Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 31, 2017 | Jun. 30, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | Innerscope Advertising Agency, Inc. | ||
Entity Central Index Key | 1,609,139 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 60,906,000 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Current Assets: | ||
Cash and cash equivalents | $ 493,514 | $ 67,841 |
Deferred commissions, stockholder | 133,334 | |
Prepaid assets and inventory | 8,545 | |
Notes and interest receivable, current portion, officer | 12,958 | 21,311 |
Accounts receivable from related party | 99,496 | |
Total current assets | 648,351 | 188,648 |
Security Deposit | 7,026 | |
Property, furniture and fixtures and equipment, net of accumulated depreciation of $184 (2016) | 2,467 | |
Notes and interest receivable, long term portion, officer | 5,125 | |
Total assets | 655,943 | 195,674 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 42,939 | 28,898 |
Accounts payable to related party | 13,048 | |
Commissions payable - stockholder | 96,000 | |
Officer salaries payable | 6,731 | |
Income tax payable | 38,482 | |
Deferred revenue | 222,223 | |
Total current liabilities | 419,423 | 28,898 |
Stockholders' Equity: | ||
Common stock, $0.0001 par value; 225,000,000 shares authorized; 60,906,000 shares issued and outstanding | 6,090 | 6,090 |
Preferred stock, $0.0001 par value; 25,000,000 shares authorized; no shares issued | ||
Additional paid-in capital | 104,110 | 104,110 |
Retained earnings | 126,320 | 56,576 |
Total stockholders' equity | 236,520 | 166,776 |
Total liabilities and stockholders' equity | $ 655,943 | $ 195,674 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Accumulated depreciation of property, furniture and fixtures and equipment | $ 184 | |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 225,000,000 | 225,000,000 |
Common stock, shares issued | 60,906,000 | 60,906,000 |
Common stock, shares outstanding | 60,906,000 | 60,906,000 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues: | ||
Revenues, related party | $ 917,020 | $ 720,000 |
Revenues, other | 980,668 | 152,329 |
Total revenues | 1,897,688 | 872,329 |
Cost of sales | 776,607 | 143,484 |
Gross profit | 1,121,081 | 728,844 |
Operating Expenses: | ||
Compensation and benefits | 612,114 | 484,846 |
Bad debt expense | 1,144 | 14,474 |
Professional fees | 136,828 | 77,838 |
Consulting fees, stockholder | 241,666 | |
Rent, related party | 33,078 | 54,000 |
Other general and administrative | 51,624 | 10,077 |
Total operating expenses | 1,076,454 | 641,235 |
Income from operations | 44,627 | 87,609 |
Other Income: | ||
Gain on contract cancellation | 64,000 | |
Interest income, including $299 (2016) and $308 (2015) from officer | 317 | 308 |
Interest expense and finance charges | (2,148) | |
Total other income, net | 62,169 | 308 |
Income before income taxes | 106,796 | 87,917 |
Income tax provision | 37,052 | 17,064 |
Net income | $ 69,744 | $ 70,853 |
Basic and diluted income per share | $ 0 | $ 0 |
Weighted average number of common shares outstanding Basic and diluted | 60,906,000 | 60,906,000 |
CONSOLIDATED STATEMENTS OF OPE5
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement [Abstract] | ||
Officer portion of interest income | $ 299 | $ 308 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Additional Paid-in Capital | Retained Earnings (deficit) | Total |
Beginning balance, shares at Dec. 31, 2014 | 60,906,000 | |||
Beginning balance, amount at Dec. 31, 2014 | $ 6,090 | $ 104,110 | $ (14,277) | $ 95,923 |
Net income | 70,853 | 70,853 | ||
Ending balance, shares at Dec. 31, 2015 | 60,906,000 | |||
Ending balance, amount at Dec. 31, 2015 | $ 6,090 | 104,110 | 56,576 | 166,776 |
Net income | 69,744 | 69,744 | ||
Ending balance, shares at Dec. 31, 2016 | 60,906,000 | |||
Ending balance, amount at Dec. 31, 2016 | $ 6,090 | $ 104,110 | $ 126,320 | $ 236,520 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | ||
Net income | $ 69,744 | $ 70,853 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation | 184 | |
Bad debt expense | 14,473 | |
Security deposit used for rent payment | 7,026 | |
Changes in operating assets and liabilities: | ||
Decrease (increase) in Interest receivable, related party | 665 | (308) |
Decrease (increase) in Accounts receivable | (14,473) | |
Decrease (increase) in Inventory | (2,321) | |
Decrease (increase) in Deferred Commissions, stockholder | (133,334) | |
Decrease (increase) in Prepaid assets | (6,223) | |
Decrease (increase) in Due from related party | 99,496 | (24,851) |
Increase in Accounts payable and accrued expenses | 52,524 | 25,201 |
Increase in Commissions payable, stockholder | 96,000 | |
Increase in Officer salaries payable | 6,731 | |
Increase in Deferred revenue | 222,223 | |
Increase in Due to related party | 13,048 | |
Net cash provided by operating activities | 425,761 | 70,895 |
Cash flows from investing activities: | ||
Payment of security deposit | (4,026) | |
Purchase of office and computer equipment | (2,651) | |
Repayments of shareholder loans receivable | 2,563 | |
Net cash used in investing activities | (88) | (4,026) |
Cash flows from financing activities | ||
Net cash provided by financing activities | ||
Net increase in cash and cash equivalents | 425,673 | 66,869 |
Cash and cash equivalents, Beginning of year | 67,841 | 972 |
Cash and cash equivalents, End of year | 493,514 | 67,841 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 2,148 | |
Cash paid for income taxes | $ 24,758 |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | NOTE 1 - ORGANIZATION Business InnerScope Advertising Agency, Inc. (Company, Innerscope or ISAA) is a Nevada Corporation incorporated June 15, 2012, with its principal place of business in Roseville, California. ISAA was formed to provide advertising and marketing services to retail establishments in the hearing device industry. On June 20, 2012, ISAA entered into an Acquisition and Plan of Share Exchange with InnerScope Advertising Agency, LLC (ILLC), a commonly owned entity, whereby ISAA acquired 100% of ILLC. On November 1, 2013, ISAA entered into an Acquisition and Plan of Share Exchange with Intela-Hear, LLC (Intela-Hear), a commonly owned entity, whereby ISAA acquired 100% of the outstanding equity of Intela-Hear in exchange for 27,000,000 shares of the Companys common stock. This resulted in Intela-Hear becoming a wholly-owned subsidiary of the Company. ISAA provides a comprehensive range of services, grouped into four fundamental disciplines: advertising/marketing, customer relationship management, public relations and specialty communications. The Company serves the retail hearing aid dispensing community through generating traffic and consumer interest for hearing aid dispensing practices. During the years ended December 31, 2016 and 2015, approximately 48% and 83%, respectively, of the Companys revenue was generated from a related party. The Company and the related party agreed to cancel the Marketing Agreement which generated these revenues as a result of the sale by the related party of substantially all of their assets. . On August 5, 2016, the Company along with Mark Moore (Mark, the Companys chairman), Matthew Moore (Matthew, the Companys Chief Executive Officer) and Kim Moore (Kim, the Companys Chief Financial Officer) entered into a Store Expansion Consulting Agreement (the Expansion Agreement) Mark, Matthew and Kim are herein referred to collectively as the Moores. Pursuant to the Expansion Agreement, the Company and the Moores will be responsible for all physical plant and marketing details for new store openings during the initial term of six-months. The Expansion Agreement was cancelled on January 6, 2017. The Companys client has decided to do their own marketing in-house and eliminate this out-sourced contract, and has decided to delay the opening of any new stores. Also on August 5, 2016, the Company and the Moores entered into a Consulting Agreement (the Consulting Agreement) with the same party as the store Expansion Agreement. Under the Consulting Agreement, including the Non-Compete provision covering a ten mile radius of any retail store, the Company and the Moores will provide unlimited licensing of the Intela-Hear brand name, exclusive access to the Aware Aural Rehab Program within 10 miles of retail stores, exclusive territory of all services within 10 miles of retail stores and 40 hours per month of various consulting services. The Consulting Agreement continues until January 31, 2019, unless terminated for cause, as defined in the Consulting Agreement. The Company recognized $402,777 of revenue from the Consulting Agreement for the year ended December 31, 2016. Effective August 5, 2016, the Company entered into a Marketing Agreement (the Marketing Agreement). Pursuant to the Marketing Agreement, the Company will provide marketing concepts and designs to promote its products and use the Companys advertising services for an initial six month period. Pursuant to the Marketing Agreement and the current structure, the Company will receive $50,000 per month. On January 6, 2017, the Marketing Agreement was cancelled. For the year ended December 31, 2016, the Company recognized $193,548 of revenue from the Marketing Agreement. On October 28, 2016, a majority of the Companys shareholders, based on the Companys Board of Directors (the BOD) recommendation, approved a forward split of the common stock whereby an additional two shares of common stock will be issued for every share of common stock outstanding (the Forward Split). The Company filed Amended and Restated Articles of Incorporation with the State of Nevada on October 31, 2016. All share amounts for all periods presented have been retroactively adjusted to reflect the Forward Split. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING PROUNCEMENTS | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING PROUNCEMENTS | NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING PRONOUNCEMENTS Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles in the United States of America ("US GAAP"). The consolidated financial statements of the Company include the consolidated accounts of Innerscope and its wholly owned subsidiaries ILLC and Intela-Hear. All intercompany accounts and transactions have been eliminated in consolidation. Emerging Growth Companies The Company qualifies as an emerging growth company under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to take advantage of the benefits of this extended transition period. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period. Significant estimates relied upon in preparing these financial statements include collectability of notes receivable from an officer and through July 31, 2016, the allocation of our Presidents compensation to the Company. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with an original term of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value. Cash and cash equivalent balances may, at certain times, exceed federally insured limits Deferred Commission and Commission Payable, Stockholder The Company records deferred commission when cash has been paid, but the related services have not been provided by the party (stockholder). Commission expense will be recognized when the services are provided. As of December 31, 2016, the Company has advanced $133,334, which the Company estimates will be expensed during the quarter ending March 31, 2017. The Company also records commissions payable, stockholder, when services have been provided and the Company has not yet paid for the services. As of December 31, 2016, the Company owed the stockholder $96,000, which was paid in January 2017. Notes Receivable, Officer The Company records notes receivable when a recipient has issued a note to the Company in exchange for cash. The Company records as a current asset, any portion of the note that is due in the subsequent twelve (12) months for the date of the balance sheet, and any payments due in excess of twelve months of the balance sheet are classified as long term. As of December 31, 2016, the Company $12,958 is due by December 31, 2017 and $5,125 is due after December 31, 2017. Revenue Recognition The Company recognizes revenue in accordance with FASB ASC 605, Revenue Recognition. ASC 605 requires that four basic criteria are met (1) persuasive evidence of an arrangement exists, (2) delivery of products and services has occurred, (3) the fee is fixed or determinable and (4) collectability is reasonably assured. The Company recognizes revenue during the period in which the service is performed. Deferred Revenue The Company records deferred revenue from the Consulting Agreements when cash has been received, but the related services have not been provided. Deferred revenue will be recognized when the services are provided and the terms of the agreements have been fulfilled. As of December 31, 2016, the Company has deferred revenue of $222,223 related to the Consulting Agreement. Fair Value of Financial Instruments The Company's financial instruments consist primarily of cash, accounts receivable, due from related party, notes with interest receivable officer and accounts payable. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities. The estimated fair value is not necessarily indicative of the amounts the Company would realize in a current market exchange or from future earnings or cash flows. Income Taxes The Company accounts for income taxes in accordance with ASC 740-10, Income Taxes. Deferred tax assets and liabilities are recognized to reflect the estimated future tax effects, calculated at the tax rate expected to be in effect at the time of realization. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment. ASC 740-10 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. Interest and penalties are classified as a component of interest and other expenses. To date, the Company has not been assessed, nor paid, any interest or penalties. Uncertain tax positions are measured and recorded by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized. Earnings (Loss) Per Share The Company reports earnings (loss) per share in accordance with ASC 260, "Earnings per Share." Basic earnings (loss) per share is computed by dividing net income (loss), after deducting preferred stock dividends accumulated during the period, by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net loss by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. As of December 31, 2016 and 2015, the Company did not have any outstanding common stock equivalents or any other potentially dilutive securities. Recent Accounting Pronouncements Recent accounting pronouncements issued by the FASB and the SEC did not have, or are not believed by management to have, a material impact on the Company's present or future consolidated financial statements. |
SALES CONCENTRATION AND CONCENT
SALES CONCENTRATION AND CONCENTRATION OF CREDIT RISK | 12 Months Ended |
Dec. 31, 2016 | |
Risks and Uncertainties [Abstract] | |
SALES CONCENTRATION AND CONCENTRATION OF CREDIT RISK | NOTE 3 SALES CONCENTRATION AND CONCENTRATION OF CREDIT RISK Cash Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant risk on its cash due to the financial position of the depository institution in which those deposits are held. Sales Concentration Following is a summary of customers who accounted for more than ten percent (10%) of the Companys revenues for the years ended December 31, 2016 and 2015 and the accounts receivable balance. Customer Sales % Year Ended December 31, 2016 Sales % Year Ended December 31, 2015 Amount Due as of December 31, 2016 Customer A, Related Party 48.3 % 82.5 % $ Customer B 17.5 % $ Customer C 51.7 % $ |
NOTE RECEIVABLE, OFFICER
NOTE RECEIVABLE, OFFICER | 12 Months Ended |
Dec. 31, 2016 | |
Receivables [Abstract] | |
NOTE RECEIVABLE, OFFICER | NOTE 4 NOTE RECEIVABLE, OFFICER On April 1, and June 25, 2013, in exchange for two notes receivable, the Company loaned the President of the Company $10,000 and $10,500, respectively. The terms of the notes include an interest rate of 1.5% per annum and the notes, as amended are due on their fifth year anniversary, with quarterly payment beginning October 1, 2016. Interest income, related party of $299 and $308 was recorded for the years ended December 31, 2016 and 2015, respectively. As of December 31, 2016 and 2015, notes and interest receivable, related party was $18,063 and $21,311, respectively. Principal amounts due in the next 12 months of the balance sheet date are shown as a current asset and amounts due after 12 months are shown as a long-term asset. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 5 RELATED PARTY TRANSACTIONS The Company loaned the President $20,500 during the year ended December 31, 2013 (see Note 4). The Company recorded interest income of $299 and $308 for the years ended December 31, 2016 and 2015, respectively. Pursuant to a Marketing Agreement (cancelled August 5, 2016), the Company provided marketing programs to promote and sell hearing aid instruments and related devices to Moore Family Hearing Company (MFHC). MFHC owned and operated retail hearing aid stores. Based on common control of MFHC and the Company, all transactions with MFHC are classified as related party transactions. On August 8, 2016, in consideration of $128,000 (the Cancellation Fee), MFHC and the Company agreed to cancel the Marketing Agreement as a result of the sale by MFHC of substantially all of their assets (see Note 6). On August 11, 2016, MFHC paid $229,622 to the Company (inclusive of the balance owed as of June 30, 2016, the Cancellation Fee and other related party activity). Pursuant to the Marketing Agreement, beginning in January 2014, the monthly fee was increased from $2,500 to $3,200 per retail location. For January through June 2015, there were 18 MFHC retail stores and one store was added July 1, 2015. From January 1, 2016 thru August 5, 2016, there were 20 stores resulting in revenue of $458,667 and $720,000 for the years ended December 31, 2016 and 2015, respectively. Also, during the year ended December 31, 2016, the Company invoiced MFHC $330,353 for the production, printing and mailing of direct mail advertising materials. Lastly, the Company recognized $128,000 from the Cancellation Fee of the Marketing Agreement as related party income for the year ended December 31, 2016. The Company has offset the accounts receivable owed from MFHC for expenses of the Company that have been paid by MFHC. As a result of these payments in addition to MFHCs payments to the Company during the year ended December 31, 2016, the balance due to MFHC as of December 31, 2016 was $13,048 and the balance due from MFHC as of December 31, 2015 was $99,496. On April 1, 2013, the Company entered into a five year sublease agreement with MFHC to sublease approximately 729 square feet of office space for $1,500 per month. The monthly rent reduced the amounts owed to the Company from MFHC for the marketing services provided to MFHC. For the years ended December 31, 2016 and 2015, the Company expensed $18,000 per year related to this lease. On February 1, 2016, the Company entered into a one year sublease agreement with MFHC to sublease approximately 2,119 square feet of office space for $4,026 per month. The monthly rent reduced the amounts owed to the Company from MFHC for the marketing services provided to MFHC. Effective April 30, 2016, MFHC released the Company from the sublease. For the year ended December 31, 2016, the Company expensed $15,078, respectively, related to this lease. Prior to August 1, 2016, the Companys President was being compensated from MFHC, as he also held a position with MFHC. During that time the Company estimated the portion of the Presidents salary that should be allocated to the Company, and subsequent to August 1, 2016, the Company agreed to compensation of $225,000 per year. Effective August 1, 2016, the Company agreed to compensate our Chief Financial Officer $125,000 per annum. On November 15, 2016, the Company entered into an employment agreement with our CEO and CFO which includes an annual base salary of $225,000 and $125,000, respectively. The Company has expensed $117,522 and $50,925 for the President, for the years ended December 31, 2016, and 2015, respectively and the Company recognized $52,885 of expense for the CFO for the year ended December 31, 2016. In November 2016, the Chairman formed a California limited liability Company (LLC), for the purpose of providing consulting services to the Company. The Company entered into an agreement with the LLC and paid the LLC, $375,000 during the year ended December 31, 2016 for services performed and to be performed. Of the $375,000 amount paid, $241,667 was recognized as consulting fees- stockholder for the year ended December 31, 2016, and the remaining $133,334 was recorded as deferred commissions- stockholder as of December 31, 2016, to be recognized as an expense when the services are provided in 2017. Additionally, the Company has accrued and recorded $96,000 in other expense- stockholder and $96,000 was recorded as commissions payable, stockholder, to be recognized as an expense when the services are provided. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 6 INCOME TAXES Deferred income taxes reflect the net tax effects of operating loss and tax credit carry forwards and temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Due to the uncertainty of the Companys ability to realize the benefit of the deferred tax assets, the deferred tax assets are fully offset by a valuation allowance at December 31, 2016 and 2015. Income tax expense for 2016 and 2015 is as follows: 2016 2015 Current: Federal $ 27,611 $ 11,300 State 9,441 5,764 37,052 17,064 As of December 31, 2016 and 2015, there were no deferred tax assets or liabilities. A reconciliation between the expected tax expense (benefit) and the effective tax rate for the years ended December 31, 2016 and 2015 are as follows: 2016 2015 Statutory federal income tax rate 25.85 % 27.22 % State taxes, net of federal income tax 8.84 % 13.88 % Effect of change in valuation allowance (15.26 )% 34.69 % 25.84 % |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and contingencies | |
COMMITMENTS AND CONTINGENCIES | NOTE 7 COMMITMENTS AND CONTINGENCIES Lease Agreements On April 1, 2013, the Company entered into a five year sublease agreement with MFHC to sublease approximately 729 square feet of office space for $1,500 per month. The monthly rent reduced the amounts owed to the Company from MFHC for the marketing services provided to MFHC. On February 1, 2014, the Company entered into a two year sublease agreement for approximately 2,119 square feet of office space in Roseville, Ca, for $3,000 per month. Effective February 1, 2016, the Company entered into a one year sublease for office space from MFHC for a monthly cost of $4,026. On February 1, 2017, the Company and MFHC terminated the above leases and the Company agreed to a month to month lease directly with the landlord for $8,436 per month. The Company is planning to relocate its office space beginning on or around May 1, 2017, at which time it will be leasing office space from a related party. Consulting Agreements Effective June 20, 2012, the Company entered into an eighteen month Business Consulting Agreement (the BCA). Pursuant to the BCA, the consultant is to assist the Company in becoming a public company and the Company agreed to a monthly compensation of $2,500 and the issuance of the amount of shares equal to 4.9% of the outstanding shares of the Company at all times until the completion of the Transaction. The Company has issued the consultant 2,940,000 shares of common stock. The Company continues to use the services of the consultant on a month to month basis at the rate of $2,500 per month. For the years ended December 31, 2016 and 2015, the Company has recorded expenses of $30,000 in professional fees. On August 5, 2016, the Company along with Mark Moore (Mark, the Companys chairman), Matthew Moore (Matthew, the Companys Chief Executive Officer) and Kim Moore (Kim, the Companys Chief Financial Officer) entered into a Store Expansion Consulting Agreement (the Expansion Agreement) Mark, Matthew and Kim are herein referred to collectively as the Moores. Pursuant to the Expansion Agreement, the Company and the Moores will be responsible for all physical plant and marketing details for new store openings during the initial term of six-months. The Expansion Agreement was cancelled on January 6, 2017. The Companys client has decided to do their own marketing in-house and eliminate this out-sourced contract, and has decided to delay the opening of any new stores. Also on August 5, 2016, the Company and the Moores entered into a Consulting Agreement (the Consulting Agreement) with the same party as the store Expansion Agreement. Under the Consulting Agreement, including the Non-Compete provision covering a ten mile radius of any retail store, the Company and the Moores will provide unlimited licensing of the Intela-Hear brand name, exclusive access to the Aware Aural Rehab Program within 10 miles of retail stores, exclusive territory of all services within 10 miles of retail stores and 40 hours per month of various consulting services. The Consulting Agreement continues until January 31, 2019, unless terminated for cause, as defined in the Consulting Agreement. The Company recognized $402,777 of revenue from the Consulting Agreement for the year ended December 31, 2016. Effective August 5, 2016, the Company entered into a Marketing Agreement (the Marketing Agreement). Pursuant to the Marketing Agreement, the Company will provide marketing concepts and designs to promote its products and use the Companys advertising services for an initial six month period. Pursuant to the Marketing Agreement and the current structure, the Company will receive $50,000 per month. On January 6, 2017, the Marketing Agreement was cancelled. For the year ended December 31, 2016, the Company recognized $193,548 of revenue from the Marketing Agreement. Legal On December 2, 2016, legal action was filed against the Company, the members of its Board of Directors, in their individual capacities and not as Members of the Board, its officers, Moore Family Hearing Company, and others by the People of the State of California through the deputy district attorneys for the counties of Sacramento, Contra Costa, Sonoma, Yolo, and Placer. The title of the case is The People of the State of California v. McDonald Hearing Aid Center, Inc., et al In this lawsuit, the People of the State of California sought civil penalties from defendants totaling at least six million dollars ($6,000,000), restitution, and injunctive relief based on allegations of false advertising, violations of section 238 of title 16 of the Code of Federal Regulations, and unfair business practices in the course of advertising, interacting, and selling hearing aids to the consumer public. For the period of time the People of the State of California were claiming said violations and seeking damages, the Company was not engaged in conducting direct mailing campaigns involving the allegedly false and misleading advertisements, nor was the Company providing direct mailing services to the other named defendants during the period of alleged violation. For this reason, the Company believed the lawsuit filed against it by the State of California was frivolous and without merit and defended accordingly. As stated above, the case was settled pursuant to a stipulated judgment, whereby parties others than Innerscope agreed to pay a fine to the State of California, with no admission of guilt or wrongdoing. Innerscope was not a party to the fine paid and was dismissed with prejudice and with no obligation to pay any of the amount paid to the State of California. The case is now closed. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 8 STOCKHOLDERS EQUITY COMMON STOCK As of December 31, 2016, there are 60,906,000 shares of common stock outstanding. PREFERRED STOCK The Company has 25,000,000 authorized shares of $0.0001 preferred stock. As of December 31, 2016 there were no shares of preferred stock issued and outstanding. |
GOING CONCERN AND MANAGEMENT'S
GOING CONCERN AND MANAGEMENT'S PLANS | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN AND MANAGEMENT'S PLANS | NOTE 9 GOING CONCERN AND MANAGEMENTS PLANS The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. During the year ended December 31, 2016 the Company had net income of $69,744 and generated cash of $425,761 in operations. Through August 5, 2016, the Company was dependent on the Marketing Agreement with MFHC. The Company and MFHC agreed to cancel the Marketing Agreement (which combined with other services the Company performed for MFHC generated revenues of $917,020 for the year ended December 31, 2016) as a result of the sale by MFHC of substantially all of their assets. The Store Expansion and Marketing Agreements were cancelled January 2, 2017, retroactive to December 1, 2016 (see Note 7). These conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Managements Plans The Companys plans include the realization of the Consulting Agreement to provide the Company with working capital. The Company plans also include setting up an alliance (the Alliance). On April 2, 2013, The Company executed a 10 Year Supply Agreement with GN Hearing Care Corporation, DBA as GN Resound (GN Resound), one of the worlds leading manufacturers of hearing devices. This supply agreement enables the Company to offer hearing aids to independent hearing aid practitioners. The Alliance will setup members to sell private label hearing devices that are manufactured and shipped by GN ReSound. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 10 SUBSEQUENT EVENTS Management has evaluated subsequent events through March 31, 2017, which is the date the financial statements were available for issuance. |