Quarterly Report (10-q)

Date : 08/14/2019 @ 8:58PM
Source : Edgar (US Regulatory)
Stock : Advantego Corporation (QB) (ADGO)
Quote : 0.0001  0.0 (0.00%) @ 9:40PM
Advantego (QB) share price Chart

Quarterly Report (10-q)

 
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
[X]   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act Of 1934
 
For the quarterly period ended  June 30, 2019
 
[  ]   Transition Report Under Section 13 or 15(d) of the Securities Exchange Act Of 1934
 
For the transition period from _______________ to _______________
 
Commission File Number:    0-23726
 
ADVANTEGO CORPORATION
(Exact name of registrant as specified in its charter)
 
COLORADO
 
84-1116515
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
3801 East Florida Ave., Ste. 400
Denver, CO 80210
(Address of principal executive offices, including Zip Code)
 
(949) 627-8977
(Issuer's telephone number, including area code)
 
______________________________________________
 (Former name or former address if changed since last report)
 
Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes [X]   No [  ]
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes [X]   No [  ]
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "non-accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
 
Large accelerated filer
[  ]
Accelerated filer
[  ]
 
Non-accelerated filer
[X]
Smaller reporting company
[X]
 
 
 
Emerging growth company
[  ]
 
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  [  ]
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):   Yes [  ]   No [X]
 
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 17,393,374 shares of common stock as of August 14, 2019.
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
None
N/A
N/A
 

 
 

 
 
Table of Contents
 
PART I.
 
 
PAGE
Item 1.     Financial Statements.
 
 
 
 
 
 
 
 
 
PART II.
 
 
 
Item 1.     Legal Proceedings.
Item 1A.      Risk Factors.
Item 5.     Other Information
Item 6.     Exhibits.
 
 
  
 
2
 
 
Advantego Corporation
 
 
 
 
 
 
Consolidated B alance Sheets
 
 
 
As of June 30, 2019 and December 31, 2018
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
June 30,
 
 
December 31,
 
 
 
2019
 
 
2018
 
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
Cash & cash equivalents
  $ 135,288  
  $ 91,643  
Accounts receivable
    67,930  
    25,400  
Inventory
    -  
    6,499  
Prepaid expenses
    175,250  
    7,608  
Total current assets
    378,468  
    131,150  
 
       
       
OTHER ASSETS
       
       
Deferred offering costs
    64,236  
    64,236  
Pre-production costs
    111,000  
    -  
Total other assets
    175,236  
    64,236  
 
       
       
Total Assets
  $ 553,704  
  $ 195,386  
 
       
       
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
       
       
 
       
       
CURRENT LIABILITIES
       
       
Accounts payable - related parties
  $ 218,866  
  $ 255,250  
Accounts payable
    111,725  
    16,142  
Deferred revenue
    45,358  
    -  
Accrued interest, convertible notes payable
    54,387  
    28,964  
Convertible notes payable (net of unamortized debt discounts of $196,188 and $124,563 and unamortized debt premium of $2,106,386
    4,351,498  
    1,355,823  
and $504,386 respectively)
       
       
Total current liabilities
    4,781,834  
    1,656,179  
Total Liabilities
  $ 4,781,834  
  $ 1,656,179  
 
       
       
 
       
       
STOCKHOLDERS' EQUITY (DEFICIT)
       
       
Preferred stock, par value $.01 per share; 10,000,000 shares authorized, 240,000 issued and outstanding
    2,400  
    2,400  
Common stock, par value $.0001 per share; shares 2,000,000,000 authorized; 17,393,374 and 16,712,819 issued and outstanding
    1,739  
    1,671  
 as of June 30, 2019 and December 31, 2018 respectively
       
       
Additional paid-in capital
    (854,260 )
    567,738  
Accumulated (deficit)
    (3,378,009 )
    (2,032,602 )
Total stockholders' equity (deficit)
    (4,228,130 )
    (1,460,793 )
Total Liabilities and Stockholders' Equity (Deficit)
  $ 553,704  
  $ 195,386  
 
       
       
The accompanying footnotes are an integral part of these unaudited condensed financial statements.
       
       
 
       
       
 
 
3
 
 
Advantego Corporation
 
 
 
 
 
 
 
Consolidated Statements of O perations
 
 
 
 
 
 
For the Three and Six Months Ended June 30, 2019 and 2018
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
    Three Months Ended
 
 
    Six Months Ended
 
 
 
June 30,
 
 
 June 30,
 
 
June 30,
 
 
 June 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REVENUES
 
 
 
 
 
 
 
 
 
 
 
 
Sales
  $ 21,066
    71,267  
  $ 29,391  
    115,244  
Cost of Sales
    (15,272 )
    (43,685 )
    (26,110 )
    (73,924 )
Gross Margin
    5,794
    27,582  
    3,281  
    41,320  
 
       
       
       
       
OPERATING EXPENSES
       
       
       
       
General and administrative
    304,403
    203,145  
    652,152
    385,585  
 
       
       
       
       
    Total operating expenses
    304,403
    203,145  
    652,152
    385,585  
 
       
       
       
       
OPERATING (LOSS)
    (298,609 )
    (175,563 )
    (648,871 )
    (344,265 )
 
       
       
       
       
OTHER INCOME (EXPENSE)
       
       
       
       
Interest expense
    (446,384 )
    (69,079 )
    (696,536 )
    (144,213 )
 
       
       
       
       
     Total other (expense)
    (446,384 )
    (69,079 )
    (696,536 )
    (144,213 )
 
       
       
       
       
Loss before income taxes
    (744,993 )
    (244,642 )
    (1,345,407 )
    (488,478 )
Income taxes
    -  
    -  
    -  
    -  
NET LOSS
    (744,993 )
    (244,642 )
    (1,345,407 )
    (488,478 )
 
       
       
       
       
Basic and diluted (loss) per share
  $ (0.04 )
  $ (0.02 )
  $ (0.08 )
  $ (0.03 )
Weighted average shares outstanding - basic
    17,077,371  
    16,010,976  
    16,896,102  
    15,766,973  
 
The accompanying footnotes are an integral part of these unaudited condensed financial statements.
 
 
4
 
 
Advantego Corporation
 
 
 
 
 
 
 
 
Consolidated Statement of Changes in Stockholders' E quity (Deficit)
For the Three and six Months Ended June 30, 2019 and 2018 (Unaudited)
 
Three Months Ended June 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional
 
 
 
 
 
 
 
 
 
Preferred Stock  
 
 
Common Stock  
 
 
Paid-in
 
 
Accumulated
 
 
 
 
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Capital
 
 
(Deficit)
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at March 31, 2019
    240,000  
  $ 2,400  
    16,712,819  
  $ 1,671  
  $ (1,270,540 )
  $ (2,633,016 )
  $ (3,899,485 )
 
       
       
       
       
       
       
       
Shares issued for conversion of notes payable
    -  
    -  
    297,618  
    30  
    39,970  
    -  
    40,000  
 
       
       
       
       
       
       
       
Shares issued for accrued interest
    -  
    -  
    21,399  
    2  
    2,683  
    -  
    2,685  
 
       
       
       
       
       
       
       
Returnable shares issued
    -  
    -  
    361,538  
    36  
    137,348  
    -  
    137,384  
 
       
       
       
       
       
       
       
Debt premium on convertible notes
    -  
    -  
    -  
    -  
    (726,265 )
    -  
    (726,265 )
 
       
       
       
       
       
       
       
Amortization of debt premium
    -  
    -  
    -  
    -  
    962,544  
    -  
    962,544  
 
       
       
       
       
       
       
       
Net loss
    -  
    -  
    -  
    -  
    -  
    (744,993 )
    (744,993 )
 
       
       
       
       
       
       
       
Balance at June 30, 2019
    240,000  
  $ 2,400  
    17,393,374  
  $ 1,739  
  $ (854,260 )
  $ (3,378,009 )
  $ (4,228,130 )
 
Three Months Ended June, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional
 
 
 
 
 
 
 
 
 
Preferred Stock  
 
 
Common Stock  
 
 
Paid-in
 
 
Accumulated
 
 
 
 
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Capital
 
 
(Deficit)
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at March 31, 2018
    240,000  
  $ 2,400  
    15,626,398  
  $ 1,563  
  $ 198,055  
  $ (1,023,098 )
  $ (821,080 )
 
       
       
       
       
       
       
       
 
       
       
       
       
       
       
       
Shares issued for cash and exercise of warrants
    -  
    -  
    130,591  
    13  
    82,612  
    -  
    82,625  
 
       
       
       
       
       
       
       
Shares issued for conversion of notes payable
    -  
    -  
    619,525  
    62  
    277,713  
    -  
    277,775  
 
       
       
       
       
       
       
       
Shares issued for conversion of notes payable -related party
    -  
    -  
    110,909  
    11  
    30,489  
    -  
    30,500  
 
       
       
       
       
       
       
       
Shares issued for accrued interest
    -  
    -  
    10,855  
    1  
    7,021  
    -  
    7,022  
 
       
       
       
       
       
       
       
Shares issued for accrued interest - related party
    -  
    -  
    20,174  
    2  
    5,546  
    -  
    5,548  
 
       
       
       
       
       
       
       
Debt premium on convertible notes
    -  
    -  
    -  
    -  
    (327,033 )
    -  
    (327,033 )
 
       
       
       
       
       
       
       
Amortization of debt premium
    -  
    -  
    -  
    -  
    294,767  
    -  
    294,767  
 
       
       
       
       
       
       
       
Deferred offering cost
    -  
    -  
    -  
    -  
    14,236  
    -  
    14,236  
 
       
       
       
       
       
       
       
Forgiveness of related party debt
    -  
    -  
    -  
    -  
    6,022  
    -  
    6,022  
 
       
       
       
       
       
       
       
Common stock subscribed
    -  
    -  
    -  
    -  
    -  
    -  
    9,999  
 
       
       
       
       
       
       
       
Net loss
    -  
    -  
    -  
    -  
    -  
    (244,642 )
    (244,642 )
Balance at June 30, 2018
    240,000  
  $ 2,400  
    16,518,452  
  $ 1,652  
  $ 589,428  
  $ (1,267,740 )
  $ (664,261 )
 
 
5
 
  
  Six Months Ended June 30, 2019
 
 
 
Preferred Stock
 
 
Common Stock
 
 
Additional Paid-in
 
 
Accumulated
 
 
 
 
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Capital
 
 
(Deficit)
 
 
Total
 
Balance at December 31, 2018
    240,000  
  $ 2,400  
    16,712,819  
  $ 1,671  
  $ 567,738  
  $ (2,032,602 )
  $ (1,460,793 )
 
       
       
       
       
       
       
       
Shares issued for conversion of notes payable
    -  
    -  
    297,618  
    30  
    39,970  
    -  
    40,000  
 
       
       
       
       
       
       
       
Shares issued for accrued interest
    -  
    -  
    21,399  
    2  
    2,683  
    -  
    2,685  
 
       
       
       
       
       
       
       
Returnable shares issued
    -  
    -  
    361,538  
    36  
    137,348  
    -  
    137,384  
 
       
       
       
       
       
       
       
Debt premium on convertible notes
    -  
    -  
    -  
    -  
    (2,323,948 )
    -  
    (2,323,948 )
 
       
       
       
       
       
       
       
Amortization of debt premium
    -  
    -  
    -  
    -  
    485,670  
    -  
    485,670  
 
       
       
       
       
       
       
       
Net loss
    -  
    -  
    -  
    -  
    -  
    (1,345,407 )
    (1,345,407 )
 
       
       
       
       
       
       
       
Balance at June 30, 2019
    240,000  
  $ 2,400  
    17,393,374  
  $ 1,739  
  $ (1,090,539 )
  $ (3,378,009 )
  $ (4,464,410 )
 
Six Months Ended June 30, 2018
  
 
 
Preferred Stock
 
 
Common Stock
 
 
Additional Paid-in
 
 
Accumulated
 
 
 
 
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Capital
 
 
(Deficit)
 
 
Total
 
Balance at December 31, 2017
    240,000  
  $ 2,400  
    14,664,718  
  $ 1,466  
  $ 163,707  
  $ (779,262 )
  $ (611,689 )
 
       
       
       
       
       
       
       
 
Shares issued for cash and exercise of warrants
 
    130,591  
    13  
    82,612  
    -  
    82,625  
 
       
       
       
       
       
       
       
Shares issued for conversion of notes payable
    -  
    -  
    545,455  
    55  
    149,945  
    -  
    150,000  
 
       
       
       
       
       
       
       
Shares issued for conversion of notes payable -related party
    -  
    -  
    178,509  
    18  
    49,072  
    -  
    49,090  
 
       
       
       
       
       
       
       
Shares issued for accrued interest
    -  
    -  
    24,775  
    2  
    6,811  
    -  
    6,813  
 
       
       
       
       
       
       
       
Shares issued for accrued interest - related party
    -  
    -  
    79,778  
    8  
    21,931  
    -  
    21,939  
 
       
       
       
       
       
       
       
Shares issued for accrued officer wages
    -  
    -  
    95,890  
    10  
    38,490  
    -  
    38,500  
 
       
       
       
       
       
       
       
Shares issued for accrued expenses
    -  
    -  
    17,273  
    2  
    13,816  
    -  
    13,818  
 
       
       
       
       
       
       
       
Shares issued to secure line of credit
    -  
    -  
    20,000  
    2  
    14,998  
    -  
    15,000  
 
       
       
       
       
       
       
       
Debt premium on convertible notes
    -  
    -  
    -  
    -  
    (284,063 )
    -  
    (284,063 )
 
       
       
       
       
       
       
       
Amortization of debt premium
    -  
    -  
    -  
    -  
    23,348  
    -  
    23,348  
 
       
       
       
       
       
       
       
Deferred offering costs
    -  
    -  
    -  
    -  
    14,236  
    -  
    14,236  
 
       
       
       
       
       
       
       
Forgiveness of related party debt
    -  
    -  
    -  
    -  
    6,022  
    -  
    6,022  
 
       
       
       
       
       
       
       
Common stock subscribed
    -  
    -  
    -  
    -  
    -  
    -  
    9,999  
 
       
       
       
       
       
       
       
Net loss
    -  
    -  
    -  
    -  
    -  
    (488,478 )
    (488,478 )
Balance at June 30, 2018
    240,000  
  $ 2,400  
    15,756,989  
  $ 1,576  
  $ 300,925  
  $ (1,267,740 )
  $ (952,840 )
 
The accompanying footnotes are an integral part of these unaudited condensed financial statements.
 
6
 
 
 Advantego Corporation
 
 
 
 
 
 Consolidated Statements of C ash Flows
 
 
 
 
 For the Six Months Ended June 30, 2019 and 2018
 
 
 
 
 (Unaudited)
 
 
 
 
 
 
 
 
 
 
 June 30,
 
 
 June 30,
 
 
 
2019
 
 
2018
 
 CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
 
 Net (loss)
  $ (1,345,407 )
  $ (488,478 )
 Adjustments to reconcile net loss to cash used by operating adtivities
       
       
 Amortization of debt discount
    162,425  
    137,163  
 Amortization of consulting services prepaid with common stock
    -  
    5,758  
 Changes in operating assets and liabilities
       
       
 (Increase) in accounts receivable
    (42,530 )
    (25,000 )
 (Increase) in prepaid expenses
    (141,258 )
    (35,510 )
 (Increase) decrease in inventory
    6,499  
    (1,914 )
 Increase (decrease) in accounts payable
    (6,716 )
    4,072  
 Increase (decrease) in deferred revenue
    45,358  
    (4,109 )
 Decrease in accounts payable - related parties
    (36,384 )
    (29,907 )
 Increase in accrued interest, convertible notes payable -related parties
    -  
    2,781  
 Increase in accrued interest, convertible notes payable
    28,108  
    2,007  
 
       
       
 Net cash flows (used by) operating activities
    (1,329,905 )
    (433,137 )
 
       
       
 CASH FLOWS FROM INVESTING ACTIVITIES
    -  
    -  
 
       
       
 CASH FLOWS FROM FINANCING ACTIVITIES
       
       
 Proceeds from sale of common stock and excersise of warrants
    -  
    82,625  
 Proceeds from convertible notes payable
    1,981,550  
    419,050  
 Principal payments on convertible notes payable
    (608,000 )
    (22,486 )
 
       
       
 Net cash flows provided by financing activities
    1,373,550  
    479,189  
 
       
       
 NET CHANGE IN CASH
    43,645  
    46,052  
 
       
       
 CASH - BEGINNING OF PERIOD
    91,643  
    37,041  
 CASH - END OF PERIOD
  $ 135,288  
  $ 83,093  
 
       
       
SUPPLEMENTAL CASH FLOW INFORMATION
       
       
Schdule of Non-cash Investing and Financing Activities:
       
       
Conversion of convertible notes payable into common stock
  $ 40,000  
  $ 434,797  
Conversion of convertible notes payable - related parties into common stock
  $ -  
  $ 79,590  
Conversion of accrued interest, convertible notes payable into common stock
  $ 2,685  
  $ 6,813  
Conversion of accrued interst, convertible notes payable-related parties into common stock
  $ -  
  $ 27,487  
Conversion of officer wages payable into common stock
  $ -  
  $ 38,500  
Issuance of common stock for accrued expenses
  $ -  
  $ 13,818  
Issuance of common stock for a finders fee
  $ -  
  $ 15,000  
Issuance of convertible note payable to secure line of credit
  $ -  
  $ 50,000  
Recording of premium on convertible debt at stock redemption value
  $ 3,050,213  
  $ 64,236  
Common stock subscribed
  $ -  
  $ 9,999  
Amortization to additional paid in capital of premium on convertible notes payable
  $ 1,448,214  
  $ 611,096  
Debt discounts on issuance of convertible notes payable
  $ 234,050  
  $ 318,115  
Forgiveness of related party debt
  $ -  
  $ 6,022  
Returnable shares issued
  $ 137,348  
  $ -  
 
       
       
Cash paid for
       
       
Interest
  $ 506,002  
  $ 2,264  
Income taxes
    -  
    -  
 
       
       
The accompanying footnotes are an integral part of these unaudited condensed financial statements.
       
       
 
       
       
 
 
7
 
 
ADVANTEGO CORPORATION
 
Notes to Consolidated Financial Statements  
Six Months Ended June 30, 2019 and 2018 (Unaudited)
 
Note A – Organization and Business
 
Organization and Nature of Business
 
Advantego Corporation ("Advantego," formerly Golden Eagle International, Inc., or "GEII") was incorporated in Colorado on July 21, 1988. Advantego Corporation, Inc. is a Colorado corporation formed on July 29, 2016. On October 27, 2016, GEII completed a reverse merger with Advantego Technologies, Inc., which resulted in a change of control and the perpetuation of Advantego Technologies, Inc.’s management and business operations.
 
Effective February 1, 2018 and pursuant to Board authorization and majority shareholder approval, the Company changed the name of GEII to Advantego Corporation (amending GEII’s Articles of Incorporation accordingly), cancelled its Series A, C, and D preferred shares, and effected a 1-for-11 reverse stock split on its issued and outstanding shares of common stock that became effective on the OTCQB on February 21, 2018 under the symbol ADGO.
 
The Company leverages a proprietary Intelligent Solution Platform combining leading third-party technologies with existing data and systems to deliver a turnkey specialized Business Process as a Services (BPaaS) that is both scalable and cost effective.
 
The Company offers a variety of stand-alone products tailored specifically to targeted industries as well as combining these with multiple software applications for large enterprises, affiliate networks and franchise operators delivering comprehensive, all-inclusive, managed bundled solutions.
 
Additional services include Product Design, Engineering and Manufacturing services; Custom Enterprise Software development, and Licensing of Intellectual Property from its vast library of strategic partners.
 
Basis of Presentation
 
The accompanying unaudited financial statements represent the consolidated operations of Advantego and Advantego Technologies, Inc., collectively "the Company," "we," "us," as the consolidated entity, with all intercompany transactions eliminated.
 
These financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, or the SEC, including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive consolidated financial statements and should be read in conjunction with our audited financial statements for the year ended December 31, 2018, included in our Annual Report on Form 10-K for the year ended December 31, 2018.
 
In the opinion of management, the accompanying financial statements contain all accruals and adjustments (each of which is of a normal recurring nature) necessary for a fair presentation of the Company’s financial position as of June 30, 2019 and the results of its operations for the six months then ended. Results for the interim period presented are not necessarily indicative of the results that might be expected for the entire fiscal year.
 
 
8
 
 
Going Concern
 
The consolidated financial statements in this report have been prepared on the going concern basis which assumes that adequate sources of financing will be obtained as required and that the Company’s assets will be realized, and liabilities settled in the ordinary course of business.  Accordingly, the financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.  The Company has not yet achieved profitable operations, has accumulated losses of $3,378,009 since its inception through June 30, 2019 and expects to incur further losses in the development of its business, all of which raises substantial doubt about the Company's ability to continue as a going concern.  Though  the Company’s line of business involves proven technologies, the Company can offer no assurances that it will be able to obtain adequate financing to implement its business plan and remain a going concern
 
Note B – Summary of Significant Accounting Policies
 
Fair Value of Financial Instruments
 
The Company accounts for fair value measurements in accordance with accounting standard ASC 820-10-50,  "Fair Value Measurements."   This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures.  The three levels are defined as follows:
 
Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
 
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
 
Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.
 
The Company's financial instruments consist of cash, accounts payable, and convertible notes payable. The carrying amount of cash and accounts payable approximates fair value because of the short-term nature of these items. The carrying amount of convertible notes payable approximates fair value as the individual borrowings bear interest at market interest rates and are also short-term in nature.
 
Use of Estimates
 
Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results may differ from those estimates, and such differences may be material to the financial statements.
 
Concentration of Credit Risk
 
From time to time our cash balances, held at major financial institutions, exceed the federally insured limits of $250,000.  Our management believes that the financial institutions are financially sound, and the risk of loss is low.  Our cash balances did not exceed federally insured limits at June 30, 2019 or December 31, 2018.
 
All of the Company’s revenues during the three and six months ended June 30, 2019 and 2018 and 100% of the accounts receivable at June 30, 2019 and December 31, 2018 were with one customer. This customer is a certifier of automobile collision repair shops, which distributes the Company’s products to the repair shops in its network.
 
 
9
 
 
Cash and Cash Equivalents
 
For the statement of cash flows, any liquid investments with a maturity of three months or less at the time of acquisition are considered to be cash equivalents. The Company has no cash equivalents at June 30, 2019 or December 31, 2018.
 
Inventory
 
The Company's inventory consists of finished good controller boxes that the Company configures with digital signage software upon customer order.  Inventory is stated at lower of cost or net realizable value, with cost being determined on the first-in, first-out (“FIFO”) method. No reserve was considered necessary for slow moving or obsolete inventory at June 30, 2019 or December 31, 2018.
 
Revenue Recognition
 
The Company recognizes revenue from the sale of products and services in accordance with ASC 606," Revenue from Contracts with Customers " following the five steps procedure:
 
Step 1: Identify the contract(s) with customers
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to performance obligations
Step 5: Recognize revenue when the entity satisfies a performance obligation
  
The Company generates revenue from online directory and digital signage components of its ongoing licensing services it provides to third parties. Revenue from online directory services are recognized over the life of the agreement ranging from one to twelve months. Revenue from digital signage control boxes is recognized at the time of sale and renewal fees are amortized over the term of the renewal, ranging from one to twelve months. The Company recognized $219 and $8,118 in online listing sales during the three months ended June 30, 2019 and 2018, respectively. The Company recognized $219 and $12,751 in online listing sales during the six months ended June 30, 2019 and 2018, respectively. The Company recognized $20,847 and $63,149 in digital signage sales during the three months ended June 30, 2019 and 2018, respectively. The Company recognized $29,172 and $102,493 in digital signage sales during the six months ended June 30, 2019 and 2018, respectively
 
As of June 30, 2019 and December 31, 2018, $45,358 and $0, respectively, of sales were deferred to future periods. Management determined no allowance for doubtful accounts was necessary at June 30, 2019 or December 31, 2018.
 
Stock Based Compensation
 
We measure stock-based compensation cost relative to the estimated fair value of the awards on the grant date.  We recognize the cost as the awards vest.  
 
Income (Loss) Per Share
 
The computation of basic earnings (loss) per common share is based on the net income (loss) divided by the weighted average number of shares outstanding during each period.
 
The computation of diluted earnings (loss) per common share is based on the weighted average number of shares outstanding during the period plus the common stock equivalents as detailed in the following chart.  During the three and six months ended June 30, 2019 and 2018, the inclusion of these common stock equivalents on the consolidated statement of operations would have resulted in a weighted average shares fully diluted number that was anti-dilutive, and as such they are excluded.
 
 
10
 
 
Fully diluted shares for the three and six months ended June 30, 2019 and 2018 are as follows:
     
 
 
    Three Months Ended     
 
 
  Six Months Ended  
 

 
  June 30,
2019
 
 
 
June 30,
2018
 
 
 June 30,
2019
 
 
  June 30,
2018
 
  Basic weighted average shares outstanding
    17,077,371  
    16,010,976  
    16,896,102  
    15,766,973  
  Convertible debt  
    13,577,043  
    172,734  
    6,974,085  
    85,890  
  Series B preferred stock
    10,909  
    10,909  
    10,909  
    10,909  
  Warrants 
    -  
    181,818  
    -  
    181,818  
  Fully diluted weighted average shares  outstanding
    30,665,323  
    16,376,437  
    23,881,096  
    16,045,590  
 
   Income Taxes
 
Income taxes are accounted for under the liability method. Under the liability method, future tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statements and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantially enacted income tax rates expected to apply when the asset is realized, or the liability settled.
 
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry-forwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax law and rates on the date of enactment.
 
Effect of New Accounting Pronouncements
 
There are no recent accounting pronouncements that are expected to have a material impact on our financial position, results of operations or cash flows.
 
Note C – Prepaid Expenses
 
The Company has capitalized certain expenses as prepaid expenses. These include rent and vendor deposits, and prepaid insurance. Additionally, we have classified $137,384 as a prepaid expense for Returnable Shares issued as a commitment fee on convertible note (u) (see Note C). Total prepaid expenses at June 30, 2019 and December 31, 2018, are as follows;
 
 
 
June 30,
2019
 
 
December 31,
2018
 
Prepaid Insurance
  $ 6,711  
  $ 3,845  
Deposits
    31,155  
    3,763  
Returnable Shares
    137,384  
    -  
Total
  $ 175,250
  $ 7,608  
 
Note D – Pre-Production Costs
 
 
 
June 30,
2019
 
 
December 31,
2018
 
Engineering, Pre-Production Costs (new products)*
    81,000  
    -  
Software Development (new products)**
    30,000  
    -  
Total
  $ 111,000  
  $ -  
 
* We are capitalizing pre-production costs in accordance with ASC 340-10. Development costs will be amortized on a per unit basis over the life of the product once we begin selling the product.
 
**We have begun capitalizing software development costs during the three months ended June 30, 2019 in accordance with ASC 985.
Software computer costs for computer software that is to be used as an integral part of a product or process is capitalized after the following conditions are met;
a.
Technological feasibility has been established for the software.
b.
All research and development activities for the other components of the product or process have been completed.
 
Capitalization of computer software costs shall cease when the product is available for general release to customers. The capitalized costs will then be amortized on a per unit basis.
 
 
11
 
 
Note E – Convertible Notes Payable
 
Convertible Notes Payable
 
We have uncollateralized convertible debt obligations with unaffiliated investors outstanding at June 30, 2019 and December 31, 2018 as follows:
 
 
  June 30, 2019        
D ecember 31, 2018        
Note
 
Principal
 
 
Less Debt Discount
 
 
Plus Premium
 
 
Net Note Balance
 
 
Accrued Interest
 
 
Principal
 
 
Less Debt Discount
 
 
 
Plus Premium
 
 
Net Note Balance
 
 
Accrued Interest
 
(a)
  $ 75,000  
  $ (11,249 )
  $ 10,598  
  $ 74,349  
  $ 750  
  $ 75,000  
  $ (33,599 )
  $ 56,250  
  $ 97,651  
  $ 1,134  
(b)
    -  
    -  
    -  
    -  
    -  
    50,000  
    -  
    -  
    50,000  
    2,713  
(c)
    85,000  
    (1,875 )
    11,345  
    94,470  
    6,877  
    125,000  
    (11,250 )
    68,072  
    181,822  
    4,500  
(d)
    -  
    -  
    -  
    -  
    -  
    63,000  
    (4,980 )
    34,308  
    92,328  
    2,016  
(e)
    -  
    -  
    -  
    -  
    -  
    65,000  
    (5,214 )
    35,561  
    95,347  
    2,582  
(f)
    -  
    -  
    -  
    -  
    -  
    125,000  
    (12,003 )
    58,829  
    171,826  
    5,417  
(g)
    -  
    -  
    -  
    -  
    -  
    150,000  
    (13,978 )
    70,023  
    206,045  
    6,700  
(h)
    -  
    -  
    -  
    -  
    -  
    50,000  
    (5,597 )
    35,401  
    79,804  
    1,111  
(i)
    273,000  
    (16,192 )
    62,281  
    319,090  
    3,1121  
    273,000  
    (37,942 )
    145,942  
    381,000  
    2,791  
(j)
    -  
    -  
    -  
    -  
    -  
    -  
    -  
    -  
    -  
    -  
(k)
    75,000  
    (10,118 )
    96,751  
    161,633  
    2,574  
    -  
    -  
    -  
    -  
    -  
(l)
    78,000  
    (2,119 )
    90,395  
    166,276  
    3,692  
    -  
    -  
    -  
    -  
    -  
(m)
    65,000  
    (5,214 )
    64,648  
    124,434  
    2,582  
    -  
    -  
    -  
    -  
    -  
(n)
    50,000  
    (12,416 )
    65,866  
    103450  
    -  
    -  
    -  
    -  
    -  
    -  
(o)
    100,000  
    (312 )
    87,708  
    187,396  
    3,750  
    -  
    -  
    -  
    -  
    -  
(p)
    50,000  
    (4,382 )
    48,333  
    93,951  
    1,778  
    -  
    -  
    -  
    -  
    -  
(q)
    68,000  
    (2,304 )
    38,825  
    104,521  
    2,788  
    -  
    -  
    -  
    -  
    -  
(r)
    610,000  
    (37,042 )
    917,294  
    1,490,252  
    16,165  
    -  
    -  
    -