Nevada | |
(State or other Jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification Number) |
Large Accelerated Filer | ¨ | Accelerated Filer | ¨ | |
Non-Accelerated Filer | ¨ | Smaller Reporting Company | þ |
Page | |
PART I—FINANCIAL INFORMATION | |
Item 1. Financial Statements. | 3 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. | |
Item 3. Quantitative and Qualitative disclosures about Market Risk. | |
Item 4. Controls and Procedures. | |
PART II—OTHER INFORMATION | |
Item 1. Legal Proceedings. | |
Item 1A. Risk Factors. | |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. | |
Item 3. Defaults Upon Senior Securities. | |
Item 4. Mine Safety Disclosures. | |
Item 5. Other Information. | |
Item 6. Exhibits. | |
Signatures |
June 30, | September 30, | March 31, | September 30, | |||||||||||||
2013 | 2012 | 2014 | 2013 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Assets | ||||||||||||||||
Current assets | ||||||||||||||||
Cash | $ | 0 | $ | 788 | $ | 29,157 | $ | (0 | ) | |||||||
Other receivables | 3,194 | 1,079 | 3,194 | 3,194 | ||||||||||||
Total current assets | 3,194 | 1,867 | 32,351 | 3,194 | ||||||||||||
Property and equipment - net | 208,100 | 233,699 | 182,501 | 199,567 | ||||||||||||
Debt issue costs - net | 19,561 | 29,182 | 8,828 | 15,983 | ||||||||||||
Total assets | $ | 230,855 | $ | 264,748 | $ | 223,680 | $ | 218,744 | ||||||||
Liabilities and Stockholders' (Deficit) | ||||||||||||||||
Current Liabilities | ||||||||||||||||
Accounts payable and accrued liabilities | $ | 122,610 | $ | 122,610 | $ | 122,610 | $ | 122,610 | ||||||||
Accounts payable - related party | 415,719 | 415,719 | 415,719 | 415,719 | ||||||||||||
Accrued interest payable | 60,709 | 37,458 | 104,465 | 74,247 | ||||||||||||
Notes/Advances payable - related party | 27,173 | 27,173 | 27,173 | 27,173 | ||||||||||||
Common stock to be issued | 41,750 | - | ||||||||||||||
Derivative liability | 164,119 | 134,678 | 198,467 | 1,337,315 | ||||||||||||
Convertible debt - net | 482,736 | 165,145 | 755,895 | 591,738 | ||||||||||||
Total current liabilities | 1,273,066 | 902,783 | 1,666,079 | 2,568,801 | ||||||||||||
Stockholders' (Deficit) | ||||||||||||||||
Preferred stock, $0.001 par value, 100,000,000 shares authorized; 100,000,000 issued and outstanding | 100,000 | - | ||||||||||||||
Common stock, $0.001 par value, 100,000,000 shares authorized; 100,000,000 and 46,838,491 issued and outstanding | 100,000 | 46,838 | ||||||||||||||
Preferred stock, $0.001 par value, 200,000,000 shares authorized; 100,000,000 issued and outstanding | 100,000 | 100,000 | ||||||||||||||
Common stock, $0.001 par value, 10,000,000,000 shares authorized; 255,178,013 and 200,000 issued and outstanding at march 31, 2014 aned June 30, 2013, respectively | 255,178 | 200 | ||||||||||||||
Additional paid-in capital | 2,609,578 | 2,054,025 | 10,082,033 | 2,709,377 | ||||||||||||
Deficit accumulated during the development stage | (3,852,294 | ) | (2,739,403 | ) | (11,880,115 | ) | (5,160,139 | ) | ||||||||
Accumulated other comprehensive income | 505 | 505 | 505 | 505 | ||||||||||||
Total stockholders' (deficit) | (1,042,211 | ) | (638,035 | ) | (1,442,399 | ) | (2,350,057 | ) | ||||||||
Total liabilities and stockholders' (deficit) | $ | 230,855 | $ | 264,748 | $ | 223,679 | $ | 218,744 |
June 21, 2006 (inception) through | ||||||||||||||||||||||||||||
Three Months Ended June 30, | Nine Months Ended June 30, | June 30, | Three Months Ended March 31 | |||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||
General and Administrative Expenses | $ | 439,334 | $ | 8,533 | $ | 686,441 | $ | 369,183 | $ | 2,529,331 | $ | 5,349,454 | $ | 12,015 | ||||||||||||||
Impairment of software | - | - | - | - | $ | 1,035,027 | - | - | ||||||||||||||||||||
Total | 439,334 | 8,533 | 686,441 | 369,183 | 3,564,358 | 5,349,454 | 12,015 | |||||||||||||||||||||
Other (Expense) | ||||||||||||||||||||||||||||
Other Income/(Expense) | ||||||||||||||||||||||||||||
Interest expense | 41,230 | (30,747 | ) | $ | (175,621 | ) | (136,308 | ) | $ | (471,125 | ) | (176,507 | ) | (102,074 | ) | |||||||||||||
Derivative expense | (23,021 | ) | $ | (160,652 | ) | $ | (1,501,278 | ) | (1,067,424 | ) | - | |||||||||||||||||
Change in fair value of derivative liability | 1,071,404 | (73,444 | ) | $ | 111,774 | 426,209 | $ | 1,850,756 | 917,897 | (1,182,780 | ) | |||||||||||||||||
Loss on Retirement of Debt | $ | (202,360 | ) | $ | (202,360 | ) | (1,825,104 | ) | (202,360 | ) | ||||||||||||||||||
Tax refunds | $ | 0 | 36,071 | $ | 36,071 | |||||||||||||||||||||||
Total Other (Expense) - net | 1,089,614 | (104,191 | ) | (426,858 | ) | 325,972 | (287,935 | ) | (2,151,139 | ) | (1,487,214 | ) | ||||||||||||||||
Net Income (Loss) | $ | 650,280 | $ | (112,724 | ) | $ | (1,113,299 | ) | $ | (43,211 | ) | $ | (3,852,294 | ) | $ | (7,500,593 | ) | $ | (1,499,229 | ) | ||||||||
Net loss per common share - basic | $ | 0.010 | $ | (0.002 | ) | $ | (0.018 | ) | $ | (0.001 | ) | $ | (0.07 | ) | $ | (12.33 | ) | |||||||||||
Net loss per common share - diluted | $ | 0.008 | $ | (0.002 | ) | $ | (0.017 | ) | $ | (0.001 | ) | $ | (0.04 | ) | $ | (12.33 | ) | |||||||||||
Weighted average number of common shares outstanding | Weighted average number of common shares outstanding | |||||||||||||||||||||||||||
during the period/year - basic | 67,883,275 | 58,354,369 | 63,366,972 | 53,884,256 | 102,394,546 | 121,558 | ||||||||||||||||||||||
Weighted average number of common shares outstanding | Weighted average number of common shares outstanding | |||||||||||||||||||||||||||
during the period/year - diluted | 77,773,385 | 58,354,369 | 66,663,675 | 53,884,256 | 202,394,546 | 121,558 |
June 21, 2006 (Inception) to | Six Months Ended March 31, | June 21, 2006 (Inception) to March 31, | ||||||||||||||||||||||
Nine Months Ended June 30, | June 30, | 2013 | 2012 | 2014 | ||||||||||||||||||||
2013 | 2012 | 2013 | ||||||||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||||||
Net loss | $ | (1,113,299 | ) | $ | (43,211 | ) | $ | (3,852,294 | ) | $ | (6,719,976 | ) | $ | 694,279 | $ | (12,660,733 | ) | |||||||
Adjustments to reconcile net loss | ||||||||||||||||||||||||
to net cash provided by (used in) operating activities: | to net cash provided by (used in) operating activities: | to net cash provided by (used in) operating activities: | ||||||||||||||||||||||
Share based payments | 471,549 | 30,000 | 652,549 | 5,255,000 | 30,000 | 5,907,549 | ||||||||||||||||||
Impairment of software | - | 1,035,027 | ||||||||||||||||||||||
Impairment of Software | 1,035,027 | |||||||||||||||||||||||
Derivative expense | 160,652 | - | 1,501,278 | 2,119,601 | 144,581 | 3,687,492 | ||||||||||||||||||
Depreciation | 25,599 | 17,065 | 426,549 | 17,066 | 34,130 | 452,148 | ||||||||||||||||||
Amortization of debt issue cost | 9,621 | 9,886 | 31,340 | 7,156 | 9,886 | 42,073 | ||||||||||||||||||
Amortization of debt discount | 151,591 | 90,657 | 387,917 | 225,023 | 169,512 | 659,326 | ||||||||||||||||||
Amortization of Original Issue Discount | 17,250 | 17,366 | ||||||||||||||||||||||
Change in fair value of derivative liabilities | (111,774 | ) | (426,209 | ) | (1,850,756 | ) | (3,258,449 | ) | (1,386,527 | ) | (4,002,623 | ) | ||||||||||||
Accrued interest on Retired debt | 779 | 779 | 779 | |||||||||||||||||||||
Legal fees on debt conversions | 9,375 | 9,375 | ||||||||||||||||||||||
Common stock to be issued | - | |||||||||||||||||||||||
Accrued interest on Retired debt | 7,526 | |||||||||||||||||||||||
Loss on Retirement of Debt | 202,360 | 202,360 | 1,999,367 | 2,201,727 | ||||||||||||||||||||
Changes in operating assets and liabilities: | Changes in operating assets and liabilities: | |||||||||||||||||||||||
(Increase) decrease in other receivables | (2,115 | ) | 77,321 | (3,194 | ) | - | 77,321 | (3,194 | ) | |||||||||||||||
Increase (decrease) in accounts payable and accrued expense | - | (18,054 | ) | 122,610 | - | (18,054 | ) | 122,610 | ||||||||||||||||
Increase in accounts payable - related party | Increase in accounts payable - related party | 133,249 | 415,719 | Increase in accounts payable - related party | 133,249 | 415,719 | ||||||||||||||||||
Increase in accrued interest | 23,251 | 5,016 | 60,709 | 30,218 | 26,624 | 104,465 | ||||||||||||||||||
Net cash provided by (used in) operating activities | (181,788 | ) | (124,280 | ) | (869,408 | ) | (290,843 | ) | (85,000 | ) | (2,010,895 | ) | ||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||||||
Purchase of property and equipment | - | (288,799 | ) | - | (288,799 | ) | ||||||||||||||||||
Net cash used in investing activities | - | - | (288,799 | ) | - | - | (288,799 | ) | ||||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||||||
Proceeds from related party notes/advances | - | 31,586 | - | 31,586 | ||||||||||||||||||||
Proceeds from convertible notes payable | 16,000 | 40,303 | 356,303 | 170,000 | 40,303 | 538,803 | ||||||||||||||||||
Notes Issued for Professional services | 165,000 | 53,727 | 218,727 | 150,000 | 53,727 | 418,727 | ||||||||||||||||||
Repayment of related party notes/advances | - | (968 | ) | - | (968 | ) | ||||||||||||||||||
Cash paid as debt offering costs | - | (24,000 | ) | - | (24,000 | ) | ||||||||||||||||||
Proceeds from issuance of common stock | - | 579,500 | - | 579,500 | ||||||||||||||||||||
Net cash provided by financing activities | 181,000 | 94,030 | 1,161,148 | 320,000 | 94,030 | 1,543,648 | ||||||||||||||||||
(788 | ) | (30,250 | ) | 2,941 | ||||||||||||||||||||
Net (Decrease) in Cash | 29,157 | 9,030 | (756,046 | ) | ||||||||||||||||||||
Effect of Exchange Rates on Cash | (9,096 | ) | (2,941 | ) | (9,096 | ) | (2,941 | ) | ||||||||||||||||
Cash - Beginning of Period/Year | 788 | 854 | (0 | ) | 854 | - | ||||||||||||||||||
Cash - End of Period/Year | $ | 0 | $ | (38,492 | ) | $ | 0 | $ | 29,157 | $ | 788 | $ | (758,987 | ) | ||||||||||
SUPPLEMENTARY CASH FLOW INFORMATION: | SUPPLEMENTARY CASH FLOW INFORMATION: | |||||||||||||||||||||||
Cash paid during the period/year for: | ||||||||||||||||||||||||
Interest | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||
Income Taxes | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||||||||||||||||||||||
Debt converted to common shares | $ | 15,000 | $ | - | $ | 111,484 | $ | 389,618 | $ | - | $ | 501,108 | ||||||||||||
Common stock issued to acquire software | $ | - | $ | - | $ | 1,380,876 | $ | - | $ | - | $ | 1,380,876 | ||||||||||||
Preferred stock issued to officers | $ | 310,000 | $ | 310,000 | $ | 310,000 | $ | 310,000 | ||||||||||||||||
Debt discount recorded on convertible debt accounted for as a derivative liability | $ | 181,000 | $ | 300,000 | $ | 300,000 | $ | 320,000 | $ | 300,000 | $ | 620,000 | ||||||||||||
Debt discount recorded on convertible debt accounted for as a derivative liability - original issue discount | $ | - | $ | 27,122 | $ | 27,122 | $ | 27,122 | $ | 27,122 | ||||||||||||||
Debt issue costs - warrants | $ | - | $ | 26,901 | $ | 26,901 | $ | - | $ | 26,901 | $ | 26,901 |
● | estimated carrying value, useful lives and impairment of property and equipment; |
● | estimated fair value of derivative liabilities; |
● | estimated valuation allowance for deferred tax assets; and |
● | estimated fair value of share based payments |
June 30, 2013 | September 30, 2012 | March 31, 2014 | September 30, 2013 | |||||||||||||
Warrants (1) | 7,894,737 | 7,894,737 | 14,989 | 14,989 | ||||||||||||
Convertible debt (1) | 155,163,918 | 91,061,086 | 270,376,629 | 212,611 | ||||||||||||
Total common stock equivalents (2) | 163,050,655 | 98,955,822 | 270,391,618 | 227,600 |
(1) | The potential shares for which these instruments can convert into common stock currently exceed the Company’s authorized shares for common stock. The Company has identified a debt and warrant holder who cannot exceed ownership in the Company by 9.99%. The investor is limited to |
(2) | There are other warrant holders included in total warrants besides those described in note (1) above. |
(i) | Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date; |
(ii) | Equity at historical rates; and |
(iii) | Revenue and expense items at the average exchange rate prevailing during the period. |
● | Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
● | Level 2: Inputs reflect: quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
● | Level 3: Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. |
June 30, 2013 | September 30, 2012 | March 31, 2013 | September 30, 2013 | |||||||||||||
Level 1 | $ | - | $ | - | $ | - | $ | - | ||||||||
Level 2 – Derivative Liability | 164,119 | 134,678 | 198,467 | 1,337,315 | ||||||||||||
Level 3 | - | - | - | - | ||||||||||||
Total | $ | 164,119 | $ | 134,678 | $ | 198,467 | $ | 1,337,315 |
June 30, 2013 | September 30, 2012 | Estimated Useful Lives | March 31, 2014 | September 30, 2013 | Estimated Useful Lives | |||||||||||||||||||
Software | $ | - | $ | 1,380,876 | 3 | $ | - | $ | 1,380,876 | 3 | ||||||||||||||
Leasehold improvements (1) | 144,802 | 144,802 | 10 | 144,802 | 144,802 | 10 | ||||||||||||||||||
Lab equipment (2) | 106,062 | 106,705 | 10 | 106,062 | 106,705 | 10 | ||||||||||||||||||
Office equipment | 37,336 | 37,336 | 5 | 37,336 | 37,336 | 5 | ||||||||||||||||||
288,843 | 1,669,719 | 288,843 | 1,669,719 | |||||||||||||||||||||
Less: Accumulated depreciation | (82,743 | ) | (400,933 | ) | (106,342 | ) | (435,125 | ) | ||||||||||||||||
Less: Impairment | - | (1,035,027 | ) | - | (1,035,027 | ) | ||||||||||||||||||
Property and equipment – net | $ | 208,100 | $ | 233,699 | $ | 182,501 | $ | 199,567 |
2010 | $ | 79,765 | ||
2011 | 24,357 | |||
$ | 104,122 |
March 31, 2013 | September 30, 2012 | March 31, 2013 | September 30, 2013 | |||||||||||||
Notes payable (1) | $ | 30,956 | $ | 30,956 | $ | 20,915 | $ | 20,915 | ||||||||
Advances (2) | 415,719 | 415,719 | 7,226 | 7,226 | ||||||||||||
Less: payments | (3,783 | ) | (3,783 | ) | (968 | ) | (968 | ) | ||||||||
Total related party liabilities | $ | 442,892 | $ | 442,892 | $ | 27,173 | $ | 27,173 |
● | Interest rate 6%; |
● | Default interest rate of 12%; |
● | Notes are due 48 months from the issuance date of February 23, 2011; |
● | Conversion rates equal to 70% or 80% of the market price on date of conversion by applying a specified formula that utilizes the average of the 3 lowest quoted closing prices 20 days immediately preceding the conversion date, and then takes the higher of the average 3 lowest closing prices or $0.12 floor price; and |
● | Secured by the Chief Executive Officer’s 15,000,000 shares of the Company common stock. |
Debt Amount | Discount | Conversion Mechanism | ||
$20,000 | 51% | low trade price over prior 30 days | ||
$25,000 | 60% | low trade price over prior 25 days | ||
$141,000 | 50% | low bid price over prior 30 days |
● | 8% cash – which is equivalent to $24,000, and |
● | 8% warrants – having a fair value of $26,901, which was computed as follows; |
Commitment Date | |||
Expected dividends | 0% | ||
Expected volatility | 180% | ||
Expected term: conversion feature | 2 years | ||
Risk free interest rate | 1.73% |
● | 8% cash – which is equivalent to $1,760, and |
● | 8% warrants – having a fair value of $154, which was computed as follows; |
Commitment Date | |||
Expected dividends | 0% | ||
Expected volatility | 364% | ||
Expected term: conversion feature | 2 years | ||
Risk free interest rate | 0.65% |
Debt issue costs paid, September 30, 2012 | $ | 29,182 | ||
Amortization of debt issue costs, December 31, 2012 | (3,059 | ) | ||
Amortization of debt issue costs, March 31, 2013 | (3,029 | ) | ||
Amortization of debt issue costs, June 30, 2013 | (3,532 | ) | ||
Debt issue costs - net | $ | 19,561 |
Debt issue costs paid, September 30, 2011 | $ | 50,901 | ||
Amortization of debt issue costs, September 30, 2011 | (11,833 | ) | ||
Amortization of debt issue costs, September 30, 2012 | (9,833 | ) | ||
Amortization of debt issue costs, September 30, 2013 | (13,199 | ) | ||
Amortization of debt issue costs, March 31, 2014 | (7,156 | ) | ||
Debt issue costs - net | $ | 8,828 |
(D) | Debt Discount |
Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life in Years | Intrinsic Value | |||||||||||||
Balance – September 30, 2011 | 1,074,000 | $ | 0.30 | 1.27 | $ | 8,560 | ||||||||||
Granted | - | - | - | - | ||||||||||||
Forfeited/Cancelled | (1,074,000 | ) | - | - | - | |||||||||||
Exercised | - | - | ||||||||||||||
Balance – March 31, 2013 - outstanding | - | $ | - | - | $ | - | ||||||||||
Balance – March 31, 2013 – exercisable | - | $ | - | - | $ | - |
Derivative liability balance at September 30, 2012 | $ | 134,678 | ||
Derivative liabilityFair value at the commitment date for convertible notes issued | ||||
Fair value mark to market adjustment – December 31, 2012 | (223,150 | ) | ||
Fair value mark to market adjustment- March 31, 2013 | 1,182,780 | |||
Fair value mark to market adjustment- June 30, 2013 | (1,071,404 | ) | ||
Derivative liability on debt converted during quarter ended June 30, 2013 | (19,436 | ) | ||
Derivative liability associated with new issuances through June 30, 2013 | 160,652 | |||
Derivative liability balance at June 30, 2013 | $ | 164,119 |
Derivative liability balance at September 30, 2013 | $ | 1,337,315 | ||
Derivative liability Fair value at the commitment date for convertible notes issued | ||||
Fair value mark to market adjustment – March 31, 2014 | 2,119,601 | |||
Derivative liability associated with new issuances through March 31, 2012 | (3,258,449 | ) | ||
Derivative liability balance at March 31, 2014 | $ | 198,467 |
February 23, 2011 | March 31, 2013 | |||
Commitment Date | Remeasurement Date | |||
Expected dividends | 0% | 0% | ||
Expected volatility | 180% | 298% | ||
Expected term: conversion feature | 4 years | 2.65 years | ||
Risk free interest rate | 1.73% | 0.25% |
Balance at September 30, | $ | 415,719 |
Quarter Ended March 31, 2014 ($) | Quarter Ended March 13, 2013 ($) | |||||||
Revenue | 0.00 | 0.00 | ||||||
Expenses | (5,349,454) | (12,015) | ||||||
Other Income (Expenses) | (2,151,139) | (1,487,214) | ||||||
Net Income (Loss) | (7,500,593) | (1,499,229) | ||||||
Income (Loss) Per Share-Basic | (.07) | (12.33) | ||||||
Income (Loss) Per Share- Fully diluted | (.04) | (12.33) |
Quarter Ended June 30, 2013 ($) | Quarter Ended June 30, 2013 ($) | |||||||
Revenue | 0.00 | 0.00 | ||||||
Expenses | (439,334) | (8,533) | ||||||
Other Income (Expenses) | 1,089,614 | (104,191) | ||||||
Net Income (Loss) | 650,280 | (112,724) | ||||||
Income (Loss) Per Share-Basic | (.01) | (0.002) | ||||||
Income (Loss) Per Share-Diluted | .008 | (0.002) |
For the Three Months Ended June 30, | For the Three Months Ended March 31, | |||||||||||||||||||||||
2013 ($) | 2012 ($) | Difference ($) | 2014 ($) | 2013 ($) | Difference ($) | |||||||||||||||||||
Professional fees | 2,335 | -0- | 2,335 | |||||||||||||||||||||
Management Compensation | 5,210,000 | -0- | 5,210,000 | |||||||||||||||||||||
Consulting Fees | 75,000 | -0- | 75,000 | |||||||||||||||||||||
Other General and administrative expenses | 436,999 | �� | 8,533 | 118,466 | 54,376 | 12,015 | 42,265 |
2014 ($) | 2013 ($) | Difference ($) | ||||||||||
Interest Expense | (176,507 | ) | (102,074 | ) | (74,433 | ) | ||||||
Derivative Expense | (1,067,424 | ) | -0- | (1,067,424 | ) | |||||||
Change in the Fair Value of Derivative liabilities | 917,897 | (1,182,780 | ) | 2,100,677 | ||||||||
Loss on Retirement of Debt | (1,825,104 | ) | (202,360 | ) | (1,622,745 | ) |
For the Nine Months Ended June 30, | ||||||||||||
2013 ($) | 2012 ($) | Difference ($) | ||||||||||
Management fees to related party – Note 7 | -0- | 215,469 | (215,469) | |||||||||
Professional fees | 167,335 | 25,166 | 142,169 | |||||||||
Rent paid to Related party | -0- | 43,970 | (43,970) | |||||||||
Other General and administrative expenses | 519,106 | 84,999 | 124,527 |
For the Six Months Ended March 31, | ||||||||||||
2014 ($) | 2013 ($) | Difference ($) | ||||||||||
Management Compensation | 5,255,000 | -0- | 5,210,000 | |||||||||
Consulting Fees | 150,000 | 165,000 | (15,000) | |||||||||
Other General and administrative expenses | 179,440 | 82,107 | 97,333 |
2014 ($) | 2013 ($) | Difference ($) | ||||||||||
Interest Expense | (280,017 | ) | (216,851 | ) | (63,165 | ) | ||||||
Derivative Expense | (2,119,601 | ) | (137,631 | ) | (1,981,971 | ) | ||||||
Change in the Fair Value of Derivative liabilities | 3,258,449 | (959,630 | ) | 4,218,079 | ||||||||
Loss on Retirement of Debt | (1,999,367 | ) | (202,360 | ) | (1,797,008 | ) |
● | Interest rate 6%; |
● | Default interest rate of 12%; |
● | Notes are due 48 months from the issuance date of February 23, 2011; |
● | Conversion rates equal to 70% or 80% of the market price on date of conversion by applying a specified formula that utilizes the average of the 3 lowest quoted closing prices 20 days immediately preceding the conversion date, and then takes the higher of the average 3 lowest closing prices or $0.12 floor price; and |
● | Secured by the Chief Executive Officer’s 15,000,000 shares of the Company common stock. |
Debt Amount | Discount | Conversion Mechanism | ||||||
$ | 20,000 | 51 | % | low trade price over prior 30 days | ||||
$ | 25,000 | 60 | % | low trade price over prior 25 days | ||||
$ | 141,000 | 50 | % | low bid price over prior 30 days |
● | estimated carrying value, useful lives and related impairment of property and equipment; |
● | estimated fair value of derivative liabilities; |
● | estimated valuation allowance for deferred tax assets, due to continuing losses; and |
● | estimated fair value of share based payments. |
● | Level 1 inputs: Quoted prices for identical instruments in active markets. |
● | Level 2 inputs: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. |
● | Level 3 inputs: Instruments with primarily unobservable value drivers. |
(i) | Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date; |
(ii) | Equity at historical rates; and |
(iii) | Revenue and expense items at the average exchange rate prevailing during the period. |
Exhibit No. | Description | |
Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a))* | ||
Certification by the Principal Accounting Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a))* | ||
Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* | ||
Certification by the Principal Accounting Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* |
Dated: | By: | /s/ Frank Neukomm | |||||
Name: Frank Neukomm | |||||||
Title: Chief Executive Officer (Principal Executive Officer) |