014. As of such date, among other things development stage entities will no longer be required to report inception-to-date information. The Company has elected early adoption of this pronouncement and will no longer be reporting inception-to-date information. In January 2014, the FASB issued ASU 2014-04, an update to ASC 310, "Receivables." The ASU clarifies that an in substance repossession or foreclosure occurs upon either the creditor obtaining legal title to the residential real estate property or the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. The amendments are effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2014. The amendments may be adopted using either a modified retrospective transition method or a prospective transition method. Early adoption of the guidance is permitted. The impact of this guidance is currently being evaluated by the Company, but is not expected to have a significant impact on the Company's financial position, results of operations or disclosures. Net Loss per Share Basic loss per share is computed using the weighted average number of common shares outstanding during the year. Diluted earnings per share reflect the potential dilution that could occur if potentially dilutive securities were exercised or converted to common stock. The dilutive effect of options and warrants and their equivalent is computed by application of the treasury stock method and the effect of convertible securities by the "if converted" method. Management Estimates The presentation 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 financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is computed by use of the straight-line method over the estimated useful lives of the assets, which for leasehold improvements is 15 years; 10 years for furniture and equipment; and 5 years for computer equipment. The Company capitalizes eligible costs to acquire or develop internal-use software that are incurred subsequent to the preliminary project stage. Capitalized costs related to internal-use software are amortized using the straight-line method over the estimated useful lives of the assets, which range from 5 to 7 years. Depreciation and amortization expense on property and equipment was $2,009 and $0 for the three months ended March 31, 2015 and 2014, respectively. |