Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 06, 2017 | Jun. 30, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | QUOTEMEDIA INC | ||
Entity Central Index Key | 1,101,433 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | 90,477,798 | ||
Entity Public Float | $ 7,403,687 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 271,700 | $ 251,834 |
Accounts receivable, net | 433,889 | 419,098 |
Prepaid expenses | 74,949 | 82,285 |
Other current assets | 103,345 | 47,287 |
Total current assets | 883,883 | 800,504 |
Deposits | 15,555 | 18,971 |
Property and equipment, net | 1,372,940 | 1,403,765 |
Goodwill | 110,000 | 110,000 |
Intangible assets | 70,594 | 76,531 |
Total assets | 2,452,972 | 2,409,771 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 1,499,827 | 1,309,746 |
Deferred revenue | 549,233 | 607,024 |
Current portion of amounts due to related parties | 44,212 | |
Total current liabilities | 2,093,272 | 1,916,770 |
Long-term portion of amounts due to related parties | 10,903,439 | 9,436,923 |
Commitments (Note 9) | ||
Stockholders' deficit: | ||
Preferred stock, nondesignated, 10,000,000 shares authorized, none issued | ||
Common stock, $0.001 par value, 150,000,000 shares authorized, 90,477,798 and 90,477,798 shares issued and outstanding | 90,479 | 90,479 |
Additional paid-in capital | 9,382,824 | 9,301,338 |
Accumulated deficit | (20,017,042) | (18,335,739) |
Total stockholders' deficit | (10,543,739) | (8,943,922) |
Total liabilities and stockholders' deficit | $ 2,452,972 | $ 2,409,771 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Stockholders' equity: | ||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 90,477,798 | 90,477,798 |
Common stock, shares outstanding | 90,477,798 | 90,477,798 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Consolidated Statements Of Operations | ||
LICENSING FEES | $ 8,870,155 | $ 8,658,667 |
COST OF REVENUE | 5,073,340 | 5,067,177 |
GROSS PROFIT | 3,796,815 | 3,591,490 |
OPERATING EXPENSES | ||
Sales and marketing | 1,507,706 | 1,696,428 |
General and administrative | 1,966,713 | 1,876,123 |
Software development | 935,786 | 1,026,106 |
Total operating expenses | 4,410,205 | 4,598,657 |
OPERATING LOSS | (613,390) | (1,007,167) |
Other income and (expense) | ||
Foreign exchange gain (loss) | (50,516) | 234,651 |
Interest expense - related party | (1,014,379) | (881,137) |
Total other income and (expense) | (1,064,895) | (646,486) |
LOSS BEFORE INCOME TAXES | (1,678,285) | (1,653,653) |
Income tax expense | (3,018) | (3,129) |
NET LOSS | $ (1,681,303) | $ (1,656,782) |
LOSS PER SHARE | ||
Basic and diluted loss per share | $ (0.02) | $ (0.02) |
WEIGHTED AVERAGE SHARES OUTSTANDING | ||
Basic and diluted | 90,477,798 | 90,465,357 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance, Shares at Dec. 31, 2014 | 90,444,162 | |||
Beginning Balance, Amount at Dec. 31, 2014 | $ 90,445 | $ 8,998,192 | $ (16,678,957) | $ (7,590,320) |
Stock-based compensation | 299,480 | 299,480 | ||
Shares issued, Shares | 33,636 | |||
Shares issued, Amount | $ 34 | 3,666 | 3,700 | |
Net loss | (1,656,782) | (1,656,782) | ||
Ending Balance, Shares at Dec. 31, 2015 | 90,477,798 | |||
Ending Balance, Amount at Dec. 31, 2015 | $ 90,479 | 9,301,338 | (18,335,739) | (8,943,922) |
Stock-based compensation | 81,486 | 81,486 | ||
Net loss | (1,681,303) | (1,681,303) | ||
Ending Balance, Shares at Dec. 31, 2016 | 90,477,798 | |||
Ending Balance, Amount at Dec. 31, 2016 | $ 90,479 | $ 9,382,824 | $ (20,017,042) | $ (10,543,739) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
OPERATING ACTIVITIES | ||
Net loss | $ (1,681,303) | $ (1,656,782) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 861,216 | 882,236 |
Bad debt expense | 93,741 | 108,306 |
Issuance of capital stock as compensation | 3,700 | |
Stock-based compensation expense | 81,486 | 299,480 |
Changes in assets and liabilities: | ||
Accounts receivable | (108,532) | (121,677) |
Prepaid expenses | 7,336 | (33,300) |
Other current assets | (56,058) | (6,347) |
Deposits | 3,416 | 302 |
Accounts payable and amounts due to related parties | 1,700,809 | 1,098,850 |
Deferred revenue | (57,791) | 47,810 |
Net cash provided by operating activities | 844,320 | 622,578 |
INVESTING ACTIVITIES | ||
Purchase of fixed assets | (134,403) | (116,159) |
Capitalized application software | (690,051) | (677,638) |
Net cash used in investing activities | (824,454) | (793,797) |
Net decrease in cash | 19,866 | (171,219) |
Cash and equivalents, beginning of period | 251,834 | 423,053 |
Cash and equivalents, end of period | $ 271,700 | $ 251,834 |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Note 1. SIGNIFICANT ACCOUNTING POLICIES | a) Nature of operations We are a software developer and distributor of financial market data and related services to a global marketplace. We specialize in the collection, aggregation, and delivery of both delayed and real-time financial data content via the Internet. We develop and license software components that deliver dynamic content to banks, brokerage firms, financial institutions, mutual fund companies, online information and financial portals, media outlets, public companies, and corporate intranets. b) Basis of consolidation The consolidated financial statements include the operations of QuoteMedia, Ltd., a wholly owned subsidiary of QuoteMedia, Inc. All intercompany transactions and balances have been eliminated. c) Foreign currency translation and transactions The U.S. dollar is the functional currency of all our company's operations. Foreign currency asset and liability amounts are remeasured into U.S. dollars at end-of-period exchange rates, except for equipment and intangible assets, which are remeasured at historical rates. Foreign currency income and expenses are remeasured at average exchange rates in effect during the year, except for expenses related to balance sheet amounts remeasured at historical exchange rates. Because the U.S. dollar is the functional currency, exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in income in the period in which they occur. d) Cash and cash equivalents Cash equivalents include money market investments that have an original maturity of three months or less and are redeemable on demand. We maintain our accounts primarily at one financial institution. At times throughout the year, our cash and cash equivalents balances may exceed amounts insured by the Federal Deposit Insurance Corporation. e) Allowance for doubtful accounts We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of the Companys customers to make required payments. The Company determines the allowance by reviewing the age of the receivables and assessing the anticipated ability of customers to pay. No collateral is required for any of the receivables and the Company does not usually apply financing charges to outstanding accounts receivable balances. If the financial condition of our customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. The allowance for doubtful accounts was $120,000 and $90,000 at December 31, 2016 and 2015 respectively. Bad debt expense for the years ended December 31, 2016 and 2015 were $93,741 and $108,306 respectively. f) Property and equipment Fixed assets are recorded at cost less accumulated depreciation. Furniture and equipment are depreciated using the straight-line method over their estimated useful lives of five years. Leasehold improvements are amortized using the straight-line method over the terms of the respective leases or useful lives, whichever is shorter. Retirements, sales and disposals of assets are recorded by removing the cost and accumulated depreciation from the asset and accumulated depreciation accounts with the resulting gain or loss reflected in income. Capitalized software costs include costs incurred in connection with the internal development of software. These costs relate to software used by subscribers to access, manage and analyze information in the Companys databases. Capitalized costs associated with internally developed software are amortized over three years which is their estimated economic life. Depreciable and amortizable assets are evaluated for impairment upon a significant change in the operating environment. In these circumstances, if an evaluation of the undiscounted cash flows indicates impairment, the asset is written down to its estimated fair value, which is based on discounted future cash flows. Useful lives are periodically evaluated to determine whether events or circumstances have occurred which indicate the need for revision. There were no impairments recorded for the years ended December 31, 2016 and 2015. g) Earnings per share Basic earnings per share are computed by dividing income by the weighted average number of shares outstanding during the year. Diluted earnings per share takes into account shares outstanding (computed under basic earnings per share) and potentially dilutive common shares (such as stock options outstanding). The effect of a stock split or reverse split is applied retroactively to preceding periods. For the years ended 2016 and 2015 all common stock equivalents were anti-dilutive. h) Stock-based compensation FASB ASC 718, Stock Compensation Total estimated stock-based compensation expense, related to all of the Companys stock-based awards, recognized for the years ended December 31, 2016 and 2015 was comprised as follows: 2016 2015 Sales and marketing $ 21,504 $ 280,508 General and administrative 59,982 18,912 Development - 60 Total stock-based compensation $ 81,486 $ 299,480 At December 31, 2016 there was $137,968 of unrecognized compensation cost related to nonvested share-based payments which is expected to be recognized over a weighted-average period of 2.39 years. We calculate the fair value of stock options granted under the provisions of FASB ASC 718 using the Black-Scholes valuation model with the following assumptions: 2016 2015 Expected dividend yield - - Expected stock price volatility 243 % 257 % Risk-free interest rate 4 % 4 % Expected life of options 5.0 5.0 Weighted average fair value of options and warrants granted $ 0.04 $ 0.10 Expected volatility is based on the historical volatility of the Companys share price in the period prior to option grant equivalent to the expected life of the options. The expected term is determined under the simplified method as allowed under the provisions of the Securities and Exchange Commissions Staff Accounting Bulletins No. 107 and No. 110, and represents the period of time that options granted are expected to be outstanding. We believe that it is appropriate to use this simplified method as there is not sufficient historical exercise data to provide a reasonable basis upon which to estimate an expected term. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. i) Income taxes Income taxes are provided in accordance with FASB ASC 740, Income Taxes Deferred tax assets are reduced by a valuation allowance, when, in the opinion of management, it is likely that some portion of the deferred tax asset will not be realized. Deferred taxes are adjusted for the effects of changes in tax laws and rates. Interest and penalties, if applicable, would be recorded in operations. In 2016, the Company recorded Canadian income tax expense of $3,018. In 2015 the Company recorded Canadian income tax expense of $3,129 (see Note 6). j) Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities as of the year end and the reported amount of revenues and expenses during the year. Such estimates include (i) fair values used to test goodwill and capitalized development costs for impairment; (ii) the amount of allowance for doubtful accounts, (iii) the capitalization of software development costs. Actual results and outcomes may differ from managements estimates and assumptions. k) Software development expenses Software development expenses consist primarily of costs associated with the design, programming, and testing of our software applications during the preliminary project stage. Software development expenses also include costs incurred to maintain our software applications. The Company expensed $935,786 and $1,026,106 in software development costs during the years ended December 31, 2016 and 2015, respectively (see Note 3). l) Revenue recognition Revenue is recognized over contractual periods as services are performed and when collection of the amount due is reasonably assured. Amounts recognized as revenue are determined based upon contractually agreed-upon fee schedules with our customers. The Company accounts for subscription revenues received in advance of services being performed by deferring such amounts until the related services are performed. The Company considers the following factors when determining if collection of a fee is reasonably assured: customer creditworthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. If these factors do not indicate collection is reasonably assured, revenue is deferred until collection becomes reasonably assured, which is generally upon receipt of cash. m) Financial instruments Financial instruments consist principally of cash, accounts receivables, accounts payable and notes payable. We believe that the fair value of financial instruments approximates the recorded book value of those instruments due to the short-term nature of the instruments, or stated interest rates that approximate market interest rates. n) Accounting Pronouncements Accounting Pronouncements Adopted During the Current Year In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. The amendment requires that all costs incurred to issue debt be presented in the balance sheet as a direct deduction from the carrying value of the debt. The new standard is limited to the presentation of debt issuance costs and does not affect the recognition or measurement of debt issuance costs. This update became effective for all annual periods and interim reporting periods beginning after December 15, 2015. The adoption of this standard did not have a material impact on our consolidated financial statements. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern. This standard describes how an entitys management should assess whether there are conditions and events that raise substantial doubt about an entitys ability to continue as a going concern within one year after the date that the financial statements are issued. Management should consider both quantitative and qualitative factors in making its assessment. If after considering managements plans, substantial doubt about an entitys going concern is alleviated, an entity shall disclose information in the footnotes that enables the users of the financial statements to understand the events that raised the going concern and how managements plan alleviated this concern. If after considering managements plans, substantial doubt about an entitys going concern is not alleviated, the entity shall disclose in the footnotes indicating that a substantial doubt about the entitys going concern exists within one year of the date of the issued financial statements. Additionally, the entity shall disclose the events that led to this going concern and managements plans to mitigate them. We adopted this standard on January 1, 2016. Our adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures. Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued ASU No. 2014-09, which creates Topic 606, Revenue from Contracts with Customers. In summary, revenue recognition would occur upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, ASU 2014-09 requires enhanced financial statement disclosures over revenue recognition as part of the new accounting guidance. The standard will be effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. In March 2016, the FASB released certain implementation guidance through ASU 2016-08 to clarify principal versus agent considerations. We are currently evaluating the impact of adopting this ASU and do not expect this standard to have a significant impact on our consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842) which amends lease accounting by lessors and lessees. This new standard will require, among other things, that lessees recognize a right-to-use asset and related lease liability for all significant financing and operating leases, and specifies where in the statement of cash flows the related lease payments are to be presented. The standard is effective for years beginning after December 15, 2018, including interim periods within those years (beginning in calendar year 2019 for the Company), and early adoption is permitted. The Company is currently in the process of evaluating the impact the adoption of ASU 2016-02 will have on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718). This ASU changes how companies account for certain aspects of share-based payment awards to employees, including accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. We are currently evaluating the impact of adopting this ASU and expect this standard to not have a significant impact on our consolidated financial statements and related disclosures, which is effective for us in our fiscal year beginning January 1, 2017. Early adoption is permitted. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payment. The main purpose of this update is to address the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. This Update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact of this ASU on the Companys consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new standard eliminates Step 2 of the goodwill impairment test. If a company determines in Step 1 of the goodwill impairment test that the carrying value of goodwill is less than the fair value, an impairment in that amount should be recorded to the income statement, rather than proceeding to Step 2. The new guidance is effective for the Company beginning after December 31, 2019, although early adoption is permitted. The Company is currently evaluating the impact of this ASU on the Companys consolidated financial statements. Other accounting standards that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Companys consolidated financial statements upon adoption. |
LIQUIDITY
LIQUIDITY | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Note 2. LIQUIDITY | The Company has an accumulated deficit of $20,017,042 as of December 31, 2016, and for the year ended December 31, 2016 had a net loss of $1,681,303. As a result, there are concerns about the liquidity of our company at December 31, 2016. The following discussion addresses those concerns. Net cash of $844,320 was provided by operating activities, and although we have a working capital deficit of $1,209,389 as of December 31, 2016, current liabilities include $549,233 in deferred revenue and the expected costs necessary to realize the deferred revenue in 2016 are minimal. As of December 31, 2016, long-term liabilities consist of $10,903,439 due to related parties which are classified as long term because we do not expect to repay amounts owed to related parties during 2016. All repayments of amounts due to related parties must be approved by our Board of Directors. Repayments are subject to our company having sufficient cash on hand and are intended not to impair continuing business operations. Implementation of our business plan may require additional financing. Additional financings may come from future equity or debt offerings that could result in dilution to our stockholders. Although the Company must ultimately achieve profitable operations, based on the factors discussed above, management believes that our cash on hand and cash to be generated from operations will be sufficient to fund operations through fiscal 2016. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Note 3. PROPERTY AND EQUIPMENT | As of December 31, 2016 2015 Computer equipment $ 955,681 $ 836,294 Office furniture and equipment 69,115 66,108 Leasehold improvements 58,464 46,455 Capitalized application software 7,050,550 6,360,499 Total property and equipment 8,133,810 7,309,356 Less: accumulated depreciation (6,760,870 ) (5,905,591 ) Property and equipment, net $ 1,372,940 $ 1,403,765 Property and Equipment are recorded at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the assets estimated useful lives as follows: Computer equipment 5 years Office Furniture and equipment 5 years Leasehold improvements Term of lease Capitalized application software 3 years For the years ended December 31, 2016 and 2015, the Company capitalized $690,051 and $677,638 of costs, respectively, related to upgrades and enhancements made to existing software applications. Software applications are used by our subscribers to access, manage and analyze information in our databases. For the years ended December 31, 2016 and 2015, amortization expenses associated with the internally developed application software was $757,864 and $791,475 respectively. At December 31, 2016, the remaining book value of the capitalized application software was $1,083,583. Depreciation expense for equipment and leaseholds for the years ended December 31, 2016 and 2015 was $97,415 and $84,824 respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Note 4. INTANGIBLE ASSETS | As of December 31, 2016 2015 Amortized intangible assets: Purchase option for office building $ 10,000 $ 10,000 Software licenses 108,085 108,085 Domain names 10,652 10,652 128,737 128,737 Less: accumulated amortization (58,143 ) (52,206 ) Amortized intangible assets, net 70,594 76,531 Unamortized intangible assets: Goodwill associated with purchase of business unit 110,000 110,000 Total intangible assets, net $ 180,594 $ 186,531 Amortization for amortized intangible assets is calculated on a straight-line basis over the assets estimated useful lives. The useful life of the purchase option is 5 years which is the term of the option. The useful life of the software licenses and domain names is estimated to be 20 years. Amortization expense for amortized intangible assets was $5,937 for the years ended December 31, 2016 and 2015. We evaluate goodwill for impairment on an annual basis in accordance with Financial Accounting Standards Board (FASB) ASC 350-20, Goodwill The estimated amortization expense of definite-lived intangible assets is as follows: For year ending December 31, 2017 $ 5,937 For year ending December 31, 2018 5,937 For year ending December 31, 2019 5,937 For year ending December 31, 2020 5,937 For year ending December 31, 2021 5,937 For years thereafter 40,909 Total $ 70,594 |
RELATED PARTIES
RELATED PARTIES | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Note 5. RELATED PARTIES | The following table summarizes amounts due to related parties at December 31, 2016 and 2015: December 31, 2016 December 31, 2015 Current Long-term Current Long-term Purchase of business unit $ - $ 182,183 $ - $ 159,790 Computer hosting services - 137,931 - 60,122 Office rent 7,365 1,113,079 - 967,839 Other 36,847 17,276 - 17,276 Loan - 997,072 - 894,952 Lead generation services - 1,416,574 - 1,282,300 Due to Management - 7,039,324 - 6,054,644 Total stock-based compensation $ 44,212 $ 10,903,439 $ - $ 9,436,923 The Company has a loan agreement with Bravenet Web Services, Inc. (Bravenet). The President and Chief Executive Officer of QuoteMedia, Ltd., a wholly owned subsidiary, is a control person of Bravenet. At December 31, 2016, the loan balance due to Bravenet including accrued interest at 10% is $997,072. On September 29, 2006, QuoteMedia, Ltd. purchased the Bravenet business unit that was responsible for providing the Company customer promotion and lead generation services. The $110,000 purchase price due to Bravenet has been accrued in amounts due to related parties and remains unpaid as of December 31, 2016. At December 31, 2016, the balance due to Bravenet for the unpaid purchase price is $182,183 which includes interest accrued at 10%. Bravenet provides computer hosting and maintenance services to the Company for approximately $6,250 per month. At December 31, 2016, the balance due to Bravenet for unpaid computer hosting and maintenance services is $137,931. This amount includes interest accrued at 10%. The Company entered into a five year office lease with 410734 B.C. Ltd. effective May 1, 2016 for $7,365 per month. The President and Chief Executive Officer of QuoteMedia, Ltd., a wholly owned subsidiary, is a control person of 410734 B.C. Ltd. At December 31, 2016, $7,365 was due to 410734 B.C. Ltd and included in amounts due to related parties. The lease replaced the Companys office lease with Harrison Avenue Holdings Ltd. (Harrison), which expired April 30, 2016. The President and Chief Executive Officer of QuoteMedia, Ltd. is also a control person of Harrison. As of December 31, 2016, the balance due to Harrison for unpaid office rent is $1,113,079. This amount is included in amounts due to related parties and includes interest accrued at 10%. From January 1, 2005 to November 30, 2006, Bravenet provided the Company customer promotion and lead generation services. At December 31, 2016, all amounts due to Bravenet for customer promotion and lead generation services have been accrued in amounts due to related parties and total $1,416,574 including accrued interest at 10% per annum. At December 31, 2016, the Company owed $7,039,324 to officers of the Company for accrued salary and other amounts advanced to the Company. As a matter of policy all related party transactions are subject to review and approval by the Companys Board of Directors. Amounts due to related parties that have been classified as non-current liabilities are not expected to be repaid within a year of the December 31, 2016 balance sheet date. All repayments of amounts due to related parties must be approved by our Board of Directors. Repayments are subject to our company having sufficient cash on hand and are intended not to impair continuing business operations. Our related party creditors have agreed to these repayment terms. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Note 6. INCOME TAXES | We account for income taxes according to the provisions of FASB ASC 740, Income Taxes, Reconciliations of income taxes computed at the statutory federal rate to income tax expense for the years ended December 31, 2016 and 2015 are as follows: 2016 2015 Tax benefit at the statutory rate of 34% $ (571,643 ) $ (562,242 ) State income taxes, net of federal income tax (51,448 ) (50,602 ) Stock-based compensation 27,705 101,823 Change in federal NOL 13,693 296 Expiration of state NOL 10,181 22,468 Change in valuation allowance and other 571,512 488,257 Canadian income tax expense 3,018 3,129 Income tax expense $ 3,018 $ 3,129 In 2016, the Company recorded Canadian income tax expense of $3,018. The Company does not have any material Canadian deferred tax assets or deferred tax liabilities. As of December 31, 2016, we had net operating loss carryforwards for federal and state income tax reporting purposes amounting to approximately $10,371,000 and $1,567,000 which expire in varying amounts through the year 2036. The components of our deferred tax asset (liabilities) at December 31, 2016 and 2015 are as follows: 2016 2015 Tax effect of net operating loss carryforward $ 3,574,000 $ 3,487,000 Accrued liabilities 3,369,000 2,902,000 Property & equipment (8,000 ) (8,000 ) Capitalized software (402,000 ) (427,000 ) Other 45,000 33,000 Less valuation allowance (6,578,000 ) (5,987,000 ) Net deferred tax asset $ - $ - A valuation allowance has been recognized to offset the entire effect of the Companys net deferred tax asset as the realization of this deferred tax benefit is uncertain. The valuation allowance increased $591,000 for the year ended December 31, 2016. The Company has analyzed filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years (2013-2016) in these jurisdictions. The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material adverse effect on the Companys financial condition, results of operations, or cash flows. Therefore, no reserves for uncertain income tax positions have been recorded. |
STOCKHOLDERS' DEFICIT
STOCKHOLDERS' DEFICIT | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Note 7. STOCKHOLDERS' DEFICIT | a) Preferred shares We are authorized to issue up to 10,000,000 non designated preferred shares at the Board of Directors discretion. As of December 31, 2016 no preferred shares have been issued. b) Common stock No shares of common stock were issued during the year ended December 31, 2016. During the year ended December 31, 2015, 33,636 shares of common stock were issued. c) Stock option plan We have stock option plans whereby shares of our common stock may be issued pursuant to the exercise of stock options granted to employees, officers, directors, advisors, and our independent contractors. The exercise price of the common stock underlying an option will be determined by the Board of Directors or compensation committee and may be equal to, greater than, or less than the market value of our common stock at the date of grant but in no event less than 50% of such market value. The options generally vest in one to four years unless, at the discretion of the Board of Directors, alternative vesting methods are allowed. The term of each option is determined at the time of grant and may extend to a maximum of ten years. At December 31, 2016, there are a total of 17,500,000 options authorized for issuance under our stock option plans. There are 15,000,000 and 2,500,000 shares of common stock authorized for issuance pursuant to the Companys 2003 and 1999 Equity Incentive Compensation Plans respectively. Options may also be granted outside our stock option plan. Options granted outside the plan generally contain terms that are more restrictive in nature and have a maximum expiration term of ten years. We may grant an unlimited number of options outside our stock option plan at the discretion of the Board of Directors. The following table represents stock option and warrant activity for the years ended December 31, 2016 and 2015: Options and Warrants Weighted- Average Exercise Price Outstanding at January 1, 2015 11,877,803 $ 0.04 Stock options granted 2,090,000 $ 0.05 Stock options forfeited/expired (595,000 ) $ 0.04 Warrants granted 7,968,803 $ 0.04 Warrants forfeited/expired (7,968,803 ) $ 0.04 Outstanding at December 31, 2015 13,372,803 $ 0.04 Warrants granted 3,000,000 $ 0.04 Outstanding at December 31, 2016 16,372,803 $ 0.04 The following table summarizes our non vested stock option and warrant activity for the years ended December 31, 2016 and 2015: Options and Warrants Weighted- Average Grant Date Fair Value Non-vested stock options and warrants at January 1, 2015 298,323 $ 0.04 Granted during the period 1,600,000 $ 0.06 Vested during the period (20,004 ) $ 0.07 Non-vested stock options and warrants at December 31, 2015 1,878,319 $ 0.06 Granted during the period 3,000,000 $ 0.04 Vested during the period (1,570,004 ) $ 0.04 Non-vested stock options and warrants at December 31, 2016 3,308,315 $ 0.05 Options and Warrants Outstanding Options and Warrants Exercisable Number Outstanding at December 31, 2016 Weighted Average Remaining Contractual Life Weighted Average Exercise Price Number Exercisable at December 31, 2016 Weighted Average Exercise Price $0.03-0.07 16,372,803 8.34 $ 0.04 13,064,488 $ 0.04 As of December 31, 2016 all stock options and warrants have been granted with exercise prices equal to or greater than the market value of the underlying common shares on the date of grant. There was no cash received from the exercise of stock options or warrants for the years ended December 31, 2016 or 2015. At December 31, 2016 the aggregate intrinsic value of options and warrants outstanding was $193,373. The aggregate intrinsic value of options and warrants exercisable was $179,373. The intrinsic value of stock options and warrants are calculated as the amount by which the market price of our common stock exceeds the exercise price of the option or warrant. |
LOSS PER SHARE
LOSS PER SHARE | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Note 8. LOSS PER SHARE | Basic earnings per share is calculated by dividing the net income applicable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing net income or loss applicable to common stockholders, adjusted to exclude potentially dilutive securities, by the weighted average number of common shares outstanding during the period, plus any additional common shares that would have been outstanding if potentially dilutive common shares had been exercised, using the treasury stock method. Due to the net loss incurred for the years ended 2016 and 2015, the diluted loss per share is the same as basic, because any potentially dilutive securities would reduce the loss per share. The following tables summarize the components of the loss per share: 2016 2015 Numerator: Net loss $ (1,681,303 ) $ (1,656,782 ) Denominator: Weighted average shares outstanding basic and diluted 90,477,798 90,465,357 Loss per share - basic and diluted $ (0.02 ) $ (0.02 ) Stock options and warrants excluded from the calculation of dilutive loss per share because they were anti-dilutive 16,372,803 13,372,803 |
COMMITMENTS
COMMITMENTS | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Note 9. COMMITMENTS | Rent expense for all operating leases was $266,967 and $271,904 for the years ended December 31, 2016 and 2015, respectively. We have office lease commitments totaling $1,079,546 over the next five years, which include $286,767 in 2017, $291,721 in 2018, $296,323 in 2019, $173,840 in 2020, and $30,895 in 2021. The Company extended its office lease with A2Z Arizona Holdings VIII, LLC effective April 1, 2017 for an additional 39 months at approximately $1,600 per month. The office lease commitments associated with the extended office lease total $60,770 over the next four years, which include $13,069 in 2017, $18,351 in 2018, $18,895 in 2019, and $10,455 in 2020. |
SUPPLEMENTARY CASH FLOW INFORMA
SUPPLEMENTARY CASH FLOW INFORMATION | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Note 10. SUPPLEMENTARY CASH FLOW INFORMATION | 2016 2015 Cash paid for Interest $ 1,214 $ 1,065 Cash received for Interest $ 46 $ 1,549 Cash paid for taxes - - |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Note 11. SUBSEQUENT EVENTS | The Company has evaluated events up to the filing date of these consolidated financial statements and determined that no subsequent event activity required disclosure. |
SIGNIFICANT ACCOUNTING POLICI18
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Significant Accounting Policies Policies | |
Nature of operations | We are a software developer and distributor of financial market data and related services to a global marketplace. We specialize in the collection, aggregation, and delivery of both delayed and real-time financial data content via the Internet. We develop and license software components that deliver dynamic content to banks, brokerage firms, financial institutions, mutual fund companies, online information and financial portals, media outlets, public companies, and corporate intranets. |
Basis of consolidation | The consolidated financial statements include the operations of QuoteMedia, Ltd., a wholly owned subsidiary of QuoteMedia, Inc. All intercompany transactions and balances have been eliminated. |
Foreign currency translation and transactions | The U.S. dollar is the functional currency of all our company's operations. Foreign currency asset and liability amounts are remeasured into U.S. dollars at end-of-period exchange rates, except for equipment and intangible assets, which are remeasured at historical rates. Foreign currency income and expenses are remeasured at average exchange rates in effect during the year, except for expenses related to balance sheet amounts remeasured at historical exchange rates. Because the U.S. dollar is the functional currency, exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in income in the period in which they occur. |
Cash and cash equivalents | Cash equivalents include money market investments that have an original maturity of three months or less and are redeemable on demand. We maintain our accounts primarily at one financial institution. At times throughout the year, our cash and cash equivalents balances may exceed amounts insured by the Federal Deposit Insurance Corporation. |
Allowances for doubtful accounts | We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of the Companys customers to make required payments. The Company determines the allowance by reviewing the age of the receivables and assessing the anticipated ability of customers to pay. No collateral is required for any of the receivables and the Company does not usually apply financing charges to outstanding accounts receivable balances. If the financial condition of our customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. The allowance for doubtful accounts was $120,000 and $90,000 at December 31, 2016 and 2015 respectively. Bad debt expense for the years ended December 31, 2016 and 2015 were $93,741 and $108,306 respectively. |
Property and equipment | Fixed assets are recorded at cost less accumulated depreciation. Furniture and equipment are depreciated using the straight-line method over their estimated useful lives of five years. Leasehold improvements are amortized using the straight-line method over the terms of the respective leases or useful lives, whichever is shorter. Retirements, sales and disposals of assets are recorded by removing the cost and accumulated depreciation from the asset and accumulated depreciation accounts with the resulting gain or loss reflected in income. Capitalized software costs include costs incurred in connection with the internal development of software. These costs relate to software used by subscribers to access, manage and analyze information in the Companys databases. Capitalized costs associated with internally developed software are amortized over three years which is their estimated economic life. Depreciable and amortizable assets are evaluated for impairment upon a significant change in the operating environment. In these circumstances, if an evaluation of the undiscounted cash flows indicates impairment, the asset is written down to its estimated fair value, which is based on discounted future cash flows. Useful lives are periodically evaluated to determine whether events or circumstances have occurred which indicate the need for revision. There were no impairments recorded for the years ended December 31, 2016 and 2015. |
Earnings per share | Basic earnings per share are computed by dividing income by the weighted average number of shares outstanding during the year. Diluted earnings per share takes into account shares outstanding (computed under basic earnings per share) and potentially dilutive common shares (such as stock options outstanding). The effect of a stock split or reverse split is applied retroactively to preceding periods. For the years ended 2016 and 2015 all common stock equivalents were anti-dilutive. |
Stock-based compensation | FASB ASC 718, Stock Compensation Total estimated stock-based compensation expense, related to all of the Companys stock-based awards, recognized for the years ended December 31, 2016 and 2015 was comprised as follows: 2016 2015 Sales and marketing $ 21,504 $ 280,508 General and administrative 59,982 18,912 Development - 60 Total stock-based compensation $ 81,486 $ 299,480 At December 31, 2016 there was $137,968 of unrecognized compensation cost related to non vested share-based payments which is expected to be recognized over a weighted-average period of 2.39 years. We calculate the fair value of stock options granted under the provisions of FASB ASC 718 using the Black-Scholes valuation model with the following assumptions: 2016 2015 Expected dividend yield - - Expected stock price volatility 243 % 257 % Risk-free interest rate 4 % 4 % Expected life of options 5.0 5.0 Weighted average fair value of options and warrants granted $ 0.04 $ 0.10 Expected volatility is based on the historical volatility of the Companys share price in the period prior to option grant equivalent to the expected life of the options. The expected term is determined under the simplified method as allowed under the provisions of the Securities and Exchange Commissions Staff Accounting Bulletins No. 107 and No. 110, and represents the period of time that options granted are expected to be outstanding. We believe that it is appropriate to use this simplified method as there is not sufficient historical exercise data to provide a reasonable basis upon which to estimate an expected term. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. |
Income taxes | Income taxes are provided in accordance with FASB ASC 740, Income Taxes Deferred tax assets are reduced by a valuation allowance, when, in the opinion of management, it is likely that some portion of the deferred tax asset will not be realized. Deferred taxes are adjusted for the effects of changes in tax laws and rates. Interest and penalties, if applicable, would be recorded in operations. In 2016, the Company recorded Canadian income tax expense of $3,018. In 2015 the Company recorded Canadian income tax expense of $3,129 (see Note 6). |
Use of estimates | The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities as of the year end and the reported amount of revenues and expenses during the year. Such estimates include (i) fair values used to test goodwill and capitalized development costs for impairment; (ii) the amount of allowance for doubtful accounts, (iii) the capitalization of software development costs. Actual results and outcomes may differ from managements estimates and assumptions. |
Software development expenses | Software development expenses consist primarily of costs associated with the design, programming, and testing of our software applications during the preliminary project stage. Software development expenses also include costs incurred to maintain our software applications. The Company expensed $935,786 and $1,026,106 in software development costs during the years ended December 31, 2016 and 2015, respectively (see Note 3). |
Revenue recognition | Revenue is recognized over contractual periods as services are performed and when collection of the amount due is reasonably assured. Amounts recognized as revenue are determined based upon contractually agreed-upon fee schedules with our customers. The Company accounts for subscription revenues received in advance of services being performed by deferring such amounts until the related services are performed. The Company considers the following factors when determining if collection of a fee is reasonably assured: customer creditworthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. If these factors do not indicate collection is reasonably assured, revenue is deferred until collection becomes reasonably assured, which is generally upon receipt of cash. |
Financial instruments | Financial instruments consist principally of cash, accounts receivables, accounts payable and notes payable. We believe that the fair value of financial instruments approximates the recorded book value of those instruments due to the short-term nature of the instruments, or stated interest rates that approximate market interest rates. |
Accounting Pronouncements | Accounting Pronouncements Adopted During the Current Year In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. The amendment requires that all costs incurred to issue debt be presented in the balance sheet as a direct deduction from the carrying value of the debt. The new standard is limited to the presentation of debt issuance costs and does not affect the recognition or measurement of debt issuance costs. This update became effective for all annual periods and interim reporting periods beginning after December 15, 2015. The adoption of this standard did not have a material impact on our consolidated financial statements. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern. This standard describes how an entitys management should assess whether there are conditions and events that raise substantial doubt about an entitys ability to continue as a going concern within one year after the date that the financial statements are issued. Management should consider both quantitative and qualitative factors in making its assessment. If after considering managements plans, substantial doubt about an entitys going concern is alleviated, an entity shall disclose information in the footnotes that enables the users of the financial statements to understand the events that raised the going concern and how managements plan alleviated this concern. If after considering managements plans, substantial doubt about an entitys going concern is not alleviated, the entity shall disclose in the footnotes indicating that a substantial doubt about the entitys going concern exists within one year of the date of the issued financial statements. Additionally, the entity shall disclose the events that led to this going concern and managements plans to mitigate them. We adopted this standard on January 1, 2016. Our adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures. Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued ASU No. 2014-09, which creates Topic 606, Revenue from Contracts with Customers. In summary, revenue recognition would occur upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, ASU 2014-09 requires enhanced financial statement disclosures over revenue recognition as part of the new accounting guidance. The standard will be effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. In March 2016, the FASB released certain implementation guidance through ASU 2016-08 to clarify principal versus agent considerations. We are currently evaluating the impact of adopting this ASU and do not expect this standard to have a significant impact on our consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842) which amends lease accounting by lessors and lessees. This new standard will require, among other things, that lessees recognize a right-to-use asset and related lease liability for all significant financing and operating leases, and specifies where in the statement of cash flows the related lease payments are to be presented. The standard is effective for years beginning after December 15, 2018, including interim periods within those years (beginning in calendar year 2019 for the Company), and early adoption is permitted. The Company is currently in the process of evaluating the impact the adoption of ASU 2016-02 will have on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718). This ASU changes how companies account for certain aspects of share-based payment awards to employees, including accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. We are currently evaluating the impact of adopting this ASU and expect this standard to not have a significant impact on our consolidated financial statements and related disclosures, which is effective for us in our fiscal year beginning January 1, 2017. Early adoption is permitted. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payment. The main purpose of this update is to address the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. This Update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact of this ASU on the Companys consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new standard eliminates Step 2 of the goodwill impairment test. If a company determines in Step 1 of the goodwill impairment test that the carrying value of goodwill is less than the fair value, an impairment in that amount should be recorded to the income statement, rather than proceeding to Step 2. The new guidance is effective for the Company beginning after December 31, 2019, although early adoption is permitted. The Company is currently evaluating the impact of this ASU on the Companys consolidated financial statements. Other accounting standards that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Companys consolidated financial statements upon adoption. |
SIGNIFICANT ACCOUNTING POLICI19
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Significant Accounting Policies Tables | |
Total estimated stock-based compensation expense | 2016 2015 Sales and marketing $ 21,504 $ 280,508 General and administrative 59,982 18,912 Development - 60 Total stock-based compensation $ 81,486 $ 299,480 |
Fair value of stock options granted under the provisions | 2016 2015 Expected dividend yield - - Expected stock price volatility 243 % 257 % Risk-free interest rate 4 % 4 % Expected life of options 5.0 5.0 Weighted average fair value of options and warrants granted $ 0.04 $ 0.10 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property And Equipment Tables | |
Property And Equipment | As of December 31, 2016 2015 Computer equipment $ 955,681 $ 836,294 Office furniture and equipment 69,115 66,108 Leasehold improvements 58,464 46,455 Capitalized application software 7,050,550 6,360,499 Total property and equipment 8,133,810 7,309,356 Less: accumulated depreciation (6,760,870 ) (5,905,591 ) Property and equipment, net $ 1,372,940 $ 1,403,765 |
Estimated useful lives of assets | Computer equipment 5 years Office Furniture and equipment 5 years Leasehold improvements Term of lease Capitalized application software 3 years |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Intangible Assets Tables | |
Amortized intangible assets | As of December 31, 2016 2015 Amortized intangible assets: Purchase option for office building $ 10,000 $ 10,000 Software licenses 108,085 108,085 Domain names 10,652 10,652 128,737 128,737 Less: accumulated amortization (58,143 ) (52,206 ) Amortized intangible assets, net 70,594 76,531 Unamortized intangible assets: Goodwill associated with purchase of business unit 110,000 110,000 Total intangible assets, net $ 180,594 $ 186,531 |
Estimated amortization expense of definite-lived intangible assets | For year ending December 31, 2017 $ 5,937 For year ending December 31, 2018 5,937 For year ending December 31, 2019 5,937 For year ending December 31, 2020 5,937 For year ending December 31, 2021 5,937 For years thereafter 40,909 Total $ 70,594 |
RELATED PARTIES (Tables)
RELATED PARTIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Related Parties Tables | |
Amounts due to related parties | December 31, 2016 December 31, 2015 Current Long-term Current Long-term Purchase of business unit $ - $ 182,183 $ - $ 159,790 Computer hosting services - 137,931 - 60,122 Office rent 7,365 1,113,079 - 967,839 Other 36,847 17,276 - 17,276 Loan - 997,072 - 894,952 Lead generation services - 1,416,574 - 1,282,300 Due to Management - 7,039,324 - 6,054,644 Total stock-based compensation $ 44,212 $ 10,903,439 $ - $ 9,436,923 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes Tables | |
Reconciliations of income taxes | 2016 2015 Tax benefit at the statutory rate of 34% $ (571,643 ) $ (562,242 ) State income taxes, net of federal income tax (51,448 ) (50,602 ) Stock-based compensation 27,705 101,823 Change in federal NOL 13,693 296 Expiration of state NOL 10,181 22,468 Change in valuation allowance and other 571,512 488,257 Canadian income tax expense 3,018 3,129 Income tax expense $ 3,018 $ 3,129 |
Components of our deferred tax asset | 2016 2015 Tax effect of net operating loss carryforward $ 3,574,000 $ 3,487,000 Accrued liabilities 3,369,000 2,902,000 Property & equipment (8,000 ) (8,000 ) Capitalized software (402,000 ) (427,000 ) Other 45,000 33,000 Less valuation allowance (6,578,000 ) (5,987,000 ) Net deferred tax asset $ - $ - |
STOCKHOLDERS' DEFICIT (Tables)
STOCKHOLDERS' DEFICIT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders Deficit Tables | |
Stock option and warrant activity | Options and Warrants Weighted- Average Exercise Price Outstanding at January 1, 2015 11,877,803 $ 0.04 Stock options granted 2,090,000 $ 0.05 Stock options forfeited/expired (595,000 ) $ 0.04 Warrants granted 7,968,803 $ 0.04 Warrants forfeited/expired (7,968,803 ) $ 0.04 Outstanding at December 31, 2015 13,372,803 $ 0.04 Warrants granted 3,000,000 $ 0.04 Outstanding at December 31, 2016 16,372,803 $ 0.04 |
Nonvested stock option and warrant activity | Options and Warrants Weighted- Average Grant Date Fair Value Non-vested stock options and warrants at January 1, 2015 298,323 $ 0.04 Granted during the period 1,600,000 $ 0.06 Vested during the period (20,004 ) $ 0.07 Non-vested stock options and warrants at December 31, 2015 1,878,319 $ 0.06 Granted during the period 3,000,000 $ 0.04 Vested during the period (1,570,004 ) $ 0.04 Non-vested stock options and warrants at December 31, 2016 3,308,315 $ 0.05 |
Option and Warrats | Options and Warrants Outstanding Options and Warrants Exercisable Number Outstanding at December 31, 2016 Weighted Average Remaining Contractual Life Weighted Average Exercise Price Number Exercisable at December 31, 2016 Weighted Average Exercise Price $0.03-0.07 16,372,803 8.34 $ 0.04 13,064,488 $ 0.04 |
LOSS PER SHARE (Tables)
LOSS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Loss Per Share Tables | |
Components of the loss per share | 2016 2015 Numerator: Net loss $ (1,681,303 ) $ (1,656,782 ) Denominator: Weighted average shares outstanding basic and diluted 90,477,798 90,465,357 Loss per share - basic and diluted $ (0.02 ) $ (0.02 ) Stock options and warrants excluded from the calculation of dilutive loss per share because they were anti-dilutive 16,372,803 13,372,803 |
SUPPLEMENTARY CASH FLOW INFOR26
SUPPLEMENTARY CASH FLOW INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Supplementary Cash Flow Information Tables | |
SUPPLEMENTARY CASH FLOW INFORMATION | 2016 2015 Cash paid for Interest $ 1,214 $ 1,065 Cash received for Interest $ 46 $ 1,549 Cash paid for taxes - - |
SIGNIFICANT ACCOUNTING POLICI27
SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Sales and marketing | $ 1,507,706 | $ 1,696,428 |
General and administrative | 1,966,713 | 1,876,123 |
Total stock-based compensation | 81,486 | 299,480 |
Stock Compensation Plan [Member] | ||
Sales and marketing | 21,504 | 280,508 |
General and administrative | 59,982 | 18,912 |
Development | 60 | |
Total stock-based compensation | $ 81,486 | $ 299,480 |
SIGNIFICANT ACCOUNTING POLICI28
SIGNIFICANT ACCOUNTING POLICIES (Details 1) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Significant Accounting Policies Details 1 | ||
Expected dividend yield | ||
Expected stock price volatility | 243.00% | 257.00% |
Risk-free interest rate | 4.00% | 4.00% |
Expected life of options | 5 years | 5 years |
Weighted average fair value of options and warrants granted | $ 0.04 | $ 0.10 |
SIGNIFICANT ACCOUNTING POLICI29
SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Significant Accounting Policies Details Narrative | ||
Allowance for doubtful accounts | $ 120,000 | $ 90,000 |
Bad debt expense | 93,741 | 108,306 |
Unrecognized compensation cost | $ 137,968 | |
Nonvested share-based payments weighted-average period | 2 years 4 months 21 days | |
Canadian income tax expense | $ 3,018 | 3,129 |
Software development costs | $ 935,786 | $ 1,026,106 |
LIQUIDITY (Details Narrative)
LIQUIDITY (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Liquidity Details Narrative | ||
Accumulated deficit | $ (20,017,042) | $ (18,335,739) |
Net loss | (1,681,303) | (1,656,782) |
Cash flow from operating activities | 844,320 | 622,578 |
Working capital deficit | 1,209,389 | |
Deferred revenue | 549,233 | 607,024 |
Long-term portion of amounts due to related parties | $ 10,903,439 | $ 9,436,923 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Total property and equipment | $ 8,133,810 | $ 7,309,356 |
Less: accumulated depreciation | (6,760,870) | (5,905,591) |
Property and equipment, net | 1,372,940 | 1,403,765 |
Computer equipment | ||
Total property and equipment | 955,681 | 836,294 |
Office furniture and equipment | ||
Total property and equipment | 69,115 | 66,108 |
Leasehold improvements | ||
Total property and equipment | 58,464 | 46,455 |
Capitalized application software | ||
Total property and equipment | $ 7,050,550 | $ 6,360,499 |
PROPERTY AND EQUIPMENT (Detai32
PROPERTY AND EQUIPMENT (Details 1) | 12 Months Ended |
Dec. 31, 2016 | |
Computer equipment | |
Estimated useful lives | 5 years |
Office furniture and equipment | |
Estimated useful lives | 5 years |
Leasehold improvements | |
Estimated useful lives | Term of lease |
Capitalized application software | |
Estimated useful lives | 3 years |
PROPERTY AND EQUIPMENT (Detai33
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Property And Equipment Details Narrative | ||
Cost related to development of new software applications and enhancements | $ 690,051 | $ 677,638 |
Amortization expenses | 757,864 | 791,475 |
Book value of capitalized application software | 1,083,583 | |
Depreciation expense for equipment and leaseholds | $ 97,415 | $ 84,824 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Amortized intangible assets: | ||
Purchase option for office building | $ 10,000 | $ 10,000 |
Software licenses | 108,085 | 108,085 |
Domain names | 10,652 | 10,652 |
Amortized intangible assets, gross | 128,737 | 128,737 |
Less: accumulated amortization | (58,143) | (52,206) |
Amortized intangible assets, net | 70,594 | 76,531 |
Unamortized intangible assets: | ||
Goodwill associated with purchase of business unit | 110,000 | 110,000 |
Total intangible assets, net | $ 180,594 | $ 186,531 |
INTANGIBLE ASSETS (Details 1)
INTANGIBLE ASSETS (Details 1) | Dec. 31, 2016USD ($) |
Intangible Assets Details 1 | |
For year ending December 31, 2017 | $ 5,937 |
For year ending December 31, 2018 | 5,937 |
For year ending December 31, 2019 | 5,937 |
For year ending December 31, 2020 | 5,937 |
For year ending December 31, 2021 | 5,937 |
For years thereafter | 40,909 |
Total | $ 70,594 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Amortization expense for amortized intangible assets | $ 5,937 | $ 5,937 |
Purchase option [Member] | ||
Estimated useful life | 5 years | |
Software licenses [Member] | ||
Estimated useful life | 20 years | |
Domain names [Member] | ||
Estimated useful life | 20 years |
RELATED PARTIES (Details)
RELATED PARTIES (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Due to related parties, Current | $ 44,212 | |
Due to related parties, Long-term | 10,903,439 | 9,436,923 |
Purchase of Business Unit [Member] | ||
Due to related parties, Current | ||
Due to related parties, Long-term | 182,183 | 159,790 |
Computer Hosting Services [Member] | ||
Due to related parties, Current | ||
Due to related parties, Long-term | 137,931 | 60,122 |
Office Rent [Member] | ||
Due to related parties, Current | 7,365 | |
Due to related parties, Long-term | 1,113,079 | 967,839 |
Other [Member] | ||
Due to related parties, Current | 36,847 | |
Due to related parties, Long-term | 17,276 | 17,276 |
Loan [Member] | ||
Due to related parties, Current | ||
Due to related parties, Long-term | 997,072 | 894,952 |
Lead Generation Services [Member] | ||
Due to related parties, Current | ||
Due to related parties, Long-term | 1,416,574 | 1,282,300 |
Due to Management [Member] | ||
Due to related parties, Current | ||
Due to related parties, Long-term | $ 7,039,324 | $ 6,054,644 |
RELATED PARTIES (Details Narrat
RELATED PARTIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Due to related parties, Long-term | $ 10,903,439 | $ 9,436,923 |
Due to related parties, Current | $ 44,212 | |
Loan [Member] | ||
Accrued interest rate | 10.00% | |
Due to related parties, Long-term | $ 997,072 | 894,952 |
Due to related parties, Current | ||
Purchase of Business Unit [Member] | ||
Accrued interest rate | 10.00% | |
Accrued amount due to related parties | $ 110,000 | |
Due to related parties, Long-term | 182,183 | 159,790 |
Due to related parties, Current | ||
Computer Hosting Services [Member] | ||
Accrued interest rate | 10.00% | |
Due to related parties, Long-term | $ 137,931 | 60,122 |
Due to related parties, Current | ||
Computer Hosting Services [Member] | Bravenet [Member] | ||
Related parties periodic payment | $ 6,250 | |
Frequency of periodic payment | Monthly | |
Office Rent [Member] | ||
Accrued interest rate | 10.00% | |
Due to related parties, Long-term | $ 1,113,079 | 967,839 |
Due to related parties, Current | 7,365 | |
Office Rent [Member] | 410734 B.C. Ltd [Member] | ||
Related parties periodic payment | $ 7,365 | |
Frequency of periodic payment | Monthly | |
Lead Generation Services [Member] | ||
Accrued interest rate | 10.00% | |
Due to related parties, Long-term | $ 1,416,574 | 1,282,300 |
Due to related parties, Current | ||
Due to Management [Member] | ||
Due to related parties, Long-term | 7,039,324 | 6,054,644 |
Due to related parties, Current |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes Details | ||
Tax benefit at the statutory rate of 34% | $ (571,643) | $ (562,242) |
State income taxes, net of federal income tax | (51,448) | (50,602) |
Stock-based compensation | 27,705 | 101,823 |
Change in federal NOL | 13,693 | 296 |
Expiration of state NOL | 10,181 | 22,468 |
Change in valuation allowance and other | 571,512 | 488,257 |
Canadian income tax expense | 3,018 | 3,129 |
Income tax expense | $ 3,018 | $ 3,129 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Income Taxes Details 1 | ||
Tax effect of net operating loss carryforward | $ 3,574,000 | $ 3,487,000 |
Accrued liabilities | 3,369,000 | 2,902,000 |
Property & equipment | (8,000) | (8,000) |
Capitalized software | (402,000) | (427,000) |
Other | 45,000 | 33,000 |
Less valuation allowance | (6,578,000) | (5,987,000) |
Net deferred tax asset |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes Details Narrative | ||
Canadian income tax expense | $ 3,018 | $ 3,129 |
Net operating loss carryforwards for federal income tax | 10,371,000 | |
Net operating loss carryforwards for state income tax | $ 1,567,000 | |
Operating loss carryforwards expiration period | year 2,036 | |
Increase in valuation allowance | $ 591,000 |
STOCKHOLDERS' DEFICIT (Details)
STOCKHOLDERS' DEFICIT (Details) - Stock Option And Warrant - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Options and Warrants | ||
Outstanding - Opening Balance | 13,372,803 | 11,877,803 |
Stock options granted | 2,090,000 | |
Stock options forfeited/expired | (595,000) | |
Warrants granted | 3,000,000 | 7,968,803 |
Warrants forfeited/expired | (7,968,803) | |
Outstanding - Ending Balance | 16,372,803 | 13,372,803 |
Weighted-Average Exercise Price | ||
Weighted-Average Exercise Price Outstanding - Opening Balance | $ 0.04 | $ 0.04 |
Stock options granted | 0.05 | |
Stock options forfeited/expired | 0.04 | |
Warrants granted | 0.04 | 0.04 |
Warrants forfeited/expired | 0.04 | |
Weighted-Average Exercise Price Outstanding - Ending Balance | $ 0.04 | $ 0.04 |
STOCKHOLDERS' DEFICIT (Details
STOCKHOLDERS' DEFICIT (Details 1) - Stock Option And Warrant - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Options and Warrants | ||
Outstanding - Opening Balance | 1,878,319 | 298,323 |
Granted during the period | 3,000,000 | 1,600,000 |
Vested during the period | (1,570,004) | (20,004) |
Outstanding - Ending Balance | 3,308,315 | 1,878,319 |
Weighted-Average Exercise Price | ||
Weighted-Average Exercise Price Outstanding - Opening Balance | $ 0.06 | $ 0.04 |
Granted during the period | 0.04 | 0.06 |
Vested during the period | 0.04 | 0.07 |
Weighted-Average Exercise Price Outstanding - Ending Balance | $ 0.05 | $ 0.06 |
STOCKHOLDERS' DEFICIT (Detail44
STOCKHOLDERS' DEFICIT (Details 2) - 0.03-0.07 | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Number Outstanding | shares | 16,372,803 |
Weighted Average Remaining Contractual Life | 8 years 4 months 2 days |
Weighted-Average Exercise Price | $ / shares | $ 0.04 |
Number Exercisable | shares | 13,064,488 |
Weighted-Average Exercise Price | $ / shares | $ 0.04 |
STOCKHOLDERS' DEFICIT (Detail45
STOCKHOLDERS' DEFICIT (Details Narrative) | 12 Months Ended |
Dec. 31, 2016USD ($)shares | |
Stock Compensation Plan [Member] | |
Conversion price, Description | The exercise price of the common stock underlying an option will be determined by the Board of Directors or compensation committee and may be equal to, greater than, or less than the market value of our common stock at the date of grant but in no event less than 50% of such market value |
Options authorized | 17,500,000 |
2003 Equity incentive compensation plan [Member] | |
Options authorized | 15,000,000 |
1999 Equity incentive compensation plan [Member] | |
Options authorized | 2,500,000 |
Stock Option And Warrant | |
Aggregate intrinsic value of options and warrants outstanding | $ | $ 193,373 |
Aggregate intrinsic value of options and warrants exercisable | $ | $ 179,373 |
LOSS PER SHARE (Details)
LOSS PER SHARE (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Numerator: | ||
Net loss | $ (1,681,303) | $ (1,656,782) |
Denominator: | ||
Weighted average shares outstanding - basic and diluted | 90,477,798 | 90,465,357 |
Loss per share - basic and diluted | $ (0.02) | $ (0.02) |
Stock options and warrants excluded from the calculation of dilutive loss per share because they were anti-dilutive | 16,372,803 | 13,372,803 |
COMMITMENTS (Details Narrative)
COMMITMENTS (Details Narrative) | 12 Months Ended | |
Dec. 31, 2016USD ($)Number | Dec. 31, 2015USD ($) | |
Rent expense of operating lease | $ 266,967 | $ 271,904 |
Office lease, 2017 | 286,767 | |
Office lease, 2018 | 291,721 | |
Office lease, 2019 | 296,323 | |
Office lease, 2020 | 173,840 | |
Office lease, 2021 | 30,895 | |
Office lease commitments total | 1,079,546 | |
A2Z Arizona Holdings VIII, LLC [Member] | ||
Office lease, 2017 | 13,069 | |
Office lease, 2018 | 18,351 | |
Office lease, 2019 | 18,895 | |
Office lease, 2020 | 10,455 | |
Office lease commitments total | 60,770 | |
Operating lease rental expense periodic payment | $ 1,600 | |
Operating lease frequency of periodic payment | Monthly | |
Number of rental payments under office lease extension | Number | 39 |
SUPPLEMENTARY CASH FLOW INFOR48
SUPPLEMENTARY CASH FLOW INFORMATION (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Supplementary Cash Flow Information | ||
Cash paid for Interest | $ 1,214 | $ 1,065 |
Cash received for Interest | 46 | 1,549 |
Cash paid for taxes |