10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018

Or

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _________

Commission File No.000-53929
 

FISION Corporation

(Exact name of registrant as specified in its charter)

Delaware	27-2205792
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)

100 N. Sixth St., Suite 308 B Minneapolis, Minnesota	55403
(Address of principal executive offices)	(Zip Code)

(612) 927-3700

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.0001 par value per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act ¨ Yes   x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act ¨ Yes   x No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the period 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days x Yes   ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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 and post such files). x Yes   ¨ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer or a smaller reporting company:

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the act). ¨ Yes   x No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common stock was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter: $6.3 Million on June 30, 2018.

Indicate the number of the registrant’s shares of common stock outstanding, as of the latest practicable date: 108,363,863 shares of common stock are outstanding as of April 4, 2019.

DOCUMENTS INCORPORATED BY REFERENCE: None

Table of Contents

		Page No.
Part I
Item 1	Business	4
Item 1A	Risk factors	9
Item 1B	Unresolved Staff Comments	18
Item 2	Properties	18
Item 3	Legal Proceedings	18
Item 4	Mine Safety Disclosures	18
Part II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19
Item 6	Selected Financial Data	21
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	28
Item 8	Financial Statements and Supplementary Data	28
Item 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	29
Item 9A	Controls and Procedures	29
Item 9B	Other Information	29
Part III
Item 10	Directors, Executive Officers and Corporate Governance	30
Item 11	Executive Compensation	32
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	36
Item 13	Certain Relationships and Related Transactions, and Director Independence	37
Item 14	Principal Accounting Fees and Services	37
Part IV
Item 15	Exhibits, Financial Statement Schedules	39
Signatures		40

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Corporate Contact Information

Our executive, sales and marketing offices, as well as our software development spaces and equipment, are located at 100 N. Sixth Street, Suite 308 B, Minneapolis, MN 55403; our telephone number is (612) 927-3700; and we maintain a website at www.fisiononline.com.

Special Note Regarding Forward-Looking Statements

There are many statements in this Annual Report on Form 10-K that are not historical facts. These “forward-looking statements” can be identified by terminology such as “believe,” “may,” “intend,” “plan,” “will,” “expect,” estimate,” “strategy,” and similar expressions. These forward-looking statements are subject to material risks and uncertainties that are beyond our control, and many of these risks are discussed herein under the section entitled “Risk Factors.” Although our management believes that the assumptions underlying these forward-looking statements are reasonable, they do not assure or guarantee our future performance. Our actual results could differ materially from those contemplated by these forward-looking statements. The assumptions used for these forward-looking statements require considerable exercise of judgment, since they represent estimates of future events and are thus subject to material uncertainties involving possible changes in economic, governmental, industry, marketplace, and other circumstances. To the extent any assumed events do not occur, the outcome may vary materially from our anticipated or projected results. In light of these risks and uncertainties, there can be no assurance that the results and events contemplated by these forward-looking statements will in fact transpire. You are cautioned to not place undue reliance on these forward-looking statements, which speak only as of their dates. We do not undertake any obligation to update or revise any forward-looking statements.

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PART I

ITEM 1 BUSINESS

Background

FISION Corporation (the “Company”) was incorporated in Delaware in 2010 under a former name, and conducted no active business operations until December 2015 when the Company merged with Fision Holdings, Inc., an operating Minnesota corporation based in Minneapolis (“the Merger”). As a result of the Merger, Fision Holdings, Inc. became our wholly-owned subsidiary, and control of the Company was acquired by the pre-merger shareholders of Fision Holdings, Inc.

In May 2017, we acquired substantially all the assets of Volerro Corporation, a Delaware corporation based in Minneapolis and engaged in the development and marketing of proprietary cloud-based “content collaboration” software services.

When used in this report, the terms “the Company,” “Fision,” “we,” “us,” and “our,” refer to FISION Corporation, a Delaware corporation and our wholly-owned operating subsidiary Fision Holdings, Inc., a Minnesota corporation (including our Volerro software services).

In connection with the 2015 Merger, we issued an aggregate of 28,845,090 shares of our common stock to the former shareholders of Minnesota Fision, and also issued derivative securities to holders of Minnesota Fision options and warrants to purchase an aggregate of 3,868,575 additional shares of our common stock. As a result of this Merger, our pre-merger shareholders plus holders of our pre-merger derivative securities held less than five percent (5%) of our total combined post-merger outstanding common stock plus reserved common stock for all derivative securities.

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Effective upon closing the 2015 Merger, the former sole officer and sole director of our parent Delaware corporation resigned from all management positions, and the following persons were appointed to serve as our management following the Merger:

Name	Position
Michael Brown	Chief Executive Officer (CEO), Board Chairman and Director
Garry Lowenthal	Executive Vice President, Chief Financial Officer (CFO) and Director

The Merger was accounted for as a “reverse merger” and recapitalization. Accordingly, for financial reporting purposes, our Minnesota Fision subsidiary was the acquirer and the Delaware parent was the acquired company. Consequently, the assets and liabilities and operations reflected in our historical financial statements prior to the Merger are those of Minnesota Fision and are recorded at their historical cost basis; and our consolidated financial statements after the Merger include assets and liabilities of both the Delaware and Minnesota corporations as well as the post-merger combined historical operations of both corporations. The tax treatment of the Merger constituted a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986.

Effective February 28, 2019, Garry Lowenthal will no longer be the Chief Financial Officer (CFO) of FISION Corporation, and will transition into a non-officer role within the company and will also step down from the Board of Directors of FISION Corporation. Effective March 1, 2019, board appointed Daniel Dorsey, age 42, as Chief Financial Officer and as a director of FISION to serve on its Board of Directors until the next regular meeting of shareholders or until his successor is elected.

Termination of Continuity Logic Merger

In August 3, 2018 the Company entered into an Agreement and Plan of Merger with Continuity Logic, L.L.C., a New Jersey limited liability company (the “Continuity Logic Merger”) to effect a merger resulting in our shareholders as a group and the equity holders of Continuity Logic as a group each owning 50% of the post-merger combined companies. This merger agreement was restated and amended on December 21, 2018. A key provision of this amended Continuity Logic Merger provided that the parties thereto and their representatives were required to raise enough working capital to support the post-merger funding requirements of the combined companies, and that the merger be completed by December 31, 2018. The Company and Continuity Logic conducted extensive due diligence regarding this merger during the last few months of 2018, but were unable to raise or receive future commitments from investors to provide sufficient capital to adequately support the anticipated post-merger combined business operations of the Company and Continuity Logic. Accordingly, on February 4, 2019 Continuity Logic terminated this merger as it was  not consummated by December 31, 2018 as well as insufficient working capital being available for post-merger business operations. The Company no longer has any relationship or involvement with the business or future prospects of Continuity Logic.

While the Continuity Logic Merger was pending, the Company made various bridge loans to Continuity Logic for working capital, of which a total balance of $817,673 is still outstanding as of March 31, 2019. These loans mature on August 31, 2019, bear interest at 6% per annum, and a portion of the Notes are secured by a first-priority perfected security interest on the accounts receivable of Continuity Logic. The termination of the Continuity Logic Merger does not change or effect the continuing obligation of Continuity Logic to satisfy the future payment of these loans to the Company.

Business of Company

We are an Internet platform technology company providing proprietary cloud-based software solutions to automate the marketing functions and activities of our customers. Our business is conducted through our Minnesota Fision subsidiary based in Minneapolis, which since 2011 has created and marketed proprietary software solutions to support marketing and sales enablement activities of both private businesses and public entities. We have developed and successfully commercialized a unique cloud-based software platform which automates and integrates all digital marketing assets and marketing communications of our customers, and thus “bridges the gap” between marketing and sales of a business enterprise. We believe that our innovative Fision platform, proprietary technology, forward-looking strategy, and experienced management have now positioned us to become a future leader in the agile marketing and sales enablement segment of the rapidly-growing software-as-a-service (SaaS) industry. Our primary mission is to develop and offer software technology tools through our Fision platform to enable our customers to maximize their marketing assets and initiatives.

We are a global software development and licensing company offering our proprietary Fision software platform to automate and facilitate marketing functions and activities in order to promote and improve sales enablement of any entity. Our innovative software system is readily scalable to adapt to fast business growth of any customer, regardless of size. Except for future customary software enhancements and periodic upgrades, the development of our Fision automated marketing platform has been completed.

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Our Fision software platform enables our customers to easily and quickly create and implement marketing campaigns to support their sales personnel while still emphasizing, protecting and enhancing their valuable brand assets. Use of our software solutions by our customers reduces substantially the time and cost incurred by them to produce and present marketing and sales campaigns and presentations for specific products or services. Every member of our customers’ marketing and sales teams, by having easy and automated access to all their digital marketing and media assets, is able to leverage the full power of their distinctive brands and marketing assets in every interaction with their consumers or buyers.

Our current and targeted customer base ranges across diverse industries of all sizes, including banks and other financial institutions, insurance companies, hotels and other hospitality enterprises, healthcare and fitness companies, large retailers, product manufacturers, software and other technology companies, telecommunications companies, and numerous other companies selling familiar branded products or services.

Fision software provides three major benefits to our customers, which are (i) accelerating their revenues, (ii) improving their marketing and brand effectiveness, and (iii) reducing significantly their marketing and sales costs.

We derive our revenues primarily from recurring payments from customers having software licensing contracts typically having terms of one to three years and requiring monthly subscription fees based on the customer’s number of users and locations where used. We currently have licensing contracts with fourteen (14) customers using our Fision platform for their marketing and sales activities. And we are currently engaged in various stages of negotiation with or procurement of several additional material customers. The majority of our revenues are recurring, due to the nature of our contracts.

Our typical customer implementation process includes integrating our cloud-based Fision platform with the marketing structure of the customer, initiating and conducting customer training, and providing marketing development support while our Fision platform is being actively launched by the customer. We also continue to provide technical and maintenance support after implementation.

We license our proprietary Fision software platform both through direct sales obtained by our management and other in-house sales personnel, and through utilizing experienced independent national sales agencies known as our “channel partners.” To date we have entered into three significant channel partnership arrangements, and we have realized material revenues from the efforts of our channel partners.

The Fision Platform - Our Fision marketing software centrally collects, stores, prioritizes, organizes, streamlines, integrates and distributes the numerous digital marketing assets of our customers including videos, images, logos and other brand materials, presentations, social media content and any other material marketing assets. Using Fision’s automated software technology, these digital assets then become readily and immediately available for user access as determined by each of our customers. Our Fision platform is designed to provide any corporate marketing department with the ability to instantly and seamlessly update its sales force or other users with the latest digital marketing content and materials, while providing them with a simple, intuitive software interface to quickly find what they need on any digital device, anytime and anywhere. In particular, large enterprise customers with extensive global sales branches and networks have the ability to quickly and efficiently create and deliver customized sales campaigns or presentations to selectively targeted consumer audiences while conveying a positive, personalized and consistent brand experience. We believe that the use of our software marketing solutions by our customers results in a substantial increase in their return on investment (ROI) and their profitability.

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Advantages of our Fision platform include the following:

· Substantial gains in both marketing and salesforce efficiency.

· Reducing the time and cost to localize marketing content, resulting in shortening the sales cycle for faster speed to market.

· Responding quickly to changing consumer market conditions.

· Enhancing the effectiveness of digital distribution to targeted consumers or buyers whether through print, email, mobile, website or social media.

· Providing autonomy to scattered sales force personnel to enable them to independently and quickly create locally relevant content and launch their own selling campaigns.

· Distribution of specialized content to selected consumer or buyer groups.

· Maintaining corporate and brand integrity while simplifying brand distribution.

· Facilitating and ensuring regulatory compliance.

· Improving marketing and sales performance analytics and big data analysis.

Our Customers - Our potential customer base is global and virtually unlimited, since our Fision platform software solutions are totally cloud-based and readily scalable, and provide a multitude of digital tools and solutions which can provide significant benefits to the marketing and sales personnel of any commercial enterprise, regardless of size and widespread locations.

Our customers typically “stick” with us and our Fision platform, and accordingly we receive substantial recurring revenues from them on a consistent basis. Certain customers have maintained written contracts with us for several years. We regard our high percentage of recurring revenues to be particularly significant to our marketing strategy which emphasizes long-term relationships with our customers under written contracts. We believe that our ability to realize such recurring revenues is a keystone feature of our business model.

Significant Marketing Developments

For the past couple years, our primary marketing strategy has been directed toward and focused on large enterprise companies with many widespread operations and personnel. We have succeeded in closing key licensing contracts with large enterprise customers in various industries, including the following:

· a worldwide provider of SaaS software services for procurement and contract management.

· a Fortune 50 global provider of aerospace and building systems.

· a nationwide leading provider of accredited online higher education courses and degrees.

· the world’s largest RV dealership with retail operations in Florida, Colorado and Arizona.

· a national insurance and financial company having more than 20,000 employees and advisors.

· an operator of the world’s largest business network.

· a leading healthcare innovator led by former key executives of Amazon, Google and 2d.MD.

We believe these significant large enterprise customers now using our Fision platform will result in a substantial increase in future recurring revenues from our cloud-based Fision platform.

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Cloud-Based Platform -Storage and operation of our software solutions platform along with the digital marketing and sales assets and related data of our customers are outsourced by us to reside and take place in the digital “cloud.” Providers of cloud services are typically referred to as “virtual servers” since they provide all digital data storage and software application services to their clients. Our cloud service provider is Microsoft’s Azure Cloud, which leading cloud-based platform offers readily scalable, high quality and secure cloud services capable of satisfying any increasing demand or changing circumstances in the needs of our customers or us.

We regard the hosting of our software applications, the ready digital interface with our customers, and the storage of unlimited customer data, with our premier cloud provider as being crucial to our operating strategy. Our major savings in expensive computer equipment, high salaried technology personnel, and costly security measures through our use of Microsoft’s cloud is vital to our cost of doing business. Moreover, we believe that our experienced and leading cloud provider is more effective in delivering our Fision software solutions to our customers than we could perform in any event.

Research and Development - Since inception, the Company has committed substantial financial, personnel and other resources toward research and development efforts and activities related to the integration, commercialization and improvement of the Fision proprietary software platform.

Our development activities are conducted both internally from our Minneapolis headquarters facility by our experienced development programmers and software architects, and externally from outsourced contracts with experienced independent software development companies and individuals. We own servers and other computer equipment located at our Minneapolis facility, which are used by our development personnel to develop and enhance our marketing software platform.

Our Industry

We are positioned in the marketing/sales segment of the broad software-as-a-service (SaaS) industry, which segment we believe from available industry data now represents annual revenues of at least $20 Billion. Corporate spending on software applications and other intellectual technology (IT) has been growing at a rapid pace for many years in order to capitalize on the benefits of digital information technology. Moreover, a large amount of that spending now is being directed to support and enhance corporate marketing and sales efforts and activities. For many corporations, marketing software technologies have evolved to become a fundamental component of IT purchasing.

Marketing

We market and sell licensing rights to our proprietary Fision software platform under written contracts with our customers typically having one to three-year terms. A majority of our historical customers and revenues were procured primarily through direct sales obtained by our management and in-house sales force. Our marketing and related sales efforts and activities include generating sales leads and contract proposals with customers through our direct sales force, our management and their personal business contacts, and other persons affiliated or associated with us. Our direct marketing and sales efforts are supported by various secondary activities including participation in selected industry trade shows and conventions, certain print and digital media advertising and promotion, and solution overviews and presentations posted on our website.

Over the past couple years, we also have developed and implemented a secondary sales channel which involves targeting and retaining key independent national sales agencies to sell (license) our branded software products as sales agents paid commissions based on their actual sales. We regard and refer to these sales agencies as our “channel partners.” To date we have entered into three significant channel partner arrangements with experienced agencies, and we have realized material revenues from their sales efforts.

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Employees

We currently have eleven (11) full-time employees, including our Chief Executive Officer, Chief Financial Officer, Chief Revenue Officer, Controller/Office Manager, Customer Support Specialist, Client Services Manager, Marketing Manager, Senior Software Developer, and three Programmer/Developers. None of our employees are subject to a collective bargaining agreement. We believe that our relations with our employees are good.

ITEM 1A RISK FACTORS

An investment in our common stock is speculative and involves a high degree of risk. You should carefully consider the following risks, along with all of the other information contained in this Annual Report, before considering making an investment decision to purchase any of our securities. If one or more of the following risks occur, our business, financial condition and results of operations could suffer materially. In that case, the price of our common shares in any future trading market could decline materially, and you could lose a substantial part or all of your investment.

Risks Related to Our Business

We have a limited operating history and substantial accumulated losses, and we anticipate incurring continued losses.

Our business must be considered and evaluated in light of the risks, expenses, and problems frequently encountered by companies in their early stages of development and commercialization of products, and particularly companies like us participating in new and rapidly evolving markets. These risks include our failure to anticipate and adapt to new technology or changing market conditions, our inability to secure enough future material customers to achieve profitability, the rejection of or lack of satisfaction with our services and products by our existing or potential customers, our inability to obtain additional capital when needed from time to time, our inability to protect our intellectual property, and any development of equal or superior products or services by our competitors. Accordingly, there can be no assurance we will be successful in addressing these risks.

We incurred net losses of $3,992,846 for the year ended December 31, 2018 and net losses of $5,083,552 for the year ended December 31, 2017. Since our inception in 2010, we have an accumulated deficit of $(22,514,711) as of December 31, 2018. Moreover, we expect to continue operating at a loss during 2019 and likely even beyond 2019. There is no assurance based on our past business experience to support any belief that we can become profitable or sustain profitability in the future. There can be no assurance that we can generate significant revenue growth, or that any revenue growth that we achieve can be sustained. To any extent that increases in our operating expenses precede or are not soon followed by increased revenues, our business, results of operations and financial condition would be adversely affected materially.

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If we are unable to obtain significant future financing from time to time, our development and operations will encounter serious delays or could even result in the complete failure of our business.

Our ability to become commercially successful and profitable will depend largely on our being able to continue raising significant additional financing from time to time in the future. If we are unable to raise additional financing through equity and/or debt sources as needed, we would not be able to succeed in our commercial operations, which eventually could result in our failure. There is no assurance any such additional funds will be available on terms satisfactory to us, if at all.

We have a significant amount of debt, a good portion of which has matured or soon will mature, and this could limit or even eliminate recovery of your investment if we fail to reach substantial profitability or otherwise resolve or satisfy our outstanding debt.

We have a substantial amount of indebtedness in the form of various Notes Payable. As of December 31, 2018, we had approximately $3,338,060 Million of outstanding Notes Payable including accrued interest, much of which is now or soon due, or due on demand. There is no assurance that we will be able to convert our outstanding debt into common stock, or to satisfy this debt through new financing or refinancing, or to achieve profitability sufficient to make future payments to satisfy this debt. If we cannot satisfy or resolve our substantial outstanding indebtedness, such failure would have a significant adverse effect on our business and financial condition and could even cause a total failure of our business.

We may not be able to continue as a going concern.

Our operating expenses have been funded by various sources including sales of our equity and debt securities, limited revenues from customer contracts, deferral of management salaries, and stock-based payment to management and certain service providers and consultants. Due to this situation and our ongoing losses, there is substantial doubt whether our business can continue as a going concern to support its commercial operations and satisfy its outstanding debt and other obligations. Our management is in the process of obtaining additional significant financing to enable us to continue as a going concern, but there is no assurance that adequate funds will become available to allow us to continue as a going concern.

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Our ability to generate future material revenues will depend upon a number of factors, some of which are beyond our control.

These factors include the rate of acceptance of our software products, competitive pressures in our industry, effectiveness of our sales force, adapting to changes in technology in our industry, and general economic trends. We cannot forecast accurately what our revenues will be in future periods.

Our operating results have fluctuated and been difficult to predict, and our results could continue to fluctuate and be unpredictable in the future.

Our operating results have been difficult to predict, have historically fluctuated, and may vary significantly from quarter to quarter due to a variety of factors, many of which are beyond our control. Accordingly, comparing our operating results on a period-to-period basis may not be meaningful. Factors that may affect our quarterly operating results may include: any material changes in demand for our software solutions; the introduction of new technologies by competitors; the nature of our variable and unpredictable sales cycle; changes in the number, availability and quality of competing products; the timing and amount of sales and marketing expenses incurred by us to attract new customers; changes in the economic or business prospects of our customers or the economy generally; changes in our pricing policies or the pricing policies of our competitors; changes in governmental regulation of the Internet, wireless networks and mobile platforms; unforeseen costs necessary to improve and maintain our technologies; and costs related to any acquisitions undertaken by us.

We face significant challenges in obtaining market acceptance of our products and establishing our Fision brand.

Our success depends primarily upon the acceptance of our software platform and our Fision brand by new customers, most of who are not familiar with and have not used our products, and also do not recognize our brand and corporate identity. Acceptance of our marketing software solutions by new customers will depend on many factors including price, reliability, performance, service accessibility and effectiveness, and our ability to overcome existing loyalties to established brands. There is no assurance we will be able to meet these challenges successfully.

We depend on a small number of customers for a substantial portion of our revenues, and any material reduction in the use of our software platform by our major customers could reduce our revenues significantly.

For the fiscal years ended December 31, 2017 and 2018, four customers and three customers, respectively, each accounted for more than 10% of our revenues. None of these customers was significantly dominant in either 2017 or 2018, however, since the highest revenue customer in each year was less than 20% of our revenues. A significant reduction for any reason in the use of our software solutions by one or more of our major customers could harm our business materially.

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Our success is dependent upon our current key personnel as well as our ability to attract, recruit and retain additional key employees.

We believe that our success will depend significantly on continued employment of our management and key technology and sales personnel, and the loss of the services of one or more of them could harm our business substantially. Our future business also will be dependent on hiring additional qualified key personnel, and if they are not available when needed, our future growth and prospects could suffer materially.

We operate in a highly competitive industry, and we may not be able to compete successfully.

Our market is highly competitive, with many companies providing solutions competitive to our software platform. Well-known and established competitors include Marketo (Adobe), Eloqua (Oracle), Unica (IBM), Hubspot, ExactTarget (Salesforce), Aprimo, Responsys and Silverpop. We expect additional strong competitors to emerge in the future from time to time.

Most of our current and potential competitors have significantly more personnel, financial, technical, marketing and other resources than we possess, and accordingly they are able to devote substantially greater resources than us to development, marketing, sales, and support of their products and services. We lack many things which most of our competitors have, including an established brand and name recognition, existing relationships with a large customer base, the ability to undertake costly and extensive marketing campaigns, and large customer support teams.

Software solutions and demands in our industry often change significantly, and our future success will depend materially on our ability to anticipate and respond to such changes. If we cannot adjust, develop and compete effectively with changing software solutions and products as and when they are introduced in our industry, our ability to generate meaningful revenues or achieve profitable operations would be impaired substantially.

Our current and potential competitors may develop and offer new software technologies that render our products less competitive, unmarketable or even obsolete. In addition, if any competitors develop products with similar or better functionality than our solutions, we may need to decrease the prices for our products to remain competitive, which could result in a material reduction in our margins and a corresponding material negative effect on our operating results and financial condition.

We may not be able to address and solve satisfactorily the many competitive pressures and challenges facing us in our industry, and our failure to do so would harm substantially our business, operating results and financial condition.

Our market may develop more slowly than we expect, which could harm our business.

Development of marketing software solutions is an emerging market, and our current and future customers may ultimately find our software platform to be less effective than anticipated for promoting their products or services, which as a result could cause them to reduce their spending on our software solutions. If the market for our products develops more slowly than we expect, we may not be able to increase our revenues effectively and our business would suffer.

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Failure to manage growth effectively could harm our business seriously.

Based on procurement transactions now underway with potential new customers, we expect the pace of our growth to increase materially. If we do not effectively manage our growth, the perceived quality of our business may suffer materially, which could negatively affect our reputation and the demand for our products. Our growth is expected to place an increasing strain on our resources and infrastructure, and our future success will in large part depend on the ability of our management personnel to manage our growth effectively. Any failure by our management or other key personnel to manage our future growth properly could impair our ability to deliver our software solutions in a timely fashion, to fulfill existing customer commitments, or to attract and retain new customers.

Interruption or failure of information technology and communications systems used by us could hurt our ability to provide our services effectively, which could damage our reputation and harm our operating results.

The availability to our customers of our products and services depends on the continuing and efficient operation of information technology and communications systems and infrastructure used by us, and most particularly on the “cloud-based” service provider facility which hosts our Fision software platform. These electronic systems are vulnerable to damage or interruption from earthquakes, vandalism, sabotage, terrorist attacks, floods, fires, power outages, telecommunications failures, and computer viruses or other deliberate attempts to harm the systems. The occurrence of a natural or intentional disaster, any decision to close a facility we are using without adequate notice, or particularly an unanticipated problem at our cloud-based virtual server facility, could result in harmful interruptions in our service, resulting in damage to our customers and brand and most likely a reduction to our revenues.

We may not be able to adequately protect or enforce our intellectual property (IP) rights.

Our success and competitive position will depend materially on our ability to protect our intellectual property (IP), including trademarks, trade names, patent rights and trade secrets. Despite our efforts to protect these proprietary rights, unauthorized parties may attempt to copy aspects of our intellectual property or to wrongly obtain and use our information technology. In addition, competitors may independently develop substantially equivalent intellectual property. If we do not effectively protect our intellectual property, or they become marginalized or valueless due to developments by a competitor, our business could suffer materially. Moreover, litigation may be necessary to enforce our intellectual property rights, to protect our trade secrets, or to determine the validity and scope of the proprietary rights of others. Any such litigation could result in substantial costs and diversion of our resources, which could cause serious harm to our business, operating results and financial condition.

We have obtained two patents from the United States Trademark and Patent Office (USTPO) covering certain technological aspects of our Fision software platform. We also have filed certain other patent claims with the USTPO and we expect to receive patent protection regarding these other pending patent claims. Although we regard the proprietary software technology covered by our granted and pending patents to be significant for our future business, there is no assurance that any granted or pending patents will provide us with any significant proprietary protection.

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We could incur substantial costs and disruption to our business as a result of any infringement claim brought against us involving intellectual property of another party, which could harm our business and operating results.

We cannot predict whether any third-party claims will occur alleging that we have infringed their intellectual property rights, and if any such claims occur whether they will substantially harm our business and operating results. If we are forced to defend any infringement claims, whether with or without merit or even if determined in our favor, we may face costly litigation and diversion of our management and other personnel. Moreover, any outcome of a claim resulting in our having infringed another’s intellectual property rights may require us to pay significant damages and attorney fees; to cease licensing our Fision software platform; to expend substantial development resources to redesign our products; or to enter into potentially unfavorable royalty or license agreements to use third-party technologies, which may not be available on terms acceptable to us, if at all. The time and resources required from us to resolve any such disputes or litigation, even if resolved in our favor, could harm our business, operating results, financial condition, brand and reputation.

Risks Related to Our Common Stock

The current public trading market for our common stock is relatively new and fluctuates widely.

There is no assurance that the trading market for our common stock will become more stable, or will continue to be sustained. Moreover, there remains a significant risk that our common stock price may fluctuate substantially in the future in response to various factors including the following:

· Variations in our operating results.

· Departures or additions of management or other key personnel.

· Announcements of significant acquisitions or strategic joint ventures.

· Announcements of significant capital commitments or transactions.

· Announcements of significant patent or other technological matters.

· Substantial sales of our common stock in the open market.

· Any significant litigation matters.

· Announcements of new product developments.

· Gain or loss of significant customers.

· General market conditions or specific political and economic conditions.

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Our common stock is subject to the “penny stock” rules of the Securities and Exchange Commission, which may make it more difficult for our stockholders to sell their common stock.

Under SEC rules, a “penny stock” includes any equity security having a market price of less than $5.00 per share, subject to certain limited exceptions. Regarding any transaction involving a penny stock, these rules require a broker or dealer to approve a person’s account for transactions in penny stocks, and also to receive from the person a written consent to the transaction and its terms. The broker or dealer also must obtain financial information and investment experience objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that the person is competent to evaluate the risks of penny stocks. Prior to the transaction, the broker or dealer also must deliver a disclosure schedule containing the rights and remedies available to the person, the basis on which the broker or dealer made the suitability determination, and the receipt of the related signed agreement from the person.

Due to these penny-stock rules, brokers and dealers may be less willing to execute transactions in penny stock securities, and this may make it more difficult for shareholders to dispose of our common stock, which could affect adversely the market value of our common stock.

Because we became a publicly-held company by means of a reverse merger with an inactive public company, it may be difficult for us to attract the attention of brokerage firms and financial analysts.

Due to our becoming public through a reverse merger, we currently have very limited relationships or public stock trading history with any brokerage firm, underwriter or financial analyst. Accordingly, there may be little or no incentive for securities analysts of brokerage and other financial firms to provide investment coverage of us or to recommend the purchase of our common stock.

Being a public company results in additional expenses and diverts management’s attentions.

Our business must bear the expenses associated with being a public company including being subject to the reporting requirements of the Securities Exchange Act of 1934. These requirements generate significant accounting, legal and financial compliance costs, and may place significant strain on our personnel and resources. As a result, management’s attention may be diverted from other significant business concerns, which could have an adverse material effect on our business, financial condition and results of operations.

Applicable and extensive regulatory requirements, including those of the Sarbanes-Oxley Act of 2002, may make it difficult for the Company to retain or even attract qualified officers and directors, which could adversely affect our business and our future relationships in the investment community.

Because of the many and ever increasing rules and regulations governing publicly-held companies, it may be difficult for us to attract and retain those qualified officers and directors necessary for effective management. The Sarbanes-Oxley Act particularly added demanding new rules and regulations and the expansion and strengthening of existing rules and regulations, including required certifications by our principal executive officers. The SEC, FINRA and the stock exchanges also continue to add to or expand their rules frequently. This extensive and ongoing regulatory situation regarding the adoption of new rules and regulations by these various agencies has created a real, or at least perceived, increased personal risk to members of management of public companies, which may deter qualified candidates from accepting roles as directors or officers of our Company. If we are unable to attract and retain future qualified officers and directors as needed, the management of our business and our future ability to obtain a listing of our securities on a national stock exchange could be adversely affected materially.

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If we fail to establish and maintain an effective system of internal controls, we may not be able to report our financial results accurately or detect fraud. In that event, investors and the financial community could lose confidence in our financial reporting, which in turn may affect adversely the trading price of our stock, or otherwise harm our financial condition.

We must maintain effective internal controls to provide reliable financial reports and detect any fraud or material weaknesses in our internal controls. We are in the process of identifying any changes in our system of internal controls needed to be implemented by us. Any failure by us to implement the changes necessary to maintain an effective system of internal controls could harm our operating results materially and also cause investors and financial analysts to lose confidence in our reported financial information.

Even if we resolve effectively any such material weaknesses in our internal controls, this still may not prevent all potential errors, since any control system, regardless of its design, can provide only reasonable and not absolute assurance that the objectives of the control system will be achieved.

Ownership and related voting power of our shareholders is concentrated in our management.

Our officers and directors beneficially own approximately 22.7% of our common stock, which concentrated ownership and control by our management could adversely affect the price of our common stock. Any material common stock sales by our insiders or affiliates, for example, could result in a decline in the price of our common stock.

This substantial concentration of stock ownership also most likely affords our current management the ability to control all matters requiring stockholder approval including the election of all directors, and the approval of mergers, acquisitions or other significant corporate transactions. Any person acquiring our common stock most likely will have no effective voice in the management of our company. This ownership concentration also could delay or prevent a change of control of the Company, which could deprive our stockholders from receiving a premium for their common shares.

We do not intend to pay dividends for the foreseeable future.

We have not paid any dividends on our common stock to date, and we do not anticipate paying any such dividends in the foreseeable future. We anticipate that any earnings experienced by us will be retained to finance the implementation of our operational business plan and expected future expansion.

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Our Articles of Incorporation allow for our Board of Directors to create and designate new series of our preferred stock without any approval of our shareholders, which could diminish the rights of holders of our common stock.

Our Board of Directors has the authority to fix and determine the relative rights and preferences of our authorized preferred stock without further common stockholder approval for issuance. Accordingly, our directors could authorize preferred shares, for example, that would grant a preference over common shareholders to our assets upon liquidation, or grant voting power and rights superior to those of common shares, or grant rights to preferred stock to accumulate and receive dividend payments before any dividend or other distribution to common shareholders, or grant special redemption terms and rights prior to any redemption of common shares, or grant rights convertible at favorable terms into common stock. Granting one or more of these or other preference rights to preferred stock could adversely affect the rights of our common stockholders including decreasing the relative voting power of our common stock and causing substantial dilution to our common stockholders.

We have no outstanding preferred stock and no present intention to designate or issue any series of our preferred stock.

The elimination of monetary liability against our directors and executive officers under Delaware law and the existence of indemnification rights held by them granted by our bylaws may result in substantial expenditures by us and may discourage lawsuits against our directors and officers.

Our articles of incorporation eliminate the personal liability of our directors and officers to the Company and its stockholders for damages for breach of fiduciary duty to the maximum extent permissible under Delaware law. These provisions and resultant costs may discourage us, or our stockholders through derivative litigation, from bringing a lawsuit against any of our current or former directors or officers for any breaches of their fiduciary duties, even if such legal actions, if successful, might benefit us or our stockholders.

In addition, our bylaws provide that we are obligated to indemnify our directors or officers to the fullest extent authorized by Delaware law for costs or damages incurred by them involving legal proceedings brought against them relating to their positions with the Company. These indemnification obligations could result in our incurring substantial expenditures to cover the cost of settlement or damage awards against our directors or officers.

Delaware law contains anti-takeover provisions which could deter or even prevent acquisition attempts of our company that may be beneficial to our stockholders.

Provisions of Delaware law could make it more difficult for a third party to acquire the Company, even if the acquisition would be beneficial to our stockholders. Section 203 of the Delaware General Corporation Law may make the acquisition of our company and the removal of our incumbent officers and directors more difficult by prohibiting stockholders holding 15% or more of our outstanding common stock from acquiring us, without the consent of our board of directors, for at least three years from the date they first owned at least 15% of our common stock.

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ITEM 1B UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2 PROPERTIES

Our corporate headquarters and development and operational facilities are located at Butler Square, a large office building complex in downtown Minneapolis, Minnesota, where we occupy 5,229 square feet of the building. We lease these spaces under a two-year lease expiring in December 2019 for $8,323 per month including rent, utilities, and maintenance. We do not own any real estate.

Our computers and computer hardware servers and other technology development equipment, as well as considerable office and administrative equipment, furniture and supplies, are also located in our Minneapolis facility. We believe that our current facilities and equipment are adequate to satisfy our current operations and support substantial future growth.

ITEM 3 LEGAL PROCEEDINGS

From time to time, we become subject to legal proceedings, claims and litigation arising in the ordinary course of business. We currently are not a party to any material legal proceedings, nor are we aware of any other pending or threatened litigation that would have a material adverse effect on our business, operating results or financial condition should such litigation be resolved unfavorably against us.

ITEM 4 MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5 MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock has been publicly traded in the over-the-counter market since January 11, 2017, and currently is quoted and traded on the OTCQB Tier of OTC Markets Group under the symbol “FSSN”. Our common stock is thinly traded, and there is no assurance that our common stock will trade actively in the future.

Since becoming publicly traded in January 2017, the high and low sale prices per share for our common stock are shown below, which quotations do not reflect retail mark-up, markdown or commission:

	High Price		Low Price
January---March, 2017	$	0.86	$	0.65
April---June, 2017		0.81		0.21
July—September, 2017		0.39		0.09
October—December, 2017		0.25		0.13
January—March, 2018		0.24		0.11
April—June, 2018		0.26		0.09
July—September, 2018		0.23		0.11
October—December, 2018		0.22		0.11
January—March, 2019		0.19		0.05

The last sale price of our common stock as reported on the OTCQB on March 29, 2019 was $.057 per share.

Stockholders

As of March 31, 2019, there were 367 holders of record of our common stock.

Dividend Policy

We have never paid any cash dividends on our common stock. For the foreseeable future, we intend to retain any future earnings for the development and growth of our business. Any future payment of dividends will be determined by the Board of Directors on the basis of various factors, including our results of operations, financial condition, capital requirements, and investment or acquisition opportunities.

Description of Securities

Common Stock -- Our Board of Directors is authorized to issue up to 500,000,000 shares of common stock, par value $.0001 per share, and as of March 31, 2019, there were 78,368,529 shares of our common stock outstanding. Holders of our common stock are entitled to one vote per share on all matters to be voted upon by stockholders. Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by our Board of Directors out of funds legally available for dividends. Upon the liquidation, dissolution or winding up of the Company, holders of common stock are entitled to share ratably in all our assets legally available for distribution after payment of all our debts and liabilities and liquidation preference of any outstanding preferred stock. Holders of common stock have no preemptive, subscription, redemption or conversion rights, and they have no rights for cumulative voting regarding any election of directors.

Preferred Stock -- The Company is also authorized to issue up to 20,000,000 shares of preferred stock, par value $.0001 per share. Our Board of Directors has the authority, without stockholder approval, to issue these preferred shares in one or more designated series, to establish the number of shares in each series, and to fix the preferences, powers, dividends, and voting or conversion rights of any preferred shares, which could dilute the voting power or other rights of holders of our common stock. We have no outstanding preferred stock, and we have no current plans to designate terms of or issue any preferred stock.

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Transfer Agent

Our transfer agent is Globex Transfer, LLC, 780 Deltona Blvd., Suite 202, Deltona, FL 32725, phone number (813) 344-4490. Our transfer agent is registered under the Securities Exchange Act of 1934.

Rule 144

In general, under Rule 144 of the Securities Act of 1933, as amended, any person (or persons who are aggregated) including persons who are affiliates, whose restricted common stock has been fully paid for and held for at least six months from the later of the date acquired from us or from an affiliate of us, may sell such common stock in broker’s transactions or directly to market makers, provided the number of shares sold in any three-month period may not exceed one percent of our then outstanding shares of common stock. Sales under Rule 144 are also subject to certain notice requirements and the availability of current public information about us. After one year has elapsed since the date of purchase of such common shares from us or an affiliate of us, persons who are not affiliates of us may sell their shares under Rule 144 without any limitation.

Future sales of our common stock under Rule 144 or otherwise could negatively impact the price of our common stock in any public market where it is traded. We cannot estimate the number of shares that may be sold in the future by our existing shareholders or the effect, if any, that sales of shares by our stockholders will have on the market price of our common stock prevailing from time to time.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth, as of December 31, 2018, our securities authorized for issuance under any equity compensation plans approved by our stockholders as well as any equity compensation plans not approved by our stockholders.

	Number of securities to be issued upon exercise of outstanding options, warrants and rights column (a)		Weighted-average exercise price of outstanding options, warrants and rights column (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding column (a)) column (c)
Equity compensation
plans approved by		3,215,500				1,385,000
security holders	shares		$	.25/share	shares
Equity compensation
plans not approved by		17,741,569				0
security holders (1)	shares		$	.22/share	shares

____________

(1) Represents options and warrants granted on a one-time basis to officers and directors, and consultants and advisors, under individual contract, bonus, or award arrangements, and warrants granted incident to private placements to raise working capital. These grants vary in term, number of shares, and exercise price as determined by the Board of Directors to be in the best interests of the Company at the effective date of the grant of each award.

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Purchases of Equity Securities by the Issuer and Affiliated Purchasers.

None.

ITEM 6 SELECTED FINANCIAL DATA

Not applicable

ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The financial data referred to in the following discussion and analysis is derived from our audited financial statements for the fiscal years ended December 31, 2018 and 2017, which are included in this Annual Report. These financial statements have been prepared and presented in accordance with generally accepted accounting principles (GAAP) in the United States. The following discussion and analysis of our financial data is only a summary and you should read and consider it in conjunction with our financial statements and their related notes. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. Our actual results and the timing of events may differ materially from those contained in our forward-looking statements due to a number of factors, including those discussed in the section entitled “Risk Factors” and elsewhere in this Annual Report on Form 10-K.

Overview

We have developed and successfully commercialized a proprietary cloud-based marketing and sales enablement software platform. Our innovative Fision platform integrates, streamlines and automates the use of many marketing and sales resources and communications of a company in order to bridge the significant gap typically existing between marketing and sales personnel, which gap inhibits the speed and effectiveness of targeting and reaching the customer base of a company. Our unique software solutions supported by their cloud-based delivery are readily scalable to adapt seamlessly to any rapid business growth of our existing or potential customers, regardless of their size.

Fision automated software enables the marketing department of our customers to easily and quickly create and implement professional marketing campaigns and other presentations for distribution to and support of sales force personnel regardless of their location. Use of our software reduces substantially the time and cost incurred by our customers for their marketing functions and activities, while still emphasizing, protecting and enhancing their valuable brand assets. Our current and targeted customer base is global and ranges across diverse industries and companies of all sizes, particularly those companies selling familiar branded products or services.

Our Fision software platform offers three major benefits to our customers, (i) accelerating their revenues, (ii) improving and protecting their marketing and brand effectiveness, and (iii) reducing significantly their marketing and sales costs.

Revenue Model

Our revenue model is primarily based on prescribed software licensing fees received by us on a regular monthly basis from customers which are under written licensing agreements with us. We consistently commit substantial expenses and sales personnel toward targeting, negotiating and procuring licensing agreements with new customers. Because of the long-term nature and the substantial expense commitment required by each new customer to enter into a binding licensing agreement with us, the sales cycle involved in our revenue model is quite lengthy. Accordingly, the unpredictable and different timing involved from customer to customer to procure our licensing contracts has prevented us from receiving consistent overall revenues or accurately forecasting our future revenue stream, particularly since each new contract provides one-time start-up revenues from prescribed initial set-up and integration fees. Assuming our business and number of customers under license continue to grow as projected by us, however, we believe that within a couple years the timing and sales cycle involved in closing new customers will not affect materially our prevailing or forecasted revenue stream.

We generate our revenues primarily from payments from customers having a license from one to three years to access and use our proprietary marketing software platform, which payments include monthly fees based on actual use of the Fision platform, and a prescribed substantial one-time set-up and integration fee payable to us at the outset of the license. We also receive certain secondary fees from time to time for customized software development projects ordered from us, and for processing emails for certain customers.

A substantial majority of our revenues have been and are “sticky” and thus of a recurring nature. Most of our customers have remained with and continually used our software platform once they have integrated it into their digital marketing model and experienced the special benefits provided from our cloud-based Fision marketing solutions.

Marketing Model

We have marketed, sold and licensed our proprietary software products through our direct sales force including management and other in-house marketing and sales personnel, and also through our “channel partners” who are experienced and recognized independent sales agencies. We generate our revenues primarily from software licensing contracts obtained by our sales force and channel partners. We have outstanding licensing contracts with fourteen (14) customers including significant contracts we closed in the past year or so, and we currently are engaged in various stages of contract negotiation with or procurement of several prospective new large enterprise customers.

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Our channel partners consist of leading independent national technology sales agencies which sell (license) our branded software products as agents being paid commissions from us based on their actual sales. To date, we have entered into three significant channel partner arrangements, and we have realized material revenues from their sales efforts.

We market and sell our products and services in the marketing software segment of the broader software-as-a-service (SaaS) industry, with virtually all our revenues derived from our proprietary cloud-based Fision software platform.

Change in Marketing Strategy

During the years prior to 2017 while our Fision software platform was being designed and developed, our marketing sales efforts were directed primarily toward local or regional small and medium sized companies whose operational, management and other commercial activities are conducted from one local or a couple regional facilities. Since our Fision platform and its cloud-based applications were developed to be readily scalable for any size company, however, during early 2017 we revised our marketing strategy and activities to primarily target and sell our software products to large global enterprise companies having many and widespread national and international branches and operations.

We believe that our enhanced marketing focus toward large enterprise companies has been effective, since during the past couple years, we closed and implemented material contracts with and are receiving recurring revenues from several large enterprise companies in various industries. And we currently are in the process of closing and implementing material contracts with certain additional large enterprise companies.

Recent Decreased Revenues

The increased length of our sales cycle necessary to sell our products to large enterprises, however, has been considerably longer than we earlier incurred while selling primarily to local and regional customers. This substantial increase in our sales cycle to negotiate and close contracts with new large enterprise customers resulted in a substantial decline in our revenues during the past couple years. We now believe this period of decreased revenues due to our change in marketing strategy has ended, and that due to the large enterprise contracts we have recently closed or are in the process of being procured, our revenues will increase materially during 2019 and following years.

Intellectual Property (IP) Protection

We commit substantial attention and resources toward obtaining patent and trademark rights and otherwise protecting our trade secrets, development know-how technology, trademarks, trade names, patent rights and other proprietary intellectual property (IP). Our IP protection includes written provisions relating to non-compete, non-recruit, confidentiality, and invention assignments as applicable with employees, vendors, sales agents, consultants and others.

In 2017, we were granted Patent No. US 9,639,551 B2 from the United States Patent and Trademark Office (USPTO), and in 2018 we were granted Patent No. US 9,984,094 B2 from the USPTO, which were titled “Computerized Sharing of Digital Asset Localization Between Organizations.” We also have a couple additional patent claims involving our software technology filed and pending with the USPTO, and we expect to obtain final patent grants for them.

Inflation and Seasonality

We do not consider our operations and business to be materially affected by either inflation or seasonality.

Critical Accounting Policies and Estimates

Principles of Consolidation

Regarding our wholly-owned Minnesota Fision subsidiary, as well as any future acquisitions that become our wholly-owned or majority-owned subsidiaries, our financial statements will be presented on a consolidated basis with all intercompany transactions and balances eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make certain material estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates materially. These accounting estimates and assumptions may be material to us and our financial statements due to the levels of subjectivity and judgment involved.

Certain estimates made in connection with our accompanying financial statements include our estimated reserve for doubtful accounts receivable, valuations used for stock-based compensation, fair value determinations in connection with our analysis of long-lived assets for impairment and estimated useful lives for intangible assets and property and equipment.

Accounts Receivable

We maintain allowances for potential credit losses on accounts receivable. In connection with the preparation of our financial statements, management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, changes in customer payment patterns, and current economic trends in order to evaluate the adequacy of these allowances. Accounts determined to be uncollectible are charged to operations when that determination is made.

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Product Development and Support

We expense all our product development and support operations and activities as they occur. During the fiscal year ended December 31, 2018 we incurred total expenses of $691,201 for such development and support. In comparison, during the fiscal year ended December 31, 2017 we incurred total expenses of $957,274 for product development and support.

Property and Equipment

Property and equipment are capitalized and stated at cost, and any additions, renewals or betterments are also capitalized. Expenditures for maintenance and repairs are charged to earnings as incurred. If property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from our accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method with estimated lives as follows:

Furniture and fixtures	5 years
Computer and office equipment	5 years

Derivative Securities

We evaluate all of our agreements and financial instruments to determine if they contain features that qualify as embedded derivatives. For any derivative financial instruments accounted for as liabilities, they initially will be accounted for at fair value and if necessary re-valued at each reporting date, with any changes in fair value reported in our statements of operations. For any stock-based derivative financial instruments or securities, we use an option pricing model to value them at inception and on any subsequent valuation dates. The classification of derivative instruments, including whether they should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in our balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

Fair Value of Financial Instruments

FASB ASC Topic 820 requires disclosure of and defines fair value of financial instruments, and also establishes a three-level valuation hierarchy for these disclosures. The carrying amounts reported in a balance sheet for receivables and current liabilities qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between their origination and their expected realization and their current market rate of interest. The three levels of valuation hierarchy for fair value determinations are defined as follows:

Level 1 inputs include quoted prices for identical assets or liabilities in active markets.

Level 2 inputs include observable quoted prices for similar assets and liabilities in active markets, and quoted prices for identical assets or liabilities in inactive markets.

Level 3 inputs include one or more unobservable inputs which we have assessed and assumed that market participants would use in pricing the asset or liability.

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Revenue Recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, originally effective for public business entities with annual reporting periods beginning after December 15, 2016. On August 12, 2015, the FASB issued an Accounting Standards Update (“ASU”), Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASC 606 for one year. ASC 606 provides accounting guidance related to revenue from contracts with customers. For public business entities, ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. This new revenue recognition standard (new guidance) has a five-step process: a) Determine whether a contract exists; b) Identify the performance obligations; c) Determine the transaction price; d) Allocate the transaction price; and e) Recognize revenue when (or as) performance obligations are satisfied. The Company has already implemented the five-step process in determining revenue recognition from contracts with customers, in accordance with ASC 606.

Revenue is recognized in the period the services are provided over the contract period, normally one (1) to three (3) years. We invoice one-time startup and implementation costs, such as consolidating and uploading digital assets of the customer, upon completion of those services as one performance obligation and recorded as revenue when completed. Monthly services, such as internet access to software as a service (SaaS), hosting and weekly backups are invoiced monthly as another performance obligation and recorded as revenue over time.

Company Recognizes Contract Liability for Its Performance Obligation

Upon receipt of a prepayment from a customer, the Company recognizes a contract liability in the amount of the prepayment for its performance obligation to transfer goods and services in the future. When the Company transfers those goods and services and, therefore, satisfies its performance obligation to the customer, the Company will then recognize the revenue.

Cost of Sales

Cost of sales primarily represents third-party hosting, data storage and other services provided by Microsoft’s Azure cloud service provider, as well as certain other expenses directly related to customer access and use of our marketing software platform. Cost of sales relating to our cloud services is recognized monthly.

Stock-Based Compensation

We record stock-based compensation in accordance with FASB ASC Topic 718, which requires us to measure the cost for any stock-based employee compensation at fair value at the grant date and recognize the expense over the related service period. In our statement of operations, we recognize the fair value of stock options and other equity-based compensation issued to employees and non-employees as of the grant date. Our estimated valuations for stock-based compensation grants are based primarily on the quoted prices for our common stock in the public trading market.

Income Taxes

We account for income taxes in accordance with the asset and liability method of accounting for income taxes, whereby any deferred tax assets are recognized for deductible temporary differences and any deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when, in the opinion of our management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Long-Lived Assets

We evaluate the recoverability of our identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists. In determining if an impairment exists, we estimate the undiscounted cash flows to be generated from the use and ultimate disposition of these assets. If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds their fair value. We evaluated the customers that came with the 2017 acquisition of Volerro and determined the fair value of our goodwill. During 2018, we took an impairment charge of $66,000 to goodwill.

Basic and Diluted Earnings Per Share

Earnings per share is calculated in accordance with ASC Topic 260, which provides that basic earnings per share is based on the weighted average number of common shares outstanding, and diluted earnings per share is based on the assumption that all dilutive convertible shares, options, and warrants were exercised. Dilution is computed by applying the treasury stock method, which provides that options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if the funds obtained thereby are used to purchase common stock at the average market price during the period.

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Recently Issued Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases (Topic 842)”, which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease terms. The new standard is effective for interim and annual periods beginning after December 15, 2018 and early adoption is permitted. We are currently evaluating the impact of ASU 2016-02 to our future consolidated financial statements.

Other recent accounting pronouncements issued by the FASB, the AICPA, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

Results of Operations – Fiscal Years Ended December 31, 2018 and December 31, 2017

Revenue -- Revenue totaled $505,030 for the fiscal year ended December 31, 2018 compared to revenue of $558,222 for the comparable fiscal year 2017, a decrease of $53,192, or 9.5%, which decrease was due primarily to the loss of one customer during the year.

For fiscal year 2018 revenue, $430,703 (85%) represented recurring revenues from customer licensing fees, and the balance of $74,327 primarily represented one-time setup and implementation fees from new customer licensing agreements and our Volerro platform revenue. As for fiscal year 2017 revenue, $437,818 (78%) represented recurring license fee revenues, and the balance of $120,403 primarily represented one-time setup and integration fees related to new customer contracts.

Cost of Sales – Cost of sales in fiscal year 2018 was $81,265 (16.1% of revenue) compared to cost of sales in fiscal year 2017 of $65,114 (11.7% of revenue), which increase was due primarily to increased expense for our cloud provider service.

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Gross Margin – Gross margin for fiscal year 2018 was $423,765 compared to $493,108 for fiscal year 2017, a decrease of $69,343 attributable primarily to higher cost of sales in 2018. Gross margin as a percentage of revenue was 84% for fiscal year 2018 compared to 88% for fiscal year 2017. In future years, we expect our gross margin will continue to remain in a high range similar to fiscal years 2018 and 2017.

Operating Expenses – Operating expenses totaled $3,139,762 for fiscal year 2018 compared to $3,987,501 for fiscal year 2017. These comparable operating expenses included:

(i)	Sales and marketing expenses of $725,018 in 2018 compared to $1,548,604 in 2017, which decrease of $823,586 in 2018 was due primarily to decreased stock-based grants, travel and other personnel expenses in 2018;
(ii)	Development and support expenses of $691,201 in 2018 compared to $957,274 in 2017, which decrease of $266,073 in 2018 was due primarily to software enhancement development of our Fision platform to support large enterprise customers being completed in 2017; and
(iii)	General and administrative expenses of $1,723,543 in 2018 compared to $1,481,623 in 2017, which increase of $241,920 was primarily due to an increase of financing and consulting services related to our merger terminated in early 2019.

Other Expenses – Other expenses for fiscal year 2018 were $1,276,849, including loan interest and debt discount expenses of $1,744,557, debt amortization expenses of $1,241,843, OID expenses of $139,150, and a goodwill impairment expense of $66,000, offset by a positive change in fair value of derivatives of $1,358,601, a net gain on settlement of debt of $549,166, and interest income of $6,934. In comparison, other expenses for fiscal year 2017 were $1,589,159, including loan interest and debt discount expenses of $1,235,290, debt amortization and OID expenses of $82,017, a negative change in fair value of derivatives of $143,697, and a loss of $128,154 on debt settlement. Net (Loss) – Our net (loss) for fiscal year 2018 was $(3,992,846) compared to $(5,083,552) for fiscal year 2017, which decreased loss in 2018 was due primarily to lower operating expenses in 2018, change in fair value of derivatives and our gain on settlement of debt.

Liquidity and Capital Resources

Our financial condition and future prospects critically depend on our access to financing in order to continue funding our operations. Much of our cost structure is based on costs related to personnel and facilities and is not subject to significant variability. In order to fund our operations and working capital needs, we have historically utilized loans from accredited investors (including management), sales of our common stock and convertible debt securities, and issuances of common stock to satisfy outstanding debt and to pay for development, marketing, management, financial, professional and other services.

We will need to raise substantial additional capital through private or public offerings of equity or debt securities, or a combination thereof, and we may have to use a material portion of the capital raised to repay past due debt obligations. To the extent any capital raised is insufficient to satisfy operational working capital needs and meet any required debt payments, we will need to either extend, refinance or convert to equity our past due indebtedness, which there is no assurance we will accomplish.

At December 31, 2018 the Company had notes payable indebtedness totaling $3,338,060 including accrued interest. A summary of our outstanding notes payable indebtedness as of December 31, 2018 is set forth in Note 8 of our financial statements included in this annual report.

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We believe that our current available cash to be received from revenues and receivables will be only sufficient to support our working capital needs until May 2019. We will need to continue raising capital to support our current and future operations. Our management estimates that based on our current monthly expenses net of revenue, we will require approximately $2,500,000 in additional financing to fund our operational working capital for the next 12 months, which does not include any funds for payment of past due debt. Financing may be sought from a number of sources including sales of our common stock or debt (including convertible debt) securities in private transactions, and loans from financial institutions or others.

We may not be able to sell sufficient securities or otherwise obtain such financing when needed on terms acceptable to us, if at all. If further financing is not available, we may be forced to abandon our business plans or even our entire business. Moreover, regarding any financing we may obtain, any equity or convertible debt financing would be dilutive to our shareholders, and any available debt financing may involve restrictive covenants.

Liquidity represents the ability of a company to generate sufficient cash to provide for its immediate needs for cash, which our continued losses have made it difficult for us to satisfy. As of December 31, 2018, we had $121,900 of cash, $19,497 of accounts receivable and $811,234 notes receivable from Continuity Logic L.L.C., and a working capital deficiency of $(2,408,969). Over the past few years we have continued to incur substantial losses without any material increase in liquid assets, which has caused a serious and harmful effect to our liquidity and a substantial strain on our ongoing business operations.

Along with our limited revenues, we have financed our operations to date through (i) loans from management and from financial and other lenders, including convertible debt (ii) stock-based compensation issued to employees and for consulting, outsourced software, and professional services, (iii) common stock issued to satisfy outstanding loans and accounts payable/accrued expenses, and (iv) equity sales of our common stock.

Net Cash Used In Operating Activities – We used $3,242,272 of net cash in operating activities for the fiscal year ended December 31, 2018 compared to $1,151,087 of net cash used in operating activities for the fiscal year ended December 31, 2017, which increase of $2,091,185 for fiscal year 2018 was due primarily to the accounting treatment of our substantially increased convertible debt for changes in derivative liability, debt discount amortization and other debt-related expenses as well as having a substantial amount of Notes Receivable at the end of fiscal year 2018.

 

Net Cash Provided By Investing Activities – During fiscal year ended December 31, 2018, we used cash in investing activities of $5,000 for used office furniture in our new office space, compared to net cash provided by investing activities in fiscal year 2017 ended December 31, 2017 of $51,500 cash obtained incident to our Volerro acquisition.

Net Cash Provided by Financing Activities – During fiscal year 2018, we were provided by financing activities with net cash of $3,358,399 including proceeds from sales of common stock of $1,400,000 and proceeds from Notes Payable of $2,985,625, offset by repayments on Notes Payable of $983,013 and a $12,200 payment on our line of credit. In comparison, during fiscal year 2017, we were provided by financing activities with net cash of $1,102,188 including proceeds from sales of common stock of $300,000, proceeds from issuance of Notes Payable of $1,112,600, offset by repayments on Notes Payable of $300,387 and a $10,025 payment on our line of credit.

Convertible Note Financing

For the past couple years, a majority of our financing has consisted of Convertible Notes sold to accredited investors in private transactions. In 2017 we raised a total of $1,020,000 through issuance of convertible notes. And in 2018, we raised a total of $2,959,500 through issuance of convertible notes as described in Note 5 to our financial statements included with this annual report on Form 10-K.

 

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Our Recent Private Placement of Securities

In October 2018 we commenced a private offering of $2,000,000 of our common stock at $.20 per share (10,000,000 shares), offered only to accredited investors. All private investors in this placement also received additional Advisory Shares, Warrants and potential True-Up Shares as follows:

Advisory Shares – Each investor also received an amount of Advisory Shares equal to 10% of the common shares purchased by the investor at $.20 per share.

Warrants -- Each private investor also received three-year warrants to purchase additional common shares equal to their purchased shares at an exercise price of $.20 per share.

True-Up Shares -- Each private investor also received the right to receive True-Up shares in the event the True-Up Price as defined in the Stock Purchase Agreement for this placement is lower than the $.20 price for the purchased shares. The True-Up Price represents the average of the fifteen lowest public market closing prices during a specified 90-day period and having a floor of $.10 per share. Based on current trading of our common stock, the True-Up Price calculation per share has become lower than this $.10 floor. Accordingly, if our common stock does not appreciate substantially, we could be required to issue a total of 10,000,000 True-Up Shares to the private investors.

In addition, the warrants issued to investors in this private offering are subject to the same True-Up Price adjustment regarding their exercise price.

Payment by investors in this private placement can be made in two equal tranches, with the first tranche due upon entering into the Stock Purchase Agreement, and the second tranche payable anytime thereafter but no later than that date occurring three days after the effectiveness with the Securities and Exchange Commission (SEC) of an S-1 Registration Statement covering all common shares obtained by investors in this private offering. We have filed this Registration Statement with the SEC.

As of March 29, 2019, we have sold and received subscriptions for all 10,000,000 common shares offered in this private placement, and have received proceeds of $1,750,000 from investors, for which we have issued an aggregate of 9,250,000 purchased shares and 925,000 Advisory Shares. Accordingly, an amount of $250,000 is still outstanding to complete the second tranche of this private offering.

Going Concern

As stated in the audited financial statements included in this Annual Report on Form 10-K, these financial statements have been prepared on a going concern basis, which contemplates and implies that the Company will continue to realize its assets and satisfy its liabilities and commitments in the normal course of business. For the year ended December 31, 2018 we incurred a net loss of $(3,992,846) and for the year ended December 31, 2017 we incurred a net loss of $(5,083,552), and we had an accumulated deficit of $(22,514,711) and a working capital deficiency of ($2,408,969) as of December 31, 2018. And we are continuing to incur substantial losses in 2019. These adverse financial conditions raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or the amounts and classification of liabilities, that might be necessary if we are unable to continue as a going concern.

Off-Balance Sheet Arrangements

We have no off-balance sheet items as of December 31, 2018 or as of December 31, 2017.

ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

See our financial statements beginning on page F-1 of this Annual Report.

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ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed pursuant to the Securities Exchange Act of 1934 (“Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating these disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their desired objectives. Our management will apply its best judgment in evaluating the cost-benefit relationship of any disclosure controls and procedures adopted by us.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. The design of our disclosure controls and procedures must reflect the fact that we will face personnel and financial restraints for some time, and accordingly the benefit of such controls must be considered relative to their costs.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting is being designed to include policies and procedures that are intended to:

(i)	maintain records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
(ii)	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors; and
(iii)	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2018. In making this assessment, our management applied the integrated framework and criteria which has been developed and set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (revised 2013). This assessment included an evaluation of the design and procedures of our control over financial reporting. Based on this evaluation, our management concluded that as of December 31, 2018 our internal control over financial reporting was not effective due to certain material weaknesses. These identified material weaknesses included (i) an insufficient accounting staff; (ii) limited checks and balances in processing cash and other transactions; and (iv) lack of independent directors and an independent audit committee.

We are committed to improving our financial and oversight organization and procedures. During the remainder of 2019, we intend to adopt revised accounting and disclosure controls and procedures and improve existing procedures to attempt to remedy material weaknesses in our internal control over financial reporting.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during our last fiscal year ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B OTHER INFORMATION

None.

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PART III

ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The following sets forth information about our directors and executive officers:

Name	Age	Position
Michael P. Brown	60	Chief Executive Officer, Board Chairman, Director
Daniel Dorsey	42	Chief Financial Officer and Director
John Bode	44	Director
Jason Mitzo	42	Chief Revenue Officer

Michael P. Brown, co-founder of the Company, has been a director and Chief Executive Officer of the Company since our inception in 2010. Mr. Brown has been an accomplished corporate executive for more than 20 years while serving in various senior operations, sales and executive positions. His extensive senior management experience includes having been Senior Vice President of Operations, Sales and Marketing at Life Time Fitness from 1997 to 2007, where he successfully managed and oversaw annual revenue growth from $7 Million to $689 Million. In 2001, he attended the Executive MBA course at the University of St. Thomas, and he has also served as a nuclear submarine diver in the United States Navy.

Daniel Dorsey has been a director of the Company since March 2019. Mr. Dorsey past corporate experience includes serving roles in financial and/or accounting management and/or as a financial officer for private companies. Since 2018, Mr. Dorsey has been a partner at Capital Market Solutions, LLC, where he is primarily involved with creating strategic initiatives with companies ranging from legacy media enterprises to digital start-ups. From 2016 to 2018, he was Vice President and Corporate Controller of Rodale, Inc., an American publisher of health and wellness magazines, books, and digital properties. From 2015-2016, Mr. Dorsey also served as the Chief Financial Officer of Hudson News Distributors, LLC, the second largest distributor of magazines and books in the USA. From 2014-2015, he has also served as the Senior Vice President and Corporate Controller of the Tribune Publishing Company (now tronc, Inc, (NASDAQ: TRNC).

John Bode has been a director of the Company since March 2018. Mr. Bode’s past corporate experience includes many years serving as a key executive and/or financial officer for leading public companies. Since February 2015, he has been the owner and managing director of Aerie Investments, LLC, an investment company focused on assisting digital media start-ups with business development, strategic initiatives, and raising capital. Prior thereto, Mr. Bode was Chief Financial Officer (CFO) of the Tribune Publishing Company (now tronc, Inc, (NASDAQ: TRNC) from October 2013 to January 2015. Mr. Bode also served as the CFO of Source Interlink Companies, one of the largest enthusiast media companies in the USA and a leading distributor of periodicals. His extensive past accounting/auditing career also included being employed as a Certified Public Accountant (CPA) for BDO Seidman. Mr. Bode qualifies as an independent director under the rules of FINRA, the SEC, and all national stock exchanges.

Jason Mitzo has been our Chief Revenue Officer since June 2017, and prior thereto he was our Senior Vice President of Sales and Marketing since February 2012. From 2008 to February 2012, Mr. Mitzo was a Sales Director of Oracle, a Fortune 50 public technology company, where he was the developer and leader of various successful Oracle sales and marketing teams. He has more than 15 years of sales and marketing leadership experience with various software and other technology companies, and he has worked with a wide array of clients on B2C and B2B programs across a broad spectrum of industries. His worldwide business client experience has included InterContinental Hotels Group, Mitsubishi Motors, ECCO, Trek Bicycle Corporation, Alticor/Amway and others. He also is the Founder of The Social 360, an online marketing agency based in Minneapolis/St. Paul.

Director Relationships

There are no family relationships among or between any of our officers and directors.

Except for John Bode, none of our directors is a director of any other company having a class of securities registered pursuant to Section 12 of the Securities Exchange Act or subject to the requirements of Section 15(d) of the Securities Exchange Act, or of any company registered as an investment company under the Investment Company Act of 1940.

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Involvement in Certain Legal Proceedings

To the best of our knowledge, our directors and executive officers have not been involved in any of the following legal proceedings during the past ten years:

i)	any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
ii)	any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
iii)	being subject to any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining or otherwise limiting the involvement of the person from any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities;
iv)	being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
v)	being subject of, or a party to, a federal or state judicial or administrative order, judgment, or decree or finding, not subsequently suspended, reversed or vacated, relating to an alleged violation of any federal or state securities or commodities laws or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
vi)	being subject of or party to any sanction or order, not subsequently suspended, reversed or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Director Committees

Currently we do not have any designated director committees due to the small size of our Board of Directors. Our entire Board of Directors performs the functions of an audit committee, including approving the annual selection of our independent auditing firm.

Section 16(a) Beneficial Ownership Reporting

Section 16(a) of the Exchange Act requires our directors and officers and any persons who beneficially own more than ten percent of our common stock to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock. To the best of our knowledge, regarding any Section 16(a) forms with respect to our fiscal year ended December 31, 2018, all such required reports were filed with the SEC.

Code of Ethics

We have not adopted a Code of Ethics for our management. We currently are in the process of developing a Code of Ethics which when adopted will apply to all our executive officers and directors as well as any other employees who perform any accounting or financial functions or operations for us.

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ITEM 11 EXECUTIVE COMPENSATION

Summary Compensation Table

The following table presents information for our last two fiscal years ended December 31, 2018 and 2017 regarding all compensation paid to, awarded to, and earned by each individual who served as our chief executive officer or in any other executive officer position with the Company. These four individuals may be referred to as our “named executive officers.”

Name and Position	Year	Salary		Bonus		Option Awards			Stock Awards			Total
Michael P. Brown	2018	$	240,000		-		-		$	-		$	240,000
Chief Executive Officer	2017	$	240,000		-		-		$	-		$	240,000
Garry N. Lowenthal	2018	$	180,000		-		-		$	-		$	180,000
Executive Vice President and Chief Financial Officer	2017	$	165,000		-		-		$	35,000	(1)	$	200,000
Wade Anderson (3)	2018	$	91,667		-				$	80,000	(6)	$	171,667
Chief Technology Officer and Chief Product Officer	2017	$	200,000		-	$	-		$	125,000	(2)	$	325,000
Jason Mitzo	2018	$	180,000			$	45,420	(7)	$	-		$	225,420
Chief Revenue Officer	2017	$	172,000	$	-	$	96,000	(4)	$	70,000	(5)	$	338,500

___________

(1)	Represents the value of stock award of 250,000 common shares.
(2)	Represents the value of stock awards of 850,000 common shares.
(3)	Mr. Anderson terminated his employment with the Company in June, 2018.
(4)	Represents the value of stock options to purchase 1,000,000 common shares.
(5)	Represents the value of stock award of 500,000 common shares granted in 2017.
(6) (7)	Represents the value of stock award of 500,000 common shares granted in 2018. Represents the value of stock options to purchase 500,000 common shares granted in 2018.

Executive Compensation Overview

Our executive compensation program historically has consisted of a combination of base salary and stock-based compensation in the form of common stock awards or options. Our executive officers and other salaried employees are also eligible to receive health and certain other fringe benefits.

Now that we have made the transition from a private company to a publicly-traded company, we will evaluate our compensation values, philosophy, plans and arrangements as circumstances require. At a minimum, we expect to review executive compensation annually with input from our Board of Directors and any future compensation committee established by our Board of Directors. Incident to considering the compensation levels needed to ensure our executive compensation program remains competitive, we also will review whether we are satisfying our retention objectives and the potential costs of replacing key employees.

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Employment Agreements With Our Named Executive Officers

Michael Brown and Garry Lowenthal

On July 1, 2014 the Company entered into three-year term Employment Agreements with Michael P. Brown to serve as our Chief Executive Officer, and with Garry N. Lowenthal to serve as our Executive Vice President and Chief Financial Officer. Mr. Brown’s base salary was $15,000 monthly during 2014 and increased to $20,000 monthly on January 1, 2015, and Mr. Lowenthal’s base salary was $10,000 monthly during 2014 and increased to $12,500 monthly on January 1, 2015 and increased to $15,000 monthly on July 1, 2017. At the end of these three-year terms, these employment contracts were extended for an additional three years.

If either Mr. Brown or Mr. Lowenthal voluntarily terminate their employment with us or are terminated by the Company “without cause” as defined in the Employment Agreements, they would be entitled to receive severance payments of the greater of 2 months of salary for every year of service to the Company of their prevailing, highest base salary, which severance payments would increase to 15 months of their prevailing, highest base salary in the event of any termination within one year from a change in control of the Company. Mr. Lowenthal is no longer the Chief Financial Officer of the Company, effective March 1, 2019, and continues to remain with the Company in a non-officer role. Mr. Lowenthal’s Employment Agreement continues to remain in effect and is entitled to sixteen months of severance of $15,000 a month, for a total of $240,000.

These written employment agreements with Messrs. Brown and Lowenthal provide for the employee to participate in any bonus, health or other benefit plans established by the Board of Directors, and to receive annually a grant of 20 days paid personal time off (PTO) for vacation and sick leave or other absences. These agreements also contain customary clauses governing confidentiality, non-solicitation, invention/IP assignment, arbitration and other matters.

Wade Anderson

Mr. Anderson is no longer employed by the Company, and his former employment contract has expired. The terms of his former employment contract are set forth in our Annual Report on 10-K for the fiscal year ended December 31, 2017.

Jason Mitzo

In September 2017, we entered into an Employment Agreement with Jason Mitzo to serve as our Chief Revenue Officer for the term of the agreement. Mr. Mitzo’s compensation under this agreement includes a base monthly salary of $15,000, an annual paid-off-time (PTO) benefit of twenty-one (21) days, commissions of a maximum of 15% of Fision product sales made directly and solely by Mr. Mitzo, and participation in any fringe benefit programs provided by Fision. The term of this agreement is twelve months, with automatic renewals for successive twelve-month periods unless terminated by either party. In the event of termination, Mr. Mitzo would receive one month of severance pay for every year employed by Fision since 2012, and he would have up to 60 days to execute any vested stock options. This employment agreement also includes customary terms governing confidentiality of proprietary information, non-solicitation of customers or employees, inventions and intellectual property (IP) developed during employment being solely owned by Fision, mandatory arbitration of any disputes, and other matters.

Concurrent with Mr. Mitzo’s employment agreement, we granted him a three-year stock option to purchase 1,000,000 common shares of the Company with 375,000 shares vested immediately and 625,000 shares vesting quarterly over the three-year term. We also granted Mr. Mitzo a stock award of 500,000 common shares to be vested annually over four years.

During fiscal year 2018, we granted Mr. Mitzo an additional stock option to purchase 500,000 shares of our common stock, ratably vesting over the four-year term of this option, 25% vesting annually, and having an exercise price of $.20 per share.

Equity Compensation Plans

Our 2011 Plan

In 2011 the Board of Directors and shareholders of our Minnesota Fision subsidiary adopted and approved our 2011 Stock Option and Compensation Plan (the “Plan”), which as amended is our only equity compensation plan approved by stockholders. The purpose of the Plan is to advance the interests of the Company and our stockholders by attracting, retaining and rewarding our employees and key consultants performing services for us, and to motivate them to contribute to our growth and profitability.

Issuance of Awards. Under the Plan, the issuance of awards and the persons, terms and conditions regarding any award are determined by our Board of Directors. Including amendments to the Plan, we have reserved up to 4,600,000 shares of our common stock to satisfy any awards under the Plan which can include one or a combination of stock options, stock appreciation rights (SARs), stock awards, restricted stock, performance shares, or cash.

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To date, we have only granted stock option awards under the Plan, and as of December 31, 2018, we had outstanding options under the Plan for a total of 3,797,500 common shares.

Term and Vesting of Options. Incident to granting an option award, the Board of Directors must fix the term, exercise price, number of option shares, and any applicable vesting conditions or schedule. The Board of Directors retains the right to accelerate vesting of an option anytime for any reason. The maximum term of an option under the Plan is ten years.

Exercise Price and Manner of Exercise. The exercise price for any option granted under the Plan is determined by the Board of Directors, provided that the option price for any Incentive Stock Options intended to qualify under Section 422A of the Internal Revenue Code of 1986 shall not be less than the Fair Market Value of our common stock as of the date of grant. The exercise price may be paid in cash or check, cashless exercise, or tender of our shares already owned by the option holder, with any cashless exercise or tender of shares being based on the fair market value of our common shares on the date of exercise.

Transferability of Awards. Grants of options under the Plan are not transferable other than by will or laws of descent and can only be exercised by the grantee during his or her lifetime.

Immediate Acceleration. The Plan provides that all options and awards not yet vested will be fully vested, and all performance conditions for restricted stock or performance share awards shall be deemed satisfied, in the event of (i) a change of control whereby a person or related group obtains 40% or more of our common stock, or (ii) a majority of our directors is replaced within 24 months without approval of the existing Board of Directors, or (iii) our stockholders approve a merger or the sale or other disposition of substantially all our ass

Our 2016 Plan

On March 28, 2016, our Board of Directors adopted our 2016 Equity Incentive Plan (“2016 Plan”) which was registered with the SEC pursuant to a Form S-8 effective on March 30, 2016. This 2016 Plan reserved 2,500,000 shares of our common stock for future grants from time to time under awards administered by our Board of Directors. The purpose of the 2016 Plan is to provide incentives to participants in order to generate positive returns for our shareholders, and also to provide us with flexibility to motivate, attract and retain the services of employees, directors and certain consultants who are eligible to participate in this plan. There are three types of awards which can be granted under the 2016 Plan, which are stock payment awards, stock option awards, or restricted stock awards.

Stock payment awards may be granted by our Board of Directors to any eligible participant for employee or other bonus compensation, director services, or payment for services to eligible consultants. When granted, these awards must be valued for services or compensation based on no less than 100% of the fair market value of our common stock

Awards of stock option grants also are administered by our Board of Directors who will set the number of option shares, any vesting terms, the length of term of any option, and the exercise price. The exercise price must be no less than 100% of the fair market value of our common stock at the date of any option grant. Such stock options must be exercised only by the participant receiving the option and are only otherwise transferable or exercisable by will or laws of descent.

Restricted stock awards are also determined by the Board of Directors, who determine the purchase price and number of restricted shares subject to the award, the length of any restriction period, and the terms of performance or restrictions applicable during the restriction period. If the employee is terminated prior to satisfying the restriction period or requirements, any shares still subject to restriction are forfeited by the participant.

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Regarding vesting of stock options and restrictive stock covenants, all stock options not yet vested will become vested and all restrictions on restricted stock will lapse upon any of the following events occurring:

(i)	if any person or group of persons becomes the beneficial owner of at least 40% of our common stock;
(ii)	if a majority of the members of our Board of Directors are replaced within any 24-month period by directors not approved by our existing directors; and
(iii)	if a merger or sale of our assets is approved by our shareholders.

Our Board of Directors has the right to amend or terminate our 2016 Plan at any time, but any such amendment or termination does not diminish or otherwise affect the terms of any outstanding awards granted prior thereto. No awards can be granted under the 2016 Plan after its tenth anniversary.

The only type of award granted to date under our 2016 Plan are stock payment awards, and since inception of our 2016 Plan, our Board of Directors has granted stock payment awards to various eligible participants for an aggregate of 2,280,000 shares of our common stock.

Outstanding Equity Awards at Fiscal Year End

The following table sets forth as of the end of fiscal year 2018 all outstanding equity awards held by our executive officers:

	Number of securities		Number of securities
	underlying		underlying
	unexercised options		unexercised options			Option exercise		Option expiration
	(#) exercisable		(#) unexercisable			Price ($)		date
Michael P. Brown	None		None				-		-
Garry N. Lowenthal	None		None				-		-
Jason Mitzo		898,750		928,750	(1)	$	.20-.25	6/30/18 to 9/7/22

___________

(1) Vesting terms are either quarterly or annually over four years.

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Director Compensation

For our fiscal year ended December 31, 2018, the only director compensation was paid to our independent director, John Bode, who received 250,000 common shares vesting quarterly since March 1, 2018, which 250,000 shares are now fully vested. Mr. Bode has received an additional grant of 250,000 common shares, vesting quarterly, for director compensation related to his current (second) year serving as a director of the Company.

Our directors who are also executive officers do not receive any compensation for serving in their capacity as a director of the Company.

ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth certain information regarding the beneficial ownership of common stock of the Company as of March 31, 2019, by each of our directors, each person known by us to own beneficially 5% or more of our Common Stock, each executive officer, and all directors and executive officers as a group. The amounts and percentages of common stock beneficially owned in this table are reported on the basis of regulations of the Securities and Exchange Commission. To the best of our knowledge, each beneficial owner named in this table has sole voting and sole investment power with respect to all shares beneficially owned. The address of each beneficial owner is c/o Fision Holdings, Inc., 100 N. Sixth Street, Suite 308 B, Minneapolis, MN 55403.

Name	Shares of Common Stock			Percent of Common Stock (1)
Michael P. Brown		14,976,348			19.11	%
John Bode		500,000			0.64	%
Daniel Dorsey		-0-			-	%
Jason Mitzo		2,327,500	(2)		2.90	%
All directors and officers as a group (four persons)		17,803,848			22.65	%
Daniel Mangless (5% or more stockholder)		6,310,000	(3)		7.75	%
2146 Swanstone Circle, De Pere, WI 54115

_____________

(1)	Based on 78,368,529 outstanding common shares of the Company as of March 31, 2019.
(2) (3)	Includes 500,000 shares owned by him and 1,827,500 shares underlying stock options. Includes 3,310,000 owned by him and 3,000,000 underlying warrants.

 

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ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Transactions With Related Persons

Since January 1, 2017 we have been involved in the following transactions with related persons, and we believe these transactions occurred on terms as favorable to us as could have been obtained from unrelated third parties.

Information regarding the employment relationship and cash and stock-based compensation of our executive officers during 2018 and 2017 is contained in this Annual Report under “Executive Compensation.”

In December 2017, we obtained a working capital loan of $76,000 from our Chief Executive Officer, with an interest rate of 6% per annum and payable upon demand.

In September 2017 we granted our Chief Revenue Officer, Jason Mitzo, a stock bonus award for 500,000 common shares, and also granted him a four-year stock option to purchase 1,000,000 common shares exercisable at $.30 per share, with 375,000 shares vested immediately and the balance of 625,000 shares vesting quarterly over the four-year term. In 2018 we granted Mr. Mitzo an additional four-year stock option to purchase 500,000 common shares exercisable at $.20 per share and vesting annually ratably over the four-year term.

In March 2018 we granted a stock award of 250,000 common shares, vesting quarterly, to our independent director, John Bode, for his serving as a director for one year, which 250,000 shares have now fully vested. In March 2019 we granted Mr. Bode an identical stock award of 250,000 common shares, vesting quarterly, for director compensation for serving currently in his second year on our Board of Directors.

Since the Company has been unable to compensate its two principal officers in cash under the terms of their respective employment agreements, their accrued compensation from time to time has been converted to notes payable bearing interest at 6% per annum. Effective December 31, 2015, Mr. Brown converted $925,000 of his outstanding note payable into 1,423,077 shares of our common stock at $.65 per share; effective in December 2016, Mr. Brown and Mr. Lowenthal each converted $25,000 of their outstanding Notes into shares of our common stock at $.30 per share; and effective in September 2017, Messrs. Brown and Lowenthal converted a total of $330,168 of their Notes into a total of l,l00,562 common shares including 850,562 shares by Mr. Brown and 250,000 shares by Mr. Lowenthal. As of December 31, 2018, Mr. Brown was owed $148,654 on his Note and Mr. Lowenthal was owed $138,110 on his Note.

Effective February 28, 2019, Garry Lowenthal will no longer be the Chief Financial Officer (CFO) of FISION Corporation, and will transition into a non-officer role within the company and will also step down from the Board of Directors of FISION Corporation. Effective March 1, 2019, board appointed Daniel Dorsey, age 42, as Chief Financial Officer and as a director of FISION to serve on its Board of Directors until the next regular meeting of shareholders or until his successor is elected.

Related Party Transaction Policy

Our Board of Directors has no formal written policy regarding related-party transactions, but rather follows the requirements of state law applicable to such transactions. In particular, after full disclosure of all material facts, review and discussion, our Board of Directors approves or disapproves such transactions. No director is allowed to vote for approval of a related-party transaction for which he or she is the related party, but shall provide all material information concerning the related-party transaction and the director’s interest in the transaction.

Director Independence

As of December 31, 2018 and as of the date of this Annual report, John Bode is our only independent director.

ITEM 14 PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table includes all fees billed for auditing and any other services provided to us by Soles, Heyn and Company LLP, for the fiscal years ended December 31, 2018 and 2017.

	2018		2017
Audit Fees	$	48,712	$	43,750
Audit-Related Fees		-		-
Tax Fees		-		-
All Other Fees		-		-
Total	$	48,712	$	43,750

Our Board of Directors has adopted a procedure for pre-approval of all fees charged by our independent registered public accounting firm. Under this procedure, our Board of Directors approves the annual engagement letter with respect to audit and review services. Any other fees are subject to pre-approval by our Board of Directors. The audit fees paid to our auditor with respect to 2018 and 2017 were pre-approved by our entire Board of Directors.

37

PART IV

ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES

FINANCIAL STATEMENTS

Item	Page
Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets – December 31, 2018 and December 31, 2017	F-2
Consolidated Statements of Operations – Years Ended December 31, 2018 and December 31, 2017	F-3
Consolidated Statements of Shareholders’ Equity – Years Ended December 31, 2018 and December 31, 2017	F-4
Consolidated Statements of Cash Flows – Years Ended December 31, 2018 and December 31, 2017	F-5
Notes to Consolidated Financial Statements	F-6

38

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Fision Corporation

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Fision Corporation (the Company) as of December 31, 2018 and 2017, and the related statements of operations, changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2018 and 2017, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financials have been prepared assuming the Company will continue as a going concern. As of December 31, 2018, the Company had accumulated losses of approximately $22,500,000, has $2.4 million working capital deficit and has generated limited revenue, and may experiences losses in the near term. These factors and the need for additional financing in order for the Company to meet its business plan, raise substantial doubt about its ability to continue as a going concern. Management’s plan to continue as a going concern is also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

We have served as the Company’s auditor since 2014.

Soles, Heyn & Company, LLC

West Palm Beach, Florida

April 5, 2019

F-1

FISION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
	December 31,			December 31,
	2018			2017
ASSETS
Current Assets:
Cash	$	121,900		$	10,773
Accounts receivable, net		19,497			39,764
Notes receivable		811,234			-
Deferred customer costs associated with contract liabilities		-			11,924
Work In Process		-			8,400
Prepaid expenses		31,955			201,092
Total Current Assets		984,587			271,953
Property and equipment, net	$	6,598		$	4,719
Other Assets:
Goodwill		13,800			132,000
Intellectual property/software code, net of accumulated amortization		52,598			62,384
Deposits		8,053			8,053
Total Assets	$	1,065,637		$	479,109
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable, accrued expenses and other current liabilities	$	856,096		$	770,598
Contract liability		-			10,424
Customer advances		181,469			249,269
Derivative liability		1,480,978			1,243,788
Note payable and accrued interest - related party		284,377			270,639
Convertible notes payable, net of debt discount of $1,050,602 and $753,437 respectively		590,636			329,401
Total Current Liabilities		3,393,556			2,874,119
Long-Term Liabilities:
Long-Term convertible notes payable, net of debt discount of $541,275 and $0 respectively		607,725			300,000
Total Long-Term Liabilities		607,725			300,000
Total Liabilities		4,001,281			3,174,119
Contingencies and Commitments
Stockholders' Equity (Deficit):
Preferred Stock, $0.0001 Par value, 20,000,000 shares authorized, no shares issued and outstanding		-			-
Common Stock, $0.0001 Par value, 500,000,000 shares authorized 67,454,276  and 45,935,369 shares issued and outstanding, respectively		6,745			4,594
Additional paid in capital		19,572,322			15,822,261
Accumulated deficit		(22,514,711	)		(18,521,865	)
Total Stockholders' Equity (Deficit)		(2,935,644	)		(2,695,010	)
Total Liabilities and Stockholders' Equity	$	1,065,637		$	479,109

The accompanying notes are an integral part of these consolidated financial statements.

F-2

FISION CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Twelve Months Ended December 31,
	2018			2017
REVENUE	$	505,030		$	558,222
COST OF SALES		81,265			65,114
GROSS MARGIN	$	423,765		$	493,108
OPERATING EXPENSES
Sales and marketing		725,018			1,548,604
Development and support		691,201			957,274
General and administrative		1,723,543			1,481,623
TOTAL OPERATING EXPENSES	$	3,139,762		$	3,987,501
OPERATING LOSS	$	(2,715,997	)	$	(3,494,393	)
OTHER INCOME / (EXPENSES)
Interest expense and debt discount		(1,744,557	)		(1,235,290	)
Amortization expense/amortization of debt discount		(1,241,843	)		(68,042	)
OID and other expenses		(139,150	)		(13,975	)
Goodwill impairment expense		(66,000	)		-
Change in fair value of derivatives		1,358,601			(143,697	)
Gain (Loss) on settlement of debt		549,166			(128,154	)
Other interest income		6,934			-
TOTAL OTHER INCOME / (EXPENSES)	$	(1,276,849	)	$	(1,589,159	)
NET LOSS	$	(3,992,846	)	$	(5,083,552	)
Net loss per common share - basic and diluted	$	(0.07	)	$	(0.12	)
Weighted average common shares outstanding:
Basic and diluted		54,219,182			42,365,892

The accompanying notes are an integral part of these consolidated financial statements.

F-3

FISION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	Twelve Months Ended
	December 31,
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$	(3,992,846	)	$	(5,083,552	)
Adjustments to reconcile Net Loss to net cash used in operating activities:
Common stock issued for services		461,070			1,416,173
Amortization of prepaid expenses		170,197			-
Depreciation and amortization		24,830			71,649
Stock warrants/stock options issued for services		1,249,665			294,234
Change in derivative liabilities		(1,358,601	)		143,697
Interest expense for derivatives and debt discount		259,385			1,184,886
Gain on settlement of debt		(549,166	)		-
Amortization of debt discount		1,220,134			68,042
Impairment and other charges		66,000			-
Changes in Operating Assets and Liabilities
(Increase) decrease in:
Accounts receivable		20,267			(30,720	)
Deferred contract costs		11,924			(11,924	)
Notes receivable - interest receivable/notes receivable		(811,234	)		-
Work In Process		8,400			(8,400	)
Prepaid expenses		(1,060	)		533,545
Increase (decrease) in:
Accounts payable & accrued expenses		(269,656	)		271,282
Change in customer advances		78,224			-
Net Cash Used in Operating Activities		(3,242,272	)		(1,151,088	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(5,000	)		-
Cash acquired in acquisition		-			51,500
Net Cash Used In Investing Activities		(5,000	)		51,500
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments on note payable		(983,013	)		(300,387	)
Proceeds from note payable		2,959,500			1,020,000
Proceeds from related party notes		26,125			92,600
Repayments for related party notes		(32,013	)		-
Repayments on line of credit		(12,200	)		(10,025	)
Proceeds from issuance of common stock		1,400,000			300,000
Net Cash Provided by Financing Activities		3,358,399			1,102,188
Net Increase in Cash		111,127			2,600
Cash at Beginning of Period		10,773			8,173
Cash at End of Period	$	121,900		$	10,773
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during period:
Interest	$	(118,920	)	$	(50,404	)
Noncash operating and financing activities:
Common Stock Issued for Services	$	461,070		$	1,416,173
Stock warrants/Stock Options issued for services	$	1,249,665		$	294,234
Conversion of debt and accrued interest to common stock	$	641,477		$	573,185
Acquisition of Volerro	$	31,800		$	252,000

The accompanying notes are an integral part of these consolidated financial statements.

F-4

FISION CORPORATION  

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY  

									Additional			Retained
	Preferred		Preferred		Common		Common		Paid in			Earnings
	Shares		Stock		Shares		Stock		Capital			(Deficit)			Total
Balance, December 31, 2016		-		-		38,302,720	$	3,830	$	12,733,704		$	(13,438,313	)	$	(700,779	)
Common stock issued for cash						842,857		84		299,916			-			300,000
Stock issued for services						3,555,596		356		1,415,818			-			1,416,174
Warrants/Options granted for services										294,234			-			294,234
Conversion of notes payable and accrued interest/expenses						2,534,196		253		579,232			-			579,485
Acquisition of the net assets Volerro						400,000		40		251,960			-			252,000
BCF from Debt Agreements										247,228			-			247,228
Shares sold to Caro Partners LLC						300,000		30		170			-			200
Net loss													(5,083,552	)		(5,083,552	)
Balance, December 31, 2017		-		-		45,935,369	$	4,594	$	15,822,261		$	(18,521,865	)	$	(2,695,010	)
Common stock issued for cash						7,000,000		700		1,399,300						1,400,000
Stock issued for services						4,154,960		416		460,654						461,070
Warrants/Options granted for services						-		-		1,249,665						1,249,665
Conversion of notes payable and accrued interest/expenses						9,079,383		908		640,569						641,477
Stock issued from exercise of warrants						1,284,564		128		(128	)					-
Net loss													(3,992,846	)		(3,992,846	)
Balance, December 31, 2018		-		-		67,454,276	$	6,745	$	19,572,322		$	(22,514,711	)	$	(2,935,644	)

The accompanying notes are an integral part of these consolidated financial statements.

F-5

FISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

FISION Corporation (formerly DE Acquisition, Inc.), a Delaware corporation (the “Company”) was incorporated on February 24, 2010 and was inactive until 2015 when it merged with Fision Holdings, Inc., a Minnesota corporation, an operating software development business based in Minneapolis, Minnesota. As a result of this merger, Fision Holdings, Inc. became a wholly-owned subsidiary of the Company. Fision Holdings, Inc. was incorporated in Minnesota in 2010, and has developed and successfully commercialized a unique proprietary cloud-based software platform which automates and integrates digital marketing asses and marketing communications in order to “bridge the gap” between the marketing and sales functions of any enterprise. The Company generates its revenues primarily from software licensing contracts typically having terms of one to three years and requiring monthly subscription fees based on the customer’s number of users and locations where used. The Company’s business model provides it with a high percentage of recurring revenues.

The terms “Fision,” “we,” “us,” and “our,” refer to FISION Corporation, a Delaware corporation and its wholly-owned operating subsidiary Fision Holdings, Inc., a Minnesota corporation.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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. Accordingly, actual results could differ materially from those estimates and assumptions. Such estimates include management’s assessments of the carrying value of certain assets, useful lives of assets, derivative securities, fair value of financial instruments, and related depreciation and amortization methods applied.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and accounts receivable. During the year ended December 31, 2018, we may have had cash deposits that exceeded Federal Deposit Insurance Corporation (“FDIC”) insurance limits. We maintain cash balances at high quality financial institutions to mitigate this risk. We perform ongoing credit evaluations of our customers and generally do not require collateral from them to do business with us.

Cash equivalents

We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. At December 31, 2018, the Company had no cash equivalents.

Fair value of financial instruments

The Company adopted the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820 (the “Fair Value Topic”) which defines fair value, establishes a framework for measuring fair value under Generally Accepted Accounting Principles (GAAP), and expands disclosures about fair value measurements.

The Fair Value Topic 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. It requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. It also establishes a fair value hierarchy, which prioritizes the valuation inputs into six broad levels.

F-6

FISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

A) Market approach—Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Prices may be indicated by pricing guides, sale transactions, market trades, or other sources;

B) Cost approach—Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost); and

C) Income approach—Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about the future amounts (includes present value techniques, and option-pricing models). Net present value is an income approach where a stream of expected cash flows is discounted at an appropriate market interest rate.

Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. An active market for an asset or liability is a market in which transactions for the asset or liability occur with significant frequency and volume to provide pricing information on an ongoing basis.

Level 2: Observable inputs other than Level 1 inputs. Example of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level 3: Unobservable inputs based on the Company’s assessment of the assumptions that are market participants would use in pricing the asset or liability.

The carrying amount of the Company’s financial assets and liabilities, such as cash, accounts receivable, accounts payable, accrued expenses, and notes payable approximate their fair value because of the short maturity of those instruments.

The following table represents our assets and liabilities by level measured at fair value on a recurring basis at December 31, 2018.

	Level 1		Level 2		Level 3
Derivative Liability	$	-	$	-	$	1,480,978

F-7

FISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following assets and liabilities are measured on the consolidated balance sheets at fair value on a recurring basis utilizing significant unobservable inputs or Level 3 assumptions in their valuation. The following table provides a reconciliation of the beginning and ending balances of the liabilities.

	Fair Value				Change in					Fair Value
	January 1,		Convertible		fair					December 31,
	2017		Notes		Value			Conversions		2017
Derivative Liability	$	0	$	1,225,906	$	(143,697	)	$	161,579	$	1,243,788

 

	Fair Value				Change in						Fair Value
	January 1,		Convertible		fair						December 31,
	2018		Notes		Value			Conversions			2018
Derivative Liability	$	1,243,788	$	3,501,616	$	(1,358,601	)	$	(1,905,825	)	$	1,480,978

All gains and losses on assets and liabilities measured at fair value on a recurring basis and classified as Level 3 within the fair value hierarchy are recognized in other interest and expense in the accompanying financial statements.

The derivative liability relating to the beneficial conversion interest of our convertible notes payable was $1,480,978 at December 31, 2018 and was computed using the following variables:

Exercise price	$.135--$.174
Expected volatility		93.6	%
Expected term	6 mos.
Risk free interest rate		2.56	%
Expected dividends		-

Derivative Instruments

We account for derivative instruments in accordance with Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”), which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value.

If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable related to the products and services sold are recorded at the time revenue is recognized and are presented on the balance sheet net of allowance for doubtful accounts. The ultimate collection of the receivable may not be known for several months after services have been provided and billed. We have established an allowance for doubtful accounts based upon factors pertaining to the credit risk of specific customers, analyses of current and historical cash collections, and the aging of receivables. Delinquent accounts are written-off when the likelihood for collection is remote and/or when we believe collection efforts have been fully exhausted and we do not intend to devote any additional efforts in an attempt to collect the receivable. We adjust our allowance for doubtful accounts balance on a quarterly basis.

F-8

FISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Property and Equipment

Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method over the assets estimated useful life of five (5) years for equipment, furniture and fixtures. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.

Impairment of long-lived assets

We follow paragraph 360-10-05-4 of the FASB Accounting Standards Codification for long-lived assets. Our long-lived assets are required to be reviewed for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

We assess the recoverability of our long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. During 2018, we took an impairment charge of $66,000 to goodwill.

Revenue recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 606, Revenue From Contracts With Customers, originally effective for public business entities with annual reporting periods beginning after December 15, 2016. On August 12, 2015, the FASB issued an Accounting Standards Update (“ASU”), Revenue From Contracts With Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASC 606 for one year. ASC 606 provides accounting guidance related to revenue from contracts with customers. For public business entities, ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. This new revenue recognition standard (new guidance) has a five-step process: a) Determine whether a contract exists; b) Identify the performance obligations; c) Determine the transaction price; d) Allocate the transaction price; and e) Recognize revenue when (or as) performance obligations are satisfied. The Company has already implemented the five-step process in determining revenue recognition from contracts with customers, in accordance with ASC 606.

Revenue is recognized in the period the services are provided over the contract period, normally one (1) to three (3) years. We invoice one-time startup and implementation costs, such as consolidating and uploading digital assets of the customer, upon completion of those services as one performance obligation and recorded as revenue when completed. Monthly services, such as internet access to software as a service (SaaS), hosting and weekly backups are invoiced monthly as another performance obligation and recorded as revenue over time.

Company Recognizes Contract Liability for Its Performance Obligation

Upon receipt of a prepayment from a customer, the Company recognizes a contract liability in the amount of the prepayment for its performance obligation to transfer goods and services in the future. When the Company transfers those goods and services and, therefore, satisfies its performance obligation to the customer, the Company will then recognize the revenue.

Income taxes

We follow Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance to the extent our management concludes it is more likely than not that the assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

F-9

FISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty in income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. We had no material adjustments to our assets and/or liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.

Stock-Based Compensation

In December 2004, the FASB issued FASB Accounting Standards Codification No. 718, Compensation – Stock Compensation. Under FASB Accounting Standards Codification No. 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant. We apply this statement prospectively.

Equity instruments (“instruments”) issued to other than employees are recorded on the basis of the fair value of the instruments, as required by FASB Accounting Standards Codification No. 718. FASB Accounting Standards Codification No. 505-50, Equity Based Payments to Non-Employees defines the measurement date and recognition period for such instruments. In general, the measurement date is when either a (a) performance commitment, as defined, is reached or (b) the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the FASB Accounting Standards Codification.

Fair Value

The closing price of our common stock on the date of grant is used as the fair value for the issuances of restricted stock. The fair value of stock options or warrants granted is estimated as of the grant date using the Black-Scholes option pricing model. The following range of assumptions in the Black- Scholes option pricing model was used to determine fair value at the years ended below:

	Twelve months ended December 31,
		2018		2017
Weighted-average volatility		93.6	%		216.3	%
Expected term (in years)		3.2			3.8
Risk-free interest rate		2.56	%		1.43	%

Expected volatilities used for award valuation in 2018 and 2017 are based on the peer group volatility.

The risk-free interest rate for periods equal to the expected term of an award is based on a blended historical rate using Federal Reserve rates for U.S. Treasury securities.

Net income (loss) per share

We compute basic and diluted earnings per share amounts pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic earnings per share is computed by dividing net income (loss) available to common shareholders, by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share is computed by dividing net income (loss) available to common shareholders by the diluted weighted average number of shares of common stock during the period. The diluted weighted average number of common shares outstanding is the basic weighted number of shares adjusted as of the first day of the year for any potentially diluted debt or equity.

For the years ended December 31, 2018 and 2017, there were 20,956,569 and 10,015,319 respectively, potentially dilutive securities not included in the calculation of weighted-average common shares outstanding since they would be anti-dilutive.

Research and Development

We expense all our research and development operations and activities as they occur. During the fiscal year ended December 31, 2018 we incurred total expenses of $691,201 for research and development. In comparison, during the fiscal year ended December 31, 2017 we incurred total expenses of $957,274 for research and development. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached, which for our software products, is generally shortly before the products are released to manufacturing. Once technological feasibility is reached, such costs are capitalized and amortized to cost of revenue over the estimated lives of the products

F-10

FISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Advertising Costs

We expense marketing and advertising costs as incurred. Marketing and advertising expenses for the years ended December 31, 2018 and 2017 were $20,444 and $17,319, respectively. The costs are included in the consolidated selling and marketing expenses.

Recently Issued Accounting Pronouncements

We regularly monitor our compliance with applicable financial reporting standards and review new pronouncements and drafts thereof that are relevant to us. As a result of new standards, changes to existing standards and changes in their interpretation, we might be required to change our accounting policies, particularly concerning revenue recognition, the capitalized incremental costs to obtain a customer contract and lease accounting, to alter our operational policies and to implement new or enhance existing systems so that they reflect new or amended financial reporting standards, or to restate our published financial statements. Such changes may have an adverse effect on our business, financial position, and operating results, or cause an adverse deviation from our revenue and operating profit target, which may negatively impact our financial results.

In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is in the process of evaluating the impact of ASU 2016-02 on the Company’s financial statements and disclosures.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

NOTE 3 - GOING CONCERN

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Our ability to continue as a going concern is contingent upon our ability to achieve and maintain profitable operations, and our ability to raise additional capital as required.

At December 31, 2018 we had a working capital deficiency of approximately $2.4 Million and an accumulated deficit of approximately $22.5 million. These conditions raise substantial doubt about our ability to continue as a going concern within one year after issuance date of the financial statements. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.

Management intends to raise additional significant funds through private placements of its equity or debt (including convertible debt) securities. Management believes that the actions presently being taken to raise capital and further implement its business plan will enable us to continue as a going concern. While we believe in the viability to raise additional funds, there can be no assurances to that effect. Our ability to continue as a going concern is dependent upon our ability to further implement our business plan and generate substantial funds.

NOTE 4 - ACCOUNTS RECEIVABLE

Our accounts receivable at December 31, 2018 and December 31, 2017 consisted of the following:

	December 31, 2018		December 31, 2017
Accounts receivable	$	19,497	$	39,764
Less: Allowance for doubtful accounts		-0-		-0-
	$	19,497	$	39,764

NOTE 5 - NOTES RECEIVABLE

Our notes receivable at December 31, 2018 and December 31, 2017 consisted of the following:

	December 31, 2018		December 31, 2017
Notes receivable	$	811,234	$	0
	$	811,234	$	0

While the Continuity Logic Merger was pending, the Company made various bridge loans to Continuity Logic for working capital, of which a total balance of $811,234 is still outstanding as of December 31, 2018. These loans mature on August 31, 2019, bear interest at 6% per annum, and a portion of the Notes are secured by a first-priority perfected security interest on the accounts receivable of Continuity Logic. The termination of the Continuity Logic Merger does not change or effect the continuing obligation of Continuity Logic to satisfy the future payment of these loans to the Company.

F-11

FISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - PROPERTY AND EQUIPMENT

Fixed assets, stated at cost, less accumulated depreciation, consist of the following at December 31, 2018 and December 31, 2017:

	December 31, 2018			December 31, 2017
Equipment	$	27,118		$	27,119
Furniture & Fixtures		11,641			6,641
Less: Accumulated Depreciation		(32,161	)		(29,041	)
Net Fixed Assets	$	6,598		$	4,719

Depreciation expense

Depreciation expense for the years ended December 31, 2018 and 2017 were $3,121 and $3,608, respectively.

NOTE 7 - OTHER BALANCE SHEET ACCOUNTS - PREPAID EXPENSES

Prepaid expenses consisted of the following:

	December 31,
	2018		2017
Prepaid Expenses:
Rent deposit		17,340		17,340
Sales Commissions Advances		1,060		0
Unvested Stock Grants		13,555		183,752
Total Prepaid Expenses	$	31,955	$	201,092

NOTE 8 - NOTES PAYABLE

At December 31, 2018 the Company was indebted under various Notes Payable in the total amount of $3,338,060 including accrued interest. Following is a summary of our outstanding Notes Payable indebtedness as of December 31, 2018:

Summary Description of Notes Payable	Amount Owed*
Decathlon LLC - Senior Secured Note, due 9/30/18, in default, interest at 15%	$	113,640
Finquest Capital Inc.- Secured Note, due 4/15/18, in default, interest at 15%		51,067
Brajoscal, LLC - Secured Note, due 12/31/18, in default, interest at 15%		41,875
Nottingham Securities Inc., monthly settlement payments		70,009
Note payable to individual investor, due 12/31/18, in default, interest at 12%		134,470
Note payable to individual investor, due 4/24/19-7/3/19 interest at 12%		79,620
Greentree Financial Group, Inc., due 4/24/19, interest at 8%		395,875
MGA Holdings LLC, due 11/26/18, in default, interest at 8%		84,150
Power Up Lending Group, due 10/12/2019-1/10/20, interest at 12%		232,760
Ignition Capital, LLC, due 11/30/2018, in default, interest at 6%		105,333
2 PLUS 2, LLC, Inc., due 4/24/19, interest at 8%		25,833
Collision Capital, due 12/31/18, in default, interest at 6%		20,600
Note payable to individual investor, monthly settlement payments		43,000
Note payable to individual investor, due 12/31/18, in default, interest at 6%		1,921
Crown Bridge Partners, due 9/28/19, interest at 10%		58,500
LG Capital LLC, due 9/12/19, interest at 10%		102,938
Adair Bays LLC, due 9/21/19, interest at 10%		102,747
Note payable to individual investor, due 5/25/19, no interest		176,000
Notes payable to four individual investors, due October-November 2019, interest at 12%		339,875
Notes payable to seven individual investors, due January-May 2020, interest at 12%		213,594
Notes payable to seven individual investors, due 9/20/20, interest at 6%		498,009
Notes payable to two principal officers, due on demand, interest at 6%		284,377
Total	$	3,338,060

___________

* Includes accrued interest.

F-12

FISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 – CONVERTIBLE AND OTHER NOTES

During the fiscal year ended December 31, 2017, we issued a total of $1,020,000 in notes, whereby $969,600 was in convertible notes as follows:

March 13, 2017 Convertible Note -- On March 13, 2017, we issued a $25,000 convertible promissory note bearing interest at 12.0% per annum to an accredited investor, payable September 13, 2017 plus accrued interest. The holder has the right to convert the note into our common stock at a conversion price equal to 50% of the average of the lowest trading prices during the 10-day period ending on the latest complete trading day prior to the conversion date. In September 2017, this note was converted incident to its terms into 560,660 shares of our common stock.

April 18, 2017 Convertible Note – On April 18, 2017, we issued a $50,000 convertible promissory note bearing interest at 12% per annum to an accredited investor, payable April 18, 2018 plus accrued interest. The holder has the right to convert the note into our common stock at a conversion price equal to 50% of the average of the lowest trading prices during the 10-day period ending on the latest complete trading day prior to the conversion date.

June 8, 2017 Convertible Note – On June 8, 2017, we issued a $53,000 Convertible Note bearing interest at 12% per annum to an accredited investor, payable March 20, 2018 plus accrued interest. The holder has the right to convert the note into our common stock at a conversion price equal to 42% of the average of the lowest trading prices during the 10-day period ending on the latest complete trading day prior to the conversion date.

June 9, 2017 Convertible Notes -- On June 9, 2017 we issued a $50,000 Convertible Note to an accredited investor and a $100,000 Convertible Note to another accredited investor, with both these notes bearing interest at 12% per annum and payable March 9, 2018 plus accrued interest. The holders of these two notes have the right to convert them into our common stock at a conversion price equal to 50% of the average of the lowest trading prices during the 10-day period ending on the latest complete trading day prior to the conversion date.

July 2017 Convertible Note -- In July 2017 we issued a $85,800 Convertible Note to an accredited investor bearing interest at 12% per annum and payable April 26, 2018 plus accrued interest. The noteholder has the right to convert the note into our common stock at a conversion price equal to the lesser of $0.20 per share or 62.5% of the average of the lowest trading prices during the 10-day period ending on the latest complete trading day prior to the conversion date.

August 2017 Convertible Note – In August 2017 we issued a $57,000 Convertible Note to an accredited investor bearing interest at 12% per annum and payable May 1, 2018 plus accrued interest. The noteholder has the right to convert the note into our common stock at a conversion price equal to the lesser of $0.24 per share or 55% of the average of the lowest trading prices during the 10-day period ending on the latest complete trading day prior to the conversion date.

November 2017 Convertible Notes – In November 2017 we issued a $85,800 Convertible Note to a private lending fund bearing interest at 12% per annum and maturing in nine months with the noteholder having the right to convert the note into our common stock at a conversion price equal to a 45% discount to its trading price during the 10-day period prior to conversion. Also, in November 2017, we issued a $100,000 Convertible Note to another private lending fund bearing interest at 6% per annum and maturing November 30, 2018 with the noteholder having the right to convert the note into our common stock at a conversion price equal to the lower of $.30 per share or that price per share representing a 25% discount to the price of a future registered public offering.

December 2017 Convertible Notes -- In December 2017 we issued a total of $363,000 in Convertible Notes as follows:

(i) $63,000 Convertible Note to a private lending group bearing interest at 12% per annum and maturing March 19, 2019 with the noteholder having the right to convert the note into our common stock at a conversion price equal to a 42% discount to the average of its three lowest daily trading prices during the ten days prior to conversion.,

(ii) A total of $300,000 in Convertible Notes sold to four accredited individual investors who purchased these notes from our 2017 private placement of $50,000 Notes bearing interest at 12% per annum and maturing two years from their purchase with the noteholders having the right to convert the notes into our common stock at a conversion price equal to the lower of $.20 per share or the Volume Weighted Average Price (VWAP) of our common shares for the ten days prior to conversion.

 

F-13

FISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2018 Convertible Notes

During the fiscal year ended December 31, 2018, we issued a total of $2,959,500 convertible notes as follows:

Short-Term 2018 Convertible Notes

In January 2018 we issued a $50,000 Convertible Note to an accredited investor bearing interest at 12% per annum, maturing on December 31, 2018, and convertible into our common stock at a conversion price of $.15 per share.

 

In February 2018 we issued a total of $250,000 of Convertible Notes to accredited investors convertible into our common stock at conversion prices varying from 50-55% of the average of the lowest trading prices for the 10 trading days prior to conversion, including (i) $150,000 of Convertible Notes bearing interest at 11% per annum and maturing on August 28, 2018, and (ii) a $100,000 Convertible Note bearing interest at 11% per annum and maturing on November 16, 2018. We paid a $3,000 legal fee for this note.

In April 2018 we issued a $75,000 Convertible Note to an accredited investor bearing interest at 12% per annum, maturing on April 11, 2019, and convertible into our common stock at a conversion price equal to 42.5% of the lowest trading price for the 10 trading days prior to conversion. We paid a $2,000 legal fee for this note.

In May 2018 we issued a total of $135,000 of Convertible Notes to accredited investors convertible into our common stock at conversion prices at 55% of the lowest trading price for the 10 trading days prior to conversion, including (i) $75,000 of Convertible Notes bearing interest at 12% per annum and maturing on May 9, 2019, and (ii) a $60,000 Convertible Note bearing interest at 10% per annum and maturing on May 21, 2019. We paid a $3,000 legal fee for this note.

In June 2018 we issued a total of $200,000 of Convertible Notes to accredited investors convertible into our common stock at conversion prices at $0.16 per share and after six months, 55% of the lowest trading price for the 10 trading days prior to conversion, including: (i) $100,000 of Convertible Notes bearing interest at 10% per annum and maturing on June 25, 2019, and (ii) a $100,000 Convertible Note bearing interest at 10% per annum and maturing on June 27, 2019. We paid $10,000 legal fees for these two notes.

In June 2018 we issued a total of $176,000 of Convertible Notes to accredited investors convertible into our common stock at conversion prices at $0.10 per share, along with 480,000 warrants to purchase common stock at $0.20 per share for three years.

In July 2018 we issued a total of $275,000 of Convertible Notes to three accredited investors convertible into our common stock at conversion prices at 50% of the lowest trading prices for the 10 trading days prior to conversion, bearing interest at 8% per annum and maturing on April 19, 2019.

In August 2018 we issued a total of $160,000 of Convertible Notes to two accredited investors convertible into our common stock at conversion prices at 50% of the lowest trading prices for the 10 trading days prior to conversion, bearing interest at 8% per annum and maturing on May 14, 2019.

In September 2018 we issued a total of $25,000 of Convertible Notes to an accredited investor convertible into our common stock at conversion prices at 50% of the lowest trading prices for the 10 trading days prior to conversion, bearing interest at 8% per annum and maturing on June 23, 2019.

In September 2018 we issued a total of $60,000 of Convertible Notes to an accredited investor convertible into our common stock at conversion prices at 55% of the lowest trading price for the 10 trading days prior to conversion. We paid a $2,000 legal fee for this note.

In September 2018 we issued a total of $200,000 of Convertible Notes to accredited investors convertible into our common stock at conversion prices at $0.16 per share and after six months, 55% of the lowest trading price for the 10 trading days prior to conversion, including: (i) $100,000 of Convertible Notes bearing interest at 10% per annum and maturing on September 12, 2019, and (ii) a $100,000 Convertible Note bearing interest at 10% per annum and maturing on September 21, 2019. We paid $10,000 legal and due diligence fees for these two notes.

In October 2018, the company issued a $108,000 convertible promissory note bearing an interest rate of 8% per annum to two accredited investors, payable on July 5, 2019 plus accrued interest. The noteholders have the right to convert the note into common stock of the Company at a conversion price equal to 50% of the lowest trading price during the 10-day period ending on the latest complete trading day prior to the conversion date.

 

F-14

FISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Long-Term 2018 Convertible Notes

In January 2018 we issued a $63,000 Convertible Note to an accredited investor bearing interest at 12% per annum, maturing on December 31, 2018, and convertible into our common stock at a conversion price equal to 42% of the average of the lowest trading prices for the 10 trading days prior to conversion. We paid a $3,000 legal fee for this note.

During January-February 2018 we issued a total of $150,000 of Convertible Notes to accredited investors, bearing interest at 12% per annum, maturing two years after their respective purchase dates, and convertible into our common stock at a conversion price equal to the lower of $.20 per share or the Volume Weighted Average Price (VWAP) for the 10 trading days prior to conversion. We paid $18,000 commissions on these long term notes.

In March 2018 we issued a $63,000 Convertible Note to an accredited investor, bearing interest at 12% per annum, maturing on June 26, 2019, and convertible into our common stock at a conversion price equal to 42% of the average of the lowest trading prices for the 10 trading days prior to conversion. We paid a $3,000 legal fee for this note.

In April and May 2018 we issued a total of $53,000 in Long Term Convertible Notes as follows: Company issued a total of $53,000 in Convertible Notes sold to four accredited individual investors who purchased these notes from our 2018 private placement of $25,000 Notes bearing interest at 12% per annum and maturing two years from their purchase with the noteholders having the right to convert the notes into our common stock at a conversion price equal to the lower of $.20 per share or the Volume Weighted Average Price (VWAP) of our common shares for the ten days prior to conversion. Incident thereto, we also issued 53,000 warrants to purchase our common stock at $0.01 per share for three years to the purchaser of this Note and 53,000 warrants to purchase our common stock at $0.01 per share for three years to the broker-dealer placement agent of this Note.

In June 2018 we issued a $75,000 Convertible Note to an accredited investor, bearing interest at 0% per annum, maturing on June 5, 2021, and convertible into our common stock at a conversion price equal to 55% of the lowest trading prices for the 10 trading days prior to conversion.

In July 2018, we issued a $103,000 convertible promissory note bearing an interest rate of 12% per annum to an accredited investor, payable on October 12, 2019 plus accrued interest, and convertible into our common stock at a conversion price equal to 42% of the lowest trading price during the 10-day trading period prior to conversion. We paid a $3,000 legal and due diligence fee for this note.

In September 2018 we issued a total of $365,000 Convertible Notes to seven accredited investors, bearing interest at 6% per annum, maturing on September 20, 2020, and convertible into our common stock at a conversion price equal to $0.20 per share.

In September 2018 we issued a $68,000 Convertible Note to an accredited investor bearing interest at 12% per annum, maturing on December 20, 2019, and convertible into our common stock at a conversion price equal to 42% of the lowest trading price for the 10 trading days prior to conversion.

In October 2018, the company issued a $53,000 convertible promissory note bearing an interest rate of 12% per annum to an accredited investor, payable on January 10, 2020 plus accrued interest. The noteholder has the right to convert the note into common stock of the Company at a conversion price equal to 58% of the average of the lowest trading price during the 10-day period ending on the latest complete trading day prior to the conversion date.

In October 2018, the Company issued a $50,000 Convertible Note to an accredited investor, bearing interest at 6% per annum, maturing on September 20, 2020, and convertible into our common stock at a conversion price equal to $.20 per share. We also issued warrants for 50,000 shares to this Noteholder incident to this purchase of the $50,000 Convertible Note, fully vested, and exercisable at $.25 per share anytime during a two-year term.

In October 2018 we issued another $75,000 Convertible Notes to two accredited investors bearing interest at 6% per annum, maturing on September 20, 2020, and convertible into our common stock at a conversion price of $.15 per share during a two-year term.

We evaluated the terms of the convertible notes in accordance with ASC 815-40, Contracts in Entity's Own Equity, and concluded that the Convertible Note resulted in a derivative with a beneficial conversion feature since the convertible notes were convertible into shares of common stock at a discount to the market value of the common stock. The discount related to the beneficial conversion feature on the notes and associated warrants was based on the Black-Scholes Model, and is being amortized over the term of the debt and associated warrants. For the year ended December 31, 2018, we recognized interest expense of $1,220,133 related to the amortization of the discount.

Short-Term Non-Convertible Notes

In January 2018, we issued a $20,000 note to our CEO, a related party, bearing interest at 6%.

In October 2018, we issued a $82,500 Promissory Note to an accredited investor, bearing an interest rate of 8% per annum and maturing on November 26, 2018.

F-15

FISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - COMMITMENTS & CONTINGENCIES

Lease

We currently occupy 5,229 square feet of office space in downtown Minneapolis Minnesota. We lease this facility under a two-year lease expiring in December 2019 and requiring monthly rental payments of $8,323 which includes rent, utilities and maintenance. The lease commitments over the two-year period is $13.00 per rentable square foot for months 1-12 and $13.50 per square foot for months 13-24. The total lease commitments, per the lease is $106,000 base rent, plus Common Area Maintenance costs. Our rent expense for 2018 and 2017 was $98,245 and $80,478 respectively. Our future rent expense the next five years, on an annual basis, is expected to be consistent with our 2018 rent expense.

NOTE 11 - INCOME TAXES

At December 31, 2018 and 2017, we had available Federal and state net operating loss carryforwards to reduce future taxable income. The amounts available were approximately $15,912,080 and $12,605,339 for Federal and state purposes, respectively. The Federal carryforward expires in 2037 and the state carryforward expires in 2022. Given our history of net operating losses, our management has determined that it is more likely than not that we will not be able to realize the tax benefit of the carryforwards. Accordingly, we have not recognized a deferred tax asset for this benefit.

Effective January 1, 2007, we adopted FASB guidelines that address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this guidance, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. This guidance also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At the date of adoption, and as of December 31, 2018 and 2017, we did not have a liability for unrecognized tax benefits, and no adjustment was required at adoption.

Our policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of December 31, 2018 and 2017, we have not accrued interest or penalties related to uncertain tax positions. Additionally, tax years 2016 through 2018 remain open to examination by the major taxing jurisdictions to which we are subject.

Upon the attainment of taxable income by us, our management will assess the likelihood of realizing the tax benefit associated with the use of the carryforwards and will recognize a deferred tax asset at that time.

The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes are as follows:

	2018			2017
Income tax at federal Statutory rate		34.0	%		34.0	%
Effects of permanent differences		(6.8	)%		(8.4	)%
Effect of temporary differences		1.1	%		1.3	%
Adjustment of prior year NOL’s		(5.3	)%		(3.8	)%
Effects of state taxes (net of federal taxes)		0	%		0	%
Change in valuation allowance		(23.0	)%		(23.1	)%
		0.0	%		0.0	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

F-16

FISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2018 and 2017, our only significant deferred income tax asset was a cumulative estimated net tax operating loss of $15,912,080 and $12,605,339, respectively, that is available to offset future taxable income, if any, in future periods, subject to expiration and other limitations imposed by the Internal Revenue Service. Management has considered our operating losses incurred to date and believes that a full valuation allowance against the deferred tax assets is required as of December 31, 2018 and 2017. For the year ended December 31 2018, the change in valuation allowance was $1,124,292.

Utilization of our net operating losses may be subject to substantial limitations if the Company experiences a 50% change in ownership, as provided by the Internal Revenue Code and similar state provisions.

NOTE 12 - RELATED PARTY TRANSACTIONS

Employment Agreements. We currently have three employment agreements in effect with our chief executive officer, our former chief financial officer and our chief revenue officer. The terms of the agreements include base salaries of $50,000 per month.

Included in our notes payable are amounts due to officers for notes payable which were accepted by them for past due compensation or for working capital loans made to us. At December 31, 2018 and 2017, the amounts of such notes due including accrued interest to our officers was $284,377 and $270,639, respectively, payable on demand and having an interest rate of 6% per annum, and conversion rights to convert the notes on the basis of $.30 per share.

In April 2017 we issued a total of 1,100,562 shares of our common stock to our two principal officers in consideration for their conversion of a total of $330,168 of Notes they held for past due compensation into equity at $.30 per share.

In September 2017, we issued 250,000 shares of our common stock as a bonus to our Chief Financial Officer and 600,000 shares as a bonus to our Chief Technology Officer. Also, in September 2017, we provided contingent future grants for the future issuance of a total of 750,000 shares of our common stock which will vest annually over a four-year term commencing in September 2018 providing they remain employed by us, including 500,000 shares for our Chief Revenue Officer and 250,000 shares for our Chief Technology Officer.

In September 2017, we granted four-year stock options to purchase a total of 1,150,000 shares of our common stock, of which (i) options for 1,000,000 shares were granted to our Chief Revenue Officer having an exercise price of $.35 per share with 375,000 shares vested immediately and the balance of 625,000 shares vesting quarterly over its four-year term, and (ii) options for 150,000 shares were granted to a newly-hired software development employee having an exercise price of $.20 per share vesting quarterly over its four-year term.

In December 2017, we obtained a working capital loan for $76,000 from our Chief Executive Officer, due on demand and bearing an interest rate of 6% per annum. The outstanding balance of this loan as of March 31, 2019 is $76,000

In March 2018, we granted a stock award of 250,000 common shares to a new director for agreeing to serve on our Board of Directors for one year, which has now all vested; and in March 2019 we granted him a similar stock grant award of 250,000 common shares, vesting quarterly, for agreeing to serve on our Board for a second year.

In 2018 we granted a four-year stock option to our Chief Revenue Officer, vesting annually, to purchase 500,000 common shares exercisable at $.20 per share; and in 2018 we also granted a stock award for 500,000 common shares to our former Chief Technical Officer related to his development work for the Company.

NOTE 13 - STOCKHOLDERS’ EQUITY

We are authorized to issue 500,000,000 shares of common stock and 20,000,000 shares of preferred stock, both having $.0001 par value per share. At December 31, 2018, there were 67,454,276 outstanding shares of common stock and no outstanding shares of preferred stock.

Common Shares Issued in 2017

In January 2017, we issued 142,857 unregistered common shares in a private placement to an accredited investor in consideration for $50,000 or $0.35 per share, which proceeds were used for working capital purposes. Also, in January 2017, we issued 133,333 unregistered common shares to a Noteholder to satisfy and convert into equity $40,000 of a Note Payable.

In February 2017, we issued a total of 650,000 unregistered common shares valued at $0.68 per share or $442,000 for consulting services, including 400,000 common shares for investment relations and financial communications services, and 250,000 common shares for technical and software advisory services. Also, In February 2017, we sold and issued 300,000 unregistered shares for total consideration of $200 incident to a consulting contract to provide us with public relations services.

In March 2017, we issued a total of 296,999 shares of our common stock, including (i) 200,000 shares sold for $100,000 ($.50 per share) to two investors in a public offering under our S-1 Registration Statement for, which proceeds were used for working capital purposes, and (ii) 96,999 shares valued at $29,100 for marketing support services.

In April 2017 (effective March 31, 2017), we issued 1,100,562 unregistered common shares to convert debt owed to its two principal officers into equity incident to the transaction described in the foregoing Note 11.

F-17

FISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In April-May 2017, we issued a total of 1,300,000 unregistered common shares as follows:

i)	500,000 common shares in a private placement with an accredited investor for proceeds of $150,000 ($.30 per share), which proceeds were used for working capital purposes;
ii)	200,000 common shares valued at $.30 per share to a financial advisor under a consulting agreement; and
iii)	400,000 shares to Volerro Corporation valued at $168,000 upon closing our purchase of the assets of Volerro Corporation, a privately-held corporation based in Minneapolis which developed and marketed “content collaboration” software services.

In June 2017, we issued a total of 548,215 unregistered common shares as follows:

i)	300,000 shares valued at $.25 per share to a financial adviser under a consulting agreement;
ii)	96,999 shares valued at $29,100 to a marketing support adviser under an outstanding agreement; and
iii)	151,216 shares issued to a note holder to convert debt in the amount of $30,243.

In July 2017, we issued 200,000 unregistered common shares valued at $40,000 to a financial adviser incident to an outstanding consulting agreement.

In September 2017, we issued or granted a total of 1,911,684 shares of our common stock as follows:

i)	We issued a debtholder who is an accredited investor 336,425 unregistered common shares to convert notes payable of $42,053 into equity.
ii)	We issued another debtholder who is an accredited investor 560,660 unregistered common shares to convert notes payable of $28,033 into equity.
iii)	Pursuant to an advisory agreement to provide marketing support related to obtaining new customers, we issued 96,999 unregistered common shares to a consultant valued at $13,580.
iv)	We granted a total of 1,667,600 shares of our common stock to employees as performance bonuses (of which 750,000 are unissued shares vesting over a four-year period), including 850,000 shares valued at $132,500 to our Chief Technology Officer, 500,000 shares valued at $85,000 to our Chief Revenue Officer, 250,000 shares valued at $35,000 to our Chief Financial Officer under the Company’s S-8 registered 2016 Equity Incentive Plan, and 67,600 shares valued at $10,140 to our Controller.

In October 2017, we issued 200,000 unregistered common shares valued at $46,000 to a financial adviser pursuant to a consulting agreement.

In December 2017, we issued a total of 1,048,999 unregistered common shares as follows:

i)	100,000 common shares valued at $19,000 to a debt holder who extended past due loans to December 31, 2018 and also reduced the interest rate on the loans from 24% to 12%.
ii)	96,999 common shares valued at $18,430 to a consultant for marketing support services.
iii)	a total of 300,000 common shares valued at $44,500 to various accredited investors who purchased convertible debt in our 2017 private placement.
iv)	300,000 common shares valued at $44,500 to a licensed broker-dealer who represented us in placing our 2017 private offering of convertible debt.
v)	252,000 common shares to convert debt in the amount of $31,500 from an outstanding convertible note, which conversion price was based on specific provisions of this convertible note.

Common Shares Issued in 2018

In January--February 2018 we issued a total of 800,000 unregistered common shares valued at $134,000 to two consultants for investor relations and shareholder communications services.

During January- March 2018 we issued a total of 2,012,957 unregistered common shares to three holders of Convertible Notes who converted their Notes to $130,433 of common stock, which conversion prices were based on specific provisions contained in their Convertible Notes.

In March 2018 we granted 250,000 unvested shares of our common stock, valued at $50,000, to John Bode in consideration for his agreement to serve for a year as an independent director on our Board of Directors, of which 62,500 shares vest quarterly on May 31, 2018, August 31, 2018, November 30, 2018 and February 28, 2019 provided he continues to serve as a director. All these shares are now vested.

In April 2018 we issued 660,000 unregistered common shares, valued at $92,844, to a holder of a Convertible Note who converted $47,248 of the Note into common stock with the conversion price based on specific provisions in the Note.

During April-May 2018 we issued a total of 779,960 unregistered common shares valued at $109,770 to three consultants for investor relations and shareholder communications services.

F-18

FISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During April-June 2018 we issued a total of 3,861,843 unregistered common shares to three holders of Convertible Notes who converted their Notes to $256,086 of common stock, which conversion prices were based on specific provisions contained in these Notes.

During June 2018, we issued 500,000 shares of restricted common stock, valued at $80,000 to our former Chief Technology Officer.

During July-August, 2018, we issued 650,000 shares of restricted common stock valued at $102,500 to two consultants and a Noteholder for investor relations and shareholder communications services.

During July-September 2018, we issued a total of 3,014,491 unregistered shares of our common stock valued at $209,388 for debt conversions from four noteholders, which conversion prices were based on specific provisions contained in their convertible Notes

During September 2018, we issued 93,333 shares of unregistered common stock valued at $14,000 to an accredited investor for exercise of a warrant with a cashless exercise provision.

During September 2018 we issued 200,000 shares of unregistered common stock valued at $31,800 to Volerro Corporation as bonus shares pursuant to terms of the 2017 acquisition agreement.

In October 2018 we issued a total of 400,000 unregistered common shares valued at $62,000 to two consultants for investor relations and shareholder communications services.

In October 2018 we issued 439,092 common shares to a noteholder to convert debt in the amount of $26,894 based on specific provisions contained in the note.

In October 2018 we issued 141,231 common shares incident to exercise of a warrant held by a broker-dealer that raised funds for the Company in 2017 and 2018.

From October-December 2018 and incident to our recent private placement offering of $2,000,000, we issued a total of 7,700,000 common shares to accredited private investors for proceeds of $1,400,000, which included purchased shares at $.20 per share and additional advisory shares based on 10% of the purchased shares.

Stock Option Grants

In September 2017, we granted four-year stock options to purchase a total of 1,150,000 shares of our common stock, of which (i) options for 1,000,000 shares were granted to the Chief Revenue Officer (CRO) of the Company with an exercise price of $.35 per share, with 375,000 shares vested immediately and the remainder of 625,000 shares vesting quarterly over the four-year term, and (ii) options for 150,000 shares were granted to a newly-hired software developer with an exercise price of $.20 per share and vesting quarterly over the four-year term.

In December 2017, we granted a four-year stock option to purchase 100,000 shares of our common stock to a newly-hired software developer with an exercise price of $.25 per share and vesting quarterly over the four-year term.

In 2018 we granted a four-year stock option to our Chief Revenue Officer to purchase 500,000 common shares, vesting quarterly, at an exercise price of $.20 per share.

In 2018 we also issued employee stock options for an aggregate purchase of 740,000 common shares, ratably vesting annually over their four-year terms, and with options for 650,000 shares exercisable at $.20 per share and options for 90,000 shares exercisable at $.25 per share.

Warrant Grants

During the year ended December 31, 2017, we granted warrants to purchase a total of 2,652,097 unregistered common shares as follows:

(i)	warrants for 41,667 shares granted for financial services, fully vested, and exercisable at $.30 per share anytime during a four-year term;
(ii)	warrants for 200,000 shares granted for investor relations services, exercisable when vested at $.40 per share anytime during a three-year term and vesting at 20,000 shares per month over a ten-month period,
(iii)	warrants for 250,000 shares granted to an accredited investor who purchased common shares in a private placement, which warrants are fully vested and exercisable at $.30 per share during a four-year term;
(iv)	warrants for 142,857 shares to an accredited investor purchasing a Convertible Note, which warrants are fully vested and exercisable any time at $.35 per share over a four-year term;
(v)	warrants for a total of 1,250,000 to two accredited investors purchasing Convertible Notes, which warrants are fully vested and exercisable any time at $.20 per share during a three-year term.
(vi)	warrants for 167,573 shares granted to a secured creditor for a loan extension, fully vested and exercisable at $.30 per share any time during a three-year term.
(vii)	warrants for 100,000 shares granted for legal services provided to us, fully vested and exercisable at $.25 per share any time during a four-year term.
(viii)	warrants for 200,000 shares granted to two independent software developers (100,000 shares apiece), and exercisable at $.25 per share and vesting over four-year terms.
(ix)	warrants for 100,000 shares granted in to an adviser for financial services, fully vested and exercisable at $.30 per share any time over a five-year term.
(x)	warrants for 50,000 shares granted to a shareholder in consideration for marketing services, fully vested and exercisable at $.17 per share any time over a four-year term.
(xi)	warrants for 150,000 shares granted to a secured lender in consideration primarily for a loan extension to September 30, 2018, fully vested and exercisable at $.15 per share over a four-year term. Concurrently the exercise price of this lender’s 2015 warrant to purchase 1,347,185 shares was reduced from $0.65 to $.30 per share until its expiration in December 27, 2019.

F-19

FISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the three-month period ended March 31, 2018, we granted warrants to purchase a total of 450,000 shares of our common stock, valued at $84,875 using Black-Scholes, as follows:

(i) warrants for 100,000 shares granted to a Noteholder incident to the purchase of a $100,000 Convertible Note, fully vested, and exercisable at $.30 per share anytime during a five-year term;

(ii) warrants for 150,000 shares granted to a Noteholder incident to purchase of a $150,000 Convertible Note, fully vested, and exercisable at $.01 per share anytime during a three-year term; and

(iii) warrants for 200,000 shares granted incident to the purchase of $100,000 of convertible debt in our private placement, fully vested, and exercisable at $.01 per share anytime during a three-year term, and which included warrants for 100,000 shares issued to the Noteholders and warrants for 100,000 shares issued to the placement agent.

During the three-month period ended June 30, 2018, we granted warrants to purchase a total of 686,000 shares of our common stock, valued at $82,407 using Black-Scholes, as follows:

(i) warrants for 100,000 shares granted to a Noteholder incident to the purchase of a $75,000 Convertible Note, fully vested, and exercisable at $.135 per share anytime during a two-year term;

(ii) warrants for 480,000 shares granted to a Noteholder incident to purchase of a $176,000 Convertible Note, fully vested, and exercisable at $.20 per share anytime during a three-year term; and

(iii) warrants for 106,000 shares granted incident to the purchase of $53,000 of convertible debt in our private placement, fully vested, and exercisable at $.01 per share anytime during a three-year term, including warrants for 53,000 shares issued to the Noteholders and warrants for 53,000 shares issued to the placement agent

During the three-month period ended September 30, 2018, we granted warrants to purchase a total of 540,000 shares of our common stock, valued at $33,656 using Black-Scholes , as follows:

(i) warrants for 100,000 shares granted to two Noteholders incident to their purchase of $100,000 Convertible Notes, fully vested, and exercisable at $.01 per share anytime during a two-year term;

(ii) warrants for 50,000 shares granted to two consultants, vesting ratably over a two-year term, and exercisable at $.25 per share anytime during their two-year term; and

(iii) warrants for 390,000 shares granted to Noteholders incident to their purchase of $390,000 Convertible Notes, fully vested, and exercisable at $.01 per share anytime during a two-year term.

During the three-month period ended December 31, 2018, related to our recent private placement, we granted three-year warrants to the private placement investors to purchase an aggregate of 10,000,000 shares of our common stock, exercisable at $.20 per share, adjusted to a discounted true-up price, with a floor of $0.10 per share, related to the trading price of our Common Stock during a 90-day period after effectiveness of a registration statement. Accounting Standards Codification (ASC) specifies prior to the Accounting Standards Update (ASU) 2017-11, it specifies the true-up price terms makes this warrant a derivative. However, post ASU 2017-11, this clause is scoped out of the analysis and is not a derivative. ASU 2017-11 is officially effective for calendar year end companies on 1/1/19, however issuers can early adopt. The Company has taken the position to early adopt, which would eliminate Section 7(b) from making these warrants a derivative.

NOTE 14 – WARRANT INFORMATION

We have the following outstanding warrants to purchase our common stock at December 31, 2017 and 2018:

	Number of Shares			Exercise Price		Weighted Average Exercise price		Average Grant Date Fair value
Balance December 31, 2016		4,206,444		$0.15-$0.40			0.40		0.39
Granted		2,652,097
Forfeited or cancelled		(640,722	)		-
Balance December 31, 2017		6,217,819		$0.15-$1.00			0.28		0.29
Granted		11,626,000
Forfeited or cancelled		(102,250	)		-
Balance December 31, 2018		17,741,569		$0.01-$1.00			0.22		0.23

During 2018 and 2017, the warrant expense issued for services and investors was $1,155,670 and $127,322 respectively.

F-20

FISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – 2017 BUSINESS ACQUISITION

The Company accounts for business combinations using the purchase method to record a new cost basis for the assets acquired, and in some cases, liabilities assumed. The Company recorded, based on purchase price allocations, intangible assets representing customer relationships, tradenames, software code, domain names, and excess of purchase price over the estimated fair values of the net assets acquired as “Goodwill” in the accompanying Consolidated Financial Statements. The goodwill is attributable to synergies achieved through the streamlining of operations combined with improved margins attainable through increased market presence and the acquisition of a large customer (a nation-wide bank) and is all attributed to our one operating reportable segment. The results of operations are reflected in the Consolidated Financial Statements of the Company from the date of acquisition.

(a) 2017 Acquisition

In fiscal 2017, the Company acquired the assets of Volerro Corporation with an aggregate purchase price of $252,000 payable in the form of 400,000 shares of Common Stock of the Company in 2017, and upon future performance, up to an additional 200,000 shares of Common Stock, which additional 200,000 shares were issued in 2018. The allocation of consideration for this acquisition is summarized as follows:

Checking and cash equivalents	$	51,500
Intellectual Property and Software Code		68,500
Intangible Asset-Goodwill		132,000
Purchase Price	$	252,000

Goodwill of $132,000 and intellectual property of $68,500 are expected to be deductible for U.S. federal income tax purposes. The Company believes that information gathered to date provides a reasonable basis for estimating the fair values of the assets acquired. During 2018, the Company took a goodwill impairment expense of $66,000 as one of the customers obtained in the Volerro acquisition may not renew the annual contract commencing in 2019.

Pursuant to this acquisition, the Company acquired a new top 5 bank in the United States, with a customer contract remaining of $10,800 as of December 31, 2018.

NOTE 16 - CONCENTRATIONS

For the year ended December 31, 2018 three customers each accounted for more than 10% of our revenues, and also and alike for the year ended December 31, 2017 four customers each accounted for more than 10% of our revenues. Combined, these customers represented less than 50% of our revenues during each of 2018 and 2017. A significant reduction for any reason in the use of our software solutions by one or more of our major customers could harm our business materially.

NOTE 17 - SUBSEQUENT EVENTS

During January-April, 2019, the following events occurred regarding our securities:

i) In February through March 2019, we issued an aggregate of 5,439,253 common shares to noteholders who converted total outstanding debt of $238,707, with the conversion price based on specific terms contained in these notes.

ii) In February 2019, we issued 300,000 common shares valued at $26,730 to a consultant for advisory services to be provided to us during February-April 2019.
 

iii) In March 2019 we issued an aggregate of 3,182,834 common shares and 3,182,834 three-year warrants to noteholders who converted total outstanding debt of $504,134, with the warrants exercisable at $.20 per share and having a value under Black-Scholes pricing of $25,908.27, with the conversion price and warrant terms based on specific terms contained in these notes.
 

iv) We also received proceeds of $350,000 during January-March 2019 from private investors making payments of the second tranche funding under our recent private placement, for which we issued 1,750,000 purchased common shares and 175,000 advisory common shares.

v) In April 2019, we signed a one-year consulting agreement with Capital Market Solutions, LLC whereby we issued 30 million common shares valued at $1,797,000 and 30 million five-year warrants exercisable at $.20 per share and having a value under Black-Scholes pricing of $1,297,570 along with a $50,000 monthly consulting fee.

vi) We also issued 62,500 restricted shares for Independent Director, John B. Bode on February 28, 2019 for his fourth quarter of board service, pursuant to an Independent Director agreement dated March 1, 2018.

F-21

EXHIBITS

Exhibit No.	Description
2.1	Agreement and Plan of Merger, by and among the registrant, DE6 Newco Inc., a Minnesota corporation, and Fision Holdings, Inc., a Minnesota corporation (incorporated by reference to Exhibit 2.1 to the registrant’s Current Report on Form 8-K filed on December 10, 2015)
2.2	First Amended and Restated Agreement and Plan of Merger dated December 21, 2018, by and among Fision Corporation and Continuity Logic, L.L.C. (incorporated by reference to the registrant’s Current Report on Form 8-K filed on December 26, 2018)
2.3	Consulting Agreement, by and among the registrant, FISION Corporation, a Delaware corporation, and Capital Market Solutions, LLC., a Delaware limited liability corporation (filed herewith)
3.1	Articles of Incorporation (incorporated by reference to Exhibit 3.1 of registrant’s Form 10 filed on 4/6/2010)
3.2	Bylaws (incorporated by reference to Exhibit 3.2 of registrant’s Form 10 filed on 4/6/2010)
10.1	Employment Agreement with Michael Brown, dated July 7/1/2014 (incorporated by reference to the registrant’s Current Report on Form 8-K filed on January 4, 2016)
10.2	Employment Agreement with Garry Lowenthal, dated 7/1/2014 (incorporated by reference to the registrant’s Current Report on Form 8-K filed on January 4, 2016)
10.3	2011 Stock Option and Compensation Plan, as amended 12/30/2014 (incorporated by reference to the registrant’s Current Report on Form 8-K filed on January 4, 2016)
10.4	2016 Equity Incentive Plan (incorporated by reference to the registrant’s Registration Statement on Form S-8 filed on March 30, 2016)
10.5	Employment Agreement with Wade Anderson (incorporated by reference to Registrant’s Registration Statement on Form S-1 filed on October 31, 2016)
10.6	Employment Agreement with Jason Mitzo, Chief Revenue Officer (filed with 2017 10-K Report)
31.1	Certification of CEO pursuant to Securities Exchange Act (filed herewith)
31.2	Certification of CFO pursuant to Securities Exchange Act (filed herewith)
32.1	Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350 (filed herewith)
101	Interactive data files pursuant to Rule 405 of Regulation S-T

39

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FISION Corporation
Dated: April 5, 2019	By:	/s/ Michael Brown
		Michael Brown
		Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Dated: April 5, 2019	By:	/s/ Michael Brown
		Michael Brown
		Director, Chief Executive Officer (principal executive officer)
Dated: April 5, 2019	By:	/s/ Daniel Dorsey
		Daniel Dorsey
		Director, Chief Financial Officer
		(principal financial and accounting officer)

40

EX-2.3

EXHIBIT 2.3

CONSULTING AGREEMENT

This Consulting Agreement (“Agreement“) is dated as of April 1, 2019 (the “Effective Date”) by and between, Fision Corp., a Delaware Corporation, with an office at I 300 N. Sixth St., Suite 308B, Minneapolis, MN 55403 (“Fision”), and Capital Market Solutions, LLC, a Delaware limited liability company , with an address at 3225 S. MacDill Ave., Suite 129-339, Tampa, FL 33629 (the “Consultant”). Fision and Consultant are sometimes hereinafter referred to individually as a “Party” and collectively as the “Parties.”

WHEREAS, Fision desires to utilize the services of the Consultant as further described hereinafter;

WHEREAS, Consultant has experience and expertise in, inter alia, accounting, finance and operations;

NOW, THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Fision and the Consultant agree as follows:

1. Services. Fision hereby engage the Consultant and the Consultant agrees to provide services to Fision in accordance with the terms set forth in this Agreement.

(a)	The Consultant shall provide outsourced interim Chief Financial Officer services.
(b)	The Consultant shall provide outsourced interim Chief Operating Officer services.
(c)	The Consultant shall provide outsource investor relations, public relations, corporate governance advice, target acquisition assessments and turnaround advisory recommendations.
(d)	The Consultant acknowledges and agrees that it shall be an independent contractor and, neither the Consultant nor any principal or agent thereof shall be considered an “employee” of Fision for any purpose. Consultant shall be solely responsible for the payment of all federal, state and local taxes, use taxes, withholding taxes, income taxes, unemployment and workers’ compensation insurance premiums and similar items relative to its compensation hereunder and any of its own staff utilized to meet its obligations hereunder.

2. Term and Termination. This Agreement shall begin on the Effective Date and terminate on April 1, 2020.

3. Compensation.

(a)	The Consultant shall be compensated in the amount of $50,000.00 per month, due on the first date of each month during the term of this Agreement. Consultant understands and agrees that dependent on cash-flows and ability to pay, Fision may accrue this liability during the term of this Agreement.
(b)	Upon execution hereof, Fision shall issue to Consultant or Consultant’s designees 30 Million common shares of Fision.
(c)	Upon execution hereof, Fision shall issue to Consultant or Consultant’s designees a Warrant to purchase 30 Million common shares of Fision at an exercise price of $0.20 per share with such Warrant having a five (5) year term.

1

4. Fision’s Representations. Fision represents and warrants with and to Consultant that:

(a)	Fision has the requisite authority and capacity to enter into and perform its obligations under this Agreement.
(b)	Fision is neither restricted nor prohibited, contractually or otherwise, from entering into and performing this Agreement and Fision’s execution and performance of this Agreement is not a violation or breach of any other agreements between Fision and any other person or entity.
(c)	Any securities issued to the Consultant under this Agreement, shall be duly authorized and validly issued, fully paid and nonassessable, and free and clear of all liens and encumbrances.

5. Consultant’s Representations. The Consultant represents and warrants with and to Fision as follows:

(a)	Consultant has the requisite authority and capacity enter into and perform its obligations under this Agreement.
(b)	Consultant is neither restricted nor prohibited, contractually or otherwise, from entering into and performing this Agreement and Consultant’s execution and performance of this Agreement is not a violation or breach of any other agreements between Consultant and any other person or entity.
(c)	This Agreement is a legal, valid and binding agreement of Consult and, enforceable according to its terms.

6. Indemnification.

(a)

Fision agree to indemnify, defend, and hold harmless the Consultant, from and against any and all claims, demands , causes of action, debts or liabilities, including reasonable attorney’s fees (collectively “ Damages”), to the extent that any such Damages are based upon or arise out of (i) a breach of any of Fision’s representations and warranties contained herein, (ii) the gross negligence or willful misconduct of Fision (including its officers and/or directors) , or (iii) a violation of any federal or state laws by Fision, including its officers and/or directors.

(b)

Consultant agree to indemnify, defend, and hold harmless Fision, from and against any and all claims, demands , causes of action, debts or liabilities, including reasonable attorney’s fees (collectively “ Damages”), to the extent that any such Damages are based upon or arise out of (i) a breach of any of Consultant’s representations and warranties contained herein, (ii) the gross negligence or willful misconduct of Consultant (including its officers and/or directors) , or (iii) a violation of any federal or state laws by Consultant, including its officers and/or directors.

2

7. Successors; Assignment. This Agreement and the rights and obligations under this Agreement shall be binding upon and inure to the benefit of the Parties to this Agreement and their respective successors and permitted assigns. Neither this Agreement nor any rights or benefits under this Agreement may be assigned by either Party to this Agreement without the other Party’s prior written consent.

8. Entire Agreement; Amendment. This Agreement constitutes the entire agreement between the Parties as to the subject matter hereof. There are no verbal understandings, agreements, representations or warranties that are not expressly set forth in those two writings. This Agreement shall not be changed orally, but only in writing signed by the Parties.

9. Governing Law. This Agreement will be governed and construed in accordance with the laws of the State of Florida, without resort to the conflict of law principles thereof. Any lawsuit brought to enforce or interpret this Agreement must be filed and prosecuted in the state court (or federal court if the requirements of federal jurisdiction are met) , as the case may be, sitting in or with jurisdiction over Hillsborough County, Florida, and each of the Parties hereby voluntarily submits to the jurisdiction of such court for such purpose and hereby voluntarily waives any defense or objection to the exercise of such jurisdiction by any such court.

10. Severability and Savings Clause. If one or more of the provisions contained in this Agreement is for any reason (i) objected to, contested or challenged by any court, government authority, agency, department, commission or instrumentality of the United States or any state or political subdivision thereof, or any securities industry regulator (collectively, “ Governmental Authority”), or (ii) held to be invalid, illegal or unenforceable in any respect, the Parties hereto agree to negotiate in good faith to modify any such objected to, contested, challenged, invalid, illegal or unenforceable provision. It is the intention of the Parties that there shall be substituted for such objected to, contested, challenged, invalid, illegal or unenforceable provision, a provision as similar to such provision as may be possible and yet be acceptable to any objecting Governmental Authority and be valid, legal and enforceable. Further, should any provisions of this Agreement ever be reformed or rewritten by a judicial body, those provisions as rewritten will be binding, but only in that jurisdiction, on Consultant and Fision as if contained in the original Agreement. The invalidity, illegality or unenforceability of any one or more provisions hereof will not affect the validity and enforceability of any other provision hereof.

11. Notices. All notices, requests, demands, claims or other communications required or permitted under this Letter Agreement (except for Notices of Additional Referrals, which shall be given as provided in paragraph 7 above) shall be sent by nationally recognized overnight courier (such as FedEx) to the parties at the addresses set forth at the head of this Agreement. A copy of any notice sent to Consultant shall also be sent to:

Daniel J. Dugan, Esquire

Spector Gadon & Rosen, P.C. 1635

Market Street, 7^th Floor

Philadelphia, PA I 9103

Email: ddugan@lawsgr.com

Fax: 215.531.9120

Any party may change the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth.

3

12. Third Party Beneficiary. No person, firm, group, corporation, LLC, LLP or other form of organization is a third-party beneficiary of this Agreement.

13. Counterparts; Electronic Delivery. This Agreement may be executed in any number of original counterparts so long as each counterpart is identical, each of which having been so executed and delivered shall be deemed an original and all of which, collectively, shall constitute one agreement; it being understood and agreed that the signature pages may be detached from one or more such counterparts and combined with the signature pages from any other counterparts in order that one or more fully executed originals may be assembled. A copy of an executed counterpart signature page signed by a Party may be delivered by facsimile or other electronic transmission and, upon such deli very, a print out of the transmitted signature of such Party will have the same effect as if a counterpart of this Agreement bearing an original signature of that Party had been delivered to the other Party.

[SIGNATURES ON FOLLOWING PAGE]

4

IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Agreement effective as of the day and year first above written.

CONSULTANT: Capital Market Solutions, LLC
By:	/s/ William Gerhauser
	William Gerhauser
	Manager
COMPANY:
Fision Corporation
By:	/s/ Michael Brown
	Michael Brown
	CEO

EX-31.1

EXHIBIT 31.1

Rule 13a-14(a)/15d-14(a) Certification

I, Michael Brown, certify that:

1.	I have reviewed this annual report on Form 10-K for the year ended December 31, 2018 of FISION Corporation.
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information contained in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: April 5, 2019	By:	/s/ Michael Brown
		Michael Brown
		Chief Executive Officer, Principal executive officer

EX-31.2

EXHIBIT 31.2

Rule 13a-14(a)/15d-14(a) Certification

I, Daniel Dorsey, certify that:

1.	I have reviewed this annual report on Form 10-K for the year ended December 31, 2018 of FISION Corporation.
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information contained in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: April 5, 2019	By:	/s/ Daniel Dorsey
		Daniel Dorsey
		Chief Financial Officer, Principal financial and accounting officer

EX-32.1

EXHIBIT 32.1

Section 1350 Certification

In connection with the Annual Report of FISION Corporation, a Delaware corporation (the “Company”), on Form 10-K for the year ended December 31, 2018 as filed with the Securities and Exchange Commission (the “Report”), I, Michael Brown, Chief Executive Officer of the Company and I, Daniel Dorsey, Chief Financial Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that :

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended, and
2.	The information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations of the Company.

April 5, 2019	By:	/s/ Michael Brown
		Michael Brown
		Chief Executive Officer, Principal executive officer
April 5, 2019		/s/ Daniel Dorsey
		Daniel Dorsey
		Chief Financial Officer, Principal financial and accounting officer

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2018	Apr. 04, 2019	Jun. 30, 2018
Document And Entity Information
Entity Registrant Name	FISION Corp
Entity Central Index Key	0001487931
Document Type	10-K
Document Period End Date	Dec. 31, 2018
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	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		108,363,863
Entity Public Float			$ 6,300,000
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2018
Entity Emerging Growth Company	false
Entity Shell company	false
Entity Small Business	true

XML

CONDENSED CONSOLIDATED BALANCE SHEET - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Current Assets:
Cash	$ 121,900	$ 10,773
Accounts receivable, net	19,497	39,764
Notes receivable	811,234
Deferred customer costs associated with contract liabilities		11,924
Work In Process		8,400
Prepaid expenses	31,955	201,092
Total Current Assets	984,587	271,953
Property and equipment, net	6,598	4,719
Other Assets:
Goodwill	13,800	132,000
Intellectual property/software code, net of accumulated amortization	52,598	62,384
Deposits	8,053	8,053
Total Assets	1,065,637	479,109
Current Liabilities:
Accounts payable, accrued expenses and other current liabilities	856,096	770,598
Contract liability		10,424
Customer advances	181,469	249,269
Derivative liability	1,480,978	1,243,788
Note payable and accrued interest - related party	284,377	270,639
Convertible notes payable, net of debt discount of $1,050,602 and $753,437 respectively	590,636	329,401
Total Current Liabilities	3,393,556	2,874,119
Long-Term Liabilities:
Long-Term convertible notes payable, net of debt discount of $541,275 and $0 respectively	607,725	300,000
Total Long-Term Liabilities	607,725	300,000
Total Liabilities	4,001,281	3,174,119
Stockholders' Equity (Deficit):
Preferred Stock, $0.0001 Par value, 20,000,000 shares authorized, no shares issued and outstanding
Common Stock, $0.0001 Par value, 500,000,000 shares authorized 67,454,276  and 45,935,369 shares issued and outstanding, respectively	6,745	4,594
Additional paid in capital	19,572,322	15,822,261
Accumulated deficit	(22,514,711)	(18,521,865)
Total Stockholders' Equity (Deficit)	(2,935,644)	(2,695,010)
Total Liabilities and Stockholders' Equity	$ 1,065,637	$ 479,109

XML

CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Current Liabilities:
Convertible notes payable, net of debt discount	$ 1,050,602	$ 753,437
Long-Term Liabilities:
Long-Term convertible notes payable, net of debt discount	$ 541,275	$ 0
Stockholders' Equity:
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	67,454,276	45,935,369
Common stock, shares outstanding	67,454,276	45,935,369

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Condensed Consolidated Statements Of Operations
REVENUE	$ 505,030	$ 558,222
COST OF SALES	81,265	65,114
GROSS MARGIN	423,765	493,108
OPERATING EXPENSES
Sales and marketing	725,018	1,548,604
Development and support	691,201	957,274
General and administrative	1,723,543	1,481,623
TOTAL OPERATING EXPENSES	3,139,762	3,987,501
OPERATING LOSS	(2,715,997)	(3,494,393)
OTHER INCOME / (EXPENSES)
Interest expense and debt discount	(1,744,557)	(1,235,290)
Amortization expense/amortization of debt discount	(1,241,843)	(68,042)
OID and other expenses	(139,150)	(13,975)
Goodwill impairment expense	(66,000)
Change in fair value of derivatives	1,358,601	(143,697)
Gain (Loss) on settlement of debt	(549,166)
Other interest income	6,934
TOTAL OTHER INCOME / (EXPENSES)	(1,276,849)	(1,589,159)
NET LOSS	$ (3,992,846)	$ (5,083,552)
Net loss per common share - basic and diluted	$ (0.07)	$ (0.12)
Weighted average common shares outstanding: Basic and diluted	54,219,182	42,365,892

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$ (3,992,846)	$ (5,083,552)
Adjustments to reconcile Net Loss to net cash used in operating activities:
Common stock issued for services	461,070	1,416,173
Amortization of prepaid expenses	170,197
Depreciation and amortization	24,830	71,649
Stock warrants/stock options issued for services	1,249,665	294,234
Change in derivative liabilities	(1,358,601)	143,697
Interest expense for derivatives and debt discount	259,385	1,184,886
Gain on settlement of debt	(549,166)
Amortization of debt discount	1,220,134	68,042
Impairment and other charges	66,000
(Increase) decrease in:
Accounts receivables	20,267	(30,720)
Deferred contract costs	11,924	(11,924)
Notes receivable - interest receivable/notes receivable	(811,234)
Work In Process	8,400	(8,400)
Prepaid expenses	(1,060)	533,545
Increase (decrease) in:
Accounts payable & accrued expenses	(269,656)	271,282
Change in customer advances	78,224
Net Cash Used in Operating Activities	(3,242,272)	(1,151,088)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(5,000)
Cash acquired in acquisition		51,500
Net Cash Used In Investing Activities	(5,000)	51,500
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments on note payable	(983,013)	(300,387)
Proceeds from note payable	2,959,500	1,020,000
Proceeds from related party notes	26,125	92,600
Repayments for related party notes	(32,013)	0
Repayments on line of credit	(12,200)	(10,025)
Proceeds from issuance of common stock	1,400,000	300,000
Net Cash Provided by Financing Activities	3,358,399	1,102,188
Net Increase in Cash	111,127	2,600
Cash at Beginning of Period	10,773	8,173
Cash at End of Period	121,900	10,773
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during period: Interest	(118,920)	(50,404)
Noncash operating and financing activities:
Common Stock Issued for Services	461,070	1,416,173
Stock warrants/Stock Options issued for services	1,249,665	294,234
Conversion of debt and accrued interest to common stock	641,477	573,185
Acquisiion of Volerro	$ 31,800	$ 252,000

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)	Preferred Stock	Common Stock	Additional Paid-In Capital	Accumulated (Deficit)	Total
Beginning Balance, Shares at Dec. 31, 2016		38,302,720
Beginning Balance, Amount at Dec. 31, 2016		$ 3,830	$ 12,733,704	$ (13,438,313)	$ (700,779)
Common stock issued for cash, Shares		842,857
Common stock issued for cash, Amount		$ 84	299,916		300,000
Stock issued for services, Shares		3,555,596
Stock issued for services, Amount		$ 356	1,415,818		1,416,174
Warrants/Options granted for services			294,234		294,234
Conversion of notes payable and accrued interest/expenses, Shares		2,534,196
Conversion of notes payable and accrued interest/expenses, Amount		$ 253	579,232		579,485
Acquisition of the net assets Volerro, Shares		400,000
Acquisition of the net assets Volerro, Amount		$ 40	251,960		252,000
BCF from Debt Agreements			247,228		247,228
Shares sold to Caro Partners LLC, Shares		300,000
Shares sold to Caro Partners LLC, Amount		$ 30	170		200
Net Loss				(5,083,552)	(5,083,552)
Ending Balance, Shares at Dec. 31, 2017		45,935,369
Ending Balance, Amount at Dec. 31, 2017		$ 4,594	15,822,261	(18,521,865)	(2,695,010)
Common stock issued for cash, Shares		7,000,000
Common stock issued for cash, Amount		$ 700	1,399,300		1,400,000
Stock issued for services, Shares		4,154,960
Stock issued for services, Amount		$ 416	460,654		461,070
Warrants/Options granted for services			1,249,665		1,249,665
Conversion of notes payable and accrued interest/expenses, Shares		9,079,383
Conversion of notes payable and accrued interest/expenses, Amount		$ 908	640,569		641,477
Stock issued from exercise of warrants, Shares		1,284,564
Stock issued from exercise of warrants, Amount		$ 128	(128)
Net Loss				(3,992,846)	(3,992,846)
Ending Balance, Shares at Dec. 31, 2018		67,454,276
Ending Balance, Amount at Dec. 31, 2018		$ 6,745	$ 19,572,322	$ (22,514,711)	$ (2,935,644)

XML

ORGANIZATION AND DESCRIPTION OF BUSINESS

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

FISION Corporation (formerly DE Acquisition, Inc.), a Delaware corporation (the “Company”) was incorporated on February 24, 2010 and was inactive until 2015 when it merged with Fision Holdings, Inc., a Minnesota corporation, an operating software development business based in Minneapolis, Minnesota. As a result of this merger, Fision Holdings, Inc. became a wholly-owned subsidiary of the Company. Fision Holdings, Inc. was incorporated in Minnesota in 2010, and has developed and successfully commercialized a unique proprietary cloud-based software platform which automates and integrates digital marketing asses and marketing communications in order to “bridge the gap” between the marketing and sales functions of any enterprise. The Company generates its revenues primarily from software licensing contracts typically having terms of one to three years and requiring monthly subscription fees based on the customer’s number of users and locations where used. The Company’s business model provides it with a high percentage of recurring revenues.

The terms “Fision,” “we,” “us,” and “our,” refer to FISION Corporation, a Delaware corporation and its wholly-owned operating subsidiary Fision Holdings, Inc., a Minnesota corporation.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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. Accordingly, actual results could differ materially from those estimates and assumptions. Such estimates include management’s assessments of the carrying value of certain assets, useful lives of assets, derivative securities, fair value of financial instruments, and related depreciation and amortization methods applied.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and accounts receivable. During the year ended December 31, 2018, we may have had cash deposits that exceeded Federal Deposit Insurance Corporation (“FDIC”) insurance limits. We maintain cash balances at high quality financial institutions to mitigate this risk. We perform ongoing credit evaluations of our customers and generally do not require collateral from them to do business with us.

Cash equivalents

We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. At December 31, 2018, the Company had no cash equivalents.

Fair value of financial instruments

The Company adopted the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820 (the “Fair Value Topic”) which defines fair value, establishes a framework for measuring fair value under Generally Accepted Accounting Principles (GAAP), and expands disclosures about fair value measurements.

The Fair Value Topic 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. It requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. It also establishes a fair value hierarchy, which prioritizes the valuation inputs into six broad levels.

The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

A) Market approach—Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Prices may be indicated by pricing guides, sale transactions, market trades, or other sources;

B) Cost approach—Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost); and

C) Income approach—Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about the future amounts (includes present value techniques, and option-pricing models). Net present value is an income approach where a stream of expected cash flows is discounted at an appropriate market interest rate.

Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. An active market for an asset or liability is a market in which transactions for the asset or liability occur with significant frequency and volume to provide pricing information on an ongoing basis.

Level 2: Observable inputs other than Level 1 inputs. Example of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level 3: Unobservable inputs based on the Company’s assessment of the assumptions that are market participants would use in pricing the asset or liability.

The carrying amount of the Company’s financial assets and liabilities, such as cash, accounts receivable, accounts payable, accrued expenses, and notes payable approximate their fair value because of the short maturity of those instruments.

The following table represents our assets and liabilities by level measured at fair value on a recurring basis at December 31, 2018.

	Level 1		Level 2		Level 3
Derivative Liability	$	-	$	-	$	1,480,978

The following assets and liabilities are measured on the consolidated balance sheets at fair value on a recurring basis utilizing significant unobservable inputs or Level 3 assumptions in their valuation. The following table provides a reconciliation of the beginning and ending balances of the liabilities.

	Fair Value January 1,		Convertible		Change in fair					Fair Value December 31,
	2017		Notes		Value			Conversions		2017
Derivative Liability	$	0	$	1,225,906	$	(143,697	)	$	161,579	$	1,243,788

	Fair Value January 1,		Convertible		Change in fair						Fair Value December 31,
	2018		Notes		Value			Conversions			2018
Derivative Liability	$	1,243,788	$	3,501,616	$	(1,358,601	)	$	(1,905,825	)	$	1,480,978

All gains and losses on assets and liabilities measured at fair value on a recurring basis and classified as Level 3 within the fair value hierarchy are recognized in other interest and expense in the accompanying financial statements.

The derivative liability relating to the beneficial conversion interest of our convertible notes payable was $1,480,978 at December 31, 2018 and was computed using the following variables:

Exercise price	$.135--$.174
Expected volatility		93.6	%
Expected term	6 mos.
Risk free interest rate		2.56	%
Expected dividends		-

Derivative Instruments

We account for derivative instruments in accordance with Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”), which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value.

If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable related to the products and services sold are recorded at the time revenue is recognized and are presented on the balance sheet net of allowance for doubtful accounts. The ultimate collection of the receivable may not be known for several months after services have been provided and billed. We have established an allowance for doubtful accounts based upon factors pertaining to the credit risk of specific customers, analyses of current and historical cash collections, and the aging of receivables. Delinquent accounts are written-off when the likelihood for collection is remote and/or when we believe collection efforts have been fully exhausted and we do not intend to devote any additional efforts in an attempt to collect the receivable. We adjust our allowance for doubtful accounts balance on a quarterly basis.

Property and Equipment

Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method over the assets estimated useful life of five (5) years for equipment, furniture and fixtures. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.

Impairment of long-lived assets

We follow paragraph 360-10-05-4 of the FASB Accounting Standards Codification for long-lived assets. Our long-lived assets are required to be reviewed for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

We assess the recoverability of our long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. During 2018, we took an impairment charge of $66,000 to goodwill.

Revenue recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 606, Revenue From Contracts With Customers, originally effective for public business entities with annual reporting periods beginning after December 15, 2016. On August 12, 2015, the FASB issued an Accounting Standards Update (“ASU”), Revenue From Contracts With Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASC 606 for one year. ASC 606 provides accounting guidance related to revenue from contracts with customers. For public business entities, ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. This new revenue recognition standard (new guidance) has a five-step process: a) Determine whether a contract exists; b) Identify the performance obligations; c) Determine the transaction price; d) Allocate the transaction price; and e) Recognize revenue when (or as) performance obligations are satisfied. The Company has already implemented the five-step process in determining revenue recognition from contracts with customers, in accordance with ASC 606.

Revenue is recognized in the period the services are provided over the contract period, normally one (1) to three (3) years. We invoice one-time startup and implementation costs, such as consolidating and uploading digital assets of the customer, upon completion of those services as one performance obligation and recorded as revenue when completed. Monthly services, such as internet access to software as a service (SaaS), hosting and weekly backups are invoiced monthly as another performance obligation and recorded as revenue over time.

Company Recognizes Contract Liability for Its Performance Obligation

Upon receipt of a prepayment from a customer, the Company recognizes a contract liability in the amount of the prepayment for its performance obligation to transfer goods and services in the future. When the Company transfers those goods and services and, therefore, satisfies its performance obligation to the customer, the Company will then recognize the revenue.

Income taxes

We follow Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance to the extent our management concludes it is more likely than not that the assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

We adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty in income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. We had no material adjustments to our assets and/or liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.

Stock-Based Compensation

In December 2004, the FASB issued FASB Accounting Standards Codification No. 718, Compensation – Stock Compensation. Under FASB Accounting Standards Codification No. 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant. We apply this statement prospectively.

Equity instruments (“instruments”) issued to other than employees are recorded on the basis of the fair value of the instruments, as required by FASB Accounting Standards Codification No. 718. FASB Accounting Standards Codification No. 505-50, Equity Based Payments to Non-Employees defines the measurement date and recognition period for such instruments. In general, the measurement date is when either a (a) performance commitment, as defined, is reached or (b) the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the FASB Accounting Standards Codification.

Fair Value

The closing price of our common stock on the date of grant is used as the fair value for the issuances of restricted stock. The fair value of stock options or warrants granted is estimated as of the grant date using the Black-Scholes option pricing model. The following range of assumptions in the Black- Scholes option pricing model was used to determine fair value at the years ended below:

	Twelve months ended December 31,
		2018		2017
Weighted-average volatility		93.6	%		216.3	%
Expected term (in years)		3.2			3.8
Risk-free interest rate		2.56	%		1.43	%

Expected volatilities used for award valuation in 2018 and 2017 are based on the peer group volatility.

The risk-free interest rate for periods equal to the expected term of an award is based on a blended historical rate using Federal Reserve rates for U.S. Treasury securities.

Net income (loss) per share

We compute basic and diluted earnings per share amounts pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic earnings per share is computed by dividing net income (loss) available to common shareholders, by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share is computed by dividing net income (loss) available to common shareholders by the diluted weighted average number of shares of common stock during the period. The diluted weighted average number of common shares outstanding is the basic weighted number of shares adjusted as of the first day of the year for any potentially diluted debt or equity.

For the years ended December 31, 2018 and 2017, there were 20,956,569 and 10,015,319 respectively, potentially dilutive securities not included in the calculation of weighted-average common shares outstanding since they would be anti-dilutive.

Research and Development

We expense all our research and development operations and activities as they occur. During the fiscal year ended December 31, 2018 we incurred total expenses of $691,201 for research and development. In comparison, during the fiscal year ended December 31, 2017 we incurred total expenses of $957,274 for research and development. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached, which for our software products, is generally shortly before the products are released to manufacturing. Once technological feasibility is reached, such costs are capitalized and amortized to cost of revenue over the estimated lives of the products.

Advertising Costs

We expense marketing and advertising costs as incurred. Marketing and advertising expenses for the years ended December 31, 2018 and 2017 were $20,444 and $17,319, respectively. The costs are included in the consolidated selling and marketing expenses.

Recently Issued Accounting Pronouncements

We regularly monitor our compliance with applicable financial reporting standards and review new pronouncements and drafts thereof that are relevant to us. As a result of new standards, changes to existing standards and changes in their interpretation, we might be required to change our accounting policies, particularly concerning revenue recognition, the capitalized incremental costs to obtain a customer contract and lease accounting, to alter our operational policies and to implement new or enhance existing systems so that they reflect new or amended financial reporting standards, or to restate our published financial statements. Such changes may have an adverse effect on our business, financial position, and operating results, or cause an adverse deviation from our revenue and operating profit target, which may negatively impact our financial results.

In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is in the process of evaluating the impact of ASU 2016-02 on the Company’s financial statements and disclosures.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

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GOING CONCERN

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

NOTE 3 - GOING CONCERN

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Our ability to continue as a going concern is contingent upon our ability to achieve and maintain profitable operations, and our ability to raise additional capital as required.

At December 31, 2018 we had a working capital deficiency of approximately $2.4 Million and an accumulated deficit of approximately $22.5 million. These conditions raise substantial doubt about our ability to continue as a going concern within one year after issuance date of the financial statements. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.

Management intends to raise additional significant funds through private placements of its equity or debt (including convertible debt) securities. Management believes that the actions presently being taken to raise capital and further implement its business plan will enable us to continue as a going concern. While we believe in the viability to raise additional funds, there can be no assurances to that effect. Our ability to continue as a going concern is dependent upon our ability to further implement our business plan and generate substantial funds.

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ACCOUNTS RECEIVABLE

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

NOTE 4 - ACCOUNTS RECEIVABLE

Our accounts receivable at December 31, 2018 and December 31, 2017 consisted of the following:

	December 31, 2018		December 31, 2017
Accounts receivable	$	19,497	$	39,764
Less: Allowance for doubtful accounts		-0-		-0-
	$	19,497	$	39,764

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NOTES RECEIVABLE

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

NOTE 5 - NOTES RECEIVABLE

Our notes receivable at December 31, 2018 and December 31, 2017 consisted of the following:

	December 31, 2018		December 31, 2017
Notes receivable	$	811,234	$	0
	$	811,234	$	0

While the Continuity Logic Merger was pending, the Company made various bridge loans to Continuity Logic for working capital, of which a total balance of $811,234 is still outstanding as of December 31, 2018. These loans mature on August 31, 2019, bear interest at 6% per annum, and a portion of the Notes are secured by a first-priority perfected security interest on the accounts receivable of Continuity Logic. The termination of the Continuity Logic Merger does not change or effect the continuing obligation of Continuity Logic to satisfy the future payment of these loans to the Company.

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PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

NOTE 6 - PROPERTY AND EQUIPMENT

Fixed assets, stated at cost, less accumulated depreciation, consist of the following at December 31, 2018 and December 31, 2017:

	December 31, 2018			December 31, 2017
Equipment	$	27,118		$	27,119
Furniture & Fixtures		11,641			6,641
Less: Accumulated Depreciation		(32,161	)		(29,041	)
Net Fixed Assets	$	6,598		$	4,719

Depreciation expense

Depreciation expense for the years ended December 31, 2018 and 2017 were $3,121 and $3,608, respectively.

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OTHER BALANCE SHEET ACCOUNTS - PREPAID EXPENSES

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

NOTE 7 - OTHER BALANCE SHEET ACCOUNTS - PREPAID EXPENSES

Prepaid expenses consisted of the following:

	December 31,
	2018		2017
Prepaid Expenses:
Rent deposit		17,340		17,340
Sales Commissions Advances		1,060		0
Unvested Stock Grants		13,555		183,752
Total Prepaid Expenses	$	31,955	$	201,092

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NOTES PAYABLE

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

NOTE 8 - NOTES PAYABLE

At December 31, 2018 the Company was indebted under various Notes Payable in the total amount of $3,338,060 including accrued interest. Following is a summary of our outstanding Notes Payable indebtedness as of December 31, 2018:

Summary Description of Notes Payable	Amount Owed*
Decathlon LLC - Senior Secured Note, due 9/30/18, in default, interest at 15%	$	113,640
Finquest Capital Inc.- Secured Note, due 4/15/18, in default, interest at 15%		51,067
Brajoscal, LLC - Secured Note, due 12/31/18, in default, interest at 15%		41,875
Nottingham Securities Inc., monthly settlement payments		70,009
Note payable to individual investor, due 12/31/18, in default, interest at 12%		134,470
Note payable to individual investor, due 4/24/19-7/3/19 interest at 12%		79,620
Greentree Financial Group, Inc., due 4/24/19, interest at 8%		395,875
MGA Holdings LLC, due 11/26/18, in default, interest at 8%		84,150
Power Up Lending Group, due 10/12/2019-1/10/20, interest at 12%		232,760
Ignition Capital, LLC, due 11/30/2018, in default, interest at 6%		105,333
2 PLUS 2, LLC, Inc., due 4/24/19, interest at 8%		25,833
Collision Capital, due 12/31/18, in default, interest at 6%		20,600
Note payable to individual investor, monthly settlement payments		43,000
Note payable to individual investor, due 12/31/18, in default, interest at 6%		1,921
Crown Bridge Partners, due 9/28/19, interest at 10%		58,500
LG Capital LLC, due 9/12/19, interest at 10%		102,938
Adair Bays LLC, due 9/21/19, interest at 10%		102,747
Note payable to individual investor, due 5/25/19, no interest		176,000
Notes payable to four individual investors, due October-November 2019, interest at 12%		339,875
Notes payable to seven individual investors, due January-May 2020, interest at 12%		213,594
Notes payable to seven individual investors, due 9/20/20, interest at 6%		498,009
Notes payable to two principal officers, due on demand, interest at 6%		284,377
Total	$	3,338,060

___________

* Includes accrued interest.

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CONVERTIBLE AND OTHER NOTES

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

NOTE 9 - CONVERTIBLE AND OTHER NOTES

During the fiscal year ended December 31, 2017, we issued a total of $1,020,000 in notes, whereby $969,600 was in convertible notes as follows:

March 13, 2017 Convertible Note -- On March 13, 2017, we issued a $25,000 convertible promissory note bearing interest at 12.0% per annum to an accredited investor, payable September 13, 2017 plus accrued interest. The holder has the right to convert the note into our common stock at a conversion price equal to 50% of the average of the lowest trading prices during the 10-day period ending on the latest complete trading day prior to the conversion date. In September 2017, this note was converted incident to its terms into 560,660 shares of our common stock.

April 18, 2017 Convertible Note – On April 18, 2017, we issued a $50,000 convertible promissory note bearing interest at 12% per annum to an accredited investor, payable April 18, 2018 plus accrued interest. The holder has the right to convert the note into our common stock at a conversion price equal to 50% of the average of the lowest trading prices during the 10-day period ending on the latest complete trading day prior to the conversion date.

June 8, 2017 Convertible Note – On June 8, 2017, we issued a $53,000 Convertible Note bearing interest at 12% per annum to an accredited investor, payable March 20, 2018 plus accrued interest. The holder has the right to convert the note into our common stock at a conversion price equal to 42% of the average of the lowest trading prices during the 10-day period ending on the latest complete trading day prior to the conversion date.

June 9, 2017 Convertible Notes -- On June 9, 2017 we issued a $50,000 Convertible Note to an accredited investor and a $100,000 Convertible Note to another accredited investor, with both these notes bearing interest at 12% per annum and payable March 9, 2018 plus accrued interest. The holders of these two notes have the right to convert them into our common stock at a conversion price equal to 50% of the average of the lowest trading prices during the 10-day period ending on the latest complete trading day prior to the conversion date.

July 2017 Convertible Note -- In July 2017 we issued a $85,800 Convertible Note to an accredited investor bearing interest at 12% per annum and payable April 26, 2018 plus accrued interest. The noteholder has the right to convert the note into our common stock at a conversion price equal to the lesser of $0.20 per share or 62.5% of the average of the lowest trading prices during the 10-day period ending on the latest complete trading day prior to the conversion date.

August 2017 Convertible Note – In August 2017 we issued a $57,000 Convertible Note to an accredited investor bearing interest at 12% per annum and payable May 1, 2018 plus accrued interest. The noteholder has the right to convert the note into our common stock at a conversion price equal to the lesser of $0.24 per share or 55% of the average of the lowest trading prices during the 10-day period ending on the latest complete trading day prior to the conversion date.

November 2017 Convertible Notes – In November 2017 we issued a $85,800 Convertible Note to a private lending fund bearing interest at 12% per annum and maturing in nine months with the noteholder having the right to convert the note into our common stock at a conversion price equal to a 45% discount to its trading price during the 10-day period prior to conversion. Also, in November 2017, we issued a $100,000 Convertible Note to another private lending fund bearing interest at 6% per annum and maturing November 30, 2018 with the noteholder having the right to convert the note into our common stock at a conversion price equal to the lower of $.30 per share or that price per share representing a 25% discount to the price of a future registered public offering.

December 2017 Convertible Notes -- In December 2017 we issued a total of $363,000 in Convertible Notes as follows:

(i) $63,000 Convertible Note to a private lending group bearing interest at 12% per annum and maturing March 19, 2019 with the noteholder having the right to convert the note into our common stock at a conversion price equal to a 42% discount to the average of its three lowest daily trading prices during the ten days prior to conversion.,

(ii) A total of $300,000 in Convertible Notes sold to four accredited individual investors who purchased these notes from our 2017 private placement of $50,000 Notes bearing interest at 12% per annum and maturing two years from their purchase with the noteholders having the right to convert the notes into our common stock at a conversion price equal to the lower of $.20 per share or the Volume Weighted Average Price (VWAP) of our common shares for the ten days prior to conversion.

2018 Convertible Notes

During the fiscal year ended December 31, 2018, we issued a total of $2,959,500 convertible notes as follows:

Short-Term 2018 Convertible Notes

In January 2018 we issued a $50,000 Convertible Note to an accredited investor bearing interest at 12% per annum, maturing on December 31, 2018, and convertible into our common stock at a conversion price of $.15 per share.

In February 2018 we issued a total of $250,000 of Convertible Notes to accredited investors convertible into our common stock at conversion prices varying from 50-55% of the average of the lowest trading prices for the 10 trading days prior to conversion, including (i) $150,000 of Convertible Notes bearing interest at 11% per annum and maturing on August 28, 2018, and (ii) a $100,000 Convertible Note bearing interest at 11% per annum and maturing on November 16, 2018. We paid a $3,000 legal fee for this note.

In April 2018 we issued a $75,000 Convertible Note to an accredited investor bearing interest at 12% per annum, maturing on April 11, 2019, and convertible into our common stock at a conversion price equal to 42.5% of the lowest trading price for the 10 trading days prior to conversion. We paid a $2,000 legal fee for this note.

In May 2018 we issued a total of $135,000 of Convertible Notes to accredited investors convertible into our common stock at conversion prices at 55% of the lowest trading price for the 10 trading days prior to conversion, including (i) $75,000 of Convertible Notes bearing interest at 12% per annum and maturing on May 9, 2019, and (ii) a $60,000 Convertible Note bearing interest at 10% per annum and maturing on May 21, 2019. We paid a $3,000 legal fee for this note.

In June 2018 we issued a total of $200,000 of Convertible Notes to accredited investors convertible into our common stock at conversion prices at $0.16 per share and after six months, 55% of the lowest trading price for the 10 trading days prior to conversion, including: (i) $100,000 of Convertible Notes bearing interest at 10% per annum and maturing on June 25, 2019, and (ii) a $100,000 Convertible Note bearing interest at 10% per annum and maturing on June 27, 2019. We paid $10,000 legal fees for these two notes.

In June 2018 we issued a total of $176,000 of Convertible Notes to accredited investors convertible into our common stock at conversion prices at $0.10 per share, along with 480,000 warrants to purchase common stock at $0.20 per share for three years.

In July 2018 we issued a total of $275,000 of Convertible Notes to three accredited investors convertible into our common stock at conversion prices at 50% of the lowest trading prices for the 10 trading days prior to conversion, bearing interest at 8% per annum and maturing on April 19, 2019.

In August 2018 we issued a total of $160,000 of Convertible Notes to two accredited investors convertible into our common stock at conversion prices at 50% of the lowest trading prices for the 10 trading days prior to conversion, bearing interest at 8% per annum and maturing on May 14, 2019.

In September 2018 we issued a total of $25,000 of Convertible Notes to an accredited investor convertible into our common stock at conversion prices at 50% of the lowest trading prices for the 10 trading days prior to conversion, bearing interest at 8% per annum and maturing on June 23, 2019.

In September 2018 we issued a total of $60,000 of Convertible Notes to an accredited investor convertible into our common stock at conversion prices at 55% of the lowest trading price for the 10 trading days prior to conversion. We paid a $2,000 legal fee for this note.

In September 2018 we issued a total of $200,000 of Convertible Notes to accredited investors convertible into our common stock at conversion prices at $0.16 per share and after six months, 55% of the lowest trading price for the 10 trading days prior to conversion, including: (i) $100,000 of Convertible Notes bearing interest at 10% per annum and maturing on September 12, 2019, and (ii) a $100,000 Convertible Note bearing interest at 10% per annum and maturing on September 21, 2019. We paid $10,000 legal and due diligence fees for these two notes.

In October 2018, the company issued a $108,000 convertible promissory note bearing an interest rate of 8% per annum to two accredited investors, payable on July 5, 2019 plus accrued interest. The noteholders have the right to convert the note into common stock of the Company at a conversion price equal to 50% of the lowest trading price during the 10-day period ending on the latest complete trading day prior to the conversion date.

Long-Term 2018 Convertible Notes

In January 2018 we issued a $63,000 Convertible Note to an accredited investor bearing interest at 12% per annum, maturing on December 31, 2018, and convertible into our common stock at a conversion price equal to 42% of the average of the lowest trading prices for the 10 trading days prior to conversion. We paid a $3,000 legal fee for this note.

During January-February 2018 we issued a total of $150,000 of Convertible Notes to accredited investors, bearing interest at 12% per annum, maturing two years after their respective purchase dates, and convertible into our common stock at a conversion price equal to the lower of $.20 per share or the Volume Weighted Average Price (VWAP) for the 10 trading days prior to conversion. We paid $18,000 commissions on these long term notes.

In March 2018 we issued a $63,000 Convertible Note to an accredited investor, bearing interest at 12% per annum, maturing on June 26, 2019, and convertible into our common stock at a conversion price equal to 42% of the average of the lowest trading prices for the 10 trading days prior to conversion. We paid a $3,000 legal fee for this note.

In April and May 2018 we issued a total of $53,000 in Long Term Convertible Notes as follows: Company issued a total of $53,000 in Convertible Notes sold to four accredited individual investors who purchased these notes from our 2018 private placement of $25,000 Notes bearing interest at 12% per annum and maturing two years from their purchase with the noteholders having the right to convert the notes into our common stock at a conversion price equal to the lower of $.20 per share or the Volume Weighted Average Price (VWAP) of our common shares for the ten days prior to conversion. Incident thereto, we also issued 53,000 warrants to purchase our common stock at $0.01 per share for three years to the purchaser of this Note and 53,000 warrants to purchase our common stock at $0.01 per share for three years to the broker-dealer placement agent of this Note.

In June 2018 we issued a $75,000 Convertible Note to an accredited investor, bearing interest at 0% per annum, maturing on June 5, 2021, and convertible into our common stock at a conversion price equal to 55% of the lowest trading prices for the 10 trading days prior to conversion.

In July 2018, we issued a $103,000 convertible promissory note bearing an interest rate of 12% per annum to an accredited investor, payable on October 12, 2019 plus accrued interest, and convertible into our common stock at a conversion price equal to 42% of the lowest trading price during the 10-day trading period prior to conversion. We paid a $3,000 legal and due diligence fee for this note.

In September 2018 we issued a total of $365,000 Convertible Notes to seven accredited investors, bearing interest at 6% per annum, maturing on September 20, 2020, and convertible into our common stock at a conversion price equal to $0.20 per share.

In September 2018 we issued a $68,000 Convertible Note to an accredited investor bearing interest at 12% per annum, maturing on December 20, 2019, and convertible into our common stock at a conversion price equal to 42% of the lowest trading price for the 10 trading days prior to conversion.

In October 2018, the company issued a $53,000 convertible promissory note bearing an interest rate of 12% per annum to an accredited investor, payable on January 10, 2020 plus accrued interest. The noteholder has the right to convert the note into common stock of the Company at a conversion price equal to 58% of the average of the lowest trading price during the 10-day period ending on the latest complete trading day prior to the conversion date.

In October 2018, the Company issued a $50,000 Convertible Note to an accredited investor, bearing interest at 6% per annum, maturing on September 20, 2020, and convertible into our common stock at a conversion price equal to $.20 per share. We also issued warrants for 50,000 shares to this Noteholder incident to this purchase of the $50,000 Convertible Note, fully vested, and exercisable at $.25 per share anytime during a two-year term.

In October 2018 we issued another $75,000 Convertible Notes to two accredited investors bearing interest at 6% per annum, maturing on September 20, 2020, and convertible into our common stock at a conversion price of $.15 per share during a two-year term.

We evaluated the terms of the convertible notes in accordance with ASC 815-40, Contracts in Entity's Own Equity, and concluded that the Convertible Note resulted in a derivative with a beneficial conversion feature since the convertible notes were convertible into shares of common stock at a discount to the market value of the common stock. The discount related to the beneficial conversion feature on the notes and associated warrants was based on the Black-Scholes Model, and is being amortized over the term of the debt and associated warrants. For the year ended December 31, 2018, we recognized interest expense of $1,220,133 related to the amortization of the discount.

Short-Term Non-Convertible Notes

In January 2018, we issued a $20,000 note to our CEO, a related party, bearing interest at 6%.

In October 2018, we issued a $82,500 Promissory Note to an accredited investor, bearing an interest rate of 8% per annum and maturing on November 26, 2018.

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COMMITMENTS & CONTINGENCIES

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

NOTE 10 - COMMITMENTS & CONTINGENCIES

Lease

We currently occupy 5,229 square feet of office space in downtown Minneapolis Minnesota. We lease this facility under a two-year lease expiring in December 2019 and requiring monthly rental payments of $8,323 which includes rent, utilities and maintenance. The lease commitments over the two-year period is $13.00 per rentable square foot for months 1-12 and $13.50 per square foot for months 13-24. The total lease commitments, per the lease is $106,000 base rent, plus Common Area Maintenance costs. Our rent expense for 2018 and 2017 was $98,245 and $80,478 respectively. Our future rent expense the next five years, on an annual basis, is expected to be consistent with our 2018 rent expense.

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INCOME TAXES

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

NOTE 11 - INCOME TAXES

At December 31, 2018 and 2017, we had available Federal and state net operating loss carryforwards to reduce future taxable income. The amounts available were approximately $15,912,080 and $12,605,339 for Federal and state purposes, respectively. The Federal carryforward expires in 2037 and the state carryforward expires in 2022. Given our history of net operating losses, our management has determined that it is more likely than not that we will not be able to realize the tax benefit of the carryforwards. Accordingly, we have not recognized a deferred tax asset for this benefit.

Effective January 1, 2007, we adopted FASB guidelines that address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this guidance, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. This guidance also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At the date of adoption, and as of December 31, 2018 and 2017, we did not have a liability for unrecognized tax benefits, and no adjustment was required at adoption.

Our policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of December 31, 2018 and 2017, we have not accrued interest or penalties related to uncertain tax positions. Additionally, tax years 2016 through 2018 remain open to examination by the major taxing jurisdictions to which we are subject.

Upon the attainment of taxable income by us, our management will assess the likelihood of realizing the tax benefit associated with the use of the carryforwards and will recognize a deferred tax asset at that time.

The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes are as follows:

	2018			2017
Income tax at federal Statutory rate		34.0	%		34.0	%
Effects of permanent differences		(6.8	)%		(8.4	)%
Effect of temporary differences		1.1	%		1.3	%
Adjustment of prior year NOL’s		(5.3	)%		(3.8	)%
Effects of state taxes (net of federal taxes)		0	%		0	%
Change in valuation allowance		(23.0	)%		(23.1	)%
		0.0	%		0.0	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

As of December 31, 2018 and 2017, our only significant deferred income tax asset was a cumulative estimated net tax operating loss of $15,912,080 and $12,605,339, respectively, that is available to offset future taxable income, if any, in future periods, subject to expiration and other limitations imposed by the Internal Revenue Service. Management has considered our operating losses incurred to date and believes that a full valuation allowance against the deferred tax assets is required as of December 31, 2018 and 2017. For the year ended December 31 2018, the change in valuation allowance was $1,124,292.

Utilization of our net operating losses may be subject to substantial limitations if the Company experiences a 50% change in ownership, as provided by the Internal Revenue Code and similar state provisions.

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RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

NOTE 12 - RELATED PARTY TRANSACTIONS

Employment Agreements. We currently have three employment agreements in effect with our chief executive officer, our former chief financial officer and our chief revenue officer. The terms of the agreements include base salaries of $50,000 per month.

Included in our notes payable are amounts due to officers for notes payable which were accepted by them for past due compensation or for working capital loans made to us. At December 31, 2018 and 2017, the amounts of such notes due including accrued interest to our officers was $284,377 and $270,639, respectively, payable on demand and having an interest rate of 6% per annum, and conversion rights to convert the notes on the basis of $.30 per share.

In April 2017 we issued a total of 1,100,562 shares of our common stock to our two principal officers in consideration for their conversion of a total of $330,168 of Notes they held for past due compensation into equity at $.30 per share.

In September 2017, we issued 250,000 shares of our common stock as a bonus to our Chief Financial Officer and 600,000 shares as a bonus to our Chief Technology Officer. Also, in September 2017, we provided contingent future grants for the future issuance of a total of 750,000 shares of our common stock which will vest annually over a four-year term commencing in September 2018 providing they remain employed by us, including 500,000 shares for our Chief Revenue Officer and 250,000 shares for our Chief Technology Officer.

In September 2017, we granted four-year stock options to purchase a total of 1,150,000 shares of our common stock, of which (i) options for 1,000,000 shares were granted to our Chief Revenue Officer having an exercise price of $.35 per share with 375,000 shares vested immediately and the balance of 625,000 shares vesting quarterly over its four-year term, and (ii) options for 150,000 shares were granted to a newly-hired software development employee having an exercise price of $.20 per share vesting quarterly over its four-year term.

In December 2017, we obtained a working capital loan for $76,000 from our Chief Executive Officer, due on demand and bearing an interest rate of 6% per annum. The outstanding balance of this loan as of March 31, 2019 is $76,000

In March 2018, we granted a stock award of 250,000 common shares to a new director for agreeing to serve on our Board of Directors for one year, which has now all vested; and in March 2019 we granted him a similar stock grant award of 250,000 common shares, vesting quarterly, for agreeing to serve on our Board for a second year.

In 2018 we granted a four-year stock option to our Chief Revenue Officer, vesting annually, to purchase 500,000 common shares exercisable at $.20 per share; and in 2018 we also granted a stock award for 500,000 common shares to our former Chief Technical Officer related to his development work for the Company.

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STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

NOTE 13 - STOCKHOLDERS' EQUITY

We are authorized to issue 500,000,000 shares of common stock and 20,000,000 shares of preferred stock, both having $.0001 par value per share. At December 31, 2018, there were 67,454,276 outstanding shares of common stock and no outstanding shares of preferred stock.

Common Shares Issued in 2017

In January 2017, we issued 142,857 unregistered common shares in a private placement to an accredited investor in consideration for $50,000 or $0.35 per share, which proceeds were used for working capital purposes. Also, in January 2017, we issued 133,333 unregistered common shares to a Noteholder to satisfy and convert into equity $40,000 of a Note Payable.

In February 2017, we issued a total of 650,000 unregistered common shares valued at $0.68 per share or $442,000 for consulting services, including 400,000 common shares for investment relations and financial communications services, and 250,000 common shares for technical and software advisory services. Also, In February 2017, we sold and issued 300,000 unregistered shares for total consideration of $200 incident to a consulting contract to provide us with public relations services.

In March 2017, we issued a total of 296,999 shares of our common stock, including (i) 200,000 shares sold for $100,000 ($.50 per share) to two investors in a public offering under our S-1 Registration Statement for, which proceeds were used for working capital purposes, and (ii) 96,999 shares valued at $29,100 for marketing support services.

In April 2017 (effective March 31, 2017), we issued 1,100,562 unregistered common shares to convert debt owed to its two principal officers into equity incident to the transaction described in the foregoing Note 11.

In April-May 2017, we issued a total of 1,300,000 unregistered common shares as follows:

i)	500,000 common shares in a private placement with an accredited investor for proceeds of $150,000 ($.30 per share), which proceeds were used for working capital purposes;
ii)	200,000 common shares valued at $.30 per share to a financial advisor under a consulting agreement; and
iii)	400,000 shares to Volerro Corporation valued at $168,000 upon closing our purchase of the assets of Volerro Corporation, a privately-held corporation based in Minneapolis which developed and marketed “content collaboration” software services.

In June 2017, we issued a total of 548,215 unregistered common shares as follows:

i)	300,000 shares valued at $.25 per share to a financial adviser under a consulting agreement;
ii)	96,999 shares valued at $29,100 to a marketing support adviser under an outstanding agreement; and
iii)	151,216 shares issued to a note holder to convert debt in the amount of $30,243.

In July 2017, we issued 200,000 unregistered common shares valued at $40,000 to a financial adviser incident to an outstanding consulting agreement.

In September 2017, we issued or granted a total of 1,911,684 shares of our common stock as follows:

i)	We issued a debtholder who is an accredited investor 336,425 unregistered common shares to convert notes payable of $42,053 into equity.
ii)	We issued another debtholder who is an accredited investor 560,660 unregistered common shares to convert notes payable of $28,033 into equity.
iii)	Pursuant to an advisory agreement to provide marketing support related to obtaining new customers, we issued 96,999 unregistered common shares to a consultant valued at $13,580.
iv)	We granted a total of 1,667,600 shares of our common stock to employees as performance bonuses (of which 750,000 are unissued shares vesting over a four-year period), including 850,000 shares valued at $132,500 to our Chief Technology Officer, 500,000 shares valued at $85,000 to our Chief Revenue Officer, 250,000 shares valued at $35,000 to our Chief Financial Officer under the Company’s S-8 registered 2016 Equity Incentive Plan, and 67,600 shares valued at $10,140 to our Controller.

In October 2017, we issued 200,000 unregistered common shares valued at $46,000 to a financial adviser pursuant to a consulting agreement.

In December 2017, we issued a total of 1,048,999 unregistered common shares as follows:

i)	100,000 common shares valued at $19,000 to a debt holder who extended past due loans to December 31, 2018 and also reduced the interest rate on the loans from 24% to 12%.
ii)	96,999 common shares valued at $18,430 to a consultant for marketing support services.
iii)	a total of 300,000 common shares valued at $44,500 to various accredited investors who purchased convertible debt in our 2017 private placement.
iv)	300,000 common shares valued at $44,500 to a licensed broker-dealer who represented us in placing our 2017 private offering of convertible debt.
v)	252,000 common shares to convert debt in the amount of $31,500 from an outstanding convertible note, which conversion price was based on specific provisions of this convertible note.

Common Shares Issued in 2018

In January--February 2018 we issued a total of 800,000 unregistered common shares valued at $134,000 to two consultants for investor relations and shareholder communications services.

During January- March 2018 we issued a total of 2,012,957 unregistered common shares to three holders of Convertible Notes who converted their Notes to $130,433 of common stock, which conversion prices were based on specific provisions contained in their Convertible Notes.

In March 2018 we granted 250,000 unvested shares of our common stock, valued at $50,000, to John Bode in consideration for his agreement to serve for a year as an independent director on our Board of Directors, of which 62,500 shares vest quarterly on May 31, 2018, August 31, 2018, November 30, 2018 and February 28, 2019 provided he continues to serve as a director. All these shares are now vested.

In April 2018 we issued 660,000 unregistered common shares, valued at $92,844 to a holder of a Convertible Note who converted $47,248 of the Note into common stock with the conversion price based on specific provisions in the Note.

During April-May 2018 we issued a total of 779,960 unregistered common shares valued at $109,770 to three consultants for investor relations and shareholder communications services.

During April-June 2018 we issued a total of 3,861,843 unregistered common shares to three holders of Convertible Notes who converted their Notes to $256,086 of common stock, which conversion prices were based on specific provisions contained in these Notes.

During June 2018, we issued 500,000 shares of restricted common stock, valued at $80,000 to our former Chief Technology Officer.

During July-August, 2018, we issued 650,000 shares of restricted common stock valued at $102,500 to two consultants and a Noteholder for investor relations and shareholder communications services.

During July-September 2018, we issued a total of 3,014,491 unregistered shares of our common stock valued at $209,388 for debt conversions from four noteholders, which conversion prices were based on specific provisions contained in their convertible Notes

During September 2018, we issued 93,333 shares of unregistered common stock valued at $14,000 to an accredited investor for exercise of a warrant with a cashless exercise provision.

During September 2018 we issued 200,000 shares of unregistered common stock valued at $31,800 to Volerro Corporation as bonus shares pursuant to terms of the 2017 acquisition agreement.

In October 2018 we issued a total of 400,000 unregistered common shares valued at $62,000 to two consultants for investor relations and shareholder communications services.

In October 2018 we issued 439,092 common shares to a noteholder to convert debt in the amount of $26,894 based on specific provisions contained in the note.

In October 2018 we issued 141,231 common shares incident to exercise of a warrant held by a broker-dealer that raised funds for the Company in 2017 and 2018.

From October-December 2018 and incident to our recent private placement offering of $2,000,000, we issued a total of 7,700,000 common shares to accredited private investors for proceeds of $1,400,000, which included purchased shares at $.20 per share and additional advisory shares based on 10% of the purchased shares.

Stock Option Grants

In September 2017, we granted four-year stock options to purchase a total of 1,150,000 shares of our common stock, of which (i) options for 1,000,000 shares were granted to the Chief Revenue Officer (CRO) of the Company with an exercise price of $.35 per share, with 375,000 shares vested immediately and the remainder of 625,000 shares vesting quarterly over the four-year term, and (ii) options for 150,000 shares were granted to a newly-hired software developer with an exercise price of $.20 per share and vesting quarterly over the four-year term.

In December 2017, we granted a four-year stock option to purchase 100,000 shares of our common stock to a newly-hired software developer with an exercise price of $.25 per share and vesting quarterly over the four-year term.

In 2018 we granted a four-year stock option to our Chief Revenue Officer to purchase 500,000 common shares, vesting quarterly, at an exercise price of $.20 per share.

In 2018 we also issued employee stock options for an aggregate purchase of 740,000 common shares, ratably vesting annually over their four-year terms, and with options for 650,000 shares exercisable at $.20 per share and options for 90,000 shares exercisable at $.25 per share.

Warrant Grants

During the year ended December 31, 2017, we granted warrants to purchase a total of 2,652,097 unregistered common shares as follows:

(i)	warrants for 41,667 shares granted for financial services, fully vested, and exercisable at $.30 per share anytime during a four-year term;
(ii)	warrants for 200,000 shares granted for investor relations services, exercisable when vested at $.40 per share anytime during a three-year term and vesting at 20,000 shares per month over a ten-month period,
(iii)	warrants for 250,000 shares granted to an accredited investor who purchased common shares in a private placement, which warrants are fully vested and exercisable at $.30 per share during a four-year term;
(iv)	warrants for 142,857 shares to an accredited investor purchasing a Convertible Note, which warrants are fully vested and exercisable any time at $.35 per share over a four-year term;
(v)	warrants for a total of 1,250,000 to two accredited investors purchasing Convertible Notes, which warrants are fully vested and exercisable any time at $.20 per share during a three-year term.
(vi)	warrants for 167,573 shares granted to a secured creditor for a loan extension, fully vested and exercisable at $.30 per share any time during a three-year term.
(vii)	warrants for 100,000 shares granted for legal services provided to us, fully vested and exercisable at $.25 per share any time during a four-year term.
(viii)	warrants for 200,000 shares granted to two independent software developers (100,000 shares apiece), and exercisable at $.25 per share and vesting over four-year terms.
(ix)	warrants for 100,000 shares granted in to an adviser for financial services, fully vested and exercisable at $.30 per share any time over a five-year term.
(x)	warrants for 50,000 shares granted to a shareholder in consideration for marketing services, fully vested and exercisable at $.17 per share any time over a four-year term.
(xi)	warrants for 150,000 shares granted to a secured lender in consideration primarily for a loan extension to September 30, 2018, fully vested and exercisable at $.15 per share over a four-year term. Concurrently the exercise price of this lender’s 2015 warrant to purchase 1,347,185 shares was reduced from $0.65 to $.30 per share until its expiration in December 27, 2019.

During the three-month period ended March 31, 2018, we granted warrants to purchase a total of 450,000 shares of our common stock, valued at $84,875 using Black-Scholes, as follows:

(i) warrants for 100,000 shares granted to a Noteholder incident to the purchase of a $100,000 Convertible Note, fully vested, and exercisable at $.30 per share anytime during a five-year term;

(ii) warrants for 150,000 shares granted to a Noteholder incident to purchase of a $150,000 Convertible Note, fully vested, and exercisable at $.01 per share anytime during a three-year term; and

(iii) warrants for 200,000 shares granted incident to the purchase of $100,000 of convertible debt in our private placement, fully vested, and exercisable at $.01 per share anytime during a three-year term, and which included warrants for 100,000 shares issued to the Noteholders and warrants for 100,000 shares issued to the placement agent.

During the three-month period ended June 30, 2018, we granted warrants to purchase a total of 686,000 shares of our common stock, valued at $82,407 using Black-Scholes, as follows:

(i) warrants for 100,000 shares granted to a Noteholder incident to the purchase of a $75,000 Convertible Note, fully vested, and exercisable at $.135 per share anytime during a two-year term;

(ii) warrants for 480,000 shares granted to a Noteholder incident to purchase of a $176,000 Convertible Note, fully vested, and exercisable at $.20 per share anytime during a three-year term; and

(iii) warrants for 106,000 shares granted incident to the purchase of $53,000 of convertible debt in our private placement, fully vested, and exercisable at $.01 per share anytime during a three-year term, including warrants for 53,000 shares issued to the Noteholders and warrants for 53,000 shares issued to the placement agent

During the three-month period ended September 30, 2018, we granted warrants to purchase a total of 540,000 shares of our common stock, valued at $33,656 using Black-Scholes , as follows:

(i) warrants for 100,000 shares granted to two Noteholders incident to their purchase of $100,000 Convertible Notes, fully vested, and exercisable at $.01 per share anytime during a two-year term;

(ii) warrants for 50,000 shares granted to two consultants, vesting ratably over a two-year term, and exercisable at $.25 per share anytime during their two-year term; and

(iii) warrants for 390,000 shares granted to Noteholders incident to their purchase of $390,000 Convertible Notes, fully vested, and exercisable at $.01 per share anytime during a two-year term.

During the three-month period ended December 31, 2018, related to our recent private placement, we granted three-year warrants to the private placement investors to purchase an aggregate of 10,000,000 shares of our common stock, exercisable at $.20 per share, adjusted to a discounted true-up price, with a floor of $0.10 per share, related to the trading price of our Common Stock during a 90-day period after effectiveness of a registration statement. Accounting Standards Codification (ASC) specifies prior to the Accounting Standards Update (ASU) 2017-11, it specifies the true-up price terms makes this warrant a derivative. However, post ASU 2017-11, this clause is scoped out of the analysis and is not a derivative. ASU 2017-11 is officially effective for calendar year end companies on 1/1/19, however issuers can early adopt. The Company has taken the position to early adopt, which would eliminate Section 7(b) from making these warrants a derivative.

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WARRANT INFORMATION

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

NOTE 14 - WARRANT INFORMATION

We have the following outstanding warrants to purchase our common stock at December 31, 2017 and 2018:

	Number of Shares			Exercise Price		Weighted Average Exercise price		Average Grant Date Fair value
Balance December 31, 2016		4,206,444		$0.15-$0.40			0.40		0.39
Granted		2,652,097
Forfeited or cancelled		(640,722	)		-
Balance December 31, 2017		6,217,819		$0.15-$1.00			0.28		0.29
Granted		11,626,000
Forfeited or cancelled		(102,250	)		-
Balance December 31, 2018		17,741,569		$0.01-$1.00			0.22		0.23

During 2018 and 2017, the warrant expense issued for services and investors was $1,155,670 and $127,322 respectively.

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2017 BUSINESS ACQUISITION

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

NOTE 15 - 2017 BUSINESS ACQUISITION

The Company accounts for business combinations using the purchase method to record a new cost basis for the assets acquired, and in some cases, liabilities assumed. The Company recorded, based on purchase price allocations, intangible assets representing customer relationships, tradenames, software code, domain names, and excess of purchase price over the estimated fair values of the net assets acquired as “Goodwill” in the accompanying Consolidated Financial Statements. The goodwill is attributable to synergies achieved through the streamlining of operations combined with improved margins attainable through increased market presence and the acquisition of a large customer (a nation-wide bank) and is all attributed to our one operating reportable segment. The results of operations are reflected in the Consolidated Financial Statements of the Company from the date of acquisition.

(a) 2017 Acquisition

In fiscal 2017, the Company acquired the assets of Volerro Corporation with an aggregate purchase price of $252,000 payable in the form of 400,000 shares of Common Stock of the Company in 2017, and upon future performance, up to an additional 200,000 shares of Common Stock, which additional 200,000 shares were issued in 2018. The allocation of consideration for this acquisition is summarized as follows:

Checking and cash equivalents	$	51,500
Intellectual Property and Software Code		68,500
Intangible Asset-Goodwill		132,000
Purchase Price	$	252,000

Goodwill of $132,000 and intellectual property of $68,500 are expected to be deductible for U.S. federal income tax purposes. The Company believes that information gathered to date provides a reasonable basis for estimating the fair values of the assets acquired. During 2018, the Company took a goodwill impairment expense of $66,000 as one of the customers obtained in the Volerro acquisition may not renew the annual contract commencing in 2019.

Pursuant to this acquisition, the Company acquired a new top 5 bank in the United States, with a customer contract remaining of $10,800 as of December 31, 2018.

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CONCENTRATIONS

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

NOTE 16 - CONCENTRATIONS

For the year ended December 31, 2018 three customers each accounted for more than 10% of our revenues, and also and alike for the year ended December 31, 2017 four customers each accounted for more than 10% of our revenues. Combined, these customers represented less than 50% of our revenues during each of 2018 and 2017. A significant reduction for any reason in the use of our software solutions by one or more of our major customers could harm our business materially.

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

NOTE 17 - SUBSEQUENT EVENTS

During January-April, 2019, the following events occurred regarding our securities:

i) In February through March 2019, we issued an aggregate of 5,439,253 common shares to noteholders who converted total outstanding debt of $238,707, with the conversion price based on specific terms contained in these notes.

ii) In February 2019, we issued 300,000 common shares valued at $26,730 to a consultant for advisory services to be provided to us during February-April 2019.
 

iii) In March 2019 we issued an aggregate of 3,182,834 common shares and 3,182,834 three-year warrants to noteholders who converted total outstanding debt of $504,134, with the warrants exercisable at $.20 per share and having a value under Black-Scholes pricing of $25,908.27, with the conversion price and warrant terms based on specific terms contained in these notes.
 

iv) We also received proceeds of $350,000 during January-March 2019 from private investors making payments of the second tranche funding under our recent private placement, for which we issued 1,750,000 purchased common shares and 175,000 advisory common shares.

v) In April 2019, we signed a one-year consulting agreement with Capital Market Solutions, LLC whereby we issued 30 million common shares valued at $1,797,000 and 30 million five-year warrants exercisable at $.20 per share and having a value under Black-Scholes pricing of $1,297,570 along with a $50,000 monthly consulting fee.

vi) We also issued 62,500 restricted shares for Independent Director, John B. Bode on February 28, 2019 for his fourth quarter of board service, pursuant to an Independent Director agreement dated March 1, 2018.

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ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2018

Organization And Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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. Accordingly, actual results could differ materially from those estimates and assumptions. Such estimates include management’s assessments of the carrying value of certain assets, useful lives of assets, derivative securities, fair value of financial instruments, and related depreciation and amortization methods applied.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and accounts receivable. During the year ended December 31, 2018, we may have had cash deposits that exceeded Federal Deposit Insurance Corporation (“FDIC”) insurance limits. We maintain cash balances at high quality financial institutions to mitigate this risk. We perform ongoing credit evaluations of our customers and generally do not require collateral from them to do business with us.

Cash equivalents

We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. At December 31, 2018, the Company had no cash equivalents.

Fair value of financial instruments

The Company adopted the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820 (the “Fair Value Topic”) which defines fair value, establishes a framework for measuring fair value under Generally Accepted Accounting Principles (GAAP), and expands disclosures about fair value measurements.

The Fair Value Topic 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. It requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. It also establishes a fair value hierarchy, which prioritizes the valuation inputs into six broad levels.

The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

A) Market approach—Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Prices may be indicated by pricing guides, sale transactions, market trades, or other sources;

B) Cost approach—Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost); and

C) Income approach—Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about the future amounts (includes present value techniques, and option-pricing models). Net present value is an income approach where a stream of expected cash flows is discounted at an appropriate market interest rate.

Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. An active market for an asset or liability is a market in which transactions for the asset or liability occur with significant frequency and volume to provide pricing information on an ongoing basis.

Level 2: Observable inputs other than Level 1 inputs. Example of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level 3: Unobservable inputs based on the Company’s assessment of the assumptions that are market participants would use in pricing the asset or liability.

The carrying amount of the Company’s financial assets and liabilities, such as cash, accounts receivable, accounts payable, accrued expenses, and notes payable approximate their fair value because of the short maturity of those instruments.

The following table represents our assets and liabilities by level measured at fair value on a recurring basis at December 31, 2018.

	Level 1		Level 2		Level 3
Derivative Liability	$	-	$	-	$	1,480,978

The following assets and liabilities are measured on the consolidated balance sheets at fair value on a recurring basis utilizing significant unobservable inputs or Level 3 assumptions in their valuation. The following table provides a reconciliation of the beginning and ending balances of the liabilities.

	Fair Value January 1,		Convertible		Change in fair					Fair Value December 31,
	2017		Notes		Value			Conversions		2017
Derivative Liability	$	0	$	1,225,906	$	(143,697	)	$	161,579	$	1,243,788

	Fair Value January 1,		Convertible		Change in fair						Fair Value December 31,
	2018		Notes		Value			Conversions			2018
Derivative Liability	$	1,243,788	$	3,501,616	$	(1,358,601	)	$	(1,905,825	)	$	1,480,978

All gains and losses on assets and liabilities measured at fair value on a recurring basis and classified as Level 3 within the fair value hierarchy are recognized in other interest and expense in the accompanying financial statements.

The derivative liability relating to the beneficial conversion interest of our convertible notes payable was $1,480,978 at December 31, 2018 and was computed using the following variables:

Exercise price	$.135--$.174
Expected volatility		93.6	%
Expected term	6 mos.
Risk free interest rate		2.56	%
Expected dividends		-

Derivative Instruments

We account for derivative instruments in accordance with Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”), which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value.

If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable related to the products and services sold are recorded at the time revenue is recognized and are presented on the balance sheet net of allowance for doubtful accounts. The ultimate collection of the receivable may not be known for several months after services have been provided and billed. We have established an allowance for doubtful accounts based upon factors pertaining to the credit risk of specific customers, analyses of current and historical cash collections, and the aging of receivables. Delinquent accounts are written-off when the likelihood for collection is remote and/or when we believe collection efforts have been fully exhausted and we do not intend to devote any additional efforts in an attempt to collect the receivable. We adjust our allowance for doubtful accounts balance on a quarterly basis.

Property and Equipment

Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method over the assets estimated useful life of five (5) years for equipment, furniture and fixtures. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.

Impairment of long-lived assets

We follow paragraph 360-10-05-4 of the FASB Accounting Standards Codification for long-lived assets. Our long-lived assets are required to be reviewed for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

We assess the recoverability of our long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. During 2018, we took an impairment charge of $66,000 to goodwill.

Revenue recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 606, Revenue From Contracts With Customers, originally effective for public business entities with annual reporting periods beginning after December 15, 2016. On August 12, 2015, the FASB issued an Accounting Standards Update (“ASU”), Revenue From Contracts With Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASC 606 for one year. ASC 606 provides accounting guidance related to revenue from contracts with customers. For public business entities, ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. This new revenue recognition standard (new guidance) has a five-step process: a) Determine whether a contract exists; b) Identify the performance obligations; c) Determine the transaction price; d) Allocate the transaction price; and e) Recognize revenue when (or as) performance obligations are satisfied. The Company has already implemented the five-step process in determining revenue recognition from contracts with customers, in accordance with ASC 606.

Revenue is recognized in the period the services are provided over the contract period, normally one (1) to three (3) years. We invoice one-time startup and implementation costs, such as consolidating and uploading digital assets of the customer, upon completion of those services as one performance obligation and recorded as revenue when completed. Monthly services, such as internet access to software as a service (SaaS), hosting and weekly backups are invoiced monthly as another performance obligation and recorded as revenue over time.

Company Recognizes Contract Liability for Its Performance Obligation

Upon receipt of a prepayment from a customer, the Company recognizes a contract liability in the amount of the prepayment for its performance obligation to transfer goods and services in the future. When the Company transfers those goods and services and, therefore, satisfies its performance obligation to the customer, the Company will then recognize the revenue.

Income taxes

We follow Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance to the extent our management concludes it is more likely than not that the assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

We adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty in income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. We had no material adjustments to our assets and/or liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.

Stock-Based Compensation

In December 2004, the FASB issued FASB Accounting Standards Codification No. 718, Compensation – Stock Compensation. Under FASB Accounting Standards Codification No. 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant. We apply this statement prospectively.

Equity instruments (“instruments”) issued to other than employees are recorded on the basis of the fair value of the instruments, as required by FASB Accounting Standards Codification No. 718. FASB Accounting Standards Codification No. 505-50, Equity Based Payments to Non-Employees defines the measurement date and recognition period for such instruments. In general, the measurement date is when either a (a) performance commitment, as defined, is reached or (b) the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the FASB Accounting Standards Codification.

Fair Value

The closing price of our common stock on the date of grant is used as the fair value for the issuances of restricted stock. The fair value of stock options or warrants granted is estimated as of the grant date using the Black-Scholes option pricing model. The following range of assumptions in the Black- Scholes option pricing model was used to determine fair value at the years ended below:

	Twelve months ended December 31,
		2018		2017
Weighted-average volatility		93.6	%		216.3	%
Expected term (in years)		3.2			3.8
Risk-free interest rate		2.56	%		1.43	%

Expected volatilities used for award valuation in 2018 and 2017 are based on the peer group volatility.

The risk-free interest rate for periods equal to the expected term of an award is based on a blended historical rate using Federal Reserve rates for U.S. Treasury securities.

Net income (loss) per share

We compute basic and diluted earnings per share amounts pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic earnings per share is computed by dividing net income (loss) available to common shareholders, by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share is computed by dividing net income (loss) available to common shareholders by the diluted weighted average number of shares of common stock during the period. The diluted weighted average number of common shares outstanding is the basic weighted number of shares adjusted as of the first day of the year for any potentially diluted debt or equity.

For the years ended December 31, 2018 and 2017, there were 20,956,569 and 10,015,319 respectively, potentially dilutive securities not included in the calculation of weighted-average common shares outstanding since they would be anti-dilutive.

Research and Development

We expense all our research and development operations and activities as they occur. During the fiscal year ended December 31, 2018 we incurred total expenses of $691,201 for research and development. In comparison, during the fiscal year ended December 31, 2017 we incurred total expenses of $957,274 for research and development. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached, which for our software products, is generally shortly before the products are released to manufacturing. Once technological feasibility is reached, such costs are capitalized and amortized to cost of revenue over the estimated lives of the products

Advertising Costs

We expense marketing and advertising costs as incurred. Marketing and advertising expenses for the years ended December 31, 2018 and 2017 were $20,444 and $17,319, respectively. The costs are included in the consolidated selling and marketing expenses.

Recently Issued Accounting Pronouncements

We regularly monitor our compliance with applicable financial reporting standards and review new pronouncements and drafts thereof that are relevant to us. As a result of new standards, changes to existing standards and changes in their interpretation, we might be required to change our accounting policies, particularly concerning revenue recognition, the capitalized incremental costs to obtain a customer contract and lease accounting, to alter our operational policies and to implement new or enhance existing systems so that they reflect new or amended financial reporting standards, or to restate our published financial statements. Such changes may have an adverse effect on our business, financial position, and operating results, or cause an adverse deviation from our revenue and operating profit target, which may negatively impact our financial results.

In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is in the process of evaluating the impact of ASU 2016-02 on the Company’s financial statements and disclosures.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2018

Summary Of Significant Accounting Policies

Fair Value, Assets Measured on Recurring Basis

The following table represents our assets and liabilities by level measured at fair value on a recurring basis at December 31, 2018.

	Level 1		Level 2		Level 3
Derivative Liability	$	-	$	-	$	1,480,978

Fair value on recurring basis significant unobservable

The following assets and liabilities are measured on the consolidated balance sheets at fair value on a recurring basis utilizing significant unobservable inputs or Level 3 assumptions in their valuation. The following table provides a reconciliation of the beginning and ending balances of the liabilities.

	Fair Value January 1,		Convertible		Change in fair					Fair Value December 31,
	2017		Notes		Value			Conversions		2017
Derivative Liability	$	0	$	1,225,906	$	(143,697	)	$	161,579	$	1,243,788

	Fair Value January 1,		Convertible		Change in fair						Fair Value December 31,
	2018		Notes		Value			Conversions			2018
Derivative Liability	$	1,243,788	$	3,501,616	$	(1,358,601	)	$	(1,905,825	)	$	1,480,978

Schdule of fair value measurement of liabilities

Exercise price	$.135--$.174
Expected volatility		93.6	%
Expected term	6 mos.
Risk free interest rate		2.56	%
Expected dividends		-

Schedule of Assumptions Used

	Twelve months ended December 31,
		2018		2017
Weighted-average volatility		93.6	%		216.3	%
Expected term (in years)		3.2			3.8
Risk-free interest rate		2.56	%		1.43	%

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ACCOUNTS RECEIVABLE (Tables)

12 Months Ended

Dec. 31, 2018

Accounts Receivable

Schedule of accounts receivable

	December 31, 2018		December 31, 2017
Accounts receivable	$	19,497	$	39,764
Less: Allowance for doubtful accounts		-0-		-0-
	$	19,497	$	39,764

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NOTES RECEIVABLE (Tables)

12 Months Ended

Dec. 31, 2018

Notes Receivable

Schedule of notes receivable

	December 31, 2018		December 31, 2017
Notes receivable	$	811,234	$	0
	$	811,234	$	0

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PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2018

Property And Equipment

Schedule of property, plant and equipment

	December 31, 2018			December 31, 2017
Equipment	$	27,118		$	27,119
Furniture & Fixtures		11,641			6,641
Less: Accumulated Depreciation		(32,161	)		(29,041	)
Net Fixed Assets	$	6,598		$	4,719

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OTHER BALANCE SHEET ACCOUNTS - PREPAID EXPENSES (Tables)

12 Months Ended

Dec. 31, 2018

Other Balance Sheet Accounts - Prepaid Expenses

Schedule Of Prepaid expenses and other current assets

	December 31,
	2018		2017
Prepaid Expenses:
Rent deposit		17,340		17,340
Sales Commissions Advances		1,060		0
Unvested Stock Grants		13,555		183,752
Total Prepaid Expenses	$	31,955	$	201,092

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NOTES PAYABLE (Tables)

12 Months Ended

Dec. 31, 2018

Notes Payable

Schedule of notes payable

Summary Description of Notes Payable	Amount Owed*
Decathlon LLC - Senior Secured Note, due 9/30/18, in default, interest at 15%	$	113,640
Finquest Capital Inc.- Secured Note, due 4/15/18, in default, interest at 15%		51,067
Brajoscal, LLC - Secured Note, due 12/31/18, in default, interest at 15%		41,875
Nottingham Securities Inc., monthly settlement payments		70,009
Note payable to individual investor, due 12/31/18, in default, interest at 12%		134,470
Note payable to individual investor, due 4/24/19-7/3/19 interest at 12%		79,620
Greentree Financial Group, Inc., due 4/24/19, interest at 8%		395,875
MGA Holdings LLC, due 11/26/18, in default, interest at 8%		84,150
Power Up Lending Group, due 10/12/2019-1/10/20, interest at 12%		232,760
Ignition Capital, LLC, due 11/30/2018, in default, interest at 6%		105,333
2 PLUS 2, LLC, Inc., due 4/24/19, interest at 8%		25,833
Collision Capital, due 12/31/18, in default, interest at 6%		20,600
Note payable to individual investor, monthly settlement payments		43,000
Note payable to individual investor, due 12/31/18, in default, interest at 6%		1,921
Crown Bridge Partners, due 9/28/19, interest at 10%		58,500
LG Capital LLC, due 9/12/19, interest at 10%		102,938
Adair Bays LLC, due 9/21/19, interest at 10%		102,747
Note payable to individual investor, due 5/25/19, no interest		176,000
Notes payable to four individual investors, due October-November 2019, interest at 12%		339,875
Notes payable to seven individual investors, due January-May 2020, interest at 12%		213,594
Notes payable to seven individual investors, due 9/20/20, interest at 6%		498,009
Notes payable to two principal officers, due on demand, interest at 6%		284,377
Total	$	3,338,060

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2018

Income Taxes

Schedule of effective income tax rate reconciliation

	2018			2017
Income tax at federal Statutory rate		34.0	%		34.0	%
Effects of permanent differences		(6.8	)%		(8.4	)%
Effect of temporary differences		1.1	%		1.3	%
Adjustment of prior year NOL’s		(5.3	)%		(3.8	)%
Effects of state taxes (net of federal taxes)		0	%		0	%
Change in valuation allowance		(23.0	)%		(23.1	)%
		0.0	%		0.0	%

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WARRANT INFORMATION (Tables)

12 Months Ended

Dec. 31, 2018

Warrant Information

Schedule of warrants

	Number of Shares			Exercise Price		Weighted Average Exercise price		Average Grant Date Fair value
Balance December 31, 2016		4,206,444		$0.15-$0.40			0.40		0.39
Granted		2,652,097
Forfeited or cancelled		(640,722	)		-
Balance December 31, 2017		6,217,819		$0.15-$1.00			0.28		0.29
Granted		11,626,000
Forfeited or cancelled		(102,250	)		-
Balance December 31, 2018		17,741,569		$0.01-$1.00			0.22		0.23

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2017 BUSINESS ACQUISITIONS (Tables)

12 Months Ended

Dec. 31, 2018

Business Acquisitions

Schedule of allocation of consideration for business acquisition

Checking and cash equivalents	$	51,500
Intellectual Property and Software Code		68,500
Intangible Asset-Goodwill		132,000
Purchase Price	$	252,000

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ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative)	12 Months Ended
	Dec. 31, 2018
Organization And Description Of Business
Entity incorporation, state country name	Delaware
Entity incorporation, date of incorporation	Feb. 24, 2010

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Derivative Liability	$ 1,480,978	$ 1,243,788	$ 0
Level 1 [Member]
Derivative Liability
Level 2 [Member]
Derivative Liability
Level 3 [Member]
Derivative Liability	$ 1,480,978

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Fair Value Of Financial Instruments Details 1Abstract
Derivative Liability, beginning	$ 1,243,788	$ 0
Convertible notes addition	3,501,616	1,225,906
Change in fair value	(1,358,601)	(143,697)
Conversions	(1,905,825)	161,579
Derivative Liability, ending	$ 1,480,978	$ 1,243,788

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Expected volatility	93.60%
Expected term	6 months
Risk free interest rate	256.00%	143.00%
Expected dividends
Minimum [Member]
Exersice price	$ 0.135
Maximum [Member]
Exersice price	$ 0.174

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Summary Of Significant Accounting Policies Details Abstract
Weighted-average volatility	93.60%	216.30%
Expected term (in years)	3 years 2 months 12 days	3 years 9 months 18 days
Risk-free interest rate	256.00%	143.00%

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Summary Of Significant Accounting Policies Details Abstract
Derivative liability	$ 1,480,978	$ 1,243,788	$ 0
Impairment charge of goodwill	$ 66,000
Property and equipment estimated useful life	5 years
Potentially dilutive securities	20,956,569	10,015,319
Research and development expenses	$ 691,201	$ 957,274
Marketing and advertising expense	$ 20,444	$ 17,319

XML

GOING CONCERN (Details Narrative) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Going Concern
Accumulated deficit	$ (22,514,711)	$ (18,521,865)
Working capital deficiency	$ 2,400,000	$ 22,500,000

XML

ACCOUNTS RECEIVABLE (Details) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Accounts Receivable Details Abstract
Accounts receivable	$ 19,497	$ 39,764
Less: Allowance for doubtful accounts	0	0
Accounts receivable, net	$ 19,497	$ 39,764

XML

NOTES RECEIVABLE (Details) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Notes Receivable Details Abstract
Note receivable	$ 811,234
Note receivable net	$ 811,234

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NOTES RECEIVABLE (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Note receivable	$ 811,234
Continuity logic [Member] | Bridge Loan [Member]
Note receivable	$ 811,234
Interest rate	6.00%
Maturity date	Aug. 31, 2019

XML

PROPERTY AND EQUIPMENT (Details) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Property And Equipment Details Abstract
Equipment	$ 27,118	$ 27,119
Furniture & Fixtures	11,641	6,641
Less: Accumulated Depreciation	(32,161)	(29,041)
Net Fixed Assets	$ 6,598	$ 4,719

XML

PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Property And Equipment Details Narrative Abstract
Depreciation expense	$ 3,121	$ 3,608

XML

OTHER BALANCE SHEET ACCOUNTS - PREPAID EXPENSES (Details) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Prepaid Expenses:
Total Prepaid Expenses	$ 31,955	$ 201,092
Rent Deposit [Member]
Prepaid Expenses:
Total Prepaid Expenses	17,340	17,340
Sales Commissions Advances [Member]
Prepaid Expenses:
Total Prepaid Expenses	1,060	0
Unvested Stock Grants [Member]
Prepaid Expenses:
Total Prepaid Expenses	$ 13,555	$ 183,752

XML

NOTES PAYABLE (Details)	Dec. 31, 2018 USD ($)	[1]
Notes payable	$ 3,338,060
Decathlon LLC [Member]
Notes payable	113,640
Finquest Capital Inc [Member]
Notes payable	51,067
Brajoscal, LLC [Member]
Notes payable	41,875
Nottingham Securities Inc [Member]
Notes payable	70,009
Individual Investor [Member]
Notes payable	134,470
Individual Investor 1 [Member]
Notes payable	79,620
Greentree Financial Group, Inc [Member]
Notes payable	395,875
MGA Holdings LLC [Member]
Notes payable	84,150
Power Up Lending Group, Ltd [Member]
Notes payable	232,760
Ignition Capital, LLC [Member]
Notes payable	105,333
2 PLUS 2, LLC, Inc [Member]
Notes payable	25,833
Collision Capital [Member]
Notes payable	20,600
Individual Investor 2 [Member]
Notes payable	43,000
Individual Investor 3 [Member]
Notes payable	1,921
Crown Bridge Partners [Member]
Notes payable	58,500
LG Capital LLC [Member]
Notes payable	102,938
Adair Bays LLC [Member]
Notes payable	102,747
Individual Investor 4 [Member]
Notes payable	176,000
Four Individual Investors [Member]
Notes payable	339,875
Seven Individual Investors [Member]
Notes payable	213,594
Seven Individual Investors One [Member]
Notes payable	498,009
Principal Officers [Member]
Notes payable	$ 284,377

[1] Includes accrued interest

XML

NOTES PAYABLE (Details) (Parenthetical)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Interest rate		6.00%
Decathlon LLC [Member]
Note payable due date	Sep. 30, 2018
Interest rate	15.00%
Finquest Capital Inc [Member]
Note payable due date	Apr. 15, 2018
Interest rate	15.00%
Brajoscal, LLC [Member]
Note payable due date	Dec. 31, 2018
Interest rate	15.00%
Individual Investor [Member]
Note payable due date	Dec. 31, 2018
Interest rate	12.00%
Individual Investor 1 [Member]
Interest rate	12.00%
Note payable due date discription	4/24/19-7/3/19
Greentree Financial Group, Inc [Member]
Note payable due date	Apr. 24, 2019
Interest rate	8.00%
MGA Holdings LLC [Member]
Note payable due date	Nov. 26, 2018
Interest rate	8.00%
Power Up Lending Group, Ltd [Member]
Interest rate	12.00%
Note payable due date discription	10/12/2019-1/10/20
Ignition Capital, LLC [Member]
Note payable due date	Nov. 30, 2018
Interest rate	6.00%
2 PLUS 2, LLC, Inc [Member]
Note payable due date	Apr. 24, 2019
Interest rate	8.00%
Collision Capital [Member]
Note payable due date	Dec. 31, 2018
Interest rate	6.00%
Individual Investor 2 [Member]
Note payable due date discription	monthly settlement payments
Individual Investor 3 [Member]
Note payable due date	Dec. 31, 2018
Interest rate	6.00%
Crown Bridge Partners [Member]
Note payable due date	Sep. 28, 2019
Interest rate	10.00%
LG Capital LLC [Member]
Note payable due date	Sep. 12, 2019
Interest rate	10.00%
Adair Bays LLC [Member]
Note payable due date	Sep. 21, 2019
Interest rate	10.00%
Individual Investor 4 [Member]
Note payable due date	May 25, 2019
Four Individual Investor [Member]
Interest rate	12.00%
Note payable due date discription	October-November 2019
Seven Individual Investors [Member]
Interest rate	12.00%
Note payable due date discription	January-May 2020
Seven Individual Investors One [Member]
Note payable due date	Sep. 20, 2020
Interest rate	6.00%
Principal Officers [Member]
Interest rate	6.00%
Note payable due date discription	due on demand

XML

NOTES PAYABLE (Details Narrative)	Dec. 31, 2018 USD ($)
Notes Payable Details Narrative Abstract
Notes payable	$ 3,338,060	[1]

[1] Includes accrued interest

XML

CONVERTIBLE AND OTHER NOTES (Details Narrative)				1 Months Ended																12 Months Ended
	Jun. 09, 2017 USD ($) $ / shares	Jun. 08, 2017 USD ($)	Mar. 13, 2017 USD ($) shares	Oct. 31, 2018 USD ($) $ / shares shares	Sep. 30, 2018 USD ($) $ / shares	Aug. 31, 2018 USD ($)	Jul. 31, 2018 USD ($)	Jun. 30, 2018 USD ($) $ / shares shares	May 31, 2018 USD ($)	Apr. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Feb. 28, 2018 USD ($)	Jan. 31, 2018 USD ($) $ / shares	Jan. 31, 2018 USD ($) $ / shares	Dec. 31, 2017 USD ($)	Nov. 30, 2017 USD ($) $ / shares	Aug. 30, 2017 USD ($) $ / shares	Jul. 30, 2017 USD ($) $ / shares	Apr. 18, 2017 USD ($)	Dec. 31, 2018 USD ($) Integer $ / shares shares	Dec. 31, 2017 USD ($)
Proceeds from convertible notes																					$ 1,020,000
Convertible debt															$ 969,600					$ 2,959,500	$ 969,600
Interest rate																					6.00%
Conversion price per share | $ / shares																				$ 0.30
Amortization of debt discount																				$ 1,220,133
Short-Term 2018 Convertible Notes [Member]
Convertible debt								$ 200,000	$ 135,000	$ 75,000		$ 250,000	$ 50,000	$ 50,000
Maturity date										Apr. 11, 2019				Dec. 31, 2018
Interest rate										12.00%				12.00%
Conversion price per share | $ / shares													$ 0.15	$ 0.15
Debt Conversion description								Convertible into our common stock at conversion prices at $0.16 per share and after six months, 55% of the lowest trading price for the 10 trading days prior to conversion	Convertible into our common stock at conversion prices at 55% of the lowest trading price for the 10 trading days prior to conversion	Convertible into our common stock at a conversion price equal to 42.5% of the lowest trading price for the 10 trading days prior to conversion.		Convertible into our common stock at conversion prices varying from 50-55% of the average of the lowest trading prices for the 10 trading days prior to conversion
Legal fees and commission										$ 2,000		$ 3,000
Short-Term 2018 Convertible Notes [Member] | Accredited Investors [Member]
Convertible debt					$ 25,000	$ 160,000	$ 275,000	$ 176,000
Maturity date					Jun. 23, 2019	May 14, 2019	Apr. 19, 2019
Interest rate					8.00%	8.00%	8.00%	10.00%
Debt Conversion description						Convertible into our common stock at conversion prices at 50% of the lowest trading prices for the 10 trading days prior to conversion	Convertible into our common stock at conversion prices at 50% of the lowest trading prices for the 10 trading days prior to conversion
Number of warrant purchase | shares								480,000
Warrant exercise price | $ / shares								$ 0.20
Warrant term								3 years
Short-Term 2018 Convertible Notes [Member] | Accredited Investors One [Member]
Convertible debt					$ 60,000
Debt Conversion description					Convertible into our common stock at conversion prices at 55% of the lowest trading price for the 10 trading days prior to conversion
Legal fees and commission					$ 2,000
Short-Term 2018 Convertible Notes [Member] | Accredited Investors Two [Member]
Convertible debt					$ 200,000
Debt Conversion description					Convertible into our common stock at conversion prices at $0.16 per share and after six months, 55% of the lowest trading price for the 10 trading days prior to conversion
Legal fees and commission					$ 10,000
Short-Term 2018 Convertible Notes [Member] | Maturity date 1 [Member]
Convertible debt								$ 100,000	$ 75,000			$ 150,000
Maturity date								Jun. 25, 2019	May 09, 2019			Aug. 28, 2018
Interest rate								10.00%	12.00%			11.00%
Short-Term 2018 Convertible Notes [Member] | Maturity date 1 [Member] | Accredited Investors Two [Member]
Convertible debt					$ 100,000
Maturity date					Sep. 12, 2019
Interest rate					10.00%
Short-Term 2018 Convertible Notes [Member] | Maturity date 2 [Member]
Convertible debt								$ 100,000	$ 60,000			$ 100,000
Maturity date								Jun. 27, 2019	May 21, 2019			Nov. 16, 2018
Interest rate								10.00%	10.00%			11.00%
Legal fees and commission								$ 10,000	$ 3,000
Short-Term 2018 Convertible Notes [Member] | Maturity date 2 [Member] | Accredited Investors Two [Member]
Convertible debt					$ 100,000
Maturity date					Sep. 21, 2019
Interest rate					10.00%
Convertible Notes [Member] | CEO [Member]
Convertible debt													$ 20,000	$ 20,000
Interest rate													6.00%
Convertible Notes [Member] | Accredited Investors [Member]
Convertible debt				$ 50,000				$ 75,000
Maturity date				Sep. 20, 2020				Jun. 05, 2021
Interest rate				6.00%				0.00%
Conversion price per share | $ / shares				$ 0.20
Debt Conversion description								Convertible into our common stock at a conversion price equal to 55% of the lowest trading prices for the 10 trading days prior to conversion
Number of warrant purchase | shares				50,000
Warrant exercise price | $ / shares				$ 0.25
Warrant term				2 years
Convertible Notes [Member] | Seven Accredited Investors [Member]
Convertible debt					$ 365,000
Maturity date					Sep. 20, 2020
Interest rate					6.00%
Conversion price per share | $ / shares					$ 0.20
Convertible Notes [Member] | Seven Accredited Investors One [Member]
Convertible debt				$ 75,000	$ 68,000
Maturity date				Sep. 20, 2020	Dec. 20, 2019
Interest rate				6.00%	12.00%
Conversion price per share | $ / shares				$ 0.15
Debt Conversion description					Convertible into our common stock at a conversion price equal to 42% of the lowest trading price for the 10 trading days prior to conversion
Warrant term				2 years
Promissory note [Member]
Proceeds from convertible notes															$ 363,000
Convertible debt	$ 50,000	$ 53,000	$ 25,000	$ 108,000												$ 85,800	$ 57,000	$ 85,800	$ 50,000	63,000
Maturity date	Mar. 09, 2018	Mar. 20, 2018	Sep. 13, 2017	Jul. 05, 2019											Mar. 19, 2019		May 01, 2018	Apr. 26, 2018	Apr. 18, 2018
Interest rate	12.00%	12.00%	12.00%	8.00%											12.00%	12.00%	12.00%	12.00%	12.00%
Debt conversion price percent	50.00%	42.00%	50.00%												42.00%	45.00%	55.00%	62.50%	50.00%
Lowest trading days	10 days	10 days	10 days												10 days	10 days	10 days	10 days	10 days
Converted common stock, share | shares			560,660
Conversion price per share | $ / shares	$ 0.20																$ 0.24	$ 0.20
Debt Conversion description				Convert the note into common stock of the Company at a conversion price equal to 50% of the lowest trading price during the 10-day period ending on the latest complete trading day prior to the conversion date
Promissory note [Member] | Accredited Investors [Member]
Convertible debt				$ 53,000			$ 103,000
Maturity date				Jan. 10, 2020			Oct. 12, 2019
Interest rate				12.00%			12.00%
Debt Conversion description				The noteholder has the right to convert the note into common stock of the Company at a conversion price equal to 58% of the average of the lowest trading price during the 10-day period ending on the latest complete trading day prior to the conversion date.			Convertible into our common stock at a conversion price equal to 42% of the lowest trading price during the 10-day trading period prior to conversion
Legal fees and commission							$ 3,000
Promissory note [Member] | Accredited Investors One [Member]
Convertible debt				$ 82,500
Maturity date				Nov. 26, 2018
Interest rate				8.00%
Promissory note 1 [Member]
Convertible debt																$ 100,000				$ 300,000
Maturity date																Nov. 30, 2018
Interest rate															12.00%	6.00%
Debt conversion price percent																25.00%
Lowest trading days															10 days
Conversion price per share | $ / shares																$ 0.30				$ 0.20
Promissory note 1 [Member] | Private Placement [Member]
Convertible debt																				$ 50,000
Promissory note 1 [Member]
Convertible debt	$ 100,000
Interest rate	12.00%
Debt conversion price percent	50.00%
Lowest trading days	10 days
Long-Term 2018 Convertible Notes [Member]
Convertible debt													$ 63,000	$ 63,000
Maturity date													Dec. 31, 2018
Interest rate													12.00%
Debt Conversion description													Convertible into our common stock at a conversion price equal to 42% of the average of the lowest trading prices for the 10 trading days prior to conversion
Legal fees and commission													$ 3,000
Long-Term 2018 Convertible Notes [Member] | Accredited Investors [Member]
Convertible debt											$ 63,000
Maturity date											Jun. 26, 2019
Interest rate											12.00%
Debt Conversion description											Convertible into our common stock at a conversion price equal to 42% of the average of the lowest trading prices for the 10 trading days prior to conversion
Legal fees and commission											$ 3,000
Long-Term 2018 Convertible Notes [Member] | January-February 2018 [Member]
Convertible debt																				$ 150,000
Interest rate																				12.00%
Debt Conversion description																				Convertible into our common stock at a conversion price equal to the lower of $.20 per share or the Volume Weighted Average Price (VWAP) for the 10 trading days prior to conversion
Legal fees and commission																				$ 18,000
Long-Term Convertible Notes [Member] | Broker-dealer [Member]
Warrant term																				3 years
Long-Term Convertible Notes [Member] | Private Placement [Member] | April and May 2018 [Member]
Convertible debt																				$ 53,000
Interest rate																				12.00%
Debt Conversion description																				Common stock at a conversion price equal to the lower of $.20 per share or the Volume Weighted Average Price (VWAP) of our common shares for the ten days prior to conversion
Convertible note purchase amount under private placement																				$ 25,000
Maturity period																				2 years
Long-Term Convertible Notes [Member] | Private Placement [Member] | April and May 2018 [Member] | Broker-dealer [Member]
Number of warrant purchase | shares																				53,000
Warrant exercise price | $ / shares																				$ 0.01
Number of investors | Integer																				4

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COMMITMENTS & CONTINGENCIES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Commitments Contingencies
Operating leases term	2 years
Operating lease monthly rent expenses	$ 8,323
Lease commitments description	The lease commitments over the two-year period is $13.00 per rentable square foot for months 1-12 and $13.50 per square foot for months 13-24.
Total lease expense	$ 106,000
Lease expiry period	December 2019
Rent expense	$ 98,245	$ 80,478

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INCOME TAXES (Details)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Income Taxes Details Abstract
Income tax at federal Statutory rate	34.00%	34.00%
Effects of permanent differences	(6.80%)	(8.40%)
Effect of temporary differences	1.10%	1.30%
Adjustment of prior year NOL’s	(5.30%)	(3.80%)
Effect of state taxes (net of federal taxes)	0.00%	0.00%
Change in valuation allowance	(23.00%)	(23.10%)
Total	0.00%	0.00%

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INCOME TAXES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Income Taxes Details Narrative Abstract
Net operating loss carryforwards	$ 15,912,080	$ 12,605,339
Operating loss carryforward expiry year	Federal carryforward expires in 2037 and the state carryforward expires in 2022
Ownership change in subsidiary	50.00%
Change in valuation allowance	$ 1,124,292
Cumulative estimated net tax operating loss	$ 15,912,080	$ 12,605,339

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RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	1 Months Ended					12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Apr. 30, 2017	Dec. 31, 2018	Dec. 31, 2017
Note payable and accrued interest - related party			$ 270,639			$ 284,377	$ 270,639
Interest rate							6.00%
Common stock shares reserved for future issuance				750,000
Warrant Exercise Price						$ 0.30
Conversion price per share						$ 0.30
Employment Agreements [Member]
Terms of salary agreements, description						The terms of the agreements include base salaries of $50,000 per month.
Interest rate						6.00%
Software Developer [Member]
Interest rate				6.00%
Warrant Exercise Price			$ 0.25	$ 0.20		$ 0.25	$ 0.25
Warrant Contractual Term			4 years	4 years
Stock options granted				150,000
Board of Directors [Member]
Granted stock award common shares	250,000	250,000
Granted stock award common shares description	vesting quarterly, for agreeing to serve on our Board for a second year.	Board of Directors for one year, which has now all vested;
Chief Revenue Officer [Member]
Terms of stock option						4 years
Employee stock ownership plan				500,000
Immediately vested share				375,000
Warrant Exercise Price				$ 0.35
Warrant Contractual Term				4 years
Stock options granted				1,000,000		500,000
Exercise price						$ .20
Former Chief Technology Officer [Member]
Granted stock award common shares						500,000
Chief Technology Officer [Member]
Bonus shares issued				600,000
Employee stock ownership plan				250,000
Chief Financial Officer [Member]
Bonus shares issued				250,000
Principal Officers [Member]
Common stock to convert debt, Shares					1,100,562
Common stock to convert debt, Amount					$ 330,168
Common stock to convert debt, Per Share					$ 0.30
Chief Executive Officer [Member]
Working capital loan						$ 76,000
Outstanding working capital loan	$ 76,000

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STOCKHOLDERS' EQUITY (Details Narrative) - USD ($)	1 Months Ended															3 Months Ended				12 Months Ended
	Oct. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Apr. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Oct. 31, 2017	Sep. 30, 2017	Jul. 30, 2017	Jun. 30, 2017	May 31, 2017	Apr. 30, 2017	Mar. 31, 2017	Feb. 28, 2017	Jan. 31, 2017	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2018	Dec. 31, 2017	Feb. 28, 2019	Nov. 30, 2018	Aug. 31, 2018	May 31, 2018
Preferred stock, shares authorized						20,000,000										20,000,000				20,000,000	20,000,000
Preferred stock, par value						$ 0.0001										$ 0.0001				$ 0.0001	$ 0.0001
Preferred stock, shares issued						0										0				0	0
Preferred stock, shares outstanding						0										0				0	0
Common stock, shares authorized						500,000,000										500,000,000				500,000,000	500,000,000
Common stock, par value						$ 0.0001										$ 0.0001				$ 0.0001	$ 0.0001
Common stock, shares issued						45,935,369										67,454,276				67,454,276	45,935,369
Common stock, shares outstanding						45,935,369										67,454,276				67,454,276	45,935,369
Unregistered common stock, Shares									200,000	548,215	1,300,000
Unregistered common stock, Amount									$ 40,000
Stock issued during period, shares								1,667,600
Stock issued during period, amount								$ 300,000												$ 1,400,000	$ 300,000
Class of Warrant or Right, Outstanding		540,000	686,000		450,000											2,652,097	540,000	686,000	450,000	2,652,097
Warrants granted, value		$ 33,656	$ 82,407		$ 84,875												$ 33,656	$ 82,407	$ 84,875
Warrant exercisable																41,667				41,667
Warrant Exercise Price																$ 0.30				$ 0.30
Stock options granted								1,150,000
Private Placement [Member]
Class of Warrant or Right, Outstanding																10,000,000				10,000,000
Warrant Exercise Price																$ .20				$ .20
Discounted true-up price description																Discounted true-up price, with a floor of $0.10 per share, related to the trading price of our Common Stock during a 90-day period after effectiveness of a registration statement.
Shareholder communications services [Member] | In January--February 2018 [Member]
Unregistered common stock, Shares																				800,000
Unregistered common stock, Amount																				$ 134,000
Marketing support services [Member
Unregistered common stock, Shares						96,999
Unregistered common stock, Amount						$ 18,430
UnregisteredCommonShares [Member]
Common stock, shares issued																1,048,999				1,048,999
Consulting Agreement [Member]
Unregistered common stock, Shares														300,000
Unregistered common stock, Amount														$ 200
2016 Equity Incentive Plan [Member]
Unregistered common stock, Shares								67,600
Unregistered common stock, Amount								$ 10,140
Performance Shares [Member]
Stock issued during period, shares								750,000
Granted Common Stock [Member]
Common stock, shares issued								1,911,684
Consulting Services [Member]
Unregistered common stock, Shares														650,000
Unregistered common stock, Amount														$ 442,000
Unregistered common stock, Per Share														$ 0.68
Legal services [Member]
Warrant exercisable																100,000				100,000
Warrant Exercise Price																$ 0.25				$ 0.25
Warrant Contractual Term																				4 years
Financial Services [Member]
Warrant exercisable																100,000				100,000
Warrant Exercise Price																$ 0.30				$ 0.30
Financial Services [Member]
Warrant Contractual Term																				5 years
Employee Stock Option [Member]
Warrant exercisable																650,000				650,000
Warrant Exercise Price																$ .20				$ .20
Warrant Contractual Term																				4 years
Employee stock options issued																				740,000
Options Held [Member]
Warrant exercisable																90,000				90,000
Warrant Exercise Price																$ .25				$ .25
Stock Option Grants Quarterly [Member]
Vested shares								625,000
Stock Option Grants Immediately [Member]
Vested shares								375,000
Chief Revenue Officer [Member]
Warrant Exercise Price								$ 0.35
Warrant Contractual Term								4 years
Stock options granted								1,000,000
Noteholder [Member]
Unregistered common stock, Shares															133,333
Unregistered common stock, Amount															$ 40,000
Unregistered common stock to convert debt, value										$ 30,243
Unregistered common stock to convert debt shares										151,216
Warrant Exercise Price			$ 0.135															$ 0.135
Warrant Contractual Term																		2 years
Warrants granted			100,000															100,000
Convertible note, amount			$ 75,000															$ 75,000
Two Consultants [Member]
Warrant Contractual Term																	2 years
Warrants granted		50,000															50,000
Weighted average strike price																	$ .25
Two Consultants [Member] | Shareholder communications services [Member] | July-August 2018 [Member]
Unregistered common stock, Shares																				650,000
Unregistered common stock, Amount																				$ 102,500
Two Noteholder [Member]
Warrant Exercise Price		$ 0.01															$ 0.01
Warrant Contractual Term																	2 years
Warrants granted		100,000															100,000
Convertible note, amount		$ 100,000															$ 100,000
Investor Two [Member]
Warrant Exercise Price																$ 0.20				$ 0.20
Warrant Contractual Term																				3 years
Cashless exercise of warrants																1,250,000				1,250,000
Investor Two [Member] | Private Placement [Member]
Warrant Exercise Price			$ 0.01		$ 0.01													$ 0.01	$ 0.01
Warrant Contractual Term																		3 years	3 years
Warrants granted			106,000		200,000													106,000	200,000
Convertible note, amount			$ 53,000		$ 100,000													$ 53,000	$ 100,000
Warrants issued to note holders			53,000		100,000													53,000	100,000
Warrants issued to placement agent			53,000		100,000													53,000	100,000
Investor [Member]
Common stock, shares issued													296,999
Unregistered common stock, Shares													96,999
Stock issued during period, shares													200,000
Stock issued during period, amount													$ 100,000
Common stock shares issued, per share													$ 0.50
Marketing support services													$ 29,100
Warrant Exercise Price			$ 0.20		$ 0.30											$ 0.40		$ 0.20	$ 0.30	$ 0.40
Warrant Contractual Term																		3 years	5 years	4 years
Warrants granted			480,000		100,000													480,000	100,000
Convertible note, amount			$ 176,000		$ 100,000													$ 176,000	$ 100,000
Cashless exercise of warrants																200,000				200,000
Number of vesting shares per month																20,000				20,000
Investor [Member] | Private Placement [Member]
Unregistered common stock, Shares											500,000				142,857
Unregistered common stock, Amount											$ 150,000				$ 50,000
Unregistered common stock, Per Share											$ 0.30				$ 0.35
Warrant exercisable																250,000				250,000
Warrant Exercise Price																$ 0.30				$ 0.30
Warrant Contractual Term																				4 years
Investor One [Member]
Warrant exercisable																142,857				142,857
Warrant Exercise Price					$ 0.01											$ 0.35			$ 0.01	$ 0.35
Warrant Contractual Term																			3 years	4 years
Warrants granted					150,000														150,000
Convertible note, amount					$ 150,000														$ 150,000
Accredited Investor [Member] | Private Placement [Member] | October-December 2018 [Member]
Common stock, par value																$ .20				$ .20
Common stock, shares issued																7,700,000				7,700,000
Private placement offering																				$ 2,000,000
Private placement offering description																				purchased shares at $.20 per share and additional advisory shares based on 10% of the purchased shares.
Proceeds from private investors																				$ 1,400,000
Accredited Investor [Member] | Shareholder communications services [Member]
Unregistered common stock, Shares		93,333
Unregistered common stock, Amount		$ 14,000
Broker-dealer [Member]
Unregistered common stock, Shares	141,231
Two Consultants [Member] | Shareholder communications services [Member]
Unregistered common stock, Shares	400,000
Unregistered common stock, Amount	$ 62,000
Volerro Corporation [Member]
Unregistered common stock, Shares											400,000
Unregistered common stock, Amount											$ 168,000
Volerro Corporation [Member] | Shareholder communications services [Member]
Unregistered common stock, Shares		200,000
Unregistered common stock, Amount		$ 31,800
Four Note Holders [Member] | July-September 2018 [Member] | Convertible Debt [Member]
Unregistered common stock, Shares																				3,014,491
Unregistered common stock to convert debt, value																				$ 209,388
Three Holders [Member] | April-June 2018 [Member] | Convertible Debt [Member]
Unregistered common stock, Shares																				3,861,843
Unregistered common stock to convert debt, value																				$ 256,086
Three Consultants [Member] | Shareholder communications services [Member] | April-May 2018 [Member]
Unregistered common stock, Shares																				779,960
Unregistered common stock, Amount																				$ 109,770
Financial Advisor [Member] | Consulting Agreement [Member]
Unregistered common stock, Shares							200,000			300,000	200,000
Unregistered common stock, Amount							$ 46,000
Unregistered common stock, Per Share										$ 0.25	$ 0.30
Financial Advisor [Member] | Outstanding Agreement [Member]
Unregistered common stock, Shares										96,999
Unregistered common stock, Amount										$ 29,100
Chief Financial Officer [Member]
Unregistered common stock, Shares								250,000
Unregistered common stock, Amount								$ 35,000
Principal Officers [Member]
Unregistered common stock to convert debt shares												1,100,562
Unregistered common stock to convert debt, per Share												$ 0.30
Technical And Software Advisory Services [Member] | Consulting Services [Member]
Unregistered common stock, Shares														250,000
Investment Relations And Financial Communications Services [Member] | Consulting Services [Member]
Unregistered common stock, Shares														400,000
Creditor [Member]
Warrant exercisable																167,573				167,573
Warrant Exercise Price																$ 0.30				$ 0.30
Warrant Contractual Term																				3 years
Convertible Debt [Member]
Unregistered common stock, Shares				660,000
Unregistered common stock, Amount				$ 92,844
Unregistered common stock to convert debt, value				$ 47,248
Convertible Debt [Member] | Private Placement [Member]
Unregistered common stock, Shares						300,000
Unregistered common stock, Amount						$ 44,500
Convertible Debt [Member] | January-March 2018 [Member]
Unregistered common stock, Shares																				2,012,957
Unregistered common stock to convert debt, value																				$ 130,433
Convertible Debt [Member] | Shareholder communications services [Member]
Unregistered common stock, Shares	439,092
Unregistered common stock, Amount	$ 26,894
Convertible Notes [Member] | Noteholder [Member]
Warrant Exercise Price		$ 0.01															$ 0.01
Warrant Contractual Term																	2 years
Warrants granted		390,000															390,000
Convertible note, amount		$ 390,000															$ 390,000
Convertible Notes Payable [Member]
Unregistered common stock, Shares						252,000
Unregistered common stock, Amount						$ 31,500
Debt holder [Member] | UnregisteredCommonShares [Member]
Unregistered common stock, Shares						100,000
Unregistered common stock, Amount						$ 19,000
Debt holder [Member] | Maximum [Member] | UnregisteredCommonShares [Member]
Interest rate																24.00%				24.00%
Debt holder [Member] | Minimum [Member] | UnregisteredCommonShares [Member]
Interest rate																12.00%				12.00%
Software Developer One [Member]
Warrant Exercise Price																$ 0.25				$ 0.25
Warrants granted																100,000				100,000
Vesting period																				4 years
Software Developer [Member]
Warrant Exercise Price						$ 0.25		$ 0.20								$ 0.25				$ 0.25	$ 0.25
Warrant Contractual Term						4 years		4 years
Warrants granted																100,000				100,000
Stock options granted						100,000		150,000
Vesting period																				4 years
Secured Lender [Member]
Warrant exercisable																150,000				150,000
Warrant Exercise Price																$ 0.15				$ 0.15
Warrant Contractual Term																				4 years
Warrants granted																1,347,185				1,347,185
Secured Lender [Member] | Maximum [Member]
Warrant Exercise Price																$ 0.30				$ 0.30
Secured Lender [Member] | Minimum [Member]
Warrant Exercise Price																0.65				0.65
John Bode [Member]
Unvested shares of common stock					250,000
Unvested shares of common stock, amount					$ 50,000
Chief Revenue Officer [Member]
Unregistered common stock, Shares								500,000
Unregistered common stock, Amount								$ 85,000
Warrant Exercise Price																$ 0.20				$ 0.20
Warrant Contractual Term								4 years												4 years
Stock options granted																				500,000
Former Chief Technology Officer [Member]
Unregistered common stock, Shares			500,000
Unregistered common stock, Amount			$ 80,000
Board of Directors [Member]
Common stock shares vested quarterly																						62,500	62,500	62,500	62,500
Licensed Broker Dealer [Member] | 2017 Private Offering [Member]
Unregistered common stock, Shares						300,000
Unregistered common stock, Amount						$ 44,500
Chief Technology Officer [Member]
Unregistered common stock, Shares								850,000
Unregistered common stock, Amount								$ 132,500
Warrant Contractual Term								4 years
New Customers [Member]
Unregistered common stock, Shares								96,999
Unregistered common stock, Amount								$ 13,580
Accredited Investor 1[Member]
Unregistered common stock, Shares								560,660
Unregistered common stock, Amount								$ 28,033
Accredited Investor [Member]
Unregistered common stock, Shares								336,425
Unregistered common stock, Amount								$ 42,053
MarketingServices [Member]
Warrant exercisable																50,000				50,000
Warrant Exercise Price																$ 0.17				$ 0.17
Warrant Contractual Term																				4 years

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WARRANT INFORMATION (Details) - Warrant [Member] - $ / shares	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Outstanding, beginning balance	6,217,819	4,206,444
Granted	11,626,000	2,652,097
Forfeited or cancelled	(102,250)	(640,722)
Outstanding, ending balance	17,741,569	6,217,819
Exercise Price Range Per Share
Outstanding, beginning balance	$ 0.28	$ 0.40
Granted
Forfeited or cancelled
Outstanding, ending balance	0.22	0.28
Average Grant Date Fair value	0.29	0.39
Granted
Forfeited or cancelled
Average Grant Date Fair value	0.23	0.29
Minimum [Member]
Exercise Price Range Per Share
Outstanding, beginning balance	0.15	0.15
Forfeited or cancelled
Outstanding, ending balance	0.01	0.15
Maximum [Member]
Exercise Price Range Per Share
Outstanding, beginning balance	1.00	0.40
Forfeited or cancelled
Outstanding, ending balance	$ 1.00	$ 1.00

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WARRANT INFORMATION (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Warrant [Member]
Stock warrant expense issued for services and investors	$ 1,155,670	$ 127,322

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BUSINESS ACQUISITIONS (Details)	12 Months Ended
	Dec. 31, 2018 USD ($)
Business Acquisitions Details Abstract
Checking and cash equivalents	$ 51,500
Intellectual Property and Software Code	68,500
Intangible Asset-Goodwill	132,000
Purchase Price	$ 252,000

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BUSINESS ACQUISITIONS (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Business acquisitions aggregate purchase price	$ 252,000
Goodwill	13,800	$ 132,000
Intellectual property	$ 68,500
2017 Acquisition [Member]
Business acquisition name of acquired entity	Volerro Corporation
Business acquisitions aggregate purchase price	$ 252,000
Common stock shares	400,000
Additional common stock shares	$ 200,000	$ 200,000
Goodwill	132,000
Intellectual property	68,500
Customer contract remaining amount	10,800
Goodwill impairment expense	$ 66,000

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CONCENTRATIONS (Details Narrative)	12 Months Ended
	Dec. 31, 2018
Concentrations
Description of Concentrations	Three customers each accounted for more than 10% of our revenues, and also and alike for the year ended December 31, 2017 four customers each accounted for more than 10% of our revenues. Combined, these customers represented less than 50% of our revenues during each of 2018 and 2017.

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SUBSEQUENT EVENTS (Details Narrative) - USD ($)	1 Months Ended				3 Months Ended	12 Months Ended
	Apr. 30, 2019	Mar. 31, 2019	Feb. 28, 2019	Sep. 30, 2017	Mar. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Convertible note						$ 590,636	$ 329,401
Common stock, shares issued						67,454,276	45,935,369
Common stock shares value				$ 300,000		$ 1,400,000	$ 300,000
Convertible debt						$ 2,959,500	$ 969,600
Warrant Exercise Price						$ 0.30
Private Placement [Member]
Warrant Exercise Price						$ .20
Subsequent Event [Member] | Private Placement [Member]
Proceeds from private investors					$ 350,000
Subsequent Event [Member] | Note Holders [Member]
Common stock, shares issued		3,182,834			3,182,834
Convertible debt		$ 504,134			$ 504,134
Warrants issued		3,182,834			3,182,834
Terms of warrants		3 years
Warrant Exercise Price		$ .20			$ .20
Fair value of warrants using black scholes pricing method		$ 25,908			$ 25,908
Subsequent Event [Member] | Note Holders [Member] | February through March 2019 [Member]
Common stock, shares issued						5,439,253
Convertible debt						$ 238,707
Subsequent Event [Member] | Advisory Common Stock [Member] | Private Placement [Member]
Common stock, shares issued		175,000			175,000
Subsequent Event [Member] | Purchased Common Stock [Member] | Private Placement [Member]
Common stock, shares issued		1,750,000			1,750,000
Subsequent Event [Member] | John B. Bode [Member]
Restricted shares issued			62,500
Independent Director agreement, description			pursuant to an Independent Director agreement dated March 1, 2018.
Subsequent Event [Member] | Capital Market Solutions, LLC [Member]
Common stock, shares issued	30,000,000
Common stock shares value	$ 1,797,000
Consulting agreement terms	1 year
Subsequent Event [Member] | Capital Market Solutions, LLC [Member] | Warrant [Member]
Common stock, shares issued	30,000,000
Terms of warrants	5 years
Warrant Exercise Price	$ 0.20
Fair value of warrants using black scholes pricing method	$ 1,297,570
Consulting fee	$ 50,000
Subsequent Event [Member] | Consultant [Member]
Common stock, shares issued			300,000
Common stock shares value			$ 26,730