NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The interim unaudited condensed financial statements included herein, presented in accordance with accounting principles generally accepted in the United States of America (GAAP) and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.
These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim unaudited condensed financial statements be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2015 and notes thereto included in the Company's Annual Report on Form 10-K. The Company follows the same accounting policies in the preparation of interim reports.
Results of operations for the interim periods are not indicative of annual results.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and cash equivalents
The Company considers cash and cash equivalents to include all stable, highly liquid investments with an original maturity of three months or less from the date of purchase.
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.
Revenue recognition
Revenue is derived on a per transaction basis through the Companys gateway and payments platform. The Company also earns revenue for services, account establishment fees and licensure on Software as a Service (SaaS) basis, and on a performance basis, such as when a client acquires a new customer through our platform. Revenue is recognized in accordance with Staff Accounting Bulletin (SAB) No. 101,
Revenue Recognition in Financial Statements
, as revised by SAB No. 104. As such, the Company recognizes revenue when persuasive evidence of an arrangement exists, title transfer has occurred, the price is fixed or readily determinable, and collectability is probable. Sales are recorded net of sales discounts.
Accounts receivable, net
Accounts receivable is reported at the customers outstanding balances, less any allowance for doubtful accounts. An allowance for doubtful accounts on accounts receivable is charged to operations in amounts sufficient to maintain the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses. Management determines the adequacy of the allowance based on historical write-off percentages and information collected from individual customers. Accounts receivable are charged off against the allowance when collectability is determined to be permanently impaired. Interest is not accrued on overdue accounts receivable.
Inventory
Inventory consists of merchandise held for sale in the ordinary course of business, including cost of freight and other miscellaneous acquisition costs, and stated at the lower of cost or market. The Company records a write-down for inventory items which have become obsolete or are in excess of anticipated demand or net realizable value. We periodically perform a detailed review of inventory that considers multiple factors including demand forecasts, market conditions, product life cycle status, product development plans and current sales levels. If actual demand or market conditions for the Companys products are less favorable than forecasted or if unforeseen changes negatively affect the utility of our inventory, additional write-downs may be required.
7
Property and equipment
Property and equipment are stated at cost. Major renewals and improvements are charged to the asset accounts while replacements, maintenance and repairs that do not improve or extend the lives of the respective assets are expensed. At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are credited or charged to income.
Depreciation is computed on the straight-line and accelerated methods for financial reporting and income tax reporting purposes based upon the following estimated useful lives:
| |
Computer software
|
3 years
|
Computer hardware
|
5 years
|
Office furniture
|
7 years
|
Long-lived assets
The Company accounts for its long-lived assets in accordance with ASC Topic 360-10-05,
Accounting for the Impairment or Disposal of Long-Lived Assets
, which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. We assess recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the assets carrying value and fair value or disposable value.
Fair value of financial instruments
We account for non-recurring fair value measurements of our non-financial assets and liabilities in accordance with ASC 820-10 Fair Value Measurement. This guidance defines fair value, establishes a framework for measuring fair value and addresses required disclosures about fair value measurements. This standard establishes a three-level hierarchy for fair value measurements based upon the significant inputs used to determine fair value. Observable inputs are those which are obtained from market participants external to the Company while unobservable inputs are generally developed internally, utilizing managements estimates, assumptions and specific knowledge of the assets/liabilities and related markets. The three levels are defined as follows:
·
Level 1 - Valuation is based on quoted prices in active markets for identical assets and liabilities.
·
Level 2 - Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, or by model-based techniques in which all significant inputs are observable in the market.
·
Level 3 - Valuation is derived from model-based techniques in which at least one significant input is unobservable and based on the companys own estimates about the assumptions that market participants would use to value the asset or liability.
If the only observable inputs are from inactive markets or for transactions which the Company evaluates as distressed, the use of Level 1 inputs should be modified by the company to properly address these factors, or the reliance of such inputs may be limited, with a greater weight attributed to Level 3 inputs.
Due to the short-term nature of our financial assets and liabilities, we consider their carrying amounts to approximate fair value.
Goodwill
We account for goodwill in accordance with ASC Topic 805-30-25,
Accounting for Business Combinations
(ASC Topic 805-30-25) and ASC Topic 350-20-35,
Accounting for Goodwill - Subsequent Measurement
(ASC Topic 350-20-35).
ASC Topic 805-30-25 requires that the acquirer recognize goodwill as of the acquisition date as the excess of the fair value of the consideration transferred over the fair value of the net acquisition-date amounts of the identifiable assets and liabilities assumed.
8
ASC Topic 350-20-35 requires that goodwill acquired in a purchase and determined to have an indefinite useful life is not amortized, but instead tested for impairment annually or more frequently when events or circumstances indicate that the carrying value of a reporting unit more likely than not exceeds its fair value. Our annual goodwill impairment testing date is December 31 of each year. The Company first assesses qualitative factors to determine whether its necessary to perform the two-step goodwill impairment test. Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value. If the qualitative assessment results in an indication that its more likely than not that the fair value of a reporting unit is less than its carrying amount, then a quantitative assessment must be performed. Management has determined that the Company has one reporting unit for purposes of testing goodwill.
The quantitative analysis involves estimating the fair value of its reporting unit utilizing a combination of valuation methods including market capitalization, the income approach and cash flows. Income and cash flow forecasts were used in the evaluation of goodwill based on managements estimate of future performance. If goodwill is determined to be impaired as a result of this analysis, an impairment loss is recorded equal to the difference between the assets carrying value and fair value. The Company recorded an impairment to its goodwill for each of the years ended December 31, 2015 and 2014, and for the quarter ended September 30, 2016, as further discussed in Note 8.
Capitalized software development costs
We capitalize internal software development costs subsequent to establishing technological feasibility of a software application. Capitalized software development costs represent the costs associated with the internal development of the Companys software applications. Amortization of such costs is recorded on a software application-by-application basis, based on the greater of the proportion of current year sales to the total of current and estimated future sales for the applications or the straight-line method over the remaining estimated useful life of the software application. We continually evaluate the recoverability of capitalized software costs and will charge to operations amounts that are deemed unrecoverable for projects we may abandon. The Company recorded an impairment to its software development costs for the year ended December 31, 2015 and for the quarters ended June 30 and September 30, 2016.
Beneficial Conversion Feature
If the conversion features of conventional convertible debt provide for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (BCF). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20
Debt with Conversion and Other Options
. In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method.
Debt Discount
The Company determines if the convertible debenture should be accounted for as liability or equity under ASC 480, Liabilities - Distinguishing Liabilities from Equity (ASC 480). ASC 480, applies to certain contracts involving a companys own equity, and requires that issuers classify the following freestanding financial instruments as liabilities. Mandatorily redeemable financial instruments, obligations that require or may require repurchase of the issuers equity shares by transferring assets (e.g., written put options and forward purchase contracts), and certain obligations where at inception the monetary value of the obligation is based solely or predominantly on:
·
A fixed monetary amount known at inception, for example, a payable settleable with a variable number of the issuer
s equity shares with an issuance date fair value equal to a fixed dollar amount,
·
Variations in something other than the fair value of the issuer
s equity shares, for example, a financial instrument indexed to the S&P 500 and settleable with a variable number of the issuer
s equity shares, or
·
Variations inversely related to changes in the fair value of the issuer
s equity shares, for example, a written put that could be net share settled.
9
If the entity determined the instrument meets the guidance under ASC 480 the instrument is accounted for as a liability with a respective debt discount. The Company records debt discounts in connection with raising funds through the issuance of promissory notes (see Notes 9 and 10). These costs are amortized to non-cash interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.
Stock-based compensation
We account for stock-based payments to employees in accordance with ASC 718,
Stock Compensation
(ASC 718). Stock-based payments to employees include grants of stock, grants of stock options and issuance of warrants that are recognized in the statements of operations based on their fair values at the date of grant.
We account for stock-based payments to non-employees in accordance with ASC 505-50,
Equity-Based Payments to Non-Employees
(ASC505-50). Stock-based payments to non-employees include grants of stock, grants of stock options and issuances of warrants that are recognized in the statements of operations based on the value of the vested portion of the award over the requisite service period as measured at its then-current fair value as of each financial reporting date. The Company calculates the fair value of option grants and warrant issuances utilizing the Black-Scholes pricing model. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. ASC 718 requires forfeitures to be estimated at the time stock options are granted and warrants are issued to employees and non-employees, and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term forfeitures is distinct from cancellations or expirations and represents only the unvested portion of the surrendered stock option or warrant.
We estimate forfeiture rates for all unvested awards when calculating the expense for the period. In estimating the forfeiture rate, the Company monitors both stock option and warrant exercises as well as employee termination patterns. The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized as compensation under ASC Topic 505-50. In accordance with ASC 505-50, the cost of stock-based compensation is measured at the grant date based on the fair value of the award and is recognized over the vesting period. The value of the stock-based award is determined using the Black-Scholes option-pricing model, whereby compensation cost is the excess of the fair value of the award as determined by the pricing model at the grant date or other measurement date over the amount that must be paid to acquire the stock.
Loss per share
We report earnings (loss) per share in accordance with ASC Topic 260-10, "
Earnings per Share
." Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings (loss) per share has not been presented since the effect of the assumed conversion of warrants and debt to purchase common shares would have an anti-dilutive effect. Potential common shares as of September 30, 2016 that have been excluded from the computation of diluted net loss per share amounted to 2,725,846 shares and include 1,178,346 warrants and 1,547,500 options. Of the 2,725,846 potential common shares that could be issued upon the exercise of the warrants and options at September 30, 2016, 815,834 had not vested. See Note 12 for more information regarding our warrants and options. The Company also has two notes payable that have conversion features. Were the holders to exercise such features, an additional 1,977,778 shares could be issued based on the note balances at September 30, 2016.
Income taxes
We account for income taxes under the provisions of ASC Topic 740,
Income Taxes
(ASC 740). The method of accounting for income taxes under ASC 740 is an asset and liability method. The asset and liability method requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between tax bases and financial reporting bases of other assets and liabilities.
Recent accounting pronouncements
We continually assess any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Companys financial reporting, we undertake a study to determine the consequence of the change to our financial statements and assure there are proper controls in place to ascertain that our financials properly reflect the change.
10
In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-09, "
Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting
" ("ASU 2016-09"). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for us beginning January 1, 2017. Early adoption is permitted. We are currently evaluating the potential impact of adopting this guidance on our financial statements.
NOTE 3 - GOING CONCERN
Our condensed financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, we have incurred a net loss of ($2,349,834) and ($4,187,596) for the three and nine months ended September 30, 2016, respectively, and have an accumulated deficit of ($23,299,711).
In order to continue as a going concern, the Company may need, among other things, additional capital resources. There are no assurances that without generating new revenue during 2016 that the Company will be successful without additional financing. Should revenues not grow sufficiently and the Company not be able to secure additional financing through the sale of its securities or debt, it would be unlikely for us to continue as a going concern.
The condensed financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence. These conditions raise substantial doubt about our ability to continue as a going concern. These financial statements do not include any adjustments that might arise from this uncertainty.
NOTE 4 - ACCOUNTS RECEIVABLE, NET
Accounts receivable consist of the following at:
|
|
|
|
| |
|
SEPTEMBER 30,
|
|
DECEMBER 31,
|
|
2016
|
|
2015
|
|
|
|
|
Due from customers and vendors
|
$
|
31,108
|
|
$
|
26,773
|
Due from sale of residual assets
|
|
--
|
|
|
75,374
|
Due from processing activity
|
|
234,250
|
|
|
2,949
|
Allowance for uncollectible accounts
|
|
(75,000)
|
|
|
--
|
Total accounts receivable, net
|
$
|
190,358
|
|
$
|
105,096
|
With the recent transition of management, the Company has undertaken various analyses with respect to the recorded balances and the underlying assets for the receivables and intangibles. In the quarter ended September 30, 2016, management analyzed amounts recorded as receivable from processing activity and the likelihood of receiving the full amount due the Company. Recent general interaction and the relationship with one of the processors has indicated that the full amount may not be collected and a reserve for $75,000 was established to reflect this. The Company will continue to pursue payment.
11
NOTE 5 - PREPAID EXPENSES AND DEPOSITS
Prepaid expenses and deposits consist of the following at:
|
|
|
|
| |
|
SEPTEMBER 30,
|
|
DECEMBER 31,
|
|
2016
|
|
2015
|
|
|
|
|
Prepaid insurance
|
$
|
9,625
|
|
$
|
44,275
|
Prepaid license and trademark fees
|
|
--
|
|
|
1,610,000
|
Prepaid consulting fees
|
|
131,566
|
|
|
129,751
|
Other prepaid expenses
|
|
--
|
|
|
5,521
|
Total prepaid expenses and deposits
|
$
|
141,191
|
|
$
|
1,789,547
|
NOTE 6 - PROPERTY AND EQUIPMENT, NET
Property and equipment, net consist of the following at:
|
|
|
|
| |
|
SEPTEMBER 30,
|
|
DECEMBER 31,
|
|
2016
|
|
2015
|
|
|
|
|
Office furniture & equipment
|
$
|
35,710
|
|
$
|
31,847
|
Less: accumulated depreciation
|
|
(19,140)
|
|
|
(14,926)
|
Total property and equipment, net
|
$
|
16,570
|
|
$
|
16,921
|
During the three and nine months ended September 30, 2016, we recorded depreciation expense of $1,408 and $4,214, respectively, and during the three months and nine months ended September 30, 2015, we recorded depreciation expense of $1,306 and $3,919, respectively.
NOTE 7 - OTHER INTANGIBLE ASSETS, NET
Other intangible assets, net consist of the following at:
|
|
|
|
|
|
|
| |
|
SEPTEMBER 30,
|
|
ACCUMULATED
|
|
SEPTEMBER 30,
|
|
2016 GROSS
|
|
AMORTIZATION
|
|
2016 NET
|
|
|
|
|
|
|
Capitalized software costs
|
$
|
1,562,704
|
|
$
|
(622,824)
|
|
$
|
939,880
|
License agreements and contracts
|
|
75,000
|
|
|
(6,250)
|
|
|
68,750
|
Domain names
|
|
85,000
|
|
|
(30,572)
|
|
|
54,428
|
|
$
|
1,722,704
|
|
$
|
(659,646)
|
|
$
|
1,063,058
|
|
|
|
|
|
|
|
|
|
|
DECEMBER 31,
|
|
ACCUMULATED
|
|
DECEMBER 31,
|
|
2015 GROSS
|
|
AMORTIZATION
|
|
2015 NET
|
|
|
|
|
|
|
|
|
|
Capitalized software costs
|
$
|
2,048,998
|
|
$
|
(763,684)
|
|
$
|
1,285,314
|
License agreements and contracts
|
|
75,000
|
|
|
--
|
|
|
75,000
|
Domain names
|
|
85,000
|
|
|
(22,564)
|
|
|
62,436
|
|
$
|
2,208,998
|
|
$
|
(786,248)
|
|
$
|
1,422,750
|
During the three months ended September 30, 2016, management reviewed the carrying amount of the assets and determined that because of changes in the focus of the Companys current direction, certain software would not be used and no longer had value to the Company. As a result of this analysis, the Company recorded an impairment loss in the amount of $597,656 for software development that had previously been capitalized, net of $419,312 of amortization related to the assets. Our amortization expense for the three and nine months ended September 30, 2016 was $116,758 and $338,518, respectively. Management will continue to review and analyze the carrying value of the intangible assets during the remainder of 2016.
12
During the year ended December 31, 2015, management reviewed the carrying amount of the assets and determined that due to changes in the focus of the Companys current direction, certain costs that had been capitalized to software development would not be used and no longer had value to the Company. As a result of this analysis, $542,771 in costs were recorded as an impairment loss, net of $287,831 of amortization related to the assets.
NOTE 8 - GOODWILL
|
|
|
|
| |
|
SEPTEMBER 30,
|
|
DECEMBER 31,
|
|
2016
|
|
2015
|
|
|
|
|
Goodwill
|
$
|
5,976,198
|
|
$
|
5,976,198
|
Less: accumulated impairment loss
|
|
(2,679,970)
|
|
|
(1,339,986)
|
Total goodwill, net
|
$
|
3,296,228
|
|
$
|
4,636,212
|
In connection with the acquisition of certain liabilities and substantially all the assets of MeNetwork on March 20, 2013, we recorded related goodwill of $2,679,970. During our annual evaluations of goodwill, we determined that the carrying amount of goodwill related to MeNetwork was less than its fair value. As a result, the Company recorded an impairment loss of $669,993 for each of the years ended December 31, 2015 and December 31, 2014. With the recent transition of management, the Company evaluated the MeNetwork goodwill during the quarter ended September 30, 2016, and determined this asset no longer has value to the Company. Therefore, the asset was completely impaired during the third quarter of 2016 and an additional $1,339,984 was recorded to impairment expense.
In connection with the acquisition of Yowza!! in January 2014, we recorded related goodwill of $3,291,932. During our annual evaluations of goodwill, we determined that the fair value of goodwill exceeded its carrying amount and thus, no impairment charge has been recorded. Management will complete its analysis in the fourth quarter of 2016 and depending on the results of such analysis, may have further impairment losses.
NOTE 9 - NOTES PAYABLE, NET OF UNAMORTIZED DISCOUNT
On May 18, 2016, we converted a $182,000 payable to an investor and entered into a Convertible Promissory Note (Note) with an investor in the Company. The note bears an interest rate of 6% per annum and has a maturity date of May 18, 2018. The total value of the note, if converted to stock, would be $404,444 and therefore a discount in the amount of $182,000 was recorded, as the conversion feature cannot be greater than the amount of the debt. This amount is amortized to interest expense over the term of the note. During the three and nine months ended September 30, 2016, interest expense related to amortization of the discount on the unpaid notes of $17,012 and $32,438, respectively, was recorded. The balance of the unamortized discount at September 30, 2016 was $149,562. During the three months ended September 30, 2016, the Company repaid $10,000 of the Notes principal balance. This Note is presented as a Long term note payable on our Condensed Balance Sheets.
On December 15, 2011, we issued a Promissory Grid Note (Grid Note) to a former director of the Company whereby formalizing various advances previously received from the former director in the amount of $51,300 and allowing for future advances of up to $250,000. The Grid Note is non-interest bearing, unsecured and matured on December 15, 2014. We imputed interest at a rate of 2% per annum and recorded a discount in the amount of $10,640. In connection with one of the previous advances in the amount of $25,000, we issued warrants to purchase up to 250,000 shares of our common stock at a price per share of $1.00 resulting in an additional discount of $17,709. The total discount attributable to the Grid Note totaled $28,349 and was amortized to interest expense over the term of the Grid Note. During the three and nine months ended September 30, 2015, interest expense of $0 and $54 related to the discount on the unpaid note balance was recorded, respectively. During the nine months ended September 30, 2016, the Company repaid $7,500 of the principal balance of the Grid Note.
13
NOTE 10 - LONG TERM NOTES PAYABLE - RELATED PARTY, NET OF UNAMORTIZED DISCOUNT
On March 25, 2016, we entered into an agreement with a 5% stockholder of the Company. This agreement is for a $100,000 promissory note, convertible to stock under certain circumstances. The note bears an interest rate of 6% per annum and has a maturity date of March 25, 2018. The total value of the note, if converted to stock, would be $133,333 and therefore a discount in the amount of $33,333 was recorded. This amount is amortized to interest expense - related party over the term of the note. During the three and nine months ended September 30, 2016, interest expense related to amortization of the discount on the unpaid note of $4,201 and $8,630 was recorded. The balance of the unamortized discount at September 30, 2016 was $24,703.
NOTE 11 - STOCKHOLDERS
EQUITY
The Company is authorized to issue up to 300,000,000 shares of common stock, par value $0.001. During the three months ended March 31, 2016, the Company:
·
authorized the issuance of 3,038,889 shares of common stock for cash proceeds totaling $410,250. Of these, 316,668 shares with a value of $42,750 were registered under the Form S-1 filed with the SEC on April 6, 2016. The Form S-1 has an effective date of April 18, 2016. These 316,668 shares were unissued at March 31, 2016. We also issued 2,722,221 shares for cash proceeds from investors totaling $367,500.
·
authorized the issuance of 90,000 shares of common stock to a member of our Board of Directors in accordance with the terms of his consulting agreement. The shares were valued at $13,200 and as of March 31, 2016, 45,000 of these shares were unissued.
·
authorized the issuance of 81,011 shares of common stock as payment for legal fees. The estimated fair value of these shares totaled $10,208 and as of March 31, 2016, these shares were unissued.
·
authorized the issuance of 476,667 shares of common stock valued at $71,407 to two members of our Advisory Board and a consultant as compensation for advisory services. Of these, 416,667 shares with a value of $64,167 were registered under the Form S-1 filed with the SEC on April 6, 2016. All 476,667 shares were unissued at March 31, 2016.
·
authorized the issuance of 92,593 shares of common stock valued at $12,500 to our Chief Executive Officer as compensation for services. As of March 31, 2016 these shares were unissued.
·
issued 680,000 previously authorized shares with a value of $187,650 to directors of the Company for services in accordance with consulting agreements and repayment of advances.
Also, in accordance with a settlement agreement signed between the Company and Help Worldwide, Inc. (HWW) that terminated the license agreement between the two entities, HWW returned 6,500,000 of the 7,000,000 shares of Spindle restricted common stock issued to HWW for the license fee in May 2015. The LPO license agreement was terminated amicably and not due to default or breach by any party. In conjunction with the settlement agreement, 200,000 shares of Spindle stock were returned to the Company by one of the principals of HWW, and the associated warrants were cancelled. The entire transaction resulted in a loss to the Company of $115,000.
During the three months ended June 30, 2016, we:
·
authorized and issued 3,055,927 shares of its common stock for cash proceeds totaling $412,550.
·
authorized and issued 500,000 shares of its common stock to our former CEO as part of his transition agreement. The shares were valued at $140,000.
·
authorized and issued 100,000 shares of its common stock with a value of $25,000 to a consultant for part of compensation for services.
14
·
authorized the issuance of 650,000 shares of common stock to members of our Board of Directors in accordance with the terms of their consulting and service agreements. The shares were valued at $174,380 and as of June 30, 2016, the shares were unissued.
·
authorized the issuance of 69,804 shares of common stock valued at $11,244 as payment for legal fees. These shares were unissued as of June 30, 2016.
·
authorized the issuance of 369,835 shares of common stock with a value of $87,678 to consultants and members of our Advisory Board as compensation for services. 286,500 of the shares were unissued as of June 30, 2016.
·
issued 975,937 previously authorized shares of common stock for legal fees, officer and director compensation and cash proceeds from investors. The Form S-1 has an effective date of April 18, 2016. Of these, 733,335 shares with a value of $106,917 were registered under the Form S-1 filed with the SEC on April 6, 2016. The balance of the shares issued had a value of $42,249.
During the three months ended September 30, 2016, the Company:
·
authorized and issued 3,113,385 shares of its common stock for cash proceeds totaling $420,307.
·
authorized the issuance of 99,861 shares of common stock valued at $16,573 as payment for legal fees. These shares were unissued as of September 30, 2016.
·
authorized the issuance of 133,500 shares of common stock with a value of $24,698 to consultants and members of our Advisory Board as compensation for services. These shares were unissued as of September 30, 2016.
·
issued 995,304 previously authorized shares of common stock for legal fees, officer and director compensation and cash proceeds from investors. The shares issued had a value of $260,312.
NOTE 12 - WARRANTS AND OPTIONS
In conjunction with the Stock Purchase Agreement in the quarter ended September 30, 2016 (SPA), the Company issued common stock purchase warrants. These warrants entitle the holder to purchase additional shares of Spindle common stock at a price of $0.135 per share. The holder may exercise his purchase rights at any time up to the third anniversary of the agreement. The following is a summary of the status of the Companys stock warrants as of September 30, 2016:
|
|
|
|
| |
|
Number of Warrants
|
|
Weighted-Average
Exercise Price
|
|
Weighted
Average
Remaining
Contractual Life
(in years)
|
Outstanding at December 31, 2014
|
250,000
|
|
|
|
|
Granted
|
350,000
|
|
--
|
|
|
Exercised
|
--
|
|
--
|
|
|
Forfeited/Cancelled
|
--
|
|
--
|
|
|
Outstanding at December 31, 2015
|
600,000
|
|
$ 0.500
|
|
1.85
|
Exercisable at December 31, 2015
|
250,000
|
|
$ 0.500
|
|
1.47
|
|
|
|
|
|
|
Outstanding at December 31, 2015
|
600,000
|
|
|
|
|
Granted
|
778,346
|
|
--
|
|
|
Exercised
|
--
|
|
--
|
|
|
Forfeited/Cancelled
|
(200,000)
|
|
--
|
|
|
Outstanding at September 30, 2016
|
1,178,346
|
|
$ 0.259
|
|
3.25
|
Exercisable at September 30, 2016
|
1,078,346
|
|
$ 0.237
|
|
3.40
|
15
The following is a summary of the status of the status of the stock options that have been granted to employees and directors under the Companys 2012 Stock Incentive Plan.