Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 8-May-15 | |
Document And Entity Information | ||
Entity Registrant Name | SPYR, Inc. | |
Entity Central Index Key | 829325 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
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 Common Stock, Shares Outstanding | 152,902,710 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2015 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Cash and cash equivalents | $7,231,864 | $6,994,180 |
Accounts receivable | 78,555 | 4,271 |
Inventory | 14,499 | 14,499 |
Prepaid expenses and other current assets | 53,665 | 60,819 |
Trading securities, at market value | 3,858,623 | 6,026,780 |
Total Current Assets | 11,237,206 | 13,100,549 |
Property and equipment, net | 156,721 | 155,250 |
Goodwill and other intangible assets | 1,725,202 | 5,000 |
Other assets | 20,689 | 15,000 |
TOTAL ASSETS | 13,139,818 | 13,275,799 |
Current Liabilities: | ||
Accounts payable and accrued liabilities | 137,980 | 72,550 |
Related party accounts payable | 7,305 | 270,000 |
Total Current Liabilities | 145,285 | 342,550 |
Total Liabilities | 145,285 | 342,550 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, $0.0001 par value, 10,000,000 shares authorized 107,636 and 107,636 Series A shares issued and outstanding as of March 31, 2015 and December 31, 2014; 20,000 Series E shares issued and outstanding as of March 31, 2015 and December 31, 2014 | 13 | 13 |
Common stock, $0.0001 par value, 250,000,000 shares authorized 152,402,710 and 140,627,710 shares issued and outstanding as of March 31, 2015 and December 31, 2014 | 15,241 | 14,063 |
Common stock issuable, 0 and 5,500,000 shares as of March 31, 2015 and December 31, 2014 | 987,500 | |
Additional paid-in capital | 31,063,256 | 26,681,601 |
Accumulated deficit | -18,083,977 | -14,749,928 |
Total Stockholders' Equity | 12,994,533 | 12,933,249 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 13,139,818 | 13,275,799 |
Series A Preferred Stock | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock, $0.0001 par value, 10,000,000 shares authorized 107,636 and 107,636 Series A shares issued and outstanding as of March 31, 2015 and December 31, 2014; 20,000 Series E shares issued and outstanding as of March 31, 2015 and December 31, 2014 | 11 | 11 |
Total Stockholders' Equity | 11 | 11 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 11 | 11 |
Series E Preferred Stock | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock, $0.0001 par value, 10,000,000 shares authorized 107,636 and 107,636 Series A shares issued and outstanding as of March 31, 2015 and December 31, 2014; 20,000 Series E shares issued and outstanding as of March 31, 2015 and December 31, 2014 | 2 | 2 |
Total Stockholders' Equity | 2 | 2 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $2 | $2 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Preferred stock, par value per share | $0.00 | $0.00 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, par value per share | $0.00 | $0.00 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 152,402,710 | 140,627,710 |
Common stock, shares outstanding | 152,402,710 | 140,627,710 |
Common stock issuable, shares | 0 | 5,500,000 |
Series A Preferred Stock | ||
Preferred stock, par value per share | $0.00 | $0.00 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 107,636 | 107,636 |
Preferred stock, shares outstanding | 107,636 | 107,636 |
Series E Preferred Stock | ||
Preferred stock, par value per share | $0.00 | $0.00 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 20,000 | 20,000 |
Preferred stock, shares outstanding | 20,000 | 20,000 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements Of Operations And Comprehensive Income (Loss) (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Income Statement [Abstract] | ||
Revenues | $432,216 | $344,590 |
Cost of sales | 100,588 | 105,710 |
Gross Margin | 331,628 | 238,880 |
Expenses | ||
Labor and related expenses | 785,844 | 92,270 |
Rent | 74,525 | 52,431 |
Depreciation and amortization | 18,702 | 18,066 |
Digital media marketing expenses | 37,817 | |
Professional fees | 1,233,320 | 147,720 |
Other general and administrative | 100,154 | 52,310 |
Total Operating Expenses | 2,250,362 | 362,797 |
Operating Loss | -1,918,734 | -123,917 |
Other Income (Expense) | ||
Interest and dividend income | 5,353 | 1,238 |
Interest expense - related party | -146,209 | |
Change in unrealized gain (loss) on trading securities | -1,122,546 | 1,684,865 |
Gain (loss) on sale of marketable securities | -298,122 | 5,819,432 |
Total Other Income (Expense) | -1,415,315 | 7,359,326 |
Net Income (Loss) | -3,334,049 | 7,235,409 |
Other Comprehensive Income | ||
Unrealized gain on available-for-sale securities | 7,507,930 | |
Total Comprehensive Income (Loss) | ($3,334,049) | $14,743,339 |
Earnings (Loss) Per Share: | ||
Basic | ($0.02) | $0.05 |
Diluted | ($0.02) | $0.05 |
Weighted Average Common Shares | ||
Basic | 142,754,422 | 136,627,710 |
Diluted | 142,754,422 | 140,008,373 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements Of Changes In Stockholders' Equity (Unaudited) (USD $) | Series A Preferred Stock | Series E Preferred Stock | Common Stock | Common Stock Issuable | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance, value at Dec. 31, 2014 | $11 | $2 | $14,063 | $987,500 | $26,681,601 | ($14,749,928) | $12,933,249 |
Balance preferred stock, shares at Dec. 31, 2014 | 107,636 | 20,000 | |||||
Balance common stock, shares at Dec. 31, 2014 | 140,627,710 | 140,627,710 | |||||
Common stock issuable for employee signing bonuses, shares | 5,500,000 | ||||||
Common stock issuable for employee signing bonuses, value | 550 | -987,500 | 986,950 | ||||
Common stock issued for employee compensation, shares | 1,525,000 | ||||||
Common stock issued for employee compensation, value | 153 | 803,722 | 803,875 | ||||
Common stock issued for consulting services, shares | 2,250,000 | ||||||
Common stock issued for consulting services, value | 225 | 891,233 | 891,458 | ||||
Common stock issued for acquisition of Franklin Networks, Inc, shares | 2,500,000 | ||||||
Common stock issued for acquisition of Franklin Networks, Inc, value | 250 | 1,699,750 | 1,700,000 | ||||
Net loss | -3,334,049 | -3,334,049 | |||||
Balance, value at Mar. 31, 2015 | $11 | $2 | $15,241 | $31,063,256 | ($18,083,977) | $12,994,533 | |
Balance preferred stock , shares at Mar. 31, 2015 | 107,636 | 20,000 | |||||
Balance common stock, shares at Mar. 31, 2015 | 152,402,710 | 152,402,710 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements Of Cash Flows (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Cash Flows From Operating Activities: | ||
Net income (loss) for the period | ($3,334,049) | $7,235,409 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 18,702 | 18,066 |
Non-cash interest on notes payable, related parties | 146,208 | |
Common stock issuable for employee compensation | 803,875 | |
Common stock issued for professional fees | 891,458 | |
Unrealized (gain) loss on trading securities | 1,122,546 | -1,684,865 |
(Gain) loss on sale of marketable securities | 298,122 | -5,819,432 |
Increase in receivables | -74,284 | -1,394 |
(Increase) decrease in prepaid expense and other current assets | 1,465 | -37,500 |
Increase in accounts payable and accrued liabilities | 65,430 | 25,178 |
Decrease in related party accounts payable | -262,695 | |
Net Cash Used in Operating Activities | -469,430 | -118,330 |
Cash Flows From Investing Activities: | ||
Purchases of trading securities | -1,360,752 | |
Purchases of available-for-sale securities | -500,000 | |
Proceeds from sale of trading securities | 747,489 | 8,176,418 |
Purchase of property and equipment | -20,173 | |
Purchase of domain name | -20,202 | |
Net Cash Provided by Investing Activities | 707,114 | 6,315,666 |
Net Cash Provided by Financing Activities | ||
Increase in cash and cash equivalents | 237,684 | 6,197,336 |
Cash and cash equivalents at beginning of period | 6,994,180 | 1,628,529 |
Cash and cash equivalents at end of period | 7,231,864 | 7,825,865 |
Supplemental Disclosure of Interest and Income Taxes Paid: | ||
Interest paid during the period | ||
Income taxes paid during the period | ||
Supplemental Disclosure of Non-cash Investing and Financing Activities: | ||
Common stock issued for acquisiton of Franklin Networks, Inc. | 1,700,000 | |
Unrealized gain on available-for-sale securities | $1,701,712 |
Organization_And_Summary_Of_Si
Organization And Summary Of Significant Accounting Policies | 3 Months Ended | ||
Mar. 31, 2015 | |||
Organization And Summary Of Significant Accounting Policies | |||
Organization and Summary of Significant Accounting Policies | NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Interim Financial Statements | |||
The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed with the SEC. The condensed consolidated balance sheet as of December 31, 2014 included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including notes, required by GAAP. | |||
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to fairly present the Company's financial position and results of operations for the interim periods reflected. Except as noted, all adjustments contained herein are of a normal recurring nature. Results of operations for the fiscal periods presented herein are not necessarily indicative of fiscal year-end results. | |||
Organization | |||
The Company was incorporated as Conceptualistics, Inc. on January 6, 1988 in Delaware. | |||
From 2002 to present, the Company has owned and operated one “American Diner” theme restaurant called “Eat at Joe’s (R)”. Located in the Philadelphia International Airport, Eat at Joe's, the classic American grill, is a restaurant concept that takes you back to eating in the era when favorite old rockers were playing on chrome-spangled jukeboxes and neon signs reflected on shiny tabletops of the 1950's. | |||
On December 16, 2014, the Company amended it articles of incorporation and changed its domicile to Nevada. | |||
On February 23, 2015 the Company issued an aggregate of 2.5 million shares of its restricted common stock valued at $1,700,000, in exchange for the issued and outstanding shares of Franklin Networks, Inc., A Tennessee corporation. (“Franklin”). By virtue of the agreement, the Company acquired the assets and business of Franklin including, but not limited to: employment contracts, consulting contracts, customer lists, customer relationships, trade secrets, trade designs, technical expertise, know how, proposals, internet web domains, internet web sites, trade names, and other intellectual property, and contractual relationships with Ad Service providers (see Note 3). | |||
In February 2015, pursuant to the approval of the Company’s Board of Directors and shareholders, the Company changed its name from Eat at Joe’s, Ltd. to SPYR, Inc. and adopted a new ticker symbol “SPYR” effective March 12, 2015. | |||
On March 24, 2015, the Company organized its wholly owned subsidiary SPYR APPS, LLC, (“Apps”) a Nevada Limited Liability Company for the purpose of expanding the Company’s digital media presence into the mobile app industry. | |||
Nature of Business | |||
The primary focus of the business of SPYR, Inc. (the “Company”) is digital media publishing and advertising and the development of mobile applications and games. The Company also owns and operates an “American Diner” theme restaurant called “Eat at Joe’s (R).” | |||
Principles of Consolidation | |||
The consolidated financial statements include the accounts of SPYR, Inc. and its wholly-owned subsidiaries, Franklin Networks, Inc., a Tennessee corporation, E.A.J.: PHL, Airport Inc., a Pennsylvania corporation, SPYR APPS, LLC, a Nevada Limited Liability Company, E.A.J. Market East, Inc., a Nevada corporation, and E.A.J. MO, Inc., a Nevada corporation. All significant intercompany accounts and transactions have been eliminated. | |||
The results of operations attributable to subsidiaries are included in the consolidated results of operations beginning on the date on which the Company’s interest in a subsidiary was acquired. | |||
Inventories | |||
Inventories consist of food, paper items and related materials to be sold through its restaurant and are stated at the lower of cost (first-in, first-out method) or market. | |||
Revenue Recognition | |||
The Company generates revenues from two of its wholly owned subsidiaries, which operate separate and distinct businesses. The following is a summary of our revenue recognition policies. | |||
Through our wholly owned subsidiary Franklin Networks, Inc. we produce content for websites and attract visitors to our sites, and then sell advertising on our sites, which generates revenue. Ad revenue is recognized when the service has been provided and collection is reasonable assured. | |||
Though our wholly owned subsidiary E.A.J.: PHL, Airport, Inc. we generate revenue from the sale of food and beverage through its restaurant. Revenue from the restaurant is recognized upon receipt of payment. | |||
Income Taxes | |||
The Company accounts for income taxes under the provisions of ASC 740 “Accounting for Income Taxes,” which requires a company to first determine whether it is more likely than not (which is defined as a likelihood of more than fifty percent) that a tax position will be sustained based on its technical merits as of the reporting date, assuming that taxing authorities will examine the position and have full knowledge of all relevant information. A tax position that meets this more likely than not threshold is then measured and recognized at the largest amount of benefit that is greater than fifty percent likely to be realized upon effective settlement with a taxing authority. | |||
Deferred income taxes are recognized for the tax consequences related to temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for tax purposes at each year end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recognized when, based on the weight of all available evidence, it is considered more likely than not that all, or some portion, of the deferred tax assets will not be realized. The Company evaluates its valuation allowance requirements based on projected future operations. When circumstances change and cause a change in management's judgment about the recoverability of deferred tax assets, the impact of the change on the valuation is reflected in current income. Income tax expense is the sum of current income tax plus the change in deferred tax assets and liabilities. | |||
Goodwill and Other Intangible Assets | |||
Intangible assets acquired, either individually or with a group of other assets (but not those acquired in a business combination), are initially recognized and measured based on fair value. Goodwill acquired in business combinations is initially computed as the amount paid by the acquiring company in excess of the fair value of the net assets acquired. | |||
The cost of internally developing, maintaining and restoring intangible assets (including goodwill) that are not specifically identifiable, that have indeterminate lives, or that are inherent in a continuing business and related to an entity as a whole, are recognized as an expense when incurred. | |||
An intangible asset (excluding goodwill) with a definite useful life is amortized; an intangible asset with an indefinite useful life is not amortized until its useful life is determined to be no longer indefinite. The remaining useful lives of intangible assets not being amortized are evaluated at least annually to determine whether events and circumstances continue to support an indefinite useful life. | |||
The Company evaluates intangible assets and goodwill for impairment, at a minimum, on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable from its estimated undiscounted future cash flows. Recoverability of goodwill and intangible assets is measured by comparing their net book value to the related projected undiscounted cash flows from these assets, considering a number of factors, including past operating results, budgets, economic projections, market trends and product development cycles. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment loss. | |||
At March 31, 2015, goodwill and intangible assets balances were $1,435,000 and $290,202, respectively. There were no indications of impairment based on management’s assessment of these assets at March 31, 2015. Factors we consider important that could trigger an impairment review include significant underperformance relative to historical or projected future operating results, significant changes in the manner of the use of our assets or the strategy for our overall business, and significant negative industry or economic trends. If current economic conditions worsen causing decreased revenues and increased costs, we may have to record an impairment to our goodwill and intangible assets. | |||
Recent Accounting Standards | |||
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, however, FASB has proposed a one-year deferral. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Management is currently assessing the impact the adoption of ASU 2014-09 and has not determined the effect of the standard on our ongoing financial reporting. | |||
In August 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impact the adoption of ASU 2014-15 on the Company’s financial statement presentation and disclosures. | |||
In January 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-01 (Subtopic 225-20) - Income Statement - Extraordinary and Unusual Items. ASU 2015-01 eliminates the concept of an extraordinary item from GAAP. As a result, an entity will no longer be required to segregate extraordinary items from the results of ordinary operations, to separately present an extraordinary item on its income statement, net of tax, after income from continuing operations or to disclose income taxes and earnings-per-share data applicable to an extraordinary item. However, ASU 2015-01 will still retain the presentation and disclosure guidance for items that are unusual in nature and occur infrequently. ASU 2015-01 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-01 is not expected to have a material effect on the Company’s consolidated financial statements. Early adoption is permitted. | |||
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. | |||
The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financials properly reflect the change. | |||
Earnings (Loss) Per Share | |||
The Company’s computation of earnings (loss) per share (EPS) includes basic and diluted EPS. Basic EPS is calculated by dividing the Company’s net income (loss) available to common stockholders by the weighted average number of common shares during the period. Diluted EPS reflects the potential dilution, using the treasury stock method that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the net income (loss) of the Company. In computing diluted EPS, the treasury stock method assumes that outstanding options and warrants are exercised and the proceeds are used to purchase common stock at the average market price during the period. | |||
The basic and fully diluted shares for the three months ended March 31, 2015 are the same because the inclusion of the potential shares (Class A – 26,909,028, Class E – 161,394) would have had an anti-dilutive effect due to the Company generating a loss for the three months ended March 31, 2015. | |||
Diluted net income per common share for the three months ended March 31, 2014 was calculated based on an increased number of shares that would be outstanding assuming that the Class E preferred shares were converted to 3,380,663 common shares as of March 31, 2014. | |||
Pervasiveness of Estimates | |||
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions used by management affected fixed asset impairment analysis, goodwill and intangible asset impairment analysis, amounts of potential liabilities and valuation of issuance of equity securities. Actual results could differ from those estimates. | |||
Concentration of Credit Risk | |||
The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company maintains the majority of its cash balances with financial institutions, in the form of demand deposits. At March 31, 2015, the Company had cash deposits in three financial institutions that were above FDIC limits of $250,000. The Company believes that no significant concentration of credit risk exists with respect to these cash balances because of its assessment of the creditworthiness and financial viability of these two financial institutions. | |||
Fair Value of Financial Instruments | |||
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. | |||
The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below: | |||
Level 1: | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. | ||
Level 2: | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. | ||
Level 3: | Pricing inputs that are generally observable inputs and not corroborated by market data. | ||
The carrying amount of the Company’s financial assets and liabilities, such as cash and cash equivalents, inventory, prepaid expenses, and accounts payable and accrued expenses approximate their fair value because of the short maturity of those instruments. | |||
The Company’s trading securities are measured at fair value using level 1 fair values. | |||
Reclassifications | |||
Certain financial position and financial results in 2014, including accounts receivable, merchant fees, professional fees and other general and administrative expenses have been reclassified to conform to the current year presentation. Such reclassification did not change the reported total assets or net loss during 2014. | |||
In presenting the Company’s consolidated balance sheet as of December 31, 2014, the Company separately reported accounts receivable of $1,093 that were previously combined with prepaid expenses and other current assets, and separately reported intangible assets of $5,000 that were previously combined with other assets. | |||
In presenting the Company’s consolidated statement of operations for the three months ended March 31, 2014, the Company reclassified merchant fees of $7,419, that were previously reflected as net revenues, to other general and administrative expenses and professional fees of $147,720, that were previously combined with other general and administrative expenses, have been separately stated. |
Investment_In_Marketable_Secur
Investment In Marketable Securities | 3 Months Ended | |||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||
Investment in Marketable Securities | NOTE 2 - INVESTMENT IN MARKETABLE SECURITIES | |||||||||||||||||
The Company’s securities investments that are bought and held for an indefinite period of time are classified as available-for-sale securities. Available-for-sale securities are purchased with the intent of selling them before they reach maturity and are recorded at fair value on the balance sheet in current assets, with the change in fair value during the period excluded from earnings and recorded net of tax as a component of other comprehensive income. The Company’s available-for-sale securities are marketable securities and have no maturity date. When sold the cost of the securities is determined using the average purchase cost of the securities and the difference is recorded as a realized gain or loss. The Company will transfer some of its available for sale securities to trading securities. When this occurs the unrealized gain or loss is immediately recognized in earnings. Trading securities are purchased with the intent of selling them in the short term. Trading securities are recorded at market value and the difference between market value and cost of the securities is recorded as an unrealized gain or loss in the statement of operations. Gains from the sales of such marketable securities will be utilized to fund payment of obligations and to provide working capital for operations and to finance future growth, including, but not limited to: conducting our ongoing business, conducting strategic business development, marketing analysis, due diligence investigations into possible acquisitions, and research and development and implementation of the Company’s business plans generally. | ||||||||||||||||||
The Company’s securities investments that are bought and held principally for the purpose of selling them in the near term are classified as trading securities. Trading securities are recorded at fair value based on quoted market price (level 1) on the balance sheet in current assets, with the change in fair value during the period included in earnings. | ||||||||||||||||||
Change in investments in securities is summarized as follows: | ||||||||||||||||||
Fair Value at | Proceeds from | Loss on | Change In Unrealized | Fair Value at | ||||||||||||||
1-Jan-15 | Sale | Sale | Gain (Loss) | 31-Mar-15 | ||||||||||||||
$ | 6,026,780 | $ | (747,489 | ) | $ | (298,122 | ) | $ | -1,122,546 | $ | 3,858,623 | |||||||
Realized gains and losses are determined on the basis of specific identification. During the three months ended March 31, 2015 and 2014, sales proceeds and gross realized gains and losses on securities classified as available-for-sale securities and trading securities were: | ||||||||||||||||||
31-Mar-15 | 31-Mar-14 | |||||||||||||||||
Sales proceeds | $ | 747,489 | $ | 8,176,418 | ||||||||||||||
Gross realized (losses) | (298,122 | ) | (122,122 | ) | ||||||||||||||
Gross realized gains | — | 5,941,554 | ||||||||||||||||
Gain on sale of marketable securities | $ | (298,122 | ) | $ | 5,819,432 | |||||||||||||
The following table discloses the assets measured at fair value on a recurring basis and the methods used to determine fair value: | ||||||||||||||||||
Fair Value Measurements at Reporting Date Using | ||||||||||||||||||
Quoted Prices | Significant | Significant | ||||||||||||||||
in Active | Other | Unobservable | ||||||||||||||||
Fair Value at | Markets | Observable Inputs | Inputs | |||||||||||||||
31-Mar-15 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||||
Trading securities | $ | 3,858,623 | $ | 3,858,623 | $ | — | $ | — | ||||||||||
Money market funds | 520,713 | 520,713 | — | — | ||||||||||||||
Total | $ | 4,379,336 | $ | 4,379,336 | $ | — | $ | — | ||||||||||
Fair Value Measurements at Reporting Date Using | ||||||||||||||||||
Quoted Prices | Significant | Significant | ||||||||||||||||
in Active | Other | Unobservable | ||||||||||||||||
Fair Value at | Markets | Observable Inputs | Inputs | |||||||||||||||
31-Dec-14 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||||
Trading securities | $ | 6,026,780 | $ | 6,026,780 | $ | — | $ | — | ||||||||||
Money market funds | 673,281 | 673,281 | — | — | ||||||||||||||
Total | $ | 6,700,061 | $ | 6,700,061 | $ | — | $ | — | ||||||||||
Generally, for all trading securities and available-for-sale securities, fair value is determined by reference to quoted market prices (level 1). |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2015 | |
Business Combinations [Abstract] | |
Acquisitions | NOTE 3 - ACQUISITIONS |
On February 23, 2015 the Company entered into a material definitive agreement whereby, the Company issued an aggregate of 2.5 million shares of the restricted common stock valued at $1,700,000, in exchange for all of the issued and outstanding shares of Franklin Networks, Inc., a Tennessee corporation (“Franklin”), a company that began operations in September 2014. | |
In addition, effective March 2, 2015, the Company entered into an employment contract with Mark McGarrity, a former owner of Franklin, in which Mr. McGarrity agreed to oversee and guide the Company’s information technologies related to the development and maintenance of the Company’s web sites, mobile applications, games, and advertising in connection to software development. The Company agreed to compensate Mr. McGarrity with an annualized base salary of $120,000 and a signing bonus of 250,000 shares of restricted common stock with a fair value of $145,000. The shares of common stock contain provisions restricting Mr. McGarrity to selling no more than 5,000 shares daily for every 250,000 shares of daily trading volume after Mr. McGarrity complies with Rule 144. | |
The assets of Franklin consisted primarily of intangible assets including employment contracts, consulting contracts, customer lists, customer relationships, trade secrets, trade designs, technical expertise, know how, proposals, internet web domains, internet web sites, trade names, other intellectual property, and contractual relationships with Ad Service providers. This acquisition will be accounted for using the purchase method of accounting. The Company’s management estimates that there are identifiable intangible assets, principally, the domains or websites, of approximately $265,000 with the remainder of the purchase price of $1,435,000 recorded to goodwill at March 31, 2015. The Company estimates that the intangible assets will have a life of 3 years. The Company plans to update its purchase price allocation upon completion of an independent valuation firm’s measurement and allocation of the purchase price based upon the fair value of the acquired assets. | |
The Company will amend its Form 8-K filed on February 27, 2015 to include audited financial statements and pro forma information for Franklin. As Franklin did not operate in the corresponding period in the previous year, no pro-forma financial information was available. |
Property_And_Equipment
Property And Equipment | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Property and Equipment | NOTE 4 - PROPERTY AND EQUIPMENT | ||||||||
Property and equipment consisted of the following: | |||||||||
31-Mar-15 | 31-Dec-14 | ||||||||
Equipment | $ | 127,034 | $ | 106,861 | |||||
Furniture & fixtures | 3,964 | 3,964 | |||||||
Leasehold improvements | 274,637 | 274,637 | |||||||
405,635 | 385,462 | ||||||||
Less: accumulated depreciation and amortization | (248,914 | ) | (230,212 | ) | |||||
Property and Equipment, Net | $ | 156,721 | $ | 155,250 | |||||
Depreciation and amortization expense for the three months ended March 31, 2015 and 2014 was $18,702 and, $18,066, respectively. |
Related_Party_Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2015 | |
Related Party Transactions | |
Related Party Transactions | NOTE 5 - RELATED PARTY TRANSACTIONS |
On February 23, 2015, the Company acquired Franklin Networks, Inc. from Mark McGarrity and another minority shareholder. Subsequently, on March 2, 2015, Mr. McGarrity was hired as Chief Information Officer of the Company. | |
As of March 31, 2015 all activities of the Company’s wholly owned subsidiary Franklin Networks Inc. are conducted on a rent free basis from shared business offices of an officer of the Company located at 101 Creekstone Blvd, Suite 103, Franklin, TN 37064. Currently, there are no outstanding debts owed by the Company for the use of these facilities. |
Common_Stock_Transactions
Common Stock Transactions | 3 Months Ended |
Mar. 31, 2015 | |
Equity [Abstract] | |
Common Stock Transactions | NOTE 6 - COMMON STOCK TRANSACTIONS |
In December 2014 the Company entered into an employment agreement with two officers effective February 2015. As part of the agreement, the Company agreed to issue a total of 5,500,000 shares of the Company’s restricted common stock as a form of signing bonus. The Company determined that it was contractually obligated to issue the 5,500,000 signing bonus shares at December 31, 2014 and as a result, recorded its fair value of $987,500 in the 2014 statement of operations and comprehensive income as part of professional fees. The shares issuable were valued at the date of the respective agreements. These shares were issued on January 9, 2015. | |
On January 9, 2015 the Company issued 1,250,000 restricted common shares as part of the base salary pursuant to employment contracts with two officers of the Company. These shares were recorded at fair value of $618,750 in the statement of operations and comprehensive income as part of Labor and related expenses for the three months ended March 31, 2015. | |
On February 1, 2015, the Company issued 2,250,000 restricted common shares pursuant to consulting agreements with various third parties. These shares were recorded at fair value of $891,458 in the statement of operations and comprehensive income as part of professional fees for the three months ended March 31, 2015. | |
On February 23, 2015 the Company issued 2,500,000 shares of the its restricted common stock valued at $1,700,000, in exchange for all of the issued and outstanding shares of Franklin Networks, Inc., a Tennessee corporation (“Franklin”).. | |
On February 23, 2015, the Company issued 250,000 restricted common shares as a form of signing bonus pursuant to an employment agreement with an officer of the Company. These shares were recorded at fair value of $170,000 in the statement of operations and comprehensive income as part of professional fees for the three months ended March 31, 2015. | |
On March 31, 2015, the Company issued 25,000 restricted common shares as part of the base salary pursuant to employment contracts with an officer of the Company. These shares were recorded at fair value of $15,125 in the statement of operations and comprehensive income as part of Labor and related expenses for the three months ended March 31, 2015. |
Segment_Reporting
Segment Reporting | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||
Segment Reporting | NOTE 7 – SEGMENT REPORTING | ||||||||||||||||
The Company operated in one segment during 2014, but concurrent with the acquisition of Franklin Networks, Inc. on February 23, 2015 (see Note 3), we operate in two segments: Digital Media and Restaurant, which provide different products or services. | |||||||||||||||||
Digital Media Segment - Through our wholly owned subsidiary Franklin Networks, Inc., the Company produces content for websites and attracts visitors to our sites, and then we programmatically sell advertising on our sites, which generates revenue. Through its wholly owned subsidiary SPYR APPS, LLC, the Company, the Company is expanding its digital media presence into the mobile app industry. | |||||||||||||||||
Restaurant Segment - Through our wholly owned subsidiary E.A.J.: PHL, Airport, Inc. we own and operate one “American Diner” theme restaurant called “Eat at Joe’s ® located in the Philadelphia International Airport. Eat at Joe’s menu includes a variety of dishes including omelets, waffles and hotcakes, sandwiches, hot dogs, burgers, traditional Philly Steak sandwiches, custom wraps, fresh salads and a full complement of beverages and deserts, all made with top quality, fresh ingredients and all prepared to order. | |||||||||||||||||
Revenue and expenses earned and charged between segments are eliminated in consolidation. Corporate expenses, interest income, interest expense, gains and losses on marketable securities and income taxes are managed on a total company basis. | |||||||||||||||||
Information related to these segments is as follows: | |||||||||||||||||
REPORTABLE SEGMENTS | |||||||||||||||||
THREE MONTHS ENDED MARCH 31, | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Digital Media | Restaurants | Corporate | Consolidated | ||||||||||||||
2015 | |||||||||||||||||
Revenues | $ | 100,295 | $ | 331,921 | $ | — | $ | 432,216 | |||||||||
Cost of sales | — | 100,588 | — | 100,588 | |||||||||||||
General and administrative | 62,756 | 274,099 | 1,894,805 | 2,231,660 | |||||||||||||
Depreciation and amortization | — | 17,797 | 905 | 18,702 | |||||||||||||
Operating income (loss) | $ | 37,539 | $ | (60,563 | ) | $ | (1,895,710 | ) | $ | (1,918,734 | ) | ||||||
Current assets | $ | 370,137 | $ | 200,543 | $ | 10,666,526 | $ | 11,237,206 | |||||||||
Fixed assets | — | 149,647 | 7,074 | 156,721 | |||||||||||||
Intangible assets and goodwill | 1,700,000 | — | 25,202 | 1,725,202 | |||||||||||||
Other non-current assets | — | 15,000 | 5,689 | 20,689 | |||||||||||||
Total assets | $ | 2,070,137 | $ | 365,190 | $ | 10,704,491 | $ | 13,139,818 | |||||||||
REPORTABLE SEGMENTS | |||||||||||||||||
THREE MONTHS ENDED MARCH 31, | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Digital Media | Restaurants | Corporate | Consolidated | ||||||||||||||
2014 | |||||||||||||||||
Revenues | $ | — | $ | 344,590 | $ | — | $ | 344,590 | |||||||||
Cost of sales | — | 105,710 | — | 105,710 | |||||||||||||
General and administrative | — | 231,160 | 113,571 | 344,731 | |||||||||||||
Depreciation and amortization | — | 18,066 | — | 18,066 | |||||||||||||
Operating Loss | $ | — | $ | (10,346 | ) | $ | (113,571 | ) | $ | (123,917 | ) | ||||||
Current assets | $ | — | $ | 220,855 | $ | 12,879,694 | $ | 13,100,549 | |||||||||
Fixed assets | — | 155,250 | — | 155,250 | |||||||||||||
Intangible assets and goodwill | — | — | 5,000 | 5,000 | |||||||||||||
Other non-current assets | — | 15,000 | — | 15,000 | |||||||||||||
Total assets | $ | — | $ | 391,105 | $ | 12,884,694 | $ | 13,275,799 |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 8 – SUBSEQUENT EVENTS |
The Company granted our legal counsel 500,000 shares of common stock with a fair value of approximately $295,000 pursuant to a new April 2015 legal service agreement. The shares were valued at market at the date of the agreement. |
Organization_And_Summary_Of_Si1
Organization And Summary Of Significant Accounting Policies (Policies) | 3 Months Ended | ||
Mar. 31, 2015 | |||
Organization And Summary Of Significant Accounting Policies Policies | |||
Interim Financial Statements | Interim Financial Statements | ||
The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed with the SEC. The condensed consolidated balance sheet as of December 31, 2014 included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including notes, required by GAAP. | |||
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to fairly present the Company's financial position and results of operations for the interim periods reflected. Except as noted, all adjustments contained herein are of a normal recurring nature. Results of operations for the fiscal periods presented herein are not necessarily indicative of fiscal year-end results. | |||
Organization | Organization | ||
The Company was incorporated as Conceptualistics, Inc. on January 6, 1988 in Delaware. | |||
From 2002 to present, the Company has owned and operated one “American Diner” theme restaurant called “Eat at Joe’s (R)”. Located in the Philadelphia International Airport, Eat at Joe's, the classic American grill, is a restaurant concept that takes you back to eating in the era when favorite old rockers were playing on chrome-spangled jukeboxes and neon signs reflected on shiny tabletops of the 1950's. | |||
On December 16, 2014, the Company amended it articles of incorporation and changed its domicile to Nevada. | |||
On February 23, 2015 the Company issued an aggregate of 2.5 million shares of the restricted common stock valued at $1,700,000, in exchange for the issued and outstanding shares of Franklin Networks, Inc., A Tennessee corporation. (“Franklin”). By virtue of the agreement, the Company acquired the assets and business of Franklin including, but not limited to: employment contracts, consulting contracts, customer lists, customer relationships, trade secrets, trade designs, technical expertise, know how, proposals, internet web domains, internet web sites, trade names, and other intellectual property, and contractual relationships with Ad Service providers (see Note 3). | |||
In February 2015, pursuant to the approval of the Company’s Board of Directors and shareholders, the Company changed its name from Eat at Joe’s, Ltd. to SPYR, Inc. and adopted a new ticker symbol “SPYR” effective March 12, 2015. | |||
On March 24, 2015, the Company organized its wholly owned subsidiary SPYR APPS, LLC, (“Apps”) a Nevada Limited Liability Company for the purpose of expanding the Company’s digital media presence into the mobile app industry. | |||
Nature of Business | Nature of Business | ||
The primary focus of the business of SPYR, Inc. (the “Company”) is digital media publishing and advertising and the development of mobile applications and games. The Company also owns and operates an “American Diner” theme restaurant called “Eat at Joe’s (R).” | |||
Principles of Consolidation | Principles of Consolidation | ||
The consolidated financial statements include the accounts of SPYR, Inc. and its wholly-owned subsidiaries, Franklin Networks, Inc., a Tennessee corporation, E.A.J.: PHL, Airport Inc., a Pennsylvania corporation, SPYR APPS, LLC, a Nevada Limited Liability Company, E.A.J. Market East, Inc., a Nevada corporation, and E.A.J. MO, Inc., a Nevada corporation. All significant intercompany accounts and transactions have been eliminated. | |||
The results of operations attributable to subsidiaries are included in the consolidated results of operations beginning on the date on which the Company’s interest in a subsidiary was acquired. | |||
Inventories | Inventories | ||
Inventories consist of food, paper items and related materials to be sold through its restaurant and are stated at the lower of cost (first-in, first-out method) or market. | |||
Revenue Recognition | Revenue Recognition | ||
The Company generates revenues from two of its wholly owned subsidiaries, which operate separate and distinct businesses. The following is a summary of our revenue recognition policies. | |||
Through our wholly owned subsidiary Franklin Networks, Inc. we produce content for websites and attract visitors to our sites, and then sell advertising on our sites, which generates revenue. Ad revenue is recognized when the service has been provided and collection is reasonable assured. | |||
Though our wholly owned subsidiary E.A.J.: PHL, Airport, Inc. we generate revenue from the sale of food and beverage through its restaurant. Revenue from the restaurant is recognized upon receipt of payment. | |||
Income Taxes | Income Taxes | ||
The Company accounts for income taxes under the provisions of ASC 740 “Accounting for Income Taxes,” which requires a company to first determine whether it is more likely than not (which is defined as a likelihood of more than fifty percent) that a tax position will be sustained based on its technical merits as of the reporting date, assuming that taxing authorities will examine the position and have full knowledge of all relevant information. A tax position that meets this more likely than not threshold is then measured and recognized at the largest amount of benefit that is greater than fifty percent likely to be realized upon effective settlement with a taxing authority. | |||
Deferred income taxes are recognized for the tax consequences related to temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for tax purposes at each year end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recognized when, based on the weight of all available evidence, it is considered more likely than not that all, or some portion, of the deferred tax assets will not be realized. The Company evaluates its valuation allowance requirements based on projected future operations. When circumstances change and cause a change in management's judgment about the recoverability of deferred tax assets, the impact of the change on the valuation is reflected in current income. Income tax expense is the sum of current income tax plus the change in deferred tax assets and liabilities. | |||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets | ||
Intangible assets acquired, either individually or with a group of other assets (but not those acquired in a business combination), are initially recognized and measured based on fair value. Goodwill acquired in business combinations is initially computed as the amount paid by the acquiring company in excess of the fair value of the net assets acquired. | |||
The cost of internally developing, maintaining and restoring intangible assets (including goodwill) that are not specifically identifiable, that have indeterminate lives, or that are inherent in a continuing business and related to an entity as a whole, are recognized as an expense when incurred. | |||
An intangible asset (excluding goodwill) with a definite useful life is amortized; an intangible asset with an indefinite useful life is not amortized until its useful life is determined to be no longer indefinite. The remaining useful lives of intangible assets not being amortized are evaluated at least annually to determine whether events and circumstances continue to support an indefinite useful life. | |||
The Company evaluates intangible assets and goodwill for impairment, at a minimum, on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable from its estimated undiscounted future cash flows. Recoverability of goodwill and intangible assets is measured by comparing their net book value to the related projected undiscounted cash flows from these assets, considering a number of factors, including past operating results, budgets, economic projections, market trends and product development cycles. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment loss. | |||
At March 31, 2015, goodwill and intangible assets balances were $1,435,000 and $290,202, respectively. There were no indications of impairment based on management’s assessment of these assets at March 31, 2015. Factors we consider important that could trigger an impairment review include significant underperformance relative to historical or projected future operating results, significant changes in the manner of the use of our assets or the strategy for our overall business, and significant negative industry or economic trends. If current economic conditions worsen causing decreased revenues and increased costs, we may have to record an impairment to our goodwill and intangible assets. | |||
Recent Accounting Standards | Recent Accounting Standards | ||
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, however, FASB has proposed a one-year deferral. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Management is currently assessing the impact the adoption of ASU 2014-09 and has not determined the effect of the standard on our ongoing financial reporting. | |||
In August 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impact the adoption of ASU 2014-15 on the Company’s financial statement presentation and disclosures. | |||
In January 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-01 (Subtopic 225-20) - Income Statement - Extraordinary and Unusual Items. ASU 2015-01 eliminates the concept of an extraordinary item from GAAP. As a result, an entity will no longer be required to segregate extraordinary items from the results of ordinary operations, to separately present an extraordinary item on its income statement, net of tax, after income from continuing operations or to disclose income taxes and earnings-per-share data applicable to an extraordinary item. However, ASU 2015-01 will still retain the presentation and disclosure guidance for items that are unusual in nature and occur infrequently. ASU 2015-01 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-01 is not expected to have a material effect on the Company’s consolidated financial statements. Early adoption is permitted. | |||
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. | |||
The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financials properly reflect the change. | |||
Earnings (Loss) Per Share | Earnings (Loss) Per Share | ||
The Company’s computation of earnings (loss) per share (EPS) includes basic and diluted EPS. Basic EPS is calculated by dividing the Company’s net income (loss) available to common stockholders by the weighted average number of common shares during the period. Diluted EPS reflects the potential dilution, using the treasury stock method that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the net income (loss) of the Company. In computing diluted EPS, the treasury stock method assumes that outstanding options and warrants are exercised and the proceeds are used to purchase common stock at the average market price during the period. | |||
The basic and fully diluted shares for the three months ended March 31, 2015 are the same because the inclusion of the potential shares (Class A – 26,909,028, Class E – 161,394) would have had an anti-dilutive effect due to the Company generating a loss for the three months ended March 31, 2015. | |||
Diluted net income per common share for the three months ended March 31, 2014 was calculated based on an increased number of shares that would be outstanding assuming that the Class E preferred shares were converted to 3,380,663 common shares as of March 31, 2014. | |||
Pervasiveness of Estimates | Pervasiveness of Estimates | ||
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions used by management affected fixed asset impairment analysis, goodwill and intangible asset impairment analysis, amounts of potential liabilities and valuation of issuance of equity securities. Actual results could differ from those estimates. | |||
Concentration of Credit Risk | Concentration of Credit Risk | ||
The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company maintains the majority of its cash balances with financial institutions, in the form of demand deposits. At March 31, 2015, the Company had cash deposits in three financial institutions that were above FDIC limits of $250,000. The Company believes that no significant concentration of credit risk exists with respect to these cash balances because of its assessment of the creditworthiness and financial viability of these two financial institutions. | |||
Fair Value of Financial Instruments | Fair Value of Financial Instruments | ||
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. | |||
The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below: | |||
Level 1: | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. | ||
Level 2: | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. | ||
Level 3: | Pricing inputs that are generally observable inputs and not corroborated by market data. | ||
The carrying amount of the Company’s financial assets and liabilities, such as cash and cash equivalents, inventory, prepaid expenses, and accounts payable and accrued expenses approximate their fair value because of the short maturity of those instruments. | |||
The Company’s trading securities are measured at fair value using level 1 fair values. | |||
Reclassifications | Reclassifications | ||
Certain financial position and financial results in 2014, including accounts receivable, merchant fees, professional fees and other general and administrative expenses have been reclassified to conform to the current year presentation. Such reclassification did not change the reported total assets or net loss during 2014. | |||
In presenting the Company’s consolidated balance sheet as of December 31, 2014, the Company separately reported accounts receivable of $1,093 that were previously combined with prepaid expenses and other current assets, and separately reported intangible assets of $5,000 that were previously combined with other assets. | |||
In presenting the Company’s consolidated statement of operations for the three months ended March 31, 2014, the Company reclassified merchant fees of $7,419, that were previously reflected as net revenues, to other general and administrative expenses and professional fees of $147,720, that were previously combined with other general and administrative expenses, have been separately stated. |
Investment_In_Marketable_Secur1
Investment In Marketable Securities (Tables) | 3 Months Ended | |||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||
Investment In Marketable Securities Tables | ||||||||||||||||||
Schedule of Change in Investment in Securities | Change in investments in securities is summarized as follows: | |||||||||||||||||
Fair Value at | Proceeds from | Loss on | Change In Unrealized | Fair Value at | ||||||||||||||
1-Jan-15 | Sale | Sale | Gain (Loss) | 31-Mar-15 | ||||||||||||||
$ | 6,026,780 | $ | (747,489 | ) | $ | (298,122 | ) | $ | -1,122,546 | $ | 3,858,623 | |||||||
Schedule of Gross Realized Gain\Loss on Securities | During the three months ended March 31, 2015 and 2014, sales proceeds and gross realized gains and losses on securities classified as available-for-sale securities and trading securities were: | |||||||||||||||||
31-Mar-15 | 31-Mar-14 | |||||||||||||||||
Sales proceeds | $ | 747,489 | $ | 8,176,418 | ||||||||||||||
Gross realized (losses) | $ | (298,122 | ) | $ | (122,122 | ) | ||||||||||||
Gross realized gains | — | 5,941,554 | ||||||||||||||||
Gain on sale of marketable securities | $ | (298,122 | ) | $ | 5,819,432 | |||||||||||||
Schedule of Fair Value of Assets Measured on Recurring Basis | The following table discloses the assets measured at fair value on a recurring basis and the methods used to determine fair value: | |||||||||||||||||
Fair Value Measurements at Reporting Date Using | ||||||||||||||||||
Quoted Prices | Significant | Significant | ||||||||||||||||
in Active | Other | Unobservable | ||||||||||||||||
Fair Value at | Markets | Observable Inputs | Inputs | |||||||||||||||
31-Mar-15 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||||
Trading securities | $ | 3,858,623 | $ | 3,858,623 | $ | — | $ | — | ||||||||||
Money market funds | 520,713 | 520,713 | — | — | ||||||||||||||
Total | $ | 4,379,336 | $ | 4,379,336 | $ | — | $ | — | ||||||||||
Fair Value Measurements at Reporting Date Using | ||||||||||||||||||
Quoted Prices | Significant | Significant | ||||||||||||||||
in Active | Other | Unobservable | ||||||||||||||||
Fair Value at | Markets | Observable Inputs | Inputs | |||||||||||||||
31-Dec-14 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||||
Trading securities | $ | 6,026,780 | $ | 6,026,780 | $ | — | $ | — | ||||||||||
Money market funds | 673,281 | 673,281 | — | — | ||||||||||||||
Total | $ | 6,700,061 | $ | 6,700,061 | $ | — | $ | — |
Property_And_Equipment_Tables
Property And Equipment (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Schedule of Property and Equipment | Property and equipment consisted of the following: | ||||||||
31-Mar-15 | 31-Dec-14 | ||||||||
Equipment | $ | 127,034 | $ | 106,861 | |||||
Furniture & fixtures | 3,964 | 3,964 | |||||||
Leasehold improvements | 274,637 | 274,637 | |||||||
405,635 | 385,462 | ||||||||
Less: accumulated depreciation and amortization | (248,914 | ) | (230,212 | ) | |||||
Property and Equipment, Net | $ | 156,721 | $ | 155,250 |
Segment_Reporting_Tables
Segment Reporting (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||
Schedule of Segment Reporting | Information related to these segments is as follows: | ||||||||||||||||
REPORTABLE SEGMENTS | |||||||||||||||||
THREE MONTHS ENDED MARCH 31, | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Digital Media | Restaurants | Corporate | Consolidated | ||||||||||||||
2015 | |||||||||||||||||
Revenues | $ | 100,295 | $ | 331,921 | $ | — | $ | 432,216 | |||||||||
Cost of sales | — | 100,588 | — | 100,588 | |||||||||||||
General and administrative | 62,756 | 274,099 | 1,894,805 | 2,231,660 | |||||||||||||
Depreciation and amortization | — | 17,797 | 905 | 18,702 | |||||||||||||
Operating income (loss) | $ | 37,539 | $ | (60,563 | ) | $ | (1,895,710 | ) | $ | (1,918,734 | ) | ||||||
Current assets | $ | 370,137 | $ | 200,543 | $ | 10,666,526 | $ | 11,237,206 | |||||||||
Fixed assets | — | 149,647 | 7,074 | 156,721 | |||||||||||||
Intangible assets and goodwill | 1,700,000 | — | 25,202 | 1,725,202 | |||||||||||||
Other non-current assets | — | 15,000 | 5,689 | 20,689 | |||||||||||||
Total assets | $ | 2,070,137 | $ | 365,190 | $ | 10,704,491 | $ | 13,139,818 | |||||||||
REPORTABLE SEGMENTS | |||||||||||||||||
THREE MONTHS ENDED MARCH 31, | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Digital Media | Restaurants | Corporate | Consolidated | ||||||||||||||
2014 | |||||||||||||||||
Revenues | $ | — | $ | 344,590 | $ | — | $ | 344,590 | |||||||||
Cost of sales | — | 105,710 | — | 105,710 | |||||||||||||
General and administrative | — | 231,160 | 113,571 | 344,731 | |||||||||||||
Depreciation and amortization | — | 18,066 | — | 18,066 | |||||||||||||
Operating Loss | $ | — | $ | (10,346 | ) | $ | (113,571 | ) | $ | (123,917 | ) | ||||||
Current assets | $ | — | $ | 220,855 | $ | 12,879,694 | $ | 13,100,549 | |||||||||
Fixed assets | — | 155,250 | — | 155,250 | |||||||||||||
Intangible assets and goodwill | — | — | 5,000 | 5,000 | |||||||||||||
Other non-current assets | — | 15,000 | — | 15,000 | |||||||||||||
Total assets | $ | — | $ | 391,105 | $ | 12,884,694 | $ | 13,275,799 |
Investment_In_Marketable_Secur2
Investment In Marketable Securities (Schedule Of Change In Investment In Securities) (Details) (Trading Securities, USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Trading Securities | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Fair Value at January 1, 2015 | $6,026,780 |
Proceeds from Sale | -747,489 |
Loss on Sale | -298,122 |
Change In Unrealized Gain (Loss) | -1,122,546 |
Fair Value at March 31, 2015 | $3,858,623 |
Investment_In_Marketable_Secur3
Investment In Marketable Securities (Schedule Of Gross Realized Gain/Loss) (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Investment In Marketable Securities Schedule Of Gross Realized Gainloss Details | ||
Sale Proceeds | $747,489 | $8,176,418 |
Gross realized (losses) | -298,122 | -122,122 |
Gross realized gains | 5,941,554 | |
Gain on sale of marketable securities | ($298,122) | $5,819,432 |
Investment_In_Marketable_Secur4
Investment In Marketable Securities (Schedule Of Fair Value Of Assets) (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading Securities | $3,858,623 | $6,026,780 |
Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading Securities | 3,858,623 | 6,026,780 |
Money market funds | 520,713 | 673,281 |
Total | 4,379,336 | 6,700,061 |
Fair Value Measurements Using Quoted Prices in Active Markets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading Securities | 3,858,623 | 6,026,780 |
Money market funds | 520,713 | 673,281 |
Total | 4,379,336 | 6,700,061 |
Fair Value Measurements Using Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading Securities | ||
Money market funds | ||
Total | ||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading Securities | ||
Money market funds | ||
Total |
Property_And_Equipment_Details
Property And Equipment (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 |
Property and Equipment, Gross | $405,635 | $385,462 | |
Less: accumulated depreciation and amortization | -248,914 | -230,212 | |
Property and Equipment, Net | 156,721 | 155,250 | 155,250 |
Equipment | |||
Property and Equipment, Gross | 127,034 | 106,861 | |
Furniture And Fixtures | |||
Property and Equipment, Gross | 3,964 | 3,964 | |
Leasehold Improvements | |||
Property and Equipment, Gross | $274,637 | $274,637 |
Segment_Reporting_Details
Segment Reporting (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Revenues | $432,216 | $344,590 | |
Cost of sales | 100,588 | 105,710 | |
General and administrative | 2,231,660 | 344,731 | |
Depreciation and amortization | 18,702 | 18,066 | |
Operating income (loss) | -1,918,734 | -123,917 | |
Current assets | 11,237,206 | 13,100,549 | 13,100,549 |
Fixed assets | 156,721 | 155,250 | 155,250 |
Intangible assets and goodwill | 1,725,202 | 5,000 | 5,000 |
Other non-current assets | 20,689 | 15,000 | 15,000 |
Total assets | 13,139,818 | 13,275,799 | 13,275,799 |
Operating Segments | Digital Media | |||
Revenues | 100,295 | ||
Cost of sales | |||
General and administrative | 62,756 | ||
Depreciation and amortization | |||
Operating income (loss) | 37,539 | ||
Current assets | 370,137 | ||
Fixed assets | |||
Intangible assets and goodwill | 1,700,000 | ||
Other non-current assets | |||
Total assets | 2,070,137 | ||
Operating Segments | Restaurants | |||
Revenues | 331,921 | 344,590 | |
Cost of sales | 100,588 | 105,710 | |
General and administrative | 274,099 | 231,160 | |
Depreciation and amortization | 17,797 | 18,066 | |
Operating income (loss) | -60,563 | -10,346 | |
Current assets | 200,543 | 220,855 | |
Fixed assets | 149,647 | 155,250 | |
Intangible assets and goodwill | |||
Other non-current assets | 15,000 | 15,000 | |
Total assets | 365,190 | 391,105 | |
Operating Segments | Corporate | |||
Revenues | |||
Cost of sales | |||
General and administrative | 1,894,805 | 113,571 | |
Depreciation and amortization | 905 | ||
Operating income (loss) | -1,895,710 | -113,571 | |
Current assets | 10,666,526 | 12,879,694 | |
Fixed assets | 7,074 | ||
Intangible assets and goodwill | 25,202 | 5,000 | |
Other non-current assets | 5,689 | ||
Total assets | $10,704,491 | $12,884,694 |
Organization_And_Summary_Of_Si2
Organization And Summary Of Significant Accounting Policies (Narrative) (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Goodwill | $1,435,000 | ||
Intangible assets | 290,202 | ||
FDIC limit of cash deposits | 250,000 | ||
Accounts receivable | 78,555 | 4,271 | |
Prepaid expenses and other current assets | 53,665 | 60,819 | |
Other assets | 20,689 | 15,000 | 15,000 |
Intangible assets | 1,725,202 | 5,000 | 5,000 |
Merchant fees revenues | 432,216 | 344,590 | |
Other general and administrative | 100,154 | 52,310 | |
Professional fees | 1,233,320 | 147,720 | |
As Reported | |||
Prepaid expenses and other current assets | 1,093 | ||
Other assets | 5,000 | ||
Merchant fees revenues | 7,419 | ||
Other general and administrative | 147,720 | ||
As Restated | |||
Accounts receivable | 1,093 | ||
Intangible assets | 5,000 | ||
Other general and administrative | 7,419 | ||
Professional fees | $147,720 | ||
Series A Preferred Stock | |||
Antidilutive shares excluded from computation of basic earnings per share | 26,909,028 | ||
Series E Preferred Stock | |||
Incremental common shares attributable to dilutive effect of conversion of preferred stock | 3,380,663 | ||
Antidilutive shares excluded from computation of basic earnings per share | 161,394 |
Acquisitions_Narrative_Details
Acquisitions (Narrative) (Details) (USD $) | 3 Months Ended | 0 Months Ended | |
Mar. 31, 2015 | Mar. 02, 2015 | Feb. 23, 2015 | |
Common stock issued for acquisition of Franklin Networks, Inc, value | $1,700,000 | ||
Common stock issued for base salary and signing bonus, value | 803,875 | ||
Goodwill | 1,435,000 | ||
Estimated useful life of intangible assets | 3 years | ||
Restricted Stock | Employment Agreement | Mark McGarrity - Chief Information Officer | |||
Commitment towards annual base salary | 120,000 | ||
Common stock issued for base salary and signing bonus, shares | 250,000 | 250,000 | |
Common stock issued for base salary and signing bonus, value | 145,000 | 170,000 | |
Employment agreement description | The shares of common stock contain provisions restricting Mr. McGarrity to selling no more than 5,000 shares daily for every 250,000 shares of daily trading volume after Mr. McGarrity complies with Rule 144. | ||
Material Definitive Agreement With Franklin Networks Inc | |||
Aquired intangible assets | 265,000 | ||
Goodwill | 1,435,000 | ||
Material Definitive Agreement With Franklin Networks Inc | Restricted Stock | |||
Common stock issued for acquisition of Franklin Networks, Inc, shares | 2,500,000 | ||
Common stock issued for acquisition of Franklin Networks, Inc, value | $1,700,000 |
Common_Stock_Transactions_Narr
Common Stock Transactions (Narrative) (Details) (USD $) | 3 Months Ended | 0 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | ||||
Mar. 31, 2015 | Mar. 31, 2014 | Feb. 01, 2015 | Mar. 02, 2015 | Feb. 23, 2015 | Jan. 09, 2015 | Dec. 31, 2014 | Dec. 31, 2014 | Mar. 31, 2015 | |
Restricted common stock obligation for signing bonus | 0 | 5,500,000 | 5,500,000 | 0 | |||||
Fair value of common stock issuable for employee signing bonuses | $803,875 | ||||||||
Common stock issued for base salary and signing bonus, value | 803,875 | ||||||||
Common stock issued for consulting services, value | 891,458 | ||||||||
Restricted Stock | Consulting Agreement With Various Third Parties | |||||||||
Common stock issued for consulting services, shares | 2,250,000 | ||||||||
Common stock issued for consulting services, value | 891,458 | ||||||||
Employment Agreement | Restricted Stock | Mark McGarrity - Chief Information Officer | |||||||||
Employment agreement description | The shares of common stock contain provisions restricting Mr. McGarrity to selling no more than 5,000 shares daily for every 250,000 shares of daily trading volume after Mr. McGarrity complies with Rule 144. | ||||||||
Common stock issued for base salary and signing bonus, shares | 250,000 | 250,000 | |||||||
Common stock issued for base salary and signing bonus, value | 145,000 | 170,000 | |||||||
Employment Agreement | Two Officers | Restricted Stock | |||||||||
Employment agreement description | In December 2014 the Company entered into an employment agreement with two officers effective February 2015. As part of the agreement, the Company agreed to issue a total of 5,500,000 shares of the Company’s restricted common stock as a form of signing bonus. | ||||||||
Restricted common stock obligation for signing bonus | 5,500,000 | 5,500,000 | |||||||
Fair value of common stock issuable for employee signing bonuses | 987,500 | ||||||||
Common stock issued for base salary and signing bonus, shares | 1,250,000 | ||||||||
Common stock issued for base salary and signing bonus, value | 618,750 | ||||||||
Employment Agreement | An Officer | Restricted Stock | |||||||||
Common stock issued for base salary and signing bonus, shares | 25,000 | ||||||||
Common stock issued for base salary and signing bonus, value | $15,125 |
Subsequent_Event_Narrative_Det
Subsequent Event (Narrative) (Details) (USD $) | 3 Months Ended | 1 Months Ended |
Mar. 31, 2015 | Apr. 30, 2015 | |
Subsequent Event [Line Items] | ||
Stock issued for legal service agreement, value | $891,458 | |
Subsequent Event | Legal Counsel - Legal Service Agreement | ||
Subsequent Event [Line Items] | ||
Stock issued for legal service agreement, shares | 500,000 | |
Stock issued for legal service agreement, value | $295,000 |