Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | LIFEAPPS BRANDS INC. | |
Entity Central Index Key | 1,510,247 | |
Document Type | 10-Q | |
Trading Symbol | LFAP | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 107,679,152 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash | $ 949 | $ 1,084 |
Other current assets | 595 | 595 |
Total current assets | 1,544 | 1,679 |
Intangible asset, net of amortization | 150 | |
Total Assets | 1,544 | 1,829 |
Current liabilities: | ||
Accounts payable | 199,579 | 124,620 |
Accrued salaries - officers | 844,154 | 601,154 |
Accrued interest | 10,375 | |
Notes payable | 28,000 | 20,000 |
Notes payable - related party | 17,885 | 17,585 |
Advances due to related party | 10,974 | 7,675 |
Convertible note payable net of discounts | 35,005 | |
Derivative liability | 44,060 | |
Total current liabilities | 1,190,032 | 771,034 |
Stockholders' (Deficit) | ||
Preferred stock, $.001 par value, 10,000,000 authorized, none issued or outstanding | ||
Common stock, $0.001 par value, 500,000,000 shares authorized, 95,232,464 and 87,704,686 shares issued and outstanding, respectively | 95,232 | 87,704 |
Additional paid in capital | 2,643,163 | 2,579,489 |
Deferred officer compensation | (244,043) | (391,010) |
Accumulated (deficit) | (3,682,841) | (3,045,388) |
Total stockholders' (deficit) | (1,188,488) | (769,205) |
Total Liabilities and Stockholders' (Deficit) | $ 1,544 | $ 1,829 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 10,000,000 | 10,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 500,000,000 | 500,000,000 |
Common stock, issued | 95,232,464 | 87,704,686 |
Common stock, outstanding | 95,232,464 | 87,704,686 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |||
Income Statement [Abstract] | ||||||
Revenue | $ 525 | $ 787 | $ 2,119 | $ 3,093 | ||
Cost of revenue | 49 | |||||
Gross profit (loss) | 525 | 787 | 2,119 | 3,044 | ||
Operating expenses: | ||||||
General and administrative | 218,988 | 47,726 | 564,824 | 171,816 | ||
Depreciation and amortization | 225 | 150 | 675 | |||
Total operating expenses | 218,988 | 47,951 | 564,974 | 172,491 | ||
(Loss) from operations | (218,463) | (47,164) | (562,855) | (169,447) | ||
Interest expense | (68,748) | (107,692) | ||||
Change in derivative liability | 28,593 | 33,095 | ||||
Net (loss) before income taxes | (258,619) | (47,164) | (637,453) | (169,447) | ||
Provision for income taxes | ||||||
Net (loss) | $ (258,619) | $ (47,164) | $ (637,453) | $ (169,447) | ||
Per share information - basic and fully diluted: | ||||||
Weighted average shares outstanding (in shares) | 92,561,268 | 25,311,186 | 91,208,732 | 25,311,186 | ||
Net (loss) per share (in dollars per share) | $ 0 | [1] | $ 0 | [1] | $ (0.01) | $ (0.01) |
[1] | Denotes a loss of less than $(0.01) per share. |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Cash Flows [Abstract] | ||
Net cash used in operations | $ (53,734) | $ (48,616) |
Cash flow from financing activities | ||
Cash flow from financing activities: | ||
Proceeds from convertible note payable | 32,000 | |
Proceeds from note payable | 10,000 | |
Proceeds from sale of common stock | 10,000 | |
Repayment of note payable | (2,000) | |
Shareholder advances | 3,599 | 49,310 |
Repayment of shareholder advances | (800) | |
Net cash provided by financing activities | 53,599 | 48,510 |
Net (decrease) in cash | (135) | (106) |
Cash at beginning of period | 1,084 | 1,388 |
Cash at end of period | 949 | 1,282 |
Non-cash financing activities: | ||
Stock issued for services | 44,100 | 7,312 |
Stock issued for debt conversion | 10,375 | |
Officer salary accrual | $ 243,000 | $ 112,500 |
Nature of Business
Nature of Business | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | Note 1. Nature of Business Throughout this report, the terms “our,” “we,” “us,” and the “Company” refer to LifeApps Brands Inc., including its subsidiaries. The accompanying unaudited condensed consolidated financial statements of LifeApps Brands Inc. at September 30, 2018 and 2017 have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial statements, instructions to Form 10-Q, and Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2017. In management’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation to make our financial statements not misleading have been included. The results of operations for the periods ended September 30, 2018 and 2017 presented are not necessarily indicative of the results to be expected for the full year. The December 31, 2017 balance sheet has been derived from our audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2017. Through our wholly owned subsidiary LifeApps, Inc., we are a licensed developer and publisher of apps for the Apple Apps Store for iPhone, iPod touch, iPad and iPad mini. We are also a licensed developer on both Google Play and Amazon Appstore for Android. We have distributed apps on all three platforms. Moving forward we are developing a digital media network specializing in targeting highly sought-after niche demographic audiences. The company will focus on two core businesses, an LGBT Ad Network and an LGBT Digital Network. Through our digital platform we will aggregate content from around the world. We will create original content along with sponsored content in a 24/7 digital network. The LGBT Ad Network will assist brands in global targeting of the LGBT demographic. The Ad Network will provide advertisers and brands with over 300 mainstream digital platforms and a “bullseye” on this loyal, affluent and ever-expanding audience. We will deliver to our audience with a relevant sponsored content marketing message across all spectrums of digitally connected devices. Our unique value proposition to our audience and sponsors is the ability deliver aggregated and original content, with emphasis on interactive content and captive video. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Going Concern The accompanying financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”), which contemplates our continuation as a going concern. We have incurred losses to date of $3,682,841 and have negative working capital. To date we have funded our operations through advances from related parties, issuance of convertible debt, and the sale of our common stock. We intend to raise additional funding through third party equity or debt financing. There is no certainty that funding will be available as needed. These factors raise substantial doubt about our ability to continue operating as a going concern. Our ability to continue our operations as a going concern, realize the carrying value of our assets, and discharge our liabilities in the normal course of business is dependent upon our ability to raise capital sufficient to fund our commitments and ongoing losses, and ultimately generate profitable operations. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries, LifeApps Inc. and Sports One Group Inc. All material inter-company transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may differ from these estimates. Fair Value Measurements: ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows: Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange. Level 2 – Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs. Level 3 – Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights. Our financial instruments consist of cash, short-term trade receivables, prepaid expenses, payables, accruals and convertible notes payable. The carrying values of cash and cash equivalents, short-term trade receivables, prepaid expenses, payables, and accruals approximate fair value because of the short-term maturities of these instruments. The fair value of notes payable approximated to their carrying value as generally their interest rates reflected our effective annual borrowing rate. Intangibles Intangibles, which include websites and databases acquired, internet domain name costs, and customer lists, are being amortized over the expected useful lives which we estimate to be three to five years. In accordance with Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) Topic 350 Intangibles – Goodwill and Other Derivative Financial Instruments: We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, we used a Black-Scholes valuation model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. Revenue Recognition ASC Topic 606, “ Revenue from Contracts with Customers” Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: ● identify the contract with a customer; ● identify the performance obligations in the contract; ● determine the transaction price; ● allocate the transaction price to performance obligations in the contract; and ● recognize revenue as the performance obligation is satisfied. Revenue is currently derived primarily from the sale of sports and fitness apparel and equipment, and software applications designed for use on mobile devices such as smart phones and tablets. We sell our software directly via Internet download through third party agents. We recognize revenue when payment is received from the agent. Payment is received net of commission paid to the agent, usually 70% to us and 30% to the agent. We record the net amount received as revenue. We plan to publish and sell digital magazines through the internet. Magazines can be purchased as individual volumes or as a subscription. To date we have not had any subscription sales. Cost of Revenue Cost of revenue includes the cost of amounts paid for articles, photography, editorial and production cost of the magazine and ongoing web hosting costs. Cost of revenue related to product sales includes the direct cost of those products sold. Rent Expense We recognize rent expense on a straight-line basis over the reasonably assured lease term as defined in ASC Topic 840, Leases (“ASC 840”). Our lease is short term and will be renewed on a month to month basis. Rent expense was $0 and $363 for the three months ended September 30, 2018 and 2017, respectively and $255 and $3,975 for the nine months ended September 30, 2018 and 2017, respectively. Stock-Based Compensation Stock-based compensation is presented in accordance with the guidance of ASC Topic 718, Compensation – Stock Compensation Earnings per share We calculate earnings per share in accordance with ASC Topic 260 Earnings Per Share Recent Pronouncements From time to time, new accounting pronouncements are issued that we adopt as of the specified effective date. We believe that the impact of recently issued standards that are not yet effective may have an impact on our results of operations and financial position. In February 2016, the FASB issued ASU No. 2016-02, Leases The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is evaluating the potential impact of ASU 2016-02 on its Consolidated Financial Statements. Other accounting standards that have been issued or proposed 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 Company’s consolidated financial statements upon adoption. |
Related Party Transactions - Of
Related Party Transactions - Officer and Shareholder Advances | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions - Officer and Shareholder Advances | Note 3. Related Party Transactions – Officer and Shareholder Advances Parties, which can be a corporation or an individual, are considered to be related if we have the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence. Advances due to related parties represent cash advances, salary accruals, notes payable, and amounts paid on our behalf by an officer and shareholders of the Company. These advances are non-interest bearing, short term in nature and due on demand. The balance at September 30, 2018 and December 31, 2017 was $10,974 and $7,675, respectively. Notes payable to related parties at 30, 2018 and December 31, 2017 totaled $17,885 and $17,585, respectively with a 2% annual interest rate. Currently the company has defaulted on all of their related party loan obligations. Forbearance has been granted by the related parties on all loans. Salary accruals for the three-month periods ended 30, 2018 and 2017 amounted to $81,000 and $37,500 respectively. Salary accruals for the -month periods ended 30, 2018 and 2017 amounted to $243,000 and $112,500, respectively. Net cash advances amounted to $3,599 and $48,510, respectively for the periods ended 30, 2018 and 2017. Total unpaid accrued salary was $844,154 and $601,154 as of 30, 2018 and December 31, 2017, respectively. On December 19, 2017 we entered into an Employment Services Agreements with our Chief Executive Officer and our President and an Executive Management Consulting Agreement with our former Chief Executive Officer. The Agreements have a two-year term and are subject to automatic renewal for successive periods of one year unless either we or the counterparties give the other written notice of intention to not renew at least 30 days prior to the end of the existing term. The Agreement with our current and former Chief Executive Officers provide for base compensation of $150,000 and a base annual salary of $24,000 for our President. The compensation payments are payable in bi-weekly installments. In the event any of the payments are not made within 30 days of the due date, they will accrue interest at the rate of 10% per annum. The Agreements contain customary termination provisions including terminations with or without cause, for good reason or voluntarily, non-competition and non-solicitation provisions, and an inventions and patents provision which provides that all the work produced by the counterparties, which is created, designed, conceived or developed by them in the course of their employment under the Agreements belong to us. Effective as of January 1, 2018, the agreements were modified to remove the conversion right provisions. During the three and nine month periods ended September 30, 2018 we recorded interest accruals of $5,736 and $7,976 related to the agreements. |
Note Payable
Note Payable | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Note Payable | Note 4. Note Payable Notes payable to two unrelated third parties amounted to $28,000 at September 30, 2018 and $20,000 to a single unrelated third party at December 31, 2017 with an interest rates of 2% and 7% per annum. One of the notes in the amount of $18,000 at September 30, 2018 is past due and is, therefore, in default. The other note in the amount of $10,000 provides for the issuance of 775,000 shares of common stock as additional interest due at maturity. |
Convertible Note Payable
Convertible Note Payable | 9 Months Ended |
Sep. 30, 2018 | |
Convertible Note Payable | |
Convertible Note Payable | Note 5. Convertible Note Payable On March 6, 2018, we executed a Promissory Note (the “2018 Note”) to an unrelated entity and received an aggregate of $32,000. The Note has an initial term of one year and provides for an original issue discount of $3,000, which is being amortized over the initial term. The note carries face interest rates of 12% per annum. The Lender has the right, at any time and/or after 180 days at their election to convert all or part of the outstanding and unpaid principal and accrued interest into shares of our common stock. The conversion price is 58% of a two-day average of the lowest trading price in the 15 range of trading days prior the conversion. The Notes provide for additional penalties if we cannot deliver the underlying common stock on a timely basis. We evaluated the terms of the conversion features of the convertible note in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined it is indexed to the Company’s common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability. We valued the conversion feature at origination of the Note at $55,118 using the Black Scholes valuation model with the following assumptions: dividend yield of zero, 1 year to maturity, risk free interest rate of 3.03% and annualized volatility of 298.79%. $32,000 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture. The debt discount was recorded as reduction (contra-liability) to the convertible Note and is being amortized over the initial term of the convertible Note. The balance of $23,118 of the value assigned to the derivative liability was recognized as origination interest on the derivative liability and expensed on origination. To determine the fair value of our embedded derivatives, management evaluates assumptions regarding the probability of certain future events. Other factors used to determine fair value include our period end stock price, historical stock volatility, risk free interest rate and derivative term. The fair value recorded for the derivative liability varies from period to period. This variability may result in the actual derivative liability for a period either above or below the estimates recorded on our consolidated financial statements, resulting in significant fluctuations in other income (expense) because of the corresponding non-cash gain or loss recorded. During the quarter ended September 30, 2018, the company became subject to a penalty assessment of $17,500 due to a loan covenant violation. Such amount has been expensed as additional interest. Additionally, the fair value of the derivative liability associated with the penalty amounted to $29,265 and has been recorded as additional interest expense. Also, during the quarter ended September, the lender exercised conversion rights pursuant to the loan agreement and converted $8,000 of the loan principal into 1,777,778 shares of common stock. The company recognized an aggregate of $10,375 of shareholder equity as a result of the conversion based of a fair value calculation at the conversion date and related adjustments to remaining loan discounts applicable to the converted loan amount. We value the derivative liability at the end of each accounting period with the difference in value recognized as gain or loss. At September 30, 2018 we determined the valuation using the Black-Sholes valuation model with the following assumptions: dividend yield of zero, .44 years to maturity, risk free interest rate of 2.49% and annualized volatility of 143%. We recognized $26,625 and $34,127 of income for the change in value of the derivative for the three- and nine-month periods ended 30, 2018. Interest expense for the - month period ended 30, 2018 includes $52,453 of origination interest, amortization of debt discounts of $24,273 and interest accrual of $2,400. At September 30, 2018 the balance of the Note is comprised of the following: Face amount of Note $ 44,500 Original issue discount (1,290 ) Debt discount (8,205 ) $ 35,005 |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Note 6. Stockholders’ Equity During the nine -month period ended 30, 2018 we issued 3,000,000 shares of common stock in connection with consulting agreements with two unrelated entities. The shares were valued at the respective trading prices of our common stock on the dates the agreements were signed. During the quarter ended September 30, 2018 an unrelated third party purchased 2,000,000 shares of common stock for $10,000 in cash at $.05 per share and made a loan to the company in the amount of $10,000. The loan provided for a stock grant of 750,000 shares of common stock. Also, as described in Note 5, the company issued 1,777,778 shares of common stock pursuant to a debt-to-equity conversion. Additionally, we recorded $146,966 of amortization of deferred officer compensation during the nine -month period ended 30, 2018. |
Options
Options | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Options | Note 7. Options Stock based compensation expense for options for the periods ended September 30, 2018 and 2017 amounted to $0 and $7,312. The following is a summary of stock options issued pursuant to the plan: Options Weighted Weighted Aggregate Outstanding January 1, 2018 17,246,688 $ 0.0056 3.4 — Granted — $ — — — Exercised — $ — — — Cancelled — $ — — — Outstanding September 30, 2018 17,246,688 $ 0.0056 2.70 $ — Exercisable September 30, 2018 17,246,688 $ 0.0056 2.70 $ — Stock based compensation expense for options for the periods ended September 30, 2018 and 2017 amounted to $0 and $7,312. There will be no additional compensation expense recognized in future periods. |
Outstanding Warrants
Outstanding Warrants | 9 Months Ended |
Sep. 30, 2018 | |
Outstanding Warrants | |
Outstanding Warrants | Note 8. Outstanding Warrants There were no warrants issued during the periods ended September 30, 2018 and 2017. The 400,000 previously outstanding warrants expired on September 20, 2017. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 9. Income Taxes On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the “Act”) resulting in significant modifications to existing law. The Company has completed a review of the accounting for the effects of the Act during the quarter ended December 31, 2017. The Company’s financial statements for the period ended September 30, 2018 reflect certain effects of the Act which includes a reduction in the corporate tax rate from 34% to 21% as well as other changes. Income tax provision (benefit) for the periods ended September 30, 2018 and 2017, is summarized below: 2018 2017 Current: Federal $ — $ — State — — Total current — — Deferred: Federal (21% tax rate in 2018) (104,600 ) (19,400 ) State (27,400 ) (3,100 ) Total deferred (132,000 ) (22,500 ) Valuation allowance 132,000 22,500 Total provision $ — $ — The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The sources and tax effects of the differences as of September 30, 2018 and 2017 are as follows: 2018 2017 Income tax provision at the federal statutory rate 21.0 % 34.0 % State income taxes, net of federal benefit 5.5 % 5.5 % Increase in valuation allowance (26.5 %) (39.5 %) 0.0 % 0.0 % Components of the net deferred income tax assets at September 30, 2018 and December 31, 2017 were as follows: 2018 2017 Net operating loss carryovers (adjusted for revised tax rate) $ 496,100 $ 364,100 Valuation allowance (496,100 ) (364,100 ) $ — $ — In accordance with ASC 740, at September 30, 2018 and December 31, 2017 we determined that a valuation allowance should be recognized against deferred tax assets because, based on the weight of available evidence, it is more likely than not (i.e., greater than 50% probability) that some portion or all of the deferred tax asset will not be realized in the future. We recognized a reserve of 100% of the amounts of the deferred tax benefit in the amount of $496,100 and $364,100, respectively. As of September 30, 2018, we had cumulative net operating loss carry forwards of $2,236,900 which expire from 2032 through 2038. There are open statutes of limitations for taxing authorities in federal and state jurisdictions to audit our tax returns from 2010 through the current period. Our policy is to account for income tax related interest and penalties in income tax expense in the consolidated statement of operations. There have been no income tax related interest or penalties assessed or recorded. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 11. Subsequent Events On October 25, 2018 we issued 1,000,000 shares to Sterling Financial Consultants LLC for accounting, tax and advisory services. On December 5, 2018 we issued an aggregate of 2,750,000 shares of our restricted common stock to one person pursuant to (i) an August 7, 2018 $10,000 promissory note, as amended, due on February 15, 2019 (750,000 shares) and (ii) a $10,000 Securities Purchase Agreement dated August 7, 2018 (2,000,000 shares). The shares were deemed to have been issued as of August 7, 2018. On December 5, 2018 we issued 10,946,688 shares of our restricted common stock to Robert Gayman pursuant to the exercise of (i) 6,000,000 stock options at an exercise price of $0.0026 per share or an aggregate of $15,600, and (ii) 4,946,688 stock options at an exercise price of $0.01 per share or an aggregate of $49,467, the payment for which was made by making a corresponding deduction to amounts owed by us to Mr. Gayman. On December 5, 2018 Robert Gayman forgave $531,487.12 of the amount due to him by us for services rendered. On December 5, 2018 we issued 500,000 shares to our corporate counsel in consideration of its deferment, on a temporary basis, of legal fees due to it by us for services rendered. On November 1, 2018 we entered into an Employment Services Agreement (the “Roan Agreement”) with Lawrence Roan pursuant to which Mr. Roan is serving as our Executive Director. The Roan Agreement has a 63-month term and is subject to automatic renewal for successive periods of one year unless either we or Mr. Roan gives the other written notice of intention to not renew at least 30 days prior to the end of the existing term. The Roan Agreement provides for a base annual salary of $100,000 and a two-year severance period in the event the Roan Agreement is terminated by us without cause or by Mr. Roan for good reason. Mr. Roan’s base salary payments are payable in bi-weekly installments. The Roan Agreement contains customary termination provisions including terminations with or without cause, for good reason or voluntarily, non-competition and non-solicitation provisions, and an inventions and patents provision which provides that all of the work produced by Mr. Roan, which is created, designed, conceived or developed by Mr. Roan in the course of his employment under the Roan Agreement belongs to us. On November 1, 2018 the Management contracts for Bobby Blair and Brian Neal and the Consultant contract for Robert Gayman were amended to remove the deferred payment salary conversion feature. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Going Concern | Going Concern The accompanying financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”), which contemplates our continuation as a going concern. We have incurred losses to date of $3,682,841 and have negative working capital. To date we have funded our operations through advances from related parties, issuance of convertible debt, and the sale of our common stock. We intend to raise additional funding through third party equity or debt financing. There is no certainty that funding will be available as needed. These factors raise substantial doubt about our ability to continue operating as a going concern. Our ability to continue our operations as a going concern, realize the carrying value of our assets, and discharge our liabilities in the normal course of business is dependent upon our ability to raise capital sufficient to fund our commitments and ongoing losses, and ultimately generate profitable operations. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries, LifeApps Inc. and Sports One Group Inc. All material inter-company transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may differ from these estimates. |
Fair Value Measurements | Fair Value Measurements: ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows: Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange. Level 2 – Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs. Level 3 – Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights. Our financial instruments consist of cash, short-term trade receivables, prepaid expenses, payables, accruals and convertible notes payable. The carrying values of cash and cash equivalents, short-term trade receivables, prepaid expenses, payables, and accruals approximate fair value because of the short-term maturities of these instruments. The fair value of notes payable approximated to their carrying value as generally their interest rates reflected our effective annual borrowing rate. |
Intangibles | Intangibles Intangibles, which include websites and databases acquired, internet domain name costs, and customer lists, are being amortized over the expected useful lives which we estimate to be three to five years. In accordance with Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) Topic 350 Intangibles – Goodwill and Other |
Derivative Financial Instruments: | Derivative Financial Instruments: We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, we used a Black-Scholes valuation model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. |
Revenue Recognition | Revenue Recognition ASC Topic 606, “ Revenue from Contracts with Customers” Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: ● identify the contract with a customer; ● identify the performance obligations in the contract; ● determine the transaction price; ● allocate the transaction price to performance obligations in the contract; and ● recognize revenue as the performance obligation is satisfied. Revenue is currently derived primarily from the sale of sports and fitness apparel and equipment, and software applications designed for use on mobile devices such as smart phones and tablets. We sell our software directly via Internet download through third party agents. We recognize revenue when payment is received from the agent. Payment is received net of commission paid to the agent, usually 70% to us and 30% to the agent. We record the net amount received as revenue. We plan to publish and sell digital magazines through the internet. Magazines can be purchased as individual volumes or as a subscription. To date we have not had any subscription sales. |
Cost of Revenue | Cost of Revenue Cost of revenue includes the cost of amounts paid for articles, photography, editorial and production cost of the magazine and ongoing web hosting costs. Cost of revenue related to product sales includes the direct cost of those products sold. |
Rent Expense | Rent Expense We recognize rent expense on a straight-line basis over the reasonably assured lease term as defined in ASC Topic 840, Leases (“ASC 840”). Our lease is short term and will be renewed on a month to month basis. Rent expense was $0 and $363 for the three months ended September 30, 2018 and 2017, respectively and $255 and $3,975 for the nine months ended September 30, 2018 and 2017, respectively. |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation is presented in accordance with the guidance of ASC Topic 718, Compensation – Stock Compensation |
Earnings per share | Earnings per share We calculate earnings per share in accordance with ASC Topic 260 Earnings Per Share |
Recent Pronouncements | Recent Pronouncements From time to time, new accounting pronouncements are issued that we adopt as of the specified effective date. We believe that the impact of recently issued standards that are not yet effective may have an impact on our results of operations and financial position. In February 2016, the FASB issued ASU No. 2016-02, Leases The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is evaluating the potential impact of ASU 2016-02 on its Consolidated Financial Statements. Other accounting standards that have been issued or proposed 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 Company’s consolidated financial statements upon adoption. |
Convertible Note Payable (Table
Convertible Note Payable (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Convertible Note Payable | |
Schedule of convertible note payable | At September 30, 2018 the balance of the Note is comprised of the following: Face amount of Note $ 44,500 Original issue discount (1,290 ) Debt discount (8,205 ) $ 35,005 |
Options (Tables)
Options (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock option | The following is a summary of stock options issued pursuant to the plan: Options Weighted Weighted Aggregate Outstanding January 1, 2018 17,246,688 $ 0.0056 3.4 — Granted — $ — — — Exercised — $ — — — Cancelled — $ — — — Outstanding September 30, 2018 17,246,688 $ 0.0056 2.70 $ — Exercisable September 30, 2018 17,246,688 $ 0.0056 2.70 $ — |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax provision (benefit) | Income tax provision (benefit) for the periods ended September 30, 2018 and 2017, is summarized below: 2018 2017 Current: Federal $ — $ — State — — Total current — — Deferred: Federal (21% tax rate in 2018) (104,600 ) (19,400 ) State (27,400 ) (3,100 ) Total deferred (132,000 ) (22,500 ) Valuation allowance 132,000 22,500 Total provision $ — $ — |
Schedule of sources and tax effects | The sources and tax effects of the differences as of September 30, 2018 and 2017 are as follows: 2018 2017 Income tax provision at the federal statutory rate 21.0 % 34.0 % State income taxes, net of federal benefit 5.5 % 5.5 % Increase in valuation allowance (26.5 %) (39.5 %) 0.0 % 0.0 % |
Schedule of net deferred income tax assets | Components of the net deferred income tax assets at September 30, 2018 and December 31, 2017 were as follows: 2018 2017 Net operating loss carryovers (adjusted for revised tax rate) $ 496,100 $ 364,100 Valuation allowance (496,100 ) (364,100 ) $ — $ — |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Accumulated (deficit) | $ (3,682,841) | $ (3,682,841) | $ (3,045,388) | ||
Rent expense | $ 0 | $ 363 | $ 255 | $ 3,975 | |
Weighted average shares outstanding | 2,893,000 | 11,065,000 | |||
Maximum [Member] | |||||
Intangibles assets estimated useful life | 5 years | ||||
Minimum [Member] | |||||
Intangibles assets estimated useful life | 3 years |
Related Party Transactions - _2
Related Party Transactions - Officer and Shareholder Advances (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Dec. 19, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Amount due to related party | $ 10,974 | $ 10,974 | $ 7,675 | |||
Notes payable to related parties | 17,885 | 17,885 | 17,585 | |||
Accrued salary | 81,000 | $ 37,500 | 243,000 | $ 112,500 | ||
Net cash advances | 3,599 | 3,599 | 48,510 | |||
Base compensation | 0 | $ 0 | ||||
Accrued interest | 5,736 | 7,976 | ||||
Unpaid accrued salary | $ 844,154 | $ 844,154 | $ 601,154 | |||
President [Member] | Employment Services Agreements [Member] | ||||||
Base annual salary | $ 24,000 | |||||
Former Chief Executive Officers [Member] | Employment Services Agreements [Member] | ||||||
Base compensation | $ 150,000 | |||||
Interest rate | 10.00% |
Note Payable (Details Narrative
Note Payable (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Notes payable | $ 28,000 | $ 20,000 |
Defaulf debt | 18,000 | |
Other Note Payable [Member] | ||
Notes payable | $ 10,000 | |
Number of issuance of common stock | 775,000 | |
Two Unrelated Third Parties [Member] | ||
Notes payable | $ 28,000 | |
Interest rate | 2.00% | |
Single Unrelated Third Parties [Member] | ||
Notes payable | $ 20,000 | |
Interest rate | 7.00% |
Convertible Note Payable (Detai
Convertible Note Payable (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Convertible Note Payable | ||
Face amount of Note | $ 44,500 | |
Original issue discount | (1,290) | |
Debt discount | (8,205) | |
Convertible note payable, net of debt discount | $ 35,005 |
Convertible Note Payable (Det_2
Convertible Note Payable (Details Narrative) | Mar. 06, 2018USD ($)Number | Sep. 30, 2018USD ($) | Sep. 30, 2018USD ($)shares | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) |
Convertible Note Payable | $ 35,005 | $ 35,005 | |||
Original issue discount | (1,290) | (1,290) | |||
Change in value of derivative | 26,625 | 34,127 | |||
Interest on derivative liability | $ 52,453 | 52,453 | |||
Amortization of debt discounts | 24,273 | ||||
Accrued interest | 2,400 | ||||
Penalty assessment | 17,500 | ||||
Additional interest expense | 29,265 | ||||
Stock issued for debt conversion | 10,375 | ||||
Loan Agreement [Member] | Lender [Member] | |||||
Value of debt converted | $ 8,000 | ||||
Number of debt converted | shares | 1,777,778 | ||||
Stock issued for debt conversion | $ 10,375 | ||||
Promissory Note [Member] | |||||
Convertible Note Payable | $ 32,000 | ||||
Original issue discount | $ 3,000 | ||||
Term | 1 year | ||||
Interest rate | 12.00% | ||||
Conversion price | 58.00% | ||||
Trading days | Number | 15 | ||||
Conversion feature of note | $ 55,118 | ||||
Valuation method | Black Scholes valuation model | Black Scholes valuation model | |||
Dividend yield | 0.00% | 0.00% | |||
Maturity Term (in years) | 1 year | 44 years | |||
Risk free interest rate | 3.03% | 2.49% | |||
Annualized volatility | 298.79% | 143.00% |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Compensation expense | $ 146,966 | |
Common stock issued for legal services | 3,000,000 | |
Common stock (in dollars per share) | $ 0.001 | $ 0.001 |
Unrelated Third Party [Member] | ||
Number of common stock issued | 2,000,000 | |
Value of common stock issued | $ 10,000 | |
Common stock (in dollars per share) | $ 0.05 | |
Laon | $ 10,000 | |
Number of common stock granted | 750,000 | |
Lender [Member] | Loan Agreement [Member] | ||
Number of debt converted | 1,777,778 |
Option (Details)
Option (Details) - Employees [Member] | 9 Months Ended |
Sep. 30, 2018USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Outstanding beginning | shares | 17,246,688 |
Granted | shares | |
Exercised | shares | |
Cancelled | shares | |
Outstanding ending | shares | 17,246,688 |
Exercisable ending | shares | 17,246,688 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |
Outstanding beginning | $ / shares | $ 0.0056 |
Granted | $ / shares | |
Exercised | $ / shares | |
Cancelled | $ / shares | |
Outstanding ending | $ / shares | 0.0056 |
Exercisable ending | $ / shares | $ 0.0056 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term [Roll Forward] | |
Outstanding beginning | 3 years 4 months 24 days |
Outstanding ending | 2 years 8 months 12 days |
Exercisable ending | 2 years 8 months 12 days |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Aggregate Intrinsic Value At Date Grant [Roll Forward] | |
Outstanding beginning | $ | |
Outstanding ending | $ | |
Exercisable ending | $ |
Option (Details Narrative)
Option (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Stock based compensation expense Compensation expense recognized in future periods | $ 0 | $ 0 |
Stock based compensation expense | $ 0 | $ 7,312 |
Outstanding Warrants (Details N
Outstanding Warrants (Details Narrative) - shares | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Outstanding Warrants | ||
Number of warrants | 0 | 0 |
Number of warrants previously outstanding | 400,000 | |
Warrants expiration date | Sep. 20, 2017 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Current: | ||||
Federal | ||||
State | ||||
Total current | ||||
Deferred: | ||||
Federal (21% tax rate in 2018) | (104,600) | (19,400) | ||
State | (27,400) | (3,100) | ||
Total deferred | (132,000) | (22,500) | ||
Valuation allowance | 132,000 | 22,500 | ||
Total provision |
Income Taxes (Details 1)
Income Taxes (Details 1) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||
Income tax provision at the federal statutory rate | 21.00% | 34.00% |
State income taxes, net of federal benefit | 5.50% | 5.50% |
Increase in valuation allowance | (26.50%) | (39.50%) |
Effective income tax rate reconciliation | 0.00% | 0.00% |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryovers (adjusted for revised tax rate) | $ 496,100 | $ 364,100 |
Valuation allowance | (496,100) | (364,100) |
Deferred tax assets, net |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Corporate tax rate | 34.00% | 21.00% |
Deferred tax benefit | $ 496,100 | $ 364,100 |
Net operating loss carry forwards | $ 2,236,900 | |
Maximum [Member] | ||
Operating loss carry forwards expiration period | Dec. 31, 2038 | |
Minimum [Member] | ||
Operating loss carry forwards expiration period | Dec. 31, 2032 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Dec. 05, 2018 | Nov. 01, 2018 | Oct. 28, 2018 | Aug. 07, 2018 | Sep. 30, 2018 |
Principal amount | $ 44,500 | ||||
Securities Purchase Agreement [Member] | |||||
Number of share issued | 2,000,000 | ||||
Value of share issued | $ 10,000 | ||||
Employment Services Agreement [Member] | |||||
Roan agreement term | The Roan Agreement has a 63-month term and is subject to automatic renewal for successive periods of one year unless either we or Mr. Roan gives the other written notice of intention to not renew at least 30 days prior to the end of the existing term. | ||||
Base annual salary | $ 100,000 | ||||
Severance period | 2 years | ||||
Promissory Note [Member] | |||||
Maturity date | Feb. 15, 2019 | ||||
Principal amount | $ 10,000 | ||||
Number of share issued | 750,000 | ||||
Subsequent Event [Member] | |||||
Number of restricted common stock issued | 2,750,000 | ||||
Subsequent Event [Member] | Robert Gayman [Member] | |||||
Number of restricted common stock issued | 10,946,688 | ||||
Forgave amount due | $ 531,487 | ||||
Number of share issuer for service rendered | 500,000 | ||||
Subsequent Event [Member] | Robert Gayman [Member] | 0.0026 Exercise Price [Member] | |||||
Number of stock option issued | $ 6,000,000 | ||||
Value of stock option issued | 15,600 | ||||
Subsequent Event [Member] | Robert Gayman [Member] | 0.01 Exercise Price [Member] | |||||
Number of stock option issued | $ 4,946,688 | ||||
Value of stock option issued | 49,467 | ||||
Subsequent Event [Member] | Sterling Financial Consultants LLC [Member] | |||||
Number of share issued for accounting, tax and advisory services | 1,000,000 |