UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2017

or

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to ___________________

 

Commission File No. 000-55483

 

 

 

DIGITAL DONATIONS TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

 

Delaware		47-4485832
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

68 South Service Road, Suite 100, Melville, New York 11747

 

(Address of principal executive offices)

 

Issuer’s telephone number: 631-465-2163

 

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

 

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

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [  ] No [X]

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes [  ] No [X]

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the 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 [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [  ]

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) 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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	[  ]	Accelerated filer	[  ]
Non-accelerated filer	[  ] (Do not check if a smaller reporting company)	Smaller reporting company	[X]
		Emerging growth company	[X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes [  ] No [X]

 

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was $0 as of June 30, 2017, the last business day of the registrant’s most recently completed second fiscal quarter.

 

At April 4, 2018, there were 89,047,729 shares of the registrant’s common stock outstanding.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

None

 

 

 

TABLE OF CONTENTS

 

PART I	3
ITEM 1. BUSINESS	3
ITEM 1A. RISK FACTORS	15
ITEM 1B. UNRESOLVED STAFF COMMENTS.	15
ITEM 2. PROPERTIES	15
ITEM 3. LEGAL PROCEEDINGS	15
ITEM 4. MINE SAFETY DISCLOSURES	15
PART II	15
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	15
ITEM 6. SELECTED FINANCIAL DATA	16
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	16
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	19
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	19
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	19
ITEM 9A. CONTROLS AND PROCEDURES	19
ITEM 9B. OTHER INFORMATION	20
PART III	21
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	21
ITEM 11. EXECUTIVE COMPENSATION	23
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	23
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR INDEPENDENCE	24
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES	25
PART IV	25
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES	25

 

Throughout this report, unless otherwise designated, the terms “we,” “us,” “our,” “the Company,” “our company” and “Digital Donations” refer to Digital Donations Technologies, Inc., a Delaware corporation, and its wholly owned subsidiary, Digital Donations, Inc., a New York corporation, on a consolidated basis. All amounts in this report are in U.S. Dollars, unless otherwise indicated.

 

FORWARD-LOOKING STATEMENTS

 

This Annual Report on Form 10-K contains “forward-looking statements,” as that term is defined under the Private Securities Litigation Reform Act of 1995. The use of words such as “anticipates,” “estimates,” “expects,” “intends,” “plans” and “believes,” among others, generally identify forward-looking statements. These forward-looking statements are based on our management’s expectations and assumptions about future events as of the date of this Annual Report on Form 10-K, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements include statements about our expectations, beliefs or intentions regarding our product offerings, business, financial condition, results of operations, strategies or prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These forward-looking statements are only predictions and reflect our views as of the date they are made with respect to future events and financial performance. We undertake no obligation to update, and we do not have a policy of updating or revising, these forward-looking statements.

 

 

PART I

 

ITEM 1. BUSINESS.

 

THE BUSINESS

 

Corporate History and General Information

 

The Company, formerly known as Fishing Ridge Acquisition Corporation, was incorporated in Delaware on May 21, 2015 and filed a registration statement on Form 10 with the Securities and Exchange Commission on July 28, 2015 and became a public reporting company sixty days thereafter.

 

In January 2016, Fishing Ridge Acquisition Corporation changed its name to Digital Donations Technologies, Inc. On January 7, 2016, the Company effected a change of control with the resignation of the then officers and directors, redemption of 19,500,000 shares of the 20,000,000 outstanding shares of its common stock, the appointment of new officers and directors and the issuance of 5,000,000 shares of common stock, pro rata, to the new shareholders of the Company.

 

On October 17, 2016, the Company acquired all the outstanding shares of common stock of Digital Donations, Inc., a New York corporation (the “Acquisition”). Prior to the Acquisition, the Company had no ongoing business or operations. Pursuant to the Acquisition, the Company has acquired the business and business plan of Digital Donations, Inc. which has become a wholly-owned subsidiary of the Company.

 

For the purposes of disclosures throughout this Annual Report, when the “Company” is used, it refers to Digital Donations Technologies, Inc. and its wholly owned subsidiary, Digital Donations, Inc.

 

The Company is located at 68 South Service Road, Suite 100, Melville, New York 11747. The Company’s main phone number is (631) 465-2163. The Company’s fiscal year end is December 31. Neither the Company nor its predecessors have filed for bankruptcy, receivership or any similar proceedings nor are in the process of filing for bankruptcy, receivership or any similar proceedings. The Company’s independent auditors have issued a report raising substantial doubt about the Company’s ability to continue as a going concern.

 

Overview

 

Digital Donations Technologies, Inc. (DDTI) is an early-stage company formed to support the non-profit industry with innovative and cost effective fundraising technologies providing alternative payment and fundraising solutions giving consumers the option to make a small donation as part of a financial transaction such as at a checkout or ATM transaction. The Company is currently developing fundraising platforms which allow non-profit organizations (“NPO”), retailers and quick service restaurants to present requests for contributions to potential donors at the time such possible donors pay for goods and services at the point of sale (“POS”) at participating merchants, ATM’s, mobile devices or via the Company’s online web site. The Company is also developing its own proprietary cryptocurrency, to be named CoinGiv, that will be specifically designed to facilitate charitable giving through transactions made on a the Company’s proprietary decentralized blockchain-based computer network (the “Digital Exchange Marketplace”) that will enable CoinGIV holders to exchange coins for cash, gift cards, points, miles or any other product or service available on the exchange.

 

Organization and Description of Business

 

Digital Donations is headquartered in Melville, New York. Digital Donations will in the future, provide alternative and new fundraising solutions for NPOs and businesses encompassing an array of techniques and technologies designed to assist large and small nonprofits to increase their donations and lower costs as described below.

 

Digital Donations intends to develop and distribute creative and innovative fundraising technologies and in the future will provide payment processing solutions that connect charities and foundations with the consumer and corporate America. The Digital Donations™ platform will in the future be available for integration at point of sale payment systems, ATMs, e-commerce, mobile devices (MYGIV) and interactive rewards crowdfunding (CROWDGIV).

 

Through the process of integrating a donation request as part of a financial transaction, retailers, e-tailers and service providers will have the ability to create a new cause marketing program or enhance their existing strategy. In addition, the Digital Donation platform will have the ability to connect nonprofits with corporate partnerships who have the opportunity to promote their products / services by offering rewards to donors. Rewards are a proven method of driving donor participation.

 

 

Products/Services

 

Digital Donations is a provider of alternative fundraising solutions for NPOs that will allow consumers to make charitable donations as part of a financial transaction. The cornerstone of the business will be the Digital Donations fundraising platform that will allow charities to present requests for support to potential donors as the potential donors pay for goods and services purchased from participating merchants, at ATMs, mobile devices (MYGIV) or online through the CROWDGIV platform. These requests will be for amounts called micro donations (under $10) and will have the ability to reach large segments of the population.

 

All current and future Digital Donations software will automate the solicitation, collection, payment and reporting of these donations for non – profit organizations. Our software will be developed to integrate into new or existing payment processing platforms and will also operate as a standalone solution for companies who have a corporate giving program in place or intend to develop a new one.

 

The Digital Donations suite of fundraising solutions and services will be tailored for the special philanthropic business needs of clients. Digital Donations provides what it believes to be a unique approach to providing transaction processing services and credit card processing for many industries, such as retail, specialty retail, travel and hospitality, professional sports and fund raising events, health care, e-commerce, not-for-profit, municipalities, utilities, online bill payments, and many more. Most consumers are familiar with this form of fundraising technology having experienced being solicited at check-out either by a cashier or automatically through the credit card processing terminal.

 

Digital Donation Technology Platform

 

We expect that all future Digital Donation’s technology will be made available for a variety of hardware devices, digital / mobile platforms, credit card payment terminals and ATMs that are used by numerous merchants, including retail stores, restaurants and banks.

 

When a customer makes a purchase at a merchant (Point of Sale), online, with a mobile device or a withdrawal at an ATM and uses a credit or debit card, the Digital Donations system will present the opportunity on the payment screen to donate to a charity. If the customer selects “yes” on the screen, several dollar amounts are presented for the customer’s selection, including a roundup and the option to choose “another amount.” Once the amount of the donation is approved, a receipt is printed for the customer showing the amount donated and, the name of the NPO to which the contribution was made. This receipt, provided either in hard copy or electronically, is the donor’s documentary evidence of their tax-deductible charitable contribution.

 

Point of Sale:

 

Our point of sale technology will provide a donation request at the time a consumer completes the sale of goods or services – at the point of purchase/sale. This is a familiar technique seen at many store checkouts such as grocery, gas or clothing stores. This technology will allow charities to present requests for support to potential donors as such potential donors pay for goods and services purchased from merchant. Our Point of Sale Program is currently in development.

 

ATM Fundraising:

 

As Digital Donations continues in providing “alternative fundraising solutions,” it is one of the first companies to develop fundraising technology for the ATM industry at large. With ATMs offering such items as postage stamps, lottery tickets, and gift cards, Digital Donations determined to integrate fundraising technology into ATMs. An optional instant incentive program will provide advertisers / sponsors the ability to provide their offers and discounts to those who donate via on screen ads, mobile messaging, custom ATM wraps and by printing their offer on the customer receipt. Our ATM Fundraising technology is currently operational and the Company has been generating revenue from this service.

 

MYGIV (mobile device donation app):

 

The myGIV mobile app developed by Digital Donations utilizes location based search and marketing (geo-targeting) and gamification (scratch off game) to deliver valuable rewards to consumers that make a small donation to a charitable cause. Registered myGIV users will have access to offers provided by retailers, restaurants and service providers where they can play, win and donate to redeem their reward. By connecting merchant rewards with a charitable cause it creates a mutual benefit for the donor, the cause and the merchant. myGIV works with local, regional and national businesses to develop new customers and retain existing ones through cause related marketing initiatives. Our myGIV mobile app is currently operational however, to date has generated no revenues.

 

CROWDGIV (a crowdfunding technique)

 

CROWDGIV (a crowdfunding technique), is a method of fundraising in which a large number of individuals are solicited to finance a new business venture or a charitable cause. Crowdfunding makes use of the easy accessibility of vast networks of friends, family and colleagues through social media networks like Facebook, Twitter and LinkedIn to get the word out about a fundraising campaign.

 

 

The Digital Donation’s CROWDGIV platform provides easy to navigate, “smart interface”, and allows for instant donation acceptance before, during or after viewing videos and the ability to share on multiple social networks with one click. A client can also send out individual or group emails by syncing its own contact list. Another unique part of the Digital Donation’s CROWDGIV platform is the ability to connect nonprofits with corporate partnerships who have the opportunity to promote their products / services by offering rewards to donors. Rewards are a proven method of driving donor participation.

 

Unlike the majority of crowdfunding sites, CROWDGIV’s model focuses solely on nonprofit fundraising. The platform allows individuals, nonprofits and corporate entities to set up fundraising campaigns on behalf of any qualified charitable, religious or educational organization they wish to support. A major part of the growth plan for CrowdGIV is a future expansion of the platform to offer individuals the ability to raise funds for personal needs similar to a GOFUNDME model.

 

As in most crowdfunding platforms, a user can select team fundraising which allows a non-profit or business to set up a master campaign and then invite others to set up sub-campaigns, (their own page) and set their own goals that feed the total objective of the master campaign. Each of these campaigns can be easily marketed to friends, family members and colleagues through social sharing, email or text, linking the request for a donation directly to your campaign page.

 

There are no costs to setup a campaign on CROWDGIV and no minimum fundraising requirements. Campaign costs are based on a number of factors which include credit card processing fees, platform and fundraising costs.

 

Our CROWDGIV platform is currently operational, however, to date has generated no revenue.

 

Credit Card Payment and Electronic Check Processing

 

The Company believes that the commoditization of the credit card processing industry has created an opportunity to utilize merchant accounts as part of an overall strategy for growth. DDI began recognizing revenue from these fees beginning in late January 2016. For the years ended December 31, 2017 and 2016, the vast majority of our revenues are generated from these activities.

 

Digital Donations has entered into an agreement with WorldPay, a multi-national payment processing company, which affords it national account preferred pricing as a Visa-approved Payment Service Provider (PSP). WorldPay is the largest provider of ATM services in the United States www.worldpay.us.

 

The Company plans to combine this preferred pricing with the Digital Donations platform to create a new revenue stream for targeted accounts. Digital Donations has already entered into processing agreements with the American Cancer Society, American Heart Association, National Multiple Sclerosis, The Humane Society of the United States, Alzheimer ’ s Foundation and Morgan Stanley. These charities utilize the Company ’ s ATM fundraising technology and are presented as a fundraising opportunity to a consumer as that consumer withdraws cash from an ATM. Donations are collected by the Company and dispersed to the charity selected by the consumer. The Company bills each charity for its services and processing fees.

 

As the Digital Donations business evolved, instead of focusing efforts on acquiring traditional credit card processing accounts Digital Donations chose to partner with major processing companies, ATM manufacturers / distributors with an existing base of customers and charities that provide access to major retailers and corporations that fit our target profile. With the development of Digital Donations as a “Processor Independent” solution we now have the ability to integrate our technology into accounts where previously there was minimal opportunity for the company to capture a merchants processing business. This provides us with the ability to sell our solutions to accounts regardless of who they use as a processor.

 

Additional Products in Development

 

PAYGIV (alternative payment solution)

 

PAYGIV™ is an alternative payments solution that is designed to reduce the costs of processing and allow consumers to discreetly donate to a charity of their choice by simply using PAYGIV as a payment option when making a purchase or donation. Donors can also enable their accounts to automatically “roundup” a purchase to the nearest dollar or to set a fixed donation amount per month and send that amount directly to the nonprofit that they chose when registering their account. Merchants that accept PAYGIV will be able to utilize the Digital Donations rewards program or tie this activity to an existing rewards / loyalty program gaining an additional benefit for all parties.

 

 

PAYGIV Digital Wallet

 

The Company is also developing a PAYGIV™ digital wallet (e-wallet) which would allow consumers to register multiple credit/debit cards and bank account numbers that can be stored securely, eliminating the need to enter account information when transacting online or at the point of sale removing the need to carry credit or debit cards in order to make a purchase and donate.

 

PAYGIV Possible Benefits:

 

	●	Less expensive for the Merchant to accept then Visa / MasterCard
	●	Safer then credit cards (reduces fraud and stolen identity)
	●	Automated donations from donors opting in to donate upon registration
	●	Connects purchasing with charitable giving activity
	●	Incorporates rewards and loyalty with every transaction and donation
	●	Available as a private label program for eligible merchants

 

CoinGIV Cryptocurrency

 

The Company is developing its own proprietary cryptocurrency, CoinGiv. Generally, cryptocurrency evolved from digital currency as a digital representation of ‘legal tender.’ Cryptocurrency is different from traditional money in that it is not categorized (US$ or €) but can be converted into real goods, services and cash. By using this technology to validate transactions (commonly referred to as “blockchain”), there is no need for a central authority to manage the processing, reducing costs and time.

 

Cryptocurrency uses an electronic wallet (e-wallet) to store the private keys that you need to access a coin’s address to spend or transfer your funds. A cryptocurrency e-wallet is similar to ApplePay™ and PayPal™ that stores sensitive information of your credit, debit or checking account creating a more secure experience for the user. These purchases can be made from your e-wallet without the risk of sharing credit card or banking information with the vendor or service provider. Traditional e-wallets still depend on a centralized authority to manage transactions. Although the information is encrypted, your account with any of these services includes your banking or credit card information.

 

Cryptocurrency goes beyond that limitation by using an algorithm of increasing difficulty to create the information block for the transaction. This information history (or blockchain) resides on every participating server eliminating the need for a central authority or control. Because of the uniqueness of each block and the capability to trace transactions back through the blockchain, opportunity for fraud is essentially non-existent.

 

We believe that the use of our proprietary CoinGiv cryptocurrency for charitable giving will be a natural extension of our technology ecosystem and will accelerate and maximize global reach of fundraising. The effort for ongoing fundraising success requires significant expense and the ability to go back to the same donors over and over. We believe that Digital Donations is at the forefront of developing solutions that alleviate this ongoing problem. As people become more accustomed to the value of using cryptocurrency and how they can automate their giving, we believe that CoinGIV will become their choice of tender.

 

When CoinGIV is purchased, buyers will have the option of pledging a percentage of their coins or appreciated value (if any) to a selected nonprofit(s). In addition, Digital Donations will automatically donate a percentage of every CoinGIV sale to the selected charity at the time of purchase. The buyer can choose to donate more of the face or appreciated value or the entire amount to a charity. CoinGIV can also be directly donated and the nonprofit will benefit from the basic gift and any additional appreciated value.

 

We believe that CoinGiv is differentiated from other cryptocurrencies for the following reasons:

 

●	Charitable Giving — CoinGIV will provide a philanthropic component, embracing the philosophy of ‘doing well by doing good’ and sets the standard for those who embrace the future of cause and commerce.
●	Rewards — CoinGIV will provide donors instant rewards in the form of additional coins when donating at a Digital Donations enabled ATM, point of sale (PayGIV), via Smartphone (MyGIV) or crowdfunding platform (CrowdGIV).
●	Automated Donations – CoinGIV will use ‘Smart Contracts’ to automate the donation process of the appreciated value as designated at the time of purchase to the selected charity, guaranteeing the correct amount is donated.
●	Emerging Marketplace – the Digital Donations Emerging Exchange Marketplace will provide CoinGIV holders the opportunity to exchange coins for cash, gift cards, points, miles or any other product or service available on the exchange.
●	Utility – CoinGIV will be both an investment and a ‘currency’ to procure goods and services on the Digital Exchange Emerging Marketplace; using Smart Contracts is a practical utility also increasing the value. Most importantly, CoinGIV will support philanthropy through its purchase and use increasing its utility over other ‘coin’ products.

 

 

CoinGIV rewards are earned when making donations on any platform in the ‘GIV’ ecosystem. Whether the donation is made at a Digital Donations enabled ATM, point of sale, via Smartphone (PayGIV) or crowdfunding platform (CrowdGIV).CoinGIV provides donors instant rewards in the form of additional CoinGIV. Rewards may be saved for future use, gifted to a friend or family member, donated to charity or used to purchase products and services wherever CoinGIV is accepted. Unlike traditional rewards CoinGIV has no expiration date.

 

Facilitating, executing and managing the Digital Donations ecosystem, will be accomplished using smart contracts that automate COINGIV transactions, scheduled pledges and rewards distribution. Smart contracts are self-executing with the terms of the agreement between donor and charity (pledges) or buyer and Digital Donations (rewards) and being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network. Smart contracts permit trusted transactions and agreements to be carried out among disparate, anonymous parties without the need for a central authority, legal system, or external enforcement mechanism. They render transactions traceable, transparent, and irreversible.

 

Digital Donations Emerging Exchange Marketplace

 

The Company intends to develop a decentralized blockchain-based computer network (the “Digital Exchange Marketplace”) that will enable CoinGIV holders to exchange coins for cash, gift cards, points, miles or any other product or service available on the exchange. Merchants who sell or trade on the Digital Exchange Marketplace could also accept CoinGIV as either full or partial (split) payment, increasing sales and donation opportunities. We believe that customers are more inclined to transact mobile payments with a merchant when multiple types of currency can be used as a form of payment. Customers may exchange loyalty points openly to other parties in exchange for CoinGIV through the exchange desk process.

 

Position Marketing Agency - A Division of Digital Donations

 

The Company recently formed a new division (Position Marketing), which we believe will enhance the Company’s ability to scale its digital offerings throughout the United States, providing Local Businesses, National Brands, Franchises and Nonprofits the tools they need to succeed in the rapidly changing world of digital marketing. Through the Position Marketing division, we will be able to offer a full complement of digital media solutions which will provide added value to our clients and partners, without increasing costly overhead. As more businesses shift their media budgets to digital, they now have the opportunity to reach potential prospects throughout all phases of their buying journey.

 

We believe that this new venture to significantly enhance Digital Donation Technologies’ future ability to acquire new consumers, donors and charities for their participation on and contributions to The GIV Ecosystem.

 

Some of the goods and services provided are:

 

●	Logo Design and Branding
●	Website Design & Development
●	PR and Writing Services
●	Social Media Strategy Consulting
●	Creation and Management of Social Media
●	Search Advertising
●	Display & Retargeting

 

Cause Marketing Products and Services

 

Digital Donations has credited The Digital Donations Pledge which it believes separates it from the others in the fundraising industry. The Digital Donations Pledge provides that any 501(c)3 in good standing that meets the requirements can apply for a minimum $5,000 in-kind donation pledge from Digital Donations. The non-profit organization can immediately use the donation to purchase products and services from Digital Donations at the lowest cost for any product or service offered by Digital Donations.

 

Some of the goods and services that can be purchased with pledge credits:

 

	●	CrowdGIV (Crowdfunding Platform) Campaign Development
	●	CrowdGIV (Crowdfunding Platform) Campaign Coaching
	●	Credit Card Processing
	●	Mobile Giving Campaigns
	●	Text to Give Campaigns
	●	Logo Design and Branding
	●	Website Design & Development
	●	PR and Writing Services
	●	Social Media Strategy Consulting
	●	Create and Manage Social Media
	●	Logo Premiums and Incentives
	●	Travel / Resort Packages, Hospitality and Events

 

 

Current contracts

 

The Company’s plan for success revolves around strategic agreements with NPOs, payment processors, integration partners, ATM manufacturers, distributors, mobile platforms and direct response companies. Working closely with NPOs and their corporate sponsors, many of which are merchants and service providers, the opportunity exists to integrate the Digital Donations platform into their point-of-sale systems, e-commerce shopping carts, ATMs and mobile devices that are capable of utilizing the Digital Donations technology.

 

Fiscal Charitable Sponsor

 

United Charitable. United Charitable (UC) is a 501(c)3 nonprofit organization whose mission is to make philanthropy accessible by providing comprehensive management of charitable programs and donor-advised foundations on a community, national, or global level. United Charitable serves as an umbrella organization for individuals or entities which are generally so small that they lack the infrastructure to run their non-profit. The Company, through its subsidiary Digital Donations, Inc., entered into an agreement in June 2014 to provide to the merchants within each of UC ’ s 500+ Programs access to the Digital Donations™ fundraising technology. Pursuant to the terms of the agreement the Company will work with selected merchants and use the Digital Donations Software to automate the solicitation, collection and delivery of charitable contributions to United Charitable at approved merchant locations.

 

ATM Manufacturers

 

At the heart of our ATM fundraising program is the manufacturers themselves who have signed exclusive agreements with Digital Donations to make our fundraising technology available to ATM owners and distributors.

 

Nautilus Hyosung. Nautilus Hyosung America is a subsidiary of South Korea Hyosung, Inc., a global leader in providing ATMs to the retail off-premises and financial institution markets. Since entering the North American market in 1998, Nautilus Hyosung America has shipped more than 200,000 ATMs and is the largest provider of ATMs in the United States. Nautilus Hyosung America is headquartered in Irving, Texas and has research and development support in its Global Software Center in Dayton, Ohio. In February, 2015, the Company, through its subsidiary Digital Donations, Inc., entered into a renewable three-year license agreement with Nautilus whereby the Company granted Nautilus the non-exclusive license to use the Company’s fundraising software technology and the Company’s trademark for ATM locations and ATM distributors. No revenue has been generated to date from this contract.

 

Triton Manufacturing. With more than 200,000 ATMs shipped in over 24 countries worldwide, (130,000 in the United States) Triton has been a leader in ATM affordability and service for over 30 years. Digital Donations recently launched a national effort with Triton to allow charitable giving on ATMs currently in the marketplace. Through its subsidiary, Digital Donations, the Company entered into an agreement whereby Triton Systems of Delaware would act as an independent sales contractor in selling and marketing the Company ’ s fundraising and marketing platform. In addition Triton has appoint the Company as the exclusive provider of ATM fundraising technology and services on all Triton ATMS. No revenue has been generated to date from this contract.

 

Genmega, Inc. Since 2006 Genmega has manufactured and distributed over 90,000 ATMs and Transactional Kiosk worldwide. Digital Donations has entered into an agreement where Genmega ATMs will be loaded with the Digital Donations software through their lead distributor PAI. PAI has 65,000 ATMs in service presently. DIGITAL has an EXCLUSIVE agreement with Genmega.

 

Revenue Based Agreements

 

Payment Alliance International - As one of the nation’s largest deployers and managers of independent ATMs, with 65,000+ units in service, PAI provides ATM processing and maintenance services, ATM equipment sales and support, and ATM branding programs. Digital Donations has a 4 year executed agreement as the exclusive professional fundraiser of donations on Genmega and Nautilus Hyosung ATMs. Payment Alliance International is based in Louisville, Kentucky, with offices in West Palm Beach, Florida, Jackson, Mississippi and Billings, Montana

 

 

ATM Donation Processor

 

WorldPay. WorldPay is a global card payment acquiring business with 450,000 merchants in the United States and operating in over 30 countries around the globe. WorldPay’s platforms allow customers to accept card payments both at point-of-sale and over the Internet. WorldPay is the largest provider of ATM services in the United States. The Company, through its subsidiary Digital Donations, Inc., entered into a processing agreement with WorldPay whereby WorldPay will provide authorization, electronic draft capture, submission of transactions to payment networks, and additional related services for sales originated by the Company.

 

Digital Media and Marketing Partner

 

GEOCommerce. is completely transforming digital advertising and mobile commerce by bridging online to offline marketing and mobile transaction data with unmatched precision. Their engagement solutions connect marketers to a targeted customer across all devices based on intelligent, exact-location audience targeting through the use of patent-pending technologies that create a precise link between a range of online and offline identifiers. Our joint marketing agreement will further enhance nonprofits and for profit engagement with donors. No revenue has been generated to date from this contract.

 

Revenues

 

Revenue is derived directly from the funds that are raised through the use of the Digital Donations technology and fundraising fees charged to the charity, credit card and electronic check processing fees and products and services provided through the Pledge.

 

Payment processing income is determined by the amount charged to the business above the cost of processing (Interchange) which is determined by Visa/MasterCard, AMEX and Discover. Credit card processing revenues are generated by the company acting as a broker of these services for one or multiple processors. The terms of these agreements provide for a wholesale cost of every transaction that is then resold to merchants or businesses that pay a rate that is above the cost. The company then receives the agreed upon profit margin for the length of the contract which is typically 3 years. Check processing follows a similar process except in our current contract we are paid the full cost of the transaction and are then billed for the wholesale price at the end of the billing cycle. Our profit is the difference of the amount charged to the business less the pre-negotiated cost.

 

Donation processing revenues are generated through contracts with nonprofit organizations that use our fundraising technology. Fundraising service fees are expected to be determined by several factors including the number of retail locations and charities using the technology, volume of transactions and amount of donations processed on behalf of the charity.

 

In all its fundraising programs, Digital Donation is paid strictly on the success of the program’s ability to generate donations.

 

Current Sources of Revenue:

 

	●	Credit and Debit Card Processing
	●	Electronic Check processing
	●	ATM Service Fees
	●	Web Service Income
	●	Digital Service Income

 

Expected Future Sources of Revenue:

 

	●	PAYGIV Mobile Wallet (in development)
	●	Digital Donations Point of Sale Program (in development)
	●	MYGIV Mobile App
	●	E-commerce Donation Checkout (in development)
	●	COINGIV cryptocurrency (in development)
	●	Digital Donations Emerging Exchange Marketplace (in development)
	●	Position Marketing services (in development)

 

 

The Market: Fundraising Services

 

According to the National Center on Charitable Statistics there are estimated to be over 1.5 million nonprofits in the United States. The Company believes that many of these nonprofits struggle to keep their doors open and lights on. With advances in technology there is a constant demand for every donated dollar leaving smaller nonprofits with limited resources behind the curve in implementing current technology trends. Nonprofits that don’t have the bandwidth or funding to establish a strong digital presence may be missing critical tools. Online marketing can raise money and awareness and draw the attention of potential funding sources.

 

The Company believes there is a considerable need for alternative fundraising solutions in the United States. In today’s uncertain economy NPOs are faced with the burden of reaching their fundraising goals with reduced opportunities and at costs that continue to rise, and are difficult to justify, causing fundraisers to look for new and alternative ways to seek donations for their organizations.

 

Point of Sale: In 2015, Cause Marketing Forum reported that more than $358 million was raised by 63 point of sale programs. The Company believes that the market for Digital Donations software is significant, as it has been developed to integrate into the majority of payment terminals manufactured by Verison, Equinox and Ingenico, which are the top three manufacturers in the world. Of this group, Verifone is the largest and manages payment acceptance in over 60% of our nation’s retailers.

 

ATMs: One of the key components to creating brand awareness and distribution for the Digital Donations fundraising suite has been the exclusive contracts with ATM manufacturers and distributors which provide a unique opportunity to create national exposure for the Digital Donations brand and the ability to accept donations for up to seven charities at any given time including the ability to respond to local, regional or global disasters immediately.

 

The Company believes that American consumers are relying on cash machines more than ever before and a great majority of consumers use ATM terminals as part of their everyday banking activity. An ATM machine can be found on almost every city block or in every grocery or market in the United States and most developed countries. The Company believes ATM donations fit perfectly into a non-profits evolving approach to donors and the evolution of the Digital Donations™ suite of solutions.

 

Crowdfunding: The Company believes that crowdfunding is poised to become a super-large industry by 2025 and increasing numbers of charitable organizations are looking to the power of the internet to fund their efforts. According to Bob Mulholland’s article Crowdfunding in the Modern Fundraising Platform: “Crowdfunded campaigns succeed in large part because of incentives that organizations promise in exchange for donations.”

 

The Market: Charitable Giving Using Cryptocurrency

 

Typically, traditional money also referred to as “fiat” is paper currency or coinage, but it can also exist as data, such as bank balances and records of credit or debit card purchases. In the today’s economy, most money is held as deposits in banks, and the fraction that exists as currency (notes and coins) is relatively small. Today’s global monetary system is essentially a fiat system because people can use paper bills or bank balances to buy goods.

 

Millennials recently replaced Baby Boomers and outpaced Gen X as the most prominent consumers of products and services. They have always had instant access via smartphones, tablets and laptop computers, and have no point of reference to what life was like without immediate connections to friends, shopping or information. They rely on social media, websites and search engines for news and entertainment. So, it is no surprise that millennials expect to do their giving using smart technology with platforms that are user friendly and up-to-date. Businesses and nonprofits must focus their efforts on digital strategies to stay relevant.

 

We believe that this generation is exceedingly generous when it comes to philanthropy. They’re committed to helping make their communities better places to work and live. Supporting the work of nonprofit organizations is more important than ever as government funding for many social programs diminishes; today 71% of funds are individual donations. The continued development of smart technology has spawned new business models like cryptocurrency. As an alternative to ‘paper money’ these solutions offer new and innovative ways to purchase goods and services, and support nonprofit organizations. We believe that a cryptocurrency focused on enhancing charitable giving and reducing the costs of accepting donations, will provide not just millennials, but all concerned and caring citizens globally, with an innovative model to donate to causes they support.

 

 

In first world countries where banks are ubiquitous, it is hard to believe that more than 2.5 billion people worldwide don’t have bank accounts or access to a centralized monetary system. What they do have, however, are mobile phones. By using digital currency with software that allows value to be exchanged via smartphone “money” is moving where it never has previously, allowing more people to purchase goods and services. The history of your account resides on the network, even if you lose your phone your money is safe guarded. Cryptocurrency (blockchain) has led to an increase in opportunities previously not possible. For the unbanked, saving to buy a home or start a business is another benefit of this form of digital currency. As an alternative to ‘paper money’ these solutions offer new and innovative ways to support nonprofit organizations. A cryptocurrency focused on enhancing charitable giving, will provide a way to support important causes as part of your everyday life using your smart phone.

 

While no actual global statistics exist for charitable giving, $410.71 billion came from the United States, China, United Kingdom, Russia, Australia, and Switzerland combined in 2016. There is at the same time a global shift towards online giving due to the ubiquitous presence of smart phones and micro-transactions. As a global society, what impacts the most remote village in the Amazon or sub-Saharan Africa touches us all. Conversely the issues that we face and actions we take in “first-world” countries are felt throughout the world. The impact on that same Amazon village of the excessive use of fossil fuels in North and South America is a global concern. The universal desire to end hunger and poverty, provide safe water, care for refugees from war-torn countries, improve access to education as well as save our planet, are all worthy goals. In many, if not most cases, the resources to achieve these goals are built on donations from individuals. We believe that CoinGIV is the natural evolution to drive individual philanthropy.

 

We believe that the largest drivers to a cryptocurrency based ecosystem are the burgeoning millennials and the generations following them. Millennials across the globe are switching to non-bank alternatives. Ninety-two percent firmly expressed their distrust of banks; that view is rapidly disseminating through the general population. We believe that there is a growing awareness that the financial industry in general and, banks specifically manipulate, control and monopolize our money has become part of the overall distrust of large institutions. We believe that today’s millennials and much of the general population prefer to use digitized methods of payments. Many prefer cash even over debit or credit cards which makes ‘coin’ and other nonbank digital currencies the most practical alternative. They offer high liquidity, global transaction capacity and freedom from the control of authorities and central banks. While they may not trust banks or credit cards they are ubiquitous in their comfort with and use of mobile technology. We believe that the future of cryptocurrency, blockchain technology and smart contracts is limitless, we have barely begun to scratch the surface of its applications and value. We believe that it is therefore logical and natural to extend this financial solution of our future to the nonprofit world. Joining the cryptocurrency revolution is an organic evolution of digital finance to enable philanthropic giving in to its ecosystem.

 

Proposed Acquisitions and Related Matters

 

The Company expects to enter into a transaction (the “Digital Processing Trade Dress Acquisition”) with Digital Processing Solutions, Inc., a Texas corporation (“Digital Processing Solutions”), which is a company in which the two founders of the Digital Donations, Inc. are also executive officers, directors and majority owners. Pursuant to the proposed terms of the Digital Process Trade Dress Acquisition, the Company expects to acquire the logo, trade name and trade mark of Digital Processing Solutions and expects to issue shares of its common stock in consideration for those items. In anticipation of the Digital Processing Trade Dress Acquisition, the Company has a revocable oral licensing agreement to use the logo, trade name and trade mark of Digital Processing Solutions until the Digital Processing Trade Dress Acquisition is consummated.

 

Employees

 

The Company has two executive officers and no employees. The Company’s wholly-owned subsidiary, Digital Donations, has one full time employee, Keith Orlean, the President, director and shareholder of the Company.

 

Effect of Existing or Probable Governmental Regulation

 

Not applicable.

 

Costs and Effects of Compliance with Environmental Laws

 

Not applicable.

 

Legal Matters

 

There are no pending, threatened or actual legal proceedings in which the Company is a party.

 

 

THE COMPANY

 

Background

 

The Company, formerly known as Fishing Ridge Acquisition Corporation, was incorporated in Delaware on May 21, 2015 and filed a registration statement on Form 10 with the Securities and Exchange Commission on July 28, 2015 and became a public reporting company sixty days thereafter. In January, 2016, Fishing Ridge Acquisition Corporation changed its name to Digital Donations Technologies, Inc. On January 7, 2016, the Company effected a change of control with the resignation of the then officers and directors, redemption of 19,500,000 shares of the 20,000,000 outstanding shares of its common stock, the appointment of new officers and directors and the issuance of 5,000,000 shares of common stock, pro rata, to the new shareholders of the Company.

 

On October 17, 2016, the Company acquired all the outstanding shares of common stock of Digital Donations, Inc., a New York company (the “Acquisition”). Prior to the Acquisition, the Company had no ongoing business or operations. Pursuant to the Acquisition, the Company has acquired the business and business plan of Digital Donations, Inc. which has become a wholly-owned subsidiary of the Company. Pursuant to the Acquisition, all the outstanding shares of Digital Donations, 79,084,807 shares, were exchanged for 79,084,807 shares of the Company’s common stock.

 

The Company has an authorized capitalization of 300,000,000 shares of common stock and 100,000,000 shares of preferred stock. The Company has a fiscal year end of December 31. At the time of the Acquisition, there were 5,500,000 shares of common stock of the Company issued and outstanding. As of the date of this Annual Report, there are 89,047,729 shares of the Company’s common stock outstanding and another 1,154,977 shares that are issuable.

 

Employees

 

The Company has two executive officers and no employees. The Company’s wholly-owned subsidiary, Digital Donations, has one full time employee, which is Keith Orlean, the President, director and shareholder of the Company.

 

Subsidiaries

 

The Company has one wholly-owned subsidiary, Digital Donations, Inc.

 

Property

 

The Company has its headquarters at 68 South Service Road, Suite 100, Melville, New York 11747.

 

Legal Proceedings

 

There are no pending, threatened or actual legal proceedings in which the Company is a party.

 

Emerging Growth Company

 

Digital Donations Technologies, Inc., qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act which became law in April, 2012. The definition of an “emerging growth company” is a company with an initial public offering of common equity securities which occurred after December 8, 2011 and has less than $1 billion of total annual gross revenues during last completed fiscal year. The disclosure regarding the company and The Jumpstart Our Business Startups Act is incorporated herein by reference from the Form 10-12G filed on July 28, 2015.

 

Jumpstart Our Business Startups Act

 

In April, 2012, the Jumpstart Our Business Startups Act (“JOBS Act”) was enacted into law. The JOBS Act provides, among other things: Exemptions for emerging growth companies from certain financial disclosure and governance requirements for up to five years and provides a new form of financing to small companies; Amendments to certain provisions of the federal securities laws to simplify the sale of securities and increase the threshold number of record holders required to trigger the reporting requirements of the Securities Exchange Act of 1934; Relaxation of the general solicitation and general advertising prohibition for Rule 506 offerings; Adoption of a new exemption for public offerings of securities in amounts not exceeding $50 million; and Exemption from registration by a non-reporting company offers and sales of securities of up to $1,000,000 that comply with rules to be adopted by the SEC pursuant to Section 4(6) of the Securities Act and such sales are exempt from state law registration, documentation or offering requirements. In general, under the JOBS Act a company is an emerging growth company if its initial public offering (“IPO”) of common equity securities was effected after December 8, 2011 and the company had less than $1 billion of total annual gross revenues during its last completed fiscal year. A company will no longer qualify as an emerging growth company after the earliest of

 

 

(i) the completion of the fiscal year in which the company has total annual gross revenues of $1 billion or more,

(ii) the completion of the fiscal year of the fifth anniversary of the company’s IPO;

(iii) the company’s issuance of more than $1 billion in nonconvertible debt in the prior three-year period; or

(iv) the company becoming a “larger accelerated filer” as defined under the Securities Exchange Act of 1934.

 

The Company meets the definition of an emerging growth company will be affected by some of the changes provided in the JOBS Act and certain of the new exemptions. The JOBS Act provides additional new guidelines and exemptions for non-reporting companies and for non-public offerings. Those exemptions that impact the Company are discussed below. Financial Disclosure. The financial disclosure in a registration statement filed by an emerging growth company pursuant to the Securities Act of 1933 will differ from registration statements filed by other companies as follows:

 

(i) audited financial statements required for only two fiscal years;

(ii) selected financial data required for only the fiscal years that were audited;

(iii) executive compensation only needs to be presented in the limited format now required for smaller reporting companies. (A smaller reporting company is one with a public float of less than $75 million as of the last day of its most recently completed second fiscal quarter)

 

However, the requirements for financial disclosure provided by Regulation S-K promulgated by the Rules and Regulations of the SEC already provide certain of these exemptions for smaller reporting companies. The Company is a smaller reporting company.

 

Currently a smaller reporting company is not required to file as part of its registration statement selected financial data and only needs audited financial statements for its two most current fiscal years and no tabular disclosure of contractual obligations.

 

The JOBS Act also exempts the Company’s independent registered public accounting firm from complying with any rules adopted by the Public Company Accounting Oversight Board (“PCAOB”) after the date of the JOBS Act’s enactment, except as otherwise required by SEC rule.

 

The JOBS Act also exempts an emerging growth company from any requirement adopted by the PCAOB for mandatory rotation of the Company’s accounting firm or for a supplemental auditor report about the audit.

 

Internal Control Attestation. The JOBS Act also provides an exemption from the requirement of the Company’s independent registered public accounting firm to file a report on the Company’s internal control over financial reporting, although management of the Company is still required to file its report on the adequacy of the Company’s internal control over financial reporting.

 

Section 102(a) of the JOBS Act goes on to exempt emerging growth companies from the requirements in 1934 Act § 14A(e) for companies with a class of securities registered under the 1934 Act to hold shareholder votes for executive compensation and golden parachutes.

 

Other Items of the JOBS Act. The JOBS Act also provides that an emerging growth company can communicate with potential investors that are qualified institutional buyers or institutions that are accredited to determine interest in a contemplated offering either prior to or after the date of filing the respective registration statement. The Act also permits research reports by a broker or dealer about an emerging growth company regardless if such report provides sufficient information for an investment decision. In addition the JOBS Act precludes the SEC and FINRA from adopting certain restrictive rules or regulations regarding brokers, dealers and potential investors, communications with management and distribution of a research reports on the emerging growth company IPO.

 

Section 106 of the JOBS Act permits emerging growth companies to submit 1933 Act registration statements on a confidential basis provided that the registration statement and all amendments are publicly filed at least 21 days before the issuer conducts any road show. This is intended to allow the emerging growth company to explore the IPO option without disclosing to the market the fact that it is seeking to go public or disclosing the information contained in its registration statement until the company is ready to conduct a road show.

 

Election to Opt Out of Transition Period. Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a 1933 Act registration statement declared effective or do not have a class of securities registered under the 1934 Act) are required to comply with the new or revised financial accounting standard.

 

The JOBS Act provides a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of the transition period.

 

 

Legal Proceedings

 

There are no pending, threatened or actual legal proceedings in which the Company is a party.

 

Reports to Security Holders

 

In July 2015, the Company (as Fishing Ridge Acquisition Corporation) filed a Form 10-12G general registration of securities pursuant to the Securities Exchange Act of 1934 and is a reporting company pursuant such Act and files with the Securities and Exchange Commission quarterly and annual reports and management shareholding information. The Company intends to deliver a copy of its annual report to its security holders, and will voluntarily send a copy of the annual report, including audited financial statements, to any registered shareholder who requests the same.

 

The Company’s documents filed with the Securities and Exchange Commission may be inspected at the Commission’s principal office in Washington, D.C. Copies of all or any part of the registration statement may be obtained from the Public Reference Section of the Securities and Exchange Commission, 100 F Street N.E., Washington, D.C. 20549. Call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms. The Securities and Exchange Commission also maintains a web site at http://www.sec.gov that contains reports, proxy statements and information regarding registrants that file electronically with the Commission. All of the Company’s filings may be located under the CIK number 0001644825.

 

PLAN OF OPERATION

 

Summary

 

History

 

Digital Donations Technologies, Inc., formerly known as Fishing Ridge Acquisition Corporation (“DDTI”), was incorporated in Delaware on May 21, 2015 and filed a registration statement on Form 10 with the Securities and Exchange Commission on July 28, 2015 and became a public reporting company sixty days thereafter.

 

In January 2016, Fishing Ridge Acquisition Corporation changed its name to Digital Donations Technologies, Inc. pursuant to a change of control with the resignation of the then officers and directors, redemption of 19,500,000 shares of the 20,000,000 outstanding shares of its common stock, the appointment of new officers and directors and the issuance of 5,000,000 shares of common stock, pro rata, to the new shareholders of the Company.

 

On October 17, 2016, Digital Donations Technologies, Inc. effected the acquisition of Digital Donations, Inc. (the “Acquisition”) as a wholly-owned subsidiary with the issuance of 79,084,807 shares of its common stock in exchange for the 79,084,807 outstanding shares of common stock of Digital Donations Inc.

 

Prior to the Acquisition, the Company had no business or operations. Pursuant to the Acquisition, the Company acquired the business plan, operations and contracts of its now wholly-owned subsidiary, Digital Donations, Inc.

 

Business Summary

 

Overview

 

Digital Donations Technologies, Inc. (DDTI) is an early-stage company formed to support the non-profit industry with innovative and cost effective fundraising technologies providing alternative payment and fundraising solutions giving consumers the option to make a small donation as part of a financial transaction such as at a checkout or ATM transaction. The Company is currently developing fundraising platforms which allow non-profit organizations (“NPO”), retailers and quick service restaurants to present requests for contributions to potential donors at the time such possible donors pay for goods and services at the point of sale (“POS”) at participating merchants, ATM’s, mobile devices or via the Company’s online web site. The Company is also developing its own proprietary cryptocurrency, to be named CoinGiv, that will be specifically designed to facilitate charitable giving through transactions made on a the Company’s proprietary decentralized blockchain-based computer network (the “Digital Exchange Marketplace”) that will enable CoinGIV holders to exchange coins for cash, gift cards, points, miles or any other product or service available on the exchange.

 

Potential Revenue

 

The Company intends to earn revenue from the funds that are raised through the use of the Digital Donations technology and fundraising fees related to the Company’s charity, credit card and electronic check processing products and services.

 

 

Developments in 2017

 

In November 2016, Company filed a registration statement on Form S-1 (the “Registration Statement”) relating to the secondary offer and sale of 8,751,920 shares of common stock of Digital Donations Technologies, Inc., $.0001 par value per share, by the holders thereof who are deemed to be statutory underwriters (the “Selling Shareholders”). On July 13, 2017, the Registration Statement had been declared effective by the SEC. No shares to date have been sold under the Form S-1.

 

ITEM 1A. RISK FACTORS.

 

Not applicable.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS.

 

Not applicable.

 

ITEM 2. PROPERTIES.

 

The Company has its headquarters at 68 South Service Road, Suite 100, Melville, New York 11747.

 

ITEM 3. LEGAL PROCEEDINGS.

 

There are no pending, threatened or actual legal proceedings in which the Company is a party.

 

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.

 

There is currently no public market for the Company’s securities.

 

At such time as it qualifies, the Company may choose to apply for quotation of its securities on the OTC Bulletin Board. The OTC Bulletin Board is a dealer-driven quotation service. Unlike the Nasdaq Stock Market, companies cannot directly apply to be quoted on the OTC Bulletin Board, only market makers can initiate quotes, and quoted companies do not have to meet any quantitative financial requirements. Any equity security of a reporting company not listed on the Nasdaq Stock Market or on a national securities exchange is eligible.

 

As such time as it qualifies, the Company may choose to apply for quotation of its securities on the Nasdaq Capital Market. In general there is greatest liquidity for traded securities on the Nasdaq Capital Market and less on the OTC Bulletin Board. It is not possible to predict where, if at all, the securities of the Company will be traded following a business combination.

 

Holders

 

As of March 31, 2018, there were approximately 53 stockholders.

 

Dividends

 

We have not paid, nor declared, any cash dividends since our inception and do not intend to declare or pay any such dividends in the foreseeable future. Our ability to pay cash dividends is subject to limitations imposed by state law.

 

Securities Authorized for Issuance Under Equity Compensation Plans

 

As of the year ended December 31, 2017, neither Digital Donations Technologies, Inc. nor its wholly owned subsidiary, Digital Donations, Inc., had compensation plans (including individual compensation arrangements) under which our Common Stock was authorized for issuance.

 

The Company’s management will review the adoption of an equity compensation plan in the future.

 

 

Recent sales of unregistered securities

 

The Company has issued the following securities during the year ended December 31, 2017. All such securities were issued pursuant to an exemption from registration of the Securities Act of 1933, as amended, as a transaction by an issuer not involving any public offering, as noted below. Each of these transactions was issued as part of a private placement of securities by the Company in which (i) no general advertising or solicitation was used, and (ii) the investors purchasing securities were acquiring the same for investment purposes only, without a view to resale. Furthermore, no underwriters participated or effectuated any of the transactions specified below. Also, no underwriting discounts or commissions applied to any of the transactions set forth below. All potential investors were contacted personally and possessed at the time of their investment bona fide substantive, pre-existing business relationships with the Company and/or its officers, directors and affiliates. No potential investors were contacted through other means, and no general advertising or general solicitation was used to solicit any investors.

 

From January 2017 to December 2017, the Company sold to five shareholders an aggregate of 3,457,931 of its common shares for a total of $307,000 pursuant to a private placement offering. As of the date of this filing, 1,154,977 shares of that aggregate amount were issuable.

 

From January 1 through April 4, 2018, the Company sold to 2 shareholders an aggregate of 482,990 of its common shares for a total of $34,500. As of the date of this filing, 482,990 shares of that aggregate amount were issuable.

 

On January 5, 2018, the Company entered into a note agreement with a third party and received gross proceeds of $10,000. The note bears interest at a rate of 1.5% per month, matures six months after issuance and is unsecured. The note and any accrued interest is convertible into common stock of the Company at $0.50 per share.

 

ITEM 6. SELECTED FINANCIAL DATA.

 

As a “smaller reporting company,” we have elected not to provide the disclosure required by this item.

 

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

 

The following discussion should be read in conjunction with our audited consolidated financial statements and notes to our financial statements included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors discussed elsewhere in this report.

 

Certain information included herein contains statements that may be considered forward-looking statements, such as statements relating to our anticipated revenues, gross margin and operating results, future performance and operations, plans for future expansion, capital spending, sources of liquidity, and financing sources. This forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future, and accordingly, such results may differ from those expressed in any forward-looking statements made herein. These risks and uncertainties include those relating to our liquidity requirements, the continued growth of the software industry, the success of our product development, marketing and sales activities, vigorous competition in the software industry, dependence on existing management, leverage and debt service (including sensitivity to fluctuations in interest rates), domestic or global economic conditions, the inherent uncertainty and costs of prolonged arbitration or litigation, and changes in federal or state tax laws or the administration of such laws.

 

Overview

 

The Company is a development stage company and was incorporated in the State of Delaware in May 2015. As of the periods from inception, through the date of this annual report, the Company has generated minimal revenue and incurred minimal expenses and operating losses, as part of its development stage activities. For the years ended December 31, 2017 and 2016, respectively, the Company had net revenues of $118,315 and $112,666, and total operating expenses of $514,248 and $661,466, respectively. For the years ended December 31, 2017 and 2016, the Company experienced a net loss of $401,870 and $551,299, respectively. As of December 31, 2017, the Company has an accumulated deficit of $1,383,973 and total liabilities of $195,715.

 

As the result of the acquisition of Digital Donations, Inc. and the change in business and operations of the Company, from an non-operating reporting company, to the business of becoming a provider of alternative fundraising solutions to the nonprofit industry, a discussion of the past, pre-Share Exchange financial results of Digital Donations Technologies, Inc., is not pertinent, and under applicable accounting principles the historical financial results of Digital Donations, Inc. the wholly owned operating subsidiary of Digital Donations Technologies, Inc., the accounting acquirer, prior to the Acquisition Agreement are considered the historical financial results of the Company.

 

The Company anticipates that it would need a minimum of approximately $1,150,000 over the next 12 months to continue as a going concern and bring the company’s products currently in development to market within that time frame. Specifically, in order for the Company to fully implement it plans it expects that it will need: (1) $250,000 for the ongoing design and development of new and existing Digital Donations technologies, (2) $150,000 for marketing and consulting expenses, (3) $500,000 to hire key personnel and (4) $250,000 for operating expenses. The Company’s executive officers and several of its current shareholders have expressed a willingness and plan to continue to fund the Company’s operations during the next 12 months or until the Company can generate ongoing revenues sufficient to independently continue its operations, however, the Company cannot guarantee that it will receive the minimum needed to fund its operations and development for the upcoming 2018 year.

 

 

The following discussion highlights Digital Donations, Inc.’s results of operations and the principal factors that have affected its financial condition as well as its liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on Digital Donations, Inc.’s audited financial statements contained in this registration statement, which have been prepared in accordance with United States generally accepted accounting principles. This discussion and analysis together with such financial statements and the related notes thereto.

 

Basis of Presentation

 

The audited financial statements for the fiscal years ended December 31, 2017 and 2016, include a summary of significant accounting policies and should be read in conjunction with the discussion below. In the opinion of management, all material adjustments necessary to present fairly the results of operations for such periods have been included in these audited financial statements. All such adjustments are of a normal recurring nature.

 

Overview of the Results of Operations for the years ended December 31, 2017 and 2016

 

Results of Operations

 

Comparison of Years Ended December 31, 2017 and 2016

 

Gross Revenues. During the year ended December 31, 2017, the Company generated gross revenues totaling $143,342, compared to $141,636 in gross revenue for the comparable year ended December 31, 2016. The revenue for both years was generated primarily through agreements to process customer’s credit card and electronic check payments received.

 

Commissions and Residuals. During the year ended December 31, 2017, the Company paid $25,027 to third parties in sales related commissions and residuals, compared to $28,970 for the same period of 2016. These costs represent, primarily, the fees the Company incurs to third party providers to perform the electronic processing of the payments and distribution of the funds to all appropriate parties.

 

Although the net changes and percent changes for our revenues and our cost of revenue for years ended December 31, 2017 and 2016 are summarized above, these trends should not be viewed as a definitive indication of our future results.

 

Operating Expenses. Operating expenses decreased $147,218, or 22%, to $514,248 through the end of 2017 from $661,466 through the year ended 2016 due primarily to a decrease in stock based compensation of $154,433 and a decrease in software development costs of $18,607. We held off production of certain of our software platform development programs due to a lack of working capital. Additionally, our IT and software expenses decreased 21%, or $11,221, from 2016 to 2017. These decreases were, in part, offset with an increase in sales and marketing expense of $17,568, an increase of 14% over 2016. In addition, our professional fees increased 28% in the year ended December 31, 2017 compared to 2016, to $107,932 compared to $84,019. This was the result of the Company becoming a public reporting entity upon the recapitalization and merger with Digital Donations Technologies, Inc. in the fourth quarter of 2016. We expect our professional fees to grow as our Company grows in future periods. Also, our corporate and office costs increased by 14% in the year ended December 31, 2017 compared to the year ended December 31, 2016. Along with professional fees, we expect our corporate overhead costs to increase as we strive to grow our Company in future periods.

 

Other Expenses. Interest expense was $8,602 and $2,567 in the years ended December 31, 2017 and 2016, respectively. This increase in interest expense of $6,035, or 235%, for the years ended was due to an increase in outstanding indebtedness.

 

Net Loss. During the year ended December 31, 2017, the Company posted a net loss of $401,870, compared to a net loss of $551,299 for the year ended December 31, 2016. The $149,429 decrease in the loss is primarily the result of the decrease in stock based compensation expense and software development costs, as noted above.

 

Financial Condition, Liquidity and Capital Resources

 

Going Concern

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in this Annual Report and in the notes to the financial statements, the Company has incurred operating losses, and at December 31, 2017, has a working capital deficiency of approximately $177,192. These factors raise substantial doubt about the ability of the Company to continue as a going concern. Additionally, the Company’s independent registered public accounting firm included an explanatory paragraph in their report for the years ended December 31, 2017 and 2016 regarding concerns about the Company’s ability to continue as a going concern.

 

 

The Company’s ability to continue as a going concern is dependent upon our generating operating cash flow and raising capital sufficient to fund operations. We have discussed our strategy and plans relating to these matters elsewhere in this Current Report although the financial statements included herein do not include any adjustments that might result from the outcome of these uncertainties. The Company’s business strategy may not be successful in addressing these issues, however, and if it cannot continue as a going concern, its stockholders may lose their entire investment.

 

In order to be able to achieve its strategic goals, the Company needs to further expand its business and financing activities. The Company’s aim to accomplish these goals by further developing its technology platform and correlated services. Expanding the technology platform and payment processing solutions will require future capital and liquidity expansion. Since inception in March 2014, the Company’s shareholders have contributed a significant amount of capital making it possible for it to develop our technology platform, services and activities. To continue to develop its product offerings and to expand services, a significant capital increase has been and will continue to be required. The Company believes it needs to raise additional capital from current shareholders and new investors. If the Company cannot continue as a going concern, its stockholders may lose their entire investment.

 

Cash Flows From Operating Activities. Net cash used by operating activities was $328,694 in the year ended December 31, 2017 compared to $360,332 in the year ended December 31, 2016. Uses of cash during 2017 included a net loss of $401,870 adjusted for noncash depreciation expense of $4,474. The net loss for 2016 was $551,299 and was adjusted for a noncash depreciation charge of $2,378 during the year. Other sources and uses of cash involved changes in operating assets and liabilities, including a decrease in trade accounts receivable in 2017 of $625, compared to a decrease of $11,337 during the same period of 2016, and an increase in accounts payable and accrued expenses of $69,327 in 2017, compared to an increase $45,493 during the same period of 2016.

 

Cash Flows From Investing Activities. For the year ended December 31, 2017, cash was used to purchase equipment totaling $1,174. For the year ended December 31, 2016, cash was used to purchase equipment totaling $13,228, and $5,900 of cash was used to make an advance to a related party.

 

Cash Flows From Financing Activities. Cash provided from financing activities was $312,810 and $355,000 in the year ended December 31 of 2017 and 2016, respectively. For the year ended December 31, 2017 and 2016, $307,000 and $325,000 was raised from the sale of common stock for cash, respectively, and for the years ended December 31, 2017 and 2016, $10,000 and $30,000 of cash was raised from short term borrowings, respectively. During the year ended December 31, 2017, $4,190 of cash was used to repay short term debt.

 

Current Financial Condition. As of December 31, 2017 the Company had a cash balance of $6,562, compared to $23,620 as of December 31, 2016. The Company continues to raise funds under its $5 million private placement offering. For the period from January 1, 2018 through April 3, 2018, the Company raised a further $16,500 under the private placement at approximately $0.07143 per share. While the Company believes it will be able to raise funds in order to meet the operating cash flow needs of the Company in 2017, there are no firm commitments as of the date of this filing. The Company expects to be able to raise significantly more funds in order to implement its development plan discussed earlier under Item 2 under its private placements upon its ability to trade on the OTC market once it obtains a ticker symbol and is otherwise qualified to do so.

 

Critical Accounting Policies

 

The Company believes that the following significant accounting policies involve a greater degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our financial condition and results of operations.

 

Estimates

 

The Company regularly evaluate the accounting estimates that used to prepare the financial statements. A complete summary of these policies is included in the Notes to the audited financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

 

Revenue Recognition

 

The Company generates its revenue from administration and service fees of transactions on the Digital Donations fundraising platform, and from residual fees and commissions from the processing of payments made by customers to client merchants via debit or credit cards, or by electronic checks. Revenue from these transactions is accounted for in the monthly period a donation is made or a payment processed.

 

 

For the brokering of credit card processing fees, the Company recognizes revenues at the time the credit card process transaction is approved, when its fee becomes fixed and determinable. For electronic check processing, the Company recognizes revenue in the same manner, when the check is processed, as at that time its fee becomes fixed and determinable. In addition, because the Company only brokers these services, the revenue recognized is net of the fee charged by the actual process provider.

 

Alternative Financial Planning

 

The Company has no alternative financial plans at the moment. If the Company is not able to successfully raise monies as needed through a private placement or other securities offering (including, but not limited to, a primary public offering of securities), the Company’s ability to survive as a going concern and implement any part of its business plan or strategy will be severely jeopardized. If the Company is unable to raise funds through equity sales or otherwise, the Company may also consider selling some of its silver holdings in the future to finance other operations.

 

The Company does not anticipate that it will generate revenue sufficient to cover its planned operating expenses, and the Company must obtain additional financing in order to develop and implement its business plan and proposed operations. If the Company is not successful in generating sufficient revenues and/or obtaining additional funding to develop its business plan and proposed operations, this could have a material adverse effect on its business, results of operations liquidity and financial condition.

 

Off-Balance Sheet Arrangements

 

The Company has no off-balance sheet arrangements (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) as of December 31, 2017 that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

As a “smaller reporting company”, we have elected not to provide the disclosure required by this item.

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

The required financial statements are included following the signature page of this Annual Report on Form 10-K.

 

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

 

Our management, with the participation of our prior principal executive and financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended, the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and principal financial officer concluded that our disclosure controls and procedures as of the end of the period covered by this report (based on the evaluation of these controls and procedures required by Rule 15d-15(b) of the Exchange Act) were not effective in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, and (ii) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. As of the end of the period covered by the Report, we did not have a formal audit committee and there was a lack of segregation of duties.

 

We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

 

 

Management’s Annual Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of our company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

 

Management assessed our internal control over financial reporting as of December 31, 2016, the end of our fiscal year. Management based its assessment on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO 2013 Criteria). Management’s assessment included evaluation of such elements as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment.

 

Based on our assessment, management has concluded that our internal control over financial reporting was not effective, as of the end of the fiscal year, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles.

 

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

 

Inherent limitations on effectiveness of controls

 

Internal control over financial reporting has inherent limitations which include but is not limited to the use of independent professionals for advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors. Internal control over financial reporting is a process which involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Changes in Internal Control Over Financial Reporting

 

There was no change in our internal control over financial reporting (as defined in Rule 15d-15(f) of the Exchange Act) that occurred during the quarter ended December 31, 2017, that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 9B. OTHER INFORMATION

 

None.

 

 

PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

 

The following tables set forth information regarding the Company’s board of directors and its executive officers as well as those of the Company’s wholly-owned subsidiary, Digital Donations..

 

Officers and Directors of Digital Donations Technologies, Inc. (the “Company”)

 

Name		Age		Position
Keith Orlean		59		Chief Executive Officer and Treasurer, Director
Jeffrey Marder		59		President, Director

 

Officers and Directors of Digital Donations, Inc. (the Company’s wholly-owned subsidiary)

 

Keith Orlean		59		President and Director
Jeffrey Marder		59		Chief Executive Officer and Director
Danny Votra		43		Executive Vice President

 

Directors

 

The Company is authorized to have at least one director but no more than five. Each of the Company’s directors serve for a term of one year or until a successor is elected and qualified.

 

Director Independence

 

Pursuant to Rule 4200 of The NASDAQ Stock Market one of the definitions of an independent director is a person other than an executive officer or employee of a company. The Company’s board of directors has reviewed the materiality of any relationship that each of the directors has with the Company, either directly or indirectly.

 

Involvement in Certain Legal Proceedings

 

None of our directors or executive officers has, during the past ten years:

 

● Been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

 

● Had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;

 

● Been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;

 

● Been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

 

● Been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

 

● Been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26)), any

 

● Registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29)), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

 

Committees and Terms

 

The Board of Directors (the “Board”) has not established any committees. The Company will notify its shareholders for an annual shareholder meeting and that they may present proposals for inclusion in the Company’s proxy statement to be mailed in connection with any such annual meeting; such proposals must be received by the Company at least 90 days prior to the meeting. No other specific policy has been adopted in regard to the inclusion of shareholder nominations to the Board of Directors.

 

Keith Orlean

 

As co-founder and CEO of Digital Donations Technologies, Inc. Mr. Orlean draws on more than 20 years of experience in sales, marketing and business development in the electronic payments and financial services industry, setting the strategic direction of the Company. Although he oversees all aspects of the Company’s operations Mr. Orlean focuses specifically on new product development and developing relationships with payment processors, independent sales organizations and other industry resources that drive the continued growth of the Company.

 

His knowledge of the payments industry led to the development of products and services such as private label rewards and loyalty programs that increase customer loyalty and reduce attrition. Mr. Orlean applied this same strategy in developing the Digital Donations platform including a rewards component to drive donor participation. This alternative method of collecting and delivering donations to charities and foundations allows retailers, e-commerce businesses and ATM owners to develop a cause marketing strategy by integrating fundraising technology at the point of transaction. His relationships with major payment processors and software developers such as: Merchant First, TSYS, Global Payments, First Data, VeriFone, Chase Paymentech, and many others has been critical in the development and growth of the Digital Donations platform.

 

Jeffrey Marder

 

As co-founder and President of Digital Donations Technologies, Inc., Mr. Marder co-developed the Digital Donations technology platform and is responsible for setting corporate strategy, driving revenue, structuring and negotiating strategic agreements, and maintaining the company’s key relationships with market partners and non-profits on a day-to-day basis. His experience in transacting business with C-Suite executives and global organizations has been crucial to the signing of strategic agreements with major industry players and numerous national nonprofits. In 2013, Mr. Marder was asked to contribute and sit on the committee of ARTS (Association Retail Technology Standards) a division of the National Retail Federation to assist in creating a new standard that will be used at the retail point of sale, by POS distributors and software developers. This Standard released in November of 2013 is now available to retailers of big box stores allowing them to support charities nationwide or on a local, regional basis.

 

Prior to joining Digital Donations, Mr. Marder spent 16 years at Active International, a global full service media and financial services company. Mr. Marder has received numerous business accolades. In 2004 the executive management team of Active presented him with the most valuable contributor award. His previous responsibilities included VP of Business Development, where he led a team of executives that were responsible for global new business development and lead generation. The team under his direction and leadership concentrated on developing C-Suite relationships with Fortune 500 / 1000 companies, resulting in 37mm in new business for 3 consecutive years. He also was responsible for training domestic and international sales associates and managing directors, which led to being promoted to Senior Vice President in 2006.

 

Danny Votra

 

Mr. Votra, the Executive Vice President of the Company, is well known for creatively ‘thinking outside of the box’ or working within an existing marketing plan boundaries to optimize digital engagement, increase traffic, build brand equity, and for designing new creative marketing plans, tying in all aspects of Design, SEO, PPC, Social and Messaging. His experience covers a wide range of rare skill both in the technical and creative aspects of digital marketing and his career spans over 20 years serving both as a service provider and as a business owner. “At Digital Donations, we help clients build brand equity, reach a wider audience, solve their unique marketing challenges, and measure their successes.” Our strength is in business to business sales and marketing strategies, client engagements and business development. Mr. Votra is the driving force behind the Digital Donations branding and marketing strategies and collaborates daily with the management team and partners to design and implement the Company’s creative marketing initiatives. As the evangelist for the GIV Ecosystem, he manages brand identity, communication and consistency.

 

 

Previous to joining Digital Donations, Mr. Votra has a long history of working in sales, marketing and creative - attaining key positions in interactive media, consulting, project management and marketing. He drove the concepts behind many of his clients’ marketing and branding strategies and regularly traveled across the country to collaborate with creative teams working on different advertising campaigns and creative marketing initiatives, continually advising clients and professionals on how they can leverage the combined power of creative marketing and technology to propel their brand, launch their products and build their businesses. Mr. Votra attended Hofstra University and received his B.S in Design and Marketing in 1996.

 

ITEM 11. EXECUTIVE COMPENSATION

 

Summary Compensation

 

In 2017 and 2016, Keith Orlean received compensation of $121,912 and $131,000, respectively, as an employee of Digital Donations, Inc.

 

Anticipated Officer and Director Remuneration

 

The Company anticipates that Messrs. Marder and Orlean will each receive an annual salary of $175,000 for their services to the Company.

 

The Company has not entered into any employment agreements with any of its officers. It intends to pay annual salaries to such officers and will pay an annual stipend to its directors when the Board determines, in its sole discretion, that cash flow is sufficient to make such payments in light of other cash needs of the Company.

 

Although not presently offered, the Company anticipates that its officers and directors will be provided with a group health, vision and dental insurance program. In addition, the Company plans to offer 401(k) matching funds as a retirement benefit, paid vacation days and paid holidays.

 

Employment Agreements

 

The Company has not entered into any employment agreements with any officers or key personnel. The Company has no oral agreements or understandings with any officer or employee regarding base salary or other compensation.

 

Outstanding Equity Awards at Fiscal Year-End

 

There are no current outstanding equity awards to our executive officers as of December 31, 2017.

 

Code of Ethics

 

Our Board of Directors has not adopted a code of ethics. We anticipate that we will adopt a code of ethics when we increase either the number of our Directors or the number of our employees.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Exchange Act may require our executive officers and Directors, and persons who own more than ten percent of our common stock to file reports of ownership and change in ownership with the Securities and Exchange Commission and the exchange on which the common stock is listed for trading. Executive officers, Directors and more than ten percent (10%) stockholders are required by regulations promulgated under the Exchange Act to furnish us with copies of all Section 16(a) reports filed. Based solely on our review of copies of the Section 16(a) reports filed for the fiscal years ended December 31, 2016, we believe that our executive officers, Directors and ten percent (10%) stockholders complied with all reporting requirements applicable to them.

 

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

 

The following table sets forth information as of the date of this prospectus regarding the beneficial ownership of the Company’s common stock by each of its executive officers and directors, individually and as a group and by each person who beneficially owns in excess of five percent of the common stock after giving effect to any exercise of warrants or options held by that person.

 

 

						Percent of
Name and Position		Shares Owned				Class(1)
Keith Orlean, Director (2) CEO and Treasurer			37,500,000				42	%
Jeffrey Marder, Director (2) President			37,500,000				42	%
Danny Votra Executive Vice President			500,000				Less than 1	%
Vitaliya Chukas > 5% Shareholder			5,227,005				5.79	%
All Officers and directors as a Group (3 persons)			75,500,000				83.7	%

 

(1)	Based on 90,202,698 shares of common stock outstanding.
(2)	Consists of 2,500,000 shares issued on change of control and 35,000,000 shares issued pursuant to the Acquisition in exchange for the 35,000,000 shares of Digital Donations Inc. held.

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR INDEPENDENCE.

 

Certain Relationships and Related Transactions

 

Messrs. Orlean and Marder each owned 35,000,000 shares (39%) of the 90,202,698 outstanding shares of common stock of Digital Donations, Inc. The reorganization by which Digital Donations became a wholly owned subsidiary of the Company was not an arms-length transaction. Messrs. Orlean and Marder serve as officers and directors of the Company and as the officers and directors of Digital Donations, Inc.

 

Prior to the incorporation of the Company, the founders created and purchased the logo, trade name and trade mark that the Company now uses from the related entity noted above. However, because of serious financial issues suffered by the related entity, the only other product developed outside of the creation and purchase of the logo, trade name and trade mark, was the development of a Point of Sale technology and product that ultimately was discontinued in 2014 since the standard that it was based on became obsolete, and this technology and product will not be used by the Company nor will it be acquired by the Company. The Company expects to enter into a transaction with Digital Processing Solutions, Inc. to acquire the logo, trade name and trade mark and expects to issue shares of its common stock in consideration for those items due to the current liquidity situation of the Company. Because the intangible items will be purchased from a related entity, the Company will record the intangible assets purchased at the historical cost incurred by the related entity to acquire those intangibles as the purchase price.

 

Director Independence

 

Our securities are not listed on a national securities exchange or in an inter-dealer quotation system which has requirements that directors be independent. Therefore, we have adopted the independence standards of the American Stock Exchange, now known as the NYSE MKT LLC, to determine the independence of our directors and those directors serving on our committees. These standards provide that a person will be considered an independent director if he or she is not an officer of the company and is, in the view of the company’s board of directors, free of any relationship that would interfere with the exercise of independent judgment. Our board of directors has determined that as of the date of this Report, we had 5 independent directors.

 

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

 

Audit Fees

 

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of our annual financial statement and review of financial statements included in our 10-Q reports and services normally provided by the accountant in connection with statutory and regulatory filings or engagements were $20,300 for fiscal year ended December 31, 2016, and $30,000 for fiscal year ended December 31, 2017.

 

Audit-Related Fees

 

The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of our financial statements that are not reported above were $22,600 and $0 for fiscal years ended December 31, 2016 and 2017, respectively.

 

Tax Fees

 

The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were $0 for fiscal years ended December 31, 2016 and 2017.

 

All Other Fees

 

The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported above were $0 for fiscal years ended December 31, 2016 and 2017.

 

Audit Committee

 

As of the date of this Annual Report, the Company did not have a standing audit committee serving, and as a result our board of directors performs the duties of an audit committee. Our board of directors will evaluate and approve in advance, the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services. We do not rely on pre-approval policies and procedures.

 

PART IV

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

 

(a)

Financial Statements Index

 

The following financial statements are filed with this report:

 

Report of Independent Registered Public Accounting Firm

 

Consolidated Balance Sheets at December 31, 2017 and 2016

 

Consolidated Statements of Operations for the years ended December 31, 2017 and December 31, 2016

 

Consolidated Statements of Cash Flows for the years ended December 31, 2017 and December 31, 2016

 

Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2017 and 2016

 

Notes to Consolidated Financial Statements

 

 

(b)

Exhibits

 

3.1	Certificate of Incorporation (filed as exhibit to the Form 10-12G)
3.2	By-laws (filed as exhibit to the Form 10-12G)
3.3	Sample stock certificate (filed as exhibit to the Form 10-12G)
10.1	Form of Services Agreement by and between DDI and United Charitable dated June 2014 (filed as exhibit to the Form S-1)
10.2	Form of Strategic Partnership Agreement by and between DDI and Triton Manufacturing dated November 2015 (filed as exhibit to the Form S-1)
10.3	Form of Customer Referral Agreement by and between DDI and WorldPay US, Inc. dated July 2015 (filed as exhibit to the Form S-1)
10.4	Form of License and Intellectual Property Agreement by and between DDI and Nautilus Hyosung America, Inc. dated February 2015 (filed as exhibit to the Form S-1)
10.5	Form of Engagement Agreement by and between DDI and Tiber Creek Corporation dated December 2015 (filed as exhibit to the Form S-1)
10.6	Form of Promissory Note by and between DDI and M. Kimberly Rupert dated August 2016 (filed as exhibit to the Form S-1)
10.7	Form of Promissory Note by and between DDI and M. Kimberly Rupert dated October 2016 (filed as exhibit to the Form S-1)
23.1*	Consent of Independent Registered Public Accounting Firm
31.1*	Rule 15d-14(a) Certification by Principal Executive Officer and Principal Financial Officer
32.1*	Section 1350 Certification of Principal Executive Officer and Principal Financial Officer

 

*	Filed herewith

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on April 6, 2018.

 

	DIGITAL DONATIONS TECHNOLOGIES, INC.
	By:	/s/ Keith Orlean
	Title:	Chief Executive Officer and Treasurer

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on April 6, 2018.

 

	By:	/s/ Keith Orlean
	Title:	Chief Executive Officer (Principal Executive Officer)
	By:	/s/ Keith Orlean
	Title:	Treasurer (Principal Financial Officer)
	By:	/s/ Keith Orlean
	Title:	Treasurer (Principal Accounting Officer)

 

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons, constituting all of the members of the board of directors, in the capacities and on the dates indicated.

 

Signature		Capacity		Date
/s/ Keith Orlean		Director		April 6, 2018
Keith Orlean
/s/ Jeffrey Marder		Director		April 6, 2018
Jeffrey Marder

 

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT

TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED

SECURITIES PURSUANT TO SECTION 12 OF THE ACT

 

We will furnish to the Securities and Exchange Commission, at the same time that it is sent to stockholders, any proxy or information statement that we send to our stockholders in connection with any annual stockholders’ meeting.

 

 

FINANCIAL STATEMENTS

 

Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets as of December 31, 2017 and 2016	F-2
Consolidated Statements of Operations for the years ended December 31, 2017 and 2016	F-3
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2017 and 2016	F-4
Consolidated Statements of Cash Flows for the years ended December 31, 2017 and 2016	F-5
Notes to Consolidated Financial Statements	F-6

 

 

Report of Independent Registered Public Accounting Firm

 

To the Shareholders and the Board of Directors

of Digital Donations Technologies, Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of Digital Donations Technologies, Inc. and subsidiary (the “Company”) as of December 31, 2017 and December 31, 2016, the related statements of operations, stockholders’ deficit and cash flows for the years ended December 31, 2017 and December 31, 2016, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and December 31, 2016, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

 

Explanatory Paragraph – Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has incurred significant losses and has an accumulated deficit of $1,383,973 as of December 31, 2017 and needs to raise substantial amount of additional funds to meet its obligations and continue its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

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

 

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

 

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

 

/s/ LJ Soldinger Associates, LLC
Deer Park, IL
April 6, 2018

 

We have served as the Company’s auditor since 2016.

 

 

Digital Donations Technologies, Inc. & Subsidiary

Consolidated Balance Sheets

December 31,

 

		2017				2016
Assets
Current Assets
Cash and cash equivalents		$	6,562			$	23,620
Accounts receivable - Trade			11,961				11,336
Total Current Assets			18,523				34,956
Fixed Assets
Equipment			14,402				13,228
Accumulated depreciation			(6,853	)			(2,378	)
Fixed Assets, net			7,549				10,850
Total Assets		$	26,072			$	45,806
Liabilities and Stockholders’ Deficit
Current Liabilities
Accounts payable		$	83,116			$	15,147
Accrued liabilities			76,789				75,432
Note Payable			35,810				30,000
Total Current Liabilities			195,715				120,579
Commitments and Contingencies
Stockholders’ Deficit
Preferred Stock, $0.001 par value; 100,000,000 shares authorized at December 31, 2017 and 2016; 0 shares issued and outstanding as of December 31, 2017 and 2016.			-				-
Common Stock, $0.0001 par value; 300,000,000 shares authorized at December 31, 2017 and 2016; 90,202,698 and 86,614,766 shares issued, issuable and outstanding at December 31, 2017 and 2016, respectively			9,020				8,662
Additional paid-in capital			1,205,310				898,668
Accumulated deficit			(1,383,973	)			(982,103	)
Total Stockholders’ Deficit			(169,643	)			(74,773	)
Total Liabilities and Stockholders’ Deficit		$	26,072			$	45,806

 

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

 

 

Digital Donations Technologies, Inc. & Subsidiary

Consolidated Statements of Operations

 

		For the Year Ended December 31,
		2017				2016
Gross Revenues
Payment processing income		$	135,027			$	137,620
Service fee income			8,315				4,016
Total Gross Revenues			143,342				141,636
Residuals and commissions			25,027				28,970
Net Revenues			118,315				112,666
Operating Expenses
Payroll expenses			151,993				166,659
Stock based compensation			-				154,433
Sales and marketing			59,459				122,970
Sales and marketing – related party			81,079				-
Professional fees			107,932				84,019
Software development costs			-				18,607
IT and software			43,009				54,230
Depreciation expense			4,474				2,378
Corporate and office			66,302				58,170
Total Operating Expenses			514,248				661,466
Operating Loss			(395,933	)			(548,800	)
Other Income and Expense
Other income			2,665				68
Interest expense			(8,602	)			(2,567	)
Total Other Income and Expense			(5,937	)			(2,499	)
Loss before income tax			(401,870	)			(551,299	)
Income taxes			-				-
Net Loss		$	(401,870	)		$	(551,299	)
Basic and Diluted
Loss Per Share		$	(0.00	)		$	(0.01	)
Weighted average shares outstanding			88,767,909				77,927,711
Pro forma information (Unaudited)
Net loss from operations						$	(551,299	)
Pro forma income tax benefit							187,400
Pro forma net loss						$	(363,899	)
Proforma basic and diluted loss per share						$	(0.00	)

 

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

 

 

Digital Donations Technologies, Inc. & Subsidiary

Statements of Stockholders’ Equity (Deficit)

 

																		Total
		Common Stock								Additional								Stockholders’
										Paid in				Accumulated				Equity
		Shares				Amount				Capital				Deficit				(Deficit)
Balance, December 31, 2015			74,390,337			$	74,390			$	352,650			$	(430,804	)		$	(3,764	)
Issuance of common stock in Digital Donations, Inc.			2,882,442				2,882				202,118								205,000
Non-employee stock compensation			2,162,021				272				154,161								154,433
Recapitalization of Digital Donations Technologies, Inc.			5,500,000				(69,051	)			69,908								857
Issuance of common stock in Digital Donations Technologies, Inc.			1,679,966				168				119,832								120,000
Net Loss															(551,299	)			(551,299	)
Balance, December 31, 2016			86,614,766				8,661				898,669				(982,103	)			(74,773	)
Issuance of common stock for cash			3,587,932				359				306,641								307,000
Net loss															(401,870	)			(401,870	)
Balance, December 31, 2017			90,202,698			$	9,020			$	1,205,310			$	(1,383,973	)		$	(169,643	)

 

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

 

 

Digital Donations Technologies, Inc. & Subsidiary

Statement of Cash Flows

 

		For the Years Ended December 31,
		2017				2016
Operating Activities
Net loss		$	(401,870	)		$	(551,299	)
Adjustments to reconcile net loss to Net cash used in operating activities
Depreciation			4,474				2,378
Stock based compensation			-				154,433
Changes in operating assets and liabilities:
Accounts receivable			(625	)			(11,337	)
Accounts payable and accrued expenses			69,327				45,493
Net Cash Used in Operating Activities			(328,694	)			(360,332	)
Investing Activities
Purchases of equipment			(1,174	)			(13,228	)
(Advances to)/Repayments from Related Parties, net			-				(5,900	)
Net Cash Used in Investing Activities			(1,174	)			(19,128	)
Financing Activities
Proceeds from short term borrowings			10,000				30,000
Repayment of short term debt			(4,190	)			-
Proceeds from sale of common stock			307,000				325,000
Net Cash Provided by Financing Activities			312,810				355,000
Net Increase (Decrease) in Cash and Cash Equivalents			(17,058	)			(24,460	)
Cash and Cash Equivalents, beginning of year			23,620				48,080
Cash and Cash Equivalents, end of year		$	6,562			$	23,620
Cash paid for interest		$	2,302			$	-
Cash paid for income taxes		$	-			$	-

 

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

 

 

Digital Donations Technologies, Inc. and Subsidiary

Notes to Consolidated Financial Statements

 

NOTE 1 - NATURE OF OPERATIONS, GOING CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

NATURE OF OPERATIONS

 

Digital Donations Technologies, Inc. (formerly Fishing Ridge Acquisition Corporation) (“DDTI”) was incorporated on May 21, 2015 under the laws of the state of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions.

 

The Company intends to develop and distribute creative and innovative fund raising technology and provide payment processing solutions connecting charities and foundations with the consumer and corporate America. The Company anticipates developing fund raising solutions that will expand and enhance the way charities and foundations reach donors. The Company perceives that through the process of integrating a donation request as part of a financial transaction, retailers, e-tailers, ATM owners and service providers will have the ability to create new, or enhance existing, cause marketing programs.

 

RECAPITALIZATION

 

On October 17, 2016, DDTI entered into a merger with Digital Donations, Inc. (the “Company” and post-merger, the “Company” represents the combined entity), which has resulted in the combination of the Company with DDTI through the issuance of 79,084,807 shares of DDTI common stock to the shareholders of the Company on a one-for-one basis in exchange for 100% of the then issued and outstanding shares of the Company’s common stock, and at which time the Company became a wholly owned subsidiary of DDTI. The Company has accounted for this merger as a recapitalization, as DDTI at the time of the merger was a public shell company, with only nominal assets and no operations of its own. The financial statements presented herein are that of Digital Donations, Inc. from its inception through the date of the merger, at which point the net assets of DDTI were included and the equity section restated to that of the DDTI. From the date of the merger and thereafter, these financial statements represent the financial position and results of operations of the consolidated entity.

 

BASIS OF PRESENTATION AND CONSOLIDATION

 

The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

The accompany consolidated financial statements include the accounts of Digital Donations Technologies, Inc. and its wholly owned subsidiary, Digital Donations, Inc. All material intercompany accounts, transactions and profits have been eliminated in consolidation.

 

 

GOING CONCERN

 

The Company has incurred operating losses since inception as it has sought to develop alternative payments and fundraising solutions to its target market. As of December 31, 2017, the Company had an accumulated deficit of $1,383,973 and a cash balance of $6,562. During the year ended December 31, 2017, the Company incurred a net loss of $401,870, negative cash flows from operating activities of $328,694 and had shareholders’ equity (deficit) of $(169,643). These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to fund future operations through additional financing from investors and/or lenders until such time as the Company can reach profitability. The Company’s plan to reach profitability includes, but is not limited to, increasing its marketing efforts to sell its existing products, identifying strategic partners to expand the distribution of its existing products and to complete its products currently under development. In 2018 through the date of this filing, the Company had raised $44,500 in private placement subscriptions and convertible note issuances (see Note 7). However, there can be no assurance that the Company will be successful in raising the additional funds needed. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

REVENUE RECOGNITION

 

The Company recognizes revenue from the sale of products and services in accordance with ASC 605,“Revenue Recognition.”

 

The Company recognizes revenue from services only when all of the following criteria have been met:

 

	i)	Persuasive evidence for an agreement exists;
	ii)	Service has been provided;
	iii)	The fee is fixed or determinable; and,
	iv)	Collection is reasonably assured.

 

In 2016, the Company’s revenue was predominantly derived from the brokerage of customer accounts to transaction processors in the credit card point of sale and ATM industry. Because of this, the Company does not report revenue gross with costs associated with those revenues in its operating expenses, but combines those costs and reports its revenue net of those costs, because the Company does not actually perform the services underlying the processing of those transactions.

 

USE OF ESTIMATES

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based upon management’s best knowledge of current events and actions that the Company may undertake in the future, actual results could differ from those estimates.

 

CASH AND CASH EQUIVALENTS

 

Cash and cash equivalents include cash on hand and on deposit at banking institutions as well as all highly liquid short-term investments with original maturities of 90 days or less.

 

CONCENTRATION OF CREDIT RISK

 

Financial instruments, which potentially subject the Company to concentrations of credit risks, consist principally of cash and trade accounts receivable. The Company’s cash and cash equivalents are held at one U.S. commercial bank. The Company has not experienced any losses to date related to its cash and cash equivalents.

 

CONCENTRATION OF FUNDING SOURCES

 

The Company’s primary source of funding has been funds received from private placement of shares of its common stock to investors. The Company has one primary investor who has contributed approximately $243,500 and $325,000 in the years ended December 31, 2017 and 2016, respectively.

 

REVENUE CONCENTRATION

 

In the years ended December 31, 2017 and 2016, the Company had two customers that accounted for approximately 90% and 91% of its gross revenues, respectively.

 

PROPERTY AND EQUIPMENT

 

Property and equipment are recorded at cost. Depreciation is generally computed using the straight-line method over the estimated useful lives of the related assets. As of December 31, 2017 and 2016, our assets lives are three to five years for office equipment, including POS terminals. Maintenance, repairs and minor renewals are expensed as incurred; improvements are capitalized. On a continuing basis, the Company reviews the carrying value of property and equipment for impairment. If events or changes in circumstances were to indicate that an asset carrying value may not be recoverable, a write-down of the asset would be recorded through a charge to operations. Depreciation expense for the years ended December 2017 and 2016 was $4,474 and $2,378, respectively.

 

SHARE BASED COMPENSATION

 

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.

 

 

INCOME TAXES

 

From its inception through the date of the merger, Digital Donations, Inc. was taxed as an S Corporation under the Internal Revenue Code of the United States. As such, its income or losses were passed through to its shareholders and therefore the benefits of losses or the liability for any taxes due from income was the responsibility of the Company’s shareholders and not the Company. Upon completion of the merger, the status of the Company automatically changed to that of a C Corporation and thus from that day forward, the Company is responsible for all tax liabilities incurred or benefits obtained.

 

Under ASC 740, “Income Taxes,” deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2017 and 2016, respectively, 100% of the net deferred tax assets recorded were fully allowed for due to the uncertainty of the realization of net operating loss or carry forward prior to expiration.

 

LOSS PER COMMON SHARE

 

Basic loss per common share excludes dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per common share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the loss of the entity. As of December 31, 2017 and 2016, there were no outstanding dilutive securities.

 

ADVERTISING AND PROMOTIONAL COSTS

 

Advertising and promotional costs are expensed as incurred. Advertising and promotional costs totaled $127,291 and $97,941 for the years ended December 31, 2017 and 2016, respectively.

 

SOFTWARE DEVELOPMENT COSTS

 

Software development costs are expensed as incurred until a product’s technological feasibility has been established. Any cost incurred after establishment of the products technological feasibility until its general release are capitalized if the Company obtains the committed funding necessary to see the project through completion. As such, there are no capitalized software development costs on the accompanying balance sheets, as the Company has not yet received the committed funding necessary to see its software projections through to their completion.

 

FAIR VALUE OF FINANCIAL INSTRUMENTS

 

ASC Topic 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes, and prioritizes, three levels of inputs that may be used to measure fair value:

 

	●	Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
	●	Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
	●	Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

 

The carrying amounts of the Company’s financial instruments, which include cash and cash equivalents, accounts payable and note payable approximate their fair values at December 31, 2016 and 2015 due to their short-term nature and management’s belief that their carrying amounts approximate the amount for which the assets could be sold or the liabilities could be settled.

 

PRO FORMA FINANCIAL INFORMATION

 

As discussed above, the Company filed to be taxed as a Subchapter S Company with the Internal Revenue Service. Upon closing of the merger, its tax status changed to that of a Subchapter C corporation. The change resulted in the post-merger company becoming obligated for the tax liabilities for the portion of income generated subsequent to the date of the merger, whereas the previous income and associated liability was passed through to the Company shareholders.

 

 

Pursuant to Securities and Exchange Commission Staff Accounting Bulletin Number 1B.2 “Pro Forma Financial Statements and Earnings per Share” (“SAB 1B.2”), pro forma information on the face of the income statement has been presented which reflects the pro forma impact as if the Company had changed its tax status and capital structure at the inception of the Company. This presentation reflects the Company generating current deferred tax asset for losses during the period.

 

RECENT ACCOUNTING PRONOUNCEMENTS

 

In April 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”), which adds further guidance on identifying performance obligations and improving the operability and understandability of the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. The amendments are effective for private companies for annual periods beginning after December 31, 2018, however early adoption is permitted. The Company is currently evaluating the impact of ASU 2016-10.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which requires lessees to recognize the following for all leases (with the exception of short-term leases) at the commencement date: a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. ASU 2016-02 is effective for annual periods beginning after December 15, 2019. Early application is permitted for all public business entities and all nonpublic business entities upon issuance. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is currently evaluating the impact of adopting this ASU.

 

RECLASSIFICATIONS

 

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported consolidated net income (loss).

 

 

NOTE 2. INCOME TAXES

 

There is no current or deferred income tax expense or benefit for the years ended December 31, 2017 or 2016.

 

The Company records deferred income taxes under applicable tax laws using rates for the years in which the taxes are expected to be paid. Deferred income taxes reflect the tax consequences on future years of differences between the tax basis of assets and liabilities and their financial reporting amounts. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets may not be realized. The Company did not record an income tax provision for all periods presented due to its expected benefits from net operating losses being completely offset by valuation allowances.

 

The items causing this difference for the periods ended December 31, 2017 and 2016 are as follows.

 

		2017				2016
Tax benefit at U.S. and state statutory rates		$	136,600			$	187,400
less: portion of income flowing directly to former shareholders of Digital Donations, Inc.							(176,200	)
Non-deductible expenses			(12,400	)
less: valuation allowance			(124,200	)			(11,200	)
Tax benefit, net		$	—			$	—

 

At December 31, 2017, the Company has estimated net operating loss carryforwards for federal income tax purposes of approximately $398,400. The actual amount of net operating losses will be determined at the time the Company’s tax returns are filed. The Company made no payments for income taxes for the years ended December 31, 2017 and 2016.

 

Deferred tax assets were comprised of the following as of December 31, 2017 and 2016:

 

		2017				2016
Current deferred tax asset		$	-			$	-
NOL carryforward			135,400				11,200
Long-term deferred tax asset			135,400				11,200
Total deferred tax asset			135,400				11,200
Less valuation allowance			(135,400	)			(11,200	)
Net deferred tax asset		$	-			$	-

 

Neither the Company nor its subsidiary have filed tax returns for any of the years ended December 31, 2015, 2016 or 2017. The Company expects to file all of its past due returns for 2015 and 2016, and the 2017 returns, which are under extension, in 2018. No taxes, penalties or interest will be due because of the losses incurred from inception, or because the subsidiary is considered a ‘pass through’ entity as noted above.

 

 

NOTE 3. NOTES PAYABLE

 

In August, 2016, the Company entered into a note agreement with an investor and received gross proceeds of $25,000. The note bears interest at the rate of 24% per annum, matures 180 days after issuance and is unsecured.

 

In October, 2016, the Company entered into a second note agreement with the same investor and received gross proceeds of $5,000. The note bears interest at the rate of 24% per annum, matures 180 days after issuance and is unsecured.

 

In 2017, the Company and the holder entered into a verbal agreement such that maturity was extended until such time as the Company files an S-1 registration statement that is declared effective. In 2018, the Company and the holder entered into another verbal agreement such that the notes are now payable on demand.

 

In October, 2017, the Company entered into a note agreement with a third party lender and received gross proceeds of $10,000. The note bears interest at a rate of 69.36% per annum, matures six months after issuance and is secured by all tangible assets of the Company and the personal guarantee of one officer and director.

 

NOTE 4. STOCKHOLDERS’ EQUITY (DEFICIT)

 

At December 31, 2017, the Company has authorized 400,000,000 shares of capital stock, consisting of 100,000,000 shares (par value of $0.001 per share) of preferred stock and 300,000,000 shares (par value of $0.0001 per share) of common stock. The total number of shares of common stock issued, issuable and outstanding at December 31, 2017 and 2016 was 90,202,698 and 86,614,766, respectively. No shares of preferred stock have been issued as of December 31, 2017.

 

COMMON STOCK

 

In 2016, the Company sold stock to one investor at $0.0714 per share for cash proceeds of $325,000. As of December 31, 2016, the Company had issued 4,199,916 shares and was obligated to issue an additional 349,993 shares to the investor. Those additional shares were issued in 2017.

 

In 2017, the Company sold 3,457,932 shares of its common stock to two investors at $0.0714 per share for total cash proceeds of $247,000. Additionally, in 2017, the Company sold 20,000 shares of its common stock to one investor at $0.25 per share for total cash proceeds of $5,000, and 110,000 shares of its common stock to three separate investors at $0.50 per share for total cash proceeds of $55,000. Total cash proceeds from the sale of stock in 2017 was $307,000.

 

The issuances described above were offered to accredited investors as defined in Rule 501 and subject to exemptions provided under Rule 506 of Regulation D of the Securities and Exchange Acts.

 

 

SHARE BASED PAYMENTS

 

In 2016, the Company issued a total of 2,162,021 shares as compensation to non-employees for consulting services performed. The Company recorded compensation expense at a share price based on the 2016 private placement raises noted above of $0.0714 per share. Total compensation expense recorded in 2016 was $154,433.

 

NOTE 5. RELATED PARTY TRANSACTIONS

 

During 2014 and 2015, Digital Donations, Inc. advanced funds on a net basis to a company in which the two founders of the Digital Donations, Inc. are also majority owners. As of December 31, 2014, the Company had advanced, net, approximately $6,400. As of December 31, 2015, the Company further advanced on a net basis approximately $23,600. The related entity during this period was under significant liquidity pressures and in 2016, the owners of the related entity decided to begin winding down the entity. Because of this, the Company fully impaired the net advances as of December 31, 2015 and 2014, which resulted in impairment expenses of the same amount noted above being recorded within the general and administrative expense line item on the statement of operations for the years ended December 31, 2015 and 2014. In 2016, the entity was further advanced funds, but was able to repay all of the 2016 advances plus an additional $9,245 which the Company has shown as a reduction of its general and administrative expense.

 

Prior to the incorporation of the Company, the founders created and purchased the logo, trade name and trade mark that the Company now uses from the related entity noted above. However, because of serious financial issues suffered by the related entity, the only other product developed outside of the creation and purchase of the logo, trade name and trade mark, was the development of a Point of Sale technology and product that ultimately was discontinued in 2014 since the standard that it was based on became obsolete, and this technology and product will not be used by the Company nor will it be acquired by the Company. In 2018 the Company expects to enter into a transaction with the related entity to acquire the logo, trade name and trade mark and expects to issue its equity in consideration for those items due to the current liquidity situation of the Company. Because the intangible items will be purchased from a related entity, the Company will record the intangible assets purchased at the historical cost incurred by the related entity to acquire those intangibles as the purchase price.

 

During 2017 the Company paid an entity owned by the Executive Vice President $81,079 in sales and marketing expenses which is shown on the statement of operations as being paid to a related party.

 

NOTE 6. COMMITMENTS AND CONTINGENCIES

 

In January 2016, the Company took over the office lease from a related party. That lease ended on January 31, 2016. During the remainder of 2016, the Company occupied that office under a month to month rental under the terms of the old related party lease. On February 1, 2017, the Company entered into its own two year lease with the landlord for the existing space. Total rent expense incurred in 2017 and 2016 was approximately $35,500 and $39,800, respectively.

 

NOTE 7. SUBSEQUENT EVENTS

 

From January 1 through April 4, 2018, the Company sold to 2 shareholders an aggregate of 482,990 of its common shares for a total of $34,500. As of the date of this filing, 482,990 shares of that aggregate amount were issuable.

 

On January 5, 2018, the Company entered into a note agreement with a third party and received gross proceeds of $10,000. The note bears interest at a rate of 1.5% per month, matures six months after issuance and is unsecured. The note and any accrued interest is convertible into common stock of the Company at $0.50 per share.