Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Apr. 14, 2016 | Jun. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | PeerLogix, Inc. | ||
Entity Central Index Key | 1,603,494 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
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 Public Float | $ 318,582 | ||
Entity Common Stock, Shares Outstanding | 23,345,035 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash | $ 1,298 | $ 10,049 |
Prepaid expenses and other current assets | 19,973 | 495 |
Total Current Assets | 21,271 | 10,544 |
Total Assets | 21,271 | 10,544 |
Current liabilities | ||
Accounts payable and accrued liabilities | 249,080 | 74,973 |
Demand loans payable | 15,000 | 15,000 |
Current maturities of notes payable - related party | 0 | 56,158 |
Current maturities of convertible notes payable | 0 | 25,000 |
Loans payable - officers | 33,648 | 29,607 |
Total Current Liabilities | 297,728 | 200,738 |
Long-Term Liabilities | ||
Convertible notes payable, net of current maturities | 0 | 58,000 |
Total Long-Term Liabilities | 0 | 58,000 |
Total Liabilities | $ 297,728 | $ 258,738 |
Commitments and Contingencies | ||
Shareholders' Equity (Deficit) | ||
Preferred stock par value $0.001: 10,000,000 shares authorized; no shares issued or outstanding as of December 31, 2015 and 2014 | $ 0 | $ 0 |
Common stock par value $0.001: 100,000,000 shares authorized;23,107,535 shares issued and outstanding as of December 31, 2015; 16,000,002 shares issued and outstanding as of December 31, 2014 | 23,108 | 16,000 |
Additional paid in capital | 1,245,416 | (239,727) |
Accumulated deficit | (1,544,981) | (24,467) |
Total Stockholders' Equity Deficiency | (276,457) | (248,194) |
Total Liabilities and Stockholders' Deficiency | $ 21,271 | $ 10,544 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ .001 | $ .001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common Stock, par value per share | $ .001 | $ .001 |
Common Stock, shares authorized | 100,000,000 | 100,000,000 |
Common Stock, shares issued | 23,107,535 | 16,000,002 |
Common Stock, shares outstanding | 23,107,535 | 16,000,002 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | ||
Revenues | $ 2,520 | $ 0 |
Operating expenses | ||
Compensation | 294,875 | 26,052 |
Research and development | 293,516 | 57,407 |
Professional fees | 704,718 | 126,411 |
General and administrative | 205,032 | 61,726 |
Operating Expenses | 1,498,141 | 271,596 |
Loss from operations | (1,495,621) | (271,596) |
Other Income (Expenses) | ||
Interest Expense | (24,962) | (3,563) |
Interest income | 69 | 0 |
Other income (expense) | (24,893) | (3,563) |
Net loss | $ (1,520,514) | $ (275,159) |
Net loss per common share - basic and diluted | $ (0.08) | $ (0.02) |
Weighted average common shares outstanding - basic and diluted | 19,117,099 | 15,819,212 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficiency - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Class A Units [Member] | ||
Beginning balance, shares | 0 | 10,472 |
Beginning balance, value | $ 0 | $ 45,000 |
Stock issued for services, shares | 698 | |
Stock issued for services, value | $ 64,037 | |
Recapitalization from LLC to corporation, shares | (11,170) | |
Recapitalization from LLC to corporation, value | $ (109,037) | |
Ending balance, shares | 0 | 0 |
Ending balance, value | $ 0 | $ 0 |
Preferred Stock | ||
Beginning balance, shares | 0 | 0 |
Beginning balance, value | $ 0 | $ 0 |
Ending balance, shares | 0 | 0 |
Ending balance, value | $ 0 | $ 0 |
Common Stock [Member] | ||
Beginning balance, shares | 16,000,002 | 0 |
Beginning balance, value | $ 16,000 | $ 0 |
Common stock and warrants issued for cash, shares | 2,683,336 | |
Common stock and warrants issued for cash, value | $ 2,683 | |
Common stock and warrants issued for settlement of convertible notes, shares | 174,566 | |
Common stock and warrants issued for settlement of convertible notes, value | $ 175 | |
Stock issued for services, shares | 250,000 | |
Stock issued for services, value | $ 250 | |
Recapitalization from LLC to corporation, shares | 16,000,002 | |
Recapitalization from LLC to corporation, value | $ 16,000 | |
Common stock issued in reverse recapitalization, shares | 3,999,631 | |
Common stock issued in reverse recapitalization, value | $ 4,000 | |
Ending balance, shares | 23,107,535 | 16,000,002 |
Ending balance, value | $ 23,108 | $ 16,000 |
Additional Paid-In Capital [Member] | ||
Beginning balance, value | (239,727) | 0 |
Common stock and warrants issued for cash, value | 1,507,318 | |
Common stock and warrants issued for settlement of convertible notes, value | 90,987 | |
Related party loan forgiven | 2,577 | |
Stock issued for services, value | 149,750 | |
Warrants issued for services | 126,000 | |
Recapitalization from LLC to corporation, value | (239,727) | |
Stock issuance costs | (387,489) | |
Common stock issued in reverse recapitalization, value | (4,000) | |
Ending balance, value | 1,245,416 | (239,727) |
Accumulated Deficit [Member] | ||
Beginning balance, value | (24,467) | (82,072) |
Recapitalization from LLC to corporation, value | 332,764 | |
Net loss | (1,520,514) | (275,159) |
Ending balance, value | (1,544,981) | (24,467) |
Beginning balance, value | (248,194) | (37,072) |
Common stock and warrants issued for cash, value | 1,510,001 | |
Common stock and warrants issued for settlement of convertible notes, value | 91,162 | |
Related party loan forgiven | 2,577 | |
Stock issued for services, value | 150,000 | 64,037 |
Warrants issued for services | 126,000 | |
Stock issuance costs | (387,489) | |
Net loss | (1,520,514) | (275,159) |
Ending balance, value | $ (276,457) | $ (248,194) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | ||
Net loss | $ (1,520,514) | $ (275,159) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Class A units issued for services | 0 | 64,037 |
Stock based compensation | 150,000 | 0 |
Amortization of debt discount | 8,750 | 0 |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other current assets | (19,478) | (495) |
Accounts payable and accrued liabilities | 182,413 | 62,667 |
Net Cash Used In Operating Activities | (1,198,829) | (148,950) |
Cash Flows From Financing Activities: | ||
Proceeds from demand loans | 5,500 | 0 |
Repayment of demand loans | (5,500) | 0 |
Proceeds from notes payable | 17,500 | 0 |
Repayment of notes payable | (26,250) | 0 |
Proceeds from notes payable - related party | 0 | 53,725 |
Repayment of notes payable - related party | (53,725) | 0 |
Proceeds from officer loans | 4,041 | 17,368 |
Proceeds from convertible notes | 0 | 83,000 |
Net proceeds from issuance of common stock and warrants | 1,248,512 | 0 |
Net Cash Provided By Financing Activities | 1,190,078 | 154,093 |
Net change in cash | (8,751) | 5,143 |
Cash at beginning of year | 10,049 | 4,906 |
Cash at end of year | 1,298 | 10,049 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 19,360 | 0 |
Income tax paid | 0 | 0 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Common stock and warrants issued for conversion of convertible notes and accrued interest | 91,162 | 0 |
Stock issuance costs paid in the form of warrants | 126,000 | 0 |
Forgiveness of related party loan | 2,577 | 0 |
Original issue discount on notes payable | 8,750 | 0 |
Recapitalization from LLC to corporation | $ 0 | $ 223,727 |
1. Organization and Operations
1. Organization and Operations | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Operations | Peerlogix, Inc. (formerly Realco International, Inc.) (Peerlogix or the Company) was incorporated in Nevada on February 14, 2014. The Company was originally established for the purpose of real estate sales and management in Europe, the Middle East and the United States. On September 3, 2015, we filed an Amendment to our Certificate of Incorporation by which we changed our name from Realco International, Inc. to Peerlogix, Inc. Recent Developments Acquisition of Peerlogix Technolgies, Inc. On August 14, 2015, (the Closing Date) the Company and Peerlogix Technologies, Inc. (formerly Peerlogix, Inc.), a privately held company, entered into an Agreement and Plan of Merger (the Merger Agreement). Under the terms of the Merger Agreement, Peerlogix Technologies, Inc. exchanged all of their shares of common stock for newly issued common shares of the Company (the Share Exchange), with the Company remaining as the surviving corporation (the Merger). Following the closing of the Merger, the Company changed its name to Peerlogix, Inc. The stockholders of the Company before the Share Exchange, after giving effect to cancellation of 18,000,000 shares of the Companys common stock, retained 990,000 shares of the Companys common stock, which after giving effect to a 4.04 for 1 split of the Companys common stock (the Stock Split), will have become approximately 3,999,600 shares of Realco common stock. Upon closing the transaction, Peerlogix, Inc. had 21,049,602 shares of common stock outstanding. As a result of this transaction, the former owners of Peerlogix Technologies, Inc. own approximately 81.0% of Peerlogix, Inc. common stock as of the closing date. The Share Exchange has been treated as a reverse merger and recapitalization of Peerlogix Technologies, Inc. for financial accounting purposes and the Company will continue the existing business operations of Peerlogix Technologies, Inc. as a wholly-owned subsidiary. The historical financial statements of the Company are those of Peerlogix Technologies, Inc, and of the consolidated entities from the date of merger forward. As a result of this merger, the equity sections of Peerlogix Technologies, Inc. for all prior periods presented reflect the recapitalization described above and are consistent with the December 31, 2015 and 2014 consolidated balance sheets presented for the Company. Peerlogix Technologies, Inc. was incorporated on December 9, 2014 under the laws of the State of Delaware for the sole purpose of acquiring all of the outstanding membership units of IP Squared Technologies Holdings, LLC, an entity organized in 2012. Upon incorporation, the Company issued an aggregate of 16,000,002 common shares of the newly formed corporations common stock to the members of the LLC for all of the outstanding membership units of IP Squared Technologies Holdings, LLC (the Recapitalization). As a result of the foregoing transactions, Peerlogix is now a data aggregation company providing a proprietary software as a service (SAAS) platform which enables the tracking and cataloguing of Torrent files and Torrent networks in order to determine consumer trends and preferences based upon media consumption. Prior to the merger, the Company had minimal operations. Simultaneously with the Share Exchange, on the Closing Date all of the issued and outstanding options and warrants to purchase shares of Peerlogix Technologies Inc. common stock were exchanged, respectively, into options (the New Options) and warrants (the New Warrants) to purchase shares of common stock of the Company. The number of shares of common stock issuable under, and the price per share upon exercise of, the New Options and the New Warrants were the same as those of the original options and warrants of Peerlogix Technologies Inc., as a result of a 1 for 1 exchange ratio of securities pursuant to the Share Exchange, which is described in the Share Exchange Agreement. The New Options will be administered under the Companys 2015 Equity Incentive Plan, which the Company assumed and adopted on the Closing Date in connection with the Share Exchange. |
2. Going Concern and Management
2. Going Concern and Management Liquidity Plans | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern and Management Liquidity Plans | The Company has generated minimal revenues and continues to incur recurring losses from operations and has an accumulated deficit since inception. Accordingly, the accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred a net loss of approximately $1,520,000 and net cash used in operations of approximately $1,200,000 for the year ended December 31, 2015. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company's primary source of operating funds since inception has been cash proceeds from the sale of Class A units, common stock and common stock warrants, convertible debentures and notes payable. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering. (See Note 14 for financing activities subsequent to December 31, 2015.) The Company requires immediate capital to remain viable. The Company can give no assurance that such financing will be available on terms advantageous to the Company, or at all. Should the Company not be successful in obtaining the necessary financing to fund its operations, the Company would need to curtail certain or all of its operational activities. There can be no assurance that such a plan will be successful. The accompanying consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. Accordingly, the accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplates continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the consolidated financial statements do not necessarily purport to represent realizable or settlement values. The consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty. |
3. Summary of Significant Accou
3. Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Basis of Presentation The accompanying consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Fiscal Year-End The Company elected December 31 as its fiscal year-end date. Principles of Consolidation The Company's wholly-owned consolidated subsidiaries are as follows: Name of consolidated subsidiary or entity State or other jurisdiction of incorporation or organization Date of incorporation or formation (date of acquisition, if applicable) Attributable interest Peerlogix Technologies, Inc. Delaware December 9, 2014 (August 14, 2015) 100% IP Squared Technologies Holdings, LLC Delaware November 20, 2012 (December 9, 2014) 100% The historical financial statements of the Company are those of PeerLogix Technologies, Inc. and of the consolidated entities from the date of merger forward. All significant inter-company balances and transactions have been eliminated. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from these estimates. The Companys significant estimates and assumptions include the fair value of the Companys equity instruments, convertible debt, stock-based compensation, and the valuation allowance relating to the Companys deferred tax assets. Concentration of Credit Risk The Company maintains deposits in a financial institution which is insured by the Federal Deposit Insurance Corporation (FDIC). The balance at times may exceed federally insured limits. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. As of December 31, 2015 and 2014, the Company does not have any cash equivalents. Income Taxes Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (temporary differences) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of these differences that have been included or excluded in the financial statements or tax returns. The Company follows a recognition threshold and measurement process for consolidated financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The guidance also prescribes direction on the recognition, classification, interest and penalties in interim periods, disclosure and transition. The Company classifies interest expense and any related penalties, if any, related to income tax uncertainties as a component of income tax expense. No interest or penalties have been recognized as of December 31, 2015 and 2014. Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Companys financial statements for the years ended December 31, 2015 and 2014. The Company does not expect any significant changes in the unrecognized tax benefits within twelve months of the reporting date. Prior to the Recapitalization in December 2014, the Company was a Delaware limited liability company that passed through income and losses to its members. As a result, the Company was not subject to any U.S. federal or state income taxes as the related tax consequences were reported by the individual members and would not have had a material impact on the consolidated financial statements. See Note 1. Convertible Instruments The Company bifurcates conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria includes circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule when the host instrument is deemed to be conventional as that term is described under applicable U.S. GAAP. When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption. The Company also records, when necessary, deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the preferred shares. Accounting for Warrants The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net-cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). The Company assessed the classification of its common stock purchase warrants as of the date of each equity offering and determined that such instruments met the criteria for equity classification, as the settlement terms indicate that the instruments are indexed to the entitys underlying stock. Research and Development Research and development (R&D) expenses are charged to operations as incurred. Advertising The Company expenses advertising when incurred. During the years ended December 31, 2015 and 2014, the Company incurred advertising expenses of $28,933 and $0, respectively. Net Loss Per Share Basic loss per share was computed using the weighted average number of outstanding common shares. Diluted earnings per share, when presented, includes the effect of dilutive common stock equivalents from the assumed exercise of options, warrants, convertible preferred stock and convertible notes. Common stock equivalents are excluded in the computation of diluted earnings per share since their inclusion would be anti-dilutive. Total shares issuable upon the exercise of warrants and conversion of convertible promissory notes for the years ended December 31, 2015 and 2014 were as follows: December 31, 2015 2014 Warrants 2,951,669 Convertible promissory notes 96,248 Total 2,951,669 96,248 Share-Based Compensation The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and amortized over the respective employment agreements or director service periods. For non-employees, the fair value of the award is measured on the commitment date and generally re-measured on interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based compensation expense is recorded by the Company in the same expense classifications in the consolidated statements of operations as if such amounts were paid in cash. Fair Value of Financial Instruments The carrying amounts of cash, accounts payable, and accrued liabilities approximate fair value due to the short-term nature of these instruments. The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 Fair Value Measurements and Disclosures which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3 Pricing inputs that are generally unobservable inputs and not corroborated by market data. Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the warrant liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Companys Chief Executive Officer determines its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Companys Chief Executive Officer. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. No such items existed as of December 31, 2015 and 2014. Recently Issued Accounting Pronouncements In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-12, Compensation-Stock Compensation In August 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-15, Presentation of Financial Statements-Going Concern. In April 2015, the Financial Accounting Standards Board issued Accounting Standards Update 2015-03, InterestImputation of Interest. To simplify presentation of debt issuance costs, the amendments in this Update would require that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs would not be affected by the amendments in this Update. This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2014-250InterestImputation of Interest (Subtopic 835-30), which has been deleted. The amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company is currently evaluating the effects of ASU 2015-03 on its consolidated financial position. In August 2015, the FASB issued the FASB Accounting Standards Update No. 2015-14 Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (ASU 2015-14).The amendments in this Update defer the effective date of Update 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently assessing the impact, if any, of the adoption of ASU 2015-04 on the consolidated financial statements. In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842). The FASB issued this update to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The updated guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company is currently evaluating the impact of the new standard. The FASB and the SEC have issued certain accounting standards updates and regulations that will become effective in subsequent periods; however, management of the Company does not believe that any of those updates would have significantly affected the Companys financial accounting measures or disclosures had they been in effect during 2015 or 2014, and does not believe that any of those pronouncements will have a significant impact on the Companys consolidated financial statements at the time they become effective. Subsequent Events The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements, except as disclosed. |
4. Demand Loans Payable
4. Demand Loans Payable | 12 Months Ended |
Dec. 31, 2015 | |
Demand Loans Payable | |
Demand Loans Payable | On January 24, 2013 a family member of an officer of the Company advanced $15,000 to the Company. The proceeds from the non-interest bearing advance were used for general operating expenses. As of December 31, 2015 and 2014, the Company is reflecting a liability of $15,000. The Company did not impute interest on the loan as it was deemed to be de minimus to the consolidated financial statements. On January 30, 2015 an officer of a related party to the Company advanced $5,500 to the Company. The proceeds from the non-interest bearing advance were used for general operating expenses. The Company did not impute interest on the loan as it was deemed to be de minimus to the consolidated financial statements. On March 5, 2015, the loan was repaid. |
5. Notes Payable
5. Notes Payable | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Notes Payable | During June and July of 2015, the Company issued promissory notes in the aggregate principal amount of $17,500 to six lenders. The notes bore aggregate interest at 50%, calculated monthly, and matured August 1, 2015. If the notes are repaid within the first month, the lenders are to be repaid 50% interest on the notes (the Original Issue Discount), a minimum payment of $26,250. The Original Issue Discount was accreted to interest expense over the life of the notes. During August and September of 2015, the notes were repaid. Total interest paid on the notes amounted to $17,500. |
6. Notes Payable - Related Part
6. Notes Payable - Related Party | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Notes Payable - Related Party | On December 1, 2013, the Company issued a Senior Unsecured Note in the principal amount of $2,433 to a shareholder of the Company. The note bore interest at a rate of 5% per annum. Principal and accrued interest on the note was due and payable on the earlier of (i) June 30, 2015 and (ii) the date upon which the Company receives gross proceeds of any offering of indebtedness, equity securities, or other of no less than $500,000. During 2014, the Company received additional advances under the note totaling $53,725. At December 31, 2014 the principal balance on the note was $56,158. Note principal and interest in the aggregate of $55,585 was repaid on March 6, 2015, at which time, the remaining outstanding principal and interest on the note in the amount of $2,577 was forgiven and accounted for as contributed capital. |
7. Convertible Notes Payable
7. Convertible Notes Payable | 12 Months Ended |
Dec. 31, 2015 | |
Convertible Notes Payable [Abstract] | |
Convertible Notes Payable | a) Senior Unsecured Convertible Notes During December 2014, the Company issued Senior Unsecured Convertible Notes in the aggregate principal amount of $25,000. The notes bore interest at a rate of 5% per annum. Principal and accrued interest on the notes was due and payable on the earlier of (i) September 12, 2015 and (ii) the date upon which the Company receives gross proceeds of any offering of indebtedness, equity securities, or other of no less than $200,000 (the Qualified Financing). The notes automatically convert at the effective time of a Qualified Financing under the same terms given to investors in the Qualified Financing. During the first quarter of 2015, the Company entered into a Qualified Financing and the notes became convertible. As per the terms of the Qualified Financing, the noteholders converted an aggregate of $25,000 in principal and were issued 50,000 shares of common stock and 50,000 warrants entitling the holders to purchase one share of common stock for a five-year period at an exercise price of $0.60 per share. b) Senior Unsecured Convertible Notes During 2014 the Company engaged in an offering (the Offering) of Series A 10% Senior Convertible Promissory Notes in the aggregate principal amount of up to $300,000 with multiple investors (collectively, the Convertible Notes). During 2014, the Company received aggregate proceeds of $58,000 related to the offering. The Convertible Notes contained the following terms and conditions: · Maturing March through September 2016, · Interest rate at 10% per annum, with interest payable at maturity, · Until the effective time of a merger, the Convertible Notes shall be convertible at the option of the holder thereof into shares of membership interests in the Company based on a $10 million pre-conversion valuation. At the effective time of a merger, the Convertible Notes shall be automatically converted without any prior action by any holder into securities offered in a qualified financing at 20% discount to the qualified financing. For purposes of Note 6 (c) qualified financing means the sale for cash by the Company or any successor in interest to the Company by means of merger, share exchange, asset acquisition or otherwise, of equity or equity derivative securities (e.g., convertible indebtedness, preferred stock, warrants, etc.), or any combination thereof, generating aggregate gross proceeds of at least $1,500,000 (including the amount of any Notes which convert into securities issued in the qualified financing) as described herein, provided, that the Company shall effect a qualified transaction (e.g., merge, sell all or substantially all of its assets, etc.) substantially simultaneously with the consummation of such qualified financing. The Company evaluated the provisions of the convertible notes periodically to determine whether any of the provisions would be considered embedded derivatives that would require bifurcation. Because the underlying common stock is thinly traded the shares of common stock underlying the convertible notes were not readily convertible to cash. Thus, the conversion option did not meet the net settlement requirement and would not be considered a derivative if freestanding. Accordingly, the convertible notes did not contain an embedded conversion feature that must be bifurcated. During the third quarter of 2015, as a result of the Merger Agreement and a qualified financing (as defined), the notes became convertible. As per the terms of the qualified financing, the noteholders converted an aggregate of $58,000 in principal and $8,162 in accrued interest and were issued 124,566 shares of common stock. The conversion feature of the notes provides for an effective conversion price that is below market value on the date of conversion. Such feature is normally characterized as a beneficial conversion feature. The Company analyzed the beneficial conversion feature on the date of conversion and deemed it to be de minimus. Debt under these obligations is as follows: December 31, December 31, Convertible notes payable $ $ 83,000 Less: current maturities (25,000 ) Convertible notes payable, net of Current maturities $ $ 58,000 |
8. Loans Payable - Officers
8. Loans Payable - Officers | 12 Months Ended |
Dec. 31, 2015 | |
Loans Payable - Officers | |
Loans Payable - Officers | During the year ended December 31, 2015 and in prior periods, one of the Companys officers made non-interest bearing loans to the Company which are due on demand. As of December 31, 2015 and 2014 the Company is reflecting a liability of $33,648, and $29,607, respectively. The Company did not impute interest on the loan as it was deemed to be de minimus to the consolidated financial statements. |
9. Stockholders' Deficit
9. Stockholders' Deficit | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Stockholders' Deficit | There is not yet a viable market for the Companys common stock to determine its fair value, therefore management is required to estimate the fair value to be utilized in the determining stock-based compensation costs. In estimating the fair value, management considers recent sales of its common stock to third parties. Considerable management judgment is necessary to estimate the fair value. Accordingly, actual results could vary significantly from managements estimates. Amendment to the Certificate of Incorporation On August 19, 2015, the Company filed with the Secretary of State of the State of Nevada an amendment to its Certificate of Incorporation increasing the number of shares of common stock that the Company is authorized to issue from 25,000,000 shares of common stock, par value $0.00001 per share, to 100,000,000 shares of common stock, par value $0.001 per share. In addition the Company is authorized to issue 10,000,000 shares of preferred stock, par value $0.001 per share, issuable in series with rights, preferences, privileges and restrictions as determined by the Companys board of directors. The amendment was approved by the written consent of the holders of a majority of the outstanding shares of common stock of the Company. Sale of Common stock During February and March 2015 (Offering 1), the Company sold $500,000 of Units to investors. Each Unit was sold at a price of $0.50 per Unit and consisted of one (1) share of common stock, par value $0.001 per share, and one (1) warrant entitling the holder to purchase one share of common stock for a five-year period at an exercise price of $0.60 per share. An aggregate of 1,000,000 shares and 1,000,000 warrants were issued to such investors. The placement agent received as compensation for its services $50,000 (10% commission) and warrants to purchase 50,000 Units at a price of $0.01 per Unit, with each Unit consisting of one share of common stock and one warrant to purchase a share of common stock at a price of $0.60 per Share. The value of the warrants was a direct cost of the private placement and has been recorded as an increase and decrease to additional paid in capital. In addition, the Company incurred legal and other miscellaneous costs in the amount of $14,263 related to the transaction, which were offset against equity. During August and September 2015 (Offering 2), the Company sold 1,683,333 Units at a price of $0.60 per Unit. Each Unit consists of one share of Common Stock and a warrant to purchase one share of Common Stock. The warrants (the Investor Warrants) are exercisable for a period of five years at a purchase price of $0.72 per share of Common Stock. The investors in the closing collectively purchased 1,683,333 Units for total cash consideration of $1,010,000. The placement agent received as compensation for its services $101,000 (10% commission) and warrants to purchase 168,333 Units at a price of $0.60 per Unit, with each Unit consisting of one share of common stock and one warrant to purchase a share of common stock at a price of $0.60 per Share. The placement agent warrants are exercisable for a period of five years. The value of the warrants was a direct cost of the private placement and has been recorded as an increase and decrease to additional paid in capital. The placement agent also received payment of a 3% non-accountable expense allowance in the amount of $30,300. In addition the Company incurred legal and other miscellaneous costs in the amount of approximately $66,000 related to the transaction, which were offset against equity. Common stock issued for services During the year ended December 31, 2015, the Company granted an aggregate of 250,000 restricted common shares to a consultant with a fair value of $150,000. The restricted shares vested immediately on the dates of issuance. The Company has recorded $150,000 in stock-based compensation expense for the year ended December 31, 2015, which is a component of professional fees in the consolidated statements of operations. The shares were valued based on recent sales of its common stock to independent qualified investors. Preferred Stock The Company is authorized to issue up to 10,000,000 shares of preferred stock, par value $0.001 per share. No shares of its preferred stock are issued or outstanding. Equity Incentive Plan Before the Share Exchange, the Companys board of directors adopted the 2015 Equity Incentive Plan (the 2015 Plan), which was submitted to and approved by the shareholders of the Company prior to the closing of the Share Exchange. The 2015 Plan provides for the issuance of up to 3,000,000 shares of common stock as incentive awards granted to executive officers, key employees, consultants and directors. In addition, the Company assumed and adopted the 2015 Plan, and as described in Note 1, option holders under that plan will be granted New Options to purchase common stock of the Company. As of December 31, 2015 no options had been issued under the 2015 Plan. No further options will be granted under the 2015 Plan. If an incentive award granted under the 2015 Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered in connection with an incentive award, the shares subject to such award and the surrendered shares will become available for further awards under the 2015 Plan. Shares issued under the 2015 Plan through the settlement, assumption or substitution of outstanding awards or obligations to grant future awards as a condition of acquiring another entity are not expected to reduce the maximum number of shares available under the 2015 Plan. In addition, the number of shares of Common Stock subject to the 2015 Plan, any number of shares subject to any numerical limit in the 2015 Plan, and the number of shares and terms of any incentive award are expected to be adjusted in the event of any change in our outstanding Common Stock by reason of any stock dividend, spin-off, split-up, stock split, reverse stock split, recapitalization, reclassification, merger, consolidation, liquidation, business combination or exchange of shares or similar transaction. Capital contribution On December 9, 2014, as part of the recapitalization, the Company applied paragraph 505-10-S99-3 of the FASB Accounting Standards Codification (formerly Topic 4B of the Staff Accounting Bulletins (SAB) (SAB Topic 4B) issued by the U.S. Securities and Exchange Commission (the SEC), by reclassifying the LLC members capital account inclusive of capital contributions of $109,037 and the LLCs accumulated losses of ($332,764) as of December 9, 2014 to additional paid-in capital. Class A Units During the year ended December 31, 2014, IP Squared issued 698 Class A units to a consultant for services rendered. The units were fully vested on the date of issuance. The Company recorded $64,037 of consultant fees in connection with such issuance. The Company determined the fair value of the equitybased payment based on the fair value of the consideration received which was more reliably measurable. Each holder of Class A units was entitled to one vote for each Class A unit held. Upon the Recapitalization, all of the then-outstanding Class A units were converted into shares of common stock. As of December 31, 2014, the Company had no Class A units outstanding. IP Squared Technologies Holdings, LLC Members Distributions Prior to the Recapitalization, in accordance with the LLC Agreement, the Company distributed to the holders of Class A units (hereafter referred to as the members) pro rata net income or losses based upon the number of units held by the members. |
10. Stock Warrants
10. Stock Warrants | 12 Months Ended |
Dec. 31, 2015 | |
Warrants and Rights Note Disclosure [Abstract] | |
Stock Warrants | The following tables set forth information concerning the Company's warrants outstanding as of, and during the year ended December 31, 2015. No warrants were granted by the Company prior to January 1, 2015: Shares Underlying Warrants Weighted Average Exercise Price Aggregate Intrinsic Value Outstanding at December 31, 2014 $ $ Granted 2,951,669 0.66 Expired Exercised Cancelled Outstanding and exercisable at December 31, 2015 2,951,669 $ 0.66 $ The following is additional information with respect to the Company's warrants as of December 31, 2015: Number of Warrants Range of Exercise Price Weighted Average Remaining Contractual Life (In Years) 2,951,669 $0.01 - $0.72 4.54 2,951,669 |
11. Commitments and Contingenci
11. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Employment Agreements On August 13, 2015 the Company entered into an employment agreement with Joshua Partridge as the Companys Head of Business Development and Secretary. The agreement calls for a three year term, an annual salary of $120,000 per annum with annual 10% increases and a payment upon termination in an amount equal to any and all unpaid salary through the end of the term. On September 10, 2015, the Company entered into a new employment agreement with Mr. Partridge solely to reflect Mr. Partridges new position as the Companys Chief Operating Officer. On August 13, 2015 the Company entered into an employment agreement with William Gorfein as the Companys Chief Executive Officer. The agreement calls for a three year term, an annual salary of $120,000 per annum with annual 10% increases and a payment upon termination in an amount equal to any and all unpaid salary through the end of the term. On August 31, 2015 the Company entered into an employment agreement with Charles Gonsher as the Companys Chief Accounting Officer. The agreement called for a two year term, an annual salary of $90,000 per annum. In addition, Mr. Gonsher was to be granted an option to purchase 240,000 shares of the Companys common stock. As of December 31, 2015 the terms of the options were not finalized. On February 18, 2016 Mr. Gonshers employment agreement was terminated. Consulting Agreement On August 24, 2015, the Company entered into a consulting agreement whereby the consultant agreed to provide investor and public relations services to the Company for a period of two months. As compensation for the services, the Company will pay the consultant a monthly fee of $20,000 and the Company shall issue 100,000 shares of the Company common stock. On November 23, 2015, the agreement was amended and extended for a period of an additional two months beginning on November 23, 2015. As compensation for the services, the Company will pay the consultant a monthly fee of $20,000 and the Company shall issue 150,000 shares of the Company common stock. The Company recorded stock compensation expense relating to the agreements of approximately $150,000, during the year ended December 31, 2015. Registration Rights Agreement All of the securities issued in connection with Offering 1, Offering 2 and the Share Exchange (collectively the Transactions) are restricted securities, and as such are subject to all applicable restrictions specified by federal and state securities laws. In connection with Offering 1, Offering 2 and the Share Exchange, the Company entered into registration rights agreements with all of its shareholders. Under the terms of the registration rights agreements, the Company has committed to file a registration statement covering the resale of (i) all shares of common stock outstanding as of August 14, 2015, the closing date of the Share Exchange; (ii) all of the shares of common stock underlying the Investor Warrants in Offering 2 and the warrants that were included in the Offering 1 units; (iii) all of the shares issuable upon exercise of the placement agent warrants (and the shares underlying the warrants issuable upon exercise of such placement agent warrants) issued in Offering 1 and Offering 2 within 60 days from August 14, 2015 (the Filing Deadline), and shall use commercially reasonable efforts to cause the registration statement to become effective no later than 90 days after it is filed (the Effective Deadline). The Company has agreed to use reasonable efforts to maintain the effectiveness of the registration statement through the one year anniversary of the date the registration statement is declared effective by the Securities and Exchange Commission (SEC), or until Rule 144 of the Securities Act is available to investors in the Offering with respect to all of their shares, whichever is earlier. The holders of any registrable securities removed from the Registration Statement a result of a Rule 415 or other comment from the SEC shall have piggyback registration rights for the shares of Common Stock or Common Stock underlying such warrants with respect to any registration statement filed by the Company following the effectiveness of the registration statement which would permit the inclusion of these shares. As of the date of the filing of this report the registration statement has not been filed. The registration rights agreements do not contain a penalty clause for the failure to file a registration statement within the period agreed upon. However, we do not exclude the possibility that our shareholders may bring litigations against us in connection with claims arising out of our failure to file a registration statement pursuant to the registration rights agreements and seek remedies under the common law. Litigations, Claims and Assessments In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. There are no such matters that are deemed material to the consolidated financial statements as of December 31, 2015 and 2014. Operating Leases The Company has an operating lease for its New York office facility under a month-to-month agreement. Beginning in October 2015, due to an increase in office space, the Company will pay monthly rental payments of $9,600. The Company will receive a discounted monthly rate of $6,663 for the period October 2015 through January 2016. Prior to October 2015, the Companys monthly rental payment was approximately $2,500. The Companys monthly rental amount in the past fluctuated based on space needed each month. Rent expense for the years ended December 31, 2015 and 2014 totaled $33,125 and $8,121, respectively. |
12. Income Taxes
12. Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
12. Income Taxes | The tax effects of temporary differences that give rise to deferred tax assets as of December 31, 2015 and 2014 are presented below: Prior to the Recapitalization in December 2014, the Company was a Delaware limited liability company that passed through income and losses to its members. As a result, the Company was not subject to any U.S. federal or state income taxes as the related tax consequences were reported by the individual members. The income tax provision (benefit) consists of the following: December 31, 2015 2014 Federal Current Deferred 492,800 8,300 State and local Current Deferred 146,500 2,500 Change in valuation allowance (639,300 ) (10,800 ) Income tax provision (benefit) The reconciliation between the statutory federal income tax rate and the Companys effective rate for the years ended December 31, 2015 and 2014 is as follows: 2015 2014 U.S. Federal statutory rate (34.0% ) (34.0% ) State tax benefit, net of federal tax (10.11 ) (10.11 ) Other permanent differences 2.07 Change in valuation allowance 42.04 44.11 Income tax provision (Benefit) 0.0% 0.0% As of December 31, 2015 and 2014 the deferred tax asset consisted of the following: 2015 2014 Deferred Tax Asset Net operating loss carryovers $ 650,100 $ 10,800 Total deferred tax asset 650,100 10,800 Valuation allowance (650,100 ) (10,800 ) Net Deferred Tax Asset, net of valuation allowance $ $ The Company files its income tax returns in the U.S. federal jurisdiction and the state of New York and such returns are subject to examination by tax authorities. The Company is in the process of filing its federal and state tax returns for the years ended December 31, 2015 and 2014. The Net operating losses (NOLs) for these years will not be available to reduce future taxable income until the returns are filed. Assuming these returns are filed, as of December 31, 2015, the Company had approximately $1.474 million of federal and state net operating losses that may be available to offset future taxable income. The net operating loss carryforwards will begin to expire in 2034 unless utilized. In accordance with Section 382 of the Internal Revenue Code, deductibility of the Companys U.S. net operating carryovers may be subject to an annual limitation in the event of a change of control as defined the regulations. The Company assesses the likelihood that deferred tax assets will be realized. To the extent that realization is not likely, a valuation allowance is established. Based upon the Companys losses since inception, management believes that it is more likely than not that the future benefits of its deferred tax assets will not be realized and has therefore established a full valuation allowance. |
13. Related Party Transactions
13. Related Party Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | On March 9, 2015, the Company engaged with a lead generation and presales outsourcing firm, Corporate Rain International (CRI). Tim Askew, a member of the Companys Board of Directors, is the founder and CEO of CRI. CRI will be compensated $6,000 per month along with a flat commission of $500 for each customer referred by CRI to the Company per the terms of the engagement. The Company recorded compensation expense to CRI of $30,000 during the year ended December 31, 2015. As of December 31, 2015, the Company had an outstanding balance due to CRI of $6,000. As of December 31, 2015, the Company and CRI suspended the engagement to reassess sales strategies. |
14. Subsequent Events
14. Subsequent Events | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Financing Activity On January 28, 2016, the Company entered into a Securities Purchase Agreement (SPA), Promissory Note (the January Note) and Registration Rights Agreement (RRA) (collectively, the Transaction Documents) with Pinewood Trading Fund, L.P. (Pinewood). Pursuant to the SPA, the Company sold 100,000 shares (the Shares) of its common stock (the Common Stock), in exchange for Pinewood lending $105,000 (Funding Amount) to the Company pursuant to the January Note with a principal amount of $131,250 (Principal Amount). The January Note is due on July 28, 2016 or earlier in the event that the gross proceeds of any Company offering equals or exceeds $300,000. The January Note is secured by all assets of the Company. Under the terms of the RRA with Pinewood, the Company committed to file a registration statement on or prior to March 31, 2016 or any additional registration statements which may be required pursuant to the terms of the RRA on or prior to the earliest practical date (Filing Date), covering, among other things, the resale of all or such portion (as permitted by SEC Guidance and Rule 415) of all of the Shares and any shares of Common Stock issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the Shares (the Registrable Securities) on such Filing Date that are not then registered on an effective registration statement. The Company has agreed to use its commercially reasonable best efforts to cause the registration statement to be declared effective under the Securities Act as promptly as practicable after the filing thereof, and use its commercially reasonable best efforts to keep such registration statement continuously effective under the Securities Act until all Registrable Securities covered by such registration statement have been sold, or may be sold without volume restrictions pursuant to Rule 144, as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Companys transfer agent and the Holder (the Effectiveness Period). If the Company fails to file the registration statement on or prior to the Filing Date, or fails to maintain the effectiveness of the registration statement pursuant to the terms of the RRA, the Company may be subject to partial cash liquidated damages, and not as a penalty, equal to $2,500 per month (not to exceed an aggregate of $20,000), pro-rated for periods of less than 30 days. If the Company fails to pay any partial liquidated damages in full within seven (7) days after the date payable, the Company will pay interest thereon at a rate of 18% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to Pinewood, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. As of the date of the filing of this report the registration statement has not been filed. On April 8, 2016 (the Initial Closing Date), we entered into a Securities Purchase Agreement (the Agreement) with Attia Investments, LLC, a related party (the Investor). A shareholder of the Company who owns in-excess of 5% of the Companys common stock is the managing member of Attia Investments, LLC. Under the Agreement, the Investor agreed to purchase senior secured convertible debentures in the aggregate principal amount of up to $125,000 (together the Debentures and each individual issuance a Debenture), bearing interest at a rate of 0% per annum, with maturity on October 8, 2016, extended to April 8, 2017 at the discretion of the Investor. The principal amount of the Debentures shall equal the amount funded by the Investor together with an original issue discount of 20%. The Debentures are secured by all assets of the Company. On the Initial Closing Date, we issued and sold to the Investor, and the Investor purchased from us, a first Debenture in the principal amount of $68,750 for a purchase price of $55,000. $13,750 was recorded as an original issue discount and will be accreted over the life of the note to interest expense. The principal amount of the Debentures can be converted at the option of the Investor into shares of our common stock at a conversion price per share of the lower of (i) $0.05 or (ii) the price per share in an offering of securities prior to the maturity date. In order to induce Investors to invest in the Debentures, the Investors will be issued two shares of Company common stock for each $1.00 invested. The Agreement provides that, the shares of Company common stock and stock options held by William Gorfein, CEO and Joshua Partridge, COO (the Founders Shares), together with medallion guaranteed stock powers relating thereto, shall be placed into an escrow account established by the Investor and shall be held pending a determination by the Board of Directors, in consultation with the Investor, of the status of the operations of the Company. Within 45 days following the Initial Closing Date the Company shall deliver to the escrow agent a written notice which shall state that the board of directors of the Company, in consultation and agreement with the Investor, have made one of the following determinations: (a) adequate funding, on terms and conditions acceptable to both the Company and the Investor, is made available to the Company and is sufficient to ensure that the Company can execute its business plan; or (b) such funding is not available to the Company, in which case the Company intends to structure a transaction as a result of which either (i) the shares of the Company and a wholly-owned subsidiary of the Company, and the operations thereof shall be returned to the CEO and COO and the Founders Shares shall be cancelled, but the Company shall be entitled to a 10% royalty on sales generated by such operation for five years or (ii) the operations thereof shall be sold to a third party, and the CEO and COO shall become employees thereof or, if not so employed, the unemployed individual shall accept from the Company a cash payment in lieu of such employment equal to $25,000. The Company can give no assurance that such funding will be available on terms and conditions acceptable to both the Company and the Investor, or at all. |
3. Summary of Significant Acc21
3. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). |
Fiscal Year-End | Fiscal Year-End The Company elected December 31 as its fiscal year-end date. |
Principles of Consolidation | Principles of Consolidation The Company's wholly-owned consolidated subsidiaries are as follows: Name of consolidated subsidiary or entity State or other jurisdiction of incorporation or organization Date of incorporation or formation (date of acquisition, if applicable) Attributable interest Peerlogix Technologies, Inc. Delaware December 9, 2014 (August 14, 2015) 100% IP Squared Technologies Holdings, LLC Delaware November 20, 2012 (December 9, 2014) 100% The historical financial statements of the Company are those of PeerLogix Technologies, Inc., and of the consolidated entities from the date of merger forward. All significant inter-company balances and transactions have been eliminated. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from these estimates. The Companys significant estimates and assumptions include the fair value of the Companys equity instruments, convertible debt, stock-based compensation, and the valuation allowance relating to the Companys deferred tax assets. |
Concentration of Credit Rick | Concentration of Credit Risk The Company maintains deposits in a financial institution which is insured by the Federal Deposit Insurance Corporation (FDIC). The balance at times may exceed federally insured limits. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. As of December 31, 2015 and 2014, the Company does not have any cash equivalents. |
Income Taxes | Income Taxes Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (temporary differences) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of these differences that have been included or excluded in the financial statements or tax returns. The Company follows a recognition threshold and measurement process for consolidated financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The guidance also prescribes direction on the recognition, classification, interest and penalties in interim periods, disclosure and transition. The Company classifies interest expense and any related penalties, if any, related to income tax uncertainties as a component of income tax expense. No interest or penalties have been recognized as of December 31, 2015 and 2014. Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Companys financial statements for the years ended December 31, 2015 and 2014. The Company does not expect any significant changes in the unrecognized tax benefits within twelve months of the reporting date. Prior to the Recapitalization in December 2014, the Company was a Delaware limited liability company that passed through income and losses to its members. As a result, the Company was not subject to any U.S. federal or state income taxes as the related tax consequences were reported by the individual members and would not have had a material impact on the consolidated financial statements. See Note 1. |
Accounting for Warrants | Accounting for Warrants The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net-cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). The Company assessed the classification of its common stock purchase warrants as of the date of each equity offering and determined that such instruments met the criteria for equity classification, as the settlement terms indicate that the instruments are indexed to the entitys underlying stock. |
Research and Development | Research and Development Research and development (R&D) expenses are charged to operations as incurred. |
Advertising | Advertising The Company expenses advertising when incurred. During the years ended December 31, 2015 and 2014, the Company incurred advertising expenses of $28,933 and $0, respectively. |
Net Loss Per Share | Net Loss Per Share Basic loss per share was computed using the weighted average number of outstanding common shares. Diluted earnings per share, when presented, includes the effect of dilutive common stock equivalents from the assumed exercise of options, warrants, convertible preferred stock and convertible notes. Common stock equivalents are excluded in the computation of diluted earnings per share since their inclusion would be anti-dilutive. Total shares issuable upon the exercise of warrants and conversion of convertible promissory notes for the years ended December 31, 2015 and 2014 were as follows: December 31, 2015 2014 Warrants 2,951,669 Convertible promissory notes 96,248 Total 2,951,669 96,248 |
Fair Value of Financial Instruments | The carrying amounts of cash, accounts payable, and accrued liabilities approximate fair value due to the short-term nature of these instruments. The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 Fair Value Measurements and Disclosures which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3 Pricing inputs that are generally unobservable inputs and not corroborated by market data. Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the warrant liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Companys Chief Executive Officer determines its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Companys Chief Executive Officer. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. No such items existed as of December 31, 2015 and 2014. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-12, Compensation-Stock Compensation In August 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-15, Presentation of Financial Statements-Going Concern. In April 2015, the Financial Accounting Standards Board issued Accounting Standards Update 2015-03, InterestImputation of Interest. To simplify presentation of debt issuance costs, the amendments in this Update would require that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs would not be affected by the amendments in this Update. This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2014-250InterestImputation of Interest (Subtopic 835-30), which has been deleted. The amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company is currently evaluating the effects of ASU 2015-03 on its consolidated financial position. In August 2015, the FASB issued the FASB Accounting Standards Update No. 2015-14 Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (ASU 2015-14).The amendments in this Update defer the effective date of Update 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently assessing the impact, if any, of the adoption of ASU 2015-04 on the consolidated financial statements. In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842). The FASB issued this update to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The updated guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company is currently evaluating the impact of the new standard. The FASB and the SEC have issued certain accounting standards updates and regulations that will become effective in subsequent periods; however, management of the Company does not believe that any of those updates would have significantly affected the Companys financial accounting measures or disclosures had they been in effect during 2015 or 2014, and does not believe that any of those pronouncements will have a significant impact on the Companys consolidated financial statements at the time they become effective. |
Subsequent Events | Subsequent Events The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements, except as disclosed. |
3. Summary of Significant Acc22
3. Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Consolidation table | Name of consolidated subsidiary or entity State or other jurisdiction of incorporation or organization Date of incorporation or formation (date of acquisition, if applicable) Attributable interest Peerlogix Technologies, Inc. Delaware December 9, 2014 (August 14, 2015) 100% IP Squared Technologies Holdings, LLC Delaware November 20, 2012 (December 9, 2014) 100% |
Shares issuable upon exercise of warrants and conversion of notes | December 31, 2015 2014 Warrants 2,951,669 Convertible promissory notes 96,248 Total 2,951,669 96,248 |
10. Stock Warrants (Tables)
10. Stock Warrants (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Warrants and Rights Note Disclosure [Abstract] | |
Outstanding warrants | Shares Underlying Warrants Weighted Average Exercise Price Aggregate Intrinsic Value Outstanding at December 31, 2014 $ $ Granted 2,951,669 0.66 Expired Exercised Cancelled Outstanding and exercisable at December 31, 2015 2,951,669 $ 0.66 $ |
Warrants by exercise price | Number of Warrants Range of Exercise Price Weighted Average Remaining Contractual Life (In Years) 2,951,669 $0.01 - $0.72 4.54 2,951,669 |
12. Income Taxes (Tables)
12. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income tax provision | December 31, 2015 2014 Federal Current Deferred 492,800 8,300 State and local Current Deferred 146,500 2,500 Change in valuation allowance (639,300 ) (10,800 ) Income tax provision (benefit) |
Reconciliation of income tax rate | 2015 2014 U.S. Federal statutory rate (34.0% ) (34.0% ) State tax benefit, net of federal tax (10.11 ) (10.11 ) Other permanent differences 2.07 Change in valuation allowance 42.04 44.11 Income tax provision (Benefit) 0.0% 0.0% |
Deferred tax assets | 2015 2014 Deferred Tax Asset Net operating loss carryovers $ 650,100 $ 10,800 Total deferred tax asset 650,100 10,800 Valuation allowance (650,100 ) (10,800 ) Net Deferred Tax Asset, net of valuation allowance $ $ |
1. Organization and Operations
1. Organization and Operations (Details Narrative) - shares | 7 Months Ended | |||
Aug. 01, 2015 | Dec. 31, 2015 | Aug. 14, 2015 | Dec. 31, 2014 | |
Stock outstanding | 23,107,535 | 21,049,602 | 16,000,002 | |
Former Owners of Peerlogix Technologies, Inc. | ||||
Ownership percentage | 81.00% |
2. Going Concern and Manageme26
2. Going Concern and Management Liquidation Plans (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Net loss | $ (1,520,514) | $ (275,159) |
Net cash used in operations | $ (1,198,829) | $ (148,950) |
3. Summary of Significant Acc27
3. Summary of Significant Accounting Policies (Details - Subsidiaries) | 12 Months Ended |
Dec. 31, 2015 | |
Peerlogix Technologies, Inc. | |
Name of subsidiary or entity | Peerlogix Technologies, Inc. |
State or other jurisdiction of incorporation or organization | Delaware |
Date of incorporation | Dec. 9, 2014 |
Date of acquisition | Aug. 14, 2015 |
Attributable interest | 100.00% |
IP Squared Technologies Holdings, LLC | |
Name of subsidiary or entity | IP Squared Technologies Holdings, LLC |
State or other jurisdiction of incorporation or organization | Delaware |
Date of incorporation | Nov. 20, 2012 |
Date of acquisition | Dec. 9, 2014 |
Attributable interest | 100.00% |
3. Summary of Significant Acc28
3. Summary of Significant Accounting Policies (Details - share equivalents) - shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Antidilutive shares | 2,951,669 | 96,248 |
Warrants | ||
Antidilutive shares | 2,951,669 | 0 |
Convertible Promissory Notes | ||
Antidilutive shares | 0 | 96,248 |
3. Summary of Significant Acc29
3. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Accounting Policies [Abstract] | ||
Cash equivalents | $ 0 | $ 0 |
Advertising expenses | $ 28,933 | $ 0 |
4. Demand Loans Payable (Detail
4. Demand Loans Payable (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Demand Loans Payable Details Narrative | ||
Proceeds from demand loans | $ 5,500 | $ 0 |
Repayment of demand loans | (5,500) | 0 |
Demand loans payable | $ 15,000 | $ 15,000 |
5. Notes Payable (Details Narra
5. Notes Payable (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Debt Disclosure [Abstract] | ||
Proceeds from notes payable | $ 17,500 | $ 0 |
Repayment of notes payable | 26,250 | $ 0 |
Interest expense | $ 17,500 |
6. Notes Payable - Related Pa32
6. Notes Payable - Related Party (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Related Party Transactions [Abstract] | ||
Repayment of notes payable - related party | $ (53,725) | $ 0 |
Interest forgiven | $ 2,577 |
7. Convertible Notes Payable (D
7. Convertible Notes Payable (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Convertible Notes Payable Details | ||
Convertible notes payable | $ 0 | $ 83,000 |
Less: current maturities | 0 | (25,000) |
Convertible notes payable, net of current maturities | $ 0 | $ 58,000 |
7. Convertible Notes Payable 34
7. Convertible Notes Payable (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Warrant exercise price | $ .66 | $ 0 |
Proceeds from convertible notes | $ 0 | $ 83,000 |
Senior Unsecured Convertible notes | ||
Stock issued for convertible debt, shares issued | 50,000 | |
Warrants issued in conversion of convertible note, warrants issued | 50,000 | |
Stock issued for convertible debt, value | $ 25,000 | |
Warrant exercise price | $ 0.60 | |
Senior Unecured Convertible Note 2 | ||
Stock issued for convertible debt, shares issued | 124,566 | |
Stock issued for convertible debt, value | $ 58,000 | |
Accrued interest converted to shares, interest amount | 8,162 | |
Proceeds from convertible notes | $ 58,000 |
8. Loans Payable - Officer (Det
8. Loans Payable - Officer (Details Narrative) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Loans Payable - Officers | ||
Due to related parties | $ 33,648 | $ 29,607 |
9. Stockholders' Deficit (Detai
9. Stockholders' Deficit (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Stock issued new, value | $ 1,510,001 | |
Share based compensation | $ 150,000 | $ 0 |
Consultant [Member] | ||
Restricted common stock issued for services, shares | 250,000 | |
Restricted common stock issued for services, value | $ 150,000 | |
Share based compensation | $ 150,000 | |
2015 Plan | ||
Shares authorized under plan | 3,000,000 | |
Offering 1 | ||
Stock issued new, shares | 1,000,000 | |
Stock issued new, value | $ 500,000 | |
Warrants issued | 1,000,000 | |
Commision fees paid | $ 50,000 | |
Warrants issued for services | 50,000 | |
Other stock issuance costs | $ 14,263 | |
Offering 2 | ||
Stock issued new, shares | 1,683,333 | |
Warrants issued | 1,010,000 | |
Commision fees paid | $ 101,000 | |
Warrants issued for services | 168,333 | |
Additional fee earned by placement agent | $ 30,300 | |
Other stock issuance costs | $ 66,000 |
10. Stock Warrants (Details - W
10. Stock Warrants (Details - Warrant activity) | 12 Months Ended |
Dec. 31, 2015USD ($)$ / sharesshares | |
Warrants and Rights Note Disclosure [Abstract] | |
Warrants outstanding, beginning balance | shares | 0 |
Warrants granted | shares | 2,951,669 |
Warrants expired | shares | 0 |
Warrants exercised | shares | 0 |
Warrants cancelled | shares | 0 |
Warrants outstanding, ending balance | shares | 2,951,669 |
Weighted average exercise price, warrants outstanding | $ / shares | $ 0 |
Weighted average exercise price, warrants granted | $ / shares | .66 |
Weighted average exercise price, warrants expired | $ / shares | 0 |
Weighted average exercise price, warrants exercised | $ / shares | 0 |
Weighted average exercise price, warrants cancelled | $ / shares | 0 |
Weighted average exercise price, warrants outstanding | $ / shares | $ .66 |
Aggregate intrinsic value, warrants outstanding | $ | $ 0 |
10. Stock Warrants (Details -38
10. Stock Warrants (Details - Warrant summary) - shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Warrants and Rights Note Disclosure [Abstract] | ||
Number of warrants outstanding | 2,951,669 | 0 |
Range of exercise prices | $0.01 - $0.72 | |
Weighted average remaining contractual life | 4 years 6 months 14 days |
11. Commitments and Contingen39
11. Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $ 33,125 | $ 8,121 |
12. Income Taxes (Details - Inc
12. Income Taxes (Details - Income tax provision) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Federal | ||
Current | $ 0 | $ 0 |
Deferred | 492,800 | 8,300 |
State and local | ||
Current | 0 | 0 |
Deferred | 146,500 | 2,500 |
Change in valuation allowance | (639,300) | (10,800) |
Income tax provision (benefit) | $ 0 | $ 0 |
12. Income Taxes (Details - Rec
12. Income Taxes (Details - Reconcilation percent) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
U.S. Federal statutory rate | (34.00%) | (34.00%) |
State tax benefit, net of federal tax | (10.11%) | (10.11%) |
Other permanent differences | 2.07% | 0.00% |
Change in valuation allowance | 42.04% | 44.11% |
Income tax provision (Benefit) | 0.00% | 0.00% |
12. Income Taxes (Details - Def
12. Income Taxes (Details - Deferred tax assets) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryover | $ 650,100 | $ 10,800 |
Total deferred tax asset | 650,100 | 10,800 |
Valuation allowance | (650,100) | (10,800) |
Net deferred tax asset, net of valuation allowance | $ 0 | $ 0 |
12. Income Taxes (Details Narra
12. Income Taxes (Details Narrative) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Income Tax Disclosure [Abstract] | |
Operating loss carryforwards | $ 1,474,000 |
Operating loss beginning expiration date | Dec. 31, 2034 |
13. Related Party Transactions
13. Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Expenses paid to related party | $ 30,000 | |
Due to related party | 33,648 | $ 29,607 |
CRI [Member] | ||
Expenses paid to related party | 30,000 | |
Due to related party | $ 6,000 |