Document and Entity Information
Document and Entity Information | 3 Months Ended |
May 31, 2018 | |
Document And Entity Information | |
Entity Registrant Name | DigitalTown, Inc. |
Entity Central Index Key | 1,065,598 |
Document Type | S-1/A |
Document Period End Date | May 31, 2018 |
Amendment Flag | true |
Amendment description | The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. |
Current Fiscal Year End Date | --02-28 |
Is Entity a Well-known Seasoned Issuer? | No |
Is Entity a Voluntary Filer? | No |
Entity Filer Category | Smaller Reporting Company |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | May 31, 2018 | Feb. 28, 2018 | Feb. 28, 2017 |
Current assets: | |||
Cash | $ 20,506 | $ 58,712 | $ 539,243 |
Digital currencies | 1,380,156 | ||
Accounts receivable, net | 11,383 | 12,089 | 25,609 |
Short term investment | 10,000 | 10,000 | |
Prepaid domain name renewal fees | 42,451 | 77,977 | 105,775 |
Prepaid expenses | 10,867 | ||
Prepaid insurance | 3,103 | 21,198 | |
Total current assets | 1,475,363 | 161,881 | 691,825 |
Property and equipment, net | 20,473 | 22,433 | 1,812 |
Total assets | 1,495,836 | 184,314 | 693,637 |
Current liabilities: | |||
Accounts payable | 302,705 | 214,700 | 166,847 |
Accounts payable - related parties | 886,532 | 458,125 | 10,612 |
Deferred revenue | 170,000 | 170,000 | 190,000 |
Domain marketing development obligation | 192,869 | 145,906 | |
Interest payable | 10,496 | 34,783 | |
Accrued expenses - related parties | 542,066 | 552,976 | 280,900 |
Notes payable - related parties | 105,479 | ||
Notes payable - third parties, net | 30,548 | ||
Convertible note payable - related party | 120,000 | 468,493 | 400,000 |
Convertible notes payable - third parties, net | 101,098 | 118,655 | |
Total current liabilities | 2,325,766 | 2,299,665 | 1,048,359 |
Commitments and contingencies | |||
Stockholders' equity (deficit): | |||
Common stock, $0.01 par value, 2,000,000,000 shares authorized, 125,749,320 and 84,509,824 shares issued and outstanding at May 31, 2018 and February 28, 2018, respectively | 1,257,493 | 845,098 | 526,060 |
Additional paid-in-capital | 49,246,963 | 43,698,746 | 34,333,479 |
Stock payable | 2,221,603 | 3,426,371 | |
Subscriptions receivable | |||
Accumulated other comprehensive income | (192,348) | 5,098 | 1,868 |
Accumulated deficit | (51,142,038) | (48,885,896) | (38,642,500) |
Total stockholders' equity (deficit) | (829,930) | (2,115,351) | (354,722) |
Total liabilities and stockholders' equity (deficit) | $ 1,495,836 | $ 184,314 | $ 693,637 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | May 31, 2018 | Feb. 28, 2018 | Feb. 28, 2017 |
Stockholders' equity (deficit): | |||
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 2,000,000,000 | 2,000,000,000 | 2,000,000,000 |
Common stock, shares issued | 125,749,320 | 84,509,824 | 52,606,000 |
Common stock, shares outstanding | 125,749,320 | 84,509,824 | 52,606,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | Feb. 28, 2018 | Feb. 28, 2017 | |
Consolidated Statements Of Operations | ||||
Revenues | $ 86,218 | $ 80,271 | $ 327,335 | $ 165,991 |
Cost of revenues | 525,328 | 98,608 | 1,031,344 | 473,056 |
Gross loss | (439,110) | (18,337) | (704,009) | (307,065) |
Operating expenses: | ||||
Selling, general and administrative expenses | 1,223,618 | 1,073,187 | 7,443,296 | 5,168,512 |
Loss from operations | (1,662,728) | (1,091,524) | (8,147,305) | (5,475,577) |
Other income (expense) | ||||
Impairment expense | (1,721,760) | (1,721,760) | (1,725,009) | |
Interest expense | 593,414 | 9,724 | (374,331) | (19,040) |
Total other income (expense) | 593,414 | 9,724 | (2,096,091) | (1,744,049) |
Loss before income taxes | (2,256,142) | (1,101,248) | (10,243,396) | (7,219,626) |
Income tax provision | ||||
Net loss | $ (2,256,142) | $ (1,101,248) | $ (10,243,396) | $ (7,219,626) |
Net loss per common share basic and diluted | $ (0.03) | $ (0.02) | $ (0.17) | $ (0.16) |
Weighted average common shares outstanding basic and diluted | 86,876,957 | 55,059,804 | 61,786,169 | 44,840,743 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) | Common Stock | Additional Paid-In Capital | Stock Payable | Subscription Receivable | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total |
Beginning balance, Shares at Feb. 29, 2016 | 41,461,543 | ||||||
Beginning balance, Amount at Feb. 29, 2016 | $ 414,615 | $ 30,967,377 | $ 37,500 | $ (12,150) | $ (31,422,874) | $ (15,532) | |
Common stock issued for cash, Shares | 6,999,707 | ||||||
Common stock issued for cash, Amount | $ 69,997 | 1,502,453 | 800,500 | 5,000 | 2,377,950 | ||
Stock issued for compensation, Shares | 775,000 | ||||||
Stock issued for compensation, Amount | $ 7,750 | 571,618 | 1,857,121 | 7,150 | 2,443,639 | ||
Stock issued for acquisitions, Shares | 3,000,000 | ||||||
Stock issued for acquisitions, Amount | $ 30,000 | 1,110,000 | 731,250 | 1,871,250 | |||
Stock issued for domain names, Shares | 369,750 | ||||||
Stock issued for domain names, Amount | $ 3,698 | 151,043 | 154,740 | ||||
Exercise of stock options, Amount | 11,948 | 11,948 | |||||
Imputed interest | 19,040 | 19,040 | |||||
Accumulated other comprehensive income | 1,868 | 1,868 | |||||
Net Loss | (7,219,626) | (7,219,626) | |||||
Ending balance, Shares at Feb. 28, 2017 | 52,606,000 | ||||||
Ending balance, Amount at Feb. 28, 2017 | $ 526,060 | 34,333,479 | 3,426,371 | 1,868 | (38,642,500) | (354,722) | |
Common stock issued for cash, Shares | 6,818,333 | ||||||
Common stock issued for cash, Amount | $ 68,183 | 1,261,817 | 332,732 | 1,662,732 | |||
Common stock issued for stock payable, Shares | 8,039,382 | ||||||
Common stock issued for stock payable, Amount | $ 80,394 | 2,478,667 | (2,559,061) | ||||
Stock issued for compensation, Shares | 8,512,776 | ||||||
Stock issued for compensation, Amount | $ 85,128 | 2,147,203 | 521,792 | 2,754,124 | |||
Stock issued for acquisitions, Shares | 8,333,333 | ||||||
Stock issued for acquisitions, Amount | $ 83,333 | 2,328,334 | 2,411,667 | ||||
Conversion of debt | 223,000 | 223,000 | |||||
Exercise of stock options, Shares | 200,000 | ||||||
Exercise of stock options, Amount | $ 2,000 | 18,000 | 20,000 | ||||
Conversion of accrued expenses | 164,743 | 276,769 | 441,512 | ||||
Warrants issued with debt | 450,000 | 450,000 | |||||
BCF | 450,246 | 450,246 | |||||
Imputed interest | 66,257 | 66,257 | |||||
Accumulated other comprehensive income | 3,230 | 3,230 | |||||
Net Loss | (10,243,396) | (10,243,396) | |||||
Ending balance, Shares at Feb. 28, 2018 | 84,509,824 | ||||||
Ending balance, Amount at Feb. 28, 2018 | $ 845,098 | $ 43,698,746 | $ 2,221,603 | $ 5,098 | $ (48,885,896) | $ (2,115,351) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | Feb. 28, 2018 | Feb. 28, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net loss | $ (2,256,142) | $ (1,101,248) | $ (10,243,396) | $ (7,219,626) |
Adjustments to reconcile net loss to net cash flows used in operating activities: | ||||
Depreciation expense | 1,842 | 1,300 | 6,022 | 2,782 |
Loss on conversion of debt and accrued expenses | 329,526 | |||
Depreciation and amortization | 70,929 | 14,805 | ||
Bad debt expense | 114,829 | |||
Debt discount amortization | 562,923 | 276,257 | ||
Loss on acquisition of Appointment.com | 853,955 | |||
Impairment expense | 1,721,760 | 1,721,760 | 1,725,009 | |
Imputed interest | 12,125 | 10,350 | 66,257 | 19,040 |
Stock based compensation | 436,406 | 346,071 | 3,524,123 | 2,455,587 |
Changes in operating assets and liabilities: | ||||
Accounts receivable | 706 | 17,692 | 13,520 | (102,014) |
Prepaid expenses | 24,762 | (27,013) | 35,893 | (104,186) |
Accounts payable | 88,123 | (17,925) | 40,544 | 91,331 |
Accounts payable - related parties | 428,407 | (765) | 447,512 | (131,835) |
Accrued expenses | 7,331 | (20,000) | ||
Accrued expenses - related parties | 428,845 | 158,565 | ||
Deferred revenue | 155,613 | (20,000) | 190,000 | |
Domain marketing development obligation | 46,963 | 145,906 | ||
Digital currencies | (15,882) | |||
Net cash used in operating activities | (662,436) | (635,925) | (3,162,324) | (1,934,540) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Cash received from sale of digital currencies | 98,656 | |||
Cash paid for equipment | (26,423) | |||
Cash paid for office equipment | (26,158) | |||
Cash paid for domain names | (69,500) | |||
Cash received from Comencia acquisition | 11,989 | |||
Cash received from Reserve | 34,256 | |||
Cash received from Appointment.com | 2,240 | |||
Cash paid for Congo acquisition | (125,000) | |||
Cash paid for Cloud.Market | (7,500) | |||
Net cash used in investing activities | 98,656 | (26,423) | (139,169) | (40,504) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Borrowings from convertible note | 735,000 | |||
Borrowings from promissory note | 450,000 | |||
Payments on promissory note | (40,000) | (30,000) | ||
Proceeds from issuance of common stock | 566,950 | 162,500 | 1,662,732 | 2,377,950 |
Net cash provided by financing activities | 526,950 | 162,500 | 2,817,732 | 2,377,950 |
Foreign currency translation adjustment | (1,376) | 3,528 | 3,230 | 1,868 |
Net change in cash and cash equivalents | (38,206) | (496,320) | (480,531) | 404,774 |
Cash and cash equivalents, beginning of year | 58,712 | 539,243 | 539,243 | 134,469 |
Cash and cash equivalents, end of year | 20,506 | 42,923 | 58,712 | 539,243 |
Non-Cash Transactions: | ||||
Issuance of common stock for domain names | 154,740 | |||
Issuance of common stock for stock payable | 1,828,200 | 1,506,250 | 2,559,061 | |
Beneficial conversion feature | 450,246 | |||
Debt discount from warrants | 450,000 | |||
Conversion of debt to common stock | 1,067,528 | 210,000 | ||
Conversion of accrued expenses to stock | $ 121,986 | |||
Stock issued for digital currencies | 1,659,000 | |||
Loss on digital currencies | 196,070 | |||
Stock cancelled for sale of prepaid domains | 3,000 | |||
Finders fee for stock issued | $ 1,000 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
May 31, 2018 | |
Notes to Financial Statements | |
Note 1. Basis of Presentation | The accompanying unaudited consolidated financial information has been prepared by DigitalTown, Inc. (the “Company”) in accordance with accounting principles generally accepted in the United States of America (“U.S.”) (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, it does not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of this financial information have been included. Financial results for the interim period presented are not necessarily indicative of the results that may be expected for the fiscal year as a whole or any other interim period. This financial information should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended February 28, 2018. The Company’s fiscal year end is the last day in February. Our current fiscal year ends on February 28, 2019 and we refer to it as “fiscal 2019”. Last year, our fiscal year ended on February 28, 2018 and we refer to this year as “fiscal 2018”. |
Nature of Operations and Signif
Nature of Operations and Significant Accounting Policies | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Notes to Financial Statements | ||
Note 1. Nature of Business and Summary of Significant Accounting Policies | Nature of Business The Company was founded in 1982 under the laws of the State of Minnesota as Command Small Computer Learning Center, Inc., a computer training company and operated under several different names in the computer hardware and training sector. In 2005, the Company began acquiring domain names. On March 1, 2007, the Company changed its name to DigitalTown, Inc. and began developing a business plan to develop a platform to monetize their domain names. DigitalTown currently provides turn-key hosted solutions to power a comprehensive platform for government entities, citizens and merchants. The easy to use platform helps city officials and local merchants manage a feature-rich Smart City for web and mobile devices and provides residents and visitors with access to Content, Community and Commerce. The Company’s headquarters are located in Bellevue, WA. The Company’s common stock is traded on the OTC Markets under the ticker symbol of DGTW. The Company’s consolidated financial statements have been prepared using U.S. GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has a working capital deficit, recurring losses, and negative cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty. At May 31, 2018, the Company had an accumulated deficit of $51,142,038. The Company anticipates that growth from its operations, expected future proceeds from additional financing through the sale of its common stock or other equity-based securities, and additional sales and/or leases of existing domain names will be sufficient to meet its working capital and capital expenditure needs through at least February 28, 2019. In the event that the Company is unable to obtain additional capital in the future, the Company would reduce operating expenses or cease operations altogether. Principles of Consolidation The consolidated financial statements include the accounts of DigitalTown, Inc. and its wholly-owned subsidiaries and have been prepared by the Company in United States (U.S.) dollars and in accordance with accounting principles generally accepted in the United States, or GAAP. All material intercompany accounts and transactions have been eliminated in consolidation. Reclassifications Certain prior period amounts in the consolidated statement of cash flows have been reclassified to conform to the current period presentation. Proceeds from related party notes payable received in the prior period have been reclassified from the prior period classification. These reclassifications had no impact on previously reported net income or accumulated deficit for any year. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.”) 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. Accounts Receivable Accounts receivable arise from the software licensing of our Rezserve subsidiary. The Company evaluates collectability of accounts receivable based on a combination of factors including the age of the receivable or a specific customer’s inability to meet its financial conditions. In these circumstances, the Company records an allowance to reduce the receivable to an amount it deems collectible. The Company has recorded an allowance for doubtful accounts as of May 31, 2018 and February 28, 2018 of $5,389 and $5,456, respectively. Goodwill and Intangible Assets Goodwill represents the excess of purchase price over the fair value of net tangible and identifiable intangible assets related to completed acquisitions. Goodwill has an indefinite life and is not amortized but instead tested for impairment annually, or more frequently if necessary. Intangible assets are recorded at fair value and are comprised of amounts assigned to acquisition-related items, such as trade names, customer lists, non-compete agreements and intellectual property/technology. Intangible assets are considered either definite or indefinite lived assets. Definite lived intangible assets are amortized on a straight-line basis over their useful lives. Certain intangible assets may have an indefinite life and are not amortized, but rather evaluated for impairment annually. We evaluate any goodwill and intangible assets for an impairment on an annual basis each fiscal year end. We also evaluate goodwill and intangible assets for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the goodwill and intangible assets below the carrying amounts. Based upon our review and analysis, we deemed all of the goodwill and intangible assets acquired in fiscal 2018 as fully impaired. Accordingly, we recognized an impairment expense of $1,721,760. Revenue Recognition Effective March 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the three months ended May 31, 2018 and the twelve months ended February 28, 2018. The Company recognizes revenue when the following four criteria have been met: · Persuasive evidence that a business relationship exists · Delivery has occurred · The price is fixed and determinable · Collectibility is reasonably assured The Company primarily recognizes revenue from sale of software licenses and related development services. Software licensing and development revenue is recognized as invoiced and over the course of the applicable agreements. In the event projects have multiple project milestones, revenue is recognized as milestones are achieved and invoices are submitted for payment. The Company may also be merchant of record for merchant transactions processed on the DigitalTown platform. When this happens, revenue is recognized on the date of the transaction. The Company has experience in merchant transaction fraud mitigation. To the extent chargebacks become material, the Company will implement a formal practice for allowance for doubtful accounts. Fair Value of Financial Instruments Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (ASC) 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under U.S. GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value. As of May 31, 2018 and February 28, 2018, the Company does not have any financial instruments that must be measured under the fair value standard. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows: Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). Level 3 - Unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing the asset or liability. There were no transfers of financial assets or liabilities between Level 1 and Level 2 inputs during the first quarter of fiscal 2019 or the fiscal year 2018. Cash Equivalents The Company considers all highly liquid investments with original maturity of three months or less when purchased to be cash equivalents. As of May 31, 2018 and February 28, 2018, the Company had no cash equivalents. Cash Deposits in Excess of Federally Insured Limits The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. Accounts are insured by the Federal Deposit Insurance Company and currently have insurance coverage up to $250,000. At May 31, 2018 and February 28, 2018, the Company did not have any deposit accounts in excess of federally insured limits. Prepaid Domain Names The annual domain name renewal fees are currently capitalized in the period of renewal then amortized over one year. Only the purchase of new domain names is capitalized. See Note 5 for further information. Property and Equipment Property and equipment are stated at cost and depreciated on a straight-line basis over their estimated useful lives, ranging from three to five years. Leasehold improvements are amortized over the shorter of the useful life or the term of the related lease. The Company recorded $1,842 and $1,300 of depreciation expense for first quarters of fiscal years 2019 and 2018, respectively. Repairs and maintenance costs are expensed as incurred; major renewals and improvements are capitalized. As items of property or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in operating income. See Note 4 for further information. Income Taxes Deferred tax assets (net of any valuation allowance) and liabilities resulting from temporary differences, net operating loss carryforwards and tax credit carryforwards are recorded using an asset-and-liability method. Deferred taxes relating to temporary differences and loss carryforwards are measured using the tax rate expected to be in effect when they are reversed or are realized. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be ultimately realized. The Company has recorded a full valuation allowance against the net deferred tax asset due to the uncertainty of realizing the related future benefits. The Company accounts for income taxes pursuant to FASB guidance. This guidance prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company believes its income tax filing positions and deductions will be sustained upon examination and, accordingly, no reserves or related accruals for interest and penalties have been recorded at May 31, 2018 or February 28, 2018. In accordance with the FASB guidance, the Company has adopted a policy under which, if required to be recognized in the future, interest related to the underpayment of income taxes will be classified as a component of interest expense and any related penalties will be classified in operating expenses in the statements of operations. The Company has three open years of tax returns subject to examination. Stock-Based Compensation, Including Options and Warrants Use of equity for compensation is a material part of the Company’s near-term strategy. The Company recognizes the cost of stock-based compensation plans and awards in operations on a straight-line basis over the respective vesting period of the awards. The Company measures and recognizes compensation expense for all stock-based payment awards made to employees, directors, consultants and advisors. The compensation expense for the Company’s stock-based payments is based on estimated fair values at the time of the grant. The Company estimates the fair value of stock-based payment awards on the date of grant using the Black-Scholes option pricing model. This option pricing model involves a number of assumptions, including the expected lives of stock options, the volatility of the public market price for the Company’s common stock and interest rates. Stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that are ultimately expected to vest. Recently Issued Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Accounting Standards Codification 606 (“ASC 606”)). ASU No. 2014-09 provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the contract and estimating the amount of variable consideration to include in the transaction price attributable to each separate performance obligation. Subsequent to the initial standards, the FASB has also issued several ASUs to clarify specific revenue recognition topics. This guidance will be effective for the Company for its fiscal year 2019. The Company will adopt using the modified retrospective approach to initially apply the update and recognize the remaining contract value at the date of application. The Company does not expect the adoption of ASU 2014-09 to have any impact on its total cash flows from operating, investing or financing activities. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which removes the second step of the two-step goodwill impairment test. Under ASU 2017-04, an entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 does not amend the optional qualitative assessment of goodwill impairment. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019; early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has not elected early adoption of this standard and is currently in the process of evaluating the impact of adopting ASU 2017-04 and cannot currently estimate the financial statement impact of adoption. In May 2017, the FASB issued ASU No. 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting.” The amendments in this update provide guidance about which changes to the terms or conditions of a share-based award require an entity to apply modification accounting in Topic 718. The guidance will be effective for the Company for its fiscal year 2018, with early adoption permitted. The Company does not expect this ASU to materially impact the Company’s consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, ”Leases (Topic 842)”. Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company does not expect the adoption to have a material impact on its consolidated financial statements upon adoption. The Company believes there are no other new pronouncements that have been issued that might have a material impact on its financial position or results of operations. | Nature of Business The Company was founded in 1982 under the laws of the State of Minnesota as Command Small Computer Learning Center, Inc., a computer training company and operated under several different names in the computer hardware and training sector. In 2005, the Company began acquiring domain names. On March 1, 2007, the Company changed its name to DigitalTown, Inc. and began developing a business plan to develop a platform to monetize their domain names. DigitalTown currently provides turn-key hosted solutions to power a comprehensive platform for government entities, citizens and merchants. The easy to use platform helps city officials and local merchants manage a feature-rich Smart City for web and mobile devices and provides residents and visitors with access to Content, Community and Commerce. The Company’s headquarters are located in Bellevue, WA. The Company’s common stock is traded on the OTC Markets under the ticker symbol of DGTW. The Company’s consolidated financial statements have been prepared using U.S. GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has a working capital deficit, recurring losses, and negative cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty. At February 28, 2018, the Company had an accumulated deficit of $48,593,820. The Company anticipates that growth from its operations, expected future proceeds from additional financing through the sale of its common stock or other equity-based securities, and additional sales and/or leases of existing domain names will be sufficient to meet its working capital and capital expenditure needs through at least February 28, 2019. In the event that the Company is unable to obtain additional capital in the future, the Company would reduce operating expenses or cease operations altogether. Principles of Consolidation The consolidated financial statements include the accounts of DigitalTown, Inc. and its wholly-owned subsidiaries and have been prepared by the Company in United States (U.S.) dollars and in accordance with accounting principles generally accepted in the United States, or GAAP. All material intercompany accounts and transactions have been eliminated in consolidation. Reclassifications Certain prior period amounts in the consolidated statement of cash flows have been reclassified to conform to the current period presentation. Proceeds from related party notes payable received in the prior period have been reclassified from the prior period classification. These reclassifications had no impact on previously reported net income or accumulated deficit for any year. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.”) 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. Accounts Receivable Accounts receivable arise from the software licensing of our Rezserve subsidiary. The Company evaluates collectability of accounts receivable based on a combination of factors including the age of the receivable or a specific customer’s inability to meet its financial conditions. In these circumstances, the Company records an allowance to reduce the receivable to an amount it deems collectible. The Company has recorded an allowance for doubtful accounts as of February 28, 2018 and February 28, 2017 of $5,456 and $23,219, respectively. During fiscal 2017, the Company recorded $114,829 of bad debt expense due mostly to new customers from the Rezserve acquisition. Goodwill and Intangible Assets Goodwill represents the excess of purchase price over the fair value of net tangible and identifiable intangible assets related to completed acquisitions. Goodwill has an indefinite life and is not amortized but instead tested for impairment annually, or more frequently if necessary. Intangible assets are recorded at fair value and are comprised of amounts assigned to acquisition-related items, such as trade names, customer lists, non-compete agreements and intellectual property/technology. Intangible assets are considered either definite or indefinite lived assets. Definite lived intangible assets are amortized on a straight-line basis over their useful lives. Certain intangible assets may have an indefinite life and are not amortized, but rather evaluated for impairment annually. We evaluate any goodwill and intangible assets for an impairment on an annual basis each fiscal year end. We also evaluate goodwill and intangible assets for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the goodwill and intangible assets below the carrying amounts. Based upon our review and analysis, we deemed all of the goodwill and intangible assets acquired in fiscal 2018 as fully impaired. Accordingly, we recognized an impairment expense of $1,721,760. In fiscal 2017, recognized an impairment expense of $1,725,009. Revenue Recognition Effective March 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the twelve months ended February 28, 2018 and 2017. The Company recognizes revenue when the following four criteria have been met: · Persuasive evidence that a business relationship exists · Delivery has occurred · The price is fixed and determinable · Collectibility is reasonably assured The Company primarily recognizes revenue from sale of software licenses and related development services. Software licensing and development revenue is recognized as invoiced and over the course of the applicable agreements. In the event projects have multiple project milestones, revenue is recognized as milestones are achieved and invoices are submitted for payment. The Company may also be merchant of record for merchant transactions processed on the DigitalTown platform. When this happens, revenue is recognized on the date of the transaction. The Company has experience in merchant transaction fraud mitigation. To the extent chargebacks become material, the Company will implement a formal practice for allowance for doubtful accounts. The Company recognizes revenue from the sale of display advertising appearing on specific pages of individual sites within DigitalTown’s network platform. Display advertising is sold by the Company directly to local merchants and placed by the Company on specific pages of individual sites targeted by the local merchant. The terms of these sales are either for a fixed monthly amount for a period ranging from three months to one year or variable based on a percentage of the per click or per-impression revenue generated by these ads. Fair Value of Financial Instruments Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (ASC) 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under U.S. GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value. As of February 28, 2018, and February 28, 2017, the Company does not have any financial instruments that must be measured under the fair value standard. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows: Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). Level 3 - Unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing the asset or liability. There were no transfers of financial assets or liabilities between Level 1 and Level 2 inputs during fiscal 2018 or fiscal 2017. Cash Equivalents The Company considers all highly liquid investments with original maturity of three months or less when purchased to be cash equivalents. As of February 28, 2018, and February 28, 2017, the Company had no cash equivalents. Cash Deposits in Excess of Federally Insured Limits The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. Accounts are insured by the Federal Deposit Insurance Company and currently have insurance coverage up to $250,000. At February 28, 2018, the Company had no uninsured cash balances. At February 28, 2017, the Company had one bank deposit account in excess of federally insured limits. Prepaid Domain Names The annual domain name renewal fees are currently capitalized in the period of renewal then amortized over one year. Only the purchase of new domain names are capitalized. See Note 4 for further information. Property and Equipment Property and equipment are stated at cost and depreciated on a straight-line basis over their estimated useful lives, ranging from three to five years. The Company recorded $6,022 and $2,782 of depreciation expense for fiscal years 2018 and 2017, respectively. Repairs and maintenance costs are expensed as incurred; major renewals and improvements are capitalized. As items of property or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in operating income. See Note 3 for further information. Income Taxes Deferred tax assets (net of any valuation allowance) and liabilities resulting from temporary differences, net operating loss carryforwards and tax credit carryforwards are recorded using an asset-and-liability method. Deferred taxes relating to temporary differences and loss carryforwards are measured using the tax rate expected to be in effect when they are reversed or are realized. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be ultimately realized. The Company has recorded a full valuation allowance against the net deferred tax asset due to the uncertainty of realizing the related future benefits. The Company accounts for income taxes pursuant to FASB guidance. This guidance prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company believes its income tax filing positions and deductions will be sustained upon examination and, accordingly, no reserves or related accruals for interest and penalties have been recorded at February 28, 2018 or February 28, 2017. In accordance with the FASB guidance, the Company has adopted a policy under which, if required to be recognized in the future, interest related to the underpayment of income taxes will be classified as a component of interest expense and any related penalties will be classified in operating expenses in the statements of operations. The Company has three open years of tax returns subject to examination. Stock-Based Compensation, Including Options and Warrants Use of equity for compensation is a material part of the Company’s near-term strategy. The Company recognizes the cost of stock-based compensation plans and awards in operations on a straight-line basis over the respective vesting period of the awards. The Company measures and recognizes compensation expense for all stock-based payment awards made to employees, directors, consultants and advisors. The compensation expense for the Company's stock-based payments is based on estimated fair values at the time of the grant. The Company estimates the fair value of stock-based payment awards on the date of grant using the Black-Scholes option pricing model. This option pricing model involves a number of assumptions, including the expected lives of stock options, the volatility of the public market price for the Company's common stock and interest rates. Stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that are ultimately expected to vest. Recently Issued Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Accounting Standards Codification 606 (“ASC 606”)). ASU No. 2014-09 provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the contract and estimating the amount of variable consideration to include in the transaction price attributable to each separate performance obligation. Subsequent to the initial standards, the FASB has also issued several ASUs to clarify specific revenue recognition topics. This guidance will be effective for the Company for its fiscal year 2019. The Company will adopt using the modified retrospective approach to initially apply the update and recognize the remaining contract value at the date of application. The Company does not expect the adoption of ASU 2014-09 to have any impact on its total cash flows from operating, investing or financing activities. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which removes the second step of the two-step goodwill impairment test. Under ASU 2017-04, an entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 does not amend the optional qualitative assessment of goodwill impairment. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019; early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has not elected early adoption of this standard and is currently in the process of evaluating the impact of adopting ASU 2017-04 and cannot currently estimate the financial statement impact of adoption. 65279; In May 2017, the FASB issued ASU No. 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting.” The amendments in this update provide guidance about which changes to the terms or conditions of a share-based award require an entity to apply modification accounting in Topic 718. The guidance will be effective for the Company for its fiscal year 2018, with early adoption permitted. The Company does not expect this ASU to materially impact the Company’s consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)”. Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company does not expect the adoption to have a material impact on its consolidated financial statements upon adoption. The Company believes there are no other new pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
Going Concern
Going Concern | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Notes to Financial Statements | ||
Note 2. Going Concern | The Company’s consolidated financial statements have been prepared using U.S. GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has a working capital deficit, recurring losses, and negative cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments related to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty. At May 31, 2018, the Company had an accumulated deficit of $51,142,038. The Company anticipates growth from its operations, expected future proceeds from additional financing through the sale of its common stock or other equity-based securities, and additional sales and/or leases of existing domain names will be sufficient to meet its working capital and capital expenditure needs through at least May 31, 2018. In the event that the Company is unable to obtain additional capital in the future, the Company would further reduce expenses or cease operations altogether. | The Company’s consolidated financial statements have been prepared using U.S. GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has a working capital deficit, recurring losses, and negative cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments related to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty. At February 28, 2018 the Company had an accumulated deficit of $48,885,896. The Company anticipates growth from its operations, expected future proceeds from additional financing through the sale of its common stock or other equity-based securities, and additional sales and/or leases of existing domain names will be sufficient to meet its working capital and capital expenditure needs through at least February 28, 2019. In the event that the Company is unable to obtain additional capital in the future, the Company would further reduce expenses or cease operations altogether. |
Property and Equipment
Property and Equipment | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Notes to Financial Statements | ||
Note 3. Property and Equipment | Property and equipment are as follows: May 31, February 28, 2018 2018 Office equipment and furniture 42,745 43,088 Less accumulated depreciation (22,272 ) (20,655 ) Property and equipment, net 20,473 22,433 Depreciation expense for the first quarter of fiscal years 2019 and 2018 was $1,842 and $1,300, respectively. | Property and equipment are as follows: February 28, February 28, 2018 2017 Office equipment and furniture $ 43,088 $ 528,034 Less accumulated depreciation (20,655 ) (526,222 ) Property and equipment, net $ 22,433 $ 1,812 Depreciation expense for fiscal years 2018 and 2017 was $6,022 and $2,782, respectively. |
Prepaid Domain Names
Prepaid Domain Names | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Notes to Financial Statements | ||
Note 4. Prepaid Domain Names | During the first quarters of fiscal years 2018 and 2017, the Company incurred $19,001 and $81,702, respectively, of annual domain name renewal fees, specifically related to .CITY registrations. These amounts were recorded as prepaid domain name renewal fees, and are then amortized over one year on a straight-line basis. During the first quarters of fiscal years 2019 and 2018, the Company recognized $54,574 and $59,053 of expense as cost of revenues related to this amortization. As of May 31, 2018, and February 28, 2018, the Company has $42,451 and $77,977, respectively, of remaining prepaid domain name renewal fees recorded on the balance sheet. See Note 9 for information on Related Party activity within Prepaid Domain Names. | During the fiscal years 2018 and 2017, the Company incurred $214,304 and $165,573, respectively, of annual domain name renewal fees, which range between $1.75 and $129.00 per domain name. These amounts were recorded as prepaid domain name renewal fees, and are then amortized over one year on a straight-line basis. During fiscal years 2018 and 2017, the Company recognized $136,328 and $82,370 of expense as cost of revenues related to this amortization. As of February 28, 2018 and February 28, 2017, the Company has $77,977 and $105,775, respectively, of remaining prepaid domain name renewal fees recorded on the balance sheet. See Note 8 for information on Related Party activity within Prepaid Domain Names. |
Accrued Expenses and Deferred R
Accrued Expenses and Deferred Revenue | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Notes to Financial Statements | ||
Note 5. Accrued Expenses and Deferred Revenue | Accrued Expenses On December 5, 2016, Richard Pomije filed a lawsuit against the Company. Mr. Pomije asserts an employment agreement existed and a continuing obligation of the Company in the form of a monthly salary for a 1 year term from May 18, 2015 to May 17, 2016 was due in addition to a stock subscription receivable. Mr. Pomije claims the Company owes him $260,900, which had been fully accrued for by the Company at February 28, 2017. On April 18, 2018, Mr. Richard Pomije was granted a judgement for the lawsuit he filed against the Company on December 5, 2016. Mr. Pomije was awarded $256,488 as damages, and $296,488 as attorney’s fees and costs, for a total award of $552,976. As at February 28, 2018, $552,976 had been accrued as payable to Mr. Pomije. During the quarter ending May 31, 2018, $10,910 was paid to Mr. Richard Pomije. As at May 31, 2018, $542,066 has been accrued as payable to Mr. Pomije. The Company is in the process of filing an appeal. See Note 16 for additional information about transactions between the Company and its former officer. Deferred Revenue During fiscal 2017, the Company signed three customer agreements to perform digital support and construction services for three third party companies. Each customer agreement consists of milestones and completion metrics to ensure that the requested services have been performed satisfactorily and to the customers’ full expectations. As the services requested by the customers have not yet been completed, the total of $170,000 has been recorded as deferred revenue as of February 28, 2018 and May 31, 2018. Domain Marketing Development Obligation During fiscal 2018, the Company signed top-level domain marketing development fund agreements with owners of 13 top level domains whereby the Company markets and purchases domain names on behalf of the owners. The owner pays us an upfront deposit to be used to purchase a predefined number of domains based on a set schedule. As of May 31, 2018 and February 28, 2018, the Company has collected $46,963 and $930,556 in cash related to these contracts. As some of the services requested by the owners have not yet been completed, a total of $192,869 and $145,906 has been recorded as domain marketing development obligation as of May 31, 2018, and February 28, 2018, respectively. | Accrued Expenses On December 5, 2016, Richard Pomije filed a lawsuit against the Company. Mr. Pomije asserts an employment agreement existed and a continuing obligation of the Company in the form of a monthly salary for a 1 year term from May 18, 2015 to May 17, 2016 was due in addition to a stock subscription receivable. Mr. Pomije claims the Company owes him $260,900, which had been fully accrued for by the Company at February 28, 2017. On April 18, 2018, Mr. Richard Pomije was granted a judgement for the lawsuit he filed against the Company on December 5, 2016. Mr. Pomije was awarded $256,488 as damages, and $296,488 as attorney’s fees and costs, for a total award of $552,976. As at February 28, 2018, $552,976 has been accrued as payable to Mr. Pomije. The Company is in the process of filing an appeal. See Note 15 for additional information about transactions between the Company and its former officer. See Note 15 for additional information about transactions between the Company and its former officer. As of February 28, 2017, the accrued salary owed to Robert Monster, CEO was $20,000. Deferred Revenue During fiscal 2017, the Company signed three customer agreements to perform digital support and construction services for three third party companies. Each customer agreement consists of milestones and completion metrics to ensure that the requested services have been performed satisfactorily and to the customers' full expectations. As the services requested by the customers have not yet been completed, the total of $170,000 has been recorded as deferred revenue as of February 28, 2018. Domain Marketing Development Obligation During fiscal 2018, the Company signed top-level domain marketing development fund agreements with owners of 13 top level domains whereby the Company markets and purchases domain names on behalf of the owners. The owner pays us an upfront deposit to be used to purchase a predefined number of domains based on a set schedule. As of February 28, 2018 and February 28, 2017, the Company has collected $930,556 and $0 in cash related to these contracts. As some of the services requested by the owners have not yet been completed, a total of $145,906 and $0 has been recorded as domain marketing development obligation as of February 28, 2018, and February 28, 2017, respectively. |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Notes to Financial Statements | ||
Note 6. Stockholders' Equity (Deficit) | The Company’s primary means of generating operating capital and completing acquisitions has been through the use of issuing common stock. Fiscal 2019 Stock Transactions During the first quarter of fiscal 2019, the Company issued 26,774,352 shares of stock to various investors for stock payable of $1,828,200, cash of $566,950 and digital currencies of $1,659.000. During the first quarter of fiscal 2019, the Company issued 3,322,372 shares to consultants and employees for services provided to the Company. During the first quarter of fiscal 2019, $436,406 was expensed related to these shares. On May 9, 2018, the Company converted the $500,000 convertible note with Darvin Habben, Chairman, along with accrued and unpaid interest of $38,027.40, to 5,380,274 shares of its common stock, fully extinguishing this note. The issuance had no gain or less as the value of the shares issued equalled the debt converted. On May 9, 2018, the Company converted the $150,000 convertible note with Darvin Habben, Chairman, to 1,5000,000 shares of its common stock, fully extinguishing this note. The issuance had no gain or less as the value of the shares issued equalled the debt converted. On May 9, 2018, the Company converted the $100,000 promissory note with Derek Schumann, Director, to 1,000,000 shares of its common stock, fully extinguishing this note. The issuance had no gain or less as the value of the shares issued equalled the debt converted. On May 9, 2018, the Company converted the $100,000 promissory note with Greg Foss, Director, to 1,000,000 shares of its common stock, fully extinguishing this note. The issuance had no gain or less as the value of the shares issued equalled the debt converted. On May 9, 2018, the Company converted the $100,000 promissory note with Donovan, to 1,000,000 shares of its common stock, fully extinguishing this note. The issuance had no gain or less as the value of the shares issued equalled the debt converted. On May 16, 2018, PowerUp Lending Group Ltd. converted $75,000 of the principal amount, plus $4,500 in accrued and unpaid interest, of the October 30, 2017 note into 1,277,498 shares of the Company’s common stock, fully extinguishing this note. There was no gain or loss due to the conversion within the terms of the note. During the first quarter of fiscal 2019, the Company sold 2 domains valued at $3,000 to one of the Company’s shareholders in exchange for 15,000 shares, which were returned to treasury. Fiscal 2018 Stock Transactions During fiscal 2018, the Company issued 14,857,715 shares of stock to various investors for stock payable of $2,559,061 and cash of $1,662,732. During fiscal 2018, a Director exercised one of his stock options for 200,000 shares of stock for cash of $20,000. During fiscal 2018, the Company issued 8,512,776 shares and recorded a stock payable of $521,792 to consultants and employees for services provided to the Company. During fiscal 2018, $1,763,168 was expensed related to these shares. During fiscal 2018, various contractors and employees converted an aggregate of $124,996 of their expenses to stock payable of the Company’s common stock, based on a conversion rate of $0.10 per share. The stock value on the conversion date was $0.23, resulting in a loss on conversion of $316,526. At February 28, 2018, the stock payable for these conversions is $276,769. On May 18, 2016, the Company granted 9,042,250 common shares to Robert Monster, CEO, in accordance with his employment agreement dated May 18, 2016, which vest monthly over the new employment agreement period which ends on May 18, 2018, a period of two years. The shares were valued based on the employment agreement date. During fiscal year 2018, $1,191,349 was expensed related to these shares. 6,799,361 shares were issued on February 8, 2018, and 2,130,500 shares were issued on May 31, 2018. During fiscal 2018, the Company signed employment agreements with three members of senior management, all of which are still active. All employment agreements were for a period of approximately 6 to 24 months. Included in the employment agreements were common stock grants of 120,000 to 1,025,000 shares which vest over a period of 6 to 24 months. A total of 1,585,000 shares were granted for the three employment agreements. During fiscal 2018, $165,436 was expensed related to these agreements. On July 1, 2017, the Company closed on an agreement and plan of share exchange and acquired Comencia, a related party Company, which was partly owned by an officer of the Company. The Company granted 2,500,000 shares of its common stock to the existing owners of Comencia, Inc. The closing price of the Company’s common stock on the acquisition date was $0.30 per share, therefore, the fair value of common stock issued was $750,000. On October 27, 2017, the Company closed on an asset purchase agreement for the acquisition of CityInformation. CityInformation, based in Amsterdam (Netherlands), develops and operates mobile apps for cities and towns worldwide. The Company granted 2,833,333 shares of its common stock to the existing owners of CityInformation. The closing price of the Company’s common stock on the acquisition date was $0.29 per share, therefore, the fair value of common stock issued was $821,667. The stock was issued in November 2017. On December 7, 2017, the Company closed on an asset purchase agreement for the acquisition of Congo Ltd. (Congo). Congo, based in Houston, TX, owns and operates a web-based platform offering; a portal connecting attorneys to prospective clients through a marketplace setting; a software-as-a-service (SaaS) subscription, selling web features to attorneys for their use on their respective law firm websites, and; the creation of customized online directories. The Company granted 3,000,000 shares of its common stock to the existing owners of Congo. The closing price of the Company’s common stock on the acquisition date was $0.28 per share, therefore, the fair value of common stock issued was $840,000. The stock was issued in February 2018. Stock Warrants The Company has regularly used warrants as a tool to attract and compensate advisors and directors of the board rather than to use cash. The Company feels this is an appropriate way to conserve cash and to incentivize its board of directors, advisors and consultants. As of May 31, 2018, the Company had 9,044,740 warrants outstanding with an average exercise price of $0.13. The warrants expire between one and ten years from the date of issuance and have a weighted average remaining exercise period as of May 31, 2018 of 5.92 years. The Company did not issue any warrants during the first quarter of fiscal 2019. During fiscal 2018, the Company issued an aggregate of 6,694,740 warrants to various investors, consultants and employees to purchase shares of the Company’s common stock at $0.10. All warrants vested immediately at the date of issuance. 4,000,000 warrants are exercisable through 2027. 30,000 warrants are exercisable through 2026. 2,964,740 warrants are exercisable through February 2019. The total estimated value using the Black-Scholes Model, based on a volatility rate between 153% and 263% and a call option value of $0.10 was $1,340,175. The Company utilized the following key assumptions in computing the fair value of the warrants using the Black-Scholes pricing model: July 20, July 27, February 6, February 15, February 16, 2017 2017 2018 2018 2018 Weighted-average volatility 263 % 263 % 157 % 153 % 158 % Expected dividends None None None None None Expected term (in years) 10.00 10.00 1.00 1.00 1.00 Weighted-average risk-free interest rate 1.17 % 1.16 % 2.00 % 1.99 % 2.00 % Weighted-average fair value of warrants granted $ 0.20 $ 0.27 $ 0.15 $ 0.14 $ 0.17 The following table summarizes information about the Company’s stock warrant activity during the fiscal years 2018 and 2017: Number of Warrants Outstanding - February 28, 2017 4,480,000 Granted 6,944,740 Canceled or expired (2,430,000 ) Outstanding - February 28, 2018 9,044,740 Granted - Canceled or expired - Outstanding - May 31, 2018 9,044,740 Exercisable at May 31, 2018 9,044,740 The following table summarizes information about stock warrants outstanding as of May 31, 2018: Exercise Price Number Outstanding Weighted Average Remaining Life (years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercisable Price $ 0.10 7,394,740 5.67 $ 0.10 7,394,740 $ 0.10 $ 0.15 300,000 6.85 $ 0.15 300,000 $ 0.15 $ 0.25 850,000 6.93 $ 0.25 850,000 $ 0.25 $ 0.30 500,000 7.28 $ 0.30 500,000 $ 0.30 $ 0.10 - $0.30 9,044,740 5.92 $ 0.13 9,044,740 $ 0.13 The Company recorded stock-based compensation expense of $0 and $0 for all outstanding stock warrants for fiscal quarters 2019 and 2018, respectively. This expense is included in stock-based compensation expense. | The Company’s primary means of generating operating capital and completing acquisitions has been through the use of issuing common stock. Fiscal 2018 Stock Transactions During fiscal 2018, the Company issued 14,857,715 shares of stock to various investors for stock payable of $2,559,061 and cash of $1,662,732. During fiscal 2018, a Director exercised one of his stock options for 200,000 shares of stock for cash of $20,000. During fiscal 2018, the Company issued 8,512,776 shares and recorded a stock payable of $521,792 to consultants and employees for services provided to the Company. During fiscal 2018, $1,763,168 was expensed related to these shares. During fiscal 2018, various contractors and employees converted an aggregate of $124,996 of their expenses to stock payable of the Company’s common stock, based on a conversion rate of $0.10 per share. The stock value on the conversion date was $0.23, resulting in a loss on conversion of $316,526. At February 28, 2018, the stock payable for these conversions is $276,769. On May 18, 2016, the Company granted 9,042,250 common shares to Robert Monster, CEO, in accordance with his employment agreement dated May 18, 2016, which vest monthly over the new employment agreement period which ends on May 18, 2018, a period of two years. The shares were valued based on the employment agreement date. During fiscal year 2018, $1,191,349 was expensed related to these shares. 6,799,361 shares were issued on February 8, 2018, and 2,130,500 shares were issued on May 31, 2018. During fiscal 2018, the Company signed employment agreements with three members of senior management, all of which are still active. All employment agreements were for a period of approximately 6 to 24 months. Included in the employment agreements were common stock grants of 120,000 to 1,025,000 shares which vest over a period of 6 to 24 months. A total of 1,585,000 shares were granted for the three employment agreements. During fiscal 2018, $165,436 was expensed related to these agreements. During fiscal 2018, the Company granted 8,512,776 shares of stock to various contractors and employees. The shares vest over a period of 6 to 24 months. The shares were valued based on the grant date. During fiscal 2018, $1,763,168 was expensed related to these shares. On July 1, 2017, the Company closed on an agreement and plan of share exchange and acquired Comencia, a related party Company, which was partly owned by an officer of the Company. The Company granted 2,500,000 shares of its common stock to the existing owners of Comencia, Inc. The closing price of the Company’s common stock on the acquisition date was $0.30 per share, therefore, the fair value of common stock issued was $750,000. On October 27, 2017, the Company closed on an asset purchase agreement for the acquisition of CityInformation. CityInformation, based in Amsterdam (Netherlands), develops and operates mobile apps for cities and towns worldwide. The Company granted 2,833,333 shares of its common stock to the existing owners of CityInformation. The closing price of the Company’s common stock on the acquisition date was $0.29 per share, therefore, the fair value of common stock issued was $821,667. The stock was issued in November 2017. On December 7, 2017, the Company closed on an asset purchase agreement for the acquisition of Congo Ltd. (Congo). Congo, based in Houston, TX, owns and operates a web-based platform offering; a portal connecting attorneys to prospective clients through a marketplace setting; a software-as-a-service (SaaS) subscription, selling web features to attorneys for their use on their respective law firm websites, and; the creation of customized online directories. The Company granted 3,000,000 shares of its common stock to the existing owners of Congo. The closing price of the Company’s common stock on the acquisition date was $0.28 per share, therefore, the fair value of common stock issued was $840,000. The stock was issued in February 2018. Fiscal 2017 Stock Transactions During fiscal 2017, the Company issued 6,999,707 shares of stock to various investors and accrued $800,500 of stock payable for cash of $2,377,950. Included in the above, are an aggregate of 435,000 shares which were sold to the Company’s chairman and a related party investor at terms below the market price and share prices available other investors at the time of the sales. As a result, the Company recorded additional stock compensation expense of $30,450 to additional paid in capital to account for the preferential common share pricing. During fiscal 2017, the Company granted 1,600,812 shares of stock to various contractors and employees. The shares vest over a period of 6 to 24 months. The shares were valued based on grant date. During fiscal 2017, $503,710 was expensed related to these shares. During fiscal 2017, the Company issued 775,000 shares and recorded a stock payable of $845,600 to directors and consultants for services provided to the Company. The value of the shares issued was $1,217,600 based on the fair market value of the common stock on the date of grant. During fiscal 2017, the Company entered into agreements to purchase domain name rights with three individuals. In exchange for the domain name rights, the Company issued 369,750 common shares and paid $46,500 in cash. The total fair value of the shares was $154,740 based on the respective domain name purchase agreements date and the closing market price on that date. On September 14, 2016, the Company closed on a Stock Purchase Agreement for 100% of Rezserve Technologies, Ltd. (Rezserve), a company based in Vancouver, British Columbia. Pursuant to the agreement, the Company purchased all of the issued and outstanding stock of Rezserve in consideration for an aggregate of $1,480,000, of which 3,000,000 shares of stock were paid at the closing and $400,000 was a secured convertible note payable to Rezserve’s founder Clint Skidmore. The stock had a value of $1,080,000 at the closing date. The terms of the note include interest at 0% per annum. Principal is due and payable within one year of September 13, 2016. The Company imputed interest expense of $19,040 related to the convertible note payable – related party as an increase in additional paid in capital during fiscal 2017. In addition, the Company recorded $1,868 of foreign currency translation loss during fiscal 2017 which was reflected as accumulated other comprehensive loss. See Note 13 for additional information on this acquisition. On December 1, 2016, the Company acquired all of the assets of Appointment.com. The purchase price pursuant to an asset purchase agreement was 1,625,000 shares. The value of the stock of $731,250 is included as a stock payable as of February 28, 2017. See Note 13 for additional information on this acquisition. On May 18, 2016, the Company granted 9,042,250 common shares to Robert Monster, CEO, in accordance with his employment agreement dated May 18, 2016, which vest monthly over the new employment agreement period which ends on May 18, 2018, a period of two years. The shares were valued based on the employment agreement date. During fiscal year 2017, $812,912 was expensed related to these shares. During fiscal 2017, the Company signed employment agreements with four members of senior management, three of which are still active. All employment agreements were for a period of approximately 12 months, however in one case there is no end date but can be terminated by either party. Included in the employment agreements were common stock grants of 250,000 to 1,000,000 shares which vest over a period of 12 to 48 months. A total of 2,220,000 shares were granted for the four employment agreements. During fiscal 2017, $154,921 was expensed related to these agreements. During fiscal 2017, the Company granted 495,000 shares of stock to four advisors and employees. The shares vest over a period of 24 months. The shares were valued based on the grant date. During fiscal year 2017, $44,508 was expensed related to these shares. On March 5, 2016, the Company acquired all of the assembled workforce, patents, intellectual property, technology, trademarks, trade names, copyrights, mask works and registrations, computer software, trade secrets and non-compete agreements related to the Cloud.Market business, pursuant to an agreement among the Company and the owner of Cloud.Market. The purchase price paid included issuance of 750,000 shares of our common stock and $7,500 of cash. The stock had a value of $60,000 at the closing date and was transferred on that date from common stock held in escrow to additional paid-in capital for that amount. See Note 13 for more information. Stock Warrants The Company has regularly used warrants as a tool to attract and compensate advisors and directors of the board rather than to use cash. The Company feels this is an appropriate way to conserve cash and to incentivize its board of directors, advisors and consultants. As of February 28, 2018, the Company had 9,044,740 warrants outstanding with an average exercise price of $0.13. The warrants expire between one and ten years from the date of issuance and have a weighted average remaining exercise period as of February 28, 2018 of 6.17 years. During fiscal 2018, the Company issued an aggregate of 6,694,740 warrants to various investors, consultants and employees to purchase shares of the Company’s common stock at $0.10. All warrants vested immediately at the date of issuance. 4,000,000 warrants are exercisable through 2027. 30,000 warrants are exercisable through 2026. 2,964,740 warrants are exercisable through February 2019. The total estimated value using the Black-Scholes Model, based on a volatility rate between 153% and 263% and a call option value of $0.10 was $1,340,175. As of February 28, 2017, the Company had 4,660,000 warrants outstanding with an average exercise price of $0.14. The warrants expire between one and ten years from the date of issuance and have a weighted average remaining exercise period as of February 28, 2017 of 4.15 years. During fiscal 2017, the Company issued an aggregate of 150,000 warrants to 3 consultants to purchase shares of the Company’s common stock at prices which ranged from $0.10 to $0.30. All warrants vested immediately at the date of issuance and are exercisable through 2026. The total estimated value using the Black-Scholes Model, based on a volatility rate of 180% and a call option value of $0.0797, was $11,948. The Company utilized the following key assumptions in computing the fair value of the warrants using the Black-Scholes pricing model: July 20, July 27, February 6, February 15, February 16, 2017 2017 2018 2018 2018 Weighted-average volatility 263 % 263 % 157 % 153 % 158 % Expected dividends None None None None None Expected term (in years) 10.00 10.00 1.00 1.00 1.00 Weighted-average risk-free interest rate 1.17 % 1.16 % 2.00 % 1.99 % 2.00 % Weighted-average fair value of warrants granted $ 0.20 $ 0.27 $ 0.15 $ 0.14 $ 0.17 The following table summarizes information about the Company’s stock warrant activity during the fiscal years 2018 and 2017: Number of Warrants Outstanding - February 28, 2016 2,050,000 Granted 2,430,000 Canceled or expired - Outstanding - February 28, 2017 4,480,000 Granted 6,994,740 Canceled or expired (2,430,000 ) Outstanding - February 28, 2018 9,044,740 Exercisable at February 28, 2018 9,044,740 The following table summarizes information about stock warrants outstanding as of February 28, 2018: Exercise Price Number Outstanding Weighted Average Remaining Life (years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercisable Price $0.10 7,394,740 5.92 $ 0.10 7,394,740 $ 0.10 $0.15 300,000 7.10 $ 0.15 300,000 $ 0.15 $0.25 850,000 7.19 $ 0.25 850,000 $ 0.25 $0.30 500,000 7.54 $ 0.30 500,000 $ 0.30 $0.10 - $0.30 9,044,740 6.17 $ 0.13 9,044,740 $ 0.13 The Company recorded stock-based compensation expense of $0 and $11,948 for all outstanding stock warrants for fiscal years 2018 and 2017, respectively. This expense is included in stock-based compensation expense. |
Stock Options
Stock Options | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Notes to Financial Statements | ||
Note 7. Stock Options | The Company has one stock option plan called The 2006 Employee Stock and Option Plan (the “2006 Plan”), which has reserved 5,000,000 shares of our common stock for issuance. The types of awards that could be granted under the 2006 Plan include incentive and non-qualified options to purchase shares of common stock, stock appreciation rights, restricted shares, restricted share units, performance awards and other types of stock-based awards. All grants are determined and approved by the Board of Directors. Through February 28, 2018, the Company has only granted non-qualified stock options under the 2006 Plan. The stock options may be granted to officers and employees of the Company. Options granted under the 2006 Plan have exercise prices and vesting terms approved by the Board of Directors at the time of each grant. Vesting terms of the outstanding options range from immediate to four years from the date of grant. The exercise period of the options range from five to ten years from the date of grant. The Company records its stock-based compensation arrangements calculating the fair value of share-based payments, including grants of employee stock options and employee stock purchase plan shares, to be recognized in the consolidated statements of operations based on their grant date fair values. The fair value of the Company’s stock options have been estimated using the Black-Scholes pricing model, which requires assumptions as to expected dividends, the options expected life, volatility and risk-free interest rate at the time of the grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense on a straight-line basis over the requisite vesting periods in the Company’s consolidated statements of operations. The Company did not issue any stock options during the first quarter of fiscal 2019. During fiscal 2018, the Company issued an aggregate of 1,035,159 stock options with a fair value of $151,627 to 1 officer, 6 employees and 2 contractors to purchase shares of the Company’s common stock at prices of $0.10. All options vested immediately and are exercisable for one year. During fiscal 2018, 1,292,310 of previously issued stock options to 1 officer expired, and 200,000 stock options previously issued to another officer were exercised for $20,000 cash. The Company utilized the following key assumptions in computing the fair value of the options using the Black-Scholes pricing model: February 16, 2018 Weighted-average volatility 153 % Expected dividends None Expected term (in years) 1.00 Weighted-average risk-free interest rate 2.00 % The Company recorded stock-based compensation expense of $0 and $164,742 for all outstanding options for fiscal quarter 2019 and fiscal year 2018, respectively. This expense is included in stock-based compensation. The following table summarizes information about the Company’s stock options as of May 31, 2018: Number of Options Weighted Average Exercise Price Outstanding - February 28, 2017 6,692,310 $ 0.16 Granted 1,035,159 $ 0.10 Canceled or expired (1,492,310 ) $ 0.14 Outstanding - February 28, 2018 6,235,159 $ 0.16 Granted - - Canceled or expired - - Outstanding - May 31, 2018 6,235,159 $ 0.16 Exercisable at May 31, 2018 6,235,159 $ 0.16 The following table summarizes information about stock options outstanding as of May 31, 2018: Exercise Price Number Outstanding Weighted Average Remaining Life (years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercisable Price $ 0.10 4,885,159 5.62 $ 0.10 4,885,159 $ 0.10 $ 0.15 200,000 7.52 $ 0.15 200,000 $ 0.15 $ 0.30 700,000 7.17 $ 0.30 700,000 $ 0.30 $ 0.54 375,000 5.68 $ 0.54 375,000 $ 0.54 $ 1.00 75,000 3.36 $ 1.00 75,000 $ 1.00 $ 0.10 - $1.00 6,235,159 5.83 $ 0.16 6,235,159 $ 0.16 | The Company has one stock option plan called The 2006 Employee Stock and Option Plan (the “2006 Plan”), which has reserved 5,000,000 shares of our common stock for issuance. The types of awards that could be granted under the 2006 Plan include incentive and non-qualified options to purchase shares of common stock, stock appreciation rights, restricted shares, restricted share units, performance awards and other types of stock-based awards. All grants are determined and approved by the Board of Directors. Through February 28, 2018, the Company has only granted non-qualified stock options under the 2006 Plan. The stock options may be granted to officers and employees of the Company. Options granted under the 2006 Plan have exercise prices and vesting terms approved by the Board of Directors at the time of each grant. Vesting terms of the outstanding options range from immediate to four years from the date of grant. The exercise period of the options range from five to ten years from the date of grant. The Company records its stock-based compensation arrangements calculating the fair value of share-based payments, including grants of employee stock options and employee stock purchase plan shares, to be recognized in the consolidated statements of operations based on their grant date fair values. The fair value of the Company’s stock options have been estimated using the Black-Scholes pricing model, which requires assumptions as to expected dividends, the options expected life, volatility and risk-free interest rate at the time of the grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense on a straight-line basis over the requisite vesting periods in the Company’s consolidated statements of operations. During fiscal 2018, the Company issued an aggregate of 1,035,159 stock options with a fair value of $151,627 to 1 officer, 6 employees and 2 contractors to purchase shares of the Company’s common stock at prices of $0.10. All options vested immediately and are exercisable for one year. During fiscal 2018, 1,292,310 of previously issued stock options to 1 officer expired, and 200,000 stock options previously issued to another officer were exercised for $20,000 cash. The Company utilized the following key assumptions in computing the fair value of the options using the Black-Scholes pricing model: February 16, 2018 Weighted-average volatility 153 % Expected dividends None Expected term (in years) 1.00 Weighted-average risk-free interest rate 2.00 % The Company recorded stock-based compensation expense of $164,742 and $0 for all outstanding options for fiscal years 2018 and 2017, respectively. This expense is included in stock-based compensation. The following table summarizes information about the Company’s stock options as of February 28, 2018 and activity during the fiscal years 2018 and 2017: Number of Options Weighted Average Exercise Price Outstanding - February 28, 2016 6,542,310 $ 0.17 Granted 150,000 $ 0.10 Canceled or expired - - Outstanding - February 28, 2017 6,692,310 $ 0.16 Granted 1,035,159 $ 0.10 Canceled or expired (1,492,310 ) $ 0.14 Outstanding - February 28, 2018 6,235,159 $ 0.16 Exercisable at February 28, 2018 6,235,159 $ 0.16 The following table summarizes information about stock options outstanding as of February 28, 2018: Exercise Price Number Outstanding Weighted Average Remaining Life (years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercisable Price $0.10 4,885,159 5.87 $ 0.10 4,885,159 $ 0.10 $0.15 200,000 7.77 $ 0.15 200,000 $ 0.15 $0.30 700,000 7.42 $ 0.30 700,000 $ 0.30 $0.54 375,000 5.93 $ 0.54 375,000 $ 0.54 $1.00 75,000 3.62 $ 1.00 75,000 $ 1.00 $0.10 - $1.00 6,235,159 6.08 $ 0.16 6,235,159 $ 0.16 |
Related Party Transactions
Related Party Transactions | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Notes to Financial Statements | ||
Note 8. Related Party Transactions | Accounts Payable – Related Parties The Company owes $7,625 and $9,847 due to advances made to an employee which is included within accounts payable – related parties as of May 31, 2018 and February 28, 2018, respectively. As of May 31, 2018 and February 28, 2018, the Company owes $748,907 and $450,500, respectively, to Epik Holdings Inc. related to annual domain name renewal fees to satisfy Domain marketing development obligations. Prepaid Domain Names During the fiscal quarter 2019 and fiscal year 2018, the Company incurred $260,907 and $214,304, respectively, of annual domain name renewal fees. The amounts paid for the annual domain name renewal fees are paid directly to Epik Holdings Inc., a company which is controlled by Robert Monster, the Company’s Chief Executive Officer. Epik, then uses those funds to directly to pay Verisign and ICANN companies for the annual domain renewal costs. The costs paid to Epik are at terms similar or better than what Epik charges its other clients. Convertible Notes Payable – Related Party On September 14, 2016, subject to a stock purchase agreement, the Company signed a secured convertible note of $400,000 with Clint Skidmore, founder of Rezserve Technology Ltd (“Rezserve”). The interest free note is due and payable within one year, at which time it can be converted into up to 1,000,000 shares of the Company’s common stock at a conversion price of $0.40 per share. The Company evaluated the note and determined that as the fixed exercise price exceeded the closing market price on the note issuance date, that no beneficial conversion feature was present. On December 22, 2017, the Company formalized its agreement to extend and convert the original convertible note of $400,000 for Clint Skidmore to October 31, 2018, original founder of Rezserve Technologies Ltd. The Company has repaid $70,000 to Clint Skidmore, and converted $210,000 of the note to 1,100,000 shares of the Company’s common stock, resulting in a loss on conversion of $13,000. At May 31, 2018, the Company owes $120,000 to Clint Skidmore, bearing no interest. This note had imputed interest expense of $38,000 in fiscal 2018, and imputed interest of $3,500 in the first quarter of fiscal 2019. The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the fixed conversion price and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares. On June 9, 2017, the Company signed a convertible note of $500,000 with Darvin Habben, Chairman. This note is due and payable within one year, bears interest of 8%, and can be converted into up to 2,000,000 shares of the Company’s common stock at a conversion price of $0.25 per share. The Company recorded a debt discount equal to $300,000 due to this conversion feature. The note had accrued interest of $28,932 as of February 28, 2018. The debt discount had a balance at February 28, 2018 of $191,507. The Company recorded debt discount amortization expense of $108,493 during the year ended February 28, 2018. On May 9, 2018, the Company converted the $500,000 convertible note with Darvin Habben, Chairman, along with accrued and unpaid interest of $38,027.40, to 5,380,274 shares of its common stock at a conversion price of $0.10 per share. The company recorded debt discount amortization expense of $191,507 during the quarter ended May 31, 2018, related to this debt’s conversion recorded at inception. Promissory Notes Payable - Related Party On July 20, 2017, the Company signed a promissory note of $100,000 with Derek Schumann, Director. This interest free note is due and payable within one year and bears no interest. The Company issued 1,000,000 warrants to Derek Schumann in connection with this note, with an exercise price of $0.10, and expiry date of July 20, 2027. The Company recorded a warrant discount equal to $100,000 due to this warrant feature. On May 9, 2018, the Company converted the $100,000 promissory note with Derek Schumann, Director, to 1,000,000 shares of its common stock at a conversion price of $0.10 per share. The company recorded debt discount amortization expense of $69,452 during the quarter ended May 31, 2018, related to this debt’s conversion recorded at inception. The note had imputed interest of $1,917 during the quarter ended May 31, 2018. On July 20, 2017, the Company signed a promissory note of $100,000 with Greg Foss, Director. This interest free note is due and payable within one year and bears no interest. The Company issued 1,000,000 warrants to Greg Foss in connection with this note, with an exercise price of $0.10, and expiry date of July 20, 2027. The Company recorded a warrant discount equal to $100,000 due to this warrant feature. On May 9, 2018, the Company converted the $100,000 promissory note with Greg Foss, Director, to 1,000,000 shares of its common stock at a conversion price of $0.10 per share. The company recorded debt discount amortization expense of $69,452 during the quarter ended May 31, 2018, related to this debt’s conversion recorded at inception. The note had imputed interest of $1,917 during the quarter ended May 31, 2018. On July 27, 2017, the Company signed a promissory note of $150,000 with Darvin Habben, CEO. This interest free note is due and payable within one year and bears no interest. The Company issued 1,000,000 warrants to Darvin Habben in connection with this note, with an exercise price of $0.10, and expiry date of July 27, 2027. The Company recorded a warrant discount equal to $150,000 due to this warrant feature. On May 9, 2018, the Company converted the $150,000 promissory note with Carvin Habben, Chairman, to 1,500,000 shares of its common stock at a conversion price of $0.10 per share. The company recorded debt discount amortization expense of $105,616 during the quarter ended May 31, 2018, related to this debt’s conversion recorded at inception. The note had imputed interest of $2,875 during the quarter ended May 31, 2018. Sales of Common Stock During the first quarter of fiscal 2019, the Company sold an aggregate of 2,950,000 shares to five of the Company’s board members at the price of $295,000. During fiscal 2018, the Company sold an aggregate of 2,100,000 shares to two of the Company’s board members at the price of $250,000. Employment Agreements During fiscal 2018, the Company signed employment agreements with three members of senior management, all of which are still active. All employment agreements were for a period of approximately 6 to 24 months. See Note 6 for more information about these employment agreements. Directors and Officers In December 2017, all non-executive directors received a stock grant of 600,000 shares. Mr. Parsons and Mr. Mills received an additional 200,000 shares each, as recognition for completing tasks outside their director responsibilities. This resulted in a stock-based compensation expense of $956,800 in fiscal 2018. CEO Employment Agreement Share Issuance The Company expensed $60,000 in annual salary and $253,926 in stock-based compensation in the first quarter of fiscal 2019, and $240,000 in annual salary and $1,026,710 in stock-based compensation in fiscal 2018, related to the employment agreement with Robert Monster, CEO. CEO Accrued Salary Conversion On February 16, 2018, Robert Monster, CEO converted $70,000 of his accrued salary into 700,000 shares of common stock and 700,000 stock options with an exercise price of $0.10 and a vesting period of 12 months. The shares and options were valued on the conversion date in the amounts of $161,000 and $92,507, respectively. Accrued Expenses - Related Parties The Company was founded in 1982 and managed by Richard Pomije since at least 1987. On May 17, 2015, Mr. Pomije resigned as CEO of the Company and on June 1, 2015, he resigned as the CFO and Chairman. At that time of his resignation, the Company and the Board of Directors were not aware of any continuing employment agreement. The Company released Mr. Pomije on September 11, 2015 concurrent with his closing of the Burnsville, MN office. On December 5, 2016, Richard Pomije filed a lawsuit against the Company. Mr. Pomije asserts an employment agreement existed and a continuing obligation of the Company in the form of a monthly salary for a 1 year term from May 18, 2015 to May 17, 2016 was due in addition to a stock subscription receivable. Mr. Pomije claims the Company owes him $260,900, which had been fully accrued for by the Company as of February 28, 2017. On April 18, 2018, Mr. Richard Pomije was granted a judgement for the lawsuit he filed against the Company on December 5, 2016. Mr. Pomije was awarded $256,488 as damages, and $296,488 as attorney’s fees and costs, for a total award of $552,976. As at February 28, 2018, $552,976 has been accrued as payable to Mr. Pomije. The Company is in the process of filing an appeal. See Note 15 for additional information about transactions between the Company and its former officer. | Accounts Payable – Related Parties As of February 28, 2018 and 2017, the Company owes $7,625 and $10,613, respectively, due to advances made to an employee which is included within accounts payable – related parties. As of February 28, 2018 and 2017, the Company owes $450,500 and $0, respectively, to Epik Holdings Inc. related to annual domain name renewal fees to satisfy Domain marketing development obligations. Prepaid Domain Names During the fiscal years 2018 and 2017, the Company incurred $214,304 and $165,573, respectively, of annual domain name renewal fees. The amounts paid for the annual domain name renewal fees are paid directly to Epik Holdings Inc., a company which is controlled by Robert Monster, the Company’s Chief Executive Officer. Epik, then uses those funds to directly to pay Verisign and ICANN companies for the annual domain renewal costs. The costs paid to Epik are at terms similar or better than what Epik charges its other clients. Convertible Notes Payable – Related Party On September 14, 2016, subject to a stock purchase agreement, the Company signed a secured convertible note of $400,000 with Clint Skidmore, founder of Rezserve Technology Ltd (“Rezserve”). The interest free note is due and payable within one year, at which time it can be converted into up to 1,000,000 shares of the Company’s common stock at a conversion price of $0.40 per share. The Company evaluated the note and determined that as the fixed exercise price exceeded the closing market price on the note issuance date, that no beneficial conversion feature was present. On December 22, 2017, the Company formalized its agreement to extend and convert the original convertible note of $400,000 for Clint Skidmore to October 31, 2018, original founder of Rezserve Technologies Ltd. The Company has repaid $30,000 to Clint Skidmore, and converted $210,000 of the note to 1,100,000 shares of the Company’s common stock, resulting in a loss on conversion of $13,000. At February 28, 2018, the Company owes $160,000 to Clint Skidmore, bearing no interest. This note had imputed interest expense of $38,000 in fiscal 2018. On June 9, 2017, the Company signed a convertible note of $500,000 with Darvin Habben, Chairman. This note is due and payable within one year, bears interest of 8%, and can be converted into up to 2,000,000 shares of the Company’s common stock at a conversion price of $0.25 per share. The Company recorded a debt discount equal to $300,000 due to this conversion feature. The note had accrued interest of $28,932 as of February 28, 2018. The debt discount had a balance at February 28, 2018 of $191,507. The Company recorded debt discount amortization expense of $108,493 during the year ended February 28, 2018. Promissory Notes Payable - Related Party On July 20, 2017, the Company signed a promissory note of $100,000 with Derek Schumann, Director. This interest free note is due and payable within one year and bears no interest. The Company issued 1,000,000 warrants to Derek Schumann in connection with this note, with an exercise price of $0.10, and expiry date of July 20, 2027. The Company recorded a warrant discount equal to $100,000 due to this warrant feature. The note had imputed interest of $6,110 as of February 28, 2018. The warrant discount had a balance at February 28, 2018 of $69,452. The Company recorded warrant discount amortization expense of $30,548 during the year ended February 28, 2018. On July 20, 2017, the Company signed a promissory note of $100,000 with Greg Foss, Director. This interest free note is due and payable within one year and bears no interest. The Company issued 1,000,000 warrants to Greg Foss in connection with this note, with an exercise price of $0.10, and expiry date of July 20, 2027. The Company recorded a warrant discount equal to $100,000 due to this warrant feature. The note had imputed interest of $6,110 as of February 28, 2018. The warrant discount had a balance at February 28, 2018 of $69,452. The Company recorded warrant discount amortization expense of $30,548 during the year ended February 28, 2018. On July 27, 2017, the Company signed a promissory note of $150,000 with Darvin Habben, CEO. This interest free note is due and payable within one year and bears no interest. The Company issued 1,000,000 warrants to Darvin Habben in connection with this note, with an exercise price of $0.10, and expiry date of July 27, 2027. The Company recorded a warrant discount equal to $150,000 due to this warrant feature. The note had imputed interest of $8,877 as of February 28, 2018. The warrant discount had a balance at February 28, 2018 of $105,616. The Company recorded warrant discount amortization expense of $44,384 during the year ended February 28, 2018. Appointment.com Acquisition On December 1, 2016, the Company acquired all assets related to Appointment.com, Inc. (“Appointment”), an online scheduling software system based in Seattle, Washington. This transaction is considered related party since the Company’s CEO, Rob Monster, owned a controlling interest in Appointment through a company owned 100% by Mr. Monster. The purchase price pursuant to an asset purchase agreement was 1,625,000 shares of common stock. This amount was paid with the issuance of 1,625,000 shares of our common stock, of which 536,364 shares were issued to Mr. Monster’s company. Due to the related party nature of the transaction, the Company did not record any goodwill related to the transaction and assets and liabilities acquired were recorded at cost. The difference between the cost of the assets received and the purchase price is recognized as compensation expense on the Company’s consolidated statement of operations. The agreement included customary representations, warranties, and covenants by us and Appointment. See Note 11 for additional information. Sales of Common Stock During fiscal 2018, the Company sold an aggregate of 2,100,000 shares to two of the Company’s board members at the market price of $250,000. During fiscal 2017, the Company sold an aggregate of 435,000 shares which were sold to the Company’s chairman and a related party investor at terms below the market price and share prices available other investors at the time of the sales. As a result, the Company recorded additional stock compensation expense of $30,450 to additional paid in capital to account for the preferential common share pricing. Employment Agreements During fiscal 2018, the Company signed employment agreements with three members of senior management, all of which are still active. All employment agreements were for a period of approximately 6 to 24 months. See Note 6 for more information about these employment agreements. During fiscal 2017, the Company signed employment agreements with four members of senior management, three of which are still active. All employment agreements were for a period of approximately 12 months, however in one case there is no end date but can be terminated by either party. See Note 6 for more information about these employment agreements. Directors and Officers In December 2017, all non-executive directors received a stock grant of 600,000 shares. Mr. Parsons and Mr. Mills received an additional 200,000 shares each, as recognition for completing tasks outside their director responsibilities. This resulted in a stock-based compensation expense of $956,800 in fiscal 2018. In December 2016, all non-executive directors received a stock grant of 300,000 shares, except for Mr. Habben who received 350,000 as chairman and Mr. Parsons who received 140,000 shares and $40,000 in cash. As of the date of this report, all shares granted have been issued. This resulted in a stock-based compensation expense of $835,800 in fiscal 2017. CEO Employment Agreement Share Issuance The Company expensed $240,000 in annual salary and $1,026,710 in stock-based compensation in fiscal 2018, and $240,000 in annual salary and $1,191,349 in stock-based compensation in fiscal 2017, related to the employment agreement with Robert Monster, CEO. On February 10, 2016, the Company issued 3,312,811 shares of common stock to Robert Monster, CEO, in accordance with his employment agreement dated May 18, 2015. The shares were valued based on the employment agreement date using the Black-Scholes model. See Note 6 for more information about this share issuance. On May 22, 2016, the Company granted 9,042,250 common shares to Robert Monster, CEO, in accordance with his employment agreement dated May 22, 2016, which vest monthly over the new employment agreement period which ends on May 21, 2018, a period of two years. The shares were valued based on the employment agreement date. See Note 6 for more information about this share issuance. CEO Accrued Salary Conversion On February 16, 2018, Robert Monster, CEO converted $70,000 of his accrued salary into 700,000 shares of common stock and 700,000 stock options with an exercise price of $0.10 and a vesting period of 12 months. The shares and options were valued on the conversion date in the amounts of $161,000 and $92,507, respectively. On February 10, 2016, Robert Monster, CEO converted $129,231 of his accrued salary into 1,292,310 shares of common stock and 1,292,310 stock options with an exercise price of $0.15 and a vesting period of 12 months. The shares and options were valued on the conversion date in the amounts of $109,846 and $19,385, respectively. Accrued Expenses - Related Parties The Company was founded in 1982 and managed by Richard Pomije since at least 1987. On May 17, 2015, Mr. Pomije resigned as CEO of the Company and on June 1, 2015, he resigned as the CFO and Chairman. At that time of his resignation, the Company and the Board of Directors were not aware of any continuing employment agreement. The Company released Mr. Pomije on September 11, 2015 concurrent with his closing of the Burnsville, MN office. On December 5, 2016, Richard Pomije filed a lawsuit against the Company. Mr. Pomije asserts an employment agreement existed and a continuing obligation of the Company in the form of a monthly salary for a 1 year term from May 18, 2015 to May 17, 2016 was due in addition to a stock subscription receivable. Mr. Pomije claims the Company owes him $260,900, which had been fully accrued for by the Company as of February 28, 2017. On April 18, 2018, Mr. Richard Pomije was granted a judgement for the lawsuit he filed against the Company on December 5, 2016. Mr. Pomije was awarded $256,488 as damages, and $296,488 as attorney’s fees and costs, for a total award of $552,976. As at February 28, 2018, $552,976 has been accrued as payable to Mr. Pomije. The Company is in the process of filing an appeal. See Note 15 for additional information about transactions between the Company and its former officer. |
Income Taxes
Income Taxes | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Notes to Financial Statements | ||
Note 9. Income Taxes | The Company accounts for income taxes under standards issued by the FASB. Under those standards, deferred tax assets and liabilities are recognized for future tax benefits or consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for significant deferred tax assets when it is more likely than not that such assets will not be realized through future operations. No provision for federal income taxes has been recorded due to the net operating loss carry forwards totaling $17,132,786 as of May 31, 2018 that will offset future taxable income. The available net operating loss carry forwards will expire in various years through 2037. Future tax benefits which may arise as a result of these losses have not been recognized in these consolidated financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the future tax loss carry forwards. The actual income tax provisions differ from the expected amounts calculated by applying the statutory income tax rate to the Company’s loss before income taxes. The components of these differences are as follows at May 31, 2018 and February 28, 2018: May 31, 2018 February 28, 2018 Net tax loss carry-forwards $ 17,132,786 $ 15,888,098 Statutory rate 21 % 21 % Expected tax recovery 3,597,885 3,336,501 Change in valuation allowance (3,597,885 ) (3,336,501 ) Income tax provision $ $ - Components of deferred tax asset: Non capital tax loss carry forwards $ 3,597,885 $ 3,336,501 Less: valuation allowance (3,597,885 ) (3,336,501 ) Net deferred tax asset $ - $ - | The Company accounts for income taxes under standards issued by the FASB. Under those standards, deferred tax assets and liabilities are recognized for future tax benefits or consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for significant deferred tax assets when it is more likely than not that such assets will not be realized through future operations. No provision for federal income taxes has been recorded due to the net operating loss carry forwards totaling $15,888,098 as of February 28, 2018 that will offset future taxable income. The available net operating loss carry forwards will expire in various years through 2038. Future tax benefits which may arise as a result of these losses have not been recognized in these consolidated financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the future tax loss carry forwards. The actual income tax provisions differ from the expected amounts calculated by applying the statutory income tax rate to the Company’s loss before income taxes. The components of these differences are as follows at February 28, 2018 and February 28, 2017: 2018 2017 Net tax loss carry-forwards $ 15,888,098 $ 11,627,532 Statutory rate 21 % 34 % Expected tax recovery 3,336,501 3,953,361 Change in valuation allowance (3,336,501 ) (3,953,361 ) Income tax provision $ - $ - Components of deferred tax asset: Non capital tax loss carry forwards $ 3,336,501 $ 3,953,361 Less: valuation allowance (3,336,501 ) (3,953,361 ) Net deferred tax asset $ - $ - |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Notes to Financial Statements | ||
Note 10. Commitments and Contingencies | Litigation The Company, in the normal course of business, is a party to various ordinary course claims and legal proceedings. In the opinion of management, the ultimate resolution of these matters, individually and in the aggregate, will not have a material adverse effect on the Company’s financial position or results of operations. On December 5, 2016, Richard Pomije filed a lawsuit against the Company. Mr. Pomije asserts an employment agreement existed and a continuing obligation of the Company in the form of a monthly salary for a 1 year term from May 18, 2015 to May 17, 2016 was due in addition to a stock subscription receivable. Mr. Pomije claims the Company owes him $260,900, which had been fully accrued for by the Company as of February 28, 2017. On April 18, 2018, Mr. Richard Pomije was granted a judgement for the lawsuit he filed against the Company on December 5, 2016. Mr. Pomije was awarded $256,488 as damages, and $296,488 as attorney’s fees and costs, for a total award of $552,976. As at February 28, 2018, $552,976 has been accrued as payable to Mr. Pomije. During the quarter ending May 31, 2018, $10,910 was paid to Mr. Richard Pomije. As at May 31, 2018, $542,066 has been accrued as payable to Mr. Pomije. The Company is in the process of filing an appeal. The Company is in the process of filing an appeal. See Note 16 for additional information about transactions between the Company and its former officer. Lease Commitments As of February 28, 2018, we have one outstanding operating lease. The lease is for 700 square feet of office space in Vancouver, British Columbia for our Rezserve subsidiary. The lease is month-to-month with either party able to terminate the lease with 30 days of notice. Gross rent is approximately $2,600 per month. | Litigation The Company, in the normal course of business, is a party to various ordinary course claims and legal proceedings. In the opinion of management, the ultimate resolution of these matters, individually and in the aggregate, will not have a material adverse effect on the Company's financial position or results of operations. On December 5, 2016, Richard Pomije filed a lawsuit against the Company. Mr. Pomije asserts an employment agreement existed and a continuing obligation of the Company in the form of a monthly salary for a 1 year term from May 18, 2015 to May 17, 2016 was due in addition to a stock subscription receivable. Mr. Pomije claims the Company owes him $260,900, which had been fully accrued for by the Company as of February 28, 2017. On April 18, 2018, Mr. Richard Pomije was granted a judgement for the lawsuit he filed against the Company on December 5, 2016. Mr. Pomije was awarded $256,488 as damages, and $296,488 as attorney’s fees and costs, for a total award of $552,976. As at February 28, 2018, $552,976 has been accrued as payable to Mr. Pomije. The Company is in the process of filing an appeal. See Note 15 for additional information about transactions between the Company and its former officer. Lease Commitments As of February 28, 2018, we have one outstanding operating lease. The lease is for 700 square feet of office space in Vancouver, British Columbia for our Rezserve subsidiary. The lease is month-to-month with either party able to terminate the lease with 30 days of notice. Gross rent is approximately $2,600 per month. |
Common Stock Subscriptions Rece
Common Stock Subscriptions Receivable | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Notes to Financial Statements | ||
Note 11. Common Stock Subscriptions Receivable | From time to time, the Company has had various stock subscription agreements outstanding all of which were due from a related party. As of May 31, 2018, the company does not have any stock subscription agreements outstanding. | From time to time, the Company has had various stock subscription agreements outstanding all of which were due from a related party. As of February 28, 2016, the Company was owed $5,000 for stock issued and had accrued an additional $7,150 for stock which was payable during the 2017 fiscal year under the employment agreement with Robert Monster. The total amount of $12,150 was satisfied in full in fiscal 2017. No amounts are outstanding for fiscal 2018. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Notes to Financial Statements | ||
Note 12. Earnings (Loss) Per Share | The Company computes earnings per share using two different methods, basic and diluted, and presents per share data for all periods in which statements of operations are presented. Basic earnings per share are computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding. Diluted earnings per share are computed by dividing net income (loss) by the weighted average number of shares of common stock and common stock equivalents outstanding. Due to the recent net losses generated by the Company, there are no dilutive elements. Therefore, basic and diluted EPS are the same. The following tables provide a reconciliation of the numerators and denominators used in calculating basic and diluted earnings (loss) per share for the first quarter of fiscal years 2019 and 2018: Fiscal 2019 Fiscal 2018 Basic earnings (loss) per share calculation: Net loss to common shareholders $ (2,256,142 ) $ (1,101,248 ) Weighted average number of common shares outstanding 86,876,957 55,059,804 Basic net loss per share $ (0.03 ) $ (0.02 ) Diluted earnings (loss) per share calculation: Net loss to common shareholders $ (2,256,142 ) $ (1,101,248 ) Weighted average number of common shares outstanding 86,876,957 55,059,804 Stock options (1) - - Warrants (2) - - Diluted weighted average common shares outstanding 86,876,957 55,059,804 Diluted net loss per share $ (0.03 ) $ (0.02 ) _________ (1) At May 31, 2018 and May 31, 2017, there were 6,235,159 and 2,392,310, respectively, of stock options equivalent to common shares outstanding. The stock options are anti-dilutive at May 31, 2018 and May 31, 2017 and therefore, have been excluded from diluted earnings (loss) per share. (2) At May 31, 2018 and May 31, 2017, there were outstanding warrants equivalent to 9,044,740 and 4,660,000 common shares, respectively. The warrants are anti-dilutive at May 31, 2018 and May 31, 2017 and therefore, have been excluded from diluted earnings (loss) per share. | The Company computes earnings per share using two different methods, basic and diluted, and presents per share data for all periods in which statements of operations are presented. Basic earnings per share are computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding. Diluted earnings per share are computed by dividing net income (loss) by the weighted average number of shares of common stock and common stock equivalents outstanding. Due to the recent net losses generated by the Company, there are no dilutive elements. Therefore, basic and diluted EPS are the same. The following tables provide a reconciliation of the numerators and denominators used in calculating basic and diluted earnings (loss) per share for the fiscal years 2018 and 2017: Fiscal 2018 Fiscal 2017 Basic earnings (loss) per share calculation: Net loss to common shareholders $ (10,243,396 ) $ (7,219,626 ) Weighted average number of common shares outstanding 61,786,169 44,840,743 Basic net loss per share $ (0.17 ) $ (0.16 ) Diluted earnings (loss) per share calculation: Net loss to common shareholders $ (10,243,396 ) $ (7,219,626 ) Weighted average number of common shares outstanding 61,786,169 44,840,743 Stock options (1) - - Warrants (2) - - Diluted weighted average common shares outstanding 61,786,169 44,840,743 Diluted net loss per share $ (0.17 ) $ (0.16 ) (1) At both February 28, 2018 and February 28, 2017, there were outstanding stock options equivalent to 6,437,600 and 6,692,310 common shares, respectively. The stock options are anti-dilutive at February 28, 2018 and February 28, 2017 and therefore, have been excluded from diluted earnings (loss) per share. (2) At February 28, 2018 and February 28, 2017, there were outstanding warrants equivalent to 7,080,000 and 8,510,000 common shares, respectively. The warrants are anti-dilutive at February 28, 2018 and February 28, 2017 and therefore, have been excluded from diluted earnings (loss) per share. |
Acquisitions
Acquisitions | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Notes to Financial Statements | ||
Note 13. Acquisitions | Congo Ltd. Acquisition On December 7, 2017, the Company closed on an asset purchase agreement for the acquisition of Congo Ltd. (Congo). Congo, based in Houston, TX, owns and operates a web-based platform offering; a portal connecting attorneys to prospective clients through a marketplace setting; a software-as-a-service (SaaS) subscription, selling web features to attorneys for their use on their respective law firm websites, and; the creation of customized online directories. The Company granted 3,000,000 shares of its common stock to the existing owners of Congo. The closing price of the Company’s common stock on the acquisition date was $0.28 per share, therefore, the fair value of common stock issued was $840,000. The stock was issued in February 2018. This acquisition was accounted for using the replacement cost method, where the cost to replace or recreate the subject asset is estimated. The agreement included customary representations, warranties, and covenants by us and Congo. According to the replacement cost method of accounting, the Company recognized the identifiable assets acquired as follows: Developed Technology, Platform and code base 420,000 Developed Technology, New code base and databases 432,000 Assembled Workforce 35,000 Goodwill 78,000 Total intangibles and goodwill 965,000 Total assets acquired, net 965,000 The purchase price consisted of the following: Common stock 840,000 Cash consideration 75,000 Earnest money 50,000 Total purchase price 965,000 The Company reviewed the fair value of the total assets of the acquisition and concluded the fair value of the goodwill and intangible assets which were acquired was less than the fair value of the common stock which was used to pay for the business. Accordingly, the Company recorded an impairment expense of $926,252 related to this acquisition in fiscal 2018. As the company is not using the assets in the same manner as the predecessor company, no proforma financials are presented. CityInformation, B.V. Acquisition On October 27, 2017, the Company closed on an asset purchase agreement for the acquisition of CityInformation. CityInformation, based in Amsterdam (Netherlands), develops and operates mobile apps for cities and towns worldwide. The Company granted 2,833,333 shares of its common stock to the existing owners of CityInformation. The closing price of the Company’s common stock on the acquisition date was $0.29 per share, therefore, the fair value of common stock issued was $821,667. The stock was issued in November 2017. This acquisition was accounted for using the replacement cost method, where the cost to replace or recreate the subject asset is estimated. The agreement included customary representations, warranties, and covenants by us and CityInformation. According to the replacement cost method of accounting, the Company recognized the identifiable assets acquired as follows: Developed Technology, App Portfolio 250,000 Developed Technology, App Handles 135,000 Assembled Workforce 40,000 Goodwill 396,667 Total intangibles and goodwill 821,667 Total assets acquired, net 821,667 The purchase price consisted of the following: Common stock 821,667 Total purchase price 821,667 The Company reviewed the fair value of the total assets of the acquisition and concluded the fair value of the goodwill and intangible assets which were acquired was less than the fair value of the common stock which was used to pay for the business. Accordingly, the Company recorded an impairment expense of $795,508 related to this acquisition in fiscal 2018. As the company is not using the assets in the same manner as the predecessor company, no proforma financials are presented. Comencia, Inc. Acquisition On July 1, 2017, the Company closed on an agreement and plan of share exchange and acquired Comencia, a related party Company, which was partly owned by an officer of the Company. The Company granted 2,500,000 shares of its common stock to the existing owners of Comencia, Inc. The closing price of the Company’s common stock on the acquisition date was $0.30 per share, therefore, the fair value of common stock issued was $750,000. As part of the closing of this agreement, the Company made a cash payment and issued a note receivable from Comencia for $55,000. The terms of the note include payable on demand within 30 days of notice and a 3.0% annual interest rate. This note has not yet been repaid. This acquisition was accounted for as a business combination under the purchase method of accounting, given that substantially all of Comencia’s assets and ongoing operations were acquired. The agreement included customary representations, warranties, and covenants by us and Comencia. According to the purchase method of accounting, the Company recognized the identifiable assets acquired and liabilities assumed as follows: Cash 11,989 Other assets 13,115 Total assets 25,104 Accrued expenses (12,741 ) Long-term payables (52,422 ) Total liabilities (65,163 ) Customer Lists 33,000 Intellectual Property 48,800 Trademarks 7,000 Total intangibles 88,800 Total assets acquired, net 48,741 Additional consideration given as compensation expense 701,259 Total consideration 750,000 The purchase price consisted of the following: Common stock 750,000 Total purchase price 750,000 This transaction was a non-arms length transaction, as one of Comencia’s owners was a Director of Digitaltown. As such, $750,000 was recorded as a stock-based compensation in fiscal 2018. The unaudited supplemental pro forma results of operations of the combined entities had the date of the acquisition been March 1, 2017 is as follows: Combined Pro Forma: For Fiscal Quarter 2018 Revenues $ 111,300 Cost of revenues 120,448 Gross profit (loss) (9,148 ) Operating expenses: Selling, general and administrative expenses 1,082,168 Loss from operations (1,092,624 ) Other income (expense) 9,724 Net loss $ (1,101,348 ) Weighted average number of common shares Outstanding – basic and fully diluted 55,059,804 Net loss per share – basic and fully diluted $ (0.02 ) | Congo Ltd. Acquisition On December 7, 2017, the Company closed on an asset purchase agreement for the acquisition of Congo Ltd. (Congo). Congo, based in Houston, TX, owns and operates a web-based platform offering; a portal connecting attorneys to prospective clients through a marketplace setting; a software-as-a-service (SaaS) subscription, selling web features to attorneys for their use on their respective law firm websites, and; the creation of customized online directories. The Company granted 3,000,000 shares of its common stock to the existing owners of Congo. The closing price of the Company’s common stock on the acquisition date was $0.28 per share, therefore, the fair value of common stock issued was $840,000. The stock was issued in February 2018. This acquisition was accounted for using the replacement cost method, where the cost to replace or recreate the subject asset is estimated. The agreement included customary representations, warranties, and covenants by us and Congo. According to the replacement cost method of accounting, the Company recognized the identifiable assets acquired as follows: Developed Technology, Platform and code base 420,000 Developed Technology, New code base and databases 432,000 Assembled Workforce 35,000 Goodwill 78,000 Total intangibles and goodwill 965,000 Total assets acquired, net 965,000 The purchase price consisted of the following: Common stock 840,000 Cash consideration 75,000 Earnest money 50,000 Total purchase price 965,000 The Company reviewed the fair value of the total assets of the acquisition and concluded the fair value of the goodwill and intangible assets which were acquired was less than the fair value of the common stock which was used to pay for the business. Accordingly, the Company recorded an impairment expense of $926,252 related to this acquisition in fiscal 2018. As the company is not using the assets in the same manner as the predecessor company, no proforma financials are presented. CityInformation, B.V. Acquisition On October 27, 2017, the Company closed on an asset purchase agreement for the acquisition of CityInformation. CityInformation, based in Amsterdam (Netherlands), develops and operates mobile apps for cities and towns worldwide. The Company granted 2,833,333 shares of its common stock to the existing owners of CityInformation. The closing price of the Company’s common stock on the acquisition date was $0.29 per share, therefore, the fair value of common stock issued was $821,667. The stock was issued in November 2017. This acquisition was accounted for using the replacement cost method, where the cost to replace or recreate the subject asset is estimated. The agreement included customary representations, warranties, and covenants by us and CityInformation. According to the replacement cost method of accounting, the Company recognized the identifiable assets acquired as follows: Developed Technology, App Portfolio 250,000 Developed Technology, App Handles 135,000 Assembled Workforce 40,000 Goodwill 396,667 Total intangibles and goodwill 821,667 Total assets acquired, net 821,667 The purchase price consisted of the following: Common stock 821,667 Total purchase price 821,667 The Company reviewed the fair value of the total assets of the acquisition and concluded the fair value of the goodwill and intangible assets which were acquired was less than the fair value of the common stock which was used to pay for the business. Accordingly, the Company recorded an impairment expense of $795,508 related to this acquisition in fiscal 2018. As the company is not using the assets in the same manner as the predecessor company, no proforma financials are presented. Comencia, Inc. Acquisition On July 1, 2017, the Company closed on an agreement and plan of share exchange and acquired Comencia, a related party Company, which was partly owned by an officer of the Company. The Company granted 2,500,000 shares of its common stock to the existing owners of Comencia, Inc. The closing price of the Company’s common stock on the acquisition date was $0.30 per share, therefore, the fair value of common stock issued was $750,000. As part of the closing of this agreement, the Company made a cash payment and issued a note receivable from Comencia for $55,000. The terms of the note include payable on demand within 30 days of notice and a 3.0% annual interest rate. This note has not yet been repaid. This acquisition was accounted for as a business combination under the purchase method of accounting, given that substantially all of Comencia’s assets and ongoing operations were acquired. The agreement included customary representations, warranties, and covenants by us and Comencia. According to the purchase method of accounting, the Company recognized the identifiable assets acquired and liabilities assumed as follows: Cash 11,989 Other assets 13,115 Total assets 25,104 Accrued expenses (12,741 ) Long-term payables (52,422 ) Total liabilities (65,163 ) Customer Lists 33,000 Intellectual Property 48,800 Trademarks 7,000 Total intangibles 88,800 Total assets acquired, net 48,741 Additional consideration given as compensation expense 701,259 Total consideration 750,000 The purchase price consisted of the following: Common stock 750,000 Total purchase price 750,000 This transaction was a non-arms length transaction, as one of Comencia’s owners was a Director of Digitaltown. As such, $750,000 was recorded as a stock-based compensation in fiscal 2018. The unaudited supplemental pro forma results of operations of the combined entities had the date of the acquisition been March 1, 2017 or March 1, 2016 are as follows: Combined Pro Forma: For Fiscal Years 2018 2017 Revenues $ 367,923 $ 251,713 Cost of revenues 1,053,184 562,216 Gross profit (loss) (685,261 ) (310,503 ) Operating expenses: Selling, general and administrative expenses 7,454,580 5,218,597 Loss from operations (8,139,841 ) (5,529,100 ) Other income (expense) (2,096,091 ) (1,744,049 ) Net loss $ (10,235,932 ) $ (7,273,149 ) Weighted average number of common shares Outstanding – basic and fully diluted 61,786,169 44,840,743 Net loss per share – basic and fully diluted $ (0.17 ) $ (0.16 ) Appointment.com Acquisition On December 1, 2016, the Company acquired all assets related to Appointment.com, Inc. (“Appointment”), an online scheduling software system based in Seattle, Washington. This transaction is considered related party since Epik Holdings Inc. is a controlling owner of Appointment and the Company’s CEO, Rob Monster, is the controlling owner of Epik Holdings Inc. The purchase price pursuant to an asset purchase agreement was 1,625,000 common shares. Due to the related party nature of the transaction, the Company did not record any goodwill related to the transaction. The sum of the cost basis of the liabilities assumed and the stock value of $731,500 is recognized as $853,955 expense on the Company’s consolidated statement of operations. The agreement included customary representations, warranties, and covenants by us and Appointment. The allocation of the purchase price to assets based upon fair value determinations was as follows: Cash $ 2,240 Related Party Payable (42,380 ) Accrued Salary (82,565 ) Total Net Liabilities Assumed $ (122,705 ) The purchase price consisted of the following: Total Net Liabilities Assumed $ 122,705 Common Stock 731,250 Total Compensation Expense and Purchase Price $ 853,955 The unaudited supplemental pro forma results of operations of the combined entities are not included in this disclosure as the acquisition of Appointment does not materially affect the Company's results from operations. Rezserve Technologies Ltd. Acquisition On September 14, 2016, the Company entered into a Stock Purchase Agreement for 100% of Rezserve Technologies, Ltd. (Rezserve), a travel industry software company based in Vancouver, British Columbia. Pursuant to the terms of the agreement, the Company purchased all of the issued and outstanding stock of Rezserve in consideration for a total purchase price of $1,480,000. This price was paid with 3,000,000 shares of the Company’s common stock and a $400,000 secured convertible note payable to Rezserve’s founder Clint Skidmore. The terms of the note include interest at 0% per annum. Principal is due and payable within one year of September 13, 2016. On December 22, 2017, the Company formalized its agreement to extend and convert the original convertible note of $400,000 for Clint Skidmore to October 31, 2018, original founder of Rezserve Technologies Ltd. The Company has repaid $30,000 to Clint Skidmore, and converted $210,000 of the note to 1,100,000 shares of the Company’s common stock, resulting in a loss on conversion of $13,000. At February 28, 2018, the Company owes $160,000 to Clint Skidmore, bearing no interest. This note had imputed interest of $38,000 in fiscal 2018. See Note 14 for more information about the convertible note payable – related party. This acquisition was accounted for as a business combination under the purchase method of accounting, given that substantially all of Rezserve’s assets and ongoing operations were acquired. The purchase resulted in $1,445,292 of impairment expense. This was due to the use of common stock by the Company to pay for the acquisition and the corresponding the value of the stock was in excess of the fair value of the assets received. The agreement included customary representations, warranties, and covenants by us and the Rezserve owner. According to the purchase method of accounting, the Company recognized the identifiable assets acquired and liabilities assumed as follows: Assets, net $ 34,708 Customer Lists 77,295 Intellectual Property 30,842 Trademarks 19,475 Goodwill 1,317,680 Total Assets Acquired $ 1,480,000 The purchase price consisted of the following: Convertible note payable – related party $ 400,000 Common Stock 1,080,000 Total Purchase Price $ 1,480,000 The Company reviewed the fair value of the total assets of the acquisition and concluded the fair value of the goodwill and intangible assets which were acquired was less than the fair value of the common stock which was used to pay for the business. Accordingly, the Company recorded an impairment expense of $1,445,292 related to this acquisition in fiscal 2017. The unaudited supplemental pro forma results of operations of the combined entities had the dates of the acquisitions been March 1, 2016 is as follows: Combined Pro Forma: For Fiscal Years 2017 Revenues $ 333,879 Cost of revenues 475,308 Gross profit (loss) (141,429 ) Operating expenses: Selling, general and administrative expenses 5,323,560 Loss from operations (5,464,989 ) Other income (expense) (1,744,049 ) Net loss $ (7,209,038 ) Weighted average number of common shares Outstanding – basic and fully diluted 44,840,743 Net loss per share – basic and fully diluted $ (0.16 ) Cloud.Market Acquisition On March 5, 2016, the Company acquired all of the assembled workforce, patents, intellectual property, technology, trademarks, trade names, copyrights, mask works and registrations, computer software, trade secrets and non-compete agreements related to the Cloud.Market business, pursuant to an agreement among the Company and the owner of Cloud.Market. The purchase price paid included issuance of 750,000 shares of our common stock and $7,500 of cash. The agreement included customary representations, warranties, and covenants by us and the Cloud.Market owner. The allocation of the purchase price to assets based upon fair value determinations was as follows: Non-compete agreements $ 700 Customer Lists 66,800 Total Assets Acquired $ 67,500 The purchase price consisted of the following: Cash $ 7,500 Common Stock 60,000 Total Purchase Price $ 67,500 The Company reviewed the fair value of the total assets of the acquisition and concluded the fair value of the goodwill and intangible assets which were acquired was less than the fair value of the common stock which was used to pay for the business. Accordingly, the Company recorded an impairment expense of $67,500 related to this acquisition in fiscal 2017. The unaudited supplemental pro forma results of operations of the combined entities are not included in this disclosure as the acquisition of Cloud.Market does not materially affect the Company's results from operations. |
Debt
Debt | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Notes to Financial Statements | ||
Note 14. Debt | Convertible Note Payable - Related Party Clint Skidmore - Note On September 14, 2016, subject to a stock purchase agreement, the Company signed a secured convertible note of $400,000 with Clint Skidmore, founder of Rezserve Technology Ltd (“Rezserve”). The interest free note is due and payable within one year, at which time it can be converted into up to 1,000,000 shares of the Company’s common stock at a conversion price of $0.40 per share. The Company evaluated the note and determined that as the fixed exercise price exceeded the closing market price on the note issuance date, that no beneficial conversion feature was present. On December 22, 2017, the Company formalized its agreement to extend and convert the original convertible note of $400,000 for Clint Skidmore to October 31, 2018, original founder of Rezserve Technologies Ltd. The Company has repaid $70,000 to Clint Skidmore, and converted $210,000 of the note to 1,100,000 shares of the Company’s common stock, resulting in a loss on conversion of $13,000. At May 31, 2018, the Company owes $120,000 to Clint Skidmore, bearing no interest. This note had imputed interest expense of $38,000 in fiscal 2018, and imputed interest of $3,500 in the first quarter of fiscal 2019. The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the fixed conversion price and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares. Darvin Habben - Note On June 9, 2017, the Company signed a convertible note of $500,000 with Darvin Habben, Chairman. This note is due and payable within one year, bears interest of 8%, and can be converted into up to 2,000,000 shares of the Company’s common stock at a conversion price of $0.25 per share. The Company recorded a debt discount equal to $300,000 due to this conversion feature. The note had accrued interest of $28,932 as of February 28, 2018. The debt discount had a balance at February 28, 2018 of $191,507. The Company recorded debt discount amortization expense of $108,493 during the year ended February 28, 2018. On May 9, 2018, the Company converted the $500,000 convertible note with Darvin Habben, Chairman, along with accrued and unpaid interest of $38,027.40, to 5,380,274 shares of its common stock at a conversion price of $0.10 per share. The company recorded debt discount amortization expense of $191,507 during the quarter ended May 31, 2018, related to this debt’s conversion recorded at inception. Promissory Note Payable - Related Party Derek Schumann - Note On July 20, 2017, the Company signed a promissory note of $100,000 with Derek Schumann, Director. This interest free note is due and payable within one year and bears no interest. The Company issued 1,000,000 warrants to Derek Schumann in connection with this note, with an exercise price of $0.10, and expiry date of July 20, 2027. The Company recorded a warrant discount equal to $100,000 due to this warrant feature. The note had imputed interest of $6,110 as of February 28, 2018. The warrant discount had a balance at February 28, 2018 of $69,452. The Company recorded warrant discount amortization expense of $30,548 during the year ended February 28, 2018. On May 9, 2018, the Company converted the $100,000 promissory note with Derek Schumann, Director, to 1,000,000 shares of its common stock at a conversion price of $0.10 per share. The company recorded debt discount amortization expense of $69,452 during the quarter ended May 31, 2018, related to this debt’s conversion recorded at inception. The note had imputed interest of $1,917 during the quarter ended May 31, 2018. Greg Foss - Note On July 20, 2017, the Company signed a promissory note of $100,000 with Greg Foss, Director. This interest free note is due and payable within one year and bears no interest. The Company issued 1,000,000 warrants to Greg Foss in connection with this note, with an exercise price of $0.10, and expiry date of July 20, 2027. The Company recorded a warrant discount equal to $100,000 due to this warrant feature. The note had imputed interest of $6,110 as of February 28, 2018. The warrant discount had a balance at February 28, 2018 of $69,452. The Company recorded warrant discount amortization expense of $30,548 during the year ended February 28, 2018. On May 9, 2018, the Company converted the $100,000 promissory note with Greg Foss, Director, to 1,000,000 shares of its common stock at a conversion price of $0.10 per share. The company recorded debt discount amortization expense of $69,452 during the quarter ended May 31, 2018, related to this debt’s conversion recorded at inception. The note had imputed interest of $1,917 during the quarter ended May 31, 2018. Darvin Habben - Note On July 27, 2017, the Company signed a promissory note of $150,000 with Darvin Habben, Chairman. This interest free note is due and payable within one year and bears no interest. The Company issued 1,000,000 warrants to Darvin Habben in connection with this note, with an exercise price of $0.10, and expiry date of July 27, 2027. The Company recorded a warrant discount equal to $150,000 due to this warrant feature. The note had imputed interest of $8,877 as of February 28, 2018. The warrant discount had a balance at February 28, 2018 of $105,616. The Company recorded warrant discount amortization expense of $44,384 during the year ended February 28, 2018. On May 9, 2018, the Company converted the $150,000 promissory note with Carvin Habben, Chairman, to 1,500,000 shares of its common stock at a conversion price of $0.10 per share. The company recorded debt discount amortization expense of $105,616 during the quarter ended May 31, 2018, related to this debt’s conversion recorded at inception. The note had imputed interest of $2,875 during the quarter ended May 31, 2018. Convertible Note Payable - Third Party PowerUp Lending - Note 1 On October 30, 2017, the Company issued a convertible note to PowerUp Lending Group Ltd. for $75,000 of cash consideration. The note bears interest at 12%, matures on October 30, 2018, and is convertible after 180 days into common stock at 61% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion. The Company recorded a debt discount equal to $47,951 due to this conversion feature. On May 3, 2018, PowerUp Lending Group Ltd. converted $12,000 of the principal amount of the October 30, 2017 note into 170,940 shares of the Company’s common stock, leaving a principal balance due of $63,000. On May 7, 2018, PowerUp Lending Group Ltd. converted $13,000 of the principal amount of the October 30, 2017 note into 213,115 shares of the Company’s common stock, leaving a principal balance due of $50,000. On May 10, 2018, PowerUp Lending Group Ltd. converted $15,000 of the principal amount of the October 30, 2017 note into 245,902 shares of the Company’s common stock, leaving a principal balance due of $35,000. On May 15, 2018, PowerUp Lending Group Ltd. converted $20,000 of the principal amount of the October 30, 2017 note into 327,869 shares of the Company’s common stock, leaving a principal balance due of $15,000. On May 16, 2018, PowerUp Lending Group Ltd. converted $15,000 of the principal amount, plus $4,500 in accrued and unpaid interest, of the October 30, 2017 note into 319,672 shares of the Company’s common stock, fully extinguishing this note. The Company recorded debt discount amortization expenses of $32,055 related to this note during the first quarter of fiscal 2019. PowerUp Lending - Note 2 On November 30, 2017, the Company issued a convertible note to PowerUp Lending Group Ltd. for $58,000 of cash consideration. The note bears interest at 12%, matures on November 30, 2018, and is convertible after 180 days into common stock at 61% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion. The Company recorded a debt discount equal to $38,164 due to this conversion feature. The note had accrued interest of $3,456 as of May 31, 2018. The debt discount had a balance at May 31, 2018 of $19,213. The Company recorded debt discount amortization expense of $9,541 during the quarter ended May 31, 2018. The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00009. PowerUp Lending - Note 3 On January 18, 2018, the Company issued a convertible note to PowerUp Lending Group Ltd. for $53,000 of cash consideration. The note bears interest at 12%, matures on January 18, 2019, and is convertible after 180 days into common stock at 61% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion. The Company recorded a debt discount equal to $33,164 due to this conversion feature. The note had accrued interest of $2,304 as of May 31, 2018. The debt discount had a balance at May 31, 2018 of $21,608. The Company recorded debt discount amortization expense of $8,471 during the quarter ended May 31, 2018 The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00009. Crown Bridge - Note 1 On January 30, 2018, the Company issued a convertible note to Crown Bridge Partners, LLC. for $55,000 of cash consideration. The note bears interest at 10%, matures on January 30, 2019, and is convertible after 180 days into common stock at 61% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion. The Company recorded a debt discount equal to $33,246 due to this conversion feature. The Company also recorded a $3,000 debt discount due to issuance fees. The note had accrued interest of $1,812 as of May 31, 2018. The debt discount had a balance at May 31, 2018 of $24,305. The Company recorded debt discount amortization expense of $9,062 during the quarter ended May 31, 2018. The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the fixed conversion price and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares. Promissory Note Payable - Third Party On July 20, 2017, the Company signed a promissory note of $100,000 with Donovan Olson. This interest free note is due and payable within one year and bears no interest. The Company issued 1,000,000 warrants to Donovan Olson in connection with this note, with an exercise price of $0.10, and expiry date of July 20, 2027. The Company recorded a warrant discount equal to $100,000 due to this warrant feature. On May 9, 2018, the Company converted the $100,000 promissory note with Donovan Olson, to 1,000,000 shares of its common stock at a conversion price of $0.10 per share. The company recorded debt discount amortization expense of $69,452 during the quarter ended May 31, 2018, related to this debt’s conversion recorded at inception. The note had imputed interest of $1,917 during the quarter ended May 31, 2018. | Convertible Note Payable - Related Party On September 14, 2016, subject to a stock purchase agreement, the Company signed a secured convertible note of $400,000 with Clint Skidmore, founder of Rezserve Technology Ltd (“Rezserve”). The interest free note is due and payable within one year, at which time it can be converted into up to 1,000,000 shares of the Company’s common stock at a conversion price of $0.40 per share. The Company evaluated the note and determined that as the fixed exercise price exceeded the closing market price on the note issuance date, that no beneficial conversion feature was present. On December 22, 2017, the Company formalized its agreement to extend and convert the original convertible note of $400,000 for Clint Skidmore to October 31, 2018, original founder of Rezserve Technologies Ltd. The Company has repaid $30,000 to Clint Skidmore, and converted $210,000 of the note to 1,100,000 shares of the Company’s common stock, resulting in a loss on conversion of $13,000. At February 28, 2018, the Company owes $160,000 to Clint Skidmore, bearing no interest. This note had imputed interest expense of $38,000 in fiscal 2018. The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the fixed conversion price and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares. On June 9, 2017, the Company signed a convertible note of $500,000 with Darvin Habben, Chairman. This note is due and payable within one year, bears interest of 8%, and can be converted into up to 2,000,000 shares of the Company’s common stock at a conversion price of $0.25 per share. The Company recorded a debt discount equal to $300,000 due to this conversion feature. The note had accrued interest of $28,932 as of February 28, 2018. The debt discount had a balance at February 28, 2018 of $191,507. The Company recorded debt discount amortization expense of $108,493 during the year ended February 28, 2018. The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the fixed conversion price and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares. Promissory Note Payable - Related Party On July 20, 2017, the Company signed a promissory note of $100,000 with Derek Schumann, Director. This interest free note is due and payable within one year and bears no interest. The Company issued 1,000,000 warrants to Derek Schumann in connection with this note, with an exercise price of $0.10, and expiry date of July 20, 2027. The Company recorded a warrant discount equal to $100,000 due to this warrant feature. The note had imputed interest of $6,110 as of February 28, 2018. The warrant discount had a balance at February 28, 2018 of $69,452. The Company recorded warrant discount amortization expense of $30,548 during the year ended February 28, 2018. On July 20, 2017, the Company signed a promissory note of $100,000 with Greg Foss, Director. This interest free note is due and payable within one year and bears no interest. The Company issued 1,000,000 warrants to Greg Foss in connection with this note, with an exercise price of $0.10, and expiry date of July 20, 2027. The Company recorded a warrant discount equal to $100,000 due to this warrant feature. The note had imputed interest of $6,110 as of February 28, 2018. The warrant discount had a balance at February 28, 2018 of $69,452. The Company recorded warrant discount amortization expense of $30,548 during the year ended February 28, 2018. On July 27, 2017, the Company signed a promissory note of $150,000 with Darvin Habben, CEO. This interest free note is due and payable within one year and bears no interest. The Company issued 1,000,000 warrants to Darvin Habben in connection with this note, with an exercise price of $0.10, and expiry date of July 27, 2027. The Company recorded a warrant discount equal to $150,000 due to this warrant feature. The note had imputed interest of $8,877 as of February 28, 2018. The warrant discount had a balance at February 28, 2018 of $105,616. The Company recorded warrant discount amortization expense of $44,384 during the year ended February 28, 2018. Convertible Note Payable - Third Party On October 30, 2017, the Company issued a convertible note to PowerUp Lending Group Ltd. for $75,000 of cash consideration. The note bears interest at 12%, matures on October 30, 2018, and is convertible after 180 days into common stock at 61% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion. The Company recorded a debt discount equal to $47,951 due to this conversion feature. The note had accrued interest of $2,885 as of February 28, 2018. The debt discount had a balance at February 28, 2018 of $32,055. The Company recorded debt discount amortization expense of $15,896 during the year ended February 28, 2018. The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00009. On November 30, 2017, the Company issued a convertible note to PowerUp Lending Group Ltd. for $58,000 of cash consideration. The note bears interest at 12%, matures on November 30, 2018, and is convertible after 180 days into common stock at 61% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion. The Company recorded a debt discount equal to $38,164 due to this conversion feature. The note had accrued interest of $1,716 as of February 28, 2018. The debt discount had a balance at February 28, 2018 of $28,754. The Company recorded debt discount amortization expense of $9,410 during the year ended February 28, 2018. The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00009. On January 18, 2018, the Company issued a convertible note to PowerUp Lending Group Ltd. for $53,000 of cash consideration. The note bears interest at 12%, matures on January 18, 2019, and is convertible after 180 days into common stock at 61% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion. The Company recorded a debt discount equal to $33,164 due to this conversion feature. The note had accrued interest of $714 as of February 28, 2018. The debt discount had a balance at February 28, 2018 of $30,079. The Company recorded debt discount amortization expense of $3,806 during the year ended February 28, 2018. The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00009. On January 30, 2018, the Company issued a convertible note to Crown Bridge Partners, LLC. for $55,000 of cash consideration. The note bears interest at 10%, matures on January 30, 2019, and is convertible after 180 days into common stock at 61% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion. The Company recorded a debt discount equal to $33,246 due to this conversion feature. The Company also recorded a $3,000 debt discount due to issuance fees. The note had accrued interest of $437 as of February 28, 2018. The debt discount had a balance at February 28, 2018 of $33,366. The Company recorded debt discount amortization expense of $2,880 during the year ended February 28, 2018. The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the fixed conversion price and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares. Promissory Note Payable - Third Party On July 20, 2017, the Company signed a promissory note of $100,000 with Donovan Olson. This interest free note is due and payable within one year and bears no interest. The Company issued 1,000,000 warrants to Donovan Olson in connection with this note, with an exercise price of $0.10, and expiry date of July 20, 2027. The Company recorded a warrant discount equal to $100,000 due to this warrant feature. The note had imputed interest of $6,110 as of February 28, 2018. The warrant discount had a balance at February 28, 2018 of $69,452. The Company recorded warrant discount amortization expense of $30,548 during the year ended February 28, 2018. |
Transactions with Former Office
Transactions with Former Officer | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Notes to Financial Statements | ||
Note 15. Transactions with Former Officer | The Company was founded in 1982 and managed by Richard Pomije since at least 1987. On May 17, 2015, Mr. Pomije resigned as CEO of the Company and on June 1, 2015, he resigned as the CFO and Chairman. At that time of his resignation, the Company and the Board of Directors were not aware of any continuing employment agreement. The Company released Mr. Pomije on September 11, 2015 concurrent with his closing of the Burnsville, MN office. On December 5, 2016, Richard Pomije filed a lawsuit against the Company. Mr. Pomije asserts an employment agreement existed and a continuing obligation of the Company in the form of a monthly salary for a 1 year term from May 18, 2015 to May 17, 2016 was due in addition to a stock subscription receivable. Mr. Pomije claims the Company owes him $260,900, which had been fully accrued for by the Company as of February 28, 2017. On April 18, 2018, Mr. Richard Pomije was granted a judgement for the lawsuit he filed against the Company on December 5, 2016. Mr. Pomije was awarded $256,488 as damages, and $296,488 as attorney’s fees and costs, for a total award of $552,976. During the quarter ending May 31, 2018, $10,910 was paid to Mr. Richard Pomije. As at May 31, 2018, $542,066 has been accrued as payable to Mr. Pomije. The Company is in the process of filing an appeal. | The Company was founded in 1982 and managed by Richard Pomije since at least 1987. On May 17, 2015, Mr. Pomije resigned as CEO of the Company and on June 1, 2015, he resigned as the CFO and Chairman. At that time of his resignation, the Company and the Board of Directors were not aware of any continuing employment agreement. The Company released Mr. Pomije on September 11, 2015 concurrent with his closing of the Burnsville, MN office. On December 5, 2016, Richard Pomije filed a lawsuit against the Company. Mr. Pomije asserts an employment agreement existed and a continuing obligation of the Company in the form of a monthly salary for a 1 year term from May 18, 2015 to May 17, 2016 was due in addition to a stock subscription receivable. Mr. Pomije claims the Company owes him $260,900, which had been fully accrued for by the Company as of February 28, 2017. On April 18, 2018, Mr. Richard Pomije was granted a judgement for the lawsuit he filed against the Company on December 5, 2016. Mr. Pomije was awarded $256,488 as damages, and $296,488 as attorney’s fees and costs, for a total award of $552,976. As at February 28, 2018, $552,976 has been accrued as payable to Mr. Pomije. The Company is in the process of filing an appeal. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Notes to Financial Statements | ||
Note 16. Intangible Assets and Goodwill | Goodwill The carrying value of goodwill at May 31, 2018 and February 28, 2018 was $0. During the fiscal 2018, the Company made an acquisition which resulted in $549,667 of goodwill being recorded and subsequently impaired. Intangible assets The carrying value of intangible assets at May 31, 2018 and February 28, 2018 was $0. During fiscal 2018, the Company acquired $1,237,000 of intangible assets, including $432,000 of code base and databases, $420,000 of platform and code base, $250,000 of app portfolios, and $135,000 of app handles. During fiscal 2018, the Company recorded $64,907 of amortization expense related to intangible assets. Impairments We evaluate our goodwill and intangible assets for an impairment on an annual basis each fiscal year end. Based upon our review and analysis, we deemed all of the goodwill and intangible assets acquired in fiscal 2018 as fully impaired as of February 28, 2018. Accordingly, we recognized an impairment expense of $1,721,760 in fiscal 2018. This reflects the full amount of goodwill and the unamortized balance of the intangible assets. | Goodwill The carrying value of goodwill at February 28, 2018 and February 28, 2017 was $0. During fiscal 2018 and fiscal 2017, the Company made three acquisitions which resulted in $549,667 and $1,317,680 of goodwill being recorded, and subsequently impaired, respectively. See Note 13 for more information about acquisitions. Intangible assets The carrying value of intangible assets at February 28, 2018 and February 28, 2017 was $0. During fiscal 2018, the Company acquired $1,237,000 of intangible assets, including $432,000 of code base and databases, $420,000 of platform and code base, $250,000 of app portfolios, and $135,000 of app handles. During fiscal 2018, the Company recorded $64,907 of amortization expense related to intangible assets. During fiscal 2017, the Company entered into agreements to purchase domain name rights with five individuals. In exchange for the domain name rights, the Company issued 369,750 common shares and paid $69,500 in cash. The total fair value of the shares was $154,740 based on the respective domain name purchase agreements date and the closing market price on that date. Impairments We evaluate our goodwill and intangible assets for an impairment on an annual basis each fiscal year end. Based upon our review and analysis, we deemed all of the goodwill and intangible assets acquired in fiscal 2018 as fully impaired as of February 28, 2018. Accordingly, we recognized an impairment expense of $1,721,760 in fiscal 2018. In fiscal 2017, we recognized an impairment of $1,725,009. This reflects the full amount of goodwill and the unamortized balance of the intangible assets each year. |
Digital Currencies
Digital Currencies | 3 Months Ended |
May 31, 2018 | |
Notes to Financial Statements | |
Note 17. Digital Currencies | The Company has entered into stock purchase agreements with investors, and has accepted digital currencies as a form of payment from these investors, in exchange for shares of the Company’s common stock. On May 15, 2018, the Company issued 11,385,590 shares of stock to Catena Fund One, LP for 1,050,000 RHOC (RChain Coins). The market price of RHOC on May 15, 2018 was $1.58 per RHOC, resulting in a value of $1,659,000. On May 16, 2018, the Company sold 63,291.13924 RHOCs at $1.56 for $100,000, resulting in a loss on exchange of $1,282. On May 31, 2018, market price of RHOC was $1.38, resulting in an unrealized loss on exchange of $196,070, which is represented as Accumulated Other Comprehensive Income in the equity section of the balance sheet. Our primary market risk exposure with regard to digital currencies is the volatility in trading prices from day to day, which would only impact the gain/loss recognized at time of exchange on such instruments. As of May 31, 2018, the Company held the equivalent of $1,380,156 in digital currencies. |
Subsequent Events
Subsequent Events | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Notes to Financial Statements | ||
Note 18. Subsequent Events | In June 2018, PowerUp Lending Group converted $50,000 of the principal amount of the November 30, 2017 note into 763,001 shares of the Company’s common stock, leaving a principal balance due of $8,000. In July 2018, the Company issued 90,000 shares of its common stock to a contractor, with a value of $7,920. There were no additional significant subsequent events through July 16, 2018, the date the financial statements were issued. | On April 18, 2018, Mr. Richard Pomije was granted a judgement for the lawsuit he filed against the Company on December 5, 2016. Mr. Pomije was awarded $256,488 as damages, and $296,488 as attorney’s fees and costs, for a total award of $552,976. As at February 28, 2017, $260,900 had been accrued. As at February 28, 2018, the accrual has increased by $292,076 to $552,976. The Company is in the process of filing an appeal. On April 25, 2018, the Company received a $1,000,000 investment commitment from Triton Funds LP to purchase registered DGTW shares. The Company has filed an S-1 with the SEC. Once approved, Triton will purchase up to 5% of the Company’s fully diluted shares. On May 15, 2018, the Company received a $2,400,000 investment from Pithia, Inc. in exchange for 10% of the Company’s fully diluted shares. Pithia invested $1,200,000 on May 15, 2018 in the form of RHOC cryptocurrency. The remaining $1,200,000 will be received 90 days from the agreement date, again in the form of RHOC cryptocurrency, as long as the Company meets certain conditions. The Company issued 11,385,590 shares of its common stock to Pithia, Inc. on May 31, 2018. On May 17, 2018, Digitaltown amended the employment agreement of Michael Cartwright, its Chief Technology Officer, to extend his employment term by two years to June 1, 2020. This included a base salary increase, additional stock award, and a cryptocurrency coin award conditional on achieving specific development and product launch milestones. A copy of his amended employment agreement is attached as Exhibit 10.1. |
Nature of Operations and Sign26
Nature of Operations and Significant Accounting Policies (Policies) | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Nature Of Operations And Significant Accounting Policies | ||
Nature of Business | The Company was founded in 1982 under the laws of the State of Minnesota as Command Small Computer Learning Center, Inc., a computer training company and operated under several different names in the computer hardware and training sector. In 2005, the Company began acquiring domain names. On March 1, 2007, the Company changed its name to DigitalTown, Inc. and began developing a business plan to develop a platform to monetize their domain names. DigitalTown currently provides turn-key hosted solutions to power a comprehensive platform for government entities, citizens and merchants. The easy to use platform helps city officials and local merchants manage a feature-rich Smart City for web and mobile devices and provides residents and visitors with access to Content, Community and Commerce. The Company’s headquarters are located in Bellevue, WA. The Company’s common stock is traded on the OTC Markets under the ticker symbol of DGTW. The Company’s consolidated financial statements have been prepared using U.S. GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has a working capital deficit, recurring losses, and negative cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty. At May 31, 2018, the Company had an accumulated deficit of $51,142,038. The Company anticipates that growth from its operations, expected future proceeds from additional financing through the sale of its common stock or other equity-based securities, and additional sales and/or leases of existing domain names will be sufficient to meet its working capital and capital expenditure needs through at least February 28, 2019. In the event that the Company is unable to obtain additional capital in the future, the Company would reduce operating expenses or cease operations altogether. | The Company was founded in 1982 under the laws of the State of Minnesota as Command Small Computer Learning Center, Inc., a computer training company and operated under several different names in the computer hardware and training sector. In 2005, the Company began acquiring domain names. On March 1, 2007, the Company changed its name to DigitalTown, Inc. and began developing a business plan to develop a platform to monetize their domain names. DigitalTown currently provides turn-key hosted solutions to power a comprehensive platform for government entities, citizens and merchants. The easy to use platform helps city officials and local merchants manage a feature-rich Smart City for web and mobile devices and provides residents and visitors with access to Content, Community and Commerce. The Company’s headquarters are located in Bellevue, WA. The Company’s common stock is traded on the OTC Markets under the ticker symbol of DGTW. The Company’s consolidated financial statements have been prepared using U.S. GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has a working capital deficit, recurring losses, and negative cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty. At February 28, 2018, the Company had an accumulated deficit of $48,593,820. The Company anticipates that growth from its operations, expected future proceeds from additional financing through the sale of its common stock or other equity-based securities, and additional sales and/or leases of existing domain names will be sufficient to meet its working capital and capital expenditure needs through at least February 28, 2019. In the event that the Company is unable to obtain additional capital in the future, the Company would reduce operating expenses or cease operations altogether. |
Principles of Consolidation | The consolidated financial statements include the accounts of DigitalTown, Inc. and its wholly-owned subsidiaries and have been prepared by the Company in United States (U.S.) dollars and in accordance with accounting principles generally accepted in the United States, or GAAP. All material intercompany accounts and transactions have been eliminated in consolidation. | The consolidated financial statements include the accounts of DigitalTown, Inc. and its wholly-owned subsidiaries and have been prepared by the Company in United States (U.S.) dollars and in accordance with accounting principles generally accepted in the United States, or GAAP. All material intercompany accounts and transactions have been eliminated in consolidation. |
Reclassifications | Certain prior period amounts in the consolidated statement of cash flows have been reclassified to conform to the current period presentation. Proceeds from related party notes payable received in the prior period have been reclassified from the prior period classification. These reclassifications had no impact on previously reported net income or accumulated deficit for any year. | Certain prior period amounts in the consolidated statement of cash flows have been reclassified to conform to the current period presentation. Proceeds from related party notes payable received in the prior period have been reclassified from the prior period classification. These reclassifications had no impact on previously reported net income or accumulated deficit for any year. |
Use of Estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.”) 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. | The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.”) 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Accounts Receivable | Accounts receivable arise from the software licensing of our Rezserve subsidiary. The Company evaluates collectability of accounts receivable based on a combination of factors including the age of the receivable or a specific customer’s inability to meet its financial conditions. In these circumstances, the Company records an allowance to reduce the receivable to an amount it deems collectible. The Company has recorded an allowance for doubtful accounts as of May 31, 2018 and February 28, 2018 of $5,389 and $5,456, respectively. | Accounts receivable arise from the software licensing of our Rezserve subsidiary. The Company evaluates collectability of accounts receivable based on a combination of factors including the age of the receivable or a specific customer’s inability to meet its financial conditions. In these circumstances, the Company records an allowance to reduce the receivable to an amount it deems collectible. The Company has recorded an allowance for doubtful accounts as of February 28, 2018 and February 28, 2017 of $5,456 and $23,219, respectively. During fiscal 2017, the Company recorded $114,829 of bad debt expense due mostly to new customers from the Rezserve acquisition. |
Goodwill and Intangible Assets | Goodwill represents the excess of purchase price over the fair value of net tangible and identifiable intangible assets related to completed acquisitions. Goodwill has an indefinite life and is not amortized but instead tested for impairment annually, or more frequently if necessary. Intangible assets are recorded at fair value and are comprised of amounts assigned to acquisition-related items, such as trade names, customer lists, non-compete agreements and intellectual property/technology. Intangible assets are considered either definite or indefinite lived assets. Definite lived intangible assets are amortized on a straight-line basis over their useful lives. Certain intangible assets may have an indefinite life and are not amortized, but rather evaluated for impairment annually. We evaluate any goodwill and intangible assets for an impairment on an annual basis each fiscal year end. We also evaluate goodwill and intangible assets for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the goodwill and intangible assets below the carrying amounts. Based upon our review and analysis, we deemed all of the goodwill and intangible assets acquired in fiscal 2018 as fully impaired. Accordingly, we recognized an impairment expense of $1,721,760. | Goodwill represents the excess of purchase price over the fair value of net tangible and identifiable intangible assets related to completed acquisitions. Goodwill has an indefinite life and is not amortized but instead tested for impairment annually, or more frequently if necessary. Intangible assets are recorded at fair value and are comprised of amounts assigned to acquisition-related items, such as trade names, customer lists, non-compete agreements and intellectual property/technology. Intangible assets are considered either definite or indefinite lived assets. Definite lived intangible assets are amortized on a straight-line basis over their useful lives. Certain intangible assets may have an indefinite life and are not amortized, but rather evaluated for impairment annually. We evaluate any goodwill and intangible assets for an impairment on an annual basis each fiscal year end. We also evaluate goodwill and intangible assets for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the goodwill and intangible assets below the carrying amounts. Based upon our review and analysis, we deemed all of the goodwill and intangible assets acquired in fiscal 2018 as fully impaired. Accordingly, we recognized an impairment expense of $1,721,760. In fiscal 2017, recognized an impairment expense of $1,725,009. |
Revenue Recognition | Effective March 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the three months ended May 31, 2018 and the twelve months ended February 28, 2018. The Company recognizes revenue when the following four criteria have been met: · Persuasive evidence that a business relationship exists · Delivery has occurred · The price is fixed and determinable · Collectibility is reasonably assured The Company primarily recognizes revenue from sale of software licenses and related development services. Software licensing and development revenue is recognized as invoiced and over the course of the applicable agreements. In the event projects have multiple project milestones, revenue is recognized as milestones are achieved and invoices are submitted for payment. The Company may also be merchant of record for merchant transactions processed on the DigitalTown platform. When this happens, revenue is recognized on the date of the transaction. The Company has experience in merchant transaction fraud mitigation. To the extent chargebacks become material, the Company will implement a formal practice for allowance for doubtful accounts. | Effective March 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the twelve months ended February 28, 2018 and 2017. The Company recognizes revenue when the following four criteria have been met: · Persuasive evidence that a business relationship exists · Delivery has occurred · The price is fixed and determinable · Collectibility is reasonably assured The Company primarily recognizes revenue from sale of software licenses and related development services. Software licensing and development revenue is recognized as invoiced and over the course of the applicable agreements. In the event projects have multiple project milestones, revenue is recognized as milestones are achieved and invoices are submitted for payment. The Company may also be merchant of record for merchant transactions processed on the DigitalTown platform. When this happens, revenue is recognized on the date of the transaction. The Company has experience in merchant transaction fraud mitigation. To the extent chargebacks become material, the Company will implement a formal practice for allowance for doubtful accounts. The Company recognizes revenue from the sale of display advertising appearing on specific pages of individual sites within DigitalTown’s network platform. Display advertising is sold by the Company directly to local merchants and placed by the Company on specific pages of individual sites targeted by the local merchant. The terms of these sales are either for a fixed monthly amount for a period ranging from three months to one year or variable based on a percentage of the per click or per-impression revenue generated by these ads. |
Fair Value of Financial Instruments | Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (ASC) 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under U.S. GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value. As of May 31, 2018 and February 28, 2018, the Company does not have any financial instruments that must be measured under the fair value standard. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows: Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). Level 3 - Unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing the asset or liability. There were no transfers of financial assets or liabilities between Level 1 and Level 2 inputs during the first quarter of fiscal 2019 or the fiscal year 2018. | Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (ASC) 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under U.S. GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value. As of February 28, 2018, and February 28, 2017, the Company does not have any financial instruments that must be measured under the fair value standard. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows: Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). Level 3 - Unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing the asset or liability. There were no transfers of financial assets or liabilities between Level 1 and Level 2 inputs during fiscal 2018 or fiscal 2017. |
Cash Equivalents | The Company considers all highly liquid investments with original maturity of three months or less when purchased to be cash equivalents. As of May 31, 2018 and February 28, 2018, the Company had no cash equivalents. | The Company considers all highly liquid investments with original maturity of three months or less when purchased to be cash equivalents. As of February 28, 2018, and February 28, 2017, the Company had no cash equivalents. |
Cash Deposits in Excess of Federally Insured Limits | The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. Accounts are insured by the Federal Deposit Insurance Company and currently have insurance coverage up to $250,000. At May 31, 2018 and February 28, 2018, the Company did not have any deposit accounts in excess of federally insured limits. | The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. Accounts are insured by the Federal Deposit Insurance Company and currently have insurance coverage up to $250,000. At February 28, 2018, the Company had no uninsured cash balances. At February 28, 2017, the Company had one bank deposit account in excess of federally insured limits. |
Prepaid Domain Names | The annual domain name renewal fees are currently capitalized in the period of renewal then amortized over one year. Only the purchase of new domain names is capitalized. See Note 5 for further information. | The annual domain name renewal fees are currently capitalized in the period of renewal then amortized over one year. Only the purchase of new domain names are capitalized. See Note 4 for further information. |
Property and Equipment | Property and equipment are stated at cost and depreciated on a straight-line basis over their estimated useful lives, ranging from three to five years. Leasehold improvements are amortized over the shorter of the useful life or the term of the related lease. The Company recorded $1,842 and $1,300 of depreciation expense for first quarters of fiscal years 2019 and 2018, respectively. Repairs and maintenance costs are expensed as incurred; major renewals and improvements are capitalized. As items of property or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in operating income. See Note 4 for further information. | Property and equipment are stated at cost and depreciated on a straight-line basis over their estimated useful lives, ranging from three to five years. The Company recorded $6,022 and $2,782 of depreciation expense for fiscal years 2018 and 2017, respectively. Repairs and maintenance costs are expensed as incurred; major renewals and improvements are capitalized. As items of property or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in operating income. See Note 3 for further information. |
Income Taxes | Deferred tax assets (net of any valuation allowance) and liabilities resulting from temporary differences, net operating loss carryforwards and tax credit carryforwards are recorded using an asset-and-liability method. Deferred taxes relating to temporary differences and loss carryforwards are measured using the tax rate expected to be in effect when they are reversed or are realized. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be ultimately realized. The Company has recorded a full valuation allowance against the net deferred tax asset due to the uncertainty of realizing the related future benefits. The Company accounts for income taxes pursuant to FASB guidance. This guidance prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company believes its income tax filing positions and deductions will be sustained upon examination and, accordingly, no reserves or related accruals for interest and penalties have been recorded at May 31, 2018 or February 28, 2018. In accordance with the FASB guidance, the Company has adopted a policy under which, if required to be recognized in the future, interest related to the underpayment of income taxes will be classified as a component of interest expense and any related penalties will be classified in operating expenses in the statements of operations. The Company has three open years of tax returns subject to examination. | Deferred tax assets (net of any valuation allowance) and liabilities resulting from temporary differences, net operating loss carryforwards and tax credit carryforwards are recorded using an asset-and-liability method. Deferred taxes relating to temporary differences and loss carryforwards are measured using the tax rate expected to be in effect when they are reversed or are realized. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be ultimately realized. The Company has recorded a full valuation allowance against the net deferred tax asset due to the uncertainty of realizing the related future benefits. The Company accounts for income taxes pursuant to FASB guidance. This guidance prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company believes its income tax filing positions and deductions will be sustained upon examination and, accordingly, no reserves or related accruals for interest and penalties have been recorded at February 28, 2018 or February 28, 2017. In accordance with the FASB guidance, the Company has adopted a policy under which, if required to be recognized in the future, interest related to the underpayment of income taxes will be classified as a component of interest expense and any related penalties will be classified in operating expenses in the statements of operations. The Company has three open years of tax returns subject to examination. |
Stock-Based Compensation, Including Options and Warrants | Use of equity for compensation is a material part of the Company’s near-term strategy. The Company recognizes the cost of stock-based compensation plans and awards in operations on a straight-line basis over the respective vesting period of the awards. The Company measures and recognizes compensation expense for all stock-based payment awards made to employees, directors, consultants and advisors. The compensation expense for the Company’s stock-based payments is based on estimated fair values at the time of the grant. The Company estimates the fair value of stock-based payment awards on the date of grant using the Black-Scholes option pricing model. This option pricing model involves a number of assumptions, including the expected lives of stock options, the volatility of the public market price for the Company’s common stock and interest rates. Stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that are ultimately expected to vest. | Use of equity for compensation is a material part of the Company’s near-term strategy. The Company recognizes the cost of stock-based compensation plans and awards in operations on a straight-line basis over the respective vesting period of the awards. The Company measures and recognizes compensation expense for all stock-based payment awards made to employees, directors, consultants and advisors. The compensation expense for the Company's stock-based payments is based on estimated fair values at the time of the grant. The Company estimates the fair value of stock-based payment awards on the date of grant using the Black-Scholes option pricing model. This option pricing model involves a number of assumptions, including the expected lives of stock options, the volatility of the public market price for the Company's common stock and interest rates. Stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that are ultimately expected to vest. |
Recently Issued Accounting Pronouncements | In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Accounting Standards Codification 606 (“ASC 606”)). ASU No. 2014-09 provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the contract and estimating the amount of variable consideration to include in the transaction price attributable to each separate performance obligation. Subsequent to the initial standards, the FASB has also issued several ASUs to clarify specific revenue recognition topics. This guidance will be effective for the Company for its fiscal year 2019. The Company will adopt using the modified retrospective approach to initially apply the update and recognize the remaining contract value at the date of application. The Company does not expect the adoption of ASU 2014-09 to have any impact on its total cash flows from operating, investing or financing activities. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which removes the second step of the two-step goodwill impairment test. Under ASU 2017-04, an entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 does not amend the optional qualitative assessment of goodwill impairment. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019; early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has not elected early adoption of this standard and is currently in the process of evaluating the impact of adopting ASU 2017-04 and cannot currently estimate the financial statement impact of adoption. In May 2017, the FASB issued ASU No. 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting.” The amendments in this update provide guidance about which changes to the terms or conditions of a share-based award require an entity to apply modification accounting in Topic 718. The guidance will be effective for the Company for its fiscal year 2018, with early adoption permitted. The Company does not expect this ASU to materially impact the Company’s consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, ”Leases (Topic 842)”. Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company does not expect the adoption to have a material impact on its consolidated financial statements upon adoption. The Company believes there are no other new pronouncements that have been issued that might have a material impact on its financial position or results of operations. | In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Accounting Standards Codification 606 (“ASC 606”)). ASU No. 2014-09 provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the contract and estimating the amount of variable consideration to include in the transaction price attributable to each separate performance obligation. Subsequent to the initial standards, the FASB has also issued several ASUs to clarify specific revenue recognition topics. This guidance will be effective for the Company for its fiscal year 2019. The Company will adopt using the modified retrospective approach to initially apply the update and recognize the remaining contract value at the date of application. The Company does not expect the adoption of ASU 2014-09 to have any impact on its total cash flows from operating, investing or financing activities. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which removes the second step of the two-step goodwill impairment test. Under ASU 2017-04, an entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 does not amend the optional qualitative assessment of goodwill impairment. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019; early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has not elected early adoption of this standard and is currently in the process of evaluating the impact of adopting ASU 2017-04 and cannot currently estimate the financial statement impact of adoption. In May 2017, the FASB issued ASU No. 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting.” The amendments in this update provide guidance about which changes to the terms or conditions of a share-based award require an entity to apply modification accounting in Topic 718. The guidance will be effective for the Company for its fiscal year 2018, with early adoption permitted. The Company does not expect this ASU to materially impact the Company’s consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)”. Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company does not expect the adoption to have a material impact on its consolidated financial statements upon adoption. The Company believes there are no other new pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Property And Equipment | ||
Schedule of Equipment | May 31, February 28, 2018 2018 Office equipment and furniture 42,745 43,088 Less accumulated depreciation (22,272 ) (20,655 ) Property and equipment, net 20,473 22,433 | Property and equipment are as follows: February 28, February 28, 2018 2017 Office equipment and furniture $ 43,088 $ 528,034 Less accumulated depreciation (20,655 ) (526,222 ) Property and equipment, net $ 22,433 $ 1,812 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Stockholders Equity | ||
Schedule of computing the fair value of the warrants using the Black-Scholes pricing model | July 20, July 27, February 6, February 15, February 16, 2017 2017 2018 2018 2018 Weighted-average volatility 263 % 263 % 157 % 153 % 158 % Expected dividends None None None None None Expected term (in years) 10.00 10.00 1.00 1.00 1.00 Weighted-average risk-free interest rate 1.17 % 1.16 % 2.00 % 1.99 % 2.00 % Weighted-average fair value of warrants granted $ 0.20 $ 0.27 $ 0.15 $ 0.14 $ 0.17 | The Company utilized the following key assumptions in computing the fair value of the warrants using the Black-Scholes pricing model: July 20, July 27, February 6, February 15, February 16, 2017 2017 2018 2018 2018 Weighted-average volatility 263 % 263 % 157 % 153 % 158 % Expected dividends None None None None None Expected term (in years) 10.00 10.00 1.00 1.00 1.00 Weighted-average risk-free interest rate 1.17 % 1.16 % 2.00 % 1.99 % 2.00 % Weighted-average fair value of warrants granted $ 0.20 $ 0.27 $ 0.15 $ 0.14 $ 0.17 |
Summary of stock warrant activity | Number of Warrants Outstanding - February 28, 2017 4,480,000 Granted 6,944,740 Canceled or expired (2,430,000 ) Outstanding - February 28, 2018 9,044,740 Granted - Canceled or expired - Outstanding - May 31, 2018 9,044,740 Exercisable at May 31, 2018 9,044,740 | The following table summarizes information about the Company’s stock warrant activity during the fiscal years 2018 and 2017: Number of Warrants Outstanding - February 28, 2016 2,050,000 Granted 2,430,000 Canceled or expired - Outstanding - February 28, 2017 4,480,000 Granted 6,994,740 Canceled or expired (2,430,000 ) Outstanding - February 28, 2018 9,044,740 Exercisable at February 28, 2018 9,044,740 |
Summary of stock warrants outstanding | Exercise Price Number Outstanding Weighted Average Remaining Life (years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercisable Price $ 0.10 7,394,740 5.67 $ 0.10 7,394,740 $ 0.10 $ 0.15 300,000 6.85 $ 0.15 300,000 $ 0.15 $ 0.25 850,000 6.93 $ 0.25 850,000 $ 0.25 $ 0.30 500,000 7.28 $ 0.30 500,000 $ 0.30 $ 0.10 - $0.30 9,044,740 5.92 $ 0.13 9,044,740 $ 0.13 | The following table summarizes information about stock warrants outstanding as of February 28, 2018: Exercise Price Number Outstanding Weighted Average Remaining Life (years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercisable Price $0.10 7,394,740 5.92 $ 0.10 7,394,740 $ 0.10 $0.15 300,000 7.10 $ 0.15 300,000 $ 0.15 $0.25 850,000 7.19 $ 0.25 850,000 $ 0.25 $0.30 500,000 7.54 $ 0.30 500,000 $ 0.30 $0.10 - $0.30 9,044,740 6.17 $ 0.13 9,044,740 $ 0.13 |
Stock Options (Tables)
Stock Options (Tables) | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Stock Options | ||
Schedule of computing the fair value of the options using the Black-Scholes pricing model | February 16, 2018 Weighted-average volatility 153 % Expected dividends None Expected term (in years) 1.00 Weighted-average risk-free interest rate 2.00 % | The Company utilized the following key assumptions in computing the fair value of the options using the Black-Scholes pricing model: February 16, 2018 Weighted-average volatility 153 % Expected dividends None Expected term (in years) 1.00 Weighted-average risk-free interest rate 2.00 % |
Summary of stock options activity | Number of Options Weighted Average Exercise Price Outstanding - February 28, 2017 6,692,310 $ 0.16 Granted 1,035,159 $ 0.10 Canceled or expired (1,492,310 ) $ 0.14 Outstanding - February 28, 2018 6,235,159 $ 0.16 Granted - - Canceled or expired - - Outstanding - May 31, 2018 6,235,159 $ 0.16 Exercisable at May 31, 2018 6,235,159 $ 0.16 | The following table summarizes information about the Company’s stock options as of February 28, 2018 and activity during the fiscal years 2018 and 2017: Number of Options Weighted Average Exercise Price Outstanding - February 28, 2016 6,542,310 $ 0.17 Granted 150,000 $ 0.10 Canceled or expired - - Outstanding - February 28, 2017 6,692,310 $ 0.16 Granted 1,035,159 $ 0.10 Canceled or expired (1,492,310 ) $ 0.14 Outstanding - February 28, 2018 6,235,159 $ 0.16 Exercisable at February 28, 2018 6,235,159 $ 0.16 |
Summary of stock options outstanding | Exercise Price Number Outstanding Weighted Average Remaining Life (years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercisable Price $ 0.10 4,885,159 5.62 $ 0.10 4,885,159 $ 0.10 $ 0.15 200,000 7.52 $ 0.15 200,000 $ 0.15 $ 0.30 700,000 7.17 $ 0.30 700,000 $ 0.30 $ 0.54 375,000 5.68 $ 0.54 375,000 $ 0.54 $ 1.00 75,000 3.36 $ 1.00 75,000 $ 1.00 $ 0.10 - $1.00 6,235,159 5.83 $ 0.16 6,235,159 $ 0.16 | The following table summarizes information about stock options outstanding as of February 28, 2018: Exercise Price Number Outstanding Weighted Average Remaining Life (years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercisable Price $0.10 4,885,159 5.87 $ 0.10 4,885,159 $ 0.10 $0.15 200,000 7.77 $ 0.15 200,000 $ 0.15 $0.30 700,000 7.42 $ 0.30 700,000 $ 0.30 $0.54 375,000 5.93 $ 0.54 375,000 $ 0.54 $1.00 75,000 3.62 $ 1.00 75,000 $ 1.00 $0.10 - $1.00 6,235,159 6.08 $ 0.16 6,235,159 $ 0.16 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Income Taxes Tables Abstract | ||
Schedule of income tax provisions | May 31, 2018 February 28, 2018 Net tax loss carry-forwards $ 17,132,786 $ 15,888,098 Statutory rate 21 % 21 % Expected tax recovery 3,597,885 3,336,501 Change in valuation allowance (3,597,885 ) (3,336,501 ) Income tax provision $ $ - Components of deferred tax asset: Non capital tax loss carry forwards $ 3,597,885 $ 3,336,501 Less: valuation allowance (3,597,885 ) (3,336,501 ) Net deferred tax asset $ - $ - | 2018 2017 Net tax loss carry-forwards $ 15,888,098 $ 11,627,532 Statutory rate 21 % 34 % Expected tax recovery 3,336,501 3,953,361 Change in valuation allowance (3,336,501 ) (3,953,361 ) Income tax provision $ - $ - Components of deferred tax asset: Non capital tax loss carry forwards $ 3,336,501 $ 3,953,361 Less: valuation allowance (3,336,501 ) (3,953,361 ) Net deferred tax asset $ - $ - |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Earnings Loss Per Share | ||
Reconciliation of basic and diluted earnings per share | The following tables provide a reconciliation of the numerators and denominators used in calculating basic and diluted earnings (loss) per share for the first quarter of fiscal years 2019 and 2018: Fiscal 2019 Fiscal 2018 Basic earnings (loss) per share calculation: Net loss to common shareholders $ (2,256,142 ) $ (1,101,248 ) Weighted average number of common shares outstanding 86,876,957 55,059,804 Basic net loss per share $ (0.03 ) $ (0.02 ) Diluted earnings (loss) per share calculation: Net loss to common shareholders $ (2,256,142 ) $ (1,101,248 ) Weighted average number of common shares outstanding 86,876,957 55,059,804 Stock options (1) - - Warrants (2) - - Diluted weighted average common shares outstanding 86,876,957 55,059,804 Diluted net loss per share $ (0.03 ) $ (0.02 ) _________ (1) At May 31, 2018 and May 31, 2017, there were 6,235,159 and 2,392,310, respectively, of stock options equivalent to common shares outstanding. The stock options are anti-dilutive at May 31, 2018 and May 31, 2017 and therefore, have been excluded from diluted earnings (loss) per share. (2) At May 31, 2018 and May 31, 2017, there were outstanding warrants equivalent to 9,044,740 and 4,660,000 common shares, respectively. The warrants are anti-dilutive at May 31, 2018 and May 31, 2017 and therefore, have been excluded from diluted earnings (loss) per share. | The following tables provide a reconciliation of the numerators and denominators used in calculating basic and diluted earnings (loss) per share for the fiscal years 2018 and 2017: Fiscal 2018 Fiscal 2017 Basic earnings (loss) per share calculation: Net loss to common shareholders $ (10,243,396 ) $ (7,219,626 ) Weighted average number of common shares outstanding 61,786,169 44,840,743 Basic net loss per share $ (0.17 ) $ (0.16 ) Diluted earnings (loss) per share calculation: Net loss to common shareholders $ (10,243,396 ) $ (7,219,626 ) Weighted average number of common shares outstanding 61,786,169 44,840,743 Stock options (1) - - Warrants (2) - - Diluted weighted average common shares outstanding 61,786,169 44,840,743 Diluted net loss per share $ (0.17 ) $ (0.16 ) (1) At both February 28, 2018 and February 28, 2017, there were outstanding stock options equivalent to 6,437,600 and 6,692,310 common shares, respectively. The stock options are anti-dilutive at February 28, 2018 and February 28, 2017 and therefore, have been excluded from diluted earnings (loss) per share. (2) At February 28, 2018 and February 28, 2017, there were outstanding warrants equivalent to 7,080,000 and 8,510,000 common shares, respectively. The warrants are anti-dilutive at February 28, 2018 and February 28, 2017 and therefore, have been excluded from diluted earnings (loss) per share. |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Summary of allocation of the purchase price to assets | The allocation of the purchase price to assets based upon fair value determinations was as follows: Cash $ 2,240 Related Party Payable (42,380 ) Accrued Salary (82,565 ) Total Net Liabilities Assumed $ (122,705 ) | |
Summary of purchase price | The purchase price consisted of the following: Total Net Liabilities Assumed $ 122,705 Common Stock 731,250 Total Compensation Expense and Purchase Price $ 853,955 | |
Summary of identifiable assets acquired and liabilities assumed | According to the purchase method of accounting, the Company recognized the identifiable assets acquired and liabilities assumed as follows: Assets, net $ 34,708 Customer Lists 77,295 Intellectual Property 30,842 Trademarks 19,475 Goodwill 1,317,680 Total Assets Acquired $ 1,480,000 | |
Schedule of purchase price | The purchase price consisted of the following: Convertible note payable – related party $ 400,000 Common Stock 1,080,000 Total Purchase Price $ 1,480,000 | |
Supplemental pro forma results of operations | The unaudited supplemental pro forma results of operations of the combined entities had the dates of the acquisitions been March 1, 2016 is as follows: Combined Pro Forma: For Fiscal Years 2017 Revenues $ 333,879 Cost of revenues 475,308 Gross profit (loss) (141,429 ) Operating expenses: Selling, general and administrative expenses 5,323,560 Loss from operations (5,464,989 ) Other income (expense) (1,744,049 ) Net loss $ (7,209,038 ) Weighted average number of common shares Outstanding – basic and fully diluted 44,840,743 Net loss per share – basic and fully diluted $ (0.16 ) | |
Purchase price to assets based upon fair value determinations | The allocation of the purchase price to assets based upon fair value determinations was as follows: Non-compete agreements $ 700 Customer Lists 66,800 Total Assets Acquired $ 67,500 | |
Purchase price consisted of fair value determinations | The purchase price consisted of the following: Cash $ 7,500 Common Stock 60,000 Total Purchase Price $ 67,500 | |
Comencia, Inc. Acquisition [Member] | ||
Summary of identifiable assets acquired and liabilities assumed | Cash 11,989 Other assets 13,115 Total assets 25,104 Accrued expenses (12,741 ) Long-term payables (52,422 ) Total liabilities (65,163 ) Customer Lists 33,000 Intellectual Property 48,800 Trademarks 7,000 Total intangibles 88,800 Total assets acquired, net 48,741 Additional consideration given as compensation expense 701,259 Total consideration 750,000 | According to the purchase method of accounting, the Company recognized the identifiable assets acquired and liabilities assumed as follows: Cash 11,989 Other assets 13,115 Total assets 25,104 Accrued expenses (12,741 ) Long-term payables (52,422 ) Total liabilities (65,163 ) Customer Lists 33,000 Intellectual Property 48,800 Trademarks 7,000 Total intangibles 88,800 Total assets acquired, net 48,741 Additional consideration given as compensation expense 701,259 Total consideration 750,000 |
Supplemental pro forma results of operations | Combined Pro Forma: For Fiscal Quarter 2018 Revenues $ 111,300 Cost of revenues 120,448 Gross profit (loss) (9,148 ) Operating expenses: Selling, general and administrative expenses 1,082,168 Loss from operations (1,092,624 ) Other income (expense) 9,724 Net loss $ (1,101,348 ) Weighted average number of common shares Outstanding – basic and fully diluted 55,059,804 Net loss per share – basic and fully diluted $ (0.02 ) | The unaudited supplemental pro forma results of operations of the combined entities had the date of the acquisition been March 1, 2017 or March 1, 2016 are as follows: Combined Pro Forma: For Fiscal Years 2018 2017 Revenues $ 367,923 $ 251,713 Cost of revenues 1,053,184 562,216 Gross profit (loss) (685,261 ) (310,503 ) Operating expenses: Selling, general and administrative expenses 7,454,580 5,218,597 Loss from operations (8,139,841 ) (5,529,100 ) Other income (expense) (2,096,091 ) (1,744,049 ) Net loss $ (10,235,932 ) $ (7,273,149 ) Weighted average number of common shares Outstanding – basic and fully diluted 61,786,169 44,840,743 Net loss per share – basic and fully diluted $ (0.17 ) $ (0.16 ) |
Purchase price to assets based upon fair value determinations | Common stock 750,000 Total purchase price 750,000 | The purchase price consisted of the following: Common stock 750,000 Total purchase price 750,000 |
Congo Ltd. Acquisition [Member] | ||
Summary of identifiable assets acquired and liabilities assumed | Developed Technology, Platform and code base 420,000 Developed Technology, New code base and databases 432,000 Assembled Workforce 35,000 Goodwill 78,000 Total intangibles and goodwill 965,000 Total assets acquired, net 965,000 | According to the replacement cost method of accounting, the Company recognized the identifiable assets acquired as follows: Developed Technology, Platform and code base 420,000 Developed Technology, New code base and databases 432,000 Assembled Workforce 35,000 Goodwill 78,000 Total intangibles and goodwill 965,000 Total assets acquired, net 965,000 |
Purchase price to assets based upon fair value determinations | Common stock 840,000 Cash consideration 75,000 Earnest money 50,000 Total purchase price 965,000 | The purchase price consisted of the following: Common stock 840,000 Cash consideration 75,000 Earnest money 50,000 Total purchase price 965,000 |
CityInformation [Member] | ||
Summary of identifiable assets acquired and liabilities assumed | Developed Technology, App Portfolio 250,000 Developed Technology, App Handles 135,000 Assembled Workforce 40,000 Goodwill 396,667 Total intangibles and goodwill 821,667 Total assets acquired, net 821,667 | According to the replacement cost method of accounting, the Company recognized the identifiable assets acquired as follows: Developed Technology, App Portfolio 250,000 Developed Technology, App Handles 135,000 Assembled Workforce 40,000 Goodwill 396,667 Total intangibles and goodwill 821,667 Total assets acquired, net 821,667 |
Purchase price to assets based upon fair value determinations | Common stock 821,667 Total purchase price 821,667 | The purchase price consisted of the following: Common stock 821,667 Total purchase price 821,667 |
Nature of Business and Summary
Nature of Business and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | Feb. 28, 2018 | Feb. 28, 2017 | |
State Country Name | State of Minnesota | |||
Accumulated deficit | $ (51,142,038) | $ (48,885,896) | $ (38,642,500) | |
Allowance for doubtful accounts | 5,389 | 5,456 | 23,219 | |
Impairment expense | (1,721,760) | (1,721,760) | (1,725,009) | |
Federal deposit insurance amount | 250,000 | |||
Depreciation expense | $ 1,842 | $ 1,300 | 6,022 | 2,782 |
Insurance | 250,000 | |||
Bad debt expense | $ 114,829 | |||
Minimum [Member] | ||||
Property and equipment useful lives | P3Y | P3Y | ||
Maximum [Member] | ||||
Property and equipment useful lives | P5Y | P5Y |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | May 31, 2018 | Feb. 28, 2018 | Feb. 28, 2017 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Accumulated Deficit | $ (51,142,038) | $ (48,885,896) | $ (38,642,500) |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | May 31, 2018 | Feb. 28, 2018 | Feb. 28, 2017 |
Property And Equipment Details Abstract | |||
Office equipment and furniture | $ 42,745 | $ 43,088 | $ 528,034 |
Less accumulated depreciation | (22,272) | (20,655) | (526,222) |
Property and equipment, net | $ 20,473 | $ 22,433 | $ 1,812 |
Property and Equipment (Detai36
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | Feb. 28, 2018 | Feb. 28, 2017 | |
Property And Equipment Details Narrative Abstract | ||||
Depreciation Expense | $ 1,842 | $ 1,300 | $ 6,022 | $ 2,782 |
Prepaid Domain Names (Details N
Prepaid Domain Names (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | Feb. 28, 2018 | Feb. 28, 2017 | |
Annual domain renewal fees | $ 19,001 | $ 81,702 | $ 214,304 | $ 165,573 |
Cost of revenues | 54,574 | $ 59,053 | 136,328 | 82,370 |
Prepaid domain name renewal fees | $ 42,451 | 77,977 | 105,775 | |
Remaining domain renewal fees | $ 77,977 | $ 105,775 | ||
Minimum [Member] | ||||
Cost of domain | $ 1.75 | |||
Maximum [Member] | ||||
Cost of domain | $ 129 |
Accrued Expenses and Deferred38
Accrued Expenses and Deferred Revenue (Details Narrative) - USD ($) | Dec. 05, 2016 | Feb. 10, 2016 | Feb. 16, 2018 | May 31, 2018 | Feb. 28, 2018 | Feb. 28, 2017 |
Deferred revenue | $ 170,000 | $ 170,000 | $ 190,000 | |||
Subscription receivable | ||||||
Damages awarded value | 552,976 | 552,976 | ||||
Accrued expenses - related parties | 542,066 | 552,976 | 280,900 | |||
Domain marketing development obligation | 192,869 | 145,906 | ||||
Chief Executive Officer [Member] | ||||||
Accrued salary | $ 129,231 | $ 70,000 | 20,000 | |||
Domain Marketing Development Obligation [Member] | ||||||
Proceeds from domain marketing development obligation | 46,963 | 930,556 | $ 0 | |||
Mr. Pomije [Member] | ||||||
Subscription receivable | $ 260,900 | |||||
Employment agreement description | The Company in the form of a monthly salary for a 1 year term from May 18, 2015 to May 17, 2016 was due in addition to a stock subscription receivable | |||||
Accrued expenses - related parties | 542,066 | 552,976 | ||||
Litigation settlement paid | 10,910 | |||||
April 18, 2018 [Member] | Mr. Pomije [Member] | ||||||
Attorney's fees and costs | 296,488 | 296,488 | ||||
Damages awarded value | $ 256,488 | $ 256,488 |
Stockholders Equity (Details)
Stockholders Equity (Details) - $ / shares | Feb. 06, 2018 | Feb. 16, 2018 | Feb. 15, 2018 | Jul. 27, 2017 | Jul. 20, 2017 |
Stockholders Equity Details Abstract | |||||
Weighted-average volatility | 157.00% | 158.00% | 153.00% | 263.00% | 263.00% |
Expected dividends | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
Expected term (in years) | 1 year | 1 year | 1 year | 10 years | 10 years |
Weighted-average risk-free interest rate | 2.00% | 2.00% | 1.99% | 1.16% | 1.17% |
Weighted-average fair value of warrants granted | $ 0.15 | $ 0.17 | $ 0.14 | $ 0.27 | $ 0.20 |
Stockholders Equity (Details 1)
Stockholders Equity (Details 1) - shares | 3 Months Ended | 12 Months Ended | |
May 31, 2018 | Feb. 28, 2018 | Feb. 28, 2017 | |
Stockholders Equity Details 1Abstract | |||
Number of Warrants Outstanding - Begning | 9,044,740 | 4,480,000 | 2,050,000 |
Granted | 6,994,740 | 2,430,000 | |
Canceled or expired | (2,430,000) | ||
Number of Warrants Outstanding - Ending | 9,044,740 | 9,044,740 | 4,480,000 |
Exercisable at End of Year | 9,044,740 |
Stockholders Equity (Details 2)
Stockholders Equity (Details 2) - $ / shares | 3 Months Ended | 12 Months Ended | |
May 31, 2018 | Feb. 28, 2018 | Feb. 28, 2017 | |
Number exercisable | 9,044,740 | ||
Warrant [Member] | |||
Number outstanding | 9,044,740 | 9,044,740 | |
Weighted average remaining life (years) | 5 years 11 months 1 day | 6 years 2 months 1 day | 56 months 4 days |
Number exercisable | 9,044,740 | ||
Warrant [Member] | Minimum [Member] | |||
Exercise Prices | $ 0.10 | $ 0.10 | $ 0.10 |
Warrant [Member] | Maximum [Member] | |||
Exercise Prices | 0.30 | 0.30 | $ 0.30 |
Warrant [Member] | 0.10 [Member] | |||
Exercise Prices | $ 0.10 | $ 0.10 | |
Number outstanding | 7,394,740 | 7,394,740 | |
Weighted average remaining life (years) | 5 years 8 months 2 days | 5 years 11 months 1 day | |
Weighted average exercise price | $ 0.10 | $ 0.10 | |
Number exercisable | 7,394,740 | 7,394,740 | |
Weighted Average Exercisable Price | 0.10 | 0.10 | |
Warrant [Member] | 0.15 [Member] | |||
Weighted average remaining life (years) | 7 years 1 month 6 days | ||
Warrant [Member] | 0.25 [Member] | |||
Exercise Prices | $ 0.25 | $ 0.25 | |
Number outstanding | 850,000 | 850,000 | |
Weighted average remaining life (years) | 6 years 11 months 4 days | 7 years 2 months 8 days | |
Weighted average exercise price | $ 0.25 | $ 0.25 | |
Number exercisable | 850,000 | 850,000 | |
Weighted Average Exercisable Price | 0.25 | 0.25 | |
Warrant [Member] | 0.30 [Member] | |||
Exercise Prices | $ 0.30 | $ 0.30 | |
Number outstanding | 500,000 | 500,000 | |
Weighted average remaining life (years) | 7 years 3 months 11 days | 7 years 6 months 14 days | |
Weighted average exercise price | $ 0.30 | $ 0.30 | |
Number exercisable | 500,000 | 500,000 | |
Weighted Average Exercisable Price | 0.30 | 0.30 | |
Warrant [Member] | 0.13 [Member] | |||
Weighted average exercise price | $ 0.13 | $ 0.13 | |
Number exercisable | 9,044,740 | 9,044,740 | |
Weighted Average Exercisable Price | 0.13 | 0.13 | |
Stock Option [Member] | |||
Weighted average remaining life (years) | 6 years 29 days | ||
Stock Option [Member] | 0.10 [Member] | |||
Exercise Prices | $ 0.10 | $ 0.10 | |
Number outstanding | 4,885,159 | 4,885,159 | |
Weighted average remaining life (years) | 5 years 7 months 13 days | 5 years 10 months 14 days | |
Weighted average exercise price | $ 0.10 | $ 0.10 | |
Number exercisable | 4,885,159 | 4,885,159 | |
Weighted Average Exercisable Price | 0.10 | 0.10 | |
Stock Option [Member] | 0.15 [Member] | |||
Exercise Prices | $ 0.15 | $ 0.15 | |
Number outstanding | 300,000 | 200,000 | |
Weighted average remaining life (years) | 6 years 10 months 6 days | 7 years 9 months 7 days | |
Weighted average exercise price | $ 0.15 | $ 0.15 | |
Number exercisable | 300,000 | 200,000 | |
Weighted Average Exercisable Price | 0.15 | 0.15 | |
Stock Option [Member] | 0.30 [Member] | |||
Exercise Prices | $ 0.30 | $ 0.30 | |
Number outstanding | 700,000 | 700,000 | |
Weighted average remaining life (years) | 7 years 2 months 1 day | 7 years 5 months 1 day | |
Weighted average exercise price | $ 0.30 | $ 0.30 | |
Number exercisable | 700,000 | 700,000 | |
Weighted Average Exercisable Price | 0.30 | 0.30 |
Stockholders Equity (Details Na
Stockholders Equity (Details Narrative) - USD ($) | May 16, 2018 | May 09, 2018 | Feb. 08, 2018 | Feb. 06, 2018 | Dec. 07, 2017 | Sep. 14, 2016 | Mar. 05, 2016 | Feb. 10, 2016 | May 31, 2018 | Feb. 16, 2018 | Feb. 15, 2018 | Oct. 27, 2017 | Jul. 27, 2017 | Jul. 20, 2017 | May 18, 2016 | May 31, 2018 | May 31, 2017 | Feb. 28, 2018 | Feb. 28, 2017 | Oct. 31, 2018 | Dec. 22, 2017 |
Digital currencies | $ 1,380,156 | $ 1,380,156 | |||||||||||||||||||
Common stock shares granted | 6,994,740 | 2,430,000 | |||||||||||||||||||
Number of Warrants Outstanding - Ending | 9,044,740 | 9,044,740 | 9,044,740 | 4,480,000 | |||||||||||||||||
Weighted-average volatility rate | 157.00% | 158.00% | 153.00% | 263.00% | 263.00% | ||||||||||||||||
Stock-based compensation expense | $ 0 | $ 0 | $ 0 | $ 11,948 | |||||||||||||||||
Exercise of stock options, Amount | 20,000 | 11,948 | |||||||||||||||||||
Common stock value | $ 1,257,493 | 1,257,493 | 845,098 | 526,060 | |||||||||||||||||
Stock issued for domain names, Amount | 154,740 | ||||||||||||||||||||
Interest expense | 593,414 | 9,724 | (374,331) | (19,040) | |||||||||||||||||
Foreign currency translation adjustment | $ (1,376) | $ 3,528 | 3,230 | 1,868 | |||||||||||||||||
Stock issued for acquisitions, Amount | 2,411,667 | $ 1,871,250 | |||||||||||||||||||
Rezserve Technologies [Member] | |||||||||||||||||||||
Aggregate shares | 3,000,000 | ||||||||||||||||||||
Stock purchase agreement | 100.00% | ||||||||||||||||||||
Aggregate purchased value | $ 1,480,000 | ||||||||||||||||||||
Common stock value | 1,080,000 | ||||||||||||||||||||
Convertible note payable | $ 400,000 | $ 400,000 | $ 400,000 | ||||||||||||||||||
Interest rate | 0.00% | ||||||||||||||||||||
Interest expense | $ (19,040) | $ (38,000) | |||||||||||||||||||
Cloud.Market Acquisition [Member] | |||||||||||||||||||||
Common stock shares issued, shares | 750,000 | ||||||||||||||||||||
Common stock shares issued value | $ 7,500 | ||||||||||||||||||||
Common stock value | $ 60,000 | ||||||||||||||||||||
Warrant [Member] | |||||||||||||||||||||
Common stock shares granted | |||||||||||||||||||||
Number of Warrants Outstanding - Ending | 9,044,740 | 9,044,740 | 9,044,740 | 4,660,000 | |||||||||||||||||
Warrants exercise price | $ 0.13 | $ 0.14 | |||||||||||||||||||
Weighted average remaining exercise period | 5 years 11 months 1 day | 6 years 2 months 1 day | 56 months 4 days | ||||||||||||||||||
Exercise of stock options per share | $ 0.10 | $ 0.0797 | |||||||||||||||||||
Stock-based compensation expense | $ 1,340,175 | $ 11,948 | |||||||||||||||||||
Aggregate shares | 6,694,740 | 150,000 | |||||||||||||||||||
Warrant [Member] | February 2019 [Member] | |||||||||||||||||||||
Warrants exercisable | 2,964,740 | ||||||||||||||||||||
Warrant [Member] | Through 2026 [Member] | |||||||||||||||||||||
Warrants exercisable | 30,000 | ||||||||||||||||||||
Warrant [Member] | Through 2027 [Member] | |||||||||||||||||||||
Warrants exercisable | 4,000,000 | ||||||||||||||||||||
Warrant [Member] | Maximum [Member] | |||||||||||||||||||||
Warrants expiration date | 10 years | 10 years | |||||||||||||||||||
Exercise Prices | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | |||||||||||||||||
Warrant [Member] | Minimum [Member] | |||||||||||||||||||||
Warrants expiration date | 1 year | 1 year | |||||||||||||||||||
Exercise Prices | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | |||||||||||||||||
Chief Executive Officer [Member] | |||||||||||||||||||||
Conversion of stock shares converted | 1,292,310 | 700,000 | |||||||||||||||||||
Vesting period | 12 years | 12 years | |||||||||||||||||||
Stock Payable [Member] | |||||||||||||||||||||
Exercise of stock options, Amount | |||||||||||||||||||||
Stock issued for domain names, Amount | |||||||||||||||||||||
Stock issued for acquisitions, Amount | $ 731,250 | ||||||||||||||||||||
Investors [Member] | Warrant [Member] | |||||||||||||||||||||
Common stock shares granted | 6,944,740 | ||||||||||||||||||||
Warrants exercise price | $ 0.13 | ||||||||||||||||||||
Exercise of stock options per share | $ 0.10 | ||||||||||||||||||||
Stock-based compensation expense | $ 1,340,175 | ||||||||||||||||||||
Investors [Member] | Warrant [Member] | February 2019 [Member] | |||||||||||||||||||||
Warrants exercisable | 2,964,740 | ||||||||||||||||||||
Investors [Member] | Warrant [Member] | Through 2026 [Member] | |||||||||||||||||||||
Warrants exercisable | 30,000 | ||||||||||||||||||||
Investors [Member] | Warrant [Member] | Through 2027 [Member] | |||||||||||||||||||||
Warrants exercisable | 4,000,000 | ||||||||||||||||||||
Fiscal 2019 Stock Transactions [Member] | |||||||||||||||||||||
Common stock shares issued, shares | 3,322,372 | ||||||||||||||||||||
Common stock shares issued value | $ 436,406 | ||||||||||||||||||||
Shares reserved for future issuance | 15,000 | 15,000 | |||||||||||||||||||
Exchange shares valued | $ 3,000 | $ 3,000 | |||||||||||||||||||
Fiscal 2019 Stock Transactions [Member] | PowerUp Lending Group Ltd [Member] | |||||||||||||||||||||
Conversion of stock shares converted | 1,277,498 | ||||||||||||||||||||
Gains losses on extinguishment of debt | $ 75,000 | ||||||||||||||||||||
Accrued unpaid interest | $ 4,500 | ||||||||||||||||||||
Fiscal 2019 Stock Transactions [Member] | Donovan Olson [Member] | |||||||||||||||||||||
Conversion of stock shares converted | 1,000,000 | ||||||||||||||||||||
Gains losses on extinguishment of debt | $ 100,000 | ||||||||||||||||||||
Fiscal 2019 Stock Transactions [Member] | Greg Foss [Member] | |||||||||||||||||||||
Conversion of stock shares converted | 1,000,000 | ||||||||||||||||||||
Gains losses on extinguishment of debt | $ 100,000 | ||||||||||||||||||||
Fiscal 2019 Stock Transactions [Member] | Derek Schumann [Member] | |||||||||||||||||||||
Conversion of stock shares converted | 1,000,000 | ||||||||||||||||||||
Gains losses on extinguishment of debt | $ 100,000 | ||||||||||||||||||||
Fiscal 2019 Stock Transactions [Member] | Darvin Habben [Member] | |||||||||||||||||||||
Conversion of stock shares converted | 5,380,274 | ||||||||||||||||||||
Gains losses on extinguishment of debt | $ 500,000 | ||||||||||||||||||||
Accrued unpaid interest | $ 38,027 | ||||||||||||||||||||
Fiscal 2019 Stock Transactions [Member] | Investors [Member] | |||||||||||||||||||||
Common stock shares issued, shares | 26,774,352 | ||||||||||||||||||||
Common stock shares issued value | $ 566,950 | ||||||||||||||||||||
Digital currencies | $ 1,659 | 1,659 | |||||||||||||||||||
Fiscal 2019 Stock Transactions [Member] | Investors [Member] | Stock Payable [Member] | |||||||||||||||||||||
Common stock shares issued value | $ 1,828,200 | ||||||||||||||||||||
Fiscal 2018 Stock Transactions [Member] | |||||||||||||||||||||
Common stock shares issued, shares | 6,799,361 | 2,130,500 | 8,512,776 | 8,512,776 | |||||||||||||||||
Common stock shares issued value | $ 1,763,168 | $ 1,763,168 | |||||||||||||||||||
Expenses | $ 1,191,349 | ||||||||||||||||||||
Exercise of stock options, Shares | 200,000 | ||||||||||||||||||||
Exercise of stock options, Amount | $ 20,000 | ||||||||||||||||||||
Fiscal 2018 Stock Transactions [Member] | Congo Ltd [Member] | |||||||||||||||||||||
Common stock shares granted | 3,000,000 | ||||||||||||||||||||
Closing price per share | $ 0.28 | ||||||||||||||||||||
Fair value of common stock | $ 840,000 | ||||||||||||||||||||
Fiscal 2018 Stock Transactions [Member] | CityInformation [Member] | |||||||||||||||||||||
Common stock shares granted | 2,833,333 | ||||||||||||||||||||
Closing price per share | $ 0.29 | ||||||||||||||||||||
Fair value of common stock | $ 821,667 | ||||||||||||||||||||
Fiscal 2018 Stock Transactions [Member] | July 1, 2017 [Member] | Comencia, Inc [Member] | |||||||||||||||||||||
Common stock shares granted | 2,500,000 | 2,500,000 | |||||||||||||||||||
Closing price per share | $ 0.30 | $ 0.30 | |||||||||||||||||||
Fair value of common stock | $ 750,000 | $ 750,000 | |||||||||||||||||||
Fiscal 2018 Stock Transactions [Member] | Chief Executive Officer [Member] | |||||||||||||||||||||
Common stock shares granted | 9,042,250 | ||||||||||||||||||||
Vesting period | 2 years | ||||||||||||||||||||
Fiscal 2018 Stock Transactions [Member] | Stock Payable [Member] | |||||||||||||||||||||
Common stock shares issued value | 521,792 | 521,792 | |||||||||||||||||||
Expenses converted in common stock | $ 124,996 | $ 124,996 | |||||||||||||||||||
Conversion price per share | $ 0.10 | $ 0.10 | $ 0.10 | ||||||||||||||||||
Stock value per share | $ 0.23 | $ 0.23 | $ 0.23 | ||||||||||||||||||
Loss on conversion of expenses to stock payable | $ 316,526 | $ 316,526 | |||||||||||||||||||
Stock payable conversion amount | $ 276,769 | ||||||||||||||||||||
Fiscal 2018 Stock Transactions [Member] | Investors [Member] | |||||||||||||||||||||
Common stock shares issued, shares | 14,857,715 | 14,857,715 | |||||||||||||||||||
Common stock shares issued value | $ 1,662,732 | $ 1,662,732 | |||||||||||||||||||
Fiscal 2018 Stock Transactions [Member] | Investors [Member] | Stock Payable [Member] | |||||||||||||||||||||
Common stock shares issued value | $ 2,559,061 | $ 2,559,061 | |||||||||||||||||||
Fiscal 2018 Stock Transactions [Member] | Three employment agreements [Member] | |||||||||||||||||||||
Common stock shares granted | 1,585,000 | 1,585,000 | |||||||||||||||||||
Expenses | $ 165,436 | $ 165,436 | |||||||||||||||||||
Fiscal 2018 Stock Transactions [Member] | Three employment agreements [Member] | Maximum [Member] | |||||||||||||||||||||
Common stock shares granted | 1,025,000 | ||||||||||||||||||||
Vesting period | 24 months | ||||||||||||||||||||
Fiscal 2018 Stock Transactions [Member] | Three employment agreements [Member] | Minimum [Member] | |||||||||||||||||||||
Common stock shares granted | 120,000 | ||||||||||||||||||||
Vesting period | 6 months | ||||||||||||||||||||
Fiscal 2018 Stock Transactions [Member] | Employment Agreement [Member] | |||||||||||||||||||||
Common stock shares issued, shares | 6,799,361 | 2,130,500 | |||||||||||||||||||
Fiscal 2018 Stock Transactions [Member] | Contractors and employees [Member] | |||||||||||||||||||||
Common stock shares granted | 8,512,776 | 1,600,812 | |||||||||||||||||||
Expenses | $ 1,763,168 | $ 503,710 | |||||||||||||||||||
Fiscal 2018 Stock Transactions [Member] | Contractors and employees [Member] | Maximum [Member] | |||||||||||||||||||||
Vesting period | 24 months | 24 months | |||||||||||||||||||
Fiscal 2018 Stock Transactions [Member] | Contractors and employees [Member] | Minimum [Member] | |||||||||||||||||||||
Vesting period | 6 months | 6 months | |||||||||||||||||||
Fiscal 2019 Stock Transactions One [Member] | Darvin Habben [Member] | |||||||||||||||||||||
Conversion of stock shares converted | 15,000,000 | ||||||||||||||||||||
Gains losses on extinguishment of debt | $ 150,000 | ||||||||||||||||||||
Fiscal 2017 Stock Transactions [Member] | |||||||||||||||||||||
Expenses | $ 812,912 | ||||||||||||||||||||
Aggregate shares | 435,000 | ||||||||||||||||||||
Additional stock compensation expense | $ 30,450 | ||||||||||||||||||||
Fiscal 2017 Stock Transactions [Member] | Chief Executive Officer [Member] | |||||||||||||||||||||
Common stock shares granted | 9,042,250 | ||||||||||||||||||||
Vesting period | 2 years | ||||||||||||||||||||
Fiscal 2017 Stock Transactions [Member] | Investors [Member] | |||||||||||||||||||||
Common stock shares issued, shares | 6,999,707 | ||||||||||||||||||||
Common stock shares issued value | $ 2,377,950 | ||||||||||||||||||||
Fiscal 2017 Stock Transactions [Member] | Investors [Member] | Stock Payable [Member] | |||||||||||||||||||||
Common stock shares issued value | 800,500 | ||||||||||||||||||||
Fiscal 2017 Stock Transactions [Member] | Appointment.com [Member] | December 1, 2016 [Member] | |||||||||||||||||||||
Aggregate purchased value | 1,625,000 | ||||||||||||||||||||
Stock issued for acquisitions, Amount | 731,250 | ||||||||||||||||||||
Fiscal 2017 Stock Transactions [Member] | Three individuals [Member] | |||||||||||||||||||||
Paid in cash | $ 46,500 | ||||||||||||||||||||
Stock issued for domain names, Shares | 369,750 | ||||||||||||||||||||
Stock issued for domain names, Amount | $ 154,740 | ||||||||||||||||||||
Fiscal 2017 Stock Transactions [Member] | Directors and Consultants [Member] | |||||||||||||||||||||
Stock issued for compensation, Shares | 775,000 | ||||||||||||||||||||
Fiscal 2017 Stock Transactions [Member] | Directors and Consultants [Member] | Stock Payable [Member] | |||||||||||||||||||||
Common stock shares issued value | $ 845,600 | ||||||||||||||||||||
Fair value of common stock | $ 1,217,600 | ||||||||||||||||||||
Fiscal 2017 Stock Transactions [Member] | Four employment agreements [Member] | |||||||||||||||||||||
Common stock shares granted | 2,220,000 | ||||||||||||||||||||
Expenses | $ 154,921 | ||||||||||||||||||||
Fiscal 2017 Stock Transactions [Member] | Four employment agreements [Member] | Maximum [Member] | |||||||||||||||||||||
Common stock shares granted | 1,000,000 | ||||||||||||||||||||
Vesting period | 48 months | ||||||||||||||||||||
Fiscal 2017 Stock Transactions [Member] | Four employment agreements [Member] | Minimum [Member] | |||||||||||||||||||||
Common stock shares granted | 250,000 | ||||||||||||||||||||
Vesting period | 12 months | ||||||||||||||||||||
Fiscal 2017 Stock Transactions [Member] | Four advisors and employees [Member] | |||||||||||||||||||||
Common stock shares granted | 495,000 | ||||||||||||||||||||
Expenses | $ 44,508 | ||||||||||||||||||||
Vesting period | 24 months |
Stock Options (Details)
Stock Options (Details) | Feb. 06, 2018 | Feb. 16, 2018 | Feb. 15, 2018 | Jul. 27, 2017 | Jul. 20, 2017 |
Weighted-average volatility | 157.00% | 158.00% | 153.00% | 263.00% | 263.00% |
Expected dividends | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
Expected term (in years) | 1 year | 1 year | 1 year | 10 years | 10 years |
Weighted-average risk-free interest rate | 2.00% | 2.00% | 1.99% | 1.16% | 1.17% |
Stock Option [Member] | |||||
Weighted-average volatility | 153.00% | ||||
Expected dividends | 0.00% | ||||
Expected term (in years) | 1 year | ||||
Weighted-average risk-free interest rate | 2.00% |
Stock Options (Details 1)
Stock Options (Details 1) - $ / shares | 3 Months Ended | 12 Months Ended | |
May 31, 2018 | Feb. 28, 2018 | Feb. 28, 2017 | |
Number of Shares | |||
Granted | 6,994,740 | 2,430,000 | |
Exercisable at End of Year | 9,044,740 | ||
Stock Option [Member] | |||
Number of Shares | |||
Outstanding, Beginning | 6,235,159 | 6,692,310 | 6,542,310 |
Granted | 1,035,159 | 150,000 | |
Canceled or expired | (1,492,310) | ||
Outstanding, Ending | 6,235,159 | 6,235,159 | 6,692,310 |
Exercisable at End of Year | 6,235,159 | ||
Weighted Average Exercise Price | |||
Outstanding, Beginning | $ 0.16 | $ 0.16 | $ 0.17 |
Granted | 0.10 | 0.10 | |
Canceled or expired | 0.14 | ||
Outstanding, Ending | 0.16 | 0.16 | $ 0.16 |
Exercisable at End of Year | $ 0.16 |
Stock Options (Details 2)
Stock Options (Details 2) - $ / shares | 3 Months Ended | 12 Months Ended |
May 31, 2018 | Feb. 28, 2018 | |
Number exercisable | 9,044,740 | |
Stock Option [Member] | ||
Number outstanding | 6,235,159 | 6,235,159 |
Weighted average remaining life (years) | 5 years 9 months 29 days | |
Weighted average exercise price | $ 0.16 | $ 0.16 |
Number exercisable | 6,235,159 | |
Weighted Average Exercisable Price | 0.16 | 0.16 |
Stock Option [Member] | Minimum [Member] | ||
Exercise Prices | $ 0.10 | $ 0.10 |
Stock Option [Member] | Maximum [Member] | ||
Exercise Prices | 1 | $ 1 |
Stock Option [Member] | ||
Weighted average remaining life (years) | 6 years 29 days | |
Stock Option [Member] | 0.10 [Member] | ||
Exercise Prices | $ 0.10 | $ 0.10 |
Number outstanding | 4,885,159 | 4,885,159 |
Weighted average remaining life (years) | 5 years 7 months 13 days | 5 years 10 months 14 days |
Weighted average exercise price | $ 0.10 | $ 0.10 |
Number exercisable | 4,885,159 | 4,885,159 |
Weighted Average Exercisable Price | 0.10 | 0.10 |
Stock Option [Member] | 0.15 [Member] | ||
Exercise Prices | $ 0.15 | $ 0.15 |
Number outstanding | 300,000 | 200,000 |
Weighted average remaining life (years) | 6 years 10 months 6 days | 7 years 9 months 7 days |
Weighted average exercise price | $ 0.15 | $ 0.15 |
Number exercisable | 300,000 | 200,000 |
Weighted Average Exercisable Price | 0.15 | 0.15 |
Stock Option [Member] | 0.30 [Member] | ||
Exercise Prices | $ 0.30 | $ 0.30 |
Number outstanding | 700,000 | 700,000 |
Weighted average remaining life (years) | 7 years 2 months 1 day | 7 years 5 months 1 day |
Weighted average exercise price | $ 0.30 | $ 0.30 |
Number exercisable | 700,000 | 700,000 |
Weighted Average Exercisable Price | 0.30 | 0.30 |
Stock Option [Member] | 0.54 [Member] | ||
Exercise Prices | $ 0.54 | $ 0.54 |
Number outstanding | 375,000 | 375,000 |
Weighted average remaining life (years) | 5 years 8 months 5 days | 5 years 11 months 4 days |
Weighted average exercise price | $ 0.54 | $ 0.54 |
Number exercisable | 375,000 | 375,000 |
Weighted Average Exercisable Price | 0.54 | 0.54 |
Stock Option [Member] | 1.00 [Member] | ||
Exercise Prices | $ 1 | $ 1 |
Number outstanding | 75,000 | 75,000 |
Weighted average remaining life (years) | 3 years 4 months 9 days | 3 years 7 months 13 days |
Weighted average exercise price | $ 1 | $ 1 |
Number exercisable | 75,000 | 75,000 |
Weighted Average Exercisable Price | 1 | 1 |
Stock Options (Details Narrativ
Stock Options (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | Feb. 28, 2018 | Feb. 28, 2017 | |
Stock options issued to purchase common shares | 9,044,740 | |||
Stock-based compensation expense | $ 0 | $ 0 | $ 0 | $ 11,948 |
2006 Employee Stock and Option Plan [Member] | ||||
Reserved shares | 5,000,000 | |||
2006 Employee Stock and Option Plan [Member] | Minimum [Member] | ||||
Exercise period range | 5 years | |||
2006 Employee Stock and Option Plan [Member] | Maximum [Member] | ||||
Exercise period range | 10 years | |||
1 officer, 6 employees and 2 contractors [Member] | ||||
Stock options issued to purchase common shares | 1,035,159 | |||
Common stock price per share | $ 0.10 | |||
Exercisable period | 1 year | |||
Fair value of stock option | $ 151,627 | |||
1 Officer expired [Member] | ||||
Stock options issued to purchase common shares | 200,000 | |||
Stock options exercised | $ 20,000 | |||
Stock Option [Member] | ||||
Stock options issued to purchase common shares | 6,235,159 | |||
Stock-based compensation expense | $ 0 | $ 164,742 | $ 164,742 | $ 0 |
Stock Option [Member] | Minimum [Member] | ||||
Common stock price per share | $ 0.10 | $ 0.10 | ||
Stock Option [Member] | Maximum [Member] | ||||
Common stock price per share | $ 1 | $ 1 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) | May 09, 2018USD ($)$ / sharesshares | Jun. 09, 2017USD ($)$ / sharesshares | Dec. 05, 2016USD ($) | Dec. 05, 2016USD ($) | Sep. 14, 2016USD ($)$ / sharesshares | Feb. 10, 2016USD ($)$ / sharesshares | Feb. 16, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)shares | Dec. 22, 2017USD ($)shares | Jul. 27, 2017USD ($)$ / sharesshares | Jul. 20, 2017USD ($)$ / sharesshares | Dec. 31, 2016shares | May 22, 2016shares | May 01, 2018USD ($) | May 31, 2018USD ($)shares | May 31, 2017USD ($) | Feb. 28, 2018USD ($)Numbershares | Feb. 28, 2017USD ($)shares | Oct. 31, 2018USD ($) |
Due to advances | $ 7,625 | $ 9,847 | $ 10,613 | ||||||||||||||||
Annual domain renewal fees | 19,001 | $ 81,702 | 214,304 | 165,573 | |||||||||||||||
Repayments of promissory note | $ (40,000) | $ (30,000) | |||||||||||||||||
Common stock share sold | shares | 2,950,000 | 2,100,000 | 435,000 | ||||||||||||||||
Proceeds from common shares sold | $ 295,000 | $ 250,000 | |||||||||||||||||
Stock compensation expense | 956,800 | $ 30,450 | |||||||||||||||||
Options valued | 109,846 | 19,385 | |||||||||||||||||
Convertible debt beneficial conversion feature | 450,246 | ||||||||||||||||||
Accrued interest | 28,932 | ||||||||||||||||||
Debt discount | 191,507 | ||||||||||||||||||
Debt discount amortization expense | 562,923 | 276,257 | |||||||||||||||||
Due to related party | 120,000 | 160,000 | |||||||||||||||||
Subscription receivable | |||||||||||||||||||
Accrued expenses - related parties | 542,066 | 552,976 | $ 280,900 | ||||||||||||||||
Damages | $ 552,976 | $ 552,976 | |||||||||||||||||
Common stock, shares issued | shares | 125,749,320 | 84,509,824 | 52,606,000 | ||||||||||||||||
Debt discount from warrants | $ 450,000 | ||||||||||||||||||
Cash | $ 20,506 | $ 58,712 | 539,243 | ||||||||||||||||
Number of operating lease | Number | 1 | ||||||||||||||||||
Lease termination | 30 days | ||||||||||||||||||
Rezserve Technologies [Member] | |||||||||||||||||||
Convertible note | $ 400,000 | $ 400,000 | $ 400,000 | ||||||||||||||||
Debt instrument converted, amount | $ 210,000 | ||||||||||||||||||
Debt instrument converted shares issued | shares | 1,100,000 | ||||||||||||||||||
NonExecutive [Member] | |||||||||||||||||||
Common shares, granted | shares | 600,000 | ||||||||||||||||||
Derek Schumann [Member] | |||||||||||||||||||
Promissory note payable | $ 100,000 | ||||||||||||||||||
Maturity of debt instrument | 1 year | ||||||||||||||||||
Warrant issued | shares | 1,000,000 | ||||||||||||||||||
Warrant discount | $ 100,000 | ||||||||||||||||||
Exercise prices of warrants | $ / shares | $ 0.10 | ||||||||||||||||||
Warrants expiration date | Jul. 20, 2027 | ||||||||||||||||||
Chairman [Member] | |||||||||||||||||||
Converted shares | shares | 2,000,000 | ||||||||||||||||||
Debt instrument conversion price | $ / shares | $ 0.10 | $ 0.25 | |||||||||||||||||
Proceeds from issuance of debt | $ 500,000 | ||||||||||||||||||
Debt instrument converted, amount | $ 500,000 | ||||||||||||||||||
Accrued interest converted amount | $ 38,027 | ||||||||||||||||||
Debt instrument converted shares issued | shares | 5,380,274 | ||||||||||||||||||
Maturity of debt instrument | 1 year | ||||||||||||||||||
Convertible debt beneficial conversion feature | $ 300,000 | ||||||||||||||||||
Skidmore [Member] | |||||||||||||||||||
Convertible note | $ 400,000 | ||||||||||||||||||
Converted shares | shares | 1,000,000 | ||||||||||||||||||
Debt instrument conversion price | $ / shares | $ 0.40 | ||||||||||||||||||
Skidmore [Member] | Rezserve Technologies [Member] | |||||||||||||||||||
Convertible note | $ 210,000 | ||||||||||||||||||
Converted shares | shares | 1,100,000 | ||||||||||||||||||
Repayments of promissory note | $ 70,000 | ||||||||||||||||||
Loss on conversion debt amount | $ 13,000 | ||||||||||||||||||
Epik, LLC [Member] | |||||||||||||||||||
Annual domain renewal fees | 748,907 | $ 450,500 | $ 0 | ||||||||||||||||
Epik, LLC [Member] | Prepaid Domain Names [Member] | |||||||||||||||||||
Annual domain renewal fees | 260,907 | 214,304 | |||||||||||||||||
Robert Monster [Member] | |||||||||||||||||||
Common stock, shares issued | shares | 3,312,811 | ||||||||||||||||||
Non Executive Director [Member] | |||||||||||||||||||
Common shares, granted | shares | 300,000 | ||||||||||||||||||
Mr. Monster [Member] | |||||||||||||||||||
Issuance of common stock, shares | shares | 536,364 | ||||||||||||||||||
Employment Agreement [Member] | Robert W. Monster [Member] | |||||||||||||||||||
Stock compensation expense | 253,926 | 1,026,710 | $ 1,191,349 | ||||||||||||||||
Common shares, granted | shares | 9,042,250 | ||||||||||||||||||
Accrued salary | 60,000 | 240,000 | 240,000 | ||||||||||||||||
Vesting period | 2 years | ||||||||||||||||||
Chief Executive Officer [Member] | |||||||||||||||||||
Converted shares | shares | 1,292,310 | 700,000 | |||||||||||||||||
Accrued salary | $ 129,231 | $ 70,000 | 20,000 | ||||||||||||||||
Exercise price | $ / shares | $ 0.15 | $ 0.10 | |||||||||||||||||
Vesting period | 12 years | 12 years | |||||||||||||||||
Option shares | shares | 1,292,310 | 700,000 | |||||||||||||||||
Options valued | 161,000 | 92,507 | |||||||||||||||||
Mr. Parsons [Member] | |||||||||||||||||||
Common shares, granted | shares | 140,000 | ||||||||||||||||||
Additional shares | shares | 200,000 | ||||||||||||||||||
Cash | $ 40,000 | ||||||||||||||||||
Mr. Mills [Member] | |||||||||||||||||||
Additional shares | shares | 200,000 | ||||||||||||||||||
Officer [Member] | Director [Member] | |||||||||||||||||||
Stock compensation expense | 956,800 | $ 835,800 | |||||||||||||||||
Chairman [Member] | |||||||||||||||||||
Common shares, granted | shares | 350,000 | ||||||||||||||||||
Mr. Pomije [Member] | |||||||||||||||||||
Subscription receivable | $ 260,900 | $ 260,900 | |||||||||||||||||
Accrued expenses - related parties | 542,066 | 552,976 | |||||||||||||||||
Description of employment agreement | Mr. Pomije asserts an employment agreement existed and a continuing obligation of the Company in the form of a monthly salary for a 1 year term from May 18, 2015 to May 17, 2016 was due in addition to a stock subscription receivable. | Mr. Pomije asserts an employment agreement existed and a continuing obligation of the Company in the form of a monthly salary for a 1 year term from May 18, 2015 to May 17, 2016 was due in addition to a stock subscription receivable | |||||||||||||||||
Warrant Two [Member] | |||||||||||||||||||
Convertible debt beneficial conversion feature | 150,000 | ||||||||||||||||||
Debt discount amortization expense | 44,384 | ||||||||||||||||||
Debt discount from warrants | 105,616 | ||||||||||||||||||
Warrant One [Member] | |||||||||||||||||||
Convertible debt beneficial conversion feature | 100,000 | ||||||||||||||||||
Debt discount amortization expense | 30,548 | ||||||||||||||||||
Debt discount from warrants | 69,452 | ||||||||||||||||||
Warrant [Member] | |||||||||||||||||||
Convertible debt beneficial conversion feature | 100,000 | ||||||||||||||||||
Debt discount amortization expense | 30,548 | ||||||||||||||||||
Debt discount from warrants | 69,452 | ||||||||||||||||||
April 18, 2018 [Member] | Mr. Pomije [Member] | |||||||||||||||||||
Attorney's fees and costs | 296,488 | 296,488 | |||||||||||||||||
Damages | 256,488 | 256,488 | |||||||||||||||||
Convertible Notes Payable [Member] | |||||||||||||||||||
Accrued interest | 28,932 | ||||||||||||||||||
Debt discount | 191,507 | ||||||||||||||||||
Debt discount amortization expense | $ 108,493 | 191,507 | |||||||||||||||||
Imputed interest | 3,500 | 38,000 | |||||||||||||||||
Promissory Notes Payable Member | Darvin Habben [Member] | |||||||||||||||||||
Debt instrument conversion price | $ / shares | $ 0.10 | ||||||||||||||||||
Promissory note payable | $ 150,000 | ||||||||||||||||||
Debt instrument converted, amount | $ 150,000 | ||||||||||||||||||
Debt instrument converted shares issued | shares | 1,500,000 | ||||||||||||||||||
Maturity of debt instrument | 1 year | ||||||||||||||||||
Debt discount amortization expense | 105,616 | ||||||||||||||||||
Warrant issued | shares | 1,000,000 | ||||||||||||||||||
Warrant discount | $ 150,000 | ||||||||||||||||||
Exercise prices of warrants | $ / shares | $ 0.10 | ||||||||||||||||||
Warrants expiration date | Jul. 27, 2027 | ||||||||||||||||||
Imputed interest | $ 2,875 | ||||||||||||||||||
Promissory Notes Payable Member | Derek Schumann [Member] | |||||||||||||||||||
Debt instrument conversion price | $ / shares | $ 0.10 | ||||||||||||||||||
Promissory note payable | $ 100,000 | ||||||||||||||||||
Debt instrument converted, amount | $ 100,000 | ||||||||||||||||||
Debt instrument converted shares issued | shares | 1,000,000 | ||||||||||||||||||
Maturity of debt instrument | 1 year | ||||||||||||||||||
Debt discount amortization expense | $ 69,452 | ||||||||||||||||||
Warrant issued | shares | 1,000,000 | ||||||||||||||||||
Exercise prices of warrants | $ / shares | $ 0.10 | ||||||||||||||||||
Warrants expiration date | Jul. 20, 2027 | ||||||||||||||||||
Imputed interest | $ 1,917 | ||||||||||||||||||
Promissory Notes Payable Member | Greg Foss [Member] | |||||||||||||||||||
Converted shares | shares | 1,000,000 | ||||||||||||||||||
Debt instrument conversion price | $ / shares | $ 0.10 | ||||||||||||||||||
Promissory note payable | $ 100,000 | $ 100,000 | |||||||||||||||||
Maturity of debt instrument | 1 year | ||||||||||||||||||
Warrant issued | shares | 1,000,000 | ||||||||||||||||||
Warrant discount | $ 100,000 | ||||||||||||||||||
Exercise prices of warrants | $ / shares | $ 0.10 | ||||||||||||||||||
Warrants expiration date | Jul. 20, 2027 | ||||||||||||||||||
Promissory Notes Payable Three Member | |||||||||||||||||||
Imputed interest | 8,877 | ||||||||||||||||||
Promissory Notes Payable Two [Member] | |||||||||||||||||||
Imputed interest | 6,110 | ||||||||||||||||||
Promissory Notes Payable One [Member] | |||||||||||||||||||
Imputed interest | $ 6,110 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | Feb. 28, 2018 | Feb. 28, 2017 | |
Income Taxes Details Abstract | ||||
Net tax loss carry-forwards | $ (17,132,786) | $ 15,888,098 | $ 11,627,532 | |
Statutory rate | 21.00% | 21.00% | 34.00% | |
Expected tax recovery | $ 3,597,885 | $ 3,336,501 | $ 3,953,361 | |
Change in valuation allowance | (3,597,885) | (3,336,501) | (3,953,361) | |
Income tax provision | ||||
Components of deferred tax asset: | ||||
Non capital tax loss carry forwards | 3,597,885 | 3,336,501 | 3,953,361 | |
Less: valuation allowance | (3,597,885) | (3,336,501) | (3,953,361) | |
Net deferred tax asset |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
May 31, 2018 | Feb. 28, 2018 | Feb. 28, 2017 | |
Income Taxes Details Narrative Abstract | |||
Net tax loss carry-forwards | $ (17,132,786) | $ 15,888,098 | $ 11,627,532 |
Expire period | 2,038 | 2,038 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | Dec. 05, 2016USD ($) | Dec. 05, 2016USD ($) | May 31, 2018USD ($) | Feb. 28, 2018USD ($)Number | Feb. 28, 2017USD ($) |
Subscription receivable | |||||
Number of operating lease | Number | 1 | ||||
Lease termination | 30 days | ||||
Gross rent | $ 2,600 | ||||
Accrued expenses - related parties | 542,066 | 552,976 | $ 280,900 | ||
Damages | 552,976 | 552,976 | |||
Mr. Pomije [Member] | |||||
Subscription receivable | $ 260,900 | $ 260,900 | |||
Accrued expenses - related parties | 542,066 | 552,976 | |||
Description of employment agreement | Mr. Pomije asserts an employment agreement existed and a continuing obligation of the Company in the form of a monthly salary for a 1 year term from May 18, 2015 to May 17, 2016 was due in addition to a stock subscription receivable. | Mr. Pomije asserts an employment agreement existed and a continuing obligation of the Company in the form of a monthly salary for a 1 year term from May 18, 2015 to May 17, 2016 was due in addition to a stock subscription receivable | |||
Litigation settlement paid | 10,910 | ||||
April 18, 2018 [Member] | Mr. Pomije [Member] | |||||
Attorney's fees and costs | 296,488 | 296,488 | |||
Damages | $ 256,488 | $ 256,488 |
Common Stock Subscriptions Re51
Common Stock Subscriptions Receivable (Details Narrative) | 12 Months Ended |
Feb. 28, 2017USD ($) | |
Common Stock Subscriptions Receivable | |
Stock issued | $ 5,000 |
Accrued additional stock | 7,150 |
Total amount | $ 12,150 |
Earnings (Loss) Per Share (Deta
Earnings (Loss) Per Share (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
May 31, 2018 | Feb. 28, 2018 | Feb. 28, 2017 | |||
Basic earnings (loss) per share calculation: | |||||
Net loss to common shareholders | $ (2,256,142) | $ (10,243,396) | $ (7,219,626) | ||
Weighted average number of common shares outstanding | 86,876,957 | 61,786,169 | 43,384,632 | ||
Basic net loss per share | $ (0.03) | $ (0.17) | $ (0.16) | ||
Diluted earnings (loss) per share calculation: | |||||
Net loss to common shareholders | $ (2,256,142) | $ (10,243,396) | $ (7,219,626) | ||
Weighted average number of common shares outstanding | 86,876,957 | 61,786,169 | 44,840,743 | ||
Stock options (1) | [1] | [1] | |||
Warrants (2) | [2] | [2] | |||
Diluted weighted average common shares outstanding | 86,876,957 | 61,786,169 | 44,840,743 | ||
Diluted net loss per share | $ (0.03) | $ (0.17) | $ (0.16) | ||
[1] | At both February 28, 2018 and February 28, 2017, there were outstanding stock options equivalent to 6,437,600 and 6,692,310 common shares, respectively. The stock options are anti-dilutive at February 28, 2018 and February 28, 2017 and therefore, have been excluded from diluted earnings (loss) per share. | ||||
[2] | At February 28, 2018 and February 28, 2017, there were outstanding warrants equivalent to 7,080,000 and 8,510,000 common shares, respectively. The warrants are anti-dilutive at February 28, 2018 and February 28, 2017 and therefore, have been excluded from diluted earnings (loss) per share. |
Earnings (Loss) Per Share (De53
Earnings (Loss) Per Share (Details Narrative) - shares | May 31, 2018 | Feb. 28, 2018 | May 31, 2017 | Feb. 28, 2017 |
Warrant [Member] | ||||
Common shares outstanding | 9,044,740 | 7,080,000 | 4,660,000 | 8,510,000 |
Stock Option [Member] | ||||
Common shares outstanding | 6,235,159 | 6,437,600 | 2,392,310 | 6,692,310 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) | May 31, 2018 | Feb. 28, 2018 | Dec. 07, 2017 | Feb. 28, 2017 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 0 | $ 0 | $ 0 | |
Congo Ltd. Acquisition [Member] | ||||
Business Acquisition [Line Items] | ||||
Developed Technology, Platform and code base | $ 420,000 | |||
Developed Technology, New code base and databases | 432,000 | |||
Assembled Workforce | 35,000 | |||
Goodwill | 78,000 | |||
Total intangibles and goodwill | 965,000 | |||
Total assets acquired, net | $ 965,000 |
Acquisitions (Details 1)
Acquisitions (Details 1) - USD ($) | May 31, 2018 | Feb. 28, 2018 | Dec. 07, 2017 | Feb. 28, 2017 |
Common stock, value | $ 1,257,493 | $ 845,098 | $ 526,060 | |
Total Purchase Price | $ 67,500 | |||
Congo Ltd. Acquisition [Member] | ||||
Common stock, value | $ 840,000 | |||
Cash consideration | 75,000 | |||
Earnest money | 50,000 | |||
Total Purchase Price | $ 965,000 |
Acquisitions (Details 2)
Acquisitions (Details 2) - USD ($) | May 31, 2018 | Feb. 28, 2018 | Oct. 27, 2017 | Feb. 28, 2017 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 0 | $ 0 | $ 0 | |
Cityinformation B V [Member] | ||||
Business Acquisition [Line Items] | ||||
Developed Technology, App Portfolio | $ 250,000 | |||
Developed Technology, App Handles | 135,000 | |||
Assembled Workforce | 40,000 | |||
Goodwill | 396,667 | |||
Total intangibles and goodwill | 821,667 | |||
Total assets acquired, net | $ 821,667 |
Acquisitions (Details 3)
Acquisitions (Details 3) - USD ($) | May 31, 2018 | Feb. 28, 2018 | Oct. 27, 2017 | Feb. 28, 2017 |
Common stock, value | $ 1,257,493 | $ 845,098 | $ 526,060 | |
Total Purchase Price | $ 67,500 | |||
Cityinformation B V [Member] | ||||
Common stock, value | $ 821,667 | |||
Total Purchase Price | $ 821,667 |
Acquisitions (Details 4)
Acquisitions (Details 4) - USD ($) | May 31, 2018 | Feb. 28, 2018 | Jul. 02, 2017 | Feb. 28, 2017 |
Cash | $ 20,506 | $ 58,712 | $ 539,243 | |
Total assets | $ 1,495,836 | 184,314 | $ 693,637 | |
Customer Lists | $ 66,800 | |||
Comencia, Inc. Acquisition [Member] | ||||
Cash | $ 11,989 | |||
Other assets | 13,115 | |||
Total assets | 25,104 | |||
Accrued expenses | (12,741) | |||
Long-term payables | (52,422) | |||
Total liabilities | (65,163) | |||
Customer Lists | 33,000 | |||
Intellectual Property | 48,800 | |||
Trademarks | 7,000 | |||
Total intangibles | 88,800 | |||
Total assets acquired, net | 48,741 | |||
Additional consideration given as compensation expense | 701,259 | |||
Total consideration | $ 750,000 |
Acquisitions (Details 5)
Acquisitions (Details 5) - USD ($) | May 31, 2018 | Feb. 28, 2018 | Jul. 02, 2017 | Feb. 28, 2017 |
Common stock, value | $ 1,257,493 | $ 845,098 | $ 526,060 | |
Total Purchase Price | $ 67,500 | |||
Comencia, Inc. Acquisition [Member] | ||||
Common stock, value | $ 750,000 | |||
Total Purchase Price | $ 750,000 |
Acquisitions (Details 6)
Acquisitions (Details 6) - USD ($) | 3 Months Ended | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | Feb. 28, 2018 | Feb. 28, 2017 | |
Revenues | $ 86,218 | $ 80,271 | $ 327,335 | $ 165,991 |
Cost of revenues | (525,328) | (98,608) | (1,031,344) | (473,056) |
Operating expenses: | ||||
Selling, general and administrative expenses | 1,223,618 | 1,073,187 | 7,443,296 | 5,168,512 |
Other income (expense) | (593,414) | (9,724) | 2,096,091 | 1,744,049 |
Net loss | $ (2,256,142) | $ (1,101,248) | $ (10,243,396) | $ (7,219,626) |
Weighted average number of common shares Outstanding – basic and fully diluted | 86,876,957 | 55,059,804 | 61,786,169 | 44,840,743 |
Net loss per share – basic and fully diluted | $ (0.03) | $ (0.02) | $ (0.17) | $ (0.16) |
Rezserve Technologies Ltd [Member] | Combined Pro Forma [Member] | ||||
Revenues | $ 333,879 | |||
Cost of revenues | 475,308 | |||
Gross profit (loss) | (141,429) | |||
Operating expenses: | ||||
Selling, general and administrative expenses | 5,323,560 | |||
Loss from operations | (5,464,989) | |||
Other income (expense) | (1,744,049) | |||
Net loss | $ (7,209,038) | |||
Weighted average number of common shares Outstanding – basic and fully diluted | 44,840,743 | |||
Net loss per share – basic and fully diluted | $ (0.16) | |||
Comencia, Inc. Acquisition [Member] | Combined Pro Forma [Member] | ||||
Revenues | $ 111,300 | $ 367,923 | $ 251,713 | |
Cost of revenues | 120,448 | 1,053,184 | 562,216 | |
Gross profit (loss) | (9,148) | (685,261) | (310,503) | |
Operating expenses: | ||||
Selling, general and administrative expenses | 1,082,168 | 7,454,580 | 5,218,597 | |
Loss from operations | (1,092,624) | (8,139,841) | (5,529,100) | |
Other income (expense) | 9,724 | (2,096,091) | (1,744,049) | |
Net loss | $ (1,101,348) | $ (10,235,932) | $ (7,273,149) | |
Weighted average number of common shares Outstanding – basic and fully diluted | 55,059,804 | 61,786,169 | 44,840,743 | |
Net loss per share – basic and fully diluted | $ (0.02) | $ (0.17) | $ (0.16) |
Acquisitions (Details 7)
Acquisitions (Details 7) | Feb. 28, 2018USD ($) |
Acquisitions | |
Cash | $ 2,240 |
Related Party Payable | (42,380) |
Accrued Salary | (82,565) |
Total Net Liabilities Assumed | $ (122,705) |
Acquisitions (Details 8)
Acquisitions (Details 8) | Feb. 28, 2018USD ($) |
Acquisitions Details 1Abstract | |
Total Net Liabilities Assumed | $ 122,705 |
Common Stock | 731,250 |
Total Compensation Expense and Purchase Price | $ 853,955 |
Acquisitions (Details 9)
Acquisitions (Details 9) | 12 Months Ended |
Feb. 28, 2018USD ($) | |
Total Assets Acquired | $ 1,480,000 |
Intellectual Property [Member] | |
Total Assets Acquired | 30,842 |
Assets Net [Member] | |
Total Assets Acquired | 34,708 |
Customer Lists [Member] | |
Total Assets Acquired | 77,295 |
Trademarks [Member] | |
Total Assets Acquired | 19,475 |
Goodwill [Member] | |
Total Assets Acquired | $ 1,317,680 |
Acquisitions (Details 10)
Acquisitions (Details 10) - USD ($) | 12 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2018 | |
Total Purchase Price | $ 1,480,000 | |
Common Stock | ||
Total Purchase Price | $ 1,080,000 | |
Convertible Notes Payable [Member] | ||
Total Purchase Price | $ 400,000 |
Acquisitions (Details 11)
Acquisitions (Details 11) | Feb. 28, 2018USD ($) |
Acquisitions Details 5Abstract | |
Non-compete agreements | $ 700 |
Customer Lists | 66,800 |
Total Assets Acquired | $ 67,500 |
Acquisitions (Details 12)
Acquisitions (Details 12) - USD ($) | May 31, 2018 | Feb. 28, 2018 | Feb. 28, 2017 |
Cash | $ 20,506 | $ 58,712 | $ 539,243 |
Common stock, value | $ 1,257,493 | 845,098 | $ 526,060 |
Total Purchase Price | 67,500 | ||
Purchase price [Member] | |||
Cash | 7,500 | ||
Common stock, value | 60,000 | ||
Total Purchase Price | $ 67,500 |
Acquisitions (Details Narrative
Acquisitions (Details Narrative) - USD ($) | Dec. 01, 2016 | Sep. 14, 2016 | Mar. 05, 2016 | Dec. 22, 2017 | Oct. 27, 2017 | May 31, 2018 | May 31, 2017 | Feb. 28, 2018 | Feb. 28, 2017 | Oct. 31, 2018 | Dec. 07, 2017 | Jul. 02, 2017 |
Common stock, value | $ 1,257,493 | $ 845,098 | $ 526,060 | |||||||||
Total Compensation Expense and Purchase Price | 853,955 | |||||||||||
Interest expense | (593,414) | $ (9,724) | 374,331 | 19,040 | ||||||||
Convertible note payable - related party (Note 8, 14) | 120,000 | 468,493 | 400,000 | |||||||||
Stock based compensation | 436,406 | $ 346,071 | 3,524,123 | $ 2,455,587 | ||||||||
Rezserve Technologies [Member] | ||||||||||||
Common stock, value | $ 1,080,000 | |||||||||||
Stock purchase agreement | 100.00% | |||||||||||
Aggregate purchased value | $ 1,480,000 | |||||||||||
Aggregate shares | 3,000,000 | |||||||||||
Convertible note payable | $ 400,000 | $ 400,000 | $ 400,000 | |||||||||
Interest rate | 0.00% | |||||||||||
Interest expense | $ 19,040 | 38,000 | ||||||||||
Convertible note payable - related party (Note 8, 14) | 400,000 | |||||||||||
Impairment expense | $ 1,445,292 | 1,445,292 | ||||||||||
Repayment of debt | 30,000 | |||||||||||
Debts conversion amount converted | $ 210,000 | |||||||||||
Debt conversion converted instrument shares issued | 1,100,000 | |||||||||||
Loss on conversion | $ 13,000 | |||||||||||
Non bearing interest | 160,000 | |||||||||||
Congo Ltd. Acquisition [Member] | ||||||||||||
Common stock, value | $ 840,000 | |||||||||||
December 7, 2017 [Member] | Congo Ltd. Acquisition [Member] | ||||||||||||
Common stock, value | $ 840,000 | $ 840,000 | ||||||||||
Common stock, closing price | $ 0.28 | $ 0.28 | ||||||||||
Impairment expense | $ 926,252 | |||||||||||
Common stock granted to existing owners | 3,000,000 | 3,000,000 | ||||||||||
Appointment.com Acquisition [Member] | ||||||||||||
Assets purchase agreement | 1,625,000 | |||||||||||
Common stock, value | $ 731,500 | |||||||||||
Total Compensation Expense and Purchase Price | $ 853,955 | |||||||||||
Comencia, Inc. Acquisition [Member] | ||||||||||||
Common stock, value | $ 750,000 | |||||||||||
Comencia, Inc. Acquisition [Member] | July 1, 2017 [Member] | ||||||||||||
Common stock, value | $ 750,000 | $ 750,000 | ||||||||||
Common stock, closing price | $ 0.30 | $ 0.30 | ||||||||||
Interest rate | 3.00% | 3.00% | ||||||||||
Note receivable | $ 55,000 | $ 55,000 | ||||||||||
Common stock granted to existing owners | 2,500,000 | 2,500,000 | ||||||||||
Stock based compensation | $ 750,000 | |||||||||||
Cityinformation B V [Member] | ||||||||||||
Common stock, value | $ 821,667 | |||||||||||
Common stock, closing price | $ 0.29 | |||||||||||
Impairment expense | 795,508 | |||||||||||
Common stock granted to existing owners | 2,833,333 | |||||||||||
Cloud.Market Acquisition [Member] | ||||||||||||
Common stock, value | $ 60,000 | |||||||||||
Impairment expense | $ 67,500 | |||||||||||
Common stock shares Issued | 750,000 | |||||||||||
Common stock shares issued value | $ 7,500 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | May 16, 2018 | May 15, 2018 | May 10, 2018 | May 09, 2018 | May 07, 2018 | May 03, 2018 | Jun. 09, 2017 | Sep. 14, 2016 | Jan. 30, 2018 | Jan. 18, 2018 | Dec. 22, 2017 | Nov. 30, 2017 | Oct. 30, 2017 | Jul. 27, 2017 | Jul. 20, 2017 | May 31, 2018 | Feb. 28, 2018 | May 31, 2017 | Feb. 28, 2018 | Feb. 28, 2017 |
Debt Instrument [Line Items] | ||||||||||||||||||||
Debt instrument unamortized discount | $ 191,507 | $ 191,507 | ||||||||||||||||||
Debt discount amortization expense | $ 562,923 | 276,257 | ||||||||||||||||||
Convertible Debt [Member] | Clint Skidmore [Member] | Stock Purchase Agreement [Member] | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Debt instrument balance | 120,000 | 160,000 | 160,000 | |||||||||||||||||
Debt instrument face amount | $ 400,000 | $ 400,000 | ||||||||||||||||||
Number of stock issued for conversion of debt (in shares) | 1,000,000 | 1,100,000 | ||||||||||||||||||
Stock issued for conversion of debt | $ 210,000 | |||||||||||||||||||
Conversion price | $ 0.40 | |||||||||||||||||||
Repayments of debt | 30,000 | |||||||||||||||||||
Loss on conversion | $ 13,000 | |||||||||||||||||||
Imputed interest expense | 3,500 | 38,000 | 38,000 | |||||||||||||||||
Convertible Debt [Member] | Crown Bridge Partners [Member] | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Proceeds from issuance of debt | $ 55,000 | |||||||||||||||||||
Interest rate on debt instrument | 10.00% | |||||||||||||||||||
Debt discount | $ 33,246 | |||||||||||||||||||
Expiry date | Jan. 30, 2019 | |||||||||||||||||||
Convertible note description | matures on January 30, 2019, and is convertible after 180 days into common stock at 61% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion. | |||||||||||||||||||
Issuance fees | $ 3,000 | |||||||||||||||||||
Convertible Debt [Member] | Crown Bridge Partners [Member] | January 30, 2018 [Member] | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Debt instrument unamortized discount | 9,062 | 2,880 | 2,880 | |||||||||||||||||
Debt discount | 24,305 | 33,366 | 33,366 | |||||||||||||||||
Accrued interest | 1,812 | 437 | 437 | |||||||||||||||||
Convertible Debt [Member] | Powerup [Member] | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Proceeds from issuance of debt | $ 53,000 | $ 58,000 | $ 75,000 | |||||||||||||||||
Interest rate on debt instrument | 12.00% | 12.00% | 12.00% | |||||||||||||||||
Debt instrument balance | $ 48,922 | |||||||||||||||||||
Debt instrument unamortized discount | 15,896 | 15,896 | ||||||||||||||||||
Debt discount | $ 33,164 | $ 38,164 | $ 47,951 | $ 32,055 | 32,055 | 32,055 | ||||||||||||||
Accrued interest | $ 4,500 | $ 2,885 | 2,885 | |||||||||||||||||
Expiry date | Jan. 18, 2019 | Nov. 30, 2018 | Oct. 30, 2018 | |||||||||||||||||
Convertible note description | matures on January 18, 2019, and is convertible after 180 days into common stock at 61% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion. | matures on November 30, 2018, and is convertible after 180 days into common stock at 61% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion. | matures on October 30, 2018, and is convertible after 180 days into common stock at 61% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion. | derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00009. | derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00009. | |||||||||||||||
Principal amount converted in common stock | $ 15,000 | $ 20,000 | $ 15,000 | $ 13,000 | $ 12,000 | |||||||||||||||
Conversion of common stock, shares converted | 319,672 | 327,869 | 245,902 | 213,115 | 170,940 | |||||||||||||||
Due balance of principal | $ 15,000 | $ 35,000 | $ 50,000 | $ 63,000 | ||||||||||||||||
Convertible Debt [Member] | Powerup [Member] | January 18, 2018 [Member] | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Debt instrument unamortized discount | $ 8,471 | $ 3,806 | 3,806 | |||||||||||||||||
Debt discount | 21,608 | 30,079 | 30,079 | |||||||||||||||||
Accrued interest | $ 2,304 | $ 714 | 714 | |||||||||||||||||
Convertible note description | derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00009. | derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00009. | ||||||||||||||||||
Convertible Debt [Member] | Powerup [Member] | November 30, 2017 [Member] | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Debt instrument unamortized discount | $ 9,541 | $ 9,410 | 9,410 | |||||||||||||||||
Debt discount | 19,213 | 28,754 | 28,754 | |||||||||||||||||
Accrued interest | 3,456 | $ 1,716 | 1,716 | |||||||||||||||||
Convertible note description | derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00009. | |||||||||||||||||||
Convertible Debt [Member] | Darvin Habben [Member] | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Interest rate on debt instrument | 8.00% | |||||||||||||||||||
Debt instrument face amount | $ 500,000 | |||||||||||||||||||
Number of stock issued for conversion of debt (in shares) | 5,380,274 | 2,000,000 | ||||||||||||||||||
Conversion price | $ 0.10 | $ 0.25 | ||||||||||||||||||
Debt discount | $ 191,507 | $ 300,000 | $ 191,507 | 191,507 | ||||||||||||||||
Accrued interest | 38,027 | 28,932 | 28,932 | |||||||||||||||||
Debt discount amortization expense | 108,493 | 108,493 | ||||||||||||||||||
Debt instrument, promissory note, converted | $ 500,000 | |||||||||||||||||||
Promissory Notes Payable Member | Donovan Olson [Member] | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Proceeds from issuance of debt | $ 100,000 | |||||||||||||||||||
Number of stock issued for conversion of debt (in shares) | 1,000,000 | |||||||||||||||||||
Conversion price | $ 0.10 | |||||||||||||||||||
Imputed interest expense | 1,917 | 6,110 | ||||||||||||||||||
Number of warrants issued in conjunction with promissory notes | 1,000,000 | |||||||||||||||||||
Exercise price of the warrants | $ 0.10 | |||||||||||||||||||
Debt instrument unamortized discount | 30,548 | 30,548 | ||||||||||||||||||
Debt discount | $ 100,000 | 69,452 | 69,452 | 69,452 | ||||||||||||||||
Expiry date | Jul. 20, 2027 | |||||||||||||||||||
Debt instrument, promissory note, converted | $ 100,000 | |||||||||||||||||||
Promissory Notes Payable Member | Darvin Habben [Member] | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Proceeds from issuance of debt | $ 150,000 | $ 150,000 | ||||||||||||||||||
Number of stock issued for conversion of debt (in shares) | 1,500,000 | |||||||||||||||||||
Conversion price | $ 0.10 | |||||||||||||||||||
Imputed interest expense | 2,875 | 8,877 | 8,877 | |||||||||||||||||
Number of warrants issued in conjunction with promissory notes | 1,000,000 | 1,000,000 | ||||||||||||||||||
Exercise price of the warrants | $ 0.10 | $ 0.10 | ||||||||||||||||||
Debt instrument unamortized discount | 44,384 | 44,384 | ||||||||||||||||||
Debt discount | $ 150,000 | $ 150,000 | 105,616 | 105,616 | 105,616 | |||||||||||||||
Debt instrument, promissory note, converted | $ 150,000 | |||||||||||||||||||
Promissory Notes Payable Member | Greg Foss [Member] | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Proceeds from issuance of debt | $ 100,000 | |||||||||||||||||||
Number of stock issued for conversion of debt (in shares) | 1,000,000 | |||||||||||||||||||
Conversion price | $ 0.10 | |||||||||||||||||||
Imputed interest expense | 1,917 | 6,110 | 6,110 | |||||||||||||||||
Number of warrants issued in conjunction with promissory notes | 1,000,000 | |||||||||||||||||||
Exercise price of the warrants | $ 0.10 | |||||||||||||||||||
Debt instrument unamortized discount | 30,548 | 30,548 | ||||||||||||||||||
Debt discount | $ 100,000 | 69,452 | 69,452 | 69,452 | ||||||||||||||||
Expiry date | Jul. 20, 2027 | |||||||||||||||||||
Debt instrument, promissory note, converted | $ 100,000 | |||||||||||||||||||
Promissory Notes Payable Member | Derek Schumann [Member] | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Proceeds from issuance of debt | $ 100,000 | |||||||||||||||||||
Number of stock issued for conversion of debt (in shares) | 1,000,000 | |||||||||||||||||||
Conversion price | $ 0.10 | |||||||||||||||||||
Imputed interest expense | $ 1,917 | 6,110 | 6,110 | |||||||||||||||||
Number of warrants issued in conjunction with promissory notes | 1,000,000 | |||||||||||||||||||
Exercise price of the warrants | $ 0.10 | |||||||||||||||||||
Debt discount | $ 69,452 | $ 100,000 | 69,452 | 69,452 | ||||||||||||||||
Debt discount amortization expense | $ 30,548 | $ 30,548 | ||||||||||||||||||
Expiry date | Jul. 20, 2027 | |||||||||||||||||||
Debt instrument, promissory note, converted | $ 100,000 |
Transactions with Former Offi69
Transactions with Former Officer (Details Narrative) - USD ($) | Dec. 05, 2016 | Apr. 18, 2018 | May 31, 2018 | Feb. 28, 2018 | Feb. 28, 2017 |
Accrued professional fees | $ 260,900 | $ 260,900 | |||
Total damages awared value | 552,976 | $ 552,976 | |||
Richard Pomije [Member] | |||||
Description of employment agreement | Mr. Pomije asserts an employment agreement existed and a continuing obligation of the Company in the form of a monthly salary for a 1 year term from May 18, 2015 to May 17, 2016 was due in addition to a stock subscription receivable. | ||||
Accrued payable | 542,066 | $ 552,976 | |||
Mr. Richard Pomije [Member] | |||||
Damages awarded, value | $ 256,488 | ||||
Attorney’s fees and costs | 296,488 | ||||
Total damages awared value | 552,976 | ||||
Payment of related party debt | $ 10,910 | ||||
Mr. Richard Pomije [Member] | Subsequent Event [Member] | |||||
Damages awarded, value | 256,488 | ||||
Attorney’s fees and costs | 296,488 | ||||
Total damages awared value | $ 552,976 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
May 31, 2018 | Feb. 28, 2018 | Feb. 28, 2017 | |
Goodwill carrying value | $ 0 | $ 0 | $ 0 |
Acquisitions of goodwill | 549,667 | 549,667 | 1,317,680 |
Intangible assets carrying value | 0 | 0 | $ 0 |
Acquire intangible assets | 1,237,000 | 1,237,000 | |
Amortization expense of intangible assets | 64,907 | 64,907 | |
Stock issued for domain names, Shares | 369,750 | ||
Cash paid for domain names | $ 69,500 | ||
Total fair value of stock issued for domain names | 154,740 | ||
Impairment expense | 1,721,760 | 1,721,760 | $ 1,725,009 |
Database [Member] | |||
Acquire intangible assets | 432,000 | 432,000 | |
Platform [Member] | |||
Acquire intangible assets | 420,000 | 420,000 | |
App portfolios [Member] | |||
Acquire intangible assets | 250,000 | 250,000 | |
App handles [Member] | |||
Acquire intangible assets | $ 135,000 | $ 135,000 |
Digital Currencies (Details Nar
Digital Currencies (Details Narrative) - USD ($) | May 16, 2018 | May 15, 2018 | May 31, 2018 | Feb. 28, 2018 | Feb. 28, 2017 |
Common stock, shares issued | 125,749,320 | 84,509,824 | 52,606,000 | ||
Common stock, value | $ 1,257,493 | $ 845,098 | $ 526,060 | ||
Digital currencies | $ 1,380,156 | ||||
Stock Purchase Agreement [Member] | |||||
Digital currencies transaction, description | the Company sold 63,291.13924 RHOCs at $1.56 for $100,000 | market price of RHOC was $1.38, resulting in an unrealized loss on exchange of $196,070 | |||
Sale of digital coins, value | $ 100,000 | ||||
Foreign currency transaction gain loss realized | $ 1,282 | ||||
Foreign currency transaction gain loss unrealized | $ 196,070 | ||||
Stock Purchase Agreement [Member] | Catena Fund One, LP [Member] | |||||
Common stock, shares issued | 11,385,590 | ||||
Common stock, value | $ 1,659,000 | ||||
Digital currencies transaction, description | the Company issued 11,385,590 shares of stock to Catena Fund One, LP for 1,050,000 RHOC (RChain Coins). The market price of RHOC on May 15, 2018 was $1.58 per RHOC |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||
Jun. 30, 2018 | May 17, 2018 | May 15, 2018 | Apr. 25, 2018 | Apr. 18, 2018 | May 31, 2018 | Feb. 28, 2018 | Jul. 30, 2018 | Feb. 28, 2017 | |
Total damages awared value | $ 552,976 | $ 552,976 | |||||||
Accrued professional fees | $ 260,900 | $ 260,900 | |||||||
Common stock, shares issued | 125,749,320 | 84,509,824 | 52,606,000 | ||||||
Common stock, value | $ 1,257,493 | $ 845,098 | $ 526,060 | ||||||
Minimum [Member] | |||||||||
Accrued professional fees | 292,076 | ||||||||
Maximum [Member] | |||||||||
Accrued professional fees | $ 552,976 | ||||||||
Mr. Richard Pomije [Member] | |||||||||
Damages awarded, value | $ 256,488 | ||||||||
Attorney’s fees and costs | 296,488 | ||||||||
Total damages awared value | 552,976 | ||||||||
Subsequent Event [Member] | Contractor [Member] | |||||||||
Common stock, shares issued | 90,000 | ||||||||
Common stock, value | $ 7,920 | ||||||||
Subsequent Event [Member] | Triton Funds LP [Member] | |||||||||
Registered shares purchase, Value | $ 1,000,000 | ||||||||
Purchase for diluted shares description | Once approved, Triton will purchase up to 5% of the Companys fully diluted shares. | ||||||||
Subsequent Event [Member] | Pithia, Inc. [Member] | |||||||||
Investment income received | $ 2,400,000 | ||||||||
Exchange for diluted shares, percent | 10.00% | ||||||||
Description of investment agreement | The remaining $1,200,000 will be received 90 days from the agreement date, again in the form of RHOC cryptocurrency, as long as the Company meets certain conditions. | ||||||||
Future issuance of common stock shares | 11,385,590 | ||||||||
Subsequent Event [Member] | Pithia, Inc. [Member] | RHOC Cryptocurrency [Member] | |||||||||
Cost of investment | $ 1,200,000 | ||||||||
Subsequent Event [Member] | Michael Cartwright [Member] | |||||||||
Description of employment agreement | to extend his employment term by two years to June 1, 2020. | ||||||||
Subsequent Event [Member] | Mr. Richard Pomije [Member] | |||||||||
Damages awarded, value | 256,488 | ||||||||
Attorney’s fees and costs | 296,488 | ||||||||
Total damages awared value | $ 552,976 | ||||||||
Subsequent Event [Member] | PowerUp Lending Group [Member] | |||||||||
Outstanding balance of principal debt | $ 8,000 | ||||||||
Debt instrument converted, amount | $ 50,000 | ||||||||
Debt instrument converted, shares issued | 763,001 |