| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3. SUMMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated
financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United
States of America for interim financial information and with the instructions to Article 8 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by accounting principles generally accepted in the United States of
America for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for
a fair presentation have been included. Operating results for the three month period ended March 31, 2019 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2019. The unaudited condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company's Form 10-K
filed on March 29, 2019. Principles of Consolidation The unaudited condensed consolidated
financial statements include the accounts and transactions of the Company and its wholly-owned subsidiary, Vi3 Technologies, Inc.
All significant inter-company accounts and transactions are 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. Actual results
could differ from those estimates. Revenue Recognition In May 2014, the FASB issued ASU
2014-09, Revenue from Contracts with Customers: Topic 606 which supersedes nearly all existing revenue recognition guidance under
GAAP. The core principle of Topic 606 is to recognize revenues when promised goods or services are transferred to customers in
an amount that reflects the consideration that is expected to be received for those goods or services. Topic 606 defines a five-step
process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the
revenue recognition process than are required under existing GAAP, including identifying performance obligations in the contract,
estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each
separate performance obligation, among others. Topic 606 also provides guidance on the recognition of costs related to obtaining
customer contracts. Topic 606 was effective as of January
1, 2018 using either of two methods: (1) retrospective application of Topic 606 to each prior reporting period presented with the
option to elect certain practical expedients as defined within Topic 606 or (2) retrospective application of Topic 606 with the
cumulative effect of initially applying Topic 606 recognized at the date of initial application and providing certain additional
disclosures as defined per Topic 606. We adopted Topic 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 January 1, 2018. Project based, services revenue is
recognized when the professional consulting, maintenance or other ancillary services are provided over time to the customer. The Company provides recurring services.
There are two components to the recurring services; set-up revenues are recognized upon completion of the set-up procedures and
the monthly recurring revenue is recognized as services are rendered. The Company provides customers with
payment days. In
determining the transaction price, the Company does not adjust the promised amount of consideration for the effects of a significant
financing component as the Company expects, at contract inception, that the period between when the entity transfers a promised
good or service to a customer and when the customer pays for that good or service will be one year or less. Deferred Revenue Deferred revenues primarily consist of monthly
service fees and implementation fees for future services which will be earned as services are performed over the contractual or
stated period, which generally ranges from three to twelve months. As of March 31, 2019 and December 31, 2018, there was deferred
revenue of $239,284 and $0, respectively. Cash and Cash Equivalents For purposes of the condensed consolidated
statements of cash flows, the Company considers all highly liquid investments with a maturity of three months or less when purchased
to be cash equivalents. The Company’s cash balances are primarily
maintained at two separate banks. Balances are insured by the Federal Deposit Insurance Corporation subject to certain limitations. Accounts Receivable Accounts receivable are stated at the amounts
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. The Company
recorded an allowance for doubtful accounts of $5,000 and $0 as of March 31, 2019 and December 31, 2018, respectively. The Company
does not accrue interest on past due receivables. Intangible Assets Customer contracts acquired were recorded at
their estimated fair value at the date of acquisition and are being amortized over their estimated useful life of five years using
the straight-line method. Impairment of Long-lived Assets The Company records an impairment of long-lived
assets used in operations, other than goodwill, when events or circumstances indicate that the asset might be impaired and the
estimated undiscounted cash flows to be generated by those assets over their remaining lives are less than the carrying amount
of those items. The net carrying value of assets not recoverable is reduced to fair value, which is typically calculated using
the discounted cash flow method. The Company did not record any impairment during the three months ended March 31, 2019 and March
31, 2018. Concentration of Risk Financial instruments, which potentially subject
the Company to concentrations of credit risk, are cash and accounts receivable. See Note 15 for significant customer concentration
disclosure. Cash is maintained with two separate major
financial institutions in the United States and may exceed the amount of insurance provided on such deposits. Generally, these
deposits may be redeemed upon demand, and, therefore, bear minimal risk. Equipment and Software Licenses Equipment and software licenses are stated
at cost. Depreciation is calculated using the straight-line method over an estimated useful life of one to ten years. Earnings and Loss per Share Basic loss per share is computed by dividing
net loss attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted loss per
share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental
shares issuable upon the exercise of stock options and warrants and the conversion of notes payable to common stock. In periods
in which a net loss has been incurred, all potentially dilutive common shares are considered anti-dilutive and thus are excluded
from the calculation. There were approximately 9,101,677 and 8,425,743 of common stock equivalents excluded for the three months
ended March 31, 2019 and 2018, respectively because their effect is anti-dilutive. Marketing Costs Marketing costs, which are expensed as incurred,
totaled approximately $23,773 and $6,575 for the three months ended March 31, 2019 and 2018, respectively and is in disclosed in
selling, general and administrative expenses. Stock-Based Compensation Compensation expense related to
share-based transactions, including employee stock options, is measured in the financial statements based on a determination of
the fair value. The grant date fair value is determined using the Black-Scholes-Merton (“Black-Scholes”) pricing model.
For all stock options, the Company recognizes expense over the requisite service period on a straight-line basis (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. See Note 11 for the assumptions
used to calculate the fair value of stock-based employee and non-employee compensation. Leases Leases of assets where
the has assumed substantially
all the and rewards ownership Finance recognized
at the lower the value the leased and the value the lease
payments. 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, the Company has determined
the deferred tax assets and liabilities on the basis of the differences between the financial statement and tax basis of assets
and liabilities by 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 recognizes deferred
tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a 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 results of recent operations. If the Company determines that it would
be able to realize our deferred tax assets in the future in excess of their net recorded amount, it would make an adjustment to
the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax
positions in accordance with ASC 740 on the basis of a two-step process in which (1) it determines whether it is more likely than
not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions
that meet the more-likely-than-not recognition threshold, it recognizes the largest amount of tax benefit that is more than 50
percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest
and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of
operations. As of March 31, 2019, no accrued interest or penalties are included on the related tax liability line in the balance
sheet. |
