UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

FORM 10-K

Commission File No. 333-197094

IDdriven, Inc.

(Exact name of registrant as specified in its charter)

 

Registrant’s telephone number, including area code: (480) 307-8700

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

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

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

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ 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 Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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). 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 filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes ☐ No ☒ 

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 equity was last sold was $0 as of the last business day of the registrant’s most recently completed second fiscal quarter. For purposes of this computation, all officers, directors, and 10% beneficial owners of the registrant are deemed to be affiliates. Such determination should not be deemed to be an admission that such officers, directors, or 10% beneficial owners are, in fact, affiliates of the registrant. 

 

As of April 12, 2016, there were outstanding 75,310,000 shares of the registrant’s common stock, par value $0.001 per share.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Report on Form 10-K contains forward looking statements that involve risks and uncertainties. All statements other than statements of historical fact contained in this Report on Form 10-K, including statements regarding future events, our future financial performance, business strategy, and plans and objectives for future operations, are forward-looking statements. In many cases, you can identify forward-looking statements by terminology such as “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” or “will” or the negative of these terms or other comparable terminology. Although we do not make forward looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors, including the risks outlined under “Risk Factors” or elsewhere in this Report on Form 10-K, which may cause our or our industry’s actual results, levels of activity, performance, or achievements to differ materially from those expressed or implied by these forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time, and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking statements.

 

You should not place undue reliance on any forward-looking statement, each of which applies only as of the date of this Report on Form 10-K. Except as required by law, we undertake no obligation to update or revise publicly any of the forward-looking statements after the date of this Report on Form 10-K to conform our statements to actual results or changed expectations.

 

 

PART I

 

ITEM 1 – BUSINESS

 

General

 

We are an enterprise software company that has developed and is now launching the next generation in identity and access management (“IAM”) enterprise solutions into a demand driven market. IAM is a solution that helps end-users to ensure that access across multiple technological environments is granted only to the right individuals. IAM solutions provide secure, identity-based access to various systems, applications, and information from any location. Thus, IAM solutions minimize the risk of fraudulent activities, thereby preventing the misuse of data. IAM solutions are being widely adopted by large and medium-scale enterprises as well as government departments.

Our flagship product — IDdriven — is designed to manage large volumes of users and access rights over various applications in hybrid environments (cloud and on-premise). IDdriven is a superior, next-gen hybrid cloud-based solution and the new state of the art software delivered as a service (Software as a Service or “SaaS”). It is dynamic, seamless, scalable, and flexible with the widest array of features. Its plug & play functionality enables a new, untapped small and medium-sized enterprises (SME) marketplace.

The Company is led by a senior management team with extensive experience in the Access governance and Identity Management market.

Market Overview

 

The highly fragmented, demand-driven IAM market is projected to double from $9.16 billion in 2014 to $18.30 billion in 2019, a 14.85% CAGR.  This growth is attributable to the growing cyber-security threat. This threat is contributing to the adoption of newer, more cost-effective IAM systems. Traditional IAM systems lack the flexibility and scalability of more advanced SaaS systems.

 

Based on the experience of our management team in the development of IAM solutions, we believe the market for IAM solutions continues to develop with new and innovative technologies emerging. In tandem, so does the realization that IAM is not just a technology concerned with security and control. We see IAM solutions being used to aid business agility – consolidating access and supporting collaboration, enabling new channels and anytime/anywhere access for everybody (across colleagues, partners and consumers).

According to a 2014 Verizon Data Breach Investigation Report, more than 16,000 incidents in the past year have been identified where sensitive information was unintentionally exposed. The data seems to suggest that highly repetitive and mundane business processes involving sensitive info are particularly error prone. Also, according to a publication of GovInfoSecurity, a provider of information on security, risk management, privacy and fraud, this pattern contains more incidents caused by business partners than any other. We believe these observations and our experience in this industry, supports the demand we expect for the IDdriven solution, which is dynamic, seamless, scalable, flexible, and offers the widest possible array of features and benefits.

Our industry experience also shows:

·

Whether through human error at the system administrator or end-user levels, deliberate or opportunistic employee theft, the insider threat facing all enterprises is acute. Limiting employee and contractor network access, to only the data that actively employed individuals need to fulfill their responsibilities, minimizes risk.

·

Enterprise awareness of the threat is rapidly growing, as major breaches occur almost daily, fueling demand for cost effective solutions that accommodate the ubiquitous convenience vs. security trade off.

Enterprises are challenged to manage access for their employees, externals, partners and suppliers. On top of that, company governance and compliance demand that they enforce business rules in both on-premises and cloud applications. IDdriven is plug & play and has the ability to make businesses compliant in a matter of minutes. It’s usable from any device, with seamless secure access to Cloud applications as well as on-premise applications.

While the IAM competition is being marginalized trying to port their programs to the cloud, IDdriven’s solution was built from scratch, in the cloud, and offers unrivalled functionality and simplicity of implementation. It also enables IDdriven to price competitively, while capable of delivering high gross margins, while providing a robust set of features and customer benefits.

A significant number of insider threat cases occur as a result of a gap between the information an employee needed to do their job and the information they had access to according to Eric Cole, a SANS Institute fellow and IT security author. "In most cases in the work I've done, usually about 70 percent of the information that an insider had access to they did not need to do their job." 

 

Technology

 

We have been developing the IDdriven solution since our inception in 2013 utilizing the experience developed by our cofounders over their 60 years of combined IAM system experience.

IDENTITY MANAGEMENT AS A SERVICE (IDaaS) BY IDdriven

Cloud technology has become an important part of today’s businesses.  The increase in usage of cloud-based applications also requires a proper management of security and access rights in order to protect confidential information and the integrity of a networked computer system. While some companies have a partial solution in place for their on-premises-based applications, they lack the access control over cloud-based applications. IDdriven is an Identity and Access Management as a Service (IDaaS) product for managing both your on-premises and cloud applications from one central point.

Complete Identity and Access Management (“IAM”) Solution

IDdriven provides a complete IDaaS (Identity as a Service) solution. It supports the entire life cycle of users and provides the customer (IT Administrator or Risk Management Officer) with control at every stage of the process. It puts the customer in control over who can do what, why and from which location – and features robust reporting capability, access certification, self-service and real time provisioning to cloud and on-premises applications. IDdriven works in a hybrid world, so the customer can control applications and systems both on-premises and in the cloud.

IDdriven Key Advantages

·

Role Based Access Control (RBAC): for cloud applications as well as on-premise applications. IDdriven integrates with existing on-premise IAM systems to the Cloud via a comprehensive API, providing a hybrid solution.

·

Attribute Based Access Control: To assign and revoke accesses or licenses based on a user’s attributes.

·

Impact Analysis: Ability to perform an impact analysis on changes in the role model before being applied into the production environment.

·

License Management: IDdriven reports how many licenses (e.g. Office 365) are in use versus the amount being paid for and to whom they are assigned -- immediately lowering a company’s expenses. IDdriven can assign and revoke licenses to users through the RBAC system. Eventually, customers can also manage the modules assigned to a user for a specific license.

·

Zone Based Access Control (ZBAC): Allows access to defined applications as a function of customers’ physical location (based on their coordinates), and identifies which access rights they have within these applications.

·

Real time: All of the adjustments carried out real time, without the use of synchronization.

·

Completely Cloud based: No need for on-premise installations and capital expenditures.

·

Certification and recertification: Ensure the employees and partners have the correct access rights, and provides customers with the ability to generate reports on that data.

·

Active Directory Cleansing.

·

Self Service Module.

·

Impact Analysis Tool: IDdriven analyzes and shows customers the impact of proposed changes, before they are implemented.

·

Plug & Play: Up and running in a matter of minutes.

The IDdriven Difference

 

 

 

Marketing Strategy

 IDdriven uses different marketing channels to reach two different categories of customer:

·

Small & Medium Enterprises (SME) (<500 subscribers) – via direct web-based interaction; and

·

Large companies (500+) via channel partners.

IDdriven is a cost effective SaaS solution suitable to companies in all industries of any size. SME’s will be able to download IDdriven, pay with a credit card, to capitalize on the program’s simple, plug & play installation. Large companies typically use a channel partner for a more sophisticated implementation to utilize IDdriven’s advanced features not needed by SME’s.

We continue to build our already established brand within the IAM industry. Our Chief Technology Officer Remy de Vries actively maintains an excellent working relationship with the Microsoft Product Group since 2010.

We also work with our partners and customers for joint news releases and case studies. We will continue our internal marketing activities, including following editorial calendars of various trade and vertical publications, seeking speaking engagements for our CEO, and publishing industry articles.

 

Intellectual Property

 

We regard certain aspects of our internal operations, products, and documentation as proprietary and rely on a combination of copyright and trademark laws, trade secrets, software security measures, license agreements, and nondisclosure agreements to protect our proprietary information. We do not currently hold any patents.

 

We cannot guarantee that our protections will be adequate or that our competitors will not independently develop technologies that are substantially equivalent or superior to our system. Nonetheless, we intend to vigorously defend our proprietary technologies, trademarks, and trade secrets. We have required and will continue to require existing and future members of management, employees, and consultants to sign non-disclosure and invention assignment agreements for work performed on our behalf.

 

Although we have not historically sought any patent protection, we intend to secure appropriate national and international trademark protections with the intention of prosecuting any infringements. To date, we have solely relied on trade secrets, software security measures, and nondisclosure agreements to protect our proprietary information. We own registered trademarks for IDdriven from the Patent and Trademark Offices in The Netherlands, Belgium and Luxembourg. We are actively pursuing trademark registration elsewhere in Europe and in the USA.

 

We do not believe that our proprietary rights infringe the intellectual property rights of third parties. However, we cannot guarantee that third parties will not assert infringement claims against us with respect to current or future technology or that any such assertion may not require us to enter into royalty arrangements or result in costly litigation. Furthermore, our proposed future products and services may not be proprietary and other companies may already be providing these products and services.

 

Government Regulation

 

The security industry and consumer data privacy are subject to government regulation. Future changes in laws or regulations could require us to change the way we operate, which could increase costs or otherwise disrupt operations. In addition, failure to comply with any applicable laws or regulations could result in substantial fines or revocation of any required operating permits and licenses. If laws and regulations change or we fail to comply in the future, our business, financial condition, and results of operations could be materially and adversely affected.

 

Employees

 

As of December 31, 2015, we have one employee in the United States and seven employees in the Netherlands. In additional we contract with a third-party software developers as needed for software development. Our future success will depend, in part, on our ability to attract, retain, and motivate highly qualified security, sales, marketing, technical and management personnel. From time to time, we employ independent consultants or contractors to support our development, marketing, sales and support, and administrative needs. Our employees are not represented by any collective bargaining unit.

 

Our History

 

We were incorporated in Nevada on January 27, 2014 under the name TiXFi, Inc. and engaged in buying and reselling tickets to end users. On December 21, 2015, we completed a reverse merger with Insight Innovators, B.V., a Dutch corporation (“Insight Innovators”), pursuant to which Insight Innovators became a wholly owned subsidiary of our company. Thereafter, we changed our name to IDdriven, Inc. After the reverse merger, we continued Insight Innovator’s historical and proposed business.

 

Our principal executive offices are located at 13355 Moss Rock Dr., Auburn, CA 95602. Our common stock is traded on the OTCQB Tier of the OTC Markets Group (OTCQB) under the trading symbol “IDDR.” Insight Innovators headquarters are located at Nijverheidsweg Noord 78, 3812PM Amersfoort, The Netherlands.

 

Available Information

 

We electronically file our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to these reports and other information with the Securities and Exchange Commission (the “SEC”). These reports can be obtained by accessing the SEC’s website at www.sec.gov. The public can also obtain copies by visiting the SEC’s Public Reference Room at 100 F Street NE, Washington, DC 20549 on official business days during the hours of 10:00 a.m. to 3:00 p.m. or by calling the SEC at 1-800-SEC-0330. We have a website located at www.iddriven.com. Information contained on our websites does not constitute a part of this Annual Report on Form 10-K.

 

ITEM 1A – RISK FACTORS

 

An investment in our securities is highly speculative and involves a high degree of risk. You should carefully consider the following risk factors, together with all of the information included in this Report on Form 10-K before making an investment decision to buy our securities. We believe the risks and uncertainties described below are the most significant we face. Additional risks and uncertainties of which we are unaware, or that we currently deem immaterial, also may become important factors that affect us. If any of the following risks occur, our business, financial condition, or results of operations could be materially and adversely affected. In that case, the trading price of our securities could decline, and you may lose all or part of your investment.

 

Risk Related to Our Business

 

Our consolidated financial statements for the year ended December 31, 2015 were prepared on a “going concern basis” and the audit report contains a “going concern qualification” (see the Audit Report on the Financial Statements for the year ended December 31, 2015 and Note 1 to those Financial Statements). Our consolidated financial statements assume we will continue as a going concern, but to be able to do so we will need to raise additional capital to fund our operations until positive operating cash flow is achieved. There can be no assurance that we will be able to raise sufficient additional capital to continue our operations.

 

We Have a Limited Operating History and Have Incurred Significant Net Losses Since Our Inception and May Not Be Able To Achieve Profitability On An Annual Basis In The Future.

 

We were incorporated on January 27, 2014 and operated as a sports and entertainment ticket broker for concerts, sporting and other entertainment events. On December 21, 2015 we acquired Insight Innovators, B.V. and continued its business of developing and launching, a next-generation identity and access management enterprise solution known as IDdriven.

 

We have not realized any revenues from sales or licensing of IDdriven and have incurred significant net losses since our inception. For the years ended December 31, 2015 and 2014, we incurred a net loss of approximately $1.2 million and earned net income of approximately $0.2 million, respectively, and had accumulated losses of approximately $1.0 million through December 31, 2015. Furthermore, because we have a limited operating history, you will have difficulty evaluating our business and future prospects and we cannot predict if we will achieve profitability in the near future or at all. The expected growth due to the recent launch of our flagship product, IDdriven, may not achieve the levels we expect and we may not generate sufficient revenue to achieve profitability. Our ability to achieve profitability depends on a number of factors, including our ability to attract and service customers on a profitable basis and the growth of the identity and access management industry. If we are unable to achieve profitability, we may not be able to execute our business plan, our prospects may be harmed, and our stock price could be materially and adversely affected.

 

We Need To Raise Significant Additional Funding.

 

At our current estimated burn rate, we have sufficient capital to continue our operations for only a short period of time. Accordingly, we must raise capital to continue as a going concern. Through the date of this report we have raised approximately $1.2 million through an offering of our Series A Preferred Stock and 10% Convertible Notes. In addition, in March, 2016, our Board of Directors approved raising up to $5.0 million through a private placement of our securities. We have not commenced this offering as of the date of this report. There is no assurance that we can raise additional funding to continue as a going concern or to operate profitably. Any inability to obtain additional financing when needed could require us to significantly curtail or cease operations.

 

Even if funding is available to us, we cannot assure investors that additional financing will be available on terms that are favorable to us or to our existing stockholders. Additional funding may be accomplished through the issuance of equity or debt securities that could be significantly dilutive to the percentage ownership of our existing stockholders. In addition, these newly issued securities may have rights, preferences, or privileges senior to those of existing stockholders. Accordingly, such a financing transaction could materially and adversely impact the price of our common stock.

 

We Depend On Certain Key Personnel.

 

Our future success is dependent on the efforts of key management personnel, particularly Arend D. Verweij our Chief Executive Officer, Chief Financial Officer and Director, Geurt van Wijk, our Chief Operating Officer and a Director and Remy de Vries, our Chief Technology Officer, each of whom is employed by us pursuant to employment agreements. The loss of one or more of our other key employees could also have a material adverse effect on our business, financial condition, and results of operations. 

We also believe that our future success will be largely dependent on our ability to attract and retain highly qualified management, sales, and marketing personnel. We cannot assure investors that we will be able to attract and retain such personnel and our inability to retain such personnel or to train them rapidly enough to meet our expanding needs could cause a decrease in the overall quality and efficiency of our staff, which could have a material adverse effect on our business, financial condition, and results of operations.

 

Demand For Our IDdriven Software Solution May Be Lower Than We Anticipate.

 

We have limited resources to undertake direct sales to end users and licensing and resale relationships with service providers and system integrators. We cannot predict with certainty the potential consumer demand for our cloud-based identity and access management solution or the degree to which we will meet that demand. If demand for our services does not develop to the extent or as quickly as expected, we might not be able to generate enough revenue to become profitable.

 

We are currently targeting the sale and licensing of our cloud-based identity and access management solution direct to the SME marketplace and for resale by software service providers and system integrators. Our strategy to target these groups is based upon their interest and a number of assumptions, some or all of which could prove to be incorrect.

 

Even if markets for our products and services develop, we could achieve a smaller share of those markets than we currently anticipate. Achieving market share will require substantial investment in technical, marketing, project management, and engineering functions to support the deployment of our services. We cannot assure investors that our efforts will result in the attainment of sufficient market share to become profitable.

 

We Believe Industry Trends Support Our Cloud Based Systems, But If Trends Reverse We May Experience Decreased Demand.

 

The identity and access management industry is characterized by rapid changes in technology and customer demands. We believe that the existing market preference for an easy to implement, low cost cloud-based solution is strong and will continue for the foreseeable future. We cannot assure investors that customer demand for our products and the market’s preference for identity and access management software systems will continue. A lack of customer demand or a decline in the preference of cloud based access management software systems could have a material adverse effect on our business, financial condition, and results of operations.

 

Rapid Growth May Strain Our Resources.

 

As we continue the commercialization of our identity and access management products and services, we expect to experience significant and rapid growth in the scope and complexity of our business, which may place a significant strain on our senior management team and our financial and other resources. Such growth, if experienced, may expose us to greater costs and other risks associated with growth and expansion. We may be required to hire a broad range of additional employees, including engineers, project managers, and other support personnel, among others, in order to successfully advance our operations. We may also be required to expand and enhance our technology and network infrastructure design and other technologies to accommodate our future customer needs. We may be unsuccessful in these efforts or we may be unable to project accurately the rate or timing of these increases. The data centers that we currently use have significant additional bandwidth capacity available should we need it.

 

The nature of our IDdriven SaaS model requires us to increase our leased space at data centers as we sell or license our solution. Our ability to manage our growth effectively will require us to continue to improve our operations, to improve our financial and management information systems, and to train, motivate, and manage our employees.

 

This growth may place a strain on our management and operational resources. The failure to develop and implement effective systems, or to hire and retain sufficient personnel for the performance of all of the functions necessary to effectively service and manage our business, or the failure to manage growth effectively, could have a materially adverse effect on our business, financial condition, and results of operations. In addition, difficulties in effectively managing the budgeting, forecasting, and other process control issues presented by such a rapid expansion could harm our business, financial condition, and results of operations.

 

We Operate In A Highly Competitive Industry And Our Failure To Compete Effectively May Adversely Affect Our Ability To Generate Revenue.

 

We compete with other identity and access management providers that may have significantly greater financial, technical, and marketing resources, larger distribution networks, and that generate greater revenue and have greater name recognition than we do. Those companies may develop cloud based platforms that are superior to those that we offer. Such competition may potentially affect our chances of achieving profitability.

 

Some of our competitors may conduct more extensive promotional activities and may offer lower prices to customers than we can, which could allow them to gain greater market share or prevent us from increasing our market share. In the future, we may need to decrease our prices to remain competitive. Our competitors may be able to respond more quickly to new or changing opportunities, technologies, and customer requirements. To be successful, we must carry out our business plan, establish and strengthen our brand awareness through marketing, effectively differentiate our services from those of our potential competitors, and build our network of service providers, while maintaining a superior platform and level of service, which we believe will ultimately differentiate our products and services from those of our competitors. We may have to substantially increase marketing and development activities in order to compete effectively.

 

We utilize a third party cloud computing provider. This service is designed to meet the most stringent requirements established by the Telecommunications Industry Association’s Telecommunications Infrastructure Standards for Data Centers. However, The Failure Of Our Systems Could Result In A Material Adverse Effect To Our Business.

 

We utilize a third party cloud computing provider for the operation of our IDdriven platform. This service is designed to meet the most stringent requirements established by the Telecommunications Industry Association’s Telecommunications Infrastructure Standards for Data Centers, or TIA-942. Our cloud computing service provider allows us monitoring our system via a secure Internet connection and offers the greatest reliability provided by the industry always-on service level in addition to offering a 99.95% uptime service level agreement, due to a number of back-up measures. Our cloud-based platform may also be vulnerable to computer viruses, electronic break-ins, and similar disruptions.

 

If Our Information Security Measures Are Breached And Unauthorized Access Is Obtained, Future Customers May Not Perceive Our Software And Services As Being Secure And May Terminate Their Agreements.

 

Our software involves the hosting of some sensitive customer information. Our software utilizes data and other security measures that are comparable to those used by financial institutions.  If we or any of our service providers or their end-users experience any breach of security in our software, we may be required to expend significant capital and resources to help restore our service providers’ systems. Furthermore, because techniques used to obtain unauthorized access to information systems change frequently and generally are not recognized until launched against a target, we may not be able to anticipate those techniques or to implement adequate preventative measures. Given the nature of our business and the business of the service providers we serve, if unauthorized parties gain access to our service providers’ information systems or such information is used in an unauthorized manner, misdirected, lost, or stolen during transmission, any theft or misuse of such information could result in, among other things, unfavorable publicity, governmental inquiry and oversight, difficulty in marketing our software, allegations by our service providers that we have not performed our contractual obligations, termination of services by existing customers, litigation by affected parties, and possible financial obligations for damages related to the theft or misuse of such information, any of which could have a material adverse effect on our business, financial condition, and results of operations.

 

Risks Related to Our Intellectual Property

 

We Could Incur Substantial Costs Defending Against Claims That Our Products Infringe On The Proprietary Rights Of Others.

 

We do not have any patents. The scope of any intellectual property rights that we have is uncertain and may not be sufficient to prevent infringement claims against us or claims that we have violated the intellectual property rights of third parties. Competitors may have filed applications for or may have been issued patents and may obtain additional patents and proprietary rights relating to products or processes that compete with or are related to our products and services. The scope and viability of these patents, the extent to which we may be required to obtain licenses under these patents or under other proprietary rights, and the cost and availability of licenses are unknown, but these factors may limit our ability to market our products and services.

 

Third parties could claim infringement by us with respect to any patents or other proprietary rights that they hold, and we cannot assure investors that we would prevail in any such proceeding as the intellectual property status of our current and future competitors’ products and services is uncertain. Any infringement claim against us, whether meritorious or not, could be time-consuming, result in costly litigation or arbitration and diversion of technical and management personnel, or require us to develop non-infringing technology or to enter into royalty or licensing agreements.

 

We may not be successful in developing or otherwise acquiring rights to non-infringing technologies. Royalty or licensing agreements, if required, may not be available on terms acceptable to us, or at all, and could significantly harm our business and operating results. A successful claim of infringement against us or our failure or inability to license the infringed or similar technology could require us to pay substantial damages and could harm our business because we would not be able to continue operating our surveillance products without incurring significant additional expense.

 

In addition, to the extent we agree to indemnify customers or other third parties against infringement of the intellectual property rights of others, a claim of infringement could require us to incur substantial time, effort, and expense to indemnify these customers and third parties and could disrupt or terminate their ability to use, market, or sell our products. Furthermore, our suppliers may not provide us with indemnification in the event that their products are found to infringe upon the intellectual property rights of any third parties, and if they do not, we would be forced to bear any resulting expense.

 

We Depend On Our Intellectual Property.

 

Our success and ability to compete depends in part on our proprietary IDdriven cloud-based identity and access management platform and technology. If any of our competitors copy or otherwise gain access to our proprietary technology or develop similar technologies independently, we may not be able to compete as effectively. We consider our proprietary platform invaluable to our ability to continue to develop and maintain the goodwill and recognition associated with our brand. We do not currently hold any patents. The measures we take to protect our technologies and other intellectual property rights, which presently are based upon trade secrets, may not be adequate to prevent their unauthorized use.

 

If we are unable to protect our intellectual property, our competitors could use our intellectual property to market products, services, and technologies similar to ours, which could reduce demand for our products, services, and technologies. We may be unable to prevent unauthorized parties from attempting to copy or otherwise obtaining and using our products or technology. Policing unauthorized use of our technology is difficult, and we may not be able to prevent misappropriation of our technology, particularly in foreign countries where the laws may not protect our intellectual property as fully as those in the United States. Others may circumvent the trade secrets, trademarks, and copyrights that we currently or in the future may own. We do not have patent protection with respect to our software or systems, although we are considering seeking such protection.

 

We seek to protect our proprietary intellectual property, which includes intellectual property that may only be protectable as a trade secret, in part by confidentiality agreements with our employees, consultants, and business partners. These agreements afford only limited protection and may not provide us with adequate remedies for any breach or prevent other persons or institutions from asserting rights to intellectual property arising out of these relationships. See “Business – Intellectual Property.”

 

We Could Incur Substantial Costs Defending Our Intellectual Property From Infringement By Others.

 

Unauthorized parties may attempt to copy aspects of our proprietary software or to obtain and use our other proprietary information. Litigation may be necessary to enforce our intellectual property rights, to protect our trade secrets, and to determine the validity and scope of the proprietary rights of others. We may not have the financial resources to prosecute any infringement claims that we may have. Any litigation could result in substantial costs and diversion of resources with no assurance of success.

 

Risk Related to Ownership of Our Securities

 

Unless Or Until We List Our Common Stock On NASDAQ Or Another Securities Exchange, Our Common Stock Will Be Deemed A “Penny Stock,” Which Makes It More Difficult For Our Investors To Sell Their Shares.

 

Unless or until our common stock lists on the Nasdaq Capital Market or another securities exchange, our common stock is subject to the “penny stock” rules adopted under Section 15(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The penny stock rules generally apply to companies whose common stock is not listed on a national securities exchange and trades at less than $5.00 per share, other than companies that have had average revenue of at least $6,000,000 for the last three years or that have tangible net worth of at least $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stocks to persons other than “established customers” complete certain documentation, make suitability inquiries of investors, and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If we remain subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our common stock. If our common stock is subject to the penny stock rules, investors will find it more difficult to dispose of our common stock.

 

Future Sales Of Our Common Stock In The Public Market By Our Existing Stockholders, Or The Perception That Such Sales Might Occur, Could Depress The Market Price Of Our Common Stock.

 

The market price of our common stock could decline as a result of the sales of a large number of shares of our common stock in the market by the selling stockholders, and even the perception that these sales could occur may depress the market price of our common stock.

 

Future Sales And Issuances Of Our Common Stock Or Rights To Purchase Common Stock By Us, Including Pursuant To Our Equity Incentive Plans, Could Result In Additional Dilution Of Percentage Ownership Of Our Stockholders And Could Cause Our Stock Price To Fall.

 

We intend to issue additional securities pursuant to our equity incentive plans and may issue equity or convertible securities in the future. To the extent we do so, our stockholders may experience substantial dilution. We may sell common stock, convertible securities, or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell common stock, convertible securities, or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales and new investors could gain rights superior to our existing stockholders.

 

There Is A Limited Market For Our Common Stock.

 

Only a very limited trading market currently exists for our common stock. As a result, any broker-dealer that makes a market in our common stock or other person that buys or sells our common stock could have a significant influence over its price at any given time. We cannot assure our stockholders that a market for our common stock will be sustained. There is no assurance that our common stock will have any greater liquidity than common stock that does not trade on a public market.

 

Our Reporting Obligations As A Public Company Are Costly.

 

Operating a public company involves substantial costs to comply with reporting obligations under federal securities laws. We may not reach sufficient size to justify our public reporting status. If we were forced to become a private company, our stockholders may lose their ability to sell their shares and there would be substantial costs associated with becoming a private company.

 

We Do Not Intend To Pay Dividends On Our Common Stock So Any Returns Will Be Limited To The Value Of Our Stock.

 

We have never declared or paid any cash dividends on our common stock. We currently anticipate that we will retain any future earnings for the development, operation, and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will be limited to the value of their stock.

  

ITEM lB – UNRESOLVED STAFF COMMENTS

 

None.

 

ITEM 2 – PROPERTIES

Our principal executive offices in Auburn, California are located in the home of our Chief Executive Officer who furnishes such space without charge. We lease approximately 4,000 square feet of space at Nijverheidsweg Noord 78, 3812PM Amersfoort, The Netherlands. The terms of the lease require that we pay €1,500 per month (approximately $1,700 per month) on a month to month basis to a related party landlord. We are searching for additional office space for our U.S. corporate offices to accommodate future growth.

 

ITEM 3 – LEGAL PROCEEDINGS

 

From time to time we may become involved in various legal proceedings that arise in the ordinary course of business, including actions related to our intellectual property. Although the outcomes of these legal proceedings cannot be predicted with certainty, we are currently not aware of any such legal proceedings or claims that we believe, either individually or in the aggregate, will have a material adverse effect on our business, financial condition, or results of operations.

  

ITEM 4 – MINE SAFETY DISCLOSURES

 

Not applicable.

 

PART II

 

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

 

Market Information

 

Our common stock is quoted on the OTCQB tier of the OTC Markets Group, Inc. and has traded under the symbol “IDDR”.  Prior to March 8, 2016, our symbol was “TXFX”.  Our stock has been thinly traded on the OTCQB since April 20, 2015 and there can be no assurance that a liquid market for our common stock will ever develop.

Security Holders

 

As of April 12, 2016, we had 75,310,000 shares of our common stock outstanding held by 23 stockholders of record and 807,568  shares of our Series A Preferred Stock outstanding held by five stockholders of record.

 

Dividend Policy

 

We have never paid a cash dividend on our common stock. We currently intend to retain all earnings, if any, to finance the growth and development of our business. We do not anticipate paying any cash dividends in the foreseeable future.

 

Equity Compensation Plans

 

Recent Sales of Unregistered Securities

 

None.

  

ITEM 6 – SELECTED FINANCIAL DATA

 

Not applicable.

 

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

 

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and associated notes appearing elsewhere in this Report on Form 10-K. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements.” Our actual results may differ materially from those contained in or implied by any forward-looking statements as a result of various factors, including the risks and uncertainties described under “Risk Factors.”

Accounting Periods. We define our accounting periods as follows:

 

 

 

		December 31,
		2015				2014				Change				%
Cash		$	48,764			$	92,224			$	(43,460	)			(47	%)
Total Assets		$	99,702			$	260,356			$	(160,654	)			(62	%)
Total Liabilities		$	586,678			$	105,226			$	481,452				458	%
Stockholders’ (Deficit) Equity		$	(486,976	)		$	155,130			$	(642,106	)			(414	%)

	Year Ended
	December 31,
	2015				2014				Change					%
Revenue		$	54,521			$	1,814,010			$	(1,759,489	)			(97	%)

		Year Ended
		December 31,
		2015				2014				Change				%
General and administration		$	443,489			$	237,132			$	206,357				87	%
Salaries and wages			263,495				277,955				(14,460	)			(5	%)
Research and development			94,496				609,073				(514,577	)			(84	%)
Management fees			360,825				448,521				(87,696	)			(20	%)
Stock based compensation			69,191				-				69,191				-
Depreciation			5,733				4,899				834				17	%
		$	1,237,229			$	1,577,580			$	(340,351	)			(22	%)

	Year Ended
	December 31,
	2015				2014				Change					%
Professional fees		$	214,023			$	31,323			$	182,700				583	%
Other general and administrative expense			229,466				205,809				23,657				11	%
		$	443,489			$	237,132			$	206,357				87	%

	Year Ended
	December 31,
	2015				2014				Change					%
Interest income		$	2,730			$	2,841			$	(111	)			(4	%)
Interest expense			(16,030	)			-				(16,030	)			-
Change in derivative			(761	)			-				(761	)			-
Gain on settlement of debt			8,146				-				8,146				-
		$	(5,915	)		$	2,841			$	(8,756	)			(308	%)

	December 31,
	2015				2014				Change					%
Current Assets		$	73,964			$	246,249			$	(172,285	)			(70	%)
Current Liabilities			116,365				105,226				11,139				11	%
Working Capital		$	(42,401	)		$	141,023			$	(183,424	)			(130	%)

	Year Ended
	December 31,
	2015				2014				Change
Cash Flows used in Operating Activities		$	(994,285	)		$	(7,094	)		$	(987,191	)
Cash Flows used in Investing Activities			(1,471	)			(10,835	)			9,364
Cash Flows from Financing Activities			947,156				-				947,156
Foreign currency translation adjustment			5,140				(6,178	)			11,318
Net Decrease in Cash During the Year		$	(43,460	)		$	(24,107	)		$	(19,353	)

 

For the periods for which financial information is presented, we do not believe that the current levels of inflation in the United States or Europe have had a significant impact on our operations.

 

Off Balance Sheet Arrangements

 

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not have any undisclosed borrowings or debt, and we have not entered into any synthetic leases. We are, therefore, not materially exposed to any financing, liquidity, market, or credit risk that could arise if we had engaged in such relationships.

 

Application of Critical Accounting Policies

ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

Reference is made to our consolidated financial statements, the notes thereto, and the report thereon, commencing on page F-1 of this Report on Form 10-K, which consolidated financial statements, notes, and report are incorporated herein by reference.

 

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

 

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer, as of December 31, 2015, concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act was recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure for the reasons noted below.

 

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 Rule 13a- 15(f) under the Exchange Act. With the participation of the Chief Executive Officer and the Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2015 as required by Rule 13a-15(c) under the Exchange Act. We utilized the criteria and framework established by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission in Internal Control – Integrated Framework (1992) in performing this assessment. Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of December 31, 2015 for the reasons noted below.

 

Internal control over financial reporting is a process designed 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. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

 

This Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Our management’s report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this Report on Form 10-K.

 

Identified Material Weakness

Management's Remediation Initiatives

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting identified by management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Limitations on the Effectiveness of Controls

 

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, misstatements, errors, and instances of fraud, if any, within our company have been or will be prevented or detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or Board override of the control.

 

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 

ITEM 9B – OTHER INFORMATION

 

None.

  

PART III

 

ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Executive Officers and Directors

 

Set forth below are the names and ages of our directors and executive officers and their principal occupations at present and for at least the past five years.

 

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until  removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board. All officers and directors listed above will remain in office until the next annual meeting of our stockholders, and until their successors have been duly elected and qualified. There are no agreements with respect to the election of directors. Our board of directors appoints officers annually and each executive officer serves at the discretion of our board of directors. 

Arend D. Verweij. Mr. Verweij was appointed as our Chairman of the Board of Directors and Chief Executive Officer and Chief Financial Officer on December 21, 2015 when we acquired Insight. Mr. Verweij is a co-founder of Insight and has been its Chief Executive Officer since 2013. During this time, Mr. Verweij was also the Chief Executive Officer of 247 Jeans B.V., a jean importer and export trading company. Prior to co-founding Insight, Mr. Verweij, was the Chief Executive Officer from 2010 to 2012 of  Elephant Security B.V. (formerly BHOLD Company B.V.), a Dutch designer and systems integrator for complex software solutions for major corporate customers. Elephant Security B.V. was acquired by Microsoft in 2011.  Prior to joining Elephant Security, Mr. Verweij held a variety of management positions from 2000 to 2009 including CEO of a Barcelona based economic development consulting group, CEO of a Silicon Valley based technology development company that was acquired by Cadence Design Systems (Nasdaq: CDNS) and as an investment banker with vFinance Inc.. From 1983 until 1998, Mr. Verweij held a variety of technology and management related positions with Philips Electronics that included positions as a research scientist, technology and worldwide planning and strategy manager, vice president of marketing and culminating as a senior vice president of North American marketing and sales with profit and loss responsibility for this division with over $1 billion in annual revenue.  Mr. Verweij earned a Masters Degree in Mechanical Engineering/Metallurgy at Twente University of Technology (Netherlands) and a Masters of Business Administration from the University of Rochester New York.

We believe Mr. Verweij’s position as our Chief Executive Officer, his extensive knowledge and understanding of the identity and access management industry, and his business and engineering expertise and management skills provide the requisite qualifications, skills, perspectives, and experience that make him well qualified to serve on our Board of Directors.

Geurt van Wijk.  Mr. van Wijk was appointed as our Chief Technology Officer on December 21, 2015 when we acquired Insight. Mr. van Wijk is a co-founder of Insight and has been its Chief Operating Officer since 2013. Prior to co-founding Insight, Mr. van Wijk was the Chief Operating Officer from 2006 until 2012 for Elephant Security B.V, a Dutch designer and systems integrator for complex software solutions for major corporate customers, where he was responsible for development of a global partner network, management of the consultancy group and overseeing product delivery and implementation.  Elephant Security B.V. was acquired by Microsoft in 2011.  Prior to joining Elephant Security, Mr. van Wijk  held a variety of management and operational positions from 1995 to 2005 including Senior Project Manager for a systems integrator, responsible for a turn-around program to implement a software solution for a Netherlands based electricity and natural gas supplier in the Netherlands, implemented a software application to manage access rights for the Dutch National Police, information systems manager at Comfort Card responsible for data management, software development and private label credit card implementation programs and a project director for logistics and CRM applications and industrial control solutions ISO 9000 at a pharmaceutical company. Mr. van Wijk earned a  Bachelors of Science Degree in Information Sciences and MBE - University College Utrecht, Netherlands and speaks, reads and writes fluent Dutch, English and German.

We believe Mr. van Wijk’s position as our Chief Operating Officer, his extensive knowledge and understanding of the identity and access management industry, and his business and engineering expertise and management skills provide the requisite qualifications, skills, perspectives, and experience that make him well qualified to serve on our Board of Directors.

Remy de Vries.  Mr. de Vries was appointed as our Chief Technology Officer on December 21, 2015 when we acquired Insight. Mr. de Vries is a co-founder of Insight and has been its Chief Technology Officer since 2013. Prior to co-founding Insight, Mr. de Vries was a Management Architect from 2010 until 2012 for Elephant Security B.V., a Dutch designer and systems integrator for complex software solutions for major corporate customers. Elephant Security B.V. was acquired by Microsoft in 2011.  Prior to joining Elephant Security, Mr. de Vries held a variety of management and operational positions including a Financial Operations Analyst, a quality assurance software tester at Electronic Arts Ltd. in the United Kingdom and an IT Support Analyst / Consultant supporting CRM-Software sold to corporate enterprises and government agencies, including British M I-5, with 500+ users. Mr. de Vries is a Microsoft Certified IT Professional and speaks fluent Dutch and English.

 

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

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

The Company's common stock is not registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act").  Accordingly, officers, directors and principal shareholders are not subject to the beneficial ownership reporting requirements of Section 16(a) of the Exchange Act.

 

Code of Ethics

 

We have adopted a Code of Conduct and Ethics that applies to all of our officers, directors, and employees. We also adopted a separate Code of Ethics that applies to our Chief Executive Officer and Senior Financial Officers, which supplements our Code of Conduct and Ethics. Both our Code of Conduct and Ethics and our supplemental Code of Ethics for our Chief Executive Officer and Senior Financial Officers is filed as Exhibits 14.1 and 14.2, respectively, to this Report on Form 10-K. Each of these policies comprises written standards that are reasonably designed to deter wrongdoing and to promote the behavior described in Item 406 of Regulation S-K promulgated by the Securities and Exchange Commission. Our Code of Conduct and Ethics and our Code of Ethics for our Chief Executive Officer and Senior Financial Officers are available in print, without charge, to any stockholder requesting a copy in writing from our Secretary at 13355 Moss Rock Dr., Auburn, CA 95602.

 

Our securities are not quoted on an exchange that has requirements that a majority of our board members be independent and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our board of directors include “independent” directors, nor are we required to establish or maintain an audit committee or other committee of our board of directors.

Through their own business activities and experiences each of directors have come to understand that in today’s business environment, development of useful products and identification of undervalued real estate, along with other related efforts, are the keys to building our company. The directors will seek out individuals with relevant experience to operate and build our current and proposed business activities.

 

Director Independence

 

Our Board of Directors is currently composed of two members, neither of whom qualifies as an independent director in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us. In addition, our Board has not made a subjective determination as to each director that no relationships exist which, in the opinion of our Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our Board of Directors made these determinations, our Board would have reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management.

 

ITEM 11 – EXECUTIVE COMPENSATION

 

Summary Compensation Table

 

The following table sets forth certain compensation information for:

●

our principal executive officer or other individual serving in a similar capacity during the year ended December 31, 2015,

●

our two most highly compensated executive officers other than our principal executive officer who were serving as executive officers at December 31, 2015 whose compensation exceed $100,000, and

●

up to two additional individuals for whom disclosure would have been required but for the fact that the individual was not serving as an executive officer at December 31, 2015.

2015 SUMMARY COMPENSATION TABLE

 

Name and Principal Position	Year		Salary				Bonus				Stock Awards				Option Awards (1)				Nonequity Incentive Plan Compensation				All Other Compensation (3)				Total
Arend D. Verweij	2015		$	142,575				–				-			$	26,861				–			$	10,624			$	180,060
Chairman, Chief Executive Officer, Chief Financial Officer, Treasurer and Corporate Secretary(2)	2014		$	119,250				–				–			$	-				–				–			$	119,250
Geurt van Wijk	2015		$	109,125				–				-			$	22,384				–			$	18,144			$	149,653
Chief Operating Officer(4)	2014		$	109,422				–				–			$	-				–				–			$	109,422
Remy de Vries	2015		$	109,125				–				-			$	22,384				–			$	18,144			$	149,653
Chief Technology Officer (5)	2014		$	119,250				–				–			$	-				–				–			$	119,250

 

	(1)	See Notes 2 and 13 of the Notes to Consolidated Financial Statements in included elsewhere in this Report on Form 10-K for information regarding assumptions underlying the valuation of equity awards.
	(2)	Mr. Verweij became our Chairman, Chief Executive Officer, Chief Financial Officer, Treasurer and Corporate Secretary on  December 21, 2015.
	(3)	Represents amount of perquisites for a vehicle reimbursement.
	(4)	Mr. van Wijk became our Chief Operating Officer and a Director on  December 21, 2015.
	(5)	Mr. de Vries became our Chief Technology Officer on  December 21, 2015.

 

Name and  Principal Position		Number of Securities Underlying Unexercised Options/Warrants (#) Exercisable				Number of Securities Underlying Unexercised Options (#) Unexercisable				Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)				Option Exercise Price ($)				Option Expiration Date
Arend D. Verweij			-	(1)			1,021,710				-			$	0.0489			12/21/2020
Chairman, Chief Executive Officer, Chief Financial Officer, Treasurer and Corporate Secretary			-	(2)			1,021,710				-			$	0.0587			12/21/2020
			-	(3)			1,021,710				-			$	0.0685			12/21/2020
Geurt van Wijk			-	(1)			851,426				-			$	0.0489			12/21/2020
Chief Operating Officer			-	(2)			851,426				-			$	0.0587			12/21/2020
			-	(3)			851,426				-			$	0.0685			12/21/2020
Remy de Vries			-	(1)			851,426				-			$	0.0489			12/21/2020
Chief Technology Officer			-	(2)			851,426				-			$	0.0587			12/21/2020
			-	(3)			851,426				-			$	0.0685			12/21/2020

 

(1)

The options vest on December 21, 2016.

(2)

The options vest on December 21, 2017.

(3)

The options vest on December 21, 2018.

 

		Common Stock								Series A Preferred Stock
Name of Beneficial Owner		Number				% of Total				Number				% of Total
Named Executive Officers and Directors:
Arend D. Verweij(1)			17,910,000				23.8	%			-				-	%
Geurt van Wijk(2)			18,660,000				24.8	%			-				-	%
Remy de Vries(3)			18,660,000				24.8	%			-				-	%
All executive officers and directors as a group (3 persons)			55,230,000				73.4	%			-				-	%
5% Stockholders:
Newbridge Financial Services, Inc.(4)			4,080,000				5.4	%			110,236				13.7	%

	(1)	Shares held by Eagle Consulting LLC. Mr. Verweij has a pecuniary interest in and exercises voting and dispositive control over 100% of the Company’s common stock owned by Eagle Consulting LLC.
	(2)	Shares held by Berlisa B.V. Mr. van Wijk has a pecuniary interest in and exercises voting and dispositive control over 100% of the Company’s common stock owned by Berlisa B.V.
	(3)	Shares held by Sterling Skies B.V. Mr. de Vries has a pecuniary interest in and exercises voting and dispositive control over 100% of the Company’s common stock owned by Sterling Skies B.V.
	(4)	The address for Newbridge Financial Services, Inc. is 5200 Town Center Circle, Tower I, Suite 306, Boca Raton, Florida 33486.

 

		2015				2014
Audit Fees		$	27,500			$	-
Audit-Related Fees			-				-
Tax Fees			-				-
All Other Fees			-				-
Total		$	27,500			$	-

(a)

Financial Statements and Financial Statement Schedules

1.

Consolidated Financial Statements are listed in the Index to Consolidated Financial Statements on page F-1 of this Report on Form 10-K.

2.

Other schedules are omitted because they are not applicable, not required, or because required information is included in the Consolidated Financial Statements or notes thereto.

(b)

Exhibits

Exhibit No.		Description
2.1		Share Exchange Agreement between Tixfi, Inc. (now known as IDdriven, Inc.) and Insight Innovators, B.V. dated December 21, 2015 (incorporated by reference to Exhibit 2.1 to the Company’s current report on Form 8-K filed with the Commission on December 28, 2015).
3.1		Amended and Restated Articles of Incorporation, filed January 14, 2016 (incorporated by reference to Exhibit 3.1 to the Company’s current report on Form 8-K filed with the Commission on January 26, 2016).
3.2		Certificate of Designation, Preferences, and Rights of Series A Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s current report on Form 8-K filed with the Commission on December 28, 2015).
4.1		Convertible Promissory Note between Tixfi, Inc. (now known as IDdriven, Inc.) and Susannah Forest dated December 21, 2015 (incorporated by reference to Exhibit 4.1 to the Company’s current report on Form 8-K filed with the Commission on December 28, 2015).
10.1		Stock Redemption Agreement between Tixfi, Inc. (now known as IDdriven, Inc.) and Paula Martin dated December 21, 2015 (incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K filed with the Commission on December 28, 2015).
10.2		Spin-Off Agreement between Tixfi, Inc. (now known as IDdriven, Inc.) and Paula Martin dated December 21, 2015 (incorporated by reference to Exhibit 10.2 to the Company’s current report on Form 8-K filed with the Commission on December 28, 2015).
10.3		Securities Purchase Agreement between Tixfi, Inc. (now known as IDdriven, Inc.) and certain purchasers dated December 21, 2015 (incorporated by reference to Exhibit 10.3 to the Company’s current report on Form 8-K filed with the Commission on December 28, 2015).
10.4		Securities Purchase Agreement between Tixfi, Inc. (now known as IDdriven, Inc.) and Susannah Forest dated December 21, 2015 (incorporated by reference to Exhibit 10.4 to the Company’s current report on Form 8-K filed with the Commission on December 28, 2015).
10.5		Consulting Services Agreement between Tixfi, Inc. (now known as IDdriven, Inc.) and Newbridge Financial, Inc. dated December 21, 2015 (incorporated by reference to Exhibit 10.5 to the Company’s current report on Form 8-K filed with the Commission on December 28, 2015).

10.6†		Employment Agreement between Tixfi, Inc. (now known as IDdriven, Inc.) and Arend D. Verweij dated December 21, 2015 (incorporated by reference to Exhibit 10.6 to the Company’s current report on Form 8-K filed with the Commission on December 28, 2015).
10.7†		Employment Agreement between Tixfi, Inc. (now known as IDdriven, Inc.) and Geurt van Wijk dated December 21, 2015 (incorporated by reference to Exhibit 10.7 to IDdriven, Inc.’s current report on Form 8-K filed with the Commission on December 28, 2015).
10.8†		Employment Agreement between Tixfi, Inc. (now known as IDdriven, Inc.) and Remy de Vries dated December 21, 2015 (incorporated by reference to Exhibit 10.8 to the Company’s current report on Form 8-K filed with the Commission on December 28, 2015).
10.9		Amendment to Securities Purchase Agreement between IDdriven, Inc. and Susannah Forest dated March 28, 2016 (incorporated by reference to Exhibit 10.2 to the Company’s current report on Form 8-K filed with the Commission on April 4, 2016).
10.10		Convertible Promissory Note of IDdriven, Inc. issued to Susannah Forest dated March 28, 2016 (incorporated by reference to Exhibit 10.3 to the Company’s current report on Form 8-K filed with the Commission on April 4, 2016).
10.11		Common Stock Purchase Warrant of IDdriven, Inc. issued to Susannah Forest dated March 28, 2016 (incorporated by reference to Exhibit 10.4 to the Company’s current report on Form 8-K filed with the Commission on April 4, 2016).
14.1*		Code of Conduct
14.2*		Code of Ethics for CEO & Senior Financial Officers
21.1*		Subsidiaries of the Registrant
31.1*		Section 302 Certificate of Chief Executive Officer.
31.2*		Section 302 Certificate of Principal Financial and Accounting Officer.
32.1*		Section 906 Certificate of Chief Executive Officer and Principal Financial and Accounting Officer.
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.INS*		XBRL Taxonomy Extension Calculation Linkbase Document
101.INS*		XBRL Taxonomy Extension Definition Linkbase Document
101.INS*		XBRL Taxonomy Extension Label Linkbase Document
101.INS*		XBRL Taxonomy Extension Presentation Linkbase Document

Date: April 14, 2016	IDdriven, Inc.
	By:	/s/ Arend D. Verweij
		Arend D. Verweij
		Chief Executive Officer

Signature		Capacity		Date
/s/ Arend D. Verweij		Chief Executive Officer, Chief Financial Officer and Chairman of the Board of Directors		April 14, 2016
Arend D. Verweij		(Principal Executive Officer and Principal Financial and Accounting Officer)
/s/ Geurt van Wijk		Director		April 14, 2016
Geurt van Wijk

 

CONTENTS
CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of December 31, 2015 and 2014		F-3
Consolidated Statements of Operations and Comprehensive (Loss) Income for the years ended December 31, 2015 and 2014		F-4
Consolidated Statement of Stockholders' (Deficit) Equity for the years ended December 31, 2015 and 2014		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2015 and 2014		F-6
Notes to the Consolidated Financial Statements		F-7

 

 

 

 

 

 

 

 

F - 2

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F - 3

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		Year Ended
		December 31,
		2015				2014
Revenues		$	54,521			$	1,814,010
Operating Expenses
General and administration			443,489				237,132
Salaries and wages			263,495				277,955
Research and development			94,496				609,073
Management fees			360,825				448,521
Stock based compensation			69,191				-
Depreciation			5,733				4,899
Total operating expenses			1,237,229				1,577,580
(Loss) income from operations			(1,182,708	)			236,430
Other income (expense)
Interest income			2,730				2,841
Interest expense			(16,030	)			-
Change in fair value of derivative liability			(761	)			-
Gain on settlement of debt			8,146				-
Total other (expense) income			(5,915	)			2,841
Net (loss) income before taxes			(1,188,623	)			239,271
Income tax benefit (expense)			34,500				(37,200	)
Net (loss) income		$	(1,154,123	)		$	202,071
Other comprehensive income (loss)
Foreign currency translation adjustment			(9,929	)			(12,107	)
Comprehensive (loss) income		$	(1,164,052	)		$	189,964
Basic and dilutive (loss) income per common share		$	(0.04	)		$	1.45
Weighted average number of common shares outstanding - basic and diluted			30,967,478				139,692

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

F - 4

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

F - 5

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		Year Ended
		December 31,
		2015				2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income		$	(1,154,123	)		$	202,071
Adjustments to reconcile net (loss) income to net cash
used in operating activities:
Depreciation			5,733				4,899
Stock-based compensation			69,191				-
Amortization of debt discount			632				-
Change in fair value of derivative liability			761				-
Gain on settlement of debt			(8,146	)			-
Changes in operating assets and liabilities:
Accounts receivable			62,277				(102,553	)
Loan receivable			33,000				28,300
Prepaid expenses and other receivables			9,299				(31,691	)
Accounts payable			19,069				53,279
Accrued expenses			1,999				-
Advances payable			-				(63,900	)
Advances from customer			(949	)			(136,400	)
Other current liabilities			(33,028	)			38,901
Net Cash Used in Operating Activities			(994,285	)			(7,094	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment			(1,471	)			(10,835	)
Net Cash Used in Investing Activities			(1,471	)			(10,835	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of note payable			794,799				-
Purchase of common stock			(155,445	)			-
Proceeds from issuance of Series A Convertible preferred stock			307,802				-
Net Cash Provided By Financing Activities			947,156				-
Foreign currency translation effect on cash and cash equivalents			5,140				(6,178	)
Decrease in cash and cash equivalents			(43,460	)			(24,107	)
Cash and cash equivalents, beginning of period			92,224				116,331
Cash and cash equivalents, end of period		$	48,764			$	92,224
Supplemental cash flow information
Cash paid for interest		$	-			$	-
Cash paid for taxes		$	-			$	-
Supplemented disclosure of non-cash investing and financing activities
Issuance of common stock for conversion of debt		$	44,799			$	-
Derivative liability recognized as debt discount		$	30,319			$	-
Conversion of notes payable into Series A convertible preferred stock		$	499,766			$	-
Exchange of convertible note for note payable		$	500,000			$	-

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

F - 6

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IDDRIVEN, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2015 AND 2014

NOTE 1. ORGANIZATION AND BUSINESS

Organization and Operations

 

IDdriven, Inc., (“IDdriven”, “we”, “us”, or the “Company”) is a Nevada corporation incorporated on January 27, 2014 under the name TiXFi, Inc.  Insight Innovators B.V., was incorporated on May 22, 2013 in the Netherlands and has its registered corporate seat in Amersfoort, The Netherlands.

 

Effective on February 1, 2016, the Company’s corporate name was changed to IDdriven, Inc..  Following its December 21, 2015 acquisition of a 100% ownership interest of Insight Innovators, B.V., a Dutch corporation (“Insight”), the Company became an enterprise software company that developed, and is currently marketing and seeking license opportunities for a next-generation Identity and Access Management enterprise solution designed to manage large volumes of users and access rights over various applications in hybrid environments (cloud and on-premises). The Company’s sports and entertainment ticket broker business was sold upon completion of the Insight merger as discussed below.

 

Stock Split. Effective January 21, 2016, we effected a 1 for 6 forward stock split of our issued and outstanding common stock (the “Forward Stock Split”). All references to shares of our common stock in this report on Form 10-K refers to the number of shares of common stock after giving effect to the Forward Stock Split (unless otherwise indicated).

Share Exchange and Reorganization

On December 21, 2015 (the “Effective Date”), Insight Innovators B.V. merged into IDdriven, and became a 100% subsidiary of IDdriven. Furthermore, the Company entered into and closed on a share exchange agreement with IDdriven and its shareholders.

Pursuant to the terms of the share exchange agreement, IDdriven issued 55,980,000 shares of its unregistered common stock to the shareholders of Insight in exchange for 40,074 shares of Insight’s common stock, representing 100% of its issued and outstanding common stock and assumed $46,000 of Insight’s debts and as a result of the share exchange agreement, Insight became a wholly owned subsidiary of TiXFi. In conjunction with the Share Exchange, we purchased 12,000,000 shares of our common stock from Paula Martin, our former Chief Executive Officer and sole director, for a price of approximately $0.0125 per share (an aggregate of $150,000) pursuant to the terms of a Stock Redemption Agreement dated December 21, 2015. In addition, pursuant to the terms and conditions of a Spin-Off Agreement dated December 21, 2015, Ms. Martin acquired all assets and liabilities related our online ticket brokerage business in exchange for the cancellation by Ms. Martin of 18,000,000 shares of our common stock she held.

Merger Financing and Private Placements

Securities Purchase Agreement – Series A Preferred Stock

 

As of the Effective Date and pursuant to a Securities Purchase Agreement dated December 21, 2015, entered into among the Company and five investors who are unrelated parties (the “Preferred Stock SPA”), we issued an aggregate of 807,568 shares of our Series A Preferred stock, par value $0.001 per share (“Series A Preferred”) in exchange for the consideration described below. See Note 12 - Stockholders’ Equity (Deficit) for a description of the Series A Preferred Designations of Rights, Preferences and Limitations. Pursuant to the Preferred Stock SPA, we issued an aggregate of 551,180 shares (110,236 shares each) of our Series A Preferred in exchange for a $500,000 aggregate principal amount in 8% convertible promissory note previously issued by Insight to five investors that we assumed as of the Effective Date (the “8% Convertible Notes”). The 8% Convertible Notes were cancelled upon issuance of the Series A Preferred. The holders of the 8% Convertible Notes previously advanced $250,000 to Insight under those notes and agreed to advance an additional aggregate amount of $250,000 to us. In addition, we agreed to issue an aggregate of 256,388 shares (64,097 shares each) of Series A Preferred to four investors in exchange for an aggregate of $307,802 in cash. Of this amount, $111,802 had been previously been advanced on behalf of both Insight and us, and $196,000 was paid to us or on our behalf on the Effective Date. See Note 6 - Convertible Notes Payable.

 

Consulting Agreement

As of the Effective Date, we entered into a consulting agreement (the “Consulting Agreement”) with an unrelated third party to assist in the review of our business, operations, financial performance and development initiatives to provide advice to the Company in connection with capital raise transactions and formulation of strategies and introduction to prospective private institutional financial investors. We issued the consultant 4,080,000 shares of our common stock as consideration for its services under the Consulting Agreement.

Recapitalization

For financial accounting purposes, this transaction was treated as a reverse acquisition by Insight, and resulted in a recapitalization with Insight being the accounting acquirer and IDdriven as the acquired company. The consummation of this reverse acquisition resulted in a change of control. Accordingly, the historical financial statements prior to the acquisition are those of the accounting acquirer, Insight and have been prepared to give retroactive effect to the reverse acquisition completed on December 21, 2015, and represent the operations of Insight.  The consolidated financial statements after the acquisition date, December 21, 2015 include the balance sheets of both companies at historical cost, the historical results of Insight and the results of the Company from the acquisition date. All share and per share information in the accompanying consolidated financial statements and footnotes has been retroactively restated to reflect the recapitalization.

Going Concern Matters

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S.  GAAP”), which contemplates the Company’s continuation as a going concern. The Company has incurred operating losses of $1,182,708 during the year ended December 31, 2015 and has an accumulated deficit of $989,330 as of December 31, 2015. In addition, current liabilities exceed current assets by $42,401 as of December 31, 2015.

There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support its working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available to the Company, it may be required to curtail or cease its operations.

 

Due to uncertainties related to these matters, there exists a substantial doubt about the ability of the Company to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES

General principles

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”). The fiscal year end is December 31.

Consolidation Policy

For December 31, 2015, the consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiary, Insight Innovators B.V. All significant intercompany balances and transactions have been eliminated in consolidation.  Prior to December 21, 2015, the financial statements presented are those of Insight.

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates includes assumptions about collection of accounts and notes receivable, the valuation and recognition of stock-based compensation expense, the valuation and recognition of derivative liability, valuation allowance for deferred tax assets and useful life of fixed assets.

Functional currency

 

Translation gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are translated into Euro at the rate on the date of the transaction and included in the results of operations as incurred. There were no material transaction gains or losses in the periods presented.

Cash and cash equivalents

Cash equivalents are short-term highly liquid investments that are readily convertible to cash with original maturities of three months or less, at the date acquired. As of December 31, 2015 and 2014, cash primarily consists of cash on hand and in bank. As of December 31, 2015 and 2014 all our cash was held in accounts in the Netherlands, backed by the Dutch Deposit Guarantee Scheme for balances not exceeding EUR100,000.

Accounts receivable and other receivables

Accounts receivable are recorded at the invoiced amount, unsecured and do not bear interest. Amounts collected on trade accounts receivable are included in net cash provided by operating activities in the statements of cash flows. The Company maintains an allowance for doubtful accounts reflecting estimated potential losses in its accounts receivable balance. In establishing the required allowance, management considers collectability of outstanding receivables adjusted to take into account current market conditions and our clients’ financial conditions, the amount of receivables in dispute, the current receivables aging and current payment patterns. The Company reviews its allowance for doubtful accounts quarterly. Any past due balances over 90 days are reviewed individually for collectability. Account balances are charged off against the allowance after all commercially reasonable means of collection have been exhausted and the potential for recovery is considered remote.

Property and equipment

Property and equipment are stated at cost. Depreciation is computed on the straight-line method. The depreciation and amortization methods are designed to amortize the cost of the assets over their estimated useful lives, in years, of the respective assets as follows:

  

 

Maintenance and repairs are charged to expense as incurred. Improvements of a major nature are capitalized. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any gains or losses are reflected in income.

 

The long-lived assets of the Company are reviewed for impairment in accordance with ASC No. 360, “Property, Plant and Equipment” (“ASC No. 360”), whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. During the years ended December 31, 2015 and 2014, no impairment losses have been identified.

Revenue recognition

The Company recognizes revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”) which requires that four basic criteria must be met before revenue can be recognized: (i) persuasive evidence of an arrangement exists; (ii) services have been rendered; (iii) the fee is fixed or is determinable; and (iv) collectability is reasonably assured. Determination of criteria (iii) and (iv) are based on management's judgments regarding the fixed nature of the selling prices of the services delivered and the collectability of those amounts. The Company’s agreements do not include general rights of return and do not provide clients with the right to take possession of the software supporting the services being provided. As such, the agreements are accounted for as service contracts.

Revenues from the services rendered are recognized in proportion to the services delivered.

Any amount receivable or received, but unrecognized for revenue recognition purpose is recorded as deferred revenues.

Sales taxes collected from clients and remitted to governmental authorities where applicable are accounted for on a net basis and therefore are excluded from revenues in the statements of operations.

Research and development costs

Research and development costs are charged to the statements of operations and comprehensive income as incurred.

Advertising and marketing expenses

Advertising and marketing expenses are charged to the statement of operations and comprehensive income, as incurred.

Income taxes

The Company accounts for income taxes in accordance with ASC No. 740, “Income Taxes”. This codification prescribes the use of the asset and liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and for carry-forward tax losses. Deferred taxes are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

Deferred tax liabilities and assets are classified as current or non-current based on the classification of the related asset or liability for financial reporting, or according to the expected reversal dates of the specific temporary differences, if not related to an asset or liability for financial reporting.

The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740, “Income Taxes”. Accounting guidance addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements, under which a company 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 consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Accordingly, the Company would report a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company elects to recognize any interest and penalties, if any, related to unrecognized tax benefits in tax expense.

Comprehensive income

The Company applies Statement of Accounting Standards Codification subtopic 220-10, “Comprehensive Income” (“ASC 220-10”). ASC 220-10 establishes standards for the reporting and displaying of comprehensive income and its components. Comprehensive income (loss) generally represents all changes in shareholders’ equity during the period except those resulting from investments by, or distributions to shareholders.

Share-Based Expense

ASC 718, "Compensation – Stock Compensation," prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, "Equity – Based Payments to Non-Employees."  Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued.  The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.  

Fair value measurements