JINGLZ, INC.
ANNUAL REPORT
December 31, 2020
10802 Lake Wynds Court, Boynton Beach, FL 33437
https://www.JinglzInc.com
BUSINESS AND GENERAL OVERVIEW
Jinglze, LLC (“LLC”) was founded on June 20, 2014 as a Florida Limited Liability Company for the purpose of developing mobile device applications, marketing data & research products and an internet platform for the distribution of mobile advertising. On March 9, 2017, Jinglz, Inc. (the “Jinglz”, “Company”,
“we”; “us”, “our”) was incorporated and registered with the state of Florida. On April 4, 2017, the LLC was dissolved, and the assets were sold to Jinglz, Inc. The partners in the LLC were issued 10,000,000 shares of Jinglz Class A common stock for their equity in the LLC. Jinglz, Inc. continues to provide the same service as the LLC.
Jinglz has created patented technology for measuring audience engagement and emotion. Our EmotionTrac AI technology measures slight changes in facial expressions to determine emotional reactions to video watched through a mobile device. EmotionTrac™, our flagship product, is a self-serve software platform that empowers brands, ad agencies, lawyers, consumer insights and any market researcher to deploy on-demand focus group tests that produce true quantitative data for emotional reactions and engagement to video content in multiple billion-dollar markets.
Our EmotionTrac™ technology, using permission-based access of the front facing camera of a mobile device, anonymously tracks a person’s emotions while panelists engage in a video. The technology utilizes machine learning and artificial intelligence to register emotional data. This data is then interpreted to deliver various reporting indexes using data science. The videos are deployed through our CampaignTester mobile app. We also recruit and provide the client with an end-to-end solution by making panel audiences available for the clients use for testing at costs significantly lower than traditional audience rentals.
Throughout this Annual Report references to “we”, “our”, “us”, “Jinglz”, “the Company”, and similar terms refer to Jinglz, Inc.
Competition
There are only a handful of companies currently employing similar technology within our target markets. Some of the dominant players include: Affectiva, Tobii AB, Noldus and Realeyes OU. In all cases, the products offered by these companies differ from Jinglz in their application, pricing, feature set, and delivery mechanism. Our competitive research reveals that Jinglz offers substantial product differentiation while also providing additional value to potential customers.
Employees
As of the year ended December 31, 2020, the Company had 3 employees.
Legal Proceedings
There are no legal proceedings material to our business or financial condition pending and, to the best of our knowledge, there are no such legal proceedings contemplated or threatened.
Technology and Intellectual Property
The Company incorporates machine learning, artificial intelligence and data science for tracking engagement and emotional responses to video presentations and reporting of results. The Company also delivers viewer validation and gamification with social rewards by having developed intellectual property and algorithms. These include facial, gaze, emotional intelligence, and volume detection. The Company has been issued two patents and an additional invention is patent-pending.
RISK FACTORS
Investing in our securities involves a great deal of risk. Careful consideration should be made of the following factors as well as other information included in this Annual Report before deciding to purchase our common stock. Our business, financial condition or results of operations could be affected materially and adversely by any or all these risks.
THE FOLLOWING MATTERS MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION, LIQUIDITY, RESULTS OF OPERATIONS OR PROSPECTS, FINANCIAL OR OTHERWISE. REFERENCE TO THIS CAUTIONARY STATEMENT IN THE CONTEXT OF A FORWARD-LOOKING STATEMENT OR STATEMENTS SHALL BE DEEMED TO BE A STATEMENT THAT ANY ONE OR MORE OF THE FOLLOWING FACTORS MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN SUCH FORWARD-LOOKING STATEMENT OR STATEMENTS.
We have a limited operating history and have not yet generated any revenues
Our limited operating history makes evaluating our business and future prospects difficult and may increase the risk of investing. We launched our product in 2020 but have not yet generated significant revenues.
Our patents and intellectual property may be unenforceable or ineffective
One of the Company’s most valuable assets is its intellectual property. We currently have a patent pending, as well as several trade secrets. The Company intends to continue to file additional patent applications, trademarks, copyrights, internet domain names and trade secrets to build its intellectual property portfolio as we discover new technologies.
There are several potential competitors who are better positioned to garner the majority of the market
We compete with larger established companies who currently have products on the market and/or various respective product development programs. They have better financial means, marketing/sales and human resources. They may succeed in developing and marketing competing equivalent products or superior products than those developed by us. There can be no assurance that competitors will not render our technology or products obsolete or that the products developed by us will be preferred to any existing or newly developed technologies. It should further be assumed that that competition will intensify.
We may need to raise additional capital to fund continuing developments and an inability to raise the necessary capital or to do so on acceptable terms could threaten the success of our business.
We estimate that we will require at least $3 million to expand and scale our business. During 2020, the Company utilized a crowdfunding campaign to raise $82,590. If it is necessary to raise additional funds prior to the generation of sufficient revenue, we cannot be sure that any additional funding will be available on terms favorable to us or at all. Debt or equity financing may subject us to restrictive covenants and significant interest costs.
There is no current market for our common stock; there may never be an active market for our common stock; and we cannot assure you that the common stock will become liquid or that it will be listed on a securities exchange.
We are unable to assure investors that a market for our common stock will develop. If no public markets become available, stockholders will have difficulty selling shares. In addition, certain conditions imposed by the Securities Act must be satisfied prior to any sale, transfer, conversion or other disposition of our common stock.
Our business projections are only estimates
There is no assurance that the Company will meet these estimated projects. There is also no assurance that there will be sufficient demand for our products.
Current management must effectively manage and support the growth of the business
The management team has full control in all areas of operations to execute the business strategy. Managing growth will place significant demands on the management team as well as on individual administrative, operational and financial systems and controls. Any inability to effectively manage, finance or support the Company’s anticipated growth could have a materially adverse effect on the business and the results of its operations.
The Company may have difficulty evaluating business and prospects as mature competitors or new business entities enter the marketplace
The Company may be unable to recognize and/or respond to trends, changing preferences or competitive factors within the industry which may result in a material adverse effect on our business and operations. The Company cannot assure it will have the ability to successfully use new business strategies or adapt its business models in a changing market. The Company is entirely reliant on our ability to recognize and respond to trends, changing preferences or competitive factors within the commercial industry.
The Company’s business model includes two areas-sweepstakes and privacy of personal information-regulated by the federal and state governments
Although the Company believes it has taken adequate steps with regards to the rules applicable to sweepstakes and compliance with privacy requirements, this is a highly regulated area, and the rules are subject to change and interpretation.
Management’s ownership of Class B Common Stock makes change in Company control difficult
At the year ended December 31, 2020, the Chief Executive Officer/Chairman owns 76.8% of the shares of Class B common stock that has 10 voting rights per share. Current investors in Class A common stock will have 1 vote per share. This disproportionate number of voting rights would make a change in control of the Company difficult and may adversely affect the value of the Class A common stock.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULT OF OPERATION
The following discussion and analysis of financial condition and results of operations relates to the operations and financial condition reported in the financial statements of Jinglz, Inc. for the years ended December 31, 2020 and 2019 and should be read in conjunction with such financial statements and related notes included in this report.
Overview
Our EmotionTrac™ technology, using permission-based access of the front facing camera of a mobile device, anonymously tracks a person’s emotions while panelists engage in a video. The technology utilizes machine learning and artificial intelligence to register emotional data. This data is then interpreted to deliver various reporting indexes using data science. The videos are deployed through our CampaignTester mobile app. We also recruit and provide the client with an end-to-end solution by making panel audiences available for the clients use for testing at costs significantly lower than traditional audience rentals.
Results of Operations of Jinglz for the Twelve-month Period Ended December 31, 2020 vs. 2019
NET REVENUES: Total net revenue for the years ended December 31, 2020 and 2019 were $7,128 and $14,351, respectively. We anticipate an increase revenue in 2021 and beyond.
OPERATING EXPENSES: Total operating expenses decreased to $891,540 for the year ended December 31, 2020 from $958,796 for the year ended December 31, 2019. The decrease is primarily a result of a decrease in executive compensation and other payroll costs offset by an increase in professional fees.
LOSS: The Company incurred a net loss of $903,830 for the year ended December 31, 2020, compared with a net loss of $961,299 for the year ended December 31, 2019, which reflects a decrease of $57,469. The decrease in loss is a result of a reduction in executive compensation and other payroll costs offset by an increase in professional fees as noted above.
Liquidity and Capital Resources
As of December 31, 2020, we had negative working capital of $645,041 compared to negative working capital of $338,999 as of December 31, 2019. The main portion of the negative working capital increase is the reduction of cash and prepaid expense and increase in short term loans and accrued expenses. Cash flows provided by financing activities were $561,839 and $1,164,553 for the years ended December 31, 2020 and December 31, 2019, respectively. The decrease in cash flows from financing activities was a reduction in the receipt of proceeds for the issuance of shares of common stock. The cash balance as of December 31, 2020 was $108,779.
For the year ended December 31, 2020, there was a negative cash flows from operations of $638,500 compared to a negative cash flows from operations of $1,232,281 for the year ended December 31, 2019. This is primarily due to a reduction of the net loss and software development costs requiring amortization. Our ability to meet our obligations depends on our ability to obtain additional financing. We cannot predict whether this additional financing will be in the form of equity or debt or be in another form. We may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. In any of these events, we may be unable to implement our current plans which circumstances would have a material adverse effect on our business, prospects, financial conditions and results of operations.
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
Our directors and executive officers as of the date of this report are as follows:
| Aaron Itzkowitz | Chief Executive Officer & Chairman | |
| Ron Erickson | Director | |
| William H Lickson | Chief Operations Officer | |
| David Markowski | Chief Financial Officer |
Aaron Itzkowitz, Chief Executive Officer and Chairman of the Board of Directors. Mr. Itzkowitz has extensive experience in technology management and in growing traditional and start-up businesses to profitability. He has launched companies and worked as a business consultant for small to Fortune 100 companies to increase revenue, implement cost cutting programs and guide manufacturing and technology expansion. He led a Hewlett Packard initiative to build an on-demand solution to introduce their wide format printers. He also founded and served as CEO of FrameLogix Inc., an online photo framing fulfillment business. Partners included Snapfish.com, Kodak and AOL. He was an independent business consultant serving clients in various industries from September 2015 through March 2017. From September 2014 through August 2015, he led sales efforts for Bruce Fox Inc., a Diremanufacturer of custom award products. In the years beginning November 2006 through August 2014, he led Successories.com and its subsidiaries as CEO, President and COO.
William Lickson, Chief Operating Officer. Mr. Lickson brings years of experience as a business consultant, serial entrepreneur, and digital strategist to the Jinglz team. He has been an advisor, partner, and investor in several companies including startups based in Silicon Valley. He previously served as Director of Digital Strategy at Zimmerman, an Omnicom agency and part of the TBWA worldwide network. He was a key member of the senior agency team responsible for thought leadership in the areas of brand architecture, integrated communication strategies, public relations, online and offline advertising, digital, social media and co-branding. He worked directly with major brands both domestically and internationally. He is also a veteran of the television and cable television industries, a seasoned professional marketer, brand architect, and driver of dramatic revenue growth for clients across a broad spectrum of industries and brands—from high-tech start-ups to billion-dollar brands.
David Markowski, Chief Financial Officer. Mr. Markowski has been CFO of Jinglz since July 2017. Mr. Markowski was recently appointed Managing Director of Dynasty Wealth, LLC, which had provided certain promotional services to the Company. He is also serving as CFO of eWellness Healthcare Corporation. From October 1997 to October 2002, he was CEO and Co-Founder of GFNN, Inc. From 2002 to 2013 Mr. Markowski has maintained various active roles within GFNN’s subsidiaries including Founder, Director and CEO positions. From October 2009 to December 2011, he was the Director of Corporate Development for Visualant, Inc. From June 2003 to 2010 he was President of Angel Systems, Inc. an independent consulting firm with competencies in strategic marketing and business development. From January 1998 to October 1998, Mr. Markowski served as the Vice President of Finance for Medcom USA, a NASDAQ listed company. Mr. Markowski served as CEO and Co-Founder of Newsgrade Corporation coordinating all aspects of corporate development and technology expansion for an $18 million software project requiring the efforts of ninety-five highly skilled team members. Prior to that, he had a decade of investment banking experience on Wall Street involved in financing start-ups and public offerings. He is a business development specialist with accolades in INC Magazine and others. Mr. Markowski obtained a BA degree in Marketing from Florida State University.
Ron Erickson, Director, Mr. Erickson has been member of the board of directors since October 2017. He is a business executive, lawyer and angel investor based in Seattle. After co-founding Microrim in 1981, he has either founded or served as an executive for companies such as GlobalTel Resources, Inc., GlobalVision, Inc, Egghead Software, Inc. and Blue Frog Media. He was the sole investor in Double Down Interactive, a social video game studio that was sold for up to $500 million in 2012. He is Founder and Chairman of Know Labs, Inc. with whom he has been affiliated since March of 2003.
OWNERSHIP AND CAPITAL STRUCTURE; RIGHTS OF THE SECURITIES
Principal Security Holders
The Company’s CEO and Chairman of the Board of Directors owns 76.8% of the shares of Class B common stock.
Classes of securities
Preferred Stock
The Company is authorized to issue up to 50,000,000 shares of preferred stock. At the year ended December 31, 2020, there are no shares issued and outstanding. There are no voting rights or rights of distribution associated with the preferred stock.
Class A Common Stock
The Company is authorized to issue up to 80,000,000 shares of Class A common stock. At the year ended December 3, 2020, there are 4,378,334 shares of Class A common stock issued and outstanding. The holders of Class A common stock have one voting right per share.
Dividend Rights
Subject to preferences that may be granted to any then outstanding preferred stock, holders of shares of Class A common stock are entitled to receive ratably such dividends as may be declared by the Board of Directors out of funds legally available for distribution as dividends. The payment of dividends on the Class A common stock will be a business decision made by the Board of Directors from time to time based on the results of operations and financial condition and any other factors considered to be relevant. Payment of dividends on the Class A Common Stock may be restricted by law and by loan agreements, indentures and other transactions entered into by the Company from time to time. The Company has never paid a dividend and does not intend to pay dividends in the foreseeable future.
Liquidation Rights
In the event of our liquidation, dissolution, or winding up, holders of Class A common stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preference of any then outstanding preferred stock.
Rights and Preferences
The rights, preferences and privileges of the holders of the company’s Class A common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of the Company’s Class B common stock, preferred stock and any additional classes of preferred stock that we may designate in the future.
Class B Common Stock
The Company is authorized to issue up to 20,000,000 shares of Class B common stock. At the year ended December 31, 2020, there are 10,100,000 shares of Class B common stock issued and outstanding. Holders of Class B common stock have ten (10) voting rights per share.
Rights and Preferences
The rights, preferences and privileges of the holders of the Company’s Class B common stock are subject to and may be adversely affected by the rights of the holders of shares of any series of our Class A common stock, preferred stock and any additional classes of preferred stock that we may designate in the future.
SIGNATURES
Pursuant to the requirements of Sections 4(a)(6) and 4A of the Securities Act of 1933 and Regulation Crowdfunding (Section 227.100-503), the issuer certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form C-AR and has duly caused this Annual Report to be signed on its behalf by the duly authorized undersigned on April 5, 2021.
JINGLZ, INC.
| By | /s/ Aaron Itzkowitz | |
| Title: | Chief Executive Officer | |
| Chairman of the Board of Directors |
EXHIBIT A – FINANCIAL STATEMENTS AND FOOTNOTES
JINGLZ, INC.
BALANCE SHEETS
(unaudited)
| December 31, 2020 | December 31, 2019 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 108,779 | $ | 188,542 | ||||
| Accounts receivable | 1,600 | - | ||||||
| Prepaid expenses | - | 12,500 | ||||||
| Total current assets | 110,379 | 201,042 | ||||||
| Property & equipment, net | 13,429 | 15,036 | ||||||
| Investment | 5,000 | 5,000 | ||||||
| Deposits | 900 | 900 | ||||||
| Software Development, net | 599,058 | 698,900 | ||||||
| TOTAL ASSETS | $ | 728,766 | $ | 920,878 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued expenses | $ | 241,083 | $ | 165,332 | ||||
| Accrued compensation | 299,776 | 255,648 | ||||||
| Loan payable | 214,561 | 119,061 | ||||||
| Total current liabilities | 755,420 | 540,041 | ||||||
| Total Liabilities | 755,420 | 540,041 | ||||||
| STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Preferred stock, authorized, 50,000,000 shares, $.001 par value, 0 shares issued and outstanding | - | - | ||||||
| Common stock, authorized 100,000,000 shares, $.001 par value consisting of Class A common stock, 80,000,000 shares authorized, 4,378,334 and 3,873,789 shares issued and outstanding, respectively, and Class B common stock, 20,000,000 shares authorized, 10,100,000 and 10,100,000 shares issued and outstanding, respectively | 14,479 | 13,828 | ||||||
| Additional paid in capital | 4,283,651 | 3,787,963 | ||||||
| Accumulated deficit | (4,324,784 | ) | (3,420,954 | ) | ||||
| Total Stockholders’ Equity (Deficit) | (26,654 | ) | 380,837 | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ | 728,766 | $ | 920,878 | ||||
The accompanying notes are an integral part of these financial statements
JINGLZ, INC.
STATEMENTS OF OPERATIONS
(unaudited)
| December 31, 2020 | December 31, 2019 | |||||||
| REVENUE | ||||||||
| Service/Fee Income | $ | 7,253 | $ | 14,351 | ||||
| Cost of Service/Fee Income | 125 | - | ||||||
| Net Revenue | 7,128 | 14,351 | ||||||
| OPERATING EXPENSES | ||||||||
| Executive compensation | 169,580 | 282,467 | ||||||
| General and administrative | 517,399 | 588,199 | ||||||
| Professional fees | 204,561 | 88,130 | ||||||
| Total Operating Expenses | 891,540 | 958,796 | ||||||
| Loss from Operations | (884,412 | ) | (944,445 | ) | ||||
| OTHER INCOME (EXPENSE) | ||||||||
| Interest income | 6 | 47 | ||||||
| Interest expense | (19,424 | ) | (16,901 | ) | ||||
| Net Loss before Income Taxes | (903,830 | ) | (961,299 | ) | ||||
| Income tax expense | - | - | ||||||
| Net Loss | $ | (903,830 | ) | $ | (961,299 | ) | ||
The accompanying notes are an integral part of these financial statements
JINGLZ, INC.
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
| Total | ||||||||||||||||||||||||||||
| Common Shares - Class A | Common Shares - Class B | Additional Paid in | Accumulated | Stockholders’ Equity | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||
| Balance at December 31, 2018 | 2,955,055 | $ | 2,955 | 10,100,000 | $ | 10,100 | $ | 2,624,183 | $ | (2,459,655 | ) | $ | 177,584 | |||||||||||||||
| Shares issued for cash received | 784,368 | 784 | - | - | 1,175,768 | - | 1,176,552 | |||||||||||||||||||||
| Shares repurchased | (12,000 | ) | (12 | ) | - | - | (11,988 | ) | - | (12,000 | ) | |||||||||||||||||
| Net loss | - | - | - | - | - | (961,299 | ) | (961,299 | ) | |||||||||||||||||||
| Balance at December 31, 2019 | 3,727,423 | $ | 3,727 | 10,100,000 | $ | 10,100 | $ | 3,787,963 | $ | (3,420,954 | ) | $ | 380,837 | |||||||||||||||
| Shares issued for cash received | 310,896 | 311 | - | - | 466,028 | - | 466,339 | |||||||||||||||||||||
| Shares issued for services | 340,000 | 340 | - | - | 29,660 | - | 30,000 | |||||||||||||||||||||
| Net loss | - | - | - | - | - | (903,830 | ) | (903,830 | ) | |||||||||||||||||||
| Balance at December 31, 2020 | 4,378,319 | $ | 4,379 | 10,100,000 | $ | 10,100 | $ | 4,283,651 | $ | (4,324,784 | ) | $ | (26,654 | ) | ||||||||||||||
The accompanying notes are an integral part of these financial statements
JINGLZ, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
| December 31, 2020 | December 31, 2019 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (903,830 | ) | $ | (965,149 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 4,709 | 4,606 | ||||||
| Amortization of software development costs | 99,842 | - | ||||||
| Shares issued for services | 30,000 | - | ||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | (1,600 | ) | - | |||||
| Prepaid expenses | 12,500 | 24,494 | ||||||
| Software development | - | (286,238 | ) | |||||
| Accounts payable and accrued expenses | 75,751 | (9,116 | ) | |||||
| Accrued compensation | 44,128 | (878 | ) | |||||
| Net cash used in operating activities | (638,500 | ) | (1,232,281 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of equipment | (3,102 | ) | - | |||||
| Investment in stock | - | - | ||||||
| Net cash used in investing activities | (3,102 | ) | - | |||||
| Cash flows from financing activities: | ||||||||
| Proceeds for issuance of common stock | 466,339 | 1,176,553 | ||||||
| Proceeds from PPV and SBA Loan | 95,500 | - | ||||||
| Payments for cancelled shares | - | (12,000 | ) | |||||
| Net cash provided by financing activities | 561,839 | 1,164,553 | ||||||
| Net increase (decrease) in cash | (79,763 | ) | (67,728 | ) | ||||
| Cash, beginning of period | 188,542 | 256,270 | ||||||
| Cash, end of period | $ | 108,779 | $ | 188,542 | ||||
| Supplemental Information: | ||||||||
| Cash paid for: | ||||||||
| Taxes | $ | - | $ | - | ||||
| Interest Expense | $ | - | $ | - | ||||
The accompanying notes are an integral part of these financial statements
JINGLZ, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND DECEMBER 31, 2019
Note 1. The Company
The Company and Nature of Business
Jinglze, LLC (“LLC”) was founded on June 20, 2014 as a Florida Limited Liability Company for the purpose of developing mobile device applications, marketing data & research products and an internet platform for the distribution of mobile advertising. On March 9, 2017, Jinglz, Inc. was incorporated and registered with the state of Florida. On April 4, 2017, the LLC was dissolved, and the assets were sold to Jinglz, Inc. The partners in the LLC were issued 10,000,000 shares of Jinglz Class A common stock for their equity in the LLC. Jinglz, Inc. continues to provide the same service as the LLC.
Jinglz has created patented technology for measuring audience engagement and emotion. Our EmotionTrac AI technology measures slight changes in facial expressions to determine emotional reactions to video watched through a mobile device. EmotionTrac™, our flagship product, is a self-serve software platform that empowers brands, ad agencies, lawyers, consumer insights and any market researcher to deploy on-demand focus group tests that produce true quantitative data for emotional reactions and engagement to video content in multiple billion-dollar markets.
Our EmotionTrac™ technology, using permission-based access of the front facing camera of a mobile device, anonymously tracks a person’s emotions while panelists engage in a video. The technology utilizes machine learning and artificial intelligence to register emotional data. This data is then interpreted to deliver various reporting indexes using data science. The videos are deployed through our CampaignTester mobile app. We also recruit and provide the client with an end-to-end solution by making panel audiences available for the clients use for testing at costs significantly lower than traditional audience rentals.
Technology and Intellectual Property
The Company incorporates machine learning, artificial intelligence and data science for tracking engagement and emotional responses to video presentations and reporting of results. The company also delivers viewer validation and gamification with social rewards by having developed intellectual property and algorithms. These include facial, gaze, emotional intelligence, and volume detection. The company has been issued two patents and an additional invention is patent-pending.
Note 2. Summary of Significant Accounting Policies.
Basis of Presentation
The accompanying condensed financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP).
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP 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 revenue and expense for each reporting period.
Cash and Cash Equivalents
Cash and cash equivalents include cash and highly liquid instruments with original maturities of three months or less.
Going Concern
For the years ended December 31, 2020 and 2019, the Company had an accumulated deficit of $4,324,784 and $3,420,954, respectively. In view of these matters, there is substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue operations is dependent upon the Company’s ability to raise additional capital and to ultimately achieve sustainable revenues and profitable operations, of which there can be no guarantee. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
Property and Equipment
Property and equipment are recorded at historical cost. Minor additions and renewals are expensed in the year incurred. Major additions and renewals are capitalized and depreciated over their estimated useful lives. Depreciation is recorded over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The estimated useful lives for significant property and equipment categories are as follows:
| Furniture and Fixtures | 5-7 Years | |
| Computer Equipment | 5-7 Years | |
| Software | 3 Years |
The Company regularly evaluates whether events or circumstances have occurred that indicate the carrying value of long-lived assets may not be recoverable. If factors indicate the asset may not be recoverable, we compare the related undiscounted future net cash flows to the carrying value of the asset to determine if impairment exists. If the expected future net cash flows are less than the carrying value, an impairment charge is recognized based on the fair value of the asset. For the years ended December 31, 2020 and 2019, there was no impairment recognized.
Software Development Costs
During the development stage, the Company recorded software development costs as an asset. With the launching of the software in the year ended December 31, 2020, the Company began to amortize these costs over the useful life of seven years.
Fair Value of Financial Instruments
Financial assets and liabilities recorded at fair value in the Company’s Balance Sheet are categorized based
upon the level of judgment associated with the inputs used to measure their fair value. The categories, as defined by the standard, are as follows:
| [ ] | Level 1 – Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement dates. | |
| [ ] | Level 2 – Inputs, other than quoted prices included in Level 1, which are observable for the asset or liability through corroboration with market data at the measurement date. | |
| [ ] | Level 3 – Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. |
For certain of our financial instruments, including accounts receivable, accounts payable, and accrued expenses, the carrying amounts are approximate fair value due to their short-term nature.
Risks and Uncertainties
The Company has a limited operating history and has not generated significant revenue from intended operations. The Company’s business and operations are sensitive to general business and economic conditions in the U.S. and worldwide along with local, state, and federal governmental policy decisions. A host of factors beyond the Company’s control could cause fluctuations in these conditions. Adverse conditions may include recession, downturn or otherwise, competition, technological advancements that render our technology obsolete, or changes in governmental policy. These adverse conditions could affect the Company’s financial condition and the results of its operations.
Stock-Based Compensation
The Company accounts for stock-based employee compensation arrangements in accordance with ASC 718, “Compensation — Stock Compensation”, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors based on the estimated grant date fair value of the award. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s statement of operations.
The Company estimates fair value of share-based awards using the Black-Scholes model. This model requires the Company to estimate the expected volatility and value of its common stock and the expected term of the stock options; all of which are highly complex and subjective variables. The variables take into consideration, among other things, actual and projected employee stock option exercise behavior. The Company uses an average of similar companies’ historical volatility as a basis for its expected volatility. Expected term is computed using the simplified method provided within Securities and Exchange Commission Staff Accounting Bulletin No. 110. The Company has selected a risk-free rate based on the implied yield available on U.S. Treasury securities with a maturity equivalent to the expected term of the stock option or warrant
Income Taxes
The Company accounts for income taxes under FASB ASC 740-10-30. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is “more likely than not” that some component or all the benefits of deferred tax assets will not be realized.
Recent Accounting Pronouncements
The Company has reviewed all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its financial statements.
Note 3. Property and Equipment
Property and equipment consist of computer equipment, furniture and fixtures and leasehold development that is stated at cost of $27,654 and $24,552 less accumulated depreciation of $14,225 and $9,516 for the years ended December 31, 2020 and 2019, respectively. Depreciation expense was $4,709 and $4,606 for the years ended December 31, 2020 and 2019, respectively
Note 4. Intangible Assets
The Company recognizes the costs of software development as intangible assets. During the years ended December 31, 2020 and 2019, the Company recorded $0 and $286,238, respectively of software development costs. Because the software was launched in the first quarter of 2020, the Company recognized $99,842 amortization costs.
Note 5. Income Taxes
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Net deferred tax liabilities consist of the following components as of the years ended December 31, 2020 and December 31, 2019, respectively:
| 2020 | 2019 | |||||||
| Deferred tax assets: | ||||||||
| NOL Carryover | $ | 724,038 | $ | 505,641 | ||||
| Deferred tax liabilities | ||||||||
| Depreciation | - | |||||||
| Valuation allowance | (724,038 | ) | (505,641 | ) | ||||
| Net deferred tax asset | $ | - | $ | - | ||||
The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the years ended December 31, 2020 and December 31, 2019, respectively, due to the following:
| 2020 | 2019 | |||||||
| Book Loss | $ | (189,804 | ) | $ | (202,681 | ) | ||
| Depreciation | - | |||||||
| Meals & Entertainment | 233 | 569 | ||||||
| Non-deductible expenses | - | |||||||
| Valuation allowance | 189,571 | 202,112 | ||||||
| $ | - | $ | - | |||||
On December 31, 2020, the Company had net operating loss carryforwards of approximately $3,447,790 that may be offset against future taxable income from the year 2021 through 2040. No tax benefit has been reported in the December 31, 2020 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years.
The Company’s policy is to recognize potential interest and penalties accrued related to unrecognized tax benefits within income tax expense. For the years ended December 31, 2020 and 2018, the Company did not recognize any interest or penalties nor did we have any interest or penalties accrued related to unrecognized benefits.
The tax years ended December 31, 2020, 2019 and 2018 are open for examination for federal income tax purposes and by other major taxing jurisdictions to which we are subject.
Note 6. Advertising Expense
Advertising costs are expensed as incurred. During the years ended December 31, 2020 and 2019, the Company expensed $94,615 and $145,200, respectively.
Note 7. Non-Convertible Loans
At the years ended December 31, 2020 and December 31, 2019, the Company had loans payable of $214,561 and $119,061, respectively. The increase in loans payable is as a result of receiving a PPP advance for $84,500 and an SBA Grant for $11,000 due to the COVID-19 pandemic. During the first quarter of 2021, the Company submitted an application for forgiveness of the PPP advance. None of the loans payable have an interest rate or repayment terms.
Note 10. Equity Transactions
Preferred Stock
The total number of shares of preferred stock which the Company shall have authority to issue is 50,000,000 shares with a par value of $0.001 per share. There have been no preferred shares issued for the years ended December 31, 2020 or 2019.
Common Stock
The total number of shares of common stock which the Company shall have authority to issue is 100,000,000 shares with a par value of $0.001 per share.
Class A Common Stock
Of the total number of shares of common stock authorized, 80,000,000 are Class A common stock with one (1) voting right per share.
During the year ended December 31, 2020, the Company issued 650,896 shares of Class A common stock for cash received totaling $496,340.
At the year ended December 31, 2020, the Company had 4,378,334 shares of Class A common stock issued and outstanding.
Class B Common Stock
Of the total number of shares of common stock authorized, 20,000,000 are Class B common stock with ten (10) voting rights per share.
At the year ended December 31, 2020, the Company had 10,100,000 shares of Class B common stock issued and outstanding.
Stock Options
On October 9, 2017, the Board of Directors authorized the 2017 Jinglz Stock Inventive Plan. The authorized the reservation of up to 3,500,000 shares of common stock. The plan authorizes the Board to determine from time-to-time eligible recipients, number of options to be issued, the exercise price and terms.
The following is a summary of the status of all Company’s stock options as of December 31, 2020 and changes during the periods ended on December 31, 2020 and 2019, respectively:
Weighted Average | ||||||||||||
Number of Stock Options | Exercise Price | Remaining Life (yrs) | ||||||||||
| Outstanding at January 1, 2019 | 1,460,000 | $ | 0.76 | 4.0 | ||||||||
| Granted | 231,272 | 1.50 | - | |||||||||
| Exercised | - | - | - | |||||||||
| Cancelled | (115,000 | ) | 0.39 | 4.3 | ||||||||
| Outstanding at December 31, 2019 | 1,576,272 | $ | 0.97 | 3.4 | ||||||||
| Granted | 400,000 | 1.50 | - | |||||||||
| Exercised | - | - | - | |||||||||
| Cancelled | (8,000 | ) | 1.50 | - | ||||||||
| Outstanding at December 31, 2020 | 1,968,272 | $ | 1.06 | 2.9 | ||||||||
| Options exercisable at December 31, 2020 | 1,068,868 | $ | 0.94 | 2.5 | ||||||||
Warrants
During the years ended December 31, 2020 and December 31, 2019, the Company issued 38,944 and 106,000 warrants, respectively, with exercise prices ranging from $.01 to $1.50 per share. Management determined that the value of the warrants was minimal.
The following is a summary of the status of all Company’s stock options as of December 31, 2020 and changes during the periods ended December 31, 2020 and 2019, respectively.
| Number of Warrants | Weighted Average Exercise Price | Remaining Life (yrs) | ||||||||||
| Outstanding at January 1, 2019 | 3,249,002 | $ | 0.23 | 3.9 | ||||||||
| Granted | 106,000 | - | 4.7 | |||||||||
| Exercised | - | - | - | |||||||||
| Expired | - | - | - | |||||||||
| Outstanding at December 31, 2019 | 3,355,002 | $ | 0.32 | 4.3 | ||||||||
| Granted | 38,944 | 0.03 | 4.7 | |||||||||
| Exercised | - | - | - | |||||||||
| Expired | (275,000 | ) | 0.96 | - | ||||||||
| Outstanding at December 31, 2020 | 3,118,946 | $ | 0.26 | 2.6 | ||||||||
| Warrants exercisable at December 31, 2020 | 3,118,946 | $ | 0.26 | 2.6 | ||||||||
Crowdfunding
During the year ended December 31, 2020, the Company raised $82,590 through crowdfunding. The shares of Class A common stock associated with these funds were issued throughout the year for a total of 55,060 shares. This crowdfunding platform is continuing into 2021.
Note 11. Commitments and Contingencies
Lawsuits, claims and proceedings have been or may be instituted or asserted against the Company in the normal course of business. The Company is also subject to local, state and federal laws and regulations related to land development activities, house construction standards, sales practices, employment practices and environmental protection. As a result, the Company is subject to periodic examinations or inquiry by agencies administering these laws and regulations.
The Company records a reserve for potential legal claims and regulatory matters when they are probable of occurring and a potential loss is reasonably estimable. The Company accrues for these matters based on facts and circumstances specific to each matter and revises these estimates when necessary.
In view of the inherent difficulty of predicting outcomes of legal claims and related contingencies, the Company generally cannot predict their ultimate resolution, related timing or eventual loss. If the Company evaluations indicate loss contingencies that could be material are not probable, but are reasonably possible, the Company will disclose their nature with an estimate of possible range of losses or a statement that such loss is not reasonably estimable. At the years ended December 31, 2020 and 2019, there were no claims that met this criterion; therefore, the Company did not have any accruals for asserted or unasserted matters.
Note 12. Subsequent Events
During the first quarter of 2021, the Company issued 185,734 shares of Class A Common Stock for the total investment of $278,600. The Company also issued 60,402 shares of Class A Common Stock for $90,603 raised through the crowdfunding platform. The Company purchased 10,796 shares of Class A Common Stock from an investor for the original investment of $5,000.