Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 11-May-15 | |
SUPPLEMENTAL DISCLOSURES | ||
Entity Registrant Name | KLEVER MARKETING INC | |
Entity Central Index Key | 866439 | |
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 | 55,126,162 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2015 |
Balance_Sheets
Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
CURRENT ASSETS | ||
Cash | $20,540 | $23,194 |
Total Current Assets | 20,540 | 23,194 |
Capitalized software development and licenses | 489,273 | 451,706 |
Office equipment | 3,350 | 3,350 |
Less accumulated depreciation | -2,633 | -2,522 |
Total Fixed Assets | 489,990 | 452,534 |
OTHER ASSETS | ||
Intangibles, net | 67,685 | 64,699 |
Total Other Assets | 67,685 | 64,699 |
TOTAL ASSETS | 578,215 | 540,427 |
CURRENT LIABILITIES | ||
Accounts payable | 345,436 | 315,180 |
Accrued liabilities | 245,601 | 201,814 |
Preferred stock dividends | 0 | 30,063 |
Related party notes payable | 3,500 | 3,500 |
Total Current Liabilities | 594,537 | 550,557 |
Total Liabilities | 594,537 | 550,557 |
STOCKHOLDERS' EQUITY | ||
Common stock (par value $0.01), 250,000,000 shares authorized, 54,563,662 and 53,691,043 shares issued and outstanding, at March 31, 2015 and December 31, 2014, respectively. | 545,637 | 536,910 |
Treasury stock, 100,000 shares at March 31, 2015 and December 31, 2014 | -1,000 | -1,000 |
Paid in capital in excess of par value | 18,008,739 | 17,935,076 |
Retained deficit | -18,573,970 | -18,485,214 |
Total Stockholders' Deficit | -16,322 | -10,130 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | 578,215 | 540,427 |
Preferred Class A | ||
STOCKHOLDERS' EQUITY | ||
Convertible preferred stock | 1,382 | 1,326 |
Preferred Class B | ||
STOCKHOLDERS' EQUITY | ||
Convertible preferred stock | 1,048 | 1,005 |
Preferred Class C | ||
STOCKHOLDERS' EQUITY | ||
Convertible preferred stock | $1,842 | $1,767 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Convertible preferred stock - shares authorized | 2,000,000 | 2,000,000 |
Common stock par value | $0.01 | $0.01 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 54,563,662 | 53,691,043 |
Common stock, shares outstanding | 54,563,662 | 53,691,043 |
Treasury stock shares | 100,000 | 100,000 |
Preferred Class A | ||
Convertible preferred stock - par value | $0.01 | $0.01 |
Convertible preferred stock - shares authorized | 150,000 | 150,000 |
Convertible preferred stock - shares issued | 138,217 | 132,582 |
Convertible preferred stock - shares outstanding | 138,217 | 132,582 |
Convertible preferred stock - liquidation preference | $3,593,642 | |
Preferred Class B | ||
Convertible preferred stock - par value | $0.01 | $0.01 |
Convertible preferred stock - shares authorized | 125,000 | 125,000 |
Convertible preferred stock - shares issued | 104,757 | 100,486 |
Convertible preferred stock - shares outstanding | 104,757 | 100,486 |
Convertible preferred stock - liquidation preference | 1,780,869 | |
Preferred Class C | ||
Convertible preferred stock - par value | $0.01 | $0.01 |
Convertible preferred stock - shares authorized | 200,000 | 200,000 |
Convertible preferred stock - shares issued | 184,194 | 176,685 |
Convertible preferred stock - shares outstanding | 184,194 | 176,685 |
Convertible preferred stock - liquidation preference | $1,215,680 |
Statements_of_Operations
Statements of Operations (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Income Statement [Abstract] | ||
General and administrative | $86,863 | $66,662 |
Research and development | 1,606 | 2,141 |
Total Operating Expenses | 88,469 | 68,803 |
OTHER INCOME (EXPENSE) | ||
Litigation settlements | 0 | 41,250 |
Total Other Income (Expense) | 0 | 41,250 |
NET LOSS BEFORE INCOME TAXES | -88,469 | -27,553 |
INCOME TAXES | -287 | -274 |
NET LOSS | ($88,756) | ($27,827) |
BASIC LOSS PER COMMON SHARE | $0 | $0 |
FULLY DILUTED INCOME (LOSS) PER COMMON SHARE | $0 | $0 |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED | 54,051,824 | 51,728,568 |
Statement_of_Stockholders_Equi
Statement of Stockholders' Equity (USD $) | Preferred Stock | Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings / Accumulated Deficit | Total |
Beginning balance, value at Dec. 31, 2014 | $4,098 | $536,910 | ($1,000) | $17,935,076 | ($18,485,214) | ($10,130) |
Beginning balance, shares at Dec. 31, 2014 | 409,753 | 53,691,043 | ||||
Common stock issued for cash, shares | 872,619 | |||||
Common stock issued for cash, value | 8,727 | 43,773 | 52,500 | |||
Accrual for preferred stock dividend | -41,788 | -41,788 | ||||
Preferred stock issued as dividends, shares | 17,415 | |||||
Preferred stock issued as dividends | 174 | 71,678 | 71,852 | |||
Net loss | -88,756 | -88,756 | ||||
Ending balance, value at Mar. 31, 2015 | $4,272 | $545,637 | ($1,000) | $18,008,739 | ($18,573,970) | ($16,322) |
Ending balance, shares at Mar. 31, 2015 | 427,168 | 54,563,662 |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | ($88,756) | ($27,827) |
Adjustments to reconcile net loss to net cash used by operating activities: | ||
Depreciation and amortization | 4,920 | 5,600 |
Changes in operating assets and liabilities: | ||
Increase in accounts payable | 30,256 | 18,785 |
Increase in accrued liabilities | 43,787 | 27,274 |
Net Cash (Used by) Provided by Operating Activities | -9,793 | 23,832 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Capitalized software development costs | -37,567 | -43,904 |
Intellectual property development costs | -7,794 | -4,161 |
Net Cash Used by Investing Activities | -45,361 | -48,065 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from capital stock issued | 52,500 | 0 |
Net Cash Provided by Financing Activities | 52,500 | 0 |
NET DECREASE IN CASH | -2,654 | -24,233 |
CASH AT BEGINNING OF PERIOD | 23,194 | 51,654 |
CASH AT END OF PERIOD | 20,540 | 27,421 |
Cash Paid For: | ||
Interest | 0 | 0 |
Income taxes | 0 | 0 |
Non-Cash Transactions from Investing and Financing Activities: | ||
Common stock to be issued for capitalized software development | 0 | 6,600 |
Accrual for preferred stock dividends payable with preferred shares | 41,788 | 24,030 |
Preferred stock issued to pay dividends | $71,852 | $0 |
1_BASIS_OF_FINANCIAL_STATEMENT
1. BASIS OF FINANCIAL STATEMENT PRESENTATION | 3 Months Ended |
Mar. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF FINANCIAL STATEMENT PRESENTATION | The accompanying unaudited financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim condensed financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim condensed financial statements be read in conjunction with the Company's audited financial statements and notes thereto included in its December 31, 2014 Annual Report on Form 10-K. Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. |
Klever Marketing, Inc. (the “Company”) was created to develop, market and distribute an electronic shopping cart device for in-store advertising, promotion and media content and retail shopper services and has not commenced its planned principal operations. The Company’s activities since inception have consisted principally of developing various applications of its electronic shopping cart concept including its mobile application for smart phones which the Company is currently testing in retail supermarkets, obtaining patents and trademarks related to its technology, and raising capital. The Company’s activities are subject to significant risks and uncertainties including failing to secure additional funding needed to finalize development of the Company’s technology and to commercialize its product in a profitable manner. |
2_SIGNIFICANT_ACCOUNTING_POLIC
2. SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Accounting Policies [Abstract] | |||||||||
SIGNIFICANT ACCOUNTING POLICIES | Earnings Per Common Share | ||||||||
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 periods where the Company incurred a net loss, common stock equivalents related to the conversion of preferred rights have not been included in the calculation of diluted earnings per share because they are anti-dilutive. | |||||||||
Following is a reconciliation of the income (loss) per share for the three months ended March 31, 2015 and 2014, respectively: | |||||||||
Three Months Ending March 31, | |||||||||
2015 | 2014 | ||||||||
Numerator: | |||||||||
Net income (loss) | $ | (88,756 | ) | $ | (27,827 | ) | |||
Denominator: | |||||||||
Weighted-average common shares outstanding | |||||||||
Basic | 54,051,824 | 51,728,568 | |||||||
Conversion of preferred rights | – | – | |||||||
Diluted | 54,051,824 | 51,728,568 | |||||||
Income (loss) per share | |||||||||
Basic | |||||||||
Net income (loss) | $ | (0.00 | ) | $ | (0.00 | ) | |||
Diluted | |||||||||
Net income (loss) | $ | (0.00 | ) | $ | (0.00 | ) | |||
Capitalized Software Development | |||||||||
The Company capitalizes software development costs incurred from the time technological feasibility has been obtained until the product is generally released to customers. The Company achieved technological feasibility with regard to its mobile phone technology during the fourth quarter of 2010. The Company had $489,273 and $451,706 of capitalized software development costs as of March 31, 2015 and December 31, 2014, respectively. | |||||||||
Income Taxes | |||||||||
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. | |||||||||
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 March 31, 2015 and December 31, 2014. There has been no significant change in the unrecognized tax benefit through March 31, 2015 except for accruing additional interest and penalties. The Company recognizes interest and penalties related to uncertain tax positions as a component of the income tax provision. The Company has not identified any uncertain tax positions for which it is reasonably possible that the total amount of liability for unrecognized tax positions will significantly increase or decrease within the next 12 months. | |||||||||
The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward period under the Federal tax laws. | |||||||||
Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate. | |||||||||
The Company files income tax returns in the U.S. federal and Utah jurisdictions. Tax years 2011 to current remain open to examination by U.S. federal and state tax authorities. | |||||||||
From inception through March 31, 2015, the Company has incurred net losses and, therefore, had no federal income tax liability. To date, the Company has incurred the statutory minimum tax liability for state taxes and has accrued for its uncertain state tax position described above. The net deferred tax asset generated by the loss carry-forwards has been fully reserved. The cumulative federal net operating loss carry-forward is approximately $14.7 million as of March 31, 2015, and will expire in the years 2018 through 2035. The cumulative state net operating loss carry-forward is approximately $5.1 million as of March 31, 2015, and will expire in the years 2017 through 2030. | |||||||||
Research and Development | |||||||||
The Company continues to develop its 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 to provide "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. | |||||||||
During the three months ended March 31, 2015 and 2014, the Company incurred costs of $1,606 and $2,141 respectively, for research and development of its technologies. | |||||||||
Fair Value of Financial Instruments | |||||||||
The FASB provides the framework for measuring fair value. 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. | |||||||||
The carrying amounts reported in the accompanying balance sheets as of March 31, 2015 and December 31, 2014 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. | |||||||||
Recent Accounting Pronouncements | |||||||||
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that are adopted by the Company as of the specified effective date or earlier if allowed. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption. | |||||||||
Adoption of ASU 2014-10 Development Stage Entities | |||||||||
In June 2014, the FASB issued Accounting Standards Update (“ASU”) ASU 2014-10 Development Stage Entities. The amendments in ASU 2014-10 remove the definition of a development stage entity from Topic 915 Development Stage Entities, thereby removing the distinction between development stage entities and other reporting entities from US GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of operations, cash flows, and shareholder’s equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations. ASU 2014-10 is effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. The Company may early adopt ASU 2014-10 for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued. | |||||||||
The Company adopted this standard effective April 1, 2014. The Company’s financial statements have been impacted by the adoption of this ASU mainly by the removal of inception-to-date information in the Company’s statements of operations, cash flows, and stockholders’ equity. | |||||||||
ASU 2014-09 Revenue from Contracts with Customers | |||||||||
In May 2014, the FASB issued ASU 2014-09 Revenue from Contracts with Customers. The amendments in ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in Topic 605 Revenue Recognition, and most industry-specific guidance, and creates a Topic 606 Revenue from Contracts with Customers. | |||||||||
The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: | |||||||||
Step 1: Identify the contract(s) with a customer. | |||||||||
Step 2: Identify the performance obligations in the contract. | |||||||||
Step 3: Determine the transaction price. | |||||||||
Step 4: Allocate the transaction price to the performance obligations in the contract. | |||||||||
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. | |||||||||
ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company’s current financial statements will not be affected by the adoption of ASU 2014-09 as the Company has not recognized revenues. |
3_GOING_CONCERN
3. GOING CONCERN | 3 Months Ended |
Mar. 31, 2015 | |
Going Concern | |
GOING CONCERN | As shown in the accompanying financial statements, the Company generated a net loss of $88,756 during the three months ended March 31, 2015. The Company did not generate any revenue from product sales during the three months ended March 31, 2015 or March 31, 2014. As of March 31, 2015, the Company’s current and total liabilities exceeded its current assets by $573,997. As of March 31, 2015, the Company had $20,540 of cash available on hand. |
The Company will require additional funding during the next twelve months to finance the growth of its current operations and achieve its strategic objectives. These factors, as well as the uncertain conditions that the Company faces relative to capital raising activities, create substantial doubt as to the Company’s ability to continue as a going concern. The Company is seeking to raise additional capital principally through private placement offerings and is targeting strategic partners in an effort to finalize the development of its products and begin generating revenues. The ability of the Company to continue as a going concern is dependent upon the success of future capital offerings or alternative financing arrangements and expansion of its operations. The accompanying financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. Management is actively pursuing additional sources of financing sufficient to generate enough cash flow to fund its operations through calendar year 2015. However, management cannot make any assurances that such financing will be secured. |
4_PREFERRED_STOCK
4. PREFERRED STOCK | 3 Months Ended |
Mar. 31, 2015 | |
Preferred Stock, Including Additional Paid in Capital [Abstract] | |
PREFERRED STOCK | Authorized Shares |
In accordance with the Company’s bylaws, the Company has authorized a total of 2,000,000 shares of preferred stock for all classes. As of March 31, 2015 and December 31, 2014, there were 427,168 and 409,753 preferred shares issued and outstanding, for all classes, respectively. As of March 31, 2015, all of the Company’s outstanding preferred shares are owned by a Company that is controlled by the Company’s CEO. | |
Preferred Stock Dividends | |
As of March 31, 2015, the Company had no accrued and unpaid preferred stock dividends. To date all accrued dividends for preferred stock have been authorized for payment through the issuance of preferred stock based on the ratios for each class of preferred stock described below. | |
Class A Voting Preferred Stock | |
The Company has 150,000 shares of “Class A Voting Preferred Stock” (“Class A Shares”) authorized. As of March 31, 2015 and December 31, 2014, there were 138,217 and 132,582 Class A Shares outstanding, respectively. The Class A Shares are convertible into 99.035 shares of common stock. Holders of Class A Shares are entitled to receive dividends at the rate of $2.20 per share per annum, payable semi-annually. Dividends are cumulative and may be paid in cash or in kind through the distribution of .0425 Class A Shares, Series 1, for each outstanding Class A Share, on each dividend payment date. Class A Shares carry a liquidation preference of $26.00 per share plus any accrued but unpaid dividends on such shares, if any, and adjusted for combinations, splits, dividends or distributions of shares of stock with respect to such shares. Class A shares are redeemable by the Company, in whole or in part, at the option of the Board of Directors of the Company, at any time. | |
Class B Voting Preferred Stock | |
The Company has 125,000 shares of “Class B Voting Preferred Stock” (“Class B Shares”) authorized. As of March 31, 2015 and December 31, 2014, there were 104,757 and 100,486 Class B Shares outstanding, respectively. The Class B Shares are convertible into 64.754 shares of common stock. Holders of Class B Shares are entitled to receive dividends at the rate of $1.70 per share per annum, payable semi-annually. Dividends are cumulative and may be paid in cash or in kind through the distribution of .0425 Class B Shares for each outstanding Class B Share, on each dividend payment date. Class B Shares carry a liquidation preference of $17.00 per share plus any accrued but unpaid dividends on such shares, if any, and adjusted for combinations, splits, dividends or distributions of shares of stock with respect to such shares. Class B shares are redeemable by the Company, in whole or in part, at the option of the Board of Directors of the Company, at any time. | |
Class C Voting Preferred Stock | |
The Company has 200,000 shares of “Class C Voting Preferred Stock” (“Class C Shares”) authorized. As of March 31, 2015 and December 31, 2014, there were 184,194 and 176,685 Class C Shares outstanding, respectively. The Class C Shares are convertible into 25.140 shares of common stock. Holders of Class C Shares are entitled to receive dividends at the rate of $0.66 per share per annum, payable semi-annually. Dividends are cumulative and may be paid in cash or in kind through the distribution of .0425 Class C Shares for each outstanding Class C Share, on each dividend payment date. Class C Shares carry a liquidation preference of $6.60 per share plus any accrued but unpaid dividends on such shares, if any, and adjusted for combinations, splits, dividends or distributions of shares of stock with respect to such shares. Class C shares are redeemable by the Company, in whole or in part, at the option of the Board of Directors of the Company, at any time. |
5_STOCK_OPTIONS
5. STOCK OPTIONS | 3 Months Ended | ||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||
STOCK OPTIONS | The shareholders approved, by a majority vote, the adoption of the 1998 Stock Incentive Plan (the “Plan”). As amended on August 11, 2003, the Plan reserves 20,000,000 shares of common stock for issuance upon the exercise of options which may be granted from time-to-time to officers, directors and certain employees and consultants of the Company or its subsidiaries by the Board of Directors. The Plan permits the award of both qualified and non-qualified incentive stock options. During the three months ended March 31, 2015, the Company issued 100,000 options to an investor who simultaneously purchased shares in the Company. | ||||||||||||||||||||||
The summary of option activity for the three months ended March 31, 2015 is presented below: | |||||||||||||||||||||||
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Life (years) | |||||||||||||||||||||
Balance as of December 31, 2014 | – | – | – | ||||||||||||||||||||
Granted | 100,000 | 0.075 | 0.63 | ||||||||||||||||||||
Exercised | – | – | – | ||||||||||||||||||||
Canceled | – | – | – | ||||||||||||||||||||
Expired | – | – | – | ||||||||||||||||||||
Balance as of March 31, 2015 | 100,000 | 0.075 | 0.5 | ||||||||||||||||||||
Outstanding and exercisable options presented by price range as of March 31, 2015 are as follows: | |||||||||||||||||||||||
Options Outstanding | Options Exerciseable | ||||||||||||||||||||||
Weighted | |||||||||||||||||||||||
Average | Weighted | Weighted | |||||||||||||||||||||
Number of | Remaining | Average | Number of | Average | |||||||||||||||||||
Exercise | Options | Life | Exercise | Options | Exercise | ||||||||||||||||||
Price | Outstanding | (Years) | Price | Exercisable | Price | ||||||||||||||||||
$ | 0.075 | 100,000 | 0.5 | $ | 0.075 | 100,000 | $ | 0.075 | |||||||||||||||
The intrinsic values of outstanding and vested stock options were as follows: | |||||||||||||||||||||||
March 31, | December 31, | ||||||||||||||||||||||
2015 | 2014 | ||||||||||||||||||||||
Intrinsic value - options outstanding | $ | 500 | – | ||||||||||||||||||||
Intrinsic value - options exercisable | $ | 500 | – | ||||||||||||||||||||
Intrinsic value - options exercised | – | – | |||||||||||||||||||||
6_COMMON_STOCK
6. COMMON STOCK | 3 Months Ended |
Mar. 31, 2015 | |
STOCKHOLDERS' EQUITY | |
COMMON STOCK | During the three months ended March 31, 2015, the Company issued 872,619 shares to investors for $52,500 in cash. As more fully described in Note 5, one investor also received options to purchase shares of the Company’s restricted common stock in connection with his investment in the Company. |
During the three months ended March 31, 2014, the Company issued 110,000 shares of common stock valued at $6,600 to a consultant for services. |
7_RELATED_PARTY_TRANSACTIONS
7. RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2015 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | The Company accrued $40,500 for compensation for the CEO during the three months ended March 31, 2015 and 2014 of which $0 was paid. |
The bookkeeper, who is the wife of the CEO, earned $4,500 during the three months ended March 31, 2015 for services provided to the Company of which $0 was paid. The bookkeeper, who is the wife of the CEO, earned $4,500 during the three months ended March 31, 2014 for services provided to the Company. $3,000 of these amounts were paid during the three months ended March 31, 2014. |
8_LITIGATION_SETTLEMENTS
8. LITIGATION SETTLEMENTS | 3 Months Ended |
Mar. 31, 2015 | |
Litigation Settlements | |
LITIGATION SETTLEMENTS | The Company did not record any proceeds from litigation settlements during the quarter ended March 31, 2015. During the three months ended March 31, 2014, the Company as Plaintiff settled certain lawsuits against various defendants for infringement against patents owned by the Company resulting in the Company recording $41,250 in net proceeds from litigation settlements. |
9_SUBSEQUENT_EVENTS
9. SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | On April 4, 2015, the Company granted 1,500,000 stock options to purchase shares of its restricted common stock to its Chairman and CEO, 1,200,000 stock options to its COO, and 100,000 stock options to its other board member. The options vest immediately and are exercisable at $0.05 per share. The options expire on January 31, 2018. |
On April 15, 2015, the Company sold 62,500 shares of restricted common stock to a third party investor for $5,000. | |
On April 24, 2015, the Company sold 500,000 shares of restricted common stock to a third party investor for $35,000. | |
The Company has evaluated events subsequent to period end pursuant to the requirements of ASC 855 and has determined that there are no additional events to disclose. |
2_SIGNIFICANT_ACCOUNTING_POLIC1
2. SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Accounting Policies [Abstract] | |||||||||
Earnings Per Common Share | Earnings Per Common Share | ||||||||
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 periods where the Company incurred a net loss, common stock equivalents related to the conversion of preferred rights have not been included in the calculation of diluted earnings per share because they are anti-dilutive. | |||||||||
Following is a reconciliation of the income (loss) per share for the three months ended March 31, 2015 and 2014, respectively: | |||||||||
Three Months Ending March 31, | |||||||||
2015 | 2014 | ||||||||
Numerator: | |||||||||
Net income (loss) | $ | (88,756 | ) | $ | (27,827 | ) | |||
Denominator: | |||||||||
Weighted-average common shares outstanding | |||||||||
Basic | 54,051,824 | 51,728,568 | |||||||
Conversion of preferred rights | – | – | |||||||
Diluted | 54,051,824 | 51,728,568 | |||||||
Income (loss) per share | |||||||||
Basic | |||||||||
Net income (loss) | $ | (0.00 | ) | $ | (0.00 | ) | |||
Diluted | |||||||||
Net income (loss) | $ | (0.00 | ) | $ | (0.00 | ) | |||
Capitalized Software Development | Capitalized Software Development | ||||||||
The Company capitalizes software development costs incurred from the time technological feasibility has been obtained until the product is generally released to customers. The Company achieved technological feasibility with regard to its mobile phone technology during the fourth quarter of 2010. The Company had $489,273 and $451,706 of capitalized software development costs as of March 31, 2015 and December 31, 2014, respectively. | |||||||||
Income Taxes | Income Taxes | ||||||||
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. | |||||||||
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 March 31, 2015 and December 31, 2014. There has been no significant change in the unrecognized tax benefit through March 31, 2015 except for accruing additional interest and penalties. The Company recognizes interest and penalties related to uncertain tax positions as a component of the income tax provision. The Company has not identified any uncertain tax positions for which it is reasonably possible that the total amount of liability for unrecognized tax positions will significantly increase or decrease within the next 12 months. | |||||||||
The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward period under the Federal tax laws. | |||||||||
Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate. | |||||||||
The Company files income tax returns in the U.S. federal and Utah jurisdictions. Tax years 2011 to current remain open to examination by U.S. federal and state tax authorities. | |||||||||
From inception through March 31, 2015, the Company has incurred net losses and, therefore, had no federal income tax liability. To date, the Company has incurred the statutory minimum tax liability for state taxes and has accrued for its uncertain state tax position described above. The net deferred tax asset generated by the loss carry-forwards has been fully reserved. The cumulative federal net operating loss carry-forward is approximately $14.7 million as of March 31, 2015, and will expire in the years 2018 through 2035. The cumulative state net operating loss carry-forward is approximately $5.1 million as of March 31, 2015, and will expire in the years 2017 through 2030. | |||||||||
Research and Development | Research and Development | ||||||||
The Company continues to develop its 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 to provide "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. | |||||||||
During the three months ended March 31, 2015 and 2014, the Company incurred costs of $1,606 and $2,141 respectively, for research and development of its technologies. | |||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments | ||||||||
The FASB provides the framework for measuring fair value. 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. | |||||||||
The carrying amounts reported in the accompanying balance sheets as of March 31, 2015 and December 31, 2014 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. | |||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements | ||||||||
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that are adopted by the Company as of the specified effective date or earlier if allowed. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption. | |||||||||
Adoption of ASU 2014-10 Development Stage Entities | |||||||||
In June 2014, the FASB issued Accounting Standards Update (“ASU”) ASU 2014-10 Development Stage Entities. The amendments in ASU 2014-10 remove the definition of a development stage entity from Topic 915 Development Stage Entities, thereby removing the distinction between development stage entities and other reporting entities from US GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of operations, cash flows, and shareholder’s equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations. ASU 2014-10 is effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. The Company may early adopt ASU 2014-10 for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued. | |||||||||
The Company adopted this standard effective April 1, 2014. The Company’s financial statements have been impacted by the adoption of this ASU mainly by the removal of inception-to-date information in the Company’s statements of operations, cash flows, and stockholders’ equity. | |||||||||
ASU 2014-09 Revenue from Contracts with Customers | |||||||||
In May 2014, the FASB issued ASU 2014-09 Revenue from Contracts with Customers. The amendments in ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in Topic 605 Revenue Recognition, and most industry-specific guidance, and creates a Topic 606 Revenue from Contracts with Customers. | |||||||||
The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: | |||||||||
Step 1: Identify the contract(s) with a customer. | |||||||||
Step 2: Identify the performance obligations in the contract. | |||||||||
Step 3: Determine the transaction price. | |||||||||
Step 4: Allocate the transaction price to the performance obligations in the contract. | |||||||||
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. | |||||||||
ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company’s current financial statements will not be affected by the adoption of ASU 2014-09 as the Company has not recognized revenues. |
2_SIGNIFICANT_ACCOUNTING_POLIC2
2. SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Accounting Policies [Abstract] | |||||||||
Earnings Per Common Share | Three Months Ending March 31, | ||||||||
2015 | 2014 | ||||||||
Numerator: | |||||||||
Net income (loss) | $ | (88,756 | ) | $ | (27,827 | ) | |||
Denominator: | |||||||||
Weighted-average common shares outstanding | |||||||||
Basic | 54,051,824 | 51,728,568 | |||||||
Conversion of preferred rights | – | – | |||||||
Diluted | 54,051,824 | 51,728,568 | |||||||
Income (loss) per share | |||||||||
Basic | |||||||||
Net income (loss) | $ | (0.00 | ) | $ | (0.00 | ) | |||
Diluted | |||||||||
Net income (loss) | $ | (0.00 | ) | $ | (0.00 | ) |
5_STOCK_OPTIONS_Tables
5. STOCK OPTIONS (Tables) | 3 Months Ended | ||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||
Option activity | Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Life (years) | ||||||||||||||||||||
Balance as of December 31, 2014 | – | – | – | ||||||||||||||||||||
Granted | 100,000 | 0.075 | 0.63 | ||||||||||||||||||||
Exercised | – | – | – | ||||||||||||||||||||
Canceled | – | – | – | ||||||||||||||||||||
Expired | – | – | – | ||||||||||||||||||||
Balance as of March 31, 2015 | 100,000 | 0.075 | 0.5 | ||||||||||||||||||||
Options outstanding and exercisable | Options Outstanding | Options Exerciseable | |||||||||||||||||||||
Weighted | |||||||||||||||||||||||
Average | Weighted | Weighted | |||||||||||||||||||||
Number of | Remaining | Average | Number of | Average | |||||||||||||||||||
Exercise | Options | Life | Exercise | Options | Exercise | ||||||||||||||||||
Price | Outstanding | (Years) | Price | Exercisable | Price | ||||||||||||||||||
$ | 0.075 | 100,000 | 0.5 | $ | 0.075 | 100,000 | $ | 0.075 | |||||||||||||||
Options intrinsic value | March 31, | December 31, | |||||||||||||||||||||
2015 | 2014 | ||||||||||||||||||||||
Intrinsic value - options outstanding | $ | 500 | – | ||||||||||||||||||||
Intrinsic value - options exercisable | $ | 500 | – | ||||||||||||||||||||
Intrinsic value - options exercised | – | – |
2_SIGNIFICANT_ACCOUNTING_POLIC3
2. SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Numerator: | ||
Net income (loss) | ($88,756) | ($27,827) |
Denominator: | ||
Weighted-average common shares outstanding Basic | 54,051,824 | 51,728,568 |
Conversion of preferred rights | 0 | 0 |
Diluted | 54,051,824 | 51,728,568 |
Income (loss) per share | ||
Net income (loss) per share - basic | $0 | $0 |
Income (loss) per share - diluted | $0 | $0 |
2_SIGNIFICANT_ACCOUNTING_POLIC4
2. SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Software development costs | $489,273 | $451,706 | |
Research and development cost | 1,606 | 2,141 | |
Federal | |||
Net operating loss carryforward | 14,700,000 | ||
Net operating loss carry-forward, expiration date | Years 2018 through 2035 | ||
State | |||
Net operating loss carryforward | $5,100,000 | ||
Net operating loss carry-forward, expiration date | Years 2017 through 2030 |
3_GOING_CONCERN_Details_Narrat
3. GOING CONCERN (Details Narrative) (USD $) | Mar. 31, 2015 |
Going Concern | |
Current and total liabilities exceeded to current assets | ($573,997) |
4_PREFERRED_STOCK_Details_Narr
4. PREFERRED STOCK (Details Narrative) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Preferred Stock, Including Additional Paid in Capital [Abstract] | ||
Preferred stock authorized | 2,000,000 | 2,000,000 |
Accrued and unpaid preferred stock dividends | $0 | $30,063 |
5_STOCK_OPTIONS_Details_option
5. STOCK OPTIONS (Details - option activity) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Number of Shares | |
Outstanding, beginning balance | 0 |
Granted | 100,000 |
Exercised | 0 |
Forfeited | 0 |
Outstanding, ending balance | 100,000 |
Exercisable | 100,000 |
Weighted Average Exercise Price | |
Granted | $0.08 |
Outstanding, ending balance | $0.08 |
Exercisable | $0.08 |
Weighed Average Remaining Contractual Life | |
Outstanding, ending balance | 6 months |
Weighted average remaining life exercised | 7 months 17 days |
Recovered_Sheet1
5. STOCK OPTIONS (Details - Options outstanding and exercisable) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Options Outstanding | ||
Options outstanding | 100,000 | 0 |
Weighted average remaining contractual life | 6 months | |
Weighted average exercise price - outstanding | $0.08 | |
Aggregate intrinsic value - outstanding | $500 | $0 |
Options Exercisable | ||
Options exercisable | 100,000 | |
Weighted average exercise price - vested and exercisable | $0.08 |
5_STOCK_OPTIONS_Details_Narrat
5. STOCK OPTIONS (Details Narrative) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Intrinsic value - options outstanding | $500 | $0 |
Intrinsic value - options exercisable | 500 | 0 |
Intrinsic value - options exercised | $0 | |
Shares reserved for issuance | 20,000,000 | |
Stock options outstanding | 100,000 | 0 |
6_COMMON_STOCK_Details_Narrati
6. COMMON STOCK (Details Narrative) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Common stock issued for cash, value | $52,500 | |
Investors | ||
Common stock issued for cash, shares | 872,619 | |
Common stock issued for cash, value | 52,500 | |
Consultant | ||
Stock issued for services, shares | 110,000 | |
Stock issued for services, value | $6,600 |
7_RELATED_PARTY_TRANSACTIONS_D
7. RELATED PARTY TRANSACTIONS (Details Narrative) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Chief Executive Officer [Member] | ||
Officer salaries paid | $0 | $0 |
Accrued officer salaries | 40,500 | 40,500 |
Wife of CEO | ||
Professional fees earned | 4,500 | 4,500 |
Professional fees paid | $3,000 |
9_LITIGATION_SETTLEMENTS_Detai
9. LITIGATION SETTLEMENTS (Details Narrative) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Litigation Settlements | |
Proceeds from litigation settlement | $41,250 |