Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Apr. 30, 2018 | Jun. 30, 2017 | |
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, 2017 | ||
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 | $ 1,854,320 | ||
Entity Common Stock, Shares Outstanding | 46,122,368 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash | $ 14,086 | $ 56,022 |
Prepaid expenses and other current assets | 19,070 | 46,869 |
Total Current Assets | 33,156 | 102,891 |
Total Assets | 33,156 | 102,891 |
Current liabilities | ||
Accounts payable | 421,518 | 309,763 |
Accrued payroll and payroll related expenses | 371,069 | 221,838 |
Accured director's fee | 95,075 | 40,075 |
Other accrued liabilities | 203,719 | 153,186 |
Demand loans payable | 15,000 | 15,000 |
Notes payable | 0 | 106,000 |
Convertible notes payable - related party | 41,857 | 70,000 |
Convertible notes payable, net of debt discount of $277,969 and $512,014, respectively | 1,432,081 | 88,486 |
Loans payable - officers | 9,941 | 34,254 |
Derivative liabilities | 935,274 | 0 |
Total current liabilities | 3,525,534 | 1,038,602 |
Total Liabilities | 3,525,534 | 1,038,602 |
Commitments and Contingencies | ||
Stockholders Deficiency | ||
Preferred stock par value $0.001: 10,000,000 shares authorized; no shares issued or outstanding as of December 31, 2017 and 2016 | 0 | 0 |
Common stock, par value $0.001; 100,000,000 shares authorized; 46,122,368 and 26,860,825 shares issued and outstanding as of December 31, 2017 and 2016, respectively | 46,122 | 26,861 |
Additional paid in capital | 4,850,445 | 2,430,276 |
Accumulated deficit | (8,388,945) | (3,392,848) |
Total stockholders' deficit | (3,492,378) | (935,711) |
Total liabilities and stockholders' deficit | $ 33,156 | $ 102,891 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Debt discount | $ 277,969 | $ 512,014 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
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 | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 100,000,000 | 100,000,000 |
Common Stock, shares issued | 46,122,368 | 26,860,825 |
Common Stock, shares outstanding | 46,122,368 | 26,860,825 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||
Revenues | $ 1,096 | $ 15,000 |
Operating expenses: | ||
General and administrative | 1,981,944 | 1,255,777 |
Operating Expenses | 1,981,944 | 1,255,777 |
Loss from operations | (1,980,848) | (1,240,777) |
Other income (expense) | ||
Interest expense | (3,805,627) | (825,858) |
Change in fair value of derivative liabilities | 1,741,441 | 0 |
Loss on loan receivable | (37,500) | 0 |
(Loss) gain on extinguishment of debt | (936,915) | 218,768 |
Total other income (expense) | (3,015,249) | (607,090) |
Net loss | $ (4,996,097) | $ (1,847,867) |
Net loss per common share - basic and diluted | $ (0.12) | $ (0.08) |
Weighted average common shares outstanding - basic and diluted | 42,366,866 | 24,447,444 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficiency - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Common Stock [Member] | ||
Beginning balance, shares | 26,860,825 | 23,107,535 |
Beginning balance, value | $ 26,861 | $ 23,108 |
Common stock issued in connection with promissory notes payable, shares | 8,211,333 | 100,000 |
Common stock issued in connection with promissory notes payable, value | $ 8,211 | $ 100 |
Common stock issued with related party notes payable, shares | 218,750 | 175,000 |
Common stock issued with related party notes payable, value | $ 219 | $ 175 |
Common stock issued with convertible notes payable, shares | 6,229,999 | |
Common stock issued with convertible notes payable, value | $ 6,230 | |
Common stock and warrants issued for settlement of convertible notes payable, shares | 3,333,333 | |
Common stock and warrants issued for settlement of convertible notes payable, value | $ 3,333 | |
Common stock issued in settlement of payables, shares | 878,710 | 240,000 |
Common stock issued in settlement of payables, value | $ 878 | $ 240 |
Cancellation of common stock, shares | (8,324,084) | |
Cancellation of common stock, value | $ (8,324) | |
Common stock issued for services, shares | 5,119,750 | 1,942,042 |
Common stock issued for services, value | $ 5,120 | $ 1,942 |
Common stock issued as payment of accrued interest on convertible notes payable, shares | 4,833,000 | |
Common stock issued as payment of accrued interest on convertible notes payable, value | $ 4,833 | |
Common stock issued new, shares | 57,000 | |
Common stock issued new, value | $ 57 | |
Ending balance, shares | 46,122,368 | 26,860,825 |
Ending balance, value | $ 46,122 | $ 26,861 |
Additional Paid-In Capital [Member] | ||
Beginning balance, value | 2,430,276 | 1,245,416 |
Common stock issued in connection with promissory notes payable, value | (2,239) | 17,900 |
Common stock issued with related party notes payable, value | 12,906 | 13,085 |
Common stock issued with convertible notes payable, value | 182,767 | |
Common stock and warrants issued for settlement of convertible notes payable, value | 479,999 | |
Fair value of warrants issued | 823,946 | 192,656 |
Beneficial conversion feature | 261,450 | |
Repurchase of beneficial conversion feature - extinguishment of convertible notes payable | (675,418) | |
Common stock issued in settlement of payables, value | 82,601 | 27,360 |
Cancellation of common stock, value | 8,324 | |
Common stock issued for services, value | 429,147 | 265,840 |
Common stock issued as payment of accrued interest on convertible notes payable, value | 414,347 | |
Common stock issued new, value | 1,943 | |
Modifications of investor warrants | 81,001 | |
Reclassify beneficial conversion feature to derivative liability | (172,036) | |
Reclassify derivative liability to equity upon payoff of convertible notes payable | 48,093 | |
Stock based compensation | 595,284 | 327,953 |
Ending balance, value | 4,850,445 | 2,430,276 |
Accumulated Deficit [Member] | ||
Beginning balance, value | (3,392,848) | (1,544,981) |
Net loss | (4,996,097) | (1,847,867) |
Ending balance, value | (8,388,945) | (3,392,848) |
Beginning balance, value | (935,711) | (276,457) |
Common stock issued in connection with promissory notes payable, value | 5,972 | 18,000 |
Common stock issued with related party notes payable, value | 13,125 | 13,260 |
Common stock issued with convertible notes payable, value | 188,997 | |
Common stock and warrants issued for settlement of convertible notes payable, value | 483,332 | |
Fair value of warrants issued | 823,946 | 192,656 |
Beneficial conversion feature | 261,450 | |
Repurchase of beneficial conversion feature - extinguishment of convertible notes payable | (675,418) | |
Common stock issued in settlement of payables, value | 83,479 | 27,600 |
Common stock issued for services, value | 434,267 | 267,782 |
Common stock issued as payment of accrued interest on convertible notes payable, value | 419,180 | |
Common stock issued new, value | 2,000 | |
Modifications of investor warrants | 81,001 | |
Reclassify beneficial conversion feature to derivative liability | (172,036) | |
Reclassify derivative liability to equity upon payoff of convertible notes payable | 48,093 | |
Stock based compensation | 595,284 | 327,953 |
Net loss | (4,996,097) | (1,847,867) |
Ending balance, value | $ (3,492,378) | $ (935,711) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash Flows From Operating Activities: | ||
Net loss | $ (4,996,097) | $ (1,847,867) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Stock based compensation | 1,024,431 | 361,956 |
Amortization of debt discounts | 1,766,925 | 676,709 |
Non cash interest | 1,442,654 | 0 |
Change in fair value of derivative liabilities | (1,741,441) | 0 |
Loss on loan receivable | 37,500 | 0 |
Loss (gain) on extinguishment of debt | 936,915 | (218,768) |
Expenses paid by officer on behalf of Company | 0 | 31,521 |
Modification of investor warrants | 37,329 | 81,001 |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other current assets | 15,323 | (14,420) |
Accounts payable | 143,504 | 90,881 |
Accrued payroll and payroll related expenses | 149,231 | 198,499 |
Accrued director's fees | 55,000 | 40,075 |
Other accrued liabilities | 403,483 | 89,357 |
Net cash used In operating activities | (725,243) | (511,056) |
Cash Flows From Investing Activities: | ||
Loan to abandoned acquisition target | (37,500) | 0 |
Net cash used in investing activities | (37,500) | 0 |
Cash Flows From Financing Activities: | ||
Proceeds from the sale of common stock | 0 | 2,000 |
Proceeds from convertible notes | 901,138 | 438,446 |
Proceeds from convertible notes - related party | 0 | 70,000 |
Proceeds from officer loans | 11,156 | 4,032 |
Proceeds from notes payable | 0 | 130,000 |
Repayment of notes payable | (106,000) | (26,250) |
Repayment of notes payable - related party | (50,018) | (17,500) |
Repayment of officer loans | (35,469) | (34,948) |
Net Cash Provided By Financing Activities | 720,807 | 565,780 |
Net change in cash | (41,936) | 54,724 |
Cash at beginning of year | 56,022 | 1,298 |
Cash at end of year | 14,086 | 56,022 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 15,670 | 6,328 |
Income tax paid | 0 | 0 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Debt discount paid in form of common shares and warrants | 24,653 | 709,580 |
Debt discount recorded on convertible debt accounted for as derivative liabilities | 1,256,460 | 0 |
Repurchase of beneficial conversion feature due to reassessment of derivative liability | 172,036 | 0 |
Common stock issued in settlement of accrued interest | 419,180 | 0 |
Reclassification of derivative liability to equity | 48,093 | 0 |
Debt issuance cost paid in form of common stock and warrants | 188,120 | 226,773 |
Debt issuance cost accrued | 98,885 | 57,500 |
Common stock issued in connection with settlement of liabilities | 83,479 | 0 |
Original issue discount on notes payable | 0 | 26,250 |
Original issue discount on convertible notes payable-related party | 0 | 17,500 |
Beneficial conversion feature-convertible note | 0 | 261,450 |
Conversion of promissory note to convertible note | 0 | 25,000 |
Increase in note principal as per forbearance agreement | $ 0 | $ 1,000 |
1. Organization and Operations
1. Organization and Operations | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Operations | Peerlogix, Inc. (“Peerlogix” or the “Company”) was incorporated in Nevada on February 14, 2014. The Company is an advertising technology and data aggregation company. The Company provides software as a service (SAAS) platform, which enables the tracking and cataloguing of over-the-top viewership and listenership in order to determine consumer trends and preferences based upon media consumption. Its platform collects over-the-top data, including Internet Protocol (IP) addresses of the streaming and downloading parties (location), the name, media type and genre of media watched, listened or downloaded, and utilizes licensed and publicly available demographic and other databases to further filter the collected data to provide insights into consumer preferences to digital advertising firms, product and media companies, entertainment studios and others. On August 14, 2015, the Company entered into a share exchange transaction whereby all of the shareholders of PeerLogix Technologies, Inc., a privately held Delaware corporation (“PeerLogix Delaware”), exchanged all of their shares of common stock for newly issued shares of common stock of the Company (the “Share Exchange”). As a result of the Share Exchange, PeerLogix Delaware has become a wholly-owned subsidiary of the Company and its business operations are assumed by the Company. On September 3, 2015, the Company filed a Certificate of Amendment to its Articles of Incorporation changing its name from Realco International, Inc. to PeerLogix, Inc. |
2. Going Concern and Management
2. Going Concern and Management Liquidity Plans | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern and Management Liquidity Plans | The Company has generated minimal revenues since inception and continues to incur recurring losses from operations and has an accumulated deficit. 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 $5.0 million and net cash used in operations of approximately $725,000 for the year ended December 31, 2017. In addition, the Company has notes payable in default (see Note 7). These conditions indicate that there is substantial doubt about the Company's ability to continue as a going concern within one year from the issuance date of the consolidated financial statements. The Company's primary source of operating funds since inception has been cash proceeds from debt and equity financing. 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 11) 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. generally accepted accounting principles (“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, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Peerlogix Technologies, Inc. and IP Squared Technologies Holdings, LLC. All significant intercompany accounts and transactions have been eliminated in consolidation. 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 Company’s significant estimates and assumptions include the fair value of the Company’s equity instruments, convertible debt, derivative liabilities, stock-based compensation, and the valuation allowance relating to the Company’s deferred tax assets. Reclassifications Certain prior year amounts in the consolidated financial statements and the notes thereto have been reclassified where necessary to conform to the current year presentation. These reclassifications did not affect the prior period total assets, total liabilities, stockholders’ deficit, net loss or net cash used in operating activities. Revenue Recognition The Company recognizes revenue when four basic criteria are met before: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for adjustments are provided for in the same period the related sales are recorded. At the time of each transaction, management assesses whether the fee associated with the transaction is fixed or determinable and whether or not collection is reasonably assured. The assessment of whether the fee is fixed or determinable is based upon the payment terms of the transaction. Collectability is assessed based on a number of factors, including past transaction history with the client and the creditworthiness of the client. The Company generates revenue primarily by licensing our Over-the-Top audience dataset to platforms and channel partners. As such, the Company predominantly contracts with Data Management Platforms (DMPs) and Demand Side Platforms (DSPs) (collectively, “Demand Partners”) who license the Company’s solution to use in conjunction with other solutions offered to their advertiser clients, including brands and advertising agencies. When the Company contracts with a Demand Partner, it acts as an agent for a disclosed or undisclosed principal, which is the advertiser. The Company contracts with Demand Partners, including DMPs and DSPs representing advertisers, are generally in the form of a revenue share between the Demand Partner and the Company. Revenue payouts to the Company typically occur within sixty (60) days after the end of each calendar month, and the contracts typically have an initial term of a year. Due to the uncertainly of amount of revenue earned during the process, it is recognized upon payout and receipt of payment. Revenue through December 31, 2017 had been de minimis to the consolidated financial statements. 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, 2017 and 2016, the Company does not have any cash equivalents. 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. 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 entity’s underlying stock. Concentrations of Credit Risk Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such amounts may be in excess of the FDIC insurance limit. Derivative Liabilities In connection with the issuance of certain convertible promissory notes, the terms of the convertible notes included an embedded conversion feature which provided for the settlement of certain convertible promissory notes into shares of common stock at a rate which was determined to be variable with no floor. The Company determined that the conversion feature was an embedded derivative instrument pursuant to ASC 815 “Derivatives and Hedging” The accounting treatment of derivative financial instruments requires that the Company record the conversion option, if applicable, at their fair values as of the inception date of the agreements and at fair value as of each subsequent balance sheet date. Any change in fair value was recorded as a change in the fair value of derivative liabilities for each reporting period at each balance sheet date. The Company reassesses the classification at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. The fair values of conversion options that are convertible at a variable conversion price are valued using a Black-Scholes Valuation Model. The Company determined the fair value of the conversion option using either the Black-Scholes Valuation Model or the Binomial Lattice Model to be materially the same. The Black-Scholes Valuation Model includes subjective input assumptions that can materially affect the fair value estimates. The model was developed for use in estimating the fair value of traded options or warrants. The expected volatility is estimated based on the most recent historical period of time equal to the weighted average life of the instrument granted. The principal assumptions used in applying the Black-Scholes model were as follows: Year Ended December 31, 2017 Risk-free interest rate 0.52 – 2.20% Contractual term 0.02 - 4.00 years Expected volatility 200% - 353% Dividends 0.0% At any given time, certain of the Company’s embedded conversion features on debt and outstanding warrants may be treated as derivative liabilities for accounting purposes under ASC 815-40 due to insufficient authorized shares to settle these outstanding contracts. Pursuant to SEC staff guidance that permits a sequencing approach based on the use of ASC 840-15-25 which provides guidance for contracts that permit partial net share settlement. The sequencing approach may be applied in one of two ways: contracts may be evaluated based on (1) earliest issuance date or (2) latest maturity date. Pursuant to the sequencing approach, the Company evaluates its contracts based upon the latest maturity date. 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, exercise of stock options and conversion of convertible promissory notes for the year ended December 31, 2017 and 2016 were as follows: December 31, 2017 2016 Warrants 36,305,369 8,956,677 Stock options 24,550,000 12,300,000 Convertible promissory notes and accrued interest 35,227,200 11,408,333 Total 96,082,569 32,665,010 For the year ended December 31, 2017, 4,269,941 warrants were included in basic and diluted loss per share as their exercise price was determined to be nominal. Income Taxes Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability during each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. 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, 2017 and 2016. Management has evaluated and concluded that there was no material uncertain tax positions requiring recognition in the Company’s financial statements for the years ended December 31, 2017 and 2016. The Company does not expect any significant changes in the unrecognized tax benefits within twelve months of the reporting date. Research and development costs All research and development costs are charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company incurred minimal research and development expenses for the years ended December 31, 2017 and 2016. Advertising The Company follows the policy of charging the costs of advertising to expense as incurred. The Company charged to operations $6,453 and $4,333 as advertising costs for the years ended December 31, 2017 and 2016, respectively. Stock 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 for non-employees, the fair value of the award is generally re-measured on vesting dates and 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 statements of operations, as if such amounts were paid in cash. Fair Value of Financial Instruments The carrying amounts of cash and accounts payable 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 Company’s Principal Financial 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 Company’s Principal Financial 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. Financial assets and liabilities measured at fair value on a recurring basis are summarized below and disclosed on the balance sheets as follows: December 31, 2017 Fair Value Measurement Using Carrying Level 1 Level 2 Level 3 Total Derivative conversion features $ 935,274 $ – $ – $ 935,274 $ 935,274 December 31, 2016 Fair Value Measurement Using Carrying Value Level 1 Level 2 Level 3 Total Derivative conversion features $ - $ – $ – $ - $ - The table below provides a summary of the changes in fair value, including net transfers in and/or out, of all financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the two years ended December 31, 2017: Fair Value Total Balance, December 31, 2016 (and prior) $ – Reclassification of derivative liability from equity 172,036 Issuances, reassessments and settlements 2,552,772 Reclassification of derivative liability to equity (48,093 ) Change in fair value (1,741,441 ) Balance, December 31, 2017 $ 935,274 Changes in the unobservable input values could potentially cause material changes in the fair value of the Company’s Level 3 financial instruments. The significant unobservable inputs used in the fair value measurements are the expected volatility assumption. A significant increase (decrease) in the expected volatility assumption could potentially result in a higher (lower) fair value measurement. Recently Adopted Accounting Guidance In March 2016, the FASB issued ASU No. 2016-06, “Derivatives and Hedging” (Topic 815). The FASB issued this update to clarify the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment under the amendments in this update is required to assess the embedded call (put) options solely in accordance with the four-step decision sequence. The updated guidance is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company adopted the provisions of ASU 2016-06 on January 1, 2017. The adoption of ASU 2016-06 did not materially impact its consolidated financial position, results of operations or cash flows. In April 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation” (Topic 718). The FASB issued this update to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The updated guidance is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company adopted the provisions of ASU 2016-09 on January 1, 2017. The adoption of ASU 2016-09 did not materially impact the Company’s consolidated financial position, results of operations or cash flows. Recently Issued Accounting Guidance In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09 “Revenue from Contracts with Customers” to supersede previous revenue recognition guidance under current U.S. GAAP. The guidance presents a single five-step model for comprehensive revenue recognition that requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Two options are available for implementation of the standard which is either the retrospective approach or cumulative effect adjustment approach. The guidance becomes effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early adoption permitted. The Company anticipates using the modified retrospective transition method beginning with the first quarter of fiscal 2019. The adoption of ASU 2014-09 using the modified retrospective transition method in the first quarter of fiscal 2019 is not anticipated to have a material impact on the Company’s financial statements. In May 2017, the FASB issued ASU 2017-09, “Compensation-Stock Compensation” (Topic 718): Scope of Modification Accounting. The amendments provide guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718 Compensation-Stock Compensation. An entity should account for the effects of a modification unless all the following are met: (1.) The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification. (2.) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified. (3.) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The ASU is effective for all entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The Company is currently assessing the impact that this standard will have on its consolidated financial statements. In July 2017, the FASB issued ASU 2017-11, “Earnings Per Share” (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity's own stock. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. For public business entities, the amendments in Part I of this update are effective for fiscal years, and years, beginning after December 15, 2018. Early adoption is permitted for all entities, including adoption in an interim period. The Company is currently assessing the impact that this standard will have on its condensed consolidated financial statements. In February 2016, the FASB issued ASU 2016-02—Leases (Topic 842), requiring lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases with the exception of short-term leases. For lessees, leases will continue to be classified as either operating or finance leases in the income statement. The effective date of the new standard for public companies is for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition and requires application of the new guidance at the beginning of the earliest comparative period presented. The Company is evaluating the effect that the updated standard will have on its financial statements and related disclosures. In August 2016, the FASB issued ASU 2016-15—Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides guidance for eight specific cash flow issues with respect to how cash receipts and cash payments are classified in the statements of cash flows, with the objective of reducing diversity in practice. The effective date for ASU 2016-15 is for annual periods beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of this new standard on its financial statements. There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s financial position, results of operations or cash flows. 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. Loan Receivable
4. Loan Receivable | 12 Months Ended |
Dec. 31, 2017 | |
Receivables [Abstract] | |
4. Loan Receivable | During February 2017, the Company loaned $37,500 to a potential merger candidate, for working capital purposes. In March 2017, the Company withdrew its plan of merger and recorded an allowance for loan losses of $37,500 due to the loan deemed uncollectible. |
5. Notes Payable
5. Notes Payable | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable | 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 issued 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 was 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. As part of the transaction, the Company recorded an $18,000 debt discount relating to the relative fair value of the 100,000 shares of common stock issued and $26,250 was recorded as an original issue discount and is being accreted over the life of the note to interest expense. The shares were valued based on the quoted closing trading price on the date of issuance. In addition the Company incurred legal fees of $7,418 which will be amortized over the life of the note to interest expense. The outstanding principal balance on the January Note at December 31, 2016 was $106,000. During the year ended December 31, 2017, the Company repaid the remaining $106,000 in principal along with outstanding accrued interest of $12,687 on a promissory note which was previously in default. The outstanding principal balance on the note at December 31, 2017 was $0. 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 Company’s 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, as an addition to the stated original issue discount, 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 this report the registration statement has not been filed. For the year ended December 31, 2017 and 2016, the Company has accrued liquidated damages of $0 and $20,000 along with accrued interest of $4,051 and $1,359, respectively, and has recorded such amounts in interest expense in the consolidated statement of operations. On August 22, 2016, the Company issued an unsecured convertible promissory note in principal amount of $25,000 to an accredited investor through a private placement. The note bears interest at a rate of 12% per annum, with maturity on the earlier of i) September 22, 2016 or ii) an offering of securities of the Company through WestPark. On September 22, 2016, the promissory note was converted into a convertible note per the contractual terms of the WestPark Offering (See Note 6 and Note 9). As part of the transaction, the Company incurred placement agent fees of $3,250 which were recorded as debt issuance costs. The debt issuance costs were accreted over the life of the notes to interest expense. |
6. Convertible Notes Payable
6. Convertible Notes Payable | 12 Months Ended |
Dec. 31, 2017 | |
Convertible Notes Payable [Abstract] | |
Convertible Notes Payable | Convertible notes payable are comprised of the following: December 31, 2017 2016 Offering 3 $ 825,500 $ 600,500 Offering 4 439,550 – Offering 5 200,000 – Offering 6 245,000 – Total 1,710,500 600,500 Less: debt discount 277,969 512,014 Net $ 1,432,081 $ 88,486 Offering 3, 4,5,6 (collectively referred to as “Offerings”): During the years ended December 31, 2017 and 2016, the Company sold $1,110,000 and $600,500, respectively, of Units to investors. Each Unit was sold at a price of $10,000 per Unit and consisted of one (1) six (6) month, 18% convertible promissory note (36% on an annual basis) with a face value of $10,000 and four year warrants exercisable for an aggregate number of shares of common stock equal to 50% of the shares of common stock into which the Note is initially convertible, exercisable at a price of $0.10 per share. The Offerings Notes are due six months after the issuance of each note, as amended. Each of the Notes will be convertible at an initial price equal to $0.06 per share. In addition, during the two month period commencing on each issuance of the Offering 3 Notes, as amended, the Notes will contain a look-back provision pursuant to which the Notes will be convertible at the lower of $0.06 or the lowest volume weighted average price of the Company’s common stock (the “VWAP”) during any 10 day period during such two (2) month period, provided however, in the event that the VWAP during any such ten (10) day period is less than $0.06, then the reset conversion price of the Notes shall be no lower than $0.03. The Notes also contain a reset provision to the same price as any future offering in the next three (3) years in the event that the conversion or offering price of securities offered in such subsequent offering is less than the Conversion Price of the Notes in this Offering. The conversion feature of the Offerings Notes issued during 2016 was accounted for in the previous year initially as equity. The Company concluded the conversion feature of the Notes did not qualify as a derivative because there was no market mechanism for net settlement and they were not readily convertible to cash. The Company reassessed the conversion feature of the Offerings Notes issued during 2016 for derivative treatment during January 2017 and concluded its shares were readily convertible to cash based on the current trading volume of the Company’s stock. Due to the fact that these convertible notes have an option to convert at a variable amount, they are subject to derivative liability treatment. The Company has applied ASC 815, due to the potential for settlement in a variable quantity of shares. The conversion feature has been measured at fair value using a Black Scholes and Binomial model at the reassessment date and the period end. The conversion feature, when reassessed, gave rise to a derivative liability of $1,526,300. In accordance with ASC 815, $129,434 was charged to paid in-capital due to the fact a beneficial conversion feature was recorded on the original issue date. In addition the Company recorded a debt discount to the Notes of $90,153 relating to the fair value of the conversion option. The fair value of the conversion option on the date of issuance in excess of the face amount of the note was recorded to interest expense on the date of issuance. The conversion feature of new Notes issued during the year ended December 31, 2017, gave rise to a derivative liability of $1,544,007. The gross proceeds from the sale of the Notes were recorded net of a discount of $1,167,289. The debt discount relates to fair value of the conversion option, issuance costs, any allocated fair value of issued warrants and placement agent warrants. The debt discount is charged to interest expense ratably over the term of the convertible note. The fair value of the conversion option on the date of issuance in excess of the net proceeds of the note was recorded to interest expense on the date of issuance. In addition, to the extent that any investor that acquires Units in this Offering had previously acquired securities issued by the Company or its subsidiary in one of the two prior private offerings placed by the Placement Agent (each a “Prior Offering”), which collectively raised gross proceeds of $1,510,000 (each an “Existing Investor”), the Company has agreed to provide additional consideration to each such Existing Investor as follows: (i) if the Existing Investor acquires Units in this Offering in an amount equal to fifty percent (50%) or greater than the amount the Existing Investor invested in a Prior Offering, such Existing Investor will receive (a) an additional 7.33 shares, as amended, (if the investor invested in the first Prior offering) or 9 shares, as amended, of the Company’s common stock (if the investor invested in the second Prior Offering) (each “Incentive Shares”); and (b) the exercise price of each of the warrants purchased by the Existing Investor will be reduced from $0.60 per share (if the investor invested in the first Prior Offering) or $0.72 per share (if the investor invested in the second Prior Offering) to $0.10 per share (the “Incentive Warrant Price Reduction”); and (ii) if the Existing Investor acquires Units in this Offering in an amount equal to less than fifty percent (50%) of the amount the Existing Investor invested in a Prior Offering, such Existing Investor will receive a pro-rata number of Incentive Shares and Incentive Warrant Price Reduction on only a pro-rata portion of the warrants acquired by the Existing Investor in the Prior Offering. During the year ended December 31, 2017, the Company issued investors who invested in prior offerings 8,211,333 shares of common stock and reduced the exercise price of 954,083 warrants as per the terms above. The incentive shares were recorded as a debt discount of $5,972 on the date of issuance based on the relative fair value of the shares. Upon modification, it is required to analyze the fair value of the instruments, before and after the modification, recognizing the increase as a charge to the statement of operations. The Company computed the fair value of the warrants directly preceding the modification and compared the fair value to that of the modified warrants with new terms. The Company recorded the increased value of the warrants of $37,329 to interest expense with an offsetting entry to additional paid in capital on the date of the modification. The Company will have the ability to extend the Notes for an additional six (6) months (the “Extended Term”) and if so extended shall be referred to herein as the “Extended Notes”. The Extended Notes, upon maturity, will pay interest at a six (6) month rate of 18% (36% annualized) at the termination of the Extended Term. The Extended Notes, to the extent extended pursuant to their terms for the Extended Term, will carry an additional 50% warrant coverage (e.g. such warrant to be exercisable for an additional 50% of the number of shares into which the Extended Note is initially convertible (the “Extended Warrants”). The Extended Warrants shall be exercisable at a price equal to $0.10. The Extended Warrants will expire four (4) years from the Extended Term and shall contain customary anti-dilution rights (for stock splits, stock dividends and sales of substantially all the Company’s assets) and the shares underlying the Extended Warrants will contain registration rights. During the year ended December 31, 2017, the Company issued warrants to acquire an aggregate of 11,883,331 shares of the Company’s common stock at $0.10 per share for four years in connection with the extension of the above described notes. The determined fair value at the date of issuance of $890,372 was charged as loss on extinguishment of debt. As part of the transactions, the Company incurred placement agent fees based on the aggregate gross proceeds raised during the year ended December 31, 2017, or $208,862, which were recorded as debt issuance costs. In addition, during the year ended December 31, 2017, the Company issued the placement agent warrants an aggregate of 3,219,106 common shares and was obligated to issue an additional 1,333,467 warrants (See Note 11). The placement agent warrants have an exercise price of $0.001 per share, have a seven (7) year term and vest immediately. |
7. Convertible Notes Payable -
7. Convertible Notes Payable - Related Party | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Convertible Notes Payable - Related Party | On April 8, 2016 (the “Initial Closing Date”), we entered into a Securities Purchase Agreement (the “SPA”) with Attia Investments, LLC, a related party (the “Investor”). A shareholder of the Company who previously owned in-excess of 5% of the Company’s common stock is the managing member of Attia Investments, LLC. Under the Agreement, we issued and sold to the Investor, and the Investor purchased from us, Debentures in the principal amount of $87,500 for a purchase price of $70,000 (together the “Debentures”), bearing interest at a rate of 0% per annum, with an original maturity on October 8, 2016, further extended to April 8, 2017. The Debentures are secured by all assets of the Company. The Company is currently in default of the SPA, making the entire unpaid principal and interest due and payable. The investor has initiated a claim against the Company for payment of a loan in default. Subsequent to December 31, 2017, the company accepted a settlement totaling approximately $90,000 cash and 750,000 shares of stock. The company has accounted for it in accordance with ASC450. The principal amount of the Debentures can be converted at the option of the Investor into shares of the Company’s 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. The Company assessed the conversion feature of the Debentures on the date of issuance and at the end of each subsequent reporting period through December 31, 2016 and concluded the conversion feature of the Debentures did not qualify as a derivative because there was no market mechanism for net settlement and they were not readily convertible to cash. The Company reassessed the conversion feature of the Notes for derivative treatment during January 2017 and concluded its shares were readily convertible to cash based on the current trading volume of the Company’s stock. Due to the fact that these convertible notes have an option to convert at a variable amount, they are subject to derivative liability treatment. The Company has applied ASC 815, due to the potential for settlement in a variable quantity of shares. The conversion feature has been measured at fair value using a Black Scholes model at the reassessment date and the period end. The conversion feature, when reassessed, gave rise to a derivative liability of $154,100. In accordance with ASC 815, $42,602 was charged to paid-in-capital since a beneficial conversion feature was recorded on the original issue date. In addition, the Company recorded a debt discount to the Notes of $70,000 relating to the fair value of the conversion option. The fair value of the conversion option on the date of issuance in excess of the face amount of the note was recorded to interest expense on the date of issuance. Amendment On March 16, 2017, the Company entered into an amendment to the SPA. The SPA was modified as follows: · The maturity date of the Debentures was extended to April 8, 2017; · The default interest rate was set at 18%. As consideration for the amendment, the Company increased the principal amount on the Debentures from $65,000 to $86,875 and issued the Investor 218,750 shares of common stock with a fair value of $13,125. All remaining terms of the Debentures remained the same. In accordance with ASC 470, since the present value of the cash flows under the new debt instrument was at least ten percent different from the present value of the remaining cash flows under the terms of the original debt instrument, the Company accounted for the amendment to SPA as a debt extinguishment. Accordingly, the Company wrote off the remaining debt discount on the original Debentures of $17,312. The Company recorded a loss on extinguishment of debt of $52,312 on the amendment date. During the year ended December 31, 2017, the Company repaid $50,018 in principal and $2,982 in accrued interest on certain convertible notes to related parties. Upon repayment derivative liabilities in the amount of $48,093 were reclassified to equity. The outstanding principal balance on the Debentures at December 31, 2017 and 2016 was $41,857 and $70,000, respectively. |
8. Loans Payable - Officers
8. Loans Payable - Officers | 12 Months Ended |
Dec. 31, 2017 | |
Loans Payable - Officers | |
Loans Payable - Officers | During the current and prior periods, one of the Company’s officers made non-interest bearing loans to the Company in the form of cash and payments to vendors on behalf of the Company. The loans are due on demand and unsecured. As of December 31, 2017 and 2016, the Company is reflecting a liability of $9,941 and $34,254, respectively. The Company did not impute interest on the loan as it was deemed to be de minimis to the consolidated financial statements. |
10. Commitments and Contingenci
10. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Litigations, Claims and Assessments Attia Enterprises, a creditor, has initiated a claim against the Company for $87,500 relating to a loan due of $46,664 including interest currently in default. The Company retained counsel for representation in the matter. Subsequent to December 31, 2017, the company accepted a settlement totaling approximately $90,000 cash and 750,000 shares of stock. The company has accounted for it in accordance with ASC450. On January 31, 2017, the Company entered into a mutual general release and settlement agreement (the "Settlement Agreement") with Microcap Headlines, Inc. (“Microcap”) to settle a judgment against the Company in the sum of $17,042 entered pursuant to a lawsuit filed by Microcap against the Company (the "Action") in the New York County, New York, Superior Court (Index No. 653105/2016). In the Action, the plaintiff alleged that the Company owed the plaintiff past due amounts for investor relations services provided to the Company. Pursuant to the Settlement Agreement, the Company agreed to pay Microcap $14,700 upon execution of the Settlement Agreement. The Settlement Agreement also contains a general release by Microcap of the Company relating to the Action, such release however is predicated on the Company making payments pursuant to the Settlement Agreement. Pursuant to the Settlement Agreement, after receipt of the full $14,700 by Microcap, the Company and Microcap shall execute a written stipulation to set aside the default and judgment against the Company and dismiss the Action with prejudice. As of December 31, 2016, the Company had accrued a liability of $17,042 related to the Settlement Agreement which has been included in other accrued liabilities at December 31, 2016 in the accompanying consolidated Balance Sheet. On February 2, 2017, the Company paid the settlement in full. 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 other than described above that are deemed material to the consolidated financial statements as of December 31, 2017 and 2016. Employment Agreements On February 21, 2017, the Company entered into an employment agreement with an individual, pursuant to which, commencing March 6, 2017, the individual will serve as the Interim Chief Executive Officer of the Company and, commencing 90 days thereafter, shall serve as Chief Executive Officer of the Company through March 5, 2019, subject to extension as provided in the employment agreement, and be appointed to the Board of Directors. The agreement calls for an annual salary of $250,000 per annum and a bonus in the amount of 10% of all incremental gross revenue generated by the Company, which bonus shall be determined and be payable quarterly. In addition, pursuant to the employment agreement, the Company granted to the individual certain stock options (See Note 9). On March 6, 2017, William Gorfein resigned as the Company’s Chief Executive Officer and was named the Company’s Chief Strategy Officer and Principal Financial Officer. No changes were made to Mr. Gorfein’s existing employment agreement. Payroll Tax Liabilities As of December 31, 2017, and through the date of this report, the Company has not filed certain federal and state income and payroll tax returns nor has it paid the payroll tax amounts and related interest and penalties relating to such returns. Amounts due under these returns with respect to penalties and interest are estimated to be $10,118 and $10,493 as of December 31, 2017 and 2016, respectively which have been included in other accrued liabilities at December 31, 2017 and 2016 in the accompanying consolidated Balance Sheets. Placement Agent and Finders Agreements In 2016 and 2017, the Company entered into a Financial Advisory and Investment Banking Agreements with WestPark Capital, Inc. (“WestPark”) (the “WestPark Advisory Agreements”). Pursuant to the WestPark Advisory Agreement, WestPark shall act as the Company’s financial advisor and placement agent in connection with a best efforts private placement (the “Financing”) of the Company’s debt and/or equity securities (the “Securities”). The Company, upon each closing of the Financing will pay consideration to WestPark, in cash, a fee in an amount equal to 10% of the aggregate gross proceeds raised in the Financing from the sale of Securities placed by WestPark and warrants in the amount of 10% of the aggregate gross proceeds. The Company will also pay all WestPark legal fees and expenses as well as a 3% non-accountable expense allowance of the aggregate gross proceeds raised in the Financing. The Placement Agent Warrants will have: (a) a nominal exercise price of $0.001 per share, (b) a seven year term, and (c) a cashless exercise provision. The shares underlying the Placement Agent Warrants will have standard piggyback registration rights. During the year ended December 31, 2017, in addition to the cash fees, the Company issued 1,319,750 shares and 3,219,106 warrants to acquire the Company’s common stock at $0.001 per share for seven years as placement agent fees as per the terms of the WestPark Advisory Agreements. In addition, as of December 31, 2017, the Company is obligated to issue an additional 1,333,467 warrants for placement agent fees with an exercise price of $0.001, expiring seven years from issuance date. Operating Lease The Company had an operating lease for its New York office facility under a month-to-month agreement which ended on March 31, 2016. The Company is not currently a party to any operating lease agreements. Rent expense for the year ended December 31, 2017 and 2016 totaled $0 and $20,231, respectively. |
11. Related Party Transactions
11. Related Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
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 Company’s 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. During the year ended December 31, 2016 $6,000 was forgiven. See Notes 7 and 8. |
12. Income Taxes
12. Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The tax effects of temporary differences that give rise to deferred tax assets as of December 31, 2017 and 2016 are presented below: The income tax provision (benefit) consists of the following: 2017 2016 Federal Current $ – $ – Deferred (94,974 ) (377,200 ) State and local Current – – Deferred (42,630 ) (104,600 ) Change in valuation allowance 137,604 481,800 Income tax provision (benefit) $ – $ – The reconciliation between the statutory federal income tax rate and the Company’s effective rate for the years ended December 31, 2017 and 2016 is as follows: 2017 2016 U.S. Federal statutory rate (34.0% ) (34.0% ) State tax, net of federal tax benefit (9.4 ) (9.42 ) Federal tax rate change 10.9 – Stock based compensation 8.9 10.33 Non-deductible interest expense 27.9 6.46 Other permanent differences (7.0 ) 0.56 Change in valuation allowance 2.7 26.07 Income tax provision (Benefit) 0.0% 0.0% As of December 31, 2017 and 2016 the deferred tax assets consisted of the following: 2017 2016 Deferred Tax Assets: Net operating loss carryovers $ 1,269,504 $ 1,131,900 Total deferred tax asset 1,269,504 1,131,900 Valuation allowance (1,269,504 ) (1,131,900 ) Net Deferred Tax Asset, net of valuation allowance $ – $ – The Company is required to file 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. Tax returns for the years ended December 31, 2015, 2016 and 2017 remain open to Internal Revenue Service and State audits. The Company is in the process of filing its federal and state tax returns for the years ended December 31, 2017, 2016, 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, 2017, the Company had approximately $4.2 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 2035 unless utilized. In accordance with Section 382 of the Internal Revenue Code, deductibility of the Company’s U.S. net operating carryovers may be subject to an annual limitation in the event of a change of control as defined the regulations. A Section 382 analysis has not been prepared and the Company’s NOLs could be subject to limitation. 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 Company’s 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. On December 22, 2017, new legislation was signed into law, informally titled the Tax Cuts and Jobs Act, which included, among other things, a provision to reduce the federal corporate income tax rate to 21%. Under ASC 740, Accounting for Income Taxes, the enactment of the Tax Act also requires companies, to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted. There is no further change to its assertion on maintaining a full valuation allowance against its U.S. deferred tax assets. The Company’s gross deferred tax assets have been revalued from 34% to 21% with a corresponding offset to the valuation allowance and any potential other taxes arising due to the Tax Act will result in reductions to its net operating loss carryforward and valuation allowance. Deferred tax assets of approximately $1,800,000 have been revalued to approximately $1,300,000 with a corresponding decrease to the Company’s valuation allowance. Therefore, there was no net impact on the Company’s financial statements for the year ended December 31, 2017. On December 22, 2017, the SEC Staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of ASC Topic 740 in situations when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Act. The Company is complete with its accounting for the effects of the Tax Act, however, as additional guidance and interpretation may be issued by the U.S. Treasury Department, the IRS and other standard setting bodies, the Company may be required to make adjustment and/or additional disclosure relating to its gross deferred tax assets in 2018. |
13. Subsequent Events
13. Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Financing In 2018, the Company sold an aggregate of $111,900 of Units to five investors under Offering 6. Each Unit was sold at a price of $10,000 per Unit and consisted of one (1) six (6) month, 18% convertible promissory note (36% on an annual basis) with a face value of $10,000 (the “Offering 6 Notes”) and four year warrants exercisable for an aggregate number of shares of common stock equal to 50% of the shares of common stock into which the Offering 6 Note is initially convertible, exercisable at a price of $0.06 per share. The Offering 6 Notes are due six months after the issuance of each note. In connection with the sale of $91,500 of Units, the Company issued an aggregate of 932,500 four year warrants. |
3. Summary of Significant Acc19
3. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Peerlogix Technologies, Inc. and IP Squared Technologies Holdings, LLC. All significant intercompany accounts and transactions have been eliminated in consolidation. |
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 Company’s significant estimates and assumptions include the fair value of the Company’s equity instruments, convertible debt, derivative liabilities, stock-based compensation, and the valuation allowance relating to the Company’s deferred tax assets. |
Reclassifications | Reclassifications Certain prior year amounts in the consolidated financial statements and the notes thereto have been reclassified where necessary to conform to the current year presentation. These reclassifications did not affect the prior period total assets, total liabilities, stockholders’ deficit, net loss or net cash used in operating activities. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when four basic criteria are met before: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for adjustments are provided for in the same period the related sales are recorded. At the time of each transaction, management assesses whether the fee associated with the transaction is fixed or determinable and whether or not collection is reasonably assured. The assessment of whether the fee is fixed or determinable is based upon the payment terms of the transaction. Collectability is assessed based on a number of factors, including past transaction history with the client and the creditworthiness of the client. The Company generates revenue primarily by licensing our Over-the-Top audience dataset to platforms and channel partners. As such, the Company predominantly contracts with Data Management Platforms (DMPs) and Demand Side Platforms (DSPs) (collectively, “Demand Partners”) who license the Company’s solution to use in conjunction with other solutions offered to their advertiser clients, including brands and advertising agencies. When the Company contracts with a Demand Partner, it acts as an agent for a disclosed or undisclosed principal, which is the advertiser. The Company contracts with Demand Partners, including DMPs and DSPs representing advertisers, are generally in the form of a revenue share between the Demand Partner and the Company. Revenue payouts to the Company typically occur within sixty (60) days after the end of each calendar month, and the contracts typically have an initial term of a year. Due to the uncertainly of amount of revenue earned during the process, it is recognized upon payout and receipt of payment. Revenue through December 31, 2017 had been de minimis to the consolidated financial statements. |
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, 2017 and 2016, the Company does not have any cash equivalents. |
Convertible Instruments | 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. |
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 entity’s underlying stock. |
Concentration of Credit Rick | Concentrations of Credit Risk Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such amounts may be in excess of the FDIC insurance limit. |
Derivative Liabilities | Derivative Liabilities In connection with the issuance of certain convertible promissory notes, the terms of the convertible notes included an embedded conversion feature which provided for the settlement of certain convertible promissory notes into shares of common stock at a rate which was determined to be variable with no floor. The Company determined that the conversion feature was an embedded derivative instrument pursuant to ASC 815 “Derivatives and Hedging” The accounting treatment of derivative financial instruments requires that the Company record the conversion option, if applicable, at their fair values as of the inception date of the agreements and at fair value as of each subsequent balance sheet date. Any change in fair value was recorded as a change in the fair value of derivative liabilities for each reporting period at each balance sheet date. The Company reassesses the classification at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. The fair values of conversion options that are convertible at a variable conversion price are valued using a Black-Scholes Valuation Model. The Company determined the fair value of the conversion option using either the Black-Scholes Valuation Model or the Binomial Lattice Model to be materially the same. The Black-Scholes Valuation Model includes subjective input assumptions that can materially affect the fair value estimates. The model was developed for use in estimating the fair value of traded options or warrants. The expected volatility is estimated based on the most recent historical period of time equal to the weighted average life of the instrument granted. The principal assumptions used in applying the Black-Scholes model were as follows: Year Ended December 31, 2017 Risk-free interest rate 0.52 – 2.20% Contractual term 0.02 - 4.00 years Expected volatility 200% - 353% Dividends 0.0% At any given time, certain of the Company’s embedded conversion features on debt and outstanding warrants may be treated as derivative liabilities for accounting purposes under ASC 815-40 due to insufficient authorized shares to settle these outstanding contracts. Pursuant to SEC staff guidance that permits a sequencing approach based on the use of ASC 840-15-25 which provides guidance for contracts that permit partial net share settlement. The sequencing approach may be applied in one of two ways: contracts may be evaluated based on (1) earliest issuance date or (2) latest maturity date. Pursuant to the sequencing approach, the Company evaluates its contracts based upon the latest maturity date. |
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, exercise of stock options and conversion of convertible promissory notes for the year ended December 31, 2017 and 2016 were as follows: December 31, 2017 2016 Warrants 36,305,369 8,956,677 Stock options 24,550,000 12,300,000 Convertible promissory notes and accrued interest 35,227,200 11,408,333 Total 96,082,569 32,665,010 For the year ended December 31, 2017, 4,269,941 warrants were included in basic and diluted loss per share as their exercise price was determined to be nominal. |
Income Taxes | Income Taxes Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability during each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. 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, 2017 and 2016. Management has evaluated and concluded that there was no material uncertain tax positions requiring recognition in the Company’s financial statements for the years ended December 31, 2017 and 2016. The Company does not expect any significant changes in the unrecognized tax benefits within twelve months of the reporting date. |
Research and Development | Research and development costs All research and development costs are charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company incurred minimal research and development expenses for the years ended December 31, 2017 and 2016. |
Advertising | Advertising The Company follows the policy of charging the costs of advertising to expense as incurred. The Company charged to operations $6,453 and $4,333 as advertising costs for the years ended December 31, 2017 and 2016, respectively. |
Share-Based Compensation | Stock 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 for non-employees, the fair value of the award is generally re-measured on vesting dates and 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 statements of operations, as if such amounts were paid in cash. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of cash and accounts payable 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 Company’s Principal Financial 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 Company’s Principal Financial 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. Financial assets and liabilities measured at fair value on a recurring basis are summarized below and disclosed on the balance sheets as follows: December 31, 2017 Fair Value Measurement Using Carrying Level 1 Level 2 Level 3 Total Derivative conversion features $ 935,274 $ – $ – $ 935,274 $ 935,274 December 31, 2016 Fair Value Measurement Using Carrying Value Level 1 Level 2 Level 3 Total Derivative conversion features $ - $ – $ – $ - $ - The table below provides a summary of the changes in fair value, including net transfers in and/or out, of all financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the two years ended December 31, 2017: Fair Value Total Balance, December 31, 2016 (and prior) $ – Reclassification of derivative liability from equity 172,036 Issuances, reassessments and settlements 2,552,772 Reclassification of derivative liability to equity (48,093 ) Change in fair value (1,741,441 ) Balance, December 31, 2017 $ 935,274 Changes in the unobservable input values could potentially cause material changes in the fair value of the Company’s Level 3 financial instruments. The significant unobservable inputs used in the fair value measurements are the expected volatility assumption. A significant increase (decrease) in the expected volatility assumption could potentially result in a higher (lower) fair value measurement. |
Recently Adopted Accounting Guidance | Recently Adopted Accounting Guidance In March 2016, the FASB issued ASU No. 2016-06, “Derivatives and Hedging” (Topic 815). The FASB issued this update to clarify the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment under the amendments in this update is required to assess the embedded call (put) options solely in accordance with the four-step decision sequence. The updated guidance is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company adopted the provisions of ASU 2016-06 on January 1, 2017. The adoption of ASU 2016-06 did not materially impact its consolidated financial position, results of operations or cash flows. In April 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation” (Topic 718). The FASB issued this update to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The updated guidance is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company adopted the provisions of ASU 2016-09 on January 1, 2017. The adoption of ASU 2016-09 did not materially impact the Company’s consolidated financial position, results of operations or cash flows. |
Recently Issued Accounting Guidance | Recently Issued Accounting Guidance In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09 “Revenue from Contracts with Customers” to supersede previous revenue recognition guidance under current U.S. GAAP. The guidance presents a single five-step model for comprehensive revenue recognition that requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Two options are available for implementation of the standard which is either the retrospective approach or cumulative effect adjustment approach. The guidance becomes effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early adoption permitted. The Company anticipates using the modified retrospective transition method beginning with the first quarter of fiscal 2019. The adoption of ASU 2014-09 using the modified retrospective transition method in the first quarter of fiscal 2019 is not anticipated to have a material impact on the Company’s financial statements. In May 2017, the FASB issued ASU 2017-09, “Compensation-Stock Compensation” (Topic 718): Scope of Modification Accounting. The amendments provide guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718 Compensation-Stock Compensation. An entity should account for the effects of a modification unless all the following are met: (1.) The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification. (2.) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified. (3.) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The ASU is effective for all entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The Company is currently assessing the impact that this standard will have on its consolidated financial statements. In July 2017, the FASB issued ASU 2017-11, “Earnings Per Share” (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity's own stock. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. For public business entities, the amendments in Part I of this update are effective for fiscal years, and years, beginning after December 15, 2018. Early adoption is permitted for all entities, including adoption in an interim period. The Company is currently assessing the impact that this standard will have on its condensed consolidated financial statements. In February 2016, the FASB issued ASU 2016-02—Leases (Topic 842), requiring lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases with the exception of short-term leases. For lessees, leases will continue to be classified as either operating or finance leases in the income statement. The effective date of the new standard for public companies is for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition and requires application of the new guidance at the beginning of the earliest comparative period presented. The Company is evaluating the effect that the updated standard will have on its financial statements and related disclosures. In August 2016, the FASB issued ASU 2016-15—Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides guidance for eight specific cash flow issues with respect to how cash receipts and cash payments are classified in the statements of cash flows, with the objective of reducing diversity in practice. The effective date for ASU 2016-15 is for annual periods beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of this new standard on its financial statements. There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s financial position, results of operations or cash flows. |
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 Acc20
3. Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Assumptions | Year Ended December 31, 2017 Risk-free interest rate 0.52 – 2.20% Contractual term 0.02 - 4.00 years Expected volatility 200% - 353% Dividends 0.0% |
Common shares issuable upon exercise of other equity | December 31, 2017 2016 Warrants 36,305,369 8,956,677 Stock options 24,550,000 12,300,000 Convertible promissory notes and accrued interest 35,227,200 11,408,333 Total 96,082,569 32,665,010 |
Schedule of fair value of assets and liabilities on recurring basis | Financial assets and liabilities measured at fair value on a recurring basis are summarized below and disclosed on the balance sheets as follows: December 31, 2017 Fair Value Measurement Using Carrying Level 1 Level 2 Level 3 Total Derivative conversion features $ 935,274 $ – $ – $ 935,274 $ 935,274 December 31, 2016 Fair Value Measurement Using Carrying Value Level 1 Level 2 Level 3 Total Derivative conversion features $ - $ – $ – $ - $ - |
Schedule of unobservable inputs | Fair Value Total Balance, December 31, 2016 (and prior) $ – Reclassification of derivative liability from equity 172,036 Issuances, reassessments and settlements 2,552,772 Reclassification of derivative liability to equity (48,093 ) Change in fair value (1,741,441 ) Balance, December 31, 2017 $ 935,274 |
6. Convertible Notes Payable (T
6. Convertible Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Convertible Notes Payable [Abstract] | |
Schedule of convertible debt | December 31, 2017 2016 Offering 3 $ 825,500 $ 600,500 Offering 4 439,550 – Offering 5 200,000 – Offering 6 245,000 – Total 1,710,500 600,500 Less: debt discount 277,969 512,014 Net $ 1,432,081 $ 88,486 |
9. Stockholders' Deficit (Table
9. Stockholders' Deficit (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Stock Options [Member] | |
Assumptions | For the Year Ended December 31, 2017 For the Year Ended December 31, 2016 Risk free interest rate 1.83-1.92% 0.087-2.45% Dividend yield 0.00% 0.00% Expected volatility 70.00-298.88% 59.00-83.71% Expected life in years 10 5-10 Forfeiture rate 0.00 0.00% |
Schedule of stock option activity | Number of Weighted Weighted Outstanding-January 1, 2016 – $ – – Granted 12,300,000 0.11 5.94 Exercised – – – Forfeited/Canceled – – – Outstanding – December 31, 2016 12,300,000 $ 0.11 5.64 Granted 12,250,000 0.09 10.00 Exercised – – – Forfeited/Cancelled – – – Outstanding – December 31, 2017 24,550,000 $ 0.10 7.03 Exercisable – December 31, 2017 5,150,000 $ 0.09 8.10 |
Warrants [Member] | |
Assumptions | Year Ended December 31, 2017 Year Ended December 31, 2016 Risk free interest rate 1.10 – 2.14% 1.13 – 1.92% Dividend yield 0.00% 0.00% Expected volatility 65.32-316.98% 68.46 – 84.00% Contractual term (years) 3.1-5 3.3 - 4 |
Schedule of Warrants, Activity | Number of Weighted Weighted Outstanding-January 1, 2016 2,951,669 $ 0.66 4.54 Granted 6,005,008 0.10 4.00 Exercised – – – Forfeited/Canceled – – – Outstanding – December 31, 2016 8,956,677 $ 0.20 3.65 Granted 27,348,692 0.09 4.11 Exercised – – – Forfeited/Canceled – – – Outstanding and Exercisable – December 31, 2017 36,305,369 $ 0.11 3.74 |
Schedule of Exerciseable and Outstanding Warrants | Number of Warrants Exercise Price Weighted Average Remaining Contractual Life (In Years) Currently Exercisable 4,219,941 $0.001 6.37 4,219,941 50,000 $0.01 2.18 50,000 1,000,000 $0.06 4.28 1,000,000 27,842,093 $0.10 3.34 27,842,093 1,000,000 $0.12 4.28 1,000,000 1,000,000 $0.18 4.28 1,000,000 418,333 $0.60 2.35 418,333 775,002 $0.72 2.62 775,002 36,305,369 36,305,369 |
12. Income Taxes (Tables)
12. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income tax provision | 2017 2016 Federal Current $ – $ – Deferred (94,974 ) (377,200 ) State and local Current – – Deferred (42,630 ) (104,600 ) Change in valuation allowance 137,604 481,800 Income tax provision (benefit) $ – $ – |
Reconciliation of income tax rate | 2017 2016 U.S. Federal statutory rate (34.0% ) (34.0% ) State tax, net of federal tax benefit (9.4 ) (9.42 ) Federal tax rate change 10.9 – Stock based compensation 8.9 10.33 Non-deductible interest expense 27.9 6.46 Other permanent differences (7.0 ) 0.56 Change in valuation allowance 2.7 26.07 Income tax provision (Benefit) 0.0% 0.0% |
Deferred tax assets | 2017 2016 Deferred Tax Assets: Net operating loss carryovers $ 1,269,504 $ 1,131,900 Total deferred tax asset 1,269,504 1,131,900 Valuation allowance (1,269,504 ) (1,131,900 ) Net Deferred Tax Asset, net of valuation allowance $ – $ – |
1. Organization and Operations
1. Organization and Operations (Details Narrative) - shares | Dec. 31, 2017 | Dec. 31, 2016 | Aug. 14, 2015 |
Stock outstanding | 46,122,368 | 26,860,825 | 21,049,602 |
Former Owners of Peerlogix Technologies, Inc. | |||
Ownership percentage | 81.00% |
2. Going Concern and Manageme25
2. Going Concern and Management Liquidation Plans (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Net loss | $ (4,996,097) | $ (1,847,867) |
Net cash used in operations | $ (725,243) | $ (511,056) |
3. Summary of Significant Acc26
3. Summary of Significant Accounting Policies (Details - Share equivalents) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Total shares issuable upon exercise | 96,082,569 | 32,665,010 |
Warrants | ||
Total shares issuable upon exercise | 36,305,369 | 2,951,669 |
Stock Option [Member] | ||
Total shares issuable upon exercise | 24,550,000 | 12,300,000 |
Convertible Promissory Notes | ||
Total shares issuable upon exercise | 35,227,200 | 11,408,333 |
3. Summary of Significant Acc27
3. Summary of Significant Accounting Policies (Details - fair value) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Derivative conversion features | $ 935,274 | $ 0 |
Fair Value, Inputs, Level 1 [Member] | ||
Derivative conversion features | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | ||
Derivative conversion features | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | ||
Derivative conversion features | $ 935,274 | $ 0 |
3. Summary of Significant Acc28
3. Summary of Significant Accounting Policies (Details - Level 3) - Fair Value, Inputs, Level 3 [Member] | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Derivatives, beginning balance | $ 0 |
Reclassification of derivative liability from equity | 172,036 |
Issuances, reassessments and settlements | 2,552,772 |
Reclassifications of derivative liability to equity | (48,093) |
Change in fair value | (1,741,441) |
Derivatives, ending balance | $ 935,274 |
3. Summary of Significant Acc29
3. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | ||
Antidilutive shares outstanding | 4,269,941 | |
Cash equivalents | $ 0 | $ 0 |
Advertising expenses | $ 6,453 | $ 4,333 |
4. Loan Receivable (Details Nar
4. Loan Receivable (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Receivables [Abstract] | ||
Payment for acquisition | $ 37,500 | |
Allowance for loan loss | $ (37,500) | $ 0 |
5. Notes Payable (Details Narra
5. Notes Payable (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Proceeds from notes payable | $ 0 | $ 130,000 |
Repayment of notes payable | 106,000 | 26,250 |
Unamortized discount | 277,969 | 512,014 |
Notes payable | 0 | 106,000 |
Unsecured Convertible Promissory Note [Member] | ||
Debt face value | $ 25,000 | |
Debt stated interest rate | 12.00% | |
Placement agent fees | $ 3,250 | |
Registration Rights Agreement [Member] | ||
Accrued liquidated damages | 0 | 20,000 |
Accrued interest | 4,051 | 1,359 |
Securities Purchase Agreement [Member] | ||
Repayment of notes payable | 106,000 | 26,250 |
Interest expense | 12,687 | $ 6,149 |
Stock issued new, shares | 100,000 | |
Unamortized discount | $ 18,000 | |
Original issue discount | 26,250 | |
Legal fees | 7,418 | |
Notes payable | $ 0 | $ 106,000 |
6. Convertible Notes Payable (D
6. Convertible Notes Payable (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Total convertible notes payable | $ 1,710,500 | $ 600,500 |
Less: debt discount | 277,969 | 512,014 |
Convertible notes payable, net | 1,432,081 | 88,486 |
Offering 3 [Member] | ||
Total convertible notes payable | 825,500 | 600,500 |
Offering 4 [Member] | ||
Total convertible notes payable | 439,550 | 0 |
Offering 5 [Member] | ||
Total convertible notes payable | 200,000 | 0 |
Offering 6 [Member] | ||
Total convertible notes payable | $ 245,000 | $ 0 |
6. Convertible Notes Payable 33
6. Convertible Notes Payable (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Proceeds from offerings | $ 901,138 | $ 438,446 |
Fair value adjustment of warrants | 37,329 | 81,001 |
Loss on extinguishment of debt | $ (936,915) | 218,768 |
Placement Agent [Member] | ||
Stock issued new, shares | 3,219,106 | |
Warrants issued | 1,333,467 | |
Offerings [Member] | ||
Proceeds from offerings | $ 1,110,000 | 600,500 |
Derivative liability | 1,544,007 | 1,526,300 |
Beneficial conversion feature | 129,434 | |
Debt discount | $ 1,167,289 | $ 90,153 |
Stock issued new, shares | 8,211,333 | |
Fair value adjustment of warrants | $ 37,329 | |
Warrants issued | 11,883,331 | |
Loss on extinguishment of debt | $ (890,372) | |
Debt issuance costs | $ 208,862 |
7. Convertible Notes Payable 34
7. Convertible Notes Payable - Related Party (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Beneficial conversion feature charged to paid-in-capital | $ 261,450 | |
Debt discount | $ 277,969 | 512,014 |
Stock issued new, value | 2,000 | |
Loss on extinguishment of debt | (936,915) | 218,768 |
Convertible debt, balance outstanding | $ 41,857 | $ 70,000 |
SPA Agreement [Member] | Attia Investments [Member] | ||
Debt issuance date | Apr. 8, 2016 | |
Debt face amount | $ 87,500 | |
Debt maturity date | Apr. 8, 2017 | |
Debt stated interest rate | 0.00% | |
Derivative liability | $ 154,100 | |
Beneficial conversion feature charged to paid-in-capital | 42,602 | |
Debt discount | 70,000 | |
Debt principal amount | $ 65,000 | |
SPA Agreement [Member] | Attia Investments [Member] | Amendment 2 [Member] | ||
Debt maturity date | Apr. 4, 2017 | |
Debt stated interest rate | 18.00% | |
Debt principal amount | $ 86,875 | |
Stock issued new, shares | 218,750 | |
Stock issued new, value | $ 13,125 | |
Debt discount written off | 17,312 | |
Loss on extinguishment of debt | (52,312) | |
Certain Convertible Notes [Member] | ||
Payments of convertible debt | 50,018 | |
Payment of interest for convertible debt | 2,982 | |
Derivative liabilities reclassified to equity | $ 48,093 |
8. Loans Payable - Officer (Det
8. Loans Payable - Officer (Details Narrative) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Loans Payable - Officers | ||
Loans payable - officers | $ 9,941 | $ 34,254 |
9. Stockholders' Deficit (Detai
9. Stockholders' Deficit (Details - Assumptions Options) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Stock Options [Member] | ||
Risk free interest rate, minimum | 1.83% | 0.087% |
Risk-free interest rate, maximum | 1.92% | 2.45% |
Dividend yield | 0.00% | 0.00% |
Expected volatility, minimum | 70.00% | 59.00% |
Expected volatility, maximum | 298.88% | 83.71% |
Expected life in years/Contractual term | 10 years | 5-10 years |
Forfeiture rate | 0.00% | 0.00% |
Warrants [Member] | ||
Risk free interest rate, minimum | 1.10% | 1.13% |
Risk-free interest rate, maximum | 2.14% | 1.92% |
Dividend yield | 0.00% | 0.00% |
Expected volatility, minimum | 65.32% | 68.46% |
Expected volatility, maximum | 316.98% | 84.00% |
Expected life in years/Contractual term | 3.1-5 years | 3.3-4 years |
9. Stockholders' Deficit (Det37
9. Stockholders' Deficit (Details - Option activity) - Stock Options [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Options | ||
Options outstanding, beginning balance | 12,300,000 | 0 |
Options granted | 12,250,000 | 12,300,000 |
Options exercised | 0 | 0 |
Options forfeited/cancelled | 0 | 0 |
Options outstanding, ending balance | 24,550,000 | 12,300,000 |
Options exercisable | 5,150,000 | |
Weighted Average Exercise Price | ||
Options outstanding, beginning balance | $ 0.11 | |
Options granted | 0.09 | 0.11 |
Options outstanding, ending balance | 0.10 | $ 0.11 |
Options exercisable | $ 0.09 | |
Weighted Average Remaining Contractual Life | ||
Options outstanding | 7 years 11 days | 5 years 7 months 20 days |
Options granted | 10 years | 5 years 11 months 8 days |
Options exercisable | 8 years 1 month 6 days |
9. Stockholders' Deficit (Det38
9. Stockholders' Deficit (Details - Warrant activity) - Warrants [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Warrants | ||
Warrants outstanding, beginning balance | 8,956,677 | 2,951,669 |
Warrants granted | 27,348,692 | 6,005,008 |
Warrants exercised | 0 | 0 |
Warrants forfeited/cancelled | 0 | 0 |
Warrants outstanding, ending balance | 36,305,369 | 8,956,677 |
Warrants exercisable | 8,956,677 | 2,951,669 |
Weighted Average Exercise Price | ||
Weighted average exercise price, warrants outstanding beginning balance | $ 0.20 | $ 0.66 |
Weighted average exercise price, warrants granted | 0.09 | 0.10 |
Weighted average exercise price, warrants outstanding ending balance | $ 0.11 | $ 0.20 |
Weighted Average Remaining Contractual Life | ||
Weighted average remaining contractual life, warrants outstanding | 3 years 8 months 26 days | 3 years 7 months 24 days |
Weighted average remaining contractual life, warrants granted | 4 years 1 month 10 days | 4 years |
9. Stockholders' Deficit (Det39
9. Stockholders' Deficit (Details - Exerciseable And Oustanding) - Warrants [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Number of Warrants | 36,305,369 | 8,956,677 | 2,951,669 |
Exercise Price ($) | $ 0.11 | $ 0.20 | $ 0.66 |
Weighted Average Remaining Life (Years) | 3 years 8 months 26 days | 3 years 7 months 24 days | |
Currently exercisable | 36,306,369 | ||
Exercise price $0.001 [Member] | |||
Number of Warrants | 4,219,941 | ||
Exercise Price ($) | $ 0.001 | ||
Weighted Average Remaining Life (Years) | 6 years 4 months 13 days | ||
Currently exercisable | 4,219,941 | ||
Exercise price $0.01 [Member] | |||
Number of Warrants | 50,000 | ||
Exercise Price ($) | $ 0.01 | ||
Weighted Average Remaining Life (Years) | 2 years 2 months 5 days | ||
Currently exercisable | 50,000 | ||
Exercise price $0.06 [Member] | |||
Number of Warrants | 1,000,000 | ||
Exercise Price ($) | $ 0.06 | ||
Weighted Average Remaining Life (Years) | 4 years 3 months 11 days | ||
Currently exercisable | 1,000,000 | ||
Exercise price $0.10 [Member] | |||
Number of Warrants | 27,842,093 | ||
Exercise Price ($) | $ 0.10 | ||
Weighted Average Remaining Life (Years) | 3 years 4 months 2 days | ||
Currently exercisable | 27,842,093 | ||
Exercise price $0.12 [Member] | |||
Number of Warrants | 1,000,000 | ||
Exercise Price ($) | $ 0.12 | ||
Weighted Average Remaining Life (Years) | 4 years 3 months 11 days | ||
Currently exercisable | 1,000,000 | ||
Exercise price $0.18 [Member] | |||
Number of Warrants | 1,000,000 | ||
Exercise Price ($) | $ 0.18 | ||
Weighted Average Remaining Life (Years) | 4 years 3 months 11 days | ||
Currently exercisable | 1,000,000 | ||
Exercise price $0.60 [Member] | |||
Number of Warrants | 418,333 | ||
Exercise Price ($) | $ 0.60 | ||
Weighted Average Remaining Life (Years) | 2 years 4 months 6 days | ||
Currently exercisable | 418,333 | ||
Exercise price $0.72 [Member] | |||
Number of Warrants | 775,002 | ||
Exercise Price ($) | $ 0.72 | ||
Weighted Average Remaining Life (Years) | 2 years 7 months 13 days | ||
Currently exercisable | 775,002 |
9. Stockholders_ Deficit (Detai
9. Stockholders’ Deficit (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stock issued new, value | $ 2,000 | ||
Proceeds from sale of stock | $ 0 | 2,000 | |
Stock issued for services, value | 434,267 | 267,782 | |
Common stock issued in settlement of payables, value | 83,479 | 27,600 | |
Gain on settlement of debt | (936,915) | 218,768 | |
Common stock issued as payment of accrued interest on convertible notes payable, value | 419,180 | ||
Stock Options [Member] | |||
Share-based compensation | $ 450,413 | $ 166,565 | |
Options granted | 12,250,000 | 12,300,000 | |
Aggregate intrinsic value options outstanding | $ 0 | ||
Unamortized stock based compensation | $ 487,684 | ||
Weighted average amortization period | 2 years 9 months | ||
Warrants [Member] | |||
Aggregate intrinsic value of warrants outstanding | $ 217,317 | ||
Warrant exercise price | $ 0.11 | $ 0.20 | $ 0.66 |
Warrants [Member] | Services [Member] | |||
Warrants issued, shares | 1,000,000 | ||
Warrant exercise price | $ 0.06 | ||
Warrants [Member] | Services [Member] | |||
Warrants issued, shares | 1,000,000 | ||
Warrant exercise price | $ 0.12 | ||
Warrants [Member] | Services [Member] | |||
Warrants issued, shares | 1,000,000 | ||
Warrant exercise price | $ 0.18 | ||
Warrants [Member] | Convertible Notes Payable [Member] | |||
Warrants issued, shares | 9,246,257 | ||
Warrant exercise price | $ .10 | ||
Warrants [Member] | Placement Agent Services [Member] | |||
Warrants issued, shares | 3,219,106 | ||
Warrant exercise price | $ 0.001 | ||
Warrants [Member] | Previously Issued Notes [Member] | |||
Warrants issued, shares | 11,883,329 | ||
Warrant exercise price | $ 0.10 | ||
Fair value of warrants issued | $ 767,936 | ||
2016 Plan | |||
Shares available for future issuance under plan | 0 | ||
Settlement of Accrued Interest [Member] | |||
Common stock issued as payment of accrued interest on convertible notes payable, shares | 4,833,000 | ||
Common stock issued as payment of accrued interest on convertible notes payable, value | $ 289,980 | ||
Investor [Member] | |||
Stock issued new, shares | 57,000 | ||
Proceeds from sale of stock | $ 2,000 | ||
Investor [Member] | Private Placement [Member] | |||
Restricted common stock issued for services, shares | 100,000 | ||
Consultant [Member] | |||
Restricted common stock issued for services, shares | 40,000 | ||
Restricted common stock issued for services, value | $ 8,000 | ||
Share-based compensation | $ 8,000 | ||
Consultant [Member] | |||
Restricted common stock issued for services, shares | 500,000 | ||
Restricted common stock issued for services, value | $ 56,667 | ||
Share-based compensation | $ 56,667 | ||
Consultant [Member] | |||
Restricted common stock issued for services, shares | 166,667 | ||
Restricted common stock issued for services, value | $ 50,000 | ||
Share-based compensation | $ 50,000 | ||
Consultant [Member] | |||
Restricted common stock issued for services, shares | 10,000 | ||
Restricted common stock issued for services, value | $ 6,000 | ||
Share-based compensation | $ 6,000 | ||
Consultant [Member] | |||
Restricted common stock issued for services, shares | 100,000 | ||
Restricted common stock issued for services, value | $ 14,200 | ||
Share-based compensation | $ 1,854 | ||
Placement Agent [Member] | |||
Stock issued new, shares | 3,219,106 | ||
Restricted common stock issued for services, shares | 819,750 | 675,000 | |
Restricted common stock issued for services, value | $ 126,287 | $ 67,500 | |
Share-based compensation | $ 67,500 | ||
Placement Agent [Member] | |||
Restricted common stock issued for services, shares | 450,375 | ||
Restricted common stock issued for services, value | $ 65,385 | ||
Consultants [Member] | |||
Restricted common stock issued for services, shares | 4,300,000 | ||
Restricted common stock issued for services, value | $ 304,830 | ||
Share-based compensation | $ 304,830 | ||
Investors [Member] | Private Placement [Member] | |||
Restricted common stock issued for services, shares | 8,211,333 | 6,229,999 | |
Related Party Investor [Member] | Private Placement [Member] | |||
Restricted common stock issued for services, shares | 218,750 | 175,000 | |
Vendors [Member] | |||
Common stock issued in settlement of payables, shares | $ 878,710 | ||
Common stock issued in settlement of payables, value | 83,479 | ||
Gain on settlement of debt | $ 29,122 | ||
3 Board Members [Member] | |||
Options granted | 12,100,000 | ||
Fair value of options issued | $ 546,000 | ||
Options vested | 2,200,000 | ||
Two Advisory Board Members [Member] | |||
Options granted | 200,000 | ||
Fair value of options issued | $ 9,600 | ||
Interim CEO [Member] | |||
Options granted | 7,000,000 | ||
Fair value of options issued | $ 409,000 | ||
Options vested | 1,000 | ||
Chairman of the Board [Member] | |||
Options granted | 5,250,000 | ||
Fair value of options issued | $ 128,525 | ||
Options vested | 1,750,000 |
10. Commitments and Contingen41
10. Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $ 0 | $ 20,231 |
Settlement liability | 17,042 | |
Payroll tax liability | $ 10,118 | $ 10,493 |
12. Income Taxes (Details - Inc
12. Income Taxes (Details - Income tax provision) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Federal | ||
Current | $ 0 | $ 0 |
Deferred | (94,974) | (377,200) |
State and local | ||
Current | 0 | 0 |
Deferred | (42,630) | (104,600) |
Change in valuation allowance | 137,604 | 481,800 |
Income tax provision (benefit) | $ 0 | $ 0 |
12. Income Taxes (Details - Rec
12. Income Taxes (Details - Reconcilation percent) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
U.S. Federal statutory rate | (34.00%) | (34.00%) |
State tax benefit, net of federal tax | (9.40%) | (9.42%) |
Federal tax rate change | 10.90% | 0.00% |
Stock based compensation | 8.90% | 10.33% |
Non-deductible interest expense | 27.90% | 6.46% |
Other permanent differences | (7.00%) | 0.56% |
Change in valuation allowance | 2.70% | 26.07% |
Income tax provision (Benefit) | 0.00% | 0.00% |
12. Income Taxes (Details - Def
12. Income Taxes (Details - Deferred tax assets) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryover | $ 1,269,504 | $ 1,131,900 |
Total deferred tax asset | 1,269,504 | 1,131,900 |
Valuation allowance | (1,269,504) | (1,131,900) |
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, 2017USD ($) | |
Income Tax Disclosure [Abstract] | |
Operating loss carryforwards | $ 4,100,000 |
Operating loss beginning expiration date | Dec. 31, 2035 |