| Note 2 - Summary of Significant Accounting Policies | Principles
of Consolidation The
condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, LB Media. All
significant inter-company transactions and balances have been eliminated in consolidation. Use
of Estimates Management
uses estimates and assumptions in preparing these condensed consolidated financial statements. Those estimates and assumptions
affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues
and expenses. Examples of estimates include loss contingencies; useful lives of our tangible and intangible assets; allowances
for doubtful accounts; and stock-based compensation forfeiture rates. Examples of assumptions include: the elements comprising
a software arrangement, including the distinction between upgrades or enhancements and new products; when technological feasibility
is achieved for our products; the potential outcome of future tax consequences of events that have been recognized in our financial
statements or tax returns. Actual results could differ from those estimates. Fair
Value Measurements The
Company adopted the provisions of FASB Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurements
and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring
fair value and expands disclosure of fair value measurements. The
estimated fair value of certain financial instruments, including cash and cash equivalents are carried at historical cost basis,
which approximates their fair values because of the short-term nature of these instruments. ASC
820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants
on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may
be used to measure fair value: Level
1 — quoted prices in active markets for identical assets or liabilities Level
2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable Level
3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions) The
Company has no assets or liabilities valued at fair value on a recurring basis. Revenue
Recognition Topic
ASC 606 is effective as of the annual reporting period beginning after December 15, 2017 using either of two methods: (1) retrospective
application of Topic ASC 606 to each prior reporting period presented with the option to elect certain practical expedients as
defined within Topic ASC 606 or (2) retrospective application of Topic ASC 606 with the cumulative effect of initially applying
Topic ASC 606 recognized at the date of initial application and providing certain additional disclosures as defined per Topic
ASC 606. We adopted Topic ASC 606 pursuant to the method (2) and we determined that any cumulative effect for the initial application
did not require an adjustment to retained earnings at July 1, 2018. For
revenue recognition arrangements that we determine are within the scope of Topic ASC 606, we perform the following five steps:
(i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction
price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or
as) the entity satisfies a performance obligation. We only apply the five-step model to arrangements that meet the definition
of a contract under Topic 606, including when it is probable that the entity will collect the consideration it is entitled to
in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to
be within the scope of Topic 606, we evaluate the goods or services promised within each contract related performance obligation
and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price
that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. We
recognize revenue upon completion of our performance obligations or expiration of the contractual time to use services such as
bulk texting. Cash
and Cash Equivalents For
purposes of the condensed consolidated statements of cash flows, cash and cash equivalents includes demand deposits, time deposits,
certificates of deposit and short-term liquid investments with original maturities of three months or less when purchased. As
of December 31, 2018, and June 30, 2018, the Company did not hold any cash equivalents. The Federal Deposit Insurance Corporation
provides coverage for all accounts of up to $250,000. Accounts
Receivable, Net Accounts
receivable are stated at the amount management expects to collect. An allowance for doubtful accounts is recorded, as a charge
to bad debt expense, where collection is considered to be doubtful due to credit issues. These allowances together reflect the
Company’s estimate of potential losses inherent in accounts receivable balances, based on historical loss and known factors
impacting its customers. Management has determined that an allowance is required at December 31, 2018 and June 30, 2018 of $43,815
and $6,617, respectively. The Company does not accrue interest on past due receivables. Inventory
Inventory
consists of merchandise and is stated at the lower of cost, determined by last-in, first-out method or market. Market is determined
based on the net realizable value, with appropriate consideration given to obsolescence, excessive levels, deterioration and other
factors. At December 31, 2018 and June 30, 2018, the Company had $3,530 and $3,530 of inventory, respectively. A write-off is
recorded for any inventory deemed excessive or obsolete. No write off was necessary at December 31, 2018 and at June 30, 2018. Internal
Use Software Software
development costs associated with internal use software are incurred in three stages of development: the preliminary project stage,
the application development stage, and the post-implementation stage. Costs incurred during the preliminary project and post-implementation
stages are expensed as incurred. Certain internal and external qualifying costs incurred during the application development stage
are capitalized as property and equipment. Internal use software is amortized on a straight-line basis over its estimated useful
life of seven years, beginning when the software is ready for its intended use. During
the period ended December 31, 2018, the Company capitalized approximately $3 million of software acquisition costs. Amortization
expense related to internal use software totaled $110,328 during the period ended December 31, 2018. Identified
Intangible Assets The
Company reviews identified intangible assets and long-lived assets to be held-and-used for impairment whenever events or changes
in circumstances indicate that the carrying amount of the assets may not be recoverable. If the sum of the undiscounted expected
future cash flows over the remaining useful life of a long-lived asset is less than its carrying amount, the asset is considered
to be impaired. Impairment losses are measured as the amount by which the carrying amount of the asset exceeds the fair value
of the asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted
at a rate commensurate with the risks associated with the recovery of the asset. For the period ended December 31, 2018 and 2017,
there were no impairments of intangible assets. Stock-Based
Compensation The
Company accounts for stock-based awards to employees in accordance with applicable accounting principles, which requires compensation
expense related to share-based transactions, including employee stock options, to be measured and recognized in the financial
statements based on a determination of the fair value of the stock options. The grant date fair value is determined using the
Black-Scholes-Merton (“Black-Scholes”) pricing model. For all employee stock options, we recognize expense over the
requisite service period on an accelerated basis over the employee’s requisite service period (generally the vesting period
of the equity grant). The Company’s option pricing model requires the input of highly subjective assumptions, including
the expected stock price volatility and expected term. Any changes in these highly subjective assumptions significantly impact
stock-based compensation expense. Options
awarded to purchase shares of common stock issued to non-employees in exchange for services are accounted for as variable awards
in accordance with applicable accounting principles. Such options are valued using the Black-Scholes option pricing model. See
Note 9 for the assumptions used to calculate the fair value of stock-based employee and non-employee compensation. The
Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services
follows the provisions of ASC 505-50 Equity-Based Payments to Non-Employees Income
Taxes The
Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.”
Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and
(ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s
financial statements or tax returns. 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 the results of operations in the period
that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the
weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets
will not be realized. As of December 31, 2018, the Company had approximately $5,942,000 of net operating loss carry forward that
was unrecognized tax benefits. Under
Internal Revenue Code 382, if a corporation undergoes an “ownership change,” the corporation’s ability to use
its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. We have
not completed a study to assess whether an “ownership change” has occurred or whether there have been multiple ownership
changes since we became a “loss corporation” as defined in Section 382. Future changes in our stock ownership, which
may be outside of our control, may trigger an “ownership change”. In addition, future equity offerings or acquisitions
that have equity as a component of the purchase price could result in an “ownership change.” If an “ownership
change” has occurred or does occur in the future, utilization of the NOL carryforwards or other tax attributes may be limited,
which could potentially result in increased future tax liability to us. ASC
Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and
prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. ASC Topic 740 provides guidance on de-recognition, classification, interest
and penalties, accounting in interim periods, disclosure, and transition. There are no material uncertain tax positions at December
31, 2018. On
December 22, 2017, the U.S. government enacted the Tax Act, which made significant changes to the Internal Revenue Code of 1986,
as amended, including, but not limited to, reducing the U.S. corporate statutory tax rate and the net operating loss incurred
after December 31, 2017 can be carried forward indefinitely and the two-year net operating loss carried back was eliminated. We
continue to evaluate the impact of the Tax Act. Recently
Issued Accounting Pronouncements In
February 2016, the FASB issued authoritative guidance which changes financial reporting as it relates to leasing transactions.
Under the new guidance, lessees will be required to recognize a lease liability, measured on a discounted basis; and a right-of-use
asset, for the lease term. The new guidance is effective for annual and interim periods beginning after December 15, 2018. Early
application is permitted for all entities upon issuance. Lessees and lessors must apply a modified retrospective transition approach
for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements.
The Company is in the process of evaluating the impact of adoption of this guidance on its financial statements. In
June 2018, the FASB issued ASU 2018-07 “Improvements to Nonemployee Share-Based Payment Accounting (Topic 718)” that
expands the scope to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should
apply the requirements to nonemployee awards except for certain exemptions specified in the amendment. The guidance is effective
for fiscal years beginning after December 15, 2018, including interim reporting periods within that fiscal year. Early adoption
is permitted. The Company does not anticipate the adoption of ASU 2018-07 will have a material impact on the Company’s financial
condition or results of operations. In
August 2018, the FASB issued Accounting Standards Update No. 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software
(Subtopic 350-40), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service
Contract”(“ASU 2018-15”). ASU 2018-15 amends current guidance to align the accounting for costs incurred in
a hosting arrangement that is a service contract with the requirements for capitalizing costs associated with developing or obtaining
internal-use software. Capitalized implementation costs must be expensed over the term of the hosting arrangement and presented
in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement.
The guidance in ASU 2018-15 is effective for annual reporting periods beginning after December 15, 2019, with early adoption permitted. The
Financial Accounting Standards Board and other entities issued new or modifications to, or interpretations of, existing accounting
guidance during 2017 and 2018. Management has carefully considered the new pronouncements that altered generally accepted accounting
principles and does not believe that any other new or modified principles will have a material impact on the Company’s reported
financial position or operations in the near term. |
