2. SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2013 |
Accounting Policies [Abstract] | ' |
Accounting Method | ' |
Accounting Method |
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The Company’s financial statements are prepared in accordance with US GAAP and reflect all adjustments (all of which are normal and recurring in nature) that, in the opinion of management, are necessary for fair presentation of the financial statements. |
Use of Estimates | ' |
Use of Estimates |
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The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Cash and Cash Equivalents | ' |
Cash and Cash Equivalents |
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The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. The Company did not have any cash equivalents as of and for the years ended December 31, 2013 and 2012. |
Valuation of Long-Lived Assets | ' |
Valuation of Long-Lived Assets |
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Long-lived assets such as property and equipment, software, and intangible assets with definite useful lives are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable or in the period in which the held for sale criteria are met. For assets held and used, this analysis consists of comparing the asset’s carrying value to the expected future cash flows to be generated from the asset on an undiscounted basis. If the carrying amount of the asset is determined not to be recoverable, a write-down to fair value is recorded. Fair values are determined based on quoted market values, discounted cash flows, or external appraisals, as applicable. Long-lived assets are reviewed for impairment at the individual asset or the asset group level for which the lowest level of independent cash flows can be identified. |
Fixed Assets | ' |
Fixed Assets |
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Fixed assets consist of property and equipment and capitalized software costs and computer equipment as of December 31, 2013 and 2012. |
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Property and Equipment |
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Depreciation and amortization are computed using the straight-line method over the estimated economic useful lives of the related assets as follows: |
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Computer equipment | 3 years | | | | | | | |
Office furniture and fixtures | 5-7 years | | | | | | | |
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Upon sale or other disposition of property and equipment, the cost and related accumulated depreciation or amortization are removed from the accounts and any gain or loss is included in the determination of income or loss. |
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Expenditures for maintenance and repairs are charged to expense as incurred. Major overhauls and betterments are capitalized and depreciated over their estimated economic useful lives. Depreciation expense was $815 and $319 for the years ended December 31, 2013 and 2012. |
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Capitalized Software Development |
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The Company capitalizes software development costs incurred from the time technological feasibility has been obtained until the product is generally released to customers. Amortization of capitalized software begins when the products are available to customers and is done using the straight-line method over the remaining estimated economic life of the product which the Company expects to occur in FYE 2014. The Company achieved technological feasibility with regard to its mobile phone technology during the fourth quarter of 2010. As of December 31, 2013 and 2012, the Company had capitalized software development costs of $422,330 and $291,343, respectively. No amortization was recorded for the years ended December 31, 2013 and 2012. |
Revenue Recognition | ' |
Revenue Recognition |
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The Company is currently in the development stage and has no revenues from its operations. |
Concentration of Credit Risk | ' |
Concentration of Credit Risk |
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The Company has no significant concentrations of credit risk. |
Earnings Per Common Share | ' |
Earnings Per Common Share |
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The computations of basic and fully diluted earnings per share of common stock are based on the weighted average number of common shares outstanding during the period of the financial statements, plus the common stock equivalents which would arise from the exercise of stock options and warrants outstanding during the period, or the exercise of convertible preferred stock. For the period ended December 31, 2013, common stock equivalents related to the conversion of preferred rights have been included in calculation of diluted earnings per share as shown in the table below. Common stock equivalents have not been included in the computations for the period ended December 31, 2012 because they are anti-dilutive. |
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Following is a reconciliation of the income (loss) per share for the years ended December 31, 2013 and 2012, respectively: |
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| | Twelve Months Ending December 31, | |
| | 2013 | | | 2012 | |
Numerator: | | | | | | | | |
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Income (loss) before extraordinary items | | $ | 521,067 | | | $ | (450,571 | ) |
Income from extraordinary items, net of tax | | | – | | | | – | |
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Net income (loss) | | $ | 521,067 | | | $ | (450,571 | ) |
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Denominator: | | | | | | | | |
Weighted-average common shares outstanding | | | | | | | | |
Basic | | | 49,757,302 | | | | 46,043,507 | |
Conversion of preferred rights | | | 22,370,432 | | | | – | |
Diluted | | | 72,127,734 | | | | 46,043,507 | |
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Income (loss) per share | | | | | | | | |
Basic | | | | | | | | |
Income (loss) before extraordinary items | | $ | 0.01 | | | $ | (0.01 | ) |
Income from extraordinary items, net of tax | | | – | | | | – | |
Net income (loss) | | $ | 0.01 | | | $ | (0.01 | ) |
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Diluted | | | | | | | | |
Income (loss) before extraordinary items | | $ | 0.01 | | | $ | (0.01 | ) |
Income from extraordinary items, net of tax | | | – | | | | – | |
Net income (loss) | | $ | 0.01 | | | $ | (0.01 | ) |
Intangibles | ' |
Intangibles |
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Intangible assets, consisting of patents and trademarks, are amortized on a straight-line basis over 5 years from the date the patent or trademark is issued. Intangible assets with indefinite lives are tested for impairment on an annual basis or when the facts and circumstances suggest that the carrying amount of the assets may not be recovered. At December 31, 2013, intangible assets have a cost of $105,273, accumulated amortization of $18,375, and had a net book value of $86,898. During the year ended December 31, 2012, the Company wrote off intangible assets totaling $775,045 that were fully amortized that were no longer being utilized by the Company. As of December 31, 2012, intangible assets had a cost of $65,721, accumulated amortization of $3,051 and had a net book value of $62,670. Amortization expense of the Company’s existing intangible assets over the remaining life of the Company’s intangible assets will be $20,945 for the years 2014 to 2016, $17,893 for 2015, and $5,313 for 2016. |
Income Taxes | ' |
Income Taxes |
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The Company accounts for income taxes pursuant to ASC 740, Income Taxes (“ASC 740”). Under this accounting standard, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences. Given the Company’s history of losses, the Company maintains a full valuation allowance with respect to any deferred tax assets. |
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ASC 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the uncertain tax position to determine the amount to recognize in the financial statements. Our uncertain tax positions relate to certain state tax issues for which we have recorded an estimated current liability for in the accompanying financial statements at December 31, 2013 and December 31, 2012. There has been no significant change in the unrecognized tax benefit through December 31, 2013. |
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The Company did not have any uncertain tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months. The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of December 31, 2013 and 2012, the Company had $6,423 and $5,328 of accrued interest and penalties related to uncertain tax positions. |
Research and Development | ' |
Research and Development |
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The Company continues to develop additional technology which facilitates the use of in-store advertising and coupon services through various technologies. As time and technology have progressed, the system being developed by the Company comprises mobile and other state of the art technology that facilitates retailers and package good companies providing "product specific" point-of-purchase advertising to its customers using proprietary software. The Company is currently developing mobile smart phone technology that will provide similar functionality to the Klever-Kart System. |
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For the years ended December 31, 2013 and 2012, the Company incurred costs of $2,940 and $7,833 respectively, for research and development of the technology involved with developing its technologies. |
Fair Value of Financial Instruments | ' |
Fair Value of Financial Instruments |
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The Company has adopted ASC 820-10-50, Fair Value Measurements. This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows: Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement. |
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In determining fair value, the Company utilizes observable market data when available, or models that incorporate observable market data. In addition to market information, the Company incorporates transaction-specific details that, in management’s judgment, market participants would take into account in measuring fair value. |
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In arriving at fair-value estimates, the Company utilizes the most observable inputs available for the valuation technique employed. If a fair-value measurement reflects inputs at multiple levels within the hierarchy, the fair-value measurement is characterized based upon the lowest level of input that is significant to the fair-value measurement. |
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The carrying amounts reported in the accompanying balance sheets as of December 31, 2013 and 2012 for cash and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and expected realization and their current market rate of interest. |
Recently Issued Accounting Pronouncements | ' |
Recently Issued Accounting Pronouncements |
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In July 2012, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2012-02, Intangibles-Goodwill and Other (Topic350): Testing Indefinite-Lived Intangible Assets for Impairment. This ASU permits an entity the option to first assess qualitative factors to determine whether it is more-likely-than-not that an indefinite-lived intangible asset is impaired. If the qualitative assessment supports the conclusion that it is more-likely-than-not that the fair value of the asset exceeds its carrying amount, the entity would not need to perform the two-step quantitative impairment test. The focus of the guidance is to reduce the cost and complexity of performing impairment tests for indefinite-lived intangible assets other than goodwill, and to improve consistency in impairment testing among long-lived asset categories. This ASU is effective for annual and interim impairment tests performed prior to the issuance of the final ASU, if an entity’s financial statements for the most recent annual or interim period have not yet been issued. This ASU did not have a material impact on the Company’s consolidated financial statements. |
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In October 2012, the FASB issued ASU 2012-04, Technical Corrections and Improvements. The amendments in this update cover a wide range of topics in the Accounting Standards Codification (“ASC”). These amendments include technical corrections and improvements to the ASC and conforming amendments related to fair value measurements. The amendments in this update were effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 did not have a material impact on the Company’s consolidated financial statements. |
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In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This update provides guidance on when to classify an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for: (1) a net operating loss carryforward, (2) a similar tax loss, or (3) a tax credit carryforward in the financial statements. Otherwise, such an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be classified in the financial statements as a liability. ASU 2013-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. |
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The Company does not expect the adoption of this ASU to have a material impact on the Company’s consolidated financial statements. |