Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 14, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | AppTech Corp. | |
Entity Central Index Key | 0001070050 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity's Reporting Status Current | Yes | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity File Number | 000-27569 | |
Entity Incorporation, State or Country Code | WY | |
Entity Interactive Data Current | Yes | |
Entity Common Stock, Shares Outstanding | 86,837,825 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash | $ 9,540 | $ 24,159 |
Accounts receivable | 41,472 | 29,836 |
Prepaid rent | 0 | 0 |
Deposit escrow | 0 | 25,000 |
Security deposit | 0 | 5,948 |
Total current assets | 51,012 | 84,943 |
Right of use asset | 280,416 | 0 |
Security deposit | 7,536 | 0 |
TOTAL ASSETS | 338,964 | 84,943 |
Current liabilities | ||
Accounts payable | 1,862,342 | 1,707,878 |
Accrued liabilities | 2,474,234 | 2,334,480 |
Right of use liability | 46,205 | 0 |
Stock repurchase liability | 430,000 | 430,000 |
Loans payable related parties | 62,601 | 93,401 |
Convertible notes payable | 620,000 | 620,000 |
Convertible notes payable related parties | 372,000 | 372,000 |
Notes payable | 1,104,081 | 1,104,081 |
Notes payable related parties | 708,493 | 708,493 |
Total current liabilities | 7,679,956 | 7,370,333 |
Long-term liabilities | ||
Accounts payable | 140,000 | 160,000 |
Right of use liability | 251,452 | 0 |
Total long-term liabilities | 391,452 | 160,000 |
TOTAL LIABILITIES | 8,071,408 | 7,530,333 |
Stockholders' Deficit | ||
Series A preferred stock; $0.001 par value; 100,000 shares authorized; 14 shares issued and outstanding at June 30, 2020 and December 31, 2019 | 0 | 0 |
Common stock, $0.001 par value; 1,000,000,000 shares authorized; 86,677,825 and 84,153,825 and outstanding at June 30, 2020 and December 31, 2019, respectively | 86,678 | 84,154 |
Additional paid-in capital | 34,731,765 | 33,230,869 |
Accumulated deficit | (42,550,887) | (40,760,413) |
Total stockholders' deficit | (7,732,444) | (7,445,390) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 338,964 | $ 84,943 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 100,000 | 100,000 |
Preferred stock, issued | 14 | 14 |
Preferred stock, outstanding | 14 | 14 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, issued | 86,677,825 | 84,153,825 |
Common stock, outstanding | 86,677,825 | 84,153,825 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenues | $ 77,853 | $ 67,079 | $ 136,010 | $ 123,879 |
Cost of revenues | 31,737 | 26,014 | 54,962 | 48,551 |
Gross profit | 46,116 | 41,065 | 81,048 | 75,328 |
Operating expenses: | ||||
General and administrative, including stock based compensation of $81,554, $35,926, $1,290,739 and $43,133, respectively | 276,207 | 245,584 | 1,692,104 | 427,889 |
Research and development | 34,250 | 14,978 | 46,251 | 29,139 |
Total operating expenses | 310,457 | 260,562 | 1,738,355 | 457,028 |
Loss from operations | (264,341) | (219,497) | (1,657,307) | (381,700) |
Other income (expenses) | ||||
Forgiveness of Debt | 9,000 | 0 | 9,000 | 0 |
Interest expense | (71,083) | (70,597) | (142,167) | (146,635) |
Total other expenses | (62,083) | (70,597) | (133,167) | (146,635) |
Loss before provision for income taxes | (326,424) | (290,094) | (1,790,474) | (528,335) |
Provision for income taxes | 0 | 0 | 0 | 0 |
Net loss | $ (326,424) | $ (290,094) | $ (1,790,474) | $ (528,335) |
Basic and diluted net loss per common share | $ 0 | $ 0 | $ (0.02) | $ (0.01) |
Weighted-average number of shares used basic and diluted per share amounts | 86,536,841 | 83,917,786 | 85,413,932 | 84,416,207 |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Stock based compensation | $ 81,554 | $ 35,926 | $ 1,290,739 | $ 43,133 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (UNAUDITED) - USD ($) | Series A Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings / Accumulated Deficit | Total |
Beginning balance at Dec. 31, 2018 | $ 86,797 | $ 32,284,735 | $ (39,417,203) | $ (7,045,671) | |
Beginning balance (in shares) at Dec. 31, 2018 | 14 | 86,797,132 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (238,241) | (238,241) | |||
Imputed interest | 3,450 | 3,450 | |||
Common stock issued for subscriptions | $ 275 | 68,475 | 68,750 | ||
Common stock issued for subscriptions (in shares) | 275,000 | ||||
Common stock issued for services | $ 12 | 7,196 | 7,208 | ||
Common stock issued for services (in shares) | 12,000 | ||||
Common stock cancelled | $ (3,450) | 3,450 | |||
Common stock cancelled (in shares) | (3,450,000) | ||||
Proceeds from sale of repurchase option | 123,750 | 123,750 | |||
Ending balance at Mar. 31, 2019 | $ 83,634 | 32,491,056 | (39,655,444) | (7,080,754) | |
Ending balance (in shares) at Mar. 31, 2019 | 14 | 83,634,132 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (290,094) | (290,094) | |||
Imputed interest | 3,450 | 3,450 | |||
Common stock issued for services | $ 313 | 35,613 | 35,926 | ||
Common stock issued for services (in shares) | 312,500 | ||||
Proceeds from sale of repurchase option | 500,000 | 500,000 | |||
Ending balance at Jun. 30, 2019 | $ 83,947 | 33,030,119 | (39,945,538) | (6,831,472) | |
Ending balance (in shares) at Jun. 30, 2019 | 14 | 83,946,632 | |||
Beginning balance at Dec. 31, 2019 | $ 84,154 | 33,230,869 | (40,760,413) | (7,445,390) | |
Beginning balance (in shares) at Dec. 31, 2019 | 14 | 84,153,825 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (1,464,050) | (1,464,050) | |||
Imputed interest | 3,450 | 3,450 | |||
Common stock issued for services | $ 2,350 | 1,206,835 | 1,209,185 | ||
Common stock issued for services (in shares) | 2,349,500 | ||||
Proceeds from sale of repurchase option | 186,531 | 186,531 | |||
Ending balance at Mar. 31, 2020 | $ 4 | $ 86,504 | 34,627,685 | (42,224,463) | (7,510,274) |
Ending balance (in shares) at Mar. 31, 2020 | 14 | 86,503,325 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (326,424) | (326,424) | |||
Imputed interest | 3,450 | 3,450 | |||
Common stock issued for services | $ 174 | 81,380 | 81,554 | ||
Common stock issued for services (in shares) | 174,500 | ||||
Proceeds from sale of repurchase option | 19,250 | 19,250 | |||
Ending balance at Jun. 30, 2020 | $ 86,678 | $ 34,731,765 | $ (42,550,887) | $ (7,732,444) | |
Ending balance (in shares) at Jun. 30, 2020 | 14 | 86,677,825 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (1,790,474) | $ (528,335) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock issued for services | 1,290,739 | 43,134 |
Imputed interest on notes payable | 6,900 | 6,900 |
Depreciation and amortization | 0 | 33 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (11,635) | (4,310) |
Accounts payable | 134,464 | (58,955) |
Accrued liabilities | 139,754 | 145,868 |
Right of use asset and liability | 17,241 | 0 |
Net cash used in operating activities | (213,011) | (395,665) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Deposit escrow | 25,000 | (50,000) |
Security deposit | (1,589) | 0 |
Net cash provided by investing activities | 23,411 | (50,000) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds (payments) from loans payable - related parties | 750 | 120,000 |
Payments on loans payable - related parties | (31,550) | (25,000) |
Payments on notes payable | 0 | (36,000) |
Proceeds from sale of repurchase option | 205,781 | 623,750 |
Proceeds from sale of common stock | 0 | 68,750 |
Net cash provided by financing activities | 174,981 | 751,500 |
Changes in cash and cash equivalents | (14,619) | 305,835 |
Cash and cash equivalents, beginning of period | 24,159 | 1,384 |
Cash and cash equivalents, end of period | 9,540 | 307,219 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 0 | 1,769 |
Cash paid for income taxes | $ 0 | $ 0 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS AppTech Corp. (“AppTech” or the “Company”) is a Wyoming Corporation incorporated on July 2, 1998. AppTech Corp. is a FinTech company providing electronic payment processing technologies and merchant services. This includes credit card processing, Automated Clearing House (“ACH”) processing, gift and loyalty cards and e-commerce. The Company expanded its core services to include global Short Messaging Service (“SMS”) patented text messaging and secure mobile payments. The patented two-way text chat platform enables secure SMS services including mobile payments, notifications, authentication, marketing, information queries and reporting. Other services include digital marketing, lead generation, mobile app development, and intellectual property rights development. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Also see Note 3. Principles of Consolidation The Company’s accounts include financials of the Company and its wholly owned subsidiaries, Transcendent One, Inc. and TransTech One, LLC. All significant inter-company transactions have been eliminated in consolidation. The operations of Transcendent One, Inc. and TransTech One, LLC are insignificant and the Company dissolved the subsidiaries on October 8, 2019. Use of Estimates The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated liabilities related to various vendors in which communications have ceased, contingent liabilities, and realization of tax deferred tax assets. Actual results could differ from those estimates. Concentration of Credit Risk Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits of $250,000 per institution that pays Federal Deposit Insurance Corporation (“FDIC”) insurance premiums. The Company has never experienced any losses related to these balances. The accounts receivable from merchant services are paid by the financial institutions on a monthly basis. The Company currently uses three financial institutions to service their merchants for which represented 100% of accounts receivable as of June 30, 2020 and 2019. The loss of one of these financial institutions would not have a significant impact on the Company’s operations as there are additional financial institutions available to the Company. For the six months ended June 30, 2020 and 2019, the one merchant (customer) represented approximately 41% and 40% of the total revenues, respectively. The loss of this customer would have significant impact on the Company’s operations. Cash and Cash Equivalents The Company classifies its highly liquid investments with maturities of three months or less at the date of purchase as cash equivalents. Management determines the appropriate classification of its investments at the time of purchase and reevaluates the designations of each investment as of the balance sheet date for each reporting period. The Company classifies its investments as either short-term or long-term based on each instrument’s underlying contractual maturity date. Investments with maturities of less than 12 months are classified as short-term and those with maturities greater than 12 months are classified as long-term. The cost of investments sold is based upon the specific identification method. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable is recorded net of an allowance for doubtful accounts, if needed. The Company considers any changes to the financial condition of its financial institutions used and any other external market factors that could impact the collectability of its receivables in the determination of its allowance for doubtful accounts. The Company does not expect to have write-offs or adjustments to accounts receivable which could have a material adverse effect on its consolidated financial position, results of operations or cash flows as the portion which is deemed uncollectible is already taken into account when the revenue is recognized. Revenue Recognition The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, codified as Accounting Standards Codification (“ASC) 606 Revenue from Contracts with Customers, which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company adopted ASC 606 effective January 1, 2019 using modified retrospective basis and the cumulative effect was immaterial to the consolidated financial statements. The Company provides merchant processing solutions for credit cards and electronic payments. In all cases, the Company acts as an agent between the merchant which generates the credit card and electronic payments, and the bank which processes such payments. The Company’s revenue is generated on services priced as a percentage of transaction value or a specified fee transaction, depending on the card or transaction type. Revenue is recorded as services are performed which is typically when the bank processes the merchant’s credit card and electronic payments. The Company provides various Cloud services to business clients. Revenues generated from the services as agreed upon in a Cloud Service Agreement. The revenue is recorded as the services are performed and billed in advance on a monthly basis. Revenues from these services represent less than 5% of the Company’s total revenues. Consideration paid to customers, such as amounts earned under our customer equity incentive program, are recorded as a reduction to revenues. Fair Value of Financial Instruments ASC 820, Fair Value Measurements and Disclosures defines fair value 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. ASC 820 also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: The fair value hierarchy prioritizes the inputs used in valuation techniques into three levels as follows: Level 1 Observable inputs – unadjusted quoted prices in active markets for identical assets and liabilities; Level 2 Observable inputs – other than the quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data; and Level 3 Unobservable inputs – includes amounts derived from valuation models where one or more significant inputs are unobservable. The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, vendor deposits, accounts payable, accrued expenses, etc. The carrying value of these assets and liabilities is representative of their fair market value, due to the short maturity of these instruments. Research and Development In accordance with ASC 730, Research and Development (“R&D”) costs are expensed when incurred. R&D costs include costs of acquiring patents and other unproven technologies, contractor fees and other costs associated with the development of the SMS short code texting platform, contract and other outside services. Total R&D costs for the six months ended June 30, 2020 and 2019 were $46,251 and $29,139, respectively. Property and Equipment Property and equipment is recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of property and equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful life of five (5) years. Upon sale or retirement of equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations. Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset or asset group to estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset or asset group exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset or asset group exceeds the estimated fair value of the asset or asset group. Long-lived assets to be disposed of by sale are reported at the lower of their carrying amounts or their estimated fair values less costs to sell and are not depreciated. As of June 30, 2020 and December 31, 2019, there were no asset impairments. Lease Commitment The Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified fixed asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. The Company has lease agreements which include lease and non-lease components, which the Company has elected to account for as a single lease component for all classes of underlying assets. Lease expense for variable lease components are recognized when the obligation is probable. Operating lease right of use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease payments are recognized as lease expense on a straight-line basis over the lease term. The Company primarily leases buildings (real estate) which are classified as operating leases. ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As an implicit interest rate is not readily determinable in the Company’s leases, the incremental borrowing rate is used based on the information available at commencement date in determining the present value of lease payments. The lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. Options for lease renewals have been excluded from the lease term (and lease liability) for the majority of the Company’s leases as the reasonably certain threshold is not met. Lease payments included in the measurement of the lease liability are comprised of fixed payments, variable payments that depend on index or rate, and amounts probable to be payable under the exercise of the Company option to purchase the underlying asset if reasonably certain. Variable lease payments not dependent on a rate or index associated with the Company’s leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed as probable. Variable lease payments are presented as operating expenses in the Company’s statement of operations in the same line as expense arising from fixed lease payments. As of June 30, 2020, management determined that there were no variable lease costs. Income Taxes The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statement of operations in the period that includes the enactment date. The Company’s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known. As of June 30, 2020 and 2019, the Company does not believe any provisions are required in connection with uncertain tax positions as there are none. Per Share Information Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. As of June 30, 2020, and 2019, the Company had potential dilutive securities related to options, warrants, Series A preferred stock and convertible notes payable. These dilutive securities were not included within the calculation of dilutive net loss per common share as the effects would have been anti-dilutive. Convertible Debt Convertible debt is accounted for under the guidelines established by ASC 470-20 Conversion and Other Options. ASC 470-20 governs the calculation of an embedded beneficial conversion, which is treated as an additional discount to the instruments where derivative accounting does not apply. The amount of the value of additional stock and other consideration in addition to the beneficial conversion feature may reduce the carrying value of the instrument to zero, but no further. The discounts are accreted over the term of the debt using the straight-line method due to the short terms of the notes. The Company accounts for modifications of its embedded beneficial conversions, in accordance with ASC 470-50 Modifications and Extinguishments. ASC 470-50 requires the modification of a convertible debt instrument that changes the fair value of an embedded conversion feature and the subsequent recognition of interest expense or the associated debt instrument when the modification does not result in a debt extinguishment. Stock Based Compensation The Company recognizes as compensation expense all share-based payment awards made to employees, directors, and consultants including grants of stock options and warrants, based on estimated fair values. Fair value is generally determined based on the closing price of the Company’s common stock on the date of grant and is recognized over the service period. The Company has several consulting agreements that have share based payment awards based on performance. These agreements typically require the Company to issue common stock to the consultants on a monthly basis. The Company records the fair market value of the common stock issuable at each month end when the performance is complete based upon the closing market price of the Company’s common stock. New Accounting Pronouncements The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company. |
GOING CONCERN
GOING CONCERN | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN | NOTE 3 – GOING CONCERN As reflected in the accompanying consolidated financial statements, during the six months ended June 30, 2020 and 2019, the Company incurred a net loss of $1,790,474 and $528,335 and used cash of $213,011 and $395,665 in operating activities. In addition, the Company had a working capital deficit of $7,628,944 and an accumulated deficit of $42,550,887 at June 30, 2020. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. We have evaluated the conditions or events that raise substantial doubt about the Company’s ability as a going concern within one year of issuance of the consolidated financial statements. While the Company is continuing operations and generating revenues, the Company’s cash position is not significant enough to support the Company’s daily operations. To fund operations and reduce the working capital deficit, the Company intends to raise additional funds through public or private debt and/or equity offerings. During 2020, the Company raised $205,781 from a sale of a repurchase option to fund operations. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern, however, such are not guaranteed. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect, nor can there be assurance that such funds will be at acceptable terms. As of the date of these consolidated financial statements, the Company has not finalized a commitment for additional capital. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate revenues and cash flows. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Risks and uncertainties On January 30, 2020, the World Health Organization declared the coronavirus outbreak a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates. Since the Company derives its revenues from processing of purchases from our merchant services clients, a downturn in economic activity, such as associated with the current coronavirus pandemic, could reduce the volume of purchases we process, and thus our revenues. In addition, such a downturn could cause our merchant customers to cease operations permanently decreasing our payment processing unless new customers are found. We may also face additional difficulty in raising capital during an economic downturn. The effects of the pandemic had significant impact on revenue at the beginning of the pandemic and began to return to normal after several months. The continuing effects of the potential impact cannot be estimate at this time. Additionally, it is reasonably possible that the estimates made in the financial statements have been, or will be materially and adversely impacted in the near term as a result of these conditions. |
PATENTS
PATENTS | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
PATENTS | NOTE 4 – PATENTS Patents On June 22, 2017, AppTech executed an Amendment to Asset Purchase Agreement with GlobalTel Media, Inc. In connection with the asset purchase agreement, 5,000,000 shares of common stock were issued to GlobalTel Media, Inc. The Company valued the common stock issuance at $1,000,000 based on the closing market price of the Company’s common stock on the date in which the performance was complete. This amendment revived the original asset purchase agreement dated December 4, 2013 to purchase the assets of GlobalTel Media, Inc. (AppTech and GlobalTel agree that the asset purchase agreement dated September 30, 2015 is null and void), which include, but is not limited to, all intellectual property, United States Patent Trademark Office (“USPTO”) issued patents, enterprise-grade, patent protected software and intellectual property for advanced messaging incorporating secure payments, databases, documentation, copyrights, trademarks, registrations, and all current development work in process of USPTO application approval; more specifically but not limited to USPTO 8,073,895 & 8,572,166 “System and Method for Delivering Web Content to a Mobile Device”, USPTO 8,315,184 “Computer to Mobile Two-Way Chat System and Method”, and USPTO 8,369,828 “Mobile-to-Mobile Payment System and Method”. GlobalTel’s technology focuses on SMS text-based applications, social media and mobile payment. The USPTO assigned the patents to AppTech on July 25, 2017. AppTech, as part of the various agreements, agreed to pay $1,600,000 which included an assumption of certain liabilities, including costs incurred to continue development of the patents, as well as guaranteed payment of 25% of the net proceeds on revenue created by the patents up to $26,600,000. As of June 30, 2020 and December 31, 2019, amounts included in accounts payable related to the assumption of liabilities in connection with the patents were $380,000 and $415,000, respectively. The Company has expensed the cost of the patents as research and development costs as the future estimated cash flow expected cannot be reasonably estimated. |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 6 Months Ended |
Jun. 30, 2020 | |
Other Liabilities Disclosure [Abstract] | |
ACCRUED LIABILITIES | NOTE 5 – ACCRUED LIABILITIES Accrued liabilities as of June 30, 2020 and December 31, 2019 consist of the following: June 30, 2020 December 31, 2019 Accrued interest – related parties $ 981,032 $ 943,356 Accrued interest – third parties 1,313,289 1,215,699 Accrued residuals 44,838 39,064 Accrued merchant equity 91,023 91,023 Other 44,052 45,338 Total accrued liabilities $ 2,474,234 $ 2,334,480 Accrued Interest Notes payable and convertible notes payable incur interest at rates between 10% and 15%, per annum. The accrued interest in most cases is currently in technical default due to the notes being past their maturity date. Accrued Residuals The Company pays commissions to independent agents that refer merchant accounts. The amounts payable to these independent agents is based upon a percentage of the amounts processed on a monthly basis by these merchant accounts. Accrued Merchant Equity Liability The Company provided all merchants the opportunity to earn shares of the Company’s common stock through their Merchant Equity Program (the “Program”). Under the Program, the merchant earned 1% of their total Visa/MasterCard volume processed during the first year of their contract. For example, if a merchant processes $1 million in credit card charges, the merchant will receive 10,000 shares of the Company’s common stock. The merchant must process with the Company for a period of three years for the shares to vest. All merchants became fully vested when the Company ended the program effective December 31, 2015. For merchants in which the shares of common stock are not known as they are within the one-year period, the Company estimates on a quarterly basis as to the estimated amount of shares based upon the expected amount to be processed by the merchant on an annual basis. At the end of the first year, when the number of shares issuable is known, the Company makes an adjustment to the value of the shares, if needed. The Company accounts for the value of the shares under the program as a sales incentive and thus the amounts in connection with the Program are recorded as a reduction to revenues. As of June 30, 2020, the Company has an obligation to issue approximately 776,000 shares of the Company’s common stock issuable under the Program. During the year ended December 31, 2019, the Company issued 37,193 shares of common stock relieving $14,877 in liability under the program. |
NOTES PAYABLE AND CONVERTIBLE N
NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE | NOTE 6 – NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE The Company funds operations through cash flows generated from operations and the issuance of loans and notes payable. The following is a summary of loans and notes payable outstanding as of June 30, 2020 and December 31, 2019. Related parties noted below are either members of management, board of directors, significant shareholders or individuals in which have significant influence over the Company. Loans Payable – Related Parties The six months ended June 30, 2020 and 2019, the Company obtained (paid) $(30,800) and $95,000 loans payable from related parties, net. As of June 30, 2020, and December 31, 2019, the balance of the loans payable was $62,601 and $93,401, respectively. The loans payable are due on demand, unsecured and non-interest bearing as there are no formal agreements executed. Subordinated Notes Payable In 2016, the Company issued $350,000 in subordinated notes payable to third parties. The subordinated notes payable were due in 30 to 180 days and incurred interest at 10% per annum. As of June 30, 2020, and December 31, 2019, accrued interest related to the subordinated notes was $136,044 and $118,545, respectively. The Company is currently in default of the subordinated note agreements. Convertible Notes Payable In 2017, the Company received $222,000 in convertible notes payable from related parties. The convertible notes payable are unsecured, were due in 180 days, incur interest at 10% per annum and are convertible at $0.10 per share. As of June 30, 2020, and December 31, 2019, accrued interest related to the convertible notes was $65,088 and $53,988, respectively. On the date of the agreement, Management calculated the beneficial conversion feature in connection with the convertible notes payable and recorded a discount of $222,000. The Company amortized the discount over the term of the convertible notes payable of 180 days. The Company is currently in default on the convertible notes payable. In 2015, the Company issued $50,000 in convertible notes payable. The convertible notes payable are unsecured, were due in nine months, incur interest at 10% per annum and are convertible at $1.00 per share. As of June 30, 2020 and December 31, 2019, the accrued interest related to the convertible notes was $23,334 and $20,833, respectively. The Company is currently in default on the convertible note payable. In 2014, the Company issued $400,000 in convertible notes payable. The convertible notes payable are unsecured, due in periods ranging up to one year, incurring interest between 10% to 12% per annum and are convertible at prices ranging from $0.33 to $1.00 per share. In addition, the Company issued 400,000 shares of common stock in connection with the convertible notes payable. The Company had the obligation to repurchase the 400,000 shares of common stock at $1.00 per share within one year of the note issuance date. As of June 30, 2020 and December 31, 2019, the Company held the obligation to repurchase the shares for $400,000. As of June 30, 2020 and December 31, 2019, the accrued interest related to the convertible notes was $206,583 and $186,083, respectively. The Company is currently in default of the note agreements. In 2008 and 2009, the Company issued $320,000 in convertible notes payable, of which $150,000 was from related parties. The convertible notes payable are currently due on demand, incur interest at 15% per annum, and convertible at $0.60 per share. As of June 30, 2020 and December 31, 2019, accrued interest related to the convertible notes was $540,013 and $516,013 of which $254,625 and $243,375, respectively, was due to related parties. The Company is currently in default of the notes payable agreements. Notes Payable In 2016, the Company issued $143,000 in notes payable to third parties. The notes payable were due in ninety days or less. During 2019, the Company paid $36,000 in notes payable. The Company is currently in default of the note agreements. In 2007 and 2008, the Company entered into notes payable with a related party for $46,000 in proceeds. The notes payable were due on demand and incurred interest at 12% per annum. These were combined into a single note agreement in 2014. As of June 30, 2020 and December 31, 2019, the balance on the note payable was $88,136 and accrued interest related to the note payable was $54,571 and $49,243, respectively. The Company is currently in default of the note payable agreement. In 2007, the Company entered into note payable with a third party for $128,000 in proceeds. Under the terms of the agreement the holder received a flat interest amount of $37,496. The Company is currently in default of the note payable agreement and the entire amount of $37,496 has been included within accrued interest. Since the note payable did not incur interest, the Company imputed interest at $6,400 and $6,400, respectively, which represented an interest rate of 10% per annum during the six months ended June 30, 2020 and 2019. In 2008, the Company entered into a note payable with a third party for $10,000 in total proceeds. The note payable is currently in default and has a flat interest amount due of $21,000. As of June 30, 2020 and December 31, 2019, the Company was in default of the note agreement and the entire amount of $21,000 has been included within accrued interest. Since the notes payable do not incur interest, the Company imputed interest at $500 and $500, respectively, which represented an interest rate of 10% per annum during the six months ended June 30, 2020 and 2019. In 2008, the Company entered into notes payable with a third party for $26,000 in total proceeds. The notes payable have a flat interest amount due of $80,000. During 2015, the Company received another $50,000 from the third party. During 2017, the Company entered into an agreement whereby they would repay the principal and accrued interest in the amount of $145,000 by April 4, 2018 and issue the holders 800,000 shares of common stock. The Company recorded the fair market value of the common stock issued at $336,000 based on the date of issuance as interest expense. Other than the issuance of shares of common stock, the Company did not perform under the agreement. The Company is currently in default of the note agreement. In 2007, the Company entered into note payable with a third party for $221,800 in proceeds. The note payable is currently in default and incurs interest at 10% per annum. On September 30, 2013, the holder received an arbitration settlement for the principal and accrued interest. As of June 30, 2020 and December 31, 2019, the Company was in default of the arbitration settlement. As of June 30, 2020 and December 31, 2019, accrued interest related to the note payable was $450,002 and $429,861, respectively. In 2007, the Company entered into note payable with a significant shareholder for $58,600 in proceeds. The note payable is currently due on demand and incurs interest at 10% per annum. As of June 30, 2020 and December 31, 2019, accrued interest related to the note payable was $73,442 and $70,513, respectively. The Company is currently in default of the note agreement. Two significant shareholders funded the Company’s operations through notes payable in primarily 2009 and 2010 and continue to support operations on a limited basis. The notes payable incur interest at 10% per annum and were due on December 31, 2016. The Company is currently in default of the note agreements. As of June 30, 2020 and December 31, 2019, the aggregate balance of the notes payable was $620,355 and accrued interest was $606,748 and $575,480, respectively. |
RIGHT OF USE ASSET
RIGHT OF USE ASSET | 6 Months Ended |
Jun. 30, 2020 | |
Notes to Financial Statements | |
RIGHT OF USE ASSET | NOTE 7 – RIGHT OF USE ASSET Lease Agreement In January 2020, the Company entered into a lease agreement commencing February 8, 2020 for its current facility which expires in 2025. The term of the lease is for five years. The Company also entered into a six month option to purchase its current facility under terms and conditions of the lease. At inception of the lease, the Company recorded a right of use asset and liability. The Company used an effective borrowing rate of 12% within the calculation. The following are the expected lease payments as of June 30, 2020, including the total amount of imputed interest related: Years ended December 31, : 2020 $ 38,390 2021 82,561 2022 85,039 2023 87,590 2024 90,217 2025 7,536 $ 391,333 Less: Imputed interest (93,676 ) Total $ 297,657 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 8 - COMMITMENTS AND CONTIGENCIES Litigation Former Shareholder Lawsuits In November 2017, two shareholders of AppTech, one who previously filed the 2014 lawsuit in the State of Washington, which was dismissed, filed another lawsuit against the Company in the State of California, claiming the same accusations as the previously filed lawsuit which was dismissed. The lawsuit has been transferred to the United States District Court for the Southern District of California. The Company filed the defendants answer, affirmative defenses and counter claims. Management believes that the Plaintiff misrepresented and misled AppTech during the merger. The court has encouraged the parties to settle. Even though the Company believes the lawsuit is without merit and will vigorously defend, the Company has made several offers to settle. On December 19, 2019, the Company entered into a settlement and release agreement. The Company has recorded the liability as of December 31, 2019 for the total obligation of $240,000 to be paid out over three years beginning February 15, 2020. The 2019 impact is recorded in general and administrative expenses. A stipulation for dismissal of action has been filed with the courts. As of June 30, 2020, we are in default on the payment schedule and have requested a delay in the payment schedule due to the pandemic from the coronavirus outbreak. Patent Acquisition Lawsuit In September 2018, a complaint was filed in San Diego superior court for a breach of contract arising from a written agreement for the purchase of a judgment to which AppTech was not a party. The purchase of the judgment was part of the transaction to acquire the patents. AppTech substantially performed under the agreement but the second agreement to extend the final payment was executed under duress. On October 26, 2018, the Company filed an answer that denied each and every purported allegation and cause of action and further denied that they caused any damage or loss. On December 3, 2019, the Company entered into a conditional settlement providing the terms of the conditional settlement have been completed by October 1, 2020. The conditional settlement amount of $150,000 is paid in monthly installments of $15,000. The settlement installments paid for the six months ended June 30, 2020 was $35,000. On June 19, 2020, resulting from the impact of Covid19, we entered into a modified settlement payment schedule. We are current on the following modified payment schedule: August 1, 2020 $ 5,000 September 1, 2020 17,250 October 1, 2020 17,250 November 1, 2020 20,000 December 1, 2020 20,000 January 2, 2021 20,500 Total $ 100,000 Employee versus Contractor Classification The Company compensates various individuals as consultants. Annually, these consultants are issued Form 1099s for amounts paid to them. In addition, these consultants do not have arrangements in which specify compensation payable to them. The Company risks potential tax and legal actions if these consultants are deemed to be employees by governmental agencies. |
STOCKHOLDERS' DEFICIT
STOCKHOLDERS' DEFICIT | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
STOCKHOLDERS’' DEFICIT | NOTE 9 – STOCKHOLDERS’ DEFICIT Common Stock During the six months ended June 30, 2020 and 2019, the Company issued 2,524,000 and 324,500, respectively, shares of common stock to several consultants in connection with business development and professional services. The Company valued the common stock issuances at $1,290,739 and $43,134, respectively, based upon the closing market price of the Company’s common stock on the date in which the performance was complete or issued based upon the vesting schedule and the closing market price of the Company’s common stock on the date of the agreement. The amounts were expensed to general and administrative expenses on the accompanying consolidated statements of operations. Common Stock Repurchase Option On January 23, 2020, the Company entered into a common stock repurchase option agreement to purchase or assign 300,000 shares of common stock from a third party at $0.05 per share. The Company assigned its rights to the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase options were exercised on January 26, 2020 for which the Company received $98,750 in proceeds which was recorded as additional paid-in capital. On February 26, 2020, the Company entered into a common stock repurchase option agreement to purchase or assign 266,115 shares of common stock from a third party at $0.05 per share. The Company assigned its rights to the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option was exercised on February 27, 2020 for which the Company received $25,281 in proceeds which was recorded as additional paid-in capital. On March 18, 2020, the Company entered into a common stock repurchase option agreement to purchase or assign 250,000 shares of common stock from a third party at $0.05 per share. The Company assigned its rights to the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option was exercised on March 19, 2020 for which the Company received $62,500 in proceeds which was recorded as additional paid-in capital. On April 24, 2020, the Company entered into a common stock repurchase option agreement to purchase or assign 55,000 shares of common stock from a third party at $0.05 per share. The Company assigned its rights to the repurchase option agreement to a third party in exchange for compensation. The common stock repurchase option was exercised on April 27, 2020 for which the Company received $19,250 in proceeds which was recorded as additional paid-in capital. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 10 – SUBSEQUENT EVENTS Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855 and has determined that no material subsequent events exist other than those disclosed below. On July 6, 2020, the Company received $68,300 in an economic injury disaster loan from the U.S Small Business Administration. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Also see Note 3. |
Principles of Consolidation | Principles of Consolidation The Company’s accounts include financials of the Company and its wholly owned subsidiaries, Transcendent One, Inc. and TransTech One, LLC. All significant inter-company transactions have been eliminated in consolidation. The operations of Transcendent One, Inc. and TransTech One, LLC are insignificant and the Company dissolved the subsidiaries on October 8, 2019. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated liabilities related to various vendors in which communications have ceased, contingent liabilities, and realization of tax deferred tax assets. Actual results could differ from those estimates. |
Concentration of Credit Risk | Concentration of Credit Risk Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits of $250,000 per institution that pays Federal Deposit Insurance Corporation (“FDIC”) insurance premiums. The Company has never experienced any losses related to these balances. The accounts receivable from merchant services are paid by the financial institutions on a monthly basis. The Company currently uses three financial institutions to service their merchants for which represented 100% of accounts receivable as of June 30, 2020 and 2019. The loss of one of these financial institutions would not have a significant impact on the Company’s operations as there are additional financial institutions available to the Company. For the six months ended June 30, 2020 and 2019, the one merchant (customer) represented approximately 41% and 40% of the total revenues, respectively. The loss of this customer would have significant impact on the Company’s operations. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company classifies its highly liquid investments with maturities of three months or less at the date of purchase as cash equivalents. Management determines the appropriate classification of its investments at the time of purchase and reevaluates the designations of each investment as of the balance sheet date for each reporting period. The Company classifies its investments as either short-term or long-term based on each instrument’s underlying contractual maturity date. Investments with maturities of less than 12 months are classified as short-term and those with maturities greater than 12 months are classified as long-term. The cost of investments sold is based upon the specific identification method. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable is recorded net of an allowance for doubtful accounts, if needed. The Company considers any changes to the financial condition of its financial institutions used and any other external market factors that could impact the collectability of its receivables in the determination of its allowance for doubtful accounts. The Company does not expect to have write-offs or adjustments to accounts receivable which could have a material adverse effect on its consolidated financial position, results of operations or cash flows as the portion which is deemed uncollectible is already taken into account when the revenue is recognized. |
Revenue Recognition | Revenue Recognition The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, codified as Accounting Standards Codification (“ASC) 606 Revenue from Contracts with Customers, which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company adopted ASC 606 effective January 1, 2019 using modified retrospective basis and the cumulative effect was immaterial to the consolidated financial statements. The Company provides merchant processing solutions for credit cards and electronic payments. In all cases, the Company acts as an agent between the merchant which generates the credit card and electronic payments, and the bank which processes such payments. The Company’s revenue is generated on services priced as a percentage of transaction value or a specified fee transaction, depending on the card or transaction type. Revenue is recorded as services are performed which is typically when the bank processes the merchant’s credit card and electronic payments. The Company provides various Cloud services to business clients. Revenues generated from the services as agreed upon in a Cloud Service Agreement. The revenue is recorded as the services are performed and billed in advance on a monthly basis. Revenues from these services represent less than 5% of the Company’s total revenues. Consideration paid to customers, such as amounts earned under our customer equity incentive program, are recorded as a reduction to revenues. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments ASC 820, Fair Value Measurements and Disclosures defines fair value 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. ASC 820 also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: The fair value hierarchy prioritizes the inputs used in valuation techniques into three levels as follows: Level 1 Observable inputs – unadjusted quoted prices in active markets for identical assets and liabilities; Level 2 Observable inputs – other than the quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data; and Level 3 Unobservable inputs – includes amounts derived from valuation models where one or more significant inputs are unobservable. The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, vendor deposits, accounts payable, accrued expenses, etc. The carrying value of these assets and liabilities is representative of their fair market value, due to the short maturity of these instruments. |
Research and Development | Research and Development In accordance with ASC 730, Research and Development (“R&D”) costs are expensed when incurred. R&D costs include costs of acquiring patents and other unproven technologies, contractor fees and other costs associated with the development of the SMS short code texting platform, contract and other outside services. Total R&D costs for the six months ended June 30, 2020 and 2019 were $46,251 and $29,139, respectively. |
Property and Equipment | Property and Equipment Property and equipment is recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of property and equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful life of five (5) years. Upon sale or retirement of equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset or asset group to estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset or asset group exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset or asset group exceeds the estimated fair value of the asset or asset group. Long-lived assets to be disposed of by sale are reported at the lower of their carrying amounts or their estimated fair values less costs to sell and are not depreciated. As of June 30, 2020 and December 31, 2019, there were no asset impairments. |
Lease Commitment | Lease Commitment The Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified fixed asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. The Company has lease agreements which include lease and non-lease components, which the Company has elected to account for as a single lease component for all classes of underlying assets. Lease expense for variable lease components are recognized when the obligation is probable. Operating lease right of use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease payments are recognized as lease expense on a straight-line basis over the lease term. The Company primarily leases buildings (real estate) which are classified as operating leases. ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As an implicit interest rate is not readily determinable in the Company’s leases, the incremental borrowing rate is used based on the information available at commencement date in determining the present value of lease payments. The lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. Options for lease renewals have been excluded from the lease term (and lease liability) for the majority of the Company’s leases as the reasonably certain threshold is not met. Lease payments included in the measurement of the lease liability are comprised of fixed payments, variable payments that depend on index or rate, and amounts probable to be payable under the exercise of the Company option to purchase the underlying asset if reasonably certain. Variable lease payments not dependent on a rate or index associated with the Company’s leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed as probable. Variable lease payments are presented as operating expenses in the Company’s statement of operations in the same line as expense arising from fixed lease payments. As of June 30, 2020, management determined that there were no variable lease costs. |
Income Taxes | Income Taxes The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statement of operations in the period that includes the enactment date. The Company’s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known. As of June 30, 2020 and 2019, the Company does not believe any provisions are required in connection with uncertain tax positions as there are none. |
Per Share Information | Per Share Information Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. As of June 30, 2020, and 2019, the Company had potential dilutive securities related to options, warrants, Series A preferred stock and convertible notes payable. These dilutive securities were not included within the calculation of dilutive net loss per common share as the effects would have been anti-dilutive. |
Convertible Debt | Convertible Debt Convertible debt is accounted for under the guidelines established by ASC 470-20 Conversion and Other Options. ASC 470-20 governs the calculation of an embedded beneficial conversion, which is treated as an additional discount to the instruments where derivative accounting does not apply. The amount of the value of additional stock and other consideration in addition to the beneficial conversion feature may reduce the carrying value of the instrument to zero, but no further. The discounts are accreted over the term of the debt using the straight-line method due to the short terms of the notes. The Company accounts for modifications of its embedded beneficial conversions, in accordance with ASC 470-50 Modifications and Extinguishments. ASC 470-50 requires the modification of a convertible debt instrument that changes the fair value of an embedded conversion feature and the subsequent recognition of interest expense or the associated debt instrument when the modification does not result in a debt extinguishment. |
Stock Based Compensation | Stock Based Compensation The Company recognizes as compensation expense all share-based payment awards made to employees, directors, and consultants including grants of stock options and warrants, based on estimated fair values. Fair value is generally determined based on the closing price of the Company’s common stock on the date of grant and is recognized over the service period. The Company has several consulting agreements that have share based payment awards based on performance. These agreements typically require the Company to issue common stock to the consultants on a monthly basis. The Company records the fair market value of the common stock issuable at each month end when the performance is complete based upon the closing market price of the Company’s common stock. |
New Accounting Pronouncements | New Accounting Pronouncements The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company. |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Accrued Liabilitie | Accrued liabilities as of June 30, 2020 and December 31, 2019 consist of the following: June 30, 2020 December 31, 2019 Accrued interest – related parties $ 981,032 $ 943,356 Accrued interest – third parties 1,313,289 1,215,699 Accrued residuals 44,838 39,064 Accrued merchant equity 91,023 91,023 Other 44,052 45,338 Total accrued liabilities $ 2,474,234 $ 2,334,480 |
RIGHT OF USE ASSET (Tables)
RIGHT OF USE ASSET (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Notes to Financial Statements | |
Schedule of Future Minimum Rental Payments for Operating Leases |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of payment of lawsuit | We are current on the following modified payment schedule: August 1, 2020 $ 5,000 September 1, 2020 17,250 October 1, 2020 17,250 November 1, 2020 20,000 December 1, 2020 20,000 January 2, 2021 20,500 Total $ 100,000 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Federally insured limits | $ 250,000 | $ 250,000 | |||
Research and Development | 34,250 | $ 14,978 | 46,251 | $ 29,139 | |
Asset impairments | 0 | $ 0 | |||
Uncertain tax positions | $ 0 | $ 0 | $ 0 | ||
Potential dilutive securities | 0 | 0 | |||
Accounts Receivable [Member] | |||||
Concentration of Credit Risk | 100.00% | 100.00% | |||
Revenue [Member] | One Merchant [Member] | |||||
Concentration of Credit Risk | 41.00% | 40.00% |
GOING CONCERN (Details Narrativ
GOING CONCERN (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Net loss | $ (326,424) | $ (290,094) | $ (1,790,474) | $ (528,335) | |
Net cash used in operating activities | (213,011) | $ (395,665) | |||
Negative working capital | (7,628,944) | (7,628,944) | |||
Accumulated deficit | $ (42,550,887) | (42,550,887) | $ (40,760,413) | ||
Proceeds from sale of repurchase option | $ 205,781 |
PATENTS (Details Narrative)
PATENTS (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | ||
Jun. 22, 2017 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Accounts payable related to assumption of liabilities | $ 380,000 | $ 415,000 | ||
Depreciation expense | $ 65 | $ 129 | ||
GlobalTel Media | ||||
Stock Issued During Period, Shares, Purchase of Assets | 5,000,000 | |||
Stock Issued During Period, Value, Purchase of Assets | $ 1,000,000 | |||
Business aqusition cost | 1,600,000 | |||
Revenue from related party | $ 26,600,000 |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Other Liabilities Disclosure [Abstract] | ||
Accrued interest - related parties | $ 981,032 | $ 943,356 |
Accrued interest - third parties | 1,313,289 | 1,215,699 |
Accrued residuals | 44,838 | 39,064 |
Accrued merchant equity | 91,023 | 91,023 |
Other | 44,052 | 45,338 |
Total accrued liabilities | $ 2,474,234 | $ 2,334,480 |
ACCRUED LIABILITIES (Details Na
ACCRUED LIABILITIES (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Common stock issued for relieving in liability (In shares) | 37,193 | |
Common stock issued for relieving in liability | $ 14,877 | |
Common stock issuable | 776,000 | |
Minimum [Member] | ||
Accrued Interest rate | 10.00% | |
Maximum [Member] | ||
Accrued Interest rate | 15.00% |
NOTES PAYABLE AND CONVERTIBLE_2
NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | 24 Months Ended | |||||||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2008 | Dec. 31, 2007 | Dec. 31, 2019 | Dec. 31, 2010 | Dec. 31, 2008 | |
Proceeds from loans payable - related parties | $ 750 | $ 120,000 | |||||||||||
Loans payable related parties | $ 62,601 | 62,601 | $ 93,401 | ||||||||||
Accrued interest | 981,032 | 981,032 | 943,356 | ||||||||||
Repayments of Notes Payable | 0 | 36,000 | |||||||||||
Note payable | 1,104,081 | 1,104,081 | 1,104,081 | ||||||||||
Interest expense | 71,083 | $ 70,597 | 142,167 | $ 146,635 | |||||||||
Subordinated Notes Payable | |||||||||||||
Debt Instrument Carrying Amount | $ 350,000 | ||||||||||||
Interest rate | 10.00% | ||||||||||||
Accrued interest | 136,044 | 136,044 | 118,545 | ||||||||||
Convertible Notes Payable | |||||||||||||
Debt Instrument Carrying Amount | $ 222,000 | ||||||||||||
Interest rate | 10.00% | ||||||||||||
Accrued interest | 65,088 | 65,088 | 53,988 | ||||||||||
Conversion Price | $ 0.10 | ||||||||||||
Discount | 222,000 | 222,000 | |||||||||||
Convertible Notes Payable | |||||||||||||
Debt Instrument Carrying Amount | $ 50,000 | ||||||||||||
Interest rate | 10.00% | ||||||||||||
Accrued interest | 23,334 | 23,334 | 20,833 | ||||||||||
Conversion Price | $ 1 | ||||||||||||
Convertible Notes Payable | |||||||||||||
Debt Instrument Carrying Amount | $ 400,000 | ||||||||||||
Accrued interest | 206,583 | $ 206,583 | $ 186,083 | ||||||||||
Common stock repurchased (In shares) | 400,000 | 400,000 | |||||||||||
Common stock repurchased | $ 400,000 | $ 400,000 | |||||||||||
Convertible Notes Payable | Minimum [Member] | |||||||||||||
Interest rate | 10.00% | ||||||||||||
Conversion Price | $ 0.33 | ||||||||||||
Convertible Notes Payable | Maximum [Member] | |||||||||||||
Interest rate | 12.00% | ||||||||||||
Conversion Price | $ 1 | ||||||||||||
Convertible Notes Payable | |||||||||||||
Debt Instrument Carrying Amount | 320,000 | 320,000 | |||||||||||
Interest rate | 15.00% | ||||||||||||
Accrued interest | $ 540,013 | $ 540,013 | $ 516,013 | ||||||||||
Conversion Price | $ 0.60 | $ 0.60 | |||||||||||
Convertible Notes Payable | Related Party | |||||||||||||
Debt Instrument Carrying Amount | $ 150,000 | $ 150,000 | |||||||||||
Accrued interest | 254,625 | 254,625 | 243,375 | ||||||||||
Notes Payable | |||||||||||||
Proceeds from note payable | $ 143,000 | ||||||||||||
Repayments of Notes Payable | 36,000 | ||||||||||||
Notes Payable | |||||||||||||
Interest rate | 12.00% | ||||||||||||
Accrued interest | 54,571 | 54,571 | 49,243 | ||||||||||
Proceeds from note payable | $ 46,000 | ||||||||||||
Note payable | 88,136 | 88,136 | 88,136 | ||||||||||
Notes Payable | |||||||||||||
Interest rate | 10.00% | ||||||||||||
Accrued interest | $ 37,496 | ||||||||||||
Proceeds from note payable | 128,000 | ||||||||||||
Interest received | $ 37,496 | ||||||||||||
Imputed interest | 6,400 | 6,400 | 6,400 | ||||||||||
Notes Payable | |||||||||||||
Interest rate | 10.00% | ||||||||||||
Accrued interest | 21,000 | 21,000 | 21,000 | ||||||||||
Proceeds from note payable | $ 10,000 | ||||||||||||
Interest received | 21,000 | 21,000 | |||||||||||
Imputed interest | 500 | 500 | 500 | ||||||||||
Notes Payable | |||||||||||||
Proceeds from note payable | 26,000 | ||||||||||||
Repayments of Notes Payable | $ 145,000 | ||||||||||||
Interest received | $ 50,000 | $ 80,000 | $ 80,000 | ||||||||||
Interest expense | $ 336,000 | ||||||||||||
Notes Payable | |||||||||||||
Interest rate | 10.00% | ||||||||||||
Accrued interest | 450,002 | 450,002 | 429,861 | ||||||||||
Proceeds from note payable | $ 221,800 | ||||||||||||
Notes Payable | |||||||||||||
Interest rate | 10.00% | ||||||||||||
Accrued interest | 73,442 | 73,442 | 70,513 | ||||||||||
Proceeds from note payable | $ 58,600 | ||||||||||||
Notes Payable | |||||||||||||
Interest rate | 10.00% | ||||||||||||
Accrued interest | 606,748 | 606,748 | 575,480 | ||||||||||
Note payable | $ 620,355 | $ 620,355 | $ 620,355 |
RIGHT OF USE ASSET (Details)
RIGHT OF USE ASSET (Details) | Mar. 10, 2020USD ($) |
Notes to Financial Statements | |
2020 | $ 38,390 |
2021 | 82,561 |
2022 | 85,039 |
2023 | 87,590 |
2024 | 90,217 |
2025 | 7,536 |
Operating Leases, Future Minimum Payments Due | 391,333 |
Less: Imputed interest | (93,676) |
Total | $ 297,657 |
RIGHT OF USE ASSET (Details Nar
RIGHT OF USE ASSET (Details Narrative) | Mar. 10, 2020 |
Notes to Financial Statements | |
Borrowing rate | 12.00% |
COMMITMENTS AND CONTIGENCIES (D
COMMITMENTS AND CONTIGENCIES (Details) - USD ($) | Jan. 02, 2021 | Dec. 01, 2020 | Nov. 01, 2020 | Oct. 01, 2020 | Sep. 01, 2020 | Aug. 01, 2020 | Jun. 30, 2020 |
Commitments and Contingencies Disclosure [Abstract] | |||||||
Lawsuit payment | $ 20,500 | $ 20,000 | $ 20,000 | $ 17,250 | $ 17,250 | $ 5,000 | $ 100,000 |
COMMITMENTS AND CONTIGENCIES _2
COMMITMENTS AND CONTIGENCIES (Details Narrative) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Patent Acquisition Lawsuit settlement expenses | $ 35,000 |
Former Shareholders | |
Liability obligation | $ 240,000 |
STOCKHOLDERS_ DEFICIT (Details
STOCKHOLDERS’ DEFICIT (Details Narrative) - USD ($) | Jun. 03, 2019 | May 01, 2019 | Apr. 24, 2020 | Mar. 18, 2020 | Feb. 26, 2020 | Jan. 23, 2020 | Jun. 30, 2020 | Jun. 30, 2019 |
Common stock issued for services | $ 1,290,739 | $ 43,134 | ||||||
Common stock issued for services (in shares) | 2,524,000 | 324,500 | ||||||
Third party | ||||||||
Common Stock Repurchase Option (in shares) | 2,000,000 | 500,000 | 55,000 | 250,000 | 266,115 | 300,000 | ||
Share Price | $ 0.05 | $ 0.10 | $ 0.05 | $ 0.05 | $ 0.05 | $ 0.05 | ||
Common Stock Repurchase Option | $ 500,000 | $ 37,500 | ||||||
Additional paid-in capital | $ 112,500 | $ 123,750 | $ 19,250 | $ 62,500 | $ 25,281 | $ 98,750 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) | Jul. 06, 2020USD ($) |
Subsequent Event [Member] | |
Proceeds from loans | $ 68,300 |