Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 25, 2015 | Jun. 30, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | ORBITAL TRACKING CORP. | ||
Entity Central Index Key | 1058307 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $8,741,342 | ||
Entity Common Stock, Shares Outstanding | 11,048,172 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 |
Consolidated_Balance_Sheets_Un
Consolidated Balance Sheets (Unaudited) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current Assets | ||
Cash | $77,137 | |
Accounts receivable | 8,410 | |
Prepaid expenses - current portion | 232,222 | |
Total Current Assets | 317,769 | |
Prepaid expenses - long-term portion | 1,987,455 | |
Intangible assets | 250,000 | |
Total  Other Assets | 2,237,455 | |
Total Assets | 2,555,224 | |
Current Liabilities | ||
Accounts payable and accrued expenses | 402,583 | 466,493 |
Accounts payable - related party | 175,000 | 175,000 |
Due to related party | 2,043 | |
Derivative liability | 4,936 | 11,942 |
Liabilities for discontinued operations | 112,397 | 112,397 |
Total Current Liabilities | 696,959 | 765,832 |
Stockholders' Deficit | ||
Common stock, $0.0001 par value; 750,000,000 shares authorized, 253,033,555 shares issued and outstanding | 1,373 | 151 |
Additional paid-in capital | 51,369,941 | 48,203,058 |
Accumulated deficit | -49,513,552 | -48,969,044 |
Total Stockholders' Deficit | 1,858,265 | -765,832 |
Total Liabilities and Stockholders' Deficit | 2,555,224 | |
Series A Preferred Stock | ||
Stockholders' Deficit | ||
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; Series A, 3,000,000 issued and outstanding; Series B, none issued and outstanding; Series C, none issued and outstanding; Series D, 1,000,000 issued and outstanding | 2 | 2 |
Preferred stock, Series B | ||
Stockholders' Deficit | ||
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; Series A, 3,000,000 issued and outstanding; Series B, none issued and outstanding; Series C, none issued and outstanding; Series D, 1,000,000 issued and outstanding | 1 | 1 |
Preferred stock, Series C | ||
Stockholders' Deficit | ||
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; Series A, 3,000,000 issued and outstanding; Series B, none issued and outstanding; Series C, none issued and outstanding; Series D, 1,000,000 issued and outstanding | ||
Series D Preferred Stock | ||
Stockholders' Deficit | ||
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; Series A, 3,000,000 issued and outstanding; Series B, none issued and outstanding; Series C, none issued and outstanding; Series D, 1,000,000 issued and outstanding | $500 | $500 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Preferred stock, par value | $0.00 | 0.0001 |
Preferred stock, shares authorized | 20,000,000 | 10,000,000 |
Common stock, par value | $0.00 | 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 13,733,172 | 1,510,975 |
Common stock, shares outstanding | 13,733,172 | 1,510,975 |
Series A Preferred Stock | ||
Preferred stock, par value | $0.00 | |
Preferred stock, shares authorized | 20,000 | |
Preferred stock, shares issued | 20,000 | 20,000 |
Preferred stock, shares outstanding | 20,000 | 20,000 |
Preferred stock, Series B | ||
Preferred stock, par value | $0.00 | |
Preferred stock, shares authorized | 30,000 | |
Preferred stock, shares issued | 6,666 | 6,666 |
Preferred stock, shares outstanding | 6,666 | 6,666 |
Preferred stock, Series C | ||
Preferred stock, par value | $0.00 | |
Preferred stock, shares authorized | 4,000,000 | |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series D Preferred Stock | ||
Preferred stock, par value | $0.00 | |
Preferred stock, shares authorized | 5,000,000 | |
Preferred stock, shares issued | 5,000,000 | 0 |
Preferred stock, shares outstanding | 5,000,000 | 0 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (Unaudited) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Statement [Abstract] | ||
Net revenues - services | $8,410 | |
Cost of revenues - services | 202 | |
Gross profit | 8,208 | |
Operating Expenses | ||
General and administrative expneses | 426,650 | 573,793 |
Total Operating Expenses | 426,650 | 573,793 |
Loss from Operations | -418,240 | -573,793 |
Other Income / (Expense) | ||
Interest expense | -120,575 | |
Gain on settlement of debt | 1,285,872 | |
Change in fair value of derivative liability | 7,006 | 32,614 |
Total Other Expense, net | 7,006 | 1,197,911 |
Loss before provision for income taxes | -411,234 | 624,118 |
Provision for income taxes | ||
Net Loss | -411,234 | 624,118 |
Preferred deemed dividend | -133,274 | |
Net (loss) income available to common stockholders | ($544,508) | $624,118 |
Net Loss Per Share - Basic | ($0.13) | $0.38 |
Net Loss Per Share - Diluted | ($0.13) | $0.36 |
Weighted average number of shares outstanding during the year Basic | 4,093,598 | 1,661,276 |
Weighted average number of shares outstanding during the year Diluted | 4,093,598 | 1,714,606 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Stockholders' Equity (Deficit) (USD $) | Preferred Stock - Series A | Preferred Stock - Series B | Preferred Stock - Series D | Common Stock | Additional Paid in Capital | Accumulated Deficit | Total |
Beginning balance, value at Dec. 31, 2012 | $2 | $1 | $169 | $47,885,179 | ($49,593,162) | ($1,707,812) | |
Beginning balance, shares at Dec. 31, 2012 | 20,000 | 6,666 | 1,686,865 | ||||
Issuance of preferred stock in connection with the conversion of debt and accrued interest, shares | 54,085 | ||||||
Issuance of preferred stock in connection with the conversion of debt and accrued interest, value | 5 | 311,524 | 311,529 | ||||
Reclassification of derivative liability upon extinguishment of convertible debentures | 6,332 | 6,332 | |||||
Cancellation of common stock, shares | -230,000 | ||||||
Cancellation of common stock, value | -23 | 23 | |||||
Net Income (loss) | 624,118 | 624,118 | |||||
Ending balance, value at Dec. 31, 2013 | 2 | 1 | 151 | 48,203,058 | -48,969,044 | -765,832 | |
Ending balance, shares at Dec. 31, 2013 | 20,000 | 6,666 | 1,510,950 | ||||
Issuance of preferred stock in connection with the conversion of debt and accrued interest, shares | 5,000,000 | ||||||
Issuance of preferred stock in connection with the conversion of debt and accrued interest, value | 500 | 132,775 | |||||
Sale of common stock, shares | 10,000,000 | ||||||
Sale of common stock, amount | 1,000 | 499,000 | 500,000 | ||||
Stock-based compensation in connection with options granted | 179,834 | 179,834 | |||||
Issuance of common stock in connection with a license agreement, shares | 2,222,222 | ||||||
Issuance of common stock in connection with a license agreement, value | 222 | 2,222,000 | 2,222,222 | ||||
Preferred stock deemed dividend in connection with issuance of preferred stock | 133,274 | -133,274 | |||||
Net Income (loss) | -411,234 | -411,234 | |||||
Ending balance, value at Dec. 31, 2014 | $2 | $1 | $500 | $1,373 | $51,369,941 | ($49,513,552) | $1,858,265 |
Ending balance, shares at Dec. 31, 2014 | 20,000 | 6,666 | 5,000,000 | 13,733,172 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (Unaudited) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cash Flows From Operating Activities: | ||
Net (loss) income | ($411,234) | $624,118 |
Adjustments to reconcile net loss to net cash used in operations | ||
Amortization of debt discount | 33,272 | |
Interest expense in connection with the conversion of debentures | 68,147 | |
Amortization of prepaid license fee | 12,545 | |
Change in fair value of derivative liabilities | -7,006 | -32,614 |
Stock based consulting expense | 179,834 | |
Gain from settlement of debt | -1,285,872 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | -8,410 | |
Prepaid expenses - current portion | -10,000 | 7,500 |
Accounts payable and accrued expenses | 34,365 | 585,429 |
Net Cash Used In Operating Activities | -209,906 | -20 |
Cash Flows From Investing Activities: | ||
Purchase of intangible assets | -250,000 | |
Net Cash Used In Investing Activities | -250,000 | |
Proceeds from issuance of preferred stock | 500,000 | |
Proceeds from issuance of common stock | 2,043 | |
Net proceeds from a loan - related party | 35,000 | |
Net Cash Provided by Financing Activities | 537,043 | |
Net increase (decrease) in Cash | 77,137 | -20 |
Cash at Beginning of Period | 20 | |
Cash at End of Period | 77,137 | |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | ||
Cash paid for taxes | ||
Supplemental disclosure of non-cash investing and financing activities: | ||
Operating expenses paid by a minority stockholder directly to the Company's vendors | 19,675 | |
Issuance of common stock for convertible debentures - principal amount | 243,382 | |
Reclassification of derivative liability to equity | 6,332 | |
Issuance of common stock in connection with a license agreement | 2,222,222 | |
Preferred stock deemed dividend | 133,274 | |
Issuance of preferred stock for debt and accrued interest | $133,275 |
BASIS_OF_PRESENTATION_AND_SUMM
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Accounting Policies [Abstract] | |||||||||||||
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||
Organization and Description of Business | |||||||||||||
Orbital Tracking Corp. (the “Company”) was formerly Great West Resources, Inc., a Nevada corporation. The Company is a provider of satellite based hardware, airtime and related services both in the United States and internationally. The Company’s principal focus is on growing the Company’s existing satellite based hardware, airtime and related services business line and developing the Company’s own tracking devices for use by retail customers worldwide. | |||||||||||||
A wholly-owned subsidiary, Orbital Satcom Corp. (“Orbital Satcom”), a Nevada corporation was formed on November 14, 2014. | |||||||||||||
On March 28, 2014, the Company merged with and into a wholly-owned subsidiary of the Company (“Great West”) solely for the purpose of changing its state of incorporation to Nevada from Delaware (the “Reincorporation”), effecting a 1:150 reverse split of its common stock, and changing its name to Great West Resources, Inc. in connection with the plans to enter into the business of potash mining and exploration. During late 2014 the Company abandoned its efforts to enter the potash mining and exploration business. All references in the audited consolidated financial statement and notes thereto have been retroactively restated to reflect the reverse stock split of 1:150. | |||||||||||||
On the effective date of the Merger: | |||||||||||||
(a) Each share of the Company’s Common Stock issued and outstanding immediately prior to the effective date changed and converted into 1/150th fully paid and non-assessable shares of Great West Common Stock; | |||||||||||||
(b) Each share of the Company’s Series A Preferred Stock issued and outstanding immediately prior to the effective date changed and converted into 1/150th fully paid and non-assessable shares of the Great West Series A Preferred Stock; | |||||||||||||
(c) Each share of the Company’s Series D Preferred Stock issued and outstanding immediately prior to the effective date changed and converted into 1/150th fully paid and non-assessable shares of the Great West Series B Preferred Stock; | |||||||||||||
(d) All options to purchase shares of the Company’s Common Stock issued and outstanding immediately prior to the effective date changed and converted into equivalent options to purchase 1/150th of a share of Great West Common Stock at an exercise price of $0.0001 per share; | |||||||||||||
(e) All warrants to purchase shares of the Company’s Common Stock issued and outstanding immediately prior to the effective date changed and converted into equivalent warrants to purchase 1/150th of a share of Great West Common Stock at 150 times the exercise price of such converted warrants; and | |||||||||||||
(f) Each share of Great West Common Stock issued and outstanding immediately prior to the Effective Date were canceled and returned to the status of authorized but unissued Great West Common Stock. | |||||||||||||
The Company was originally incorporated in 1997 in Florida. On April 21, 2010, the Company merged with and into a wholly-owned subsidiary for the purpose of changing its state of incorporation to Delaware and changing its state of incorporation to Delaware, effecting a 2:1 forward split of its common stock, and changing its name to EClips Media Technologies, Inc. On April 25, 2011, the Company changed its name to Silver Horn Mining Ltd. pursuant to a merger with a wholly-owned subsidiary. | |||||||||||||
Discontinued Operations | |||||||||||||
The Company’s former operations were developing and manufacturing products and services, which reduce fuel costs, save power and energy and protect the environment. The products and services were made available for sale into markets in the public and private sectors. In December 2009, the Company discontinued these operations and disposed of certain of its subsidiaries, and prior periods have been restated in the Company’s condensed consolidated financial statements and related footnotes to conform to this presentation. | |||||||||||||
The remaining liabilities for discontinued operations are presented in the consolidated balance sheets under the caption “Liabilities of discontinued operation” and relates to the discontinued operations of developing and manufacturing of energy saving and fuel efficient products and services. The carrying amounts of the major classes of these liabilities as of December 31, 2014 and 2013 are summarized as follows: | |||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||
Assets of discontinued operations | $ | - | $ | - | |||||||||
Liabilities | |||||||||||||
Accounts payables and accrued expenses | $ | (112,397 | ) | $ | (112,397 | ) | |||||||
Liabilities of discontinued operations | $ | (112,397 | ) | $ | (112,397 | ) | |||||||
Basis of Presentation and Principles of Consolidation | |||||||||||||
The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). The consolidated financial statements of the Company include the Company and its wholly-owned subsidiary. All material intercompany balances and transactions have been eliminated in consolidation. | |||||||||||||
Use of Estimates | |||||||||||||
In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition, and revenues and expenses for the years then ended. Actual results may differ significantly from those estimates. Significant estimates made by management include, but are not limited to, the assumptions used to calculate stock-based compensation, derivative liabilities, preferred deemed dividend and common stock issued for services. | |||||||||||||
Cash and Cash Equivalents | |||||||||||||
The Company considers all highly liquid investments with a maturity of three months or less when acquired to be cash equivalents. The Company places its cash with a high credit quality financial institution. The Company’s account at this institution is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At December 31, 2014, the Company has not reached bank balances exceeding the FDIC insurance limit on interest bearing accounts. To reduce its risk associated with the failure of such financial institution, the Company evaluates at least annually the rating of the financial institution in which it holds deposits. | |||||||||||||
Accounts receivable and allowance for doubtful accounts | |||||||||||||
The Company has a policy of reserving for questionable accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company periodically reviews its accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged to the bad debt expense after all means of collection have been exhausted and the potential for recovery is considered remote. As of December 31, 2014 and 2013, there is no allowance for doubtful accounts. | |||||||||||||
Revenue Recognition | |||||||||||||
The Company recognizes revenue from satellite services when earned, as services are rendered or delivered to customers. Equipment sales revenue is recognized when the equipment is delivered to and accepted by the customer. Only equipment sales are subject to warranty. Historically, the Company has not incurred significant expenses for warranties. | |||||||||||||
The Company’s customers generally purchase a combination of our products and services as part of a multiple element arrangement. The Company’s assessment of which revenue recognition guidance is appropriate to account for each element in an arrangement can involve significant judgment. This assessment has a significant impact on the amount and timing of revenue recognition. | |||||||||||||
Revenue is recognized when all of the following criteria have been met: | |||||||||||||
• | Persuasive evidence of an arrangement exists. Contracts and customer purchase orders are generally used to determine the existence of an arrangement. | ||||||||||||
• | Delivery has occurred. Shipping documents and customer acceptance, when applicable, are used to verify delivery. | ||||||||||||
• | The fee is fixed or determinable. We assess whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. | ||||||||||||
• | Collectability is reasonably assured. We assess collectability based primarily on the creditworthiness of the customer as determined by credit checks and analysis, as well as the customer’s payment history. | ||||||||||||
In accordance with ASC 605-25, Revenue Recognition — Multiple-Element Arrangements, based on the terms and conditions of the product arrangements, the Company believes that its products and services can be accounted for separately as its products and services have value to the Company’s customers on a stand-alone basis. When a transaction involves more than one product or service, revenue is allocated to each deliverable based on its relative fair value; otherwise, revenue is recognized as products are delivered or as services are provided over the term of the customer contract. | |||||||||||||
Cost of Product Sales and Services | |||||||||||||
Cost of sales consists primarily of materials, labor and overhead costs incurred internally and amounts incurred to contract manufacturers to produce our products, personnel and other implementation costs incurred to install our products and train customer personnel, and customer service and third party original equipment manufacturer costs to provide continuing support to our customers. | |||||||||||||
Shipping and handling costs are included as a component of costs of product sales in the Company’s consolidated statements of operations because the Company includes in revenue the related costs that the Company bill its customers. | |||||||||||||
Prepaid expenses – current and long-term portion | |||||||||||||
Prepaid expenses – current and long-term portion amounted to $232,222 and $1,987,455 at December 31, 2014, respectively. Prepaid expenses include prepayments in cash for accounting fees and prepayments in equity instruments license fees which are being amortized over the terms of their respective agreements. The current portion consists primarily of costs paid for future services which will occur within a year and the long-term portion consist primarily of costs paid for future services after one year. | |||||||||||||
Intangible assets | |||||||||||||
Intangible assets include customer contracts purchased and recorded based on the cost to acquire them. These assets are amortized over 10 years. Useful lives of intangible assets are periodically evaluated for reasonableness and the assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may no longer be recoverable. | |||||||||||||
Goodwill and other intangible assets | |||||||||||||
In accordance with ASC 350-30-65, “Intangibles - Goodwill and Others”, the Company assesses the impairment of identifiable intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable. | |||||||||||||
Factors the Company considers to be important which could trigger an impairment review include the following: | |||||||||||||
1 | Significant underperformance relative to expected historical or projected future operating results; | ||||||||||||
2 | Significant changes in the manner of use of the acquired assets or the strategy for the overall business; and | ||||||||||||
3 | Significant negative industry or economic trends. | ||||||||||||
When the Company determines that the carrying value of intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge. The Company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows. | |||||||||||||
Impairment of long-lived assets | |||||||||||||
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not consider it necessary to record any impairment charges during the years ended December 31, 2014 and 2013 respectively. | |||||||||||||
Fair value of financial instruments | |||||||||||||
The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures”, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing US GAAP that require the use of fair value measurements which establishes a framework for measuring fair value and expands disclosure about such fair value measurements. | |||||||||||||
ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: | |||||||||||||
Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities | |||||||||||||
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data | |||||||||||||
Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. | |||||||||||||
The following table presents a reconciliation of the derivative liability measured at fair value on a recurring basis using significant unobservable input (Level 3) from January 1, 2013 to December 31, 2014: | |||||||||||||
Conversion feature | Warrant liability | Total | |||||||||||
derivative liability | |||||||||||||
Balance at January 1, 2013 | $ | 14,996 | $ | 35,892 | $ | 50,888 | |||||||
Reclassification of derivative liability upon conversion of debt to equity | (6,332 | ) | — | (6,332 | ) | ||||||||
Change in fair value included in earnings | (8,664 | ) | (23,950 | ) | (32,614 | ) | |||||||
Balance at December 31, 2013 | — | 11,942 | 11,942 | ||||||||||
Change in fair value included in earnings | — | (7,006 | ) | (7,006 | ) | ||||||||
Balance at December 31, 2014 | $ | — | $ | 4,936 | $ | 4,936 | |||||||
The Company did not identify any other assets or liabilities that are required to be presented on the consolidated balance sheets at fair value in accordance with the accounting guidance. The carrying amounts reported in the balance sheet for cash, accounts payable, and accrued expenses approximate their estimated fair market value based on the short-term maturity of the instruments. | |||||||||||||
Stock Based Compensation | |||||||||||||
Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. | |||||||||||||
Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date. | |||||||||||||
Income Taxes | |||||||||||||
The Company accounts for income taxes pursuant to the provision of ASC 740-10, “Accounting for Income Taxes” (“ASC 740-10”) which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized. | |||||||||||||
The Company follows the provision of ASC 740-10 related to Accounting for Uncertain Income Tax Positions. When tax returns are filed, there may be uncertainty about the merits of positions taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. | |||||||||||||
Tax positions that meet the more likely than not recognition threshold are measured at the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefit associated with tax positions taken that exceed the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. | |||||||||||||
The Company believes its tax positions are all more likely than not to be upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits. | |||||||||||||
The Company has adopted ASC 740-10-25, “Definition of Settlement”, which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion and examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they are filed. | |||||||||||||
Earnings per Common Share | |||||||||||||
Net income (loss) per common share is calculated in accordance with ASC Topic 260: Earnings Per Share (“ASC 260”). Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. The computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average shares outstanding as they would be anti-dilutive. In periods where the Company has a net loss, all dilutive securities are excluded. | |||||||||||||
The following are dilutive common stock equivalents during the year ended: | |||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||
Convertible preferred stock | 100,053,330 | 53,330 | |||||||||||
Stock Options | 60,000 | - | |||||||||||
Stock Warrants | 245,000 | 245,000 | |||||||||||
Total | 100,358,330 | 298,330 | |||||||||||
Recent Accounting Pronouncements | |||||||||||||
In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements—Going Concern.” The provisions of ASU No. 2014-15 require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently assessing the impact of ASU No. 2014-15 on the Company’s consolidated financial statements once adopted. | |||||||||||||
Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. |
GOING_CONCERN_CONSIDERATIONS
GOING CONCERN CONSIDERATIONS | 12 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN CONSIDERATIONS | NOTE 2 - GOING CONCERN CONSIDERATIONS |
The accompanying consolidated financial statements are prepared assuming the Company will continue as a going concern. At December 31, 2014, the Company had an accumulated deficit of approximately $49.5 million, a working capital deficiency of approximately $379,000 and net loss of approximately $411,000 during the year ended December 31, 2014. 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 upon obtaining additional capital and financing. Management intends to attempt to raise additional funds by way of a public or private offering. While the Company believes in the viability of its strategy to raise additional funds, there can be no assurances to that effect. The consolidated financial statements do not include any adjustments relating to classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
PREPAID_LICENSE_FEES
PREPAID LICENSE FEES | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||
PREPAID LICENSE FEES | NOTE 3 – PREPAID LICENSE FEES | ||||
On December 10, 2014, the Company, Orbital Satcom, Global Telesat Corp. (“GTC”) and World Surveillance Group, Inc. (“World”), which owns 100% of GTC, entered into a license agreement (the “License Agreement”) pursuant to which GTC granted to Orbital Satcom a fully-paid and irrevocable non-exclusive license to use certain equipment owned by GTC or its affiliates consisting of “appliques” in connection with the Globalstar Contracts (the “Globalstar Appliques”). Appliques are demodulator and RF interfaces located at various ground stations (or “gateways”). | |||||
The License Agreement is a fully-paid and irrevocable non-exclusive license to Orbital Satcom to use the Globalstar Appliques and includes the full right to utilize the Globalstar Appliques used by GTC prior to and following the date of grant. The GTC License has a term of 10 years. In consideration of the License Agreement, the Company issued GTC 2,222,222 shares of the Company’s common stock. In connection with the License Agreement, World, GTC, the Company and Orbital Satcom agreed that GTC shall receive a discount of 25% on the Company’s standard pricing on messaging air-time in connection with GTC’s business. The Company valued these common shares at the fair value of approximately $1.00 per common share or $2,222,222 based on the quoted trading price on the execution date of the license agreement. | |||||
Mr. David Phipps, the Company’s current CEO, is the founder of GTC and its former President. Prior to December 10, 2014, Mr. Phipps had no affiliation with the Company. | |||||
Amortization of prepaid license fees is included in general and administrative expenses as reflected in the accompanying consolidated statements of operations. Amortization expense for the year ended December 31, 2014 was $12,545. Prepaid license fees – current and long-term portion amounted to $222,222 and $1,987,455 at December 31, 2014, respectively, and are included in prepaid expenses. Future amortization of prepaid license fees is as follows: | |||||
2015 | $ | 222,222 | |||
2016 | 222,222 | ||||
2017 | 222,222 | ||||
2018 | 222,222 | ||||
2019 and thereafter | 1,320,789 | ||||
Total | $ | 2,209,677 |
INTANGIBLE_ASSETS
INTANGIBLE ASSETS | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
INTANGIBLE ASSETS | NOTE 4 – INTANGIBLE ASSETS | ||||
On December 10, 2014, the Company entered the satellite voice and data equipment sales and service business through the purchase of certain contracts from GTC. These contracts permit the Company to utilize the Globalstar, Inc. and Globalstar LLC (collectively, “Globalstar”) mobile satellite voice and data network. The purchase price for the contracts of $250,000 was paid by the Company under an asset purchase agreement by and among the Company, its wholly-owned subsidiary Orbital Satcom, GTC and World Surveillance Group, Inc. | |||||
Included in the purchased assets are: (i) the rights and benefits granted to GTC under each of the Globalstar Contracts, subject to certain exclusions, (ii) account and online access to the Globalstar Cody Simplex activation system, (iii) GTC’s existing customers who are serviced pursuant to the Globalstar Contracts (only as to their business directly and exclusively related to the Globalstar Contracts), and (iv) all of GTC’s rights and benefits directly and exclusively related to the Globalstar Contracts. | |||||
Amortization of customer contracts will be included in general and administrative expenses. The Company shall begin amortizing the customer contracts in January 2015. Future amortization of intangible assets is as follows: | |||||
2015 | $ | 25,000 | |||
2016 | 25,000 | ||||
2017 | 25,000 | ||||
2018 | 25,000 | ||||
2019 and thereafter | 150,000 | ||||
Total | $ | 250,000 | |||
LOAN_PAYABLE_RELATED_PARTY
LOAN PAYABLE - RELATED PARTY | 12 Months Ended |
Dec. 31, 2014 | |
Debt Disclosure [Abstract] | |
LOAN PAYABLE - RELATED PARTY | NOTE 6 – CONVERTIBLE DEBENTURES AND NOTES PAYABLE |
Convertible Debentures | |
On November 8, 2013, the Company entered into a note amendment agreement with the lender of the remaining outstanding balance of the 6% convertible debentures amounting to $137,500 pursuant to which the lender agreed to change the conversion price of $137,500 convertible notes to $4.50 per share from $7.50 (post-split) per share. Such lender was at the time of the transaction a holder of 5% or more of the Company’s common stock. On November 8, 2013, the Company issued an aggregate of 30,556 shares of common stock in connection with the conversion of the remaining balance of the 6% convertible debenture which amounted to $137,500 at the new conversion price. The Company accounted the reduction of the conversion price per share and such conversion under ASC 470-20-40 “Debt with Conversion and Other Options” and accordingly, during the year ended December 31, 2013, the Company recorded interest expense of $38,500 which is equal to the fair value of shares issued in excess of the fair value issuable pursuant to the original conversion terms. | |
In accordance with ASC Topic 815 “Derivatives and Hedging”, the convertible debentures and warrants above included a down-round provision under which the conversion price could be affected by future equity offerings. Instruments with down-round protection are not considered indexed to a company’s own stock under ASC Topic 815, because neither the occurrence of a sale of common stock by the company at market nor the issuance of another equity-linked instrument with a lower strike price is an input to the fair value of a fixed-for-fixed option on equity shares. During fiscal year 2011, the down-round provisions for convertible debentures and warrants that were issued during fiscal 2010 were terminated after 18 months from such issuance pursuant to the Debenture agreement and thus no longer considered derivatives. However, the down-round provisions for the warrants that were issued in May 2012 are considered derivatives as of December 31, 2014 (see Note 11). | |
Convertible Notes Payable | |
On November 8, 2013, the Company entered into note amendment agreements with certain investors pursuant to which the parties agreed to change the conversion price of $105,882 convertible notes to $4.50 per share from $7.50 (post-split) per share. On November 8, 2013, the Company issued an aggregate of 23,529 shares of common stock in connection with the conversion of each of the amended notes at the new conversion price. The Company accounted the reduction of the conversion price per share and such conversion under ASC 470-20-40 “Debt with Conversion and Other Options” and accordingly, during the year ended December 31, 2013, the Company recorded interest expense of $29,647 which is equal to the fair value of shares issued in excess of the fair value issuable pursuant to the original conversion terms. | |
On October 15, 2014, the Company entered into a series of exchange agreement with certain former holders of convertible debentures who had previously converted the debentures but who were still owed unpaid interest on the debentures in the aggregate amount of $98,275. Pursuant to the exchange agreements, the holders exchanged the right to receive unpaid interest and relinquished any and all other rights that they may have pursuant to the debentures in exchange for 4,250,000 shares of newly designated Series D Convertible Preferred Stock (see Note 7 and Note 10). | |
Total amortization of debt discounts for the convertible debentures amounted to $0 and $33,272 for the years ended December 31, 2014 and 2013, respectively, and was included in interest expense. Accrued interest as of December 31, 2014 and 2013 amounted to $0 and $98,275 respectively, and was included in accounts payable and accrued expenses as reflected in the accompanying consolidated balance sheets. | |
At December 31, 2014 and 2013, outstanding balance of convertible debentures and notes payable was $0. | |
CONVERTIBLE_DEBENTURES_AND_NOT
CONVERTIBLE DEBENTURES AND NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2014 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE DEBENTURES AND NOTES PAYABLE | NOTE 6 – CONVERTIBLE DEBENTURES AND NOTES PAYABLE |
Convertible Debentures | |
On November 8, 2013, the Company entered into a note amendment agreement with the lender of the remaining outstanding balance of the 6% convertible debentures amounting to $137,500 pursuant to which the lender agreed to change the conversion price of $137,500 convertible notes to $4.50 per share from $7.50 (post-split) per share. Such lender was at the time of the transaction a holder of 5% or more of the Company’s common stock. On November 8, 2013, the Company issued an aggregate of 30,556 shares of common stock in connection with the conversion of the remaining balance of the 6% convertible debenture which amounted to $137,500 at the new conversion price. The Company accounted the reduction of the conversion price per share and such conversion under ASC 470-20-40 “Debt with Conversion and Other Options” and accordingly, during the year ended December 31, 2013, the Company recorded interest expense of $38,500 which is equal to the fair value of shares issued in excess of the fair value issuable pursuant to the original conversion terms. | |
In accordance with ASC Topic 815 “Derivatives and Hedging”, the convertible debentures and warrants above included a down-round provision under which the conversion price could be affected by future equity offerings. Instruments with down-round protection are not considered indexed to a company’s own stock under ASC Topic 815, because neither the occurrence of a sale of common stock by the company at market nor the issuance of another equity-linked instrument with a lower strike price is an input to the fair value of a fixed-for-fixed option on equity shares. During fiscal year 2011, the down-round provisions for convertible debentures and warrants that were issued during fiscal 2010 were terminated after 18 months from such issuance pursuant to the Debenture agreement and thus no longer considered derivatives. However, the down-round provisions for the warrants that were issued in May 2012 are considered derivatives as of December 31, 2014 (see Note 11). | |
Convertible Notes Payable | |
On November 8, 2013, the Company entered into note amendment agreements with certain investors pursuant to which the parties agreed to change the conversion price of $105,882 convertible notes to $4.50 per share from $7.50 (post-split) per share. On November 8, 2013, the Company issued an aggregate of 23,529 shares of common stock in connection with the conversion of each of the amended notes at the new conversion price. The Company accounted the reduction of the conversion price per share and such conversion under ASC 470-20-40 “Debt with Conversion and Other Options” and accordingly, during the year ended December 31, 2013, the Company recorded interest expense of $29,647 which is equal to the fair value of shares issued in excess of the fair value issuable pursuant to the original conversion terms. | |
On October 15, 2014, the Company entered into a series of exchange agreement with certain former holders of convertible debentures who had previously converted the debentures but who were still owed unpaid interest on the debentures in the aggregate amount of $98,275. Pursuant to the exchange agreements, the holders exchanged the right to receive unpaid interest and relinquished any and all other rights that they may have pursuant to the debentures in exchange for 4,250,000 shares of newly designated Series D Convertible Preferred Stock (see Note 7 and Note 10). | |
Total amortization of debt discounts for the convertible debentures amounted to $0 and $33,272 for the years ended December 31, 2014 and 2013, respectively, and was included in interest expense. Accrued interest as of December 31, 2014 and 2013 amounted to $0 and $98,275 respectively, and was included in accounts payable and accrued expenses as reflected in the accompanying consolidated balance sheets. | |
At December 31, 2014 and 2013, outstanding balance of convertible debentures and notes payable was $0. | |
STOCKHOLDERS_EQUITY_DEFICIT
STOCKHOLDERS' EQUITY (DEFICIT) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||
STOCKHOLDERS' DEFICIT | NOTE 7 – STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||||||||||||||
Capital Structure | ||||||||||||||||||||
On March 28, 2014, in connection with the Reincorporation (see Note 1), all share and per share values for all periods presented in the accompanying consolidated financial statements are retroactively restated for the effect of the Reincorporation. | ||||||||||||||||||||
The authorized capital of the Company consists of 200,000,000 shares of common stock, par value $0.0001 per share and 20,000,000 shares of preferred stock, par value $0.0001 per share. | ||||||||||||||||||||
Preferred Stock | ||||||||||||||||||||
Series A Convertible Preferred Stock | ||||||||||||||||||||
On March 28, 2014, in connection with the merger with and into the Company’s former subsidiary Great West Resources, Inc., each issued and outstanding share of the Company’s Series A Convertible Preferred Stock, par value $0.0001 per share, was converted into 1/150th shares of Series A Convertible Preferred Stock, par value $0.0001 per share, for a total of 20,000 issued and outstanding shares of Series A Convertible Preferred Stock. Pursuant to the Series A Certificate of Designation, the Company designated 20,000 shares of its blank check preferred stock as Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred Stock is convertible into one share each of our common stock, subject to equitable adjustments after such events as stock dividends, stock splits or fundamental corporate transactions. The holders of our Series A Convertible Preferred Stock are entitled to 250 votes for each share of Series A Convertible Preferred Stock owned at the record date for the determination of shareholders entitled to vote, or, if no record date is established, at the date such vote is taken or any written consent of shareholders is solicited. In the event of a liquidation, dissolution or winding up of our business, the holder of the Series A Convertible Preferred Stock would have preferential payment and distribution rights over any other class or series of capital stock that provide for Series A Convertible Preferred Stock’s preferential payment and over our common stock. | ||||||||||||||||||||
As of December 31, 2014 and 2013, 20,000 shares of Series A Convertible Preferred Stock, $0.0001 par value were authorized with 20,000 issued and outstanding. | ||||||||||||||||||||
Series B Convertible Preferred Stock | ||||||||||||||||||||
On March 28, 2014, in connection with the merger with and into the Company’s former subsidiary Great West Resources, Inc., each issued and outstanding share of the Company’s Series D Convertible Preferred Stock, par value $0.0001 per share, was converted into 1/150th shares of Series B Convertible Preferred Stock, par value $0.0001 per share, for a total of 6,666 issued and outstanding shares of Series B Convertible Preferred Stock. Pursuant to the Series B Certificate of Designation, the Company designated 30,000 shares of its blank check preferred stock as Series B Convertible Preferred. Each share of Series B Convertible Preferred has a stated value of $0.0001 per share. | ||||||||||||||||||||
In the event of a liquidation, dissolution or winding up of the Company, the holder of the Series B Convertible Preferred Stock would have preferential payment and distribution rights over any other class or series of capital stock that provide for Series B Convertible Preferred Stock’s preferential payment and over our common stock. The Series B Convertible Preferred is convertible into five (5) shares of the Company’s common stock. The Company is prohibited from effecting the conversion of the Series B Convertible Preferred to the extent that, as a result of such conversion, the holder beneficially owns more than 4.99%, in the aggregate, of the issued and outstanding shares of common stock calculated immediately after giving effect to the issuance of shares of common stock upon the conversion of the Series B Convertible Preferred. Each share of Series B Convertible Preferred entitles the holder to vote on all matters voted on by holders of common stock as a single class. With respect to any such vote, each share of Series B Convertible Preferred entitles the holder to cast one (1) votes per share of Series B Convertible Preferred owned at the time of such vote, subject to the 4.99% beneficial ownership limitation. | ||||||||||||||||||||
As of December 31, 2014 and 2013, 30,000 shares of Series B Convertible Preferred Stock, $0.0001 par value were authorized with 6,666 issued and outstanding. | ||||||||||||||||||||
Series C Convertible Preferred Stock | ||||||||||||||||||||
On October 10, 2014, the Company filed with the Secretary of State of the State of Nevada a Certificate of Designation for the Series C Convertible Preferred Stock, setting forth the rights, powers, and preferences of the Series C Convertible Preferred Stock. Pursuant to the Series C Certificate of Designation, as amended on February 19, 2015, the Company designated 4,000,000 shares of its blank check preferred stock as Series C Convertible Preferred Stock. Each share of Series C Convertible Preferred Stock has a stated value equal to its par value of $0.0001 per share. In the event of a liquidation, dissolution or winding up of the Company, the holder of the Series C Convertible Preferred Stock would have preferential payment and distribution rights over any other class or series of capital stock that provide for Series C Convertible Preferred Stock’s preferential payment and over our common stock. The Series C Convertible Preferred is convertible into ten (10) shares of the Company’s common stock. The Company is prohibited from effecting the conversion of the Series C Convertible Preferred Stock to the extent that, as a result of such conversion, the holder beneficially owns more than 4.99%, in the aggregate, of the issued and outstanding shares of common stock calculated immediately after giving effect to the issuance of shares of common stock upon the conversion of the Series C Convertible Preferred. Each share of Series C Convertible Preferred Stock entitles the holder to vote on all matters voted on by holders of common stock as a single class. With respect to any such vote, each share of Series C Convertible Preferred entitles the holder to cast ten (10) votes per share of Series C Convertible Preferred Stock owned at the time of such vote, subject to the 4.99% beneficial ownership limitation. | ||||||||||||||||||||
As of December 31, 2014, 3,000,000 shares of Series C Convertible Preferred Stock, $0.0001 par value were authorized with none issued and outstanding. As of December 31, 2013, no shares of Series C Convertible Preferred Stock were authorized or issued. On February 19, 2015, the Company filed an amendment to the Certificate of Designation of Rights and Preferences of its Series C Convertible Preferred Stock, increasing the authorized shares of Series C Convertible Preferred Stock to 4,000,000 from 3,000,000. | ||||||||||||||||||||
Series D Convertible Preferred Stock | ||||||||||||||||||||
On October 15, 2014, the Company filed with the Secretary of State of the State of Nevada a Certificate of Designation for the Series D Convertible Preferred Stock, setting forth the rights, powers, and preferences of the Series D Convertible Preferred Stock. Pursuant to the Series D Certificate of Designation, the Company designated 5,000,000 shares of its blank check preferred stock as Series D Convertible Preferred Stock. Each share of Series D Convertible Preferred Stock has a stated value equal to its par value of $0.0001 per share. In the event of a liquidation, dissolution or winding up of the Company, the holder of the Series D Convertible Preferred Stock would have preferential payment and distribution rights over any other class or series of capital stock that provide for Series D Convertible Preferred Stock’s preferential payment and over our common stock. The Series D Convertible Preferred is convertible into twenty (20) shares of the Company’s common stock. The Company is prohibited from effecting the conversion of the Series D Convertible Preferred Stock to the extent that, as a result of such conversion, the holder beneficially owns more than 4.99%, in the aggregate, of the issued and outstanding shares of common stock calculated immediately after giving effect to the issuance of shares of common stock upon the conversion of the Series D Convertible Preferred Stock. | ||||||||||||||||||||
Each share of Series D Convertible Preferred Stock entitles the holder to vote on all matters voted on by holders of common stock as a single class. With respect to any such vote, each share of Series D Convertible Preferred Stock entitles the holder to cast twenty (20) votes per share of Series D Convertible Preferred Stock owned at the time of such vote, subject to the 4.99% beneficial ownership limitation. | ||||||||||||||||||||
On October 15, 2014, the Company entered into an exchange agreement with a holder of promissory notes who is considered a related party in the aggregate principal face amount of $35,000 previously issued by the Company (see Note 5). Pursuant to the exchange agreement, the note holder exchanged the notes and relinquished any and all other rights it may have pursuant to the notes in exchange for 750,000 shares of newly designated Series D Convertible Preferred Stock. | ||||||||||||||||||||
Also on October 15, 2014, the Company entered into a series of exchange agreement with certain former holders of convertible debentures who had previously converted the debentures but who were still owed unpaid interest on the debentures in the aggregate amount of $98,275. Pursuant to the exchange agreements, the holders exchanged the right to receive unpaid interest and relinquished any and all other rights that they may have pursuant to the debentures in exchange for 4,250,000 shares of newly designated Series D Convertible Preferred. | ||||||||||||||||||||
As a result of the conversion of debt and accrued interest on October 15, 2014 into Series D Convertible Preferred, the Company recorded a deemed dividend of $133,274 for the additional value of the beneficial conversion feature. | ||||||||||||||||||||
As of December 31, 2014, there were 5,000,000 shares of Series D Convertible Preferred Stock authorized and 5,000,000 shares issued and outstanding, respectively. As of December 31, 2013, no shares of Series D Convertible Preferred Stock were authorized or issued. | ||||||||||||||||||||
Common Stock | ||||||||||||||||||||
On November 8, 2013, Daniel Bleak resigned from all of his positions with the Company, including director, President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary, and Chairman of the board of directors. On November 8, 2013, the Company and Daniel Bleak entered into an agreement to cancel 230,000 shares of common stock held by Mr. Bleak pursuant to the terms of a cancellation and recapitalization agreement. The Company valued and recorded the cancelled shares at par value or $23 in additional paid in capital. | ||||||||||||||||||||
On November 8, 2013, the Company entered into note amendment agreements with certain investors pursuant to which the parties agreed to change the conversion price of $243,382 convertible notes to $4.50 per share from $7.50 (post-split) per share. Also on November 8, 2013, the Company issued an aggregate of 54,085 shares of common stock in connection with the conversion of each of the amended notes at the new conversion price. The Company accounted the reduction of the conversion price per share and such conversion under ASC 470-20-40 “Debt with Conversion and Other Options” and accordingly, during the year ended December 31, 2013, the Company recorded interest expense of $68,147 which is equal to the fair value of shares issued in excess of the fair value issuable pursuant to the original conversion terms (see Note 6). | ||||||||||||||||||||
Between September 29, 2014 and October 15, 2014, the Company sold an aggregate of 10 million shares of common stock for gross proceeds of $500,000. | ||||||||||||||||||||
On December 10, 2014, the Company entered into a license agreement (see Note 3) pursuant to which the Company was granted through its wholly-owned subsidiary, Orbital Satcom, a fully-paid and irrevocable non-exclusive license to use certain equipment owned by GTC or its affiliates consisting of “appliques” in connection with the Globalstar Contracts. In consideration of the License Agreement, the Company issued GTC 2,222,222 shares of the Company’s common stock. The Company valued these common shares at the fair value of approximately $1.00 per common share or $2,222,222 based on the quoted trading price on the execution date of the license agreement. | ||||||||||||||||||||
Stock Options | ||||||||||||||||||||
2014 Equity Incentive Plan | ||||||||||||||||||||
On January 21, 2014, the Board approved the adoption of a 2014 Equity Incentive Plan (the “2014 Plan”). The purpose of the 2014 Plan is to promote the success of the Company and to increase stockholder value by providing an additional means through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons. The 2014 Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights and other types of stock-based awards to the Company’s employees, officers, directors and consultants. Pursuant to the terms of the 2014 Plan, either the Board or a board committee is authorized to administer the plan, including by determining which eligible participants will receive awards, the number of shares of common stock subject to the awards and the terms and conditions of such awards. | ||||||||||||||||||||
Unless earlier terminated by the Board, the Plan shall terminate at the close of business on January 21, 2024. Up to 34,000,000 shares of the Company’s common stock are reserved for issuance under the 2014 Equity Incentive Plan as awards to employees, directors, consultants, advisors and other service providers. | ||||||||||||||||||||
On January 21, 2014, the board approved non-employee director fees of $1,000 per month and issued to each of Mr. Uribe and Mr. Bhansali, the Company’s non-employee directors, a four year option to purchase up to 30,000 of the Company’s issued and outstanding common stock at a cashless exercise price of $0.015 per share. The options vested immediately. On October 15, 2014, the Company entered into separation agreements with Mr. Uribe and Mr. Bhansali pursuant to which, in exchange for a release of all claims against the Company, each received a one-time severance payment of $2,500. The options shall forfeit three months after the resignation date. | ||||||||||||||||||||
The 60,000 options were valued on the grant date at approximately $3.00 per option or a total of $179,834 using a Black-Scholes option pricing model with the following assumptions: stock price of $3.00 per share (based on the quoted trading price on the grant date), volatility of 260%, expected term of 4 years, and a risk free interest rate of 0.81%. During the year ended December 31, 2014, the Company recorded stock based consulting expense related to options of $179,834. | ||||||||||||||||||||
For the years ended December 31, 2014 and 2013, the Company recorded stock-based compensation expense related to stock options of $179,834 and $0, respectively. At December 31, 2014 there was approximately $80,000 intrinsic value for the stock options outstanding. At December 31, 2014, there was no unrecognized compensation expense as all outstanding options have vested. A summary of the status of the Company’s outstanding stock options and changes during the year ended December 31, 2014 is as follows: | ||||||||||||||||||||
Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | ||||||||||||||||||
Balance at January 1, 2014 | — | $ | — | — | ||||||||||||||||
Granted | 60,000 | 0.015 | 4 | |||||||||||||||||
Exercised | — | — | — | |||||||||||||||||
Forfeited | — | — | — | |||||||||||||||||
Cancelled | — | — | — | |||||||||||||||||
Balance outstanding at December 31, 2014 | 60,000 | $ | 0.015 | 3.06 | ||||||||||||||||
Options exercisable at December 31, 2014 | 60,000 | $ | 0.015 | |||||||||||||||||
Weighted average fair value of options granted during the period | $ | 3 | ||||||||||||||||||
Stock Warrants | ||||||||||||||||||||
The following table summarizes the Company’s stock warrants outstanding at December 31, 2014: | ||||||||||||||||||||
Warrants Outstanding | Warrants Exercisable | |||||||||||||||||||
Exercise | Number Outstanding at December 31, 2014 | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | Number Exercisable at December 31, 2014 | Weighted Average Exercise Price | |||||||||||||||
Price | ||||||||||||||||||||
$ | 3.75 | 240,000 | 0.29 Years | $ | 3.75 | 240,000 | $ | 3.75 | ||||||||||||
4.5 | 5,000 | 2.36 Years | 4.5 | 5,000 | 4.5 | |||||||||||||||
$ | 3.77 | 245,000 | 1.36 Years | $ | 3.77 | 245,000 | $ | 3.77 | ||||||||||||
There were no changes that occurred during the year ended December 31, 2014 and 2013. There were 245,000 warrants outstanding as of December 31, 2014 and 2013. |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
INCOME TAXES | NOTE 8 – INCOME TAXES | ||||||||
The Company accounts for income taxes under ASC Topic 740: Income Taxes which requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry forwards. ASC Topic 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. The Company has a net operating loss carry forward for tax purposes totaling approximately $9.8 million at December 31, 2014, expiring through the year 2034. Internal Revenue Code Section 382 places a limitation on the amount of taxable income that can be offset by carry forwards after certain ownership shifts. | |||||||||
The table below summarizes the differences between the Company’s effective tax rate and the statutory federal rate as follows for the year ended December 31, 2014 and 2013: | |||||||||
December 31, 2014 | December 31, 2013 | ||||||||
Tax expense (benefit) computed at "expected" statutory rate | $ | (139,800 | ) | $ | 212,200 | ||||
State income taxes, net of benefit | (13,100 | ) | 38,111 | ||||||
Permanent differences : | |||||||||
Stock based compensation and consulting | 61,100 | - | |||||||
Loss (gain) from change in fair value of derivative liability | (2,300 | ) | (11,088 | ) | |||||
Amortization of debt discount and other non-cash interest | - | 34,482 | |||||||
Increase (decrease) in valuation allowance | (94,100 | ) | (273,705 | ) | |||||
Net income tax benefit | $ | - | $ | - | |||||
Deferred tax assets and liabilities are provided for significant income and expense items recognized in different years for tax and financial reporting purposes. Temporary differences, which give rise to a net deferred tax asset is as follows: | |||||||||
December 31, 2014 | December 31, 2013 | ||||||||
Deferred tax assets: | |||||||||
Net operating loss carryforward | $ | 9,824,400 | $ | 9,730,279 | |||||
Total deferred tax assets | $ | 9,824,400 | $ | 9,730,279 | |||||
Deferred tax liabilities: | |||||||||
Book basis of property and equipment in excess of tax basis | $ | - | $ | - | |||||
Total deferred tax liabilities | $ | - | $ | - | |||||
Net deferred tax asset before valuation allowance | $ | 9,824,400 | $ | 9,730,279 | |||||
Less: valuation allowance | (9,824,400 | ) | (9,730,279 | ) | |||||
Net deferred tax asset | $ | - | $ | - | |||||
After consideration of all the evidence, both positive and negative, management has recorded a full valuation allowance at December 31, 2014 and 2013, due to the uncertainty of realizing the deferred income tax assets. The valuation allowance was increased by approximately $94,000. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 9 – COMMITMENTS AND CONTINGENCIES |
Services and Employee Leasing Agreement | |
On June 1, 2011, the Company entered into a Services and Employee Leasing Agreement (the “Agreement”) with MJI Resource Management Corp. (“MJI”) pursuant to which the Company had agreed to pay MJI $15,000 a month and MJI agreed to make available to the Company six of its employees, including Mr. Bleak, for the purpose of performing management, operations, legal, accounting and resource location services. On August 1, 2011, the Company amended this Agreement whereby the Company had agreed to pay MJI $25,000 per month. On October 1, 2011, the Company entered into a third amendment of Agreement. Such amendment specifies the services and associated expenses in consideration for $25,000 a month as defined in the amended Agreement. Associated expenses include general administrative costs, rent, utilities and office supplies. The term of this Agreement was to commence for a period of 5 years. This Agreement may be terminated at any time by either party by giving a written notice to the other party and shall terminate 180 days following the delivery of such notice. Mr. Eckersley, a former director of the Company, was the former President of MJI, and Mr. Bleak, the former CEO of the Company, serves as the sole Officer and Chairman of the Board for MJI. | |
During the year ended December 31, 2014 and 2013, the Company incurred $0 and $225,000, respectively, of management fees. On November 8, 2013, this Agreement was terminated. | |
On November 8, 2013, contemporaneously with the termination of the Services and Employee Leasing Agreement with MJI, the Company entered into a debt forgiveness agreement with MJI, pursuant to which MJI forgave (i) $1,264,253 owed to them pursuant to outstanding invoices less $175,000 and (ii) all other debt incurred by the Company from January 1, 2011 through the November 8, 2013. The Company agreed to pay MJI $175,000 upon the closing of its future purchase of all or substantially all of the assets of a privately held or public operating company and simultaneous capital raising transaction (the “Financing”) as (i) a cash payment, (ii) conversion into the applicable dollar amount of securities issued by the Company in the Financing upon the same terms provided to the other investors in the Financing or (iii) a combination of (i) and (ii). | |
Accordingly, during the year ended December 31, 2013, the Company recognized gain on settlement of debt of $1,089,253 in connection with this debt forgiveness agreement with MJI. | |
Consulting Agreement | |
On December 10, 2014, the Company entered into a two year agreement with a consultant to assist the Company with business development, corporate structure, strategic and business planning, selecting management and other functions reasonably necessary for advancing the business of the Company. The Company agreed to pay the consultant an aggregate of $240,000 payable in 24 equal monthly payments, at the sole discretion of the Company, of either (i) $10,000 cash or (ii) 200,000 shares of common stock. On January 28, 2015, the Company entered into a termination and cancellation agreement with the consultant whereby both parties agreed to terminate the contractual relationship and cancel 400,000 shares of common stock issued under this consulting agreement. The parties agreed that the consulting agreement has no further force and effect and neither party have any further obligations there under. | |
Debt forgiveness agreement | |
On November 8, 2013, the Company entered into a debt forgiveness agreement with Bond Media Group, Inc. (“Bond”), pursuant to which Bond forgave $196,619 owed to it pursuant to outstanding invoices and all other debt incurred by the Company from January 1, 2011 through the November 8, 2013. Accordingly, during the year ended December 31, 2013, the Company recognized gain on settlement of debt of $196,619 in connection with this debt forgiveness agreement with Bond Media Group, Inc. | |
Litigation | |
From time to time, the Company may become involved in litigation relating to claims arising out of our operations in the normal course of business. The Company is not currently involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which the Company is a party or to which any of the Company’s properties is subject, which would reasonably be likely to have a material adverse effect on the Company’s business, financial condition and operating results. |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2014 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 10 – RELATED PARTY TRANSACTIONS |
On November 8, 2013 the Company amended all $137,500 outstanding notes issued to Michael Brauser, a holder of 5% or greater of the Company’s securities at the time, to change the conversion price from $7.50 to $4.50 and issued Mr. Brauser 30,556 shares of common stock upon conversion of the debt. | |
On November 8, 2013 the Company amended a $14,706 note issued to Sandor Capital Master Fund LP, a holder of 5% or greater of the Company’s securities at the time, to change the conversion price from $7.50 to $4.50 and issued to Sandor Capital Master Fund LP 3,268 shares of common stock upon his conversion of the note. | |
On November 8, 2013 the Company amended the $23,529 note issued to Mr. Bleak, the former CEO of the Company, to change the conversion price from $7.50 to $4.50 and issued Mr. Bleak 5,229 shares of common stock upon his conversion of the note. | |
On November 8, 2013, Mr. Bleak cancelled 230,000 shares of common stock owned by him in connection with his resignation from all positions with the Company. | |
On November 8, 2013, contemporaneously with the termination of the Services and Employee Leasing Agreement with MJI, the Company entered into a debt forgiveness agreement with MJI, pursuant to which MJI forgave (i) $1,264,253 owed to it pursuant to outstanding invoices less $175,000 and (ii) all other debt incurred by the Company from January 1, 2011 through the November 8, 2013. The Company agreed to pay MJI $175,000 upon the closing of its future purchase of all or substantially all of the assets of a privately held or public operating company and simultaneous capital raising transaction (the “Financing”) as (i) a cash payment, (ii) conversion into the applicable dollar amount of securities issued by the Company in the Financing upon the same terms provided to the other investors in the Financing or (iii) a combination of (i) and (ii). | |
On February 19, 2015, the Company issued 175,000 shares of common stock to MJI in full satisfaction of all outstanding debts pursuant to a new settlement agreement that supersedes the November 8, 2013 agreement. Up to 5,000 of the shares may be sold per day and the Company has a six month option to repurchase these shares at a purchase price of $0.75 per share. | |
On January 21, 2014, the Company entered into a consulting agreement with Mr. Glenn Kesner pursuant to which Mr. Kesner agreed to provide administrative and management services to the Company for compensation of $7,500 per month and reimbursement for the cost of group family health insurance. Mr. Kesner is the President of Auracana LLC, at the time a majority shareholder of the Company. Mr. Kesner was also appointed as Secretary of the Company on January 21, 2014. On October 15, 2014, Mr. Kesner resigned as the Secretary of the Company. The Company entered into a separation agreement with Mr. Kesner pursuant to which, in exchange for a release of all claims against the Company, Mr. Kesner received a one-time severance payment of $5,000. | |
On January 21, 2014, the Company entered into a securities purchase agreement with Auracana LLC, which was a majority stockholder of the Company at that time and an entity owned by Glenn Kesner, pursuant to which it sold to Auracana LLC its inactive wholly owned subsidiaries H-Hybrid Technologies, Inc., a Florida corporation and RZ Acquisition Corp., a New York corporation. The Company sold the subsidiaries to Auracana LLC for a purchase price of $1.00. At the time of the sale, the inactive subsidiaries had no assets and liabilities. | |
Between March 2014 and May 2014, Marlin Capital Investments, LLC, an entity affiliated with Barry Honig, a holder of 5% or greater of the Company’s securities at the time, loaned a total of $35,000 to the Company without interest (see Note 5). | |
On August 18, 2014, the Company entered into a Mutual Release Agreement (the “Agreement”) whereby Patrick Avery resigned from all of his positions with the Company, including Chief Executive Officer, President, Chief Financial Officer, Treasurer, director and Chairman of the board of directors. Mr. Avery's resignation was not a result of any disagreement with the Company, its policies or management. Pursuant to the Agreement, Mr. Avery released and discharged the Company and its affiliates from any charges, liabilities and obligations. | |
On September 30, 2014, Sandor Capital Master Fund LP purchased 8 million shares of the Company’s common stock at a purchase price of $0.05 per share. | |
On October 8, 2014, the Company entered into an exchange agreement with Sandor Capital Master Fund LP, who had purchased the $35,000 note from Marlin Capital Investments, LLC (see Note 5). Pursuant to the exchange agreement, Sandor Capital Master Fund LP exchanged the note and relinquished any and all other rights it may have pursuant to the note in exchange for 750,000 shares of the Company’s newly designated Series D Convertible Preferred Stock. | |
Also on October 15, 2014, the Company entered into a series of exchange agreements with Mr. Brauser, Mr. Honig and affiliates of Mr. Honig who had previously converted outstanding debentures but who were still owed unpaid interest on the debentures in the aggregate amount of $98,275 (see Note 6). Pursuant to the exchange agreements, the holders exchanged the right to receive unpaid interest and relinquished any and all other rights they may have pursuant to the debentures in exchange for 4,250,000 shares of newly designated Series D Convertible Preferred Stock. | |
On December 10, 2014, the Company purchased certain contracts from GTC for $250,000 pursuant to an asset purchase agreement by and among the Company, its wholly owned subsidiary Orbital Satcom, GTC and World (see Note 4). Also on December 10, 2014, the Company, Orbital Satcom, GTC and World entered into a license agreement pursuant to which GTC granted to Orbital Satcom a fully-paid and irrevocable non-exclusive license to use certain equipment owned by GTC or its affiliates consisting of “appliques” in connection with the purchased contracts (see Note 3). | |
During the year ended December 31, 2014, the Company paid consulting fees of $15,000 to an affiliated company. The President of the affiliated company is the CFO of the Company. |
DERIVATIVE_LIABILITIES
DERIVATIVE LIABILITIES | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Notes to Financial Statements | |||||||||
DERIVATIVE LIABILITIES | NOTE 11 – DERIVATIVE LIABILITIES | ||||||||
In June 2008, a FASB approved guidance related to the determination of whether a freestanding equity-linked instrument should be classified as equity or debt under the provisions of FASB ASC Topic No. 815-40, Derivatives and Hedging – Contracts in an Entity’s Own Stock. The adoption of this requirement will affected accounting for convertible instruments and warrants with provisions that protect holders from declines in the stock price (“down-round” provisions). Warrants with such provisions are no longer recorded in equity and are reclassified as a liability. | |||||||||
Instruments with down-round protection are not considered indexed to a company’s own stock under ASC Topic 815, because neither the occurrence of a sale of common stock by the company at market nor the issuance of another equity-linked instrument with a lower strike price is an input to the fair value of a fixed-for-fixed option on equity shares. | |||||||||
In connection with the issuance of its 6% convertible debentures and related warrants, the Company has determined that the terms of the convertible warrants include down-round provisions under which the exercise price could be affected by future equity offerings. Accordingly, the warrants are accounted for as liabilities at the date of issuance and adjusted to fair value through earnings at each reporting date. The Company has recognized derivative liabilities of $4,936 and $11,942 at December 31, 2014 and 2013, respectively. The gain resulting from the decrease in fair value of this convertible instrument was $7,006 and $32,614 for the years ended December 31, 2014 and 2013, respectively. | |||||||||
The Company used the following assumptions for determining the fair value of the convertible instruments granted under the Black-Scholes option pricing model: | |||||||||
31-Dec-14 | 31-Dec-13 | ||||||||
Expected volatility | 357 | % | 235% - 320 | % | |||||
Expected term | 2.36 Years | 0.48 – 3.61 Years | |||||||
Risk-free interest rate | 0.67 | % | 0.09% - 1.39 | % | |||||
Expected dividend yield | 0 | % | 0 | % |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12 – SUBSEQUENT EVENTS |
On January 22, 2015, the Company changed its legal corporate name to Orbital Tracking Corp. from Great West Resources, Inc. The Company effectuated the name change through a short-form merger pursuant to Chapter 92A of the Nevada Revised Statutes where a subsidiary formed solely for the purpose of the name change was merged with and into the Company, with the Company as the surviving corporation in the merger. The merger had the effect of amending the Company’s Articles of Incorporation to reflect its new legal name. | |
The Company settled in full approximately $156,000 of amount owed to certain vendors on January 23, 2015. On such date the Company paid one vendor $35,000 and issued the vendors an aggregate of 1,650,000 shares of the Company’s common stock. The Company further agreed that upon the close of its next financing, it would pay the vendors additional $10,000 cash, issue 850,000 shares of common stock or securities convertible into 850,000 shares of common stock and convert an aggregate of $56,221 into securities on the same terms offered to investors in the Company’s next qualified financing as defined in the settlement agreements. On February 19, 2015, the closing day of the private placement (see below), the Company issued an aggregate of 197,442 of the Company’s Series C Convertible Preferred Stock pursuant to the settlement agreements. | |
The Company entered into a settlement agreement and release with a vendor pursuant to which the vendor settled in full $21,264 amount owed on January 26, 2015 for legal services rendered. The Company paid the vendor $2,646 as settlement payment and both parties have agreed to mutually release and discharge the Company from any liabilities and future claims arising from such obligation. | |
On February 11, 2015, the Company entered into exchange agreements with each of Sandor Capital Master Fund LP and Point Capital, Inc. Pursuant to the exchange agreements, Sandor Capital Master Fund LP exchanged 8 million shares of common stock for 800,000 shares of the Company’s Series C Convertible Preferred Stock and Point Capital, Inc. exchanged 2 million shares of common stock for 200,000 shares of Series C Convertible Preferred Stock. | |
On February 19, 2015, the Company filed with the Secretary of State of the State of Nevada a Certificate of Designation for the Series E Convertible Preferred Stock, setting forth the rights, powers, and preferences of the Series E Convertible Preferred Stock. Pursuant to the Series E Certificate of Designation, the Company designated 8,746,000 shares of its blank check preferred stock as Series E Convertible Preferred Stock. Each share of Series E Convertible Preferred Stock has a stated value equal to its par value of $0.0001 per share. In the event of a liquidation, dissolution or winding up of the Company, the holder of the Series E Convertible Preferred Stock would have preferential payment and distribution rights over any other class or series of capital stock that provide for Series E Convertible Preferred Stock’s preferential payment and over our common stock. The Series E Convertible Preferred is convertible into ten (10) shares of the Company’s common stock. Each share of Series E Convertible Preferred Stock entitles the holder to vote on all matters voted on by holders of common stock as a single class. With respect to any such vote, each share of Series E Convertible Preferred Stock entitles the holder to cast ten (10) votes per share of Series E Convertible Preferred Stock owned at the time of such vote, subject to the 4.99% beneficial ownership limitation. | |
On February 19, 2015, the Company entered into a Share Exchange Agreement (the “Exchange Agreement”) with Global Telesat Communications Limited, a Private Limited Company formed under the laws of England and Wales (“GTCL”) and all of the holders of the outstanding equity of GTCL (the “GTCL Shareholders”). Upon closing of the transactions contemplated under the Exchange Agreement (the “Share Exchange”), the GTCL Shareholders (7 members) transferred all of the issued and outstanding equity of GTCL to the Company in exchange for (i) an aggregate of 2,540,000 shares of the common stock of the Company and 8,746,000 shares of the newly issued Series E Convertible Preferred Stock of the Company with each share of Series E Convertible Preferred Stock convertible into ten shares of common stock, (ii) a cash payment of $375,000 (the “Cash Payment”) and (iii) a one-year promissory note in the amount of $122,536 (the “Note”). Such exchange caused GTCL to become a wholly owned subsidiary of the Company. | |
The completion of the Share Exchange resulted in a change of control. The Share Exchange was accounted for as a reverse acquisition and re-capitalization. The GTCL Shareholders obtained approximately 39% of voting control on the date of Share Exchange. GTCL was the acquirer for financial reporting purposes and the Company was the acquired company. Consequently, the assets and liabilities and the operations reflected in the historical financial statements prior to the Share Exchange were those of GTCL and was recorded at the historical cost basis of GTCL, and the consolidated financial statements after completion of the Share Exchange included the assets and liabilities of the Company and GTCL, historical operations of GTCL and operations of the Company from the closing date of the Share Exchange. GTCL is one of the largest providers in Europe of retail satellite based hardware, airtime and services through various ecommerce storefronts, and one of the largest providers of personal satellite tracking devices. Following the closing of the Share Exchange, through the Company’s wholly owned subsidiary, GTCL, the Company expands the Company’s global satellite based business launched with the acquisition of various contracts by Orbital Satcom in December 2014 and will allow the Company to operate as a vertically integrated satellite services business with experienced management operating from additional locations in Poole, England in the United Kingdom and Aventura, Florida. | |
Also on February 19, 2015, David Phipps, the founder, principal owner and sole director of GTCL, was appointed President of Orbital Satcom Corp., the Company’s wholly owned subsidiary. Following the transaction, Mr. Phipps was appointed Chief Executive Officer and Chairman of the Board of Directors of the Company. Mr. Phipps, who was one of the GTCL Shareholders, received 400,000 shares of the Company’s common stock and 6,692,000 shares of Series E Convertible Preferred Stock in connection with the Share Exchange of GTCL shares, and was paid the Cash Payment and the Note. The Company also paid Mr. Phipps an additional $25,000 at closing as compensation for transition services previously provided by him to the Company in anticipation of the Share Exchange. | |
Upon the closing of the Share Exchange, Orbital Satcom entered into an employment agreement with Mr. Phipps (the “Phipps Employment Agreement”), whereby Mr. Phipps agreed to serve as the President of Orbital Satcom for a period of two years, subject to renewal, in consideration for an annual salary of $180,000. Additionally, under the terms of the Phipps Employment Agreement, Mr. Phipps shall be eligible for an annual bonus if the Company meets certain criteria, as established by the Board of Directors. Mr. Phipps remains the sole director of GTCL following the closing of the Share Exchange. Mr. Phipps and the Company entered into an Indemnification Agreement at the closing. | |
On February 19, 2015, the Company issued an aggregate of 1,675,000 shares of common stock to certain current consultants, former consultants and employees. These shares consist of (i) 250,000 shares of common stock issued to a consultant as compensation for services relating to the provision of satellite tracking hardware and related services, sales and lead generation, (ii) 1 million shares of common stock issued to a consultant as compensation for the design and delivery of dual mode gsm/Globalstar Simplex tracking devices and related hardware and intellectual property, (iii) 250,000 shares of common stock, subject to a one year lock up, issued to the Company’s controller and (iv) 175,000 shares of common stock issued to MJI in full satisfaction of outstanding debts. MJI agreed to sell only up to 5,000 shares per day and the Company has a six month option to repurchase these shares at a purchase price of $0.75 per share. | |
On February 25, 2015, David Rector resigned as Chief Executive Officer of the Company and David Phipps was appointed Chief Executive Officer. Mr. Rector remains the Chief Financial Officer and a director of the Company. | |
On February 19, 2015, the Company issued to Mr. Rector, the current Chief Financial Officer and a director of the Company and former Chief Executive Officer of the Company, 850,000 shares of the Company’s common stock and a seven year option to purchase 2,150,000 shares of common stock as compensation for services provided to the Company. The options have an exercise price of $0.05 per share, were fully vested on the date of grant and shall expire in February 2022. | |
On February 19, 2015, the Company sold an aggregate of 550,000 units at a per unit purchase price of $2.00, in a private placement to certain accredited investors for gross proceeds of $1,100,000. Each unit consists of: forty (40) shares of the Company’s common stock or, at the election of any purchaser who would, as a result of purchase of units become a beneficial owner of five (5%) percent or greater of the outstanding common stock of the Company, four (4) shares of the Company’s Series C Convertible Preferred Stock, par value $0.0001 per share, with each share convertible into ten (10) shares of common stock. The 550,000 units sale included 15,000 units consisting of an aggregate of 600,000 shares of common stock and 535,000 units consisting of an aggregate of 2,140,000 shares of Series C Convertible Preferred Stock. Included in this 550,000 units private placement was a sale to Frost Gamma Investments Trust, a holder of 5% or more of its securities, of an aggregate of 450,000 units of its securities, with 15,000 units consisting of 40 shares of common stock per unit and 435,000 units consisting of 4 shares of its Series C Convertible Preferred Stock per unit at a purchase price of $2.00 per unit for gross proceeds to the Company of $900,000. | |
Immediately prior to the closing of the private placement, the Company filed an amendment to the Certificate of Designation of Rights and Preferences of its Series C Convertible Preferred Stock, increasing the authorized shares of Series C Convertible Preferred Stock to 4,000,000 from 3,000,000. |
BASIS_OF_PRESENTATION_AND_SUMM1
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Accounting Policies [Abstract] | |||||||||||||
Organization and Description of Business | Organization and Description of Business | ||||||||||||
Orbital Tracking Corp. (the “Company”) was formerly Great West Resources, Inc., a Nevada corporation. The Company is a provider of satellite based hardware, airtime and related services both in the United States and internationally. The Company’s principal focus is on growing the Company’s existing satellite based hardware, airtime and related services business line and developing the Company’s own tracking devices for use by retail customers worldwide. | |||||||||||||
A wholly-owned subsidiary, Orbital Satcom Corp. (“Orbital Satcom”), a Nevada corporation was formed on November 14, 2014. | |||||||||||||
On March 28, 2014, the Company merged with and into a wholly-owned subsidiary of the Company (“Great West”) solely for the purpose of changing its state of incorporation to Nevada from Delaware (the “Reincorporation”), effecting a 1:150 reverse split of its common stock, and changing its name to Great West Resources, Inc. in connection with the plans to enter into the business of potash mining and exploration. During late 2014 the Company abandoned its efforts to enter the potash mining and exploration business. All references in the audited consolidated financial statement and notes thereto have been retroactively restated to reflect the reverse stock split of 1:150. | |||||||||||||
On the effective date of the Merger: | |||||||||||||
(a) Each share of the Company’s Common Stock issued and outstanding immediately prior to the effective date changed and converted into 1/150th fully paid and non-assessable shares of Great West Common Stock; | |||||||||||||
(b) Each share of the Company’s Series A Preferred Stock issued and outstanding immediately prior to the effective date changed and converted into 1/150th fully paid and non-assessable shares of the Great West Series A Preferred Stock; | |||||||||||||
(c) Each share of the Company’s Series D Preferred Stock issued and outstanding immediately prior to the effective date changed and converted into 1/150th fully paid and non-assessable shares of the Great West Series B Preferred Stock; | |||||||||||||
(d) All options to purchase shares of the Company’s Common Stock issued and outstanding immediately prior to the effective date changed and converted into equivalent options to purchase 1/150th of a share of Great West Common Stock at an exercise price of $0.0001 per share; | |||||||||||||
(e) All warrants to purchase shares of the Company’s Common Stock issued and outstanding immediately prior to the effective date changed and converted into equivalent warrants to purchase 1/150th of a share of Great West Common Stock at 150 times the exercise price of such converted warrants; and | |||||||||||||
(f) Each share of Great West Common Stock issued and outstanding immediately prior to the Effective Date were canceled and returned to the status of authorized but unissued Great West Common Stock. | |||||||||||||
The Company was originally incorporated in 1997 in Florida. On April 21, 2010, the Company merged with and into a wholly-owned subsidiary for the purpose of changing its state of incorporation to Delaware and changing its state of incorporation to Delaware, effecting a 2:1 forward split of its common stock, and changing its name to EClips Media Technologies, Inc. On April 25, 2011, the Company changed its name to Silver Horn Mining Ltd. pursuant to a merger with a wholly-owned subsidiary. | |||||||||||||
Discontinued Operations | Discontinued Operations | ||||||||||||
The Company’s former operations were developing and manufacturing products and services, which reduce fuel costs, save power and energy and protect the environment. The products and services were made available for sale into markets in the public and private sectors. In December 2009, the Company discontinued these operations and disposed of certain of its subsidiaries, and prior periods have been restated in the Company’s condensed consolidated financial statements and related footnotes to conform to this presentation. | |||||||||||||
The remaining liabilities for discontinued operations are presented in the consolidated balance sheets under the caption “Liabilities of discontinued operation” and relates to the discontinued operations of developing and manufacturing of energy saving and fuel efficient products and services. The carrying amounts of the major classes of these liabilities as of December 31, 2014 and 2013 are summarized as follows: | |||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||
Assets of discontinued operations | $ | - | $ | - | |||||||||
Liabilities | |||||||||||||
Accounts payables and accrued expenses | $ | (112,397 | ) | $ | (112,397 | ) | |||||||
Liabilities of discontinued operations | $ | (112,397 | ) | $ | (112,397 | ) | |||||||
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation | ||||||||||||
The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). The consolidated financial statements of the Company include the Company and its wholly-owned subsidiary. All material intercompany balances and transactions have been eliminated in consolidation. | |||||||||||||
Use of Estimates | Use of Estimates | ||||||||||||
In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition, and revenues and expenses for the years then ended. Actual results may differ significantly from those estimates. Significant estimates made by management include, but are not limited to, the assumptions used to calculate stock-based compensation, derivative liabilities, preferred deemed dividend and common stock issued for services. | |||||||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents | ||||||||||||
The Company considers all highly liquid investments with a maturity of three months or less when acquired to be cash equivalents. The Company places its cash with a high credit quality financial institution. The Company’s account at this institution is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At December 31, 2014, the Company has not reached bank balances exceeding the FDIC insurance limit on interest bearing accounts. To reduce its risk associated with the failure of such financial institution, the Company evaluates at least annually the rating of the financial institution in which it holds deposits. | |||||||||||||
Accounts receivable and allowance for doubtful accounts | Accounts receivable and allowance for doubtful accounts | ||||||||||||
The Company has a policy of reserving for questionable accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company periodically reviews its accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged to the bad debt expense after all means of collection have been exhausted and the potential for recovery is considered remote. As of December 31, 2014 and 2013, there is no allowance for doubtful accounts. | |||||||||||||
Revenue Recognition | Revenue Recognition | ||||||||||||
The Company recognizes revenue from satellite services when earned, as services are rendered or delivered to customers. Equipment sales revenue is recognized when the equipment is delivered to and accepted by the customer. Only equipment sales are subject to warranty. Historically, the Company has not incurred significant expenses for warranties. | |||||||||||||
The Company’s customers generally purchase a combination of our products and services as part of a multiple element arrangement. The Company’s assessment of which revenue recognition guidance is appropriate to account for each element in an arrangement can involve significant judgment. This assessment has a significant impact on the amount and timing of revenue recognition. | |||||||||||||
Revenue is recognized when all of the following criteria have been met: | |||||||||||||
• | Persuasive evidence of an arrangement exists. Contracts and customer purchase orders are generally used to determine the existence of an arrangement. | ||||||||||||
• | Delivery has occurred. Shipping documents and customer acceptance, when applicable, are used to verify delivery. | ||||||||||||
• | The fee is fixed or determinable. We assess whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. | ||||||||||||
• | Collectability is reasonably assured. We assess collectability based primarily on the creditworthiness of the customer as determined by credit checks and analysis, as well as the customer’s payment history. | ||||||||||||
In accordance with ASC 605-25, Revenue Recognition — Multiple-Element Arrangements, based on the terms and conditions of the product arrangements, the Company believes that its products and services can be accounted for separately as its products and services have value to the Company’s customers on a stand-alone basis. When a transaction involves more than one product or service, revenue is allocated to each deliverable based on its relative fair value; otherwise, revenue is recognized as products are delivered or as services are provided over the term of the customer contract. | |||||||||||||
Cost of Product Sales and Services | Cost of Product Sales and Services | ||||||||||||
Cost of sales consists primarily of materials, labor and overhead costs incurred internally and amounts incurred to contract manufacturers to produce our products, personnel and other implementation costs incurred to install our products and train customer personnel, and customer service and third party original equipment manufacturer costs to provide continuing support to our customers. | |||||||||||||
Shipping and handling costs are included as a component of costs of product sales in the Company’s consolidated statements of operations because the Company includes in revenue the related costs that the Company bill its customers. | |||||||||||||
Prepaid expenses - current and long-term portion | Prepaid expenses – current and long-term portion | ||||||||||||
Prepaid expenses – current and long-term portion amounted to $232,222 and $1,987,455 at December 31, 2014, respectively. Prepaid expenses include prepayments in cash for accounting fees and prepayments in equity instruments license fees which are being amortized over the terms of their respective agreements. The current portion consists primarily of costs paid for future services which will occur within a year and the long-term portion consist primarily of costs paid for future services after one year. | |||||||||||||
Goodwill and other intangible assets | Goodwill and other intangible assets | ||||||||||||
In accordance with ASC 350-30-65, “Intangibles - Goodwill and Others”, the Company assesses the impairment of identifiable intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable. | |||||||||||||
Factors the Company considers to be important which could trigger an impairment review include the following: | |||||||||||||
1 | Significant underperformance relative to expected historical or projected future operating results; | ||||||||||||
2 | Significant changes in the manner of use of the acquired assets or the strategy for the overall business; and | ||||||||||||
3 | Significant negative industry or economic trends. | ||||||||||||
When the Company determines that the carrying value of intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge. The Company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows. | |||||||||||||
Impairment of long-lived assets | Impairment of long-lived assets | ||||||||||||
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not consider it necessary to record any impairment charges during the years ended December 31, 2014 and 2013 respectively. | |||||||||||||
Fair value of financial instruments | Fair value of financial instruments | ||||||||||||
The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures”, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing US GAAP that require the use of fair value measurements which establishes a framework for measuring fair value and expands disclosure about such fair value measurements. | |||||||||||||
ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: | |||||||||||||
Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities | |||||||||||||
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data | |||||||||||||
Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. | |||||||||||||
The following table presents a reconciliation of the derivative liability measured at fair value on a recurring basis using significant unobservable input (Level 3) from January 1, 2013 to December 31, 2014: | |||||||||||||
Conversion feature | Warrant liability | Total | |||||||||||
derivative liability | |||||||||||||
Balance at January 1, 2013 | $ | 14,996 | $ | 35,892 | $ | 50,888 | |||||||
Reclassification of derivative liability upon conversion of debt to equity | (6,332 | ) | — | (6,332 | ) | ||||||||
Change in fair value included in earnings | (8,664 | ) | (23,950 | ) | (32,614 | ) | |||||||
Balance at December 31, 2013 | — | 11,942 | 11,942 | ||||||||||
Change in fair value included in earnings | — | (7,006 | ) | (7,006 | ) | ||||||||
Balance at December 31, 2014 | $ | — | $ | 4,936 | $ | 4,936 | |||||||
The Company did not identify any other assets or liabilities that are required to be presented on the consolidated balance sheets at fair value in accordance with the accounting guidance. The carrying amounts reported in the balance sheet for cash, accounts payable, and accrued expenses approximate their estimated fair market value based on the short-term maturity of the instruments. | |||||||||||||
Stock Based Compensation | Stock Based Compensation | ||||||||||||
Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. | |||||||||||||
Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date. | |||||||||||||
Income Taxes | Income Taxes | ||||||||||||
The Company accounts for income taxes pursuant to the provision of ASC 740-10, “Accounting for Income Taxes” (“ASC 740-10”) which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized. | |||||||||||||
The Company follows the provision of ASC 740-10 related to Accounting for Uncertain Income Tax Positions. When tax returns are filed, there may be uncertainty about the merits of positions taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. | |||||||||||||
Tax positions that meet the more likely than not recognition threshold are measured at the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefit associated with tax positions taken that exceed the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. | |||||||||||||
The Company believes its tax positions are all more likely than not to be upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits. | |||||||||||||
The Company has adopted ASC 740-10-25, “Definition of Settlement”, which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion and examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they are filed. | |||||||||||||
Earnings per Common Share | Earnings per Common Share | ||||||||||||
Net income (loss) per common share is calculated in accordance with ASC Topic 260: Earnings Per Share (“ASC 260”). Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. The computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average shares outstanding as they would be anti-dilutive. In periods where the Company has a net loss, all dilutive securities are excluded. | |||||||||||||
The following are dilutive common stock equivalents during the year ended: | |||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||
Convertible preferred stock | 100,053,330 | 53,330 | |||||||||||
Stock Options | 60,000 | - | |||||||||||
Stock Warrants | 245,000 | 245,000 | |||||||||||
Total | 100,358,330 | 298,330 | |||||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements | ||||||||||||
In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements—Going Concern.” The provisions of ASU No. 2014-15 require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently assessing the impact of ASU No. 2014-15 on the Company’s consolidated financial statements once adopted. | |||||||||||||
Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. |
BASIS_OF_PRESENTATION_AND_SUMM2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Accounting Policies [Abstract] | |||||||||||||
Carrying amount of the major classes of liabilities | |||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||
Assets of discontinued operations | $ | - | $ | - | |||||||||
Liabilities | |||||||||||||
Accounts payables and accrued expenses | $ | (112,397 | ) | $ | (112,397 | ) | |||||||
Liabilities of discontinued operations | $ | (112,397 | ) | $ | (112,397 | ) | |||||||
Reconciliation of the derivative liability measured at fair value | |||||||||||||
Conversion feature | Warrant liability | Total | |||||||||||
derivative liability | |||||||||||||
Balance at January 1, 2013 | $ | 14,996 | $ | 35,892 | $ | 50,888 | |||||||
Reclassification of derivative liability upon conversion of debt to equity | (6,332 | ) | — | (6,332 | ) | ||||||||
Change in fair value included in earnings | (8,664 | ) | (23,950 | ) | (32,614 | ) | |||||||
Balance at December 31, 2013 | — | 11,942 | 11,942 | ||||||||||
Change in fair value included in earnings | — | (7,006 | ) | (7,006 | ) | ||||||||
Balance at December 31, 2014 | $ | — | $ | 4,936 | $ | 4,936 | |||||||
Dilutive securities | The following are dilutive common stock equivalents during the year ended: | ||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||
Convertible preferred stock | 100,053,330 | 53,330 | |||||||||||
Stock Options | 60,000 | - | |||||||||||
Stock Warrants | 245,000 | 245,000 | |||||||||||
Total | 100,358,330 | 298,330 |
PREPAID_LICENSE_FEES_Tables
PREPAID LICENSE FEES (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||
Future amortization of prepaid license fees | Future amortization of prepaid license fees is as follows: | ||||
2015 | $ | 222,222 | |||
2016 | 222,222 | ||||
2017 | 222,222 | ||||
2018 | 222,222 | ||||
2019 and thereafter | 1,320,789 | ||||
Total | $ | 2,209,677 |
INTANGIBLE_ASSETS_Tables
INTANGIBLE ASSETS (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Future amortization of intangible assets | Amortization of customer contracts will be included in general and administrative expenses. The Company shall begin amortizing the customer contracts in January 2015. Future amortization of intangible assets is as follows: | ||||
2015 | $ | 25,000 | |||
2016 | 25,000 | ||||
2017 | 25,000 | ||||
2018 | 25,000 | ||||
2019 and thereafter | 150,000 | ||||
Total | $ | 250,000 | |||
STOCKHOLDERS_EQUITY_DEFICIT_Ta
STOCKHOLDERS' EQUITY (DEFICIT) (Tables) | 3 Months Ended | |||||||||||||||||||
Jun. 30, 2014 | ||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||
Outstanding stock options | Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | |||||||||||||||||
Balance at January 1, 2014 | — | $ | — | — | ||||||||||||||||
Granted | 60,000 | 0.015 | 4 | |||||||||||||||||
Exercised | — | — | — | |||||||||||||||||
Forfeited | — | — | — | |||||||||||||||||
Cancelled | — | — | — | |||||||||||||||||
Balance outstanding at December 31, 2014 | 60,000 | $ | 0.015 | 3.06 | ||||||||||||||||
Options exercisable at December 31, 2014 | 60,000 | $ | 0.015 | |||||||||||||||||
Weighted average fair value of options granted during the period | $ | 3 | ||||||||||||||||||
Stock warrants outstanding | The following table summarizes the Company’s stock warrants outstanding at December 31, 2014: | |||||||||||||||||||
Warrants Outstanding | Warrants Exercisable | |||||||||||||||||||
Exercise | Number Outstanding at December 31, 2014 | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | Number Exercisable at December 31, 2014 | Weighted Average Exercise Price | |||||||||||||||
Price | ||||||||||||||||||||
$ | 3.75 | 240,000 | 0.29 Years | $ | 3.75 | 240,000 | $ | 3.75 | ||||||||||||
4.5 | 5,000 | 2.36 Years | 4.5 | 5,000 | 4.5 | |||||||||||||||
$ | 3.77 | 245,000 | 1.36 Years | $ | 3.77 | 245,000 | $ | 3.77 | ||||||||||||
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
Differences between effective tax rate and the statutory federal rate | The table below summarizes the differences between the Company’s effective tax rate and the statutory federal rate as follows for the year ended December 31, 2014 and 2013: | ||||||||
December 31, 2014 | December 31, 2013 | ||||||||
Tax expense (benefit) computed at "expected" statutory rate | $ | (139,800 | ) | $ | 212,200 | ||||
State income taxes, net of benefit | (13,100 | ) | 38,111 | ||||||
Permanent differences : | |||||||||
Stock based compensation and consulting | 61,100 | - | |||||||
Loss (gain) from change in fair value of derivative liability | (2,300 | ) | (11,088 | ) | |||||
Amortization of debt discount and other non-cash interest | - | 34,482 | |||||||
Increase (decrease) in valuation allowance | (94,100 | ) | (273,705 | ) | |||||
Net income tax benefit | $ | - | $ | - | |||||
Deferred tax assets and liabilities | December 31, 2014 | December 31, 2013 | |||||||
Deferred tax assets: | |||||||||
Net operating loss carryforward | $ | 9,824,400 | $ | 9,730,279 | |||||
Total deferred tax assets | $ | 9,824,400 | $ | 9,730,279 | |||||
Deferred tax liabilities: | |||||||||
Book basis of property and equipment in excess of tax basis | $ | - | $ | - | |||||
Total deferred tax liabilities | $ | - | $ | - | |||||
Net deferred tax asset before valuation allowance | $ | 9,824,400 | $ | 9,730,279 | |||||
Less: valuation allowance | (9,824,400 | ) | (9,730,279 | ) | |||||
Net deferred tax asset | $ | - | $ | - |
DERIVATIVE_LIABILITIES_Tables
DERIVATIVE LIABILITIES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Notes to Financial Statements | |||||||||
Assumptions for fair value of convertible instruments granted under Black-Scholes option pricing model | The Company used the following assumptions for determining the fair value of the convertible instruments granted under the Black-Scholes option pricing model: | ||||||||
31-Dec-14 | 31-Dec-13 | ||||||||
Expected volatility | 357 | % | 235% - 320 | % | |||||
Expected term | 2.36 Years | 0.48 – 3.61 Years | |||||||
Risk-free interest rate | 0.67 | % | 0.09% - 1.39 | % | |||||
Expected dividend yield | 0 | % | 0 | % | |||||
BASIS_OF_PRESENTATION_AND_SUMM3
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Basis Of Presentation And Summary Of Significant Accounting Policies Details | ||
Assets of discontinued operations | ||
Liabilities | ||
Accounts payables and accrued expenses | -112,397 | -112,397 |
Liabilities of discontinued operations | ($112,397) | ($112,397) |
BASIS_OF_PRESENTATION_AND_SUMM4
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Balance at Beginning of Period | $11,942 | $50,888 |
Reclassification of derivative liability upon conversion of debt to equity | -6,332 | |
Change in fair value of derivative liability | -7,006 | -32,614 |
Balance at End of Period | 4,936 | 11,942 |
Conversion Feature Derivative Liability | ||
Balance at Beginning of Period | 14,996 | |
Reclassification of derivative liability upon conversion of debt to equity | -6,332 | |
Change in fair value of derivative liability | -8,664 | |
Balance at End of Period | ||
Warrant Liability | ||
Balance at Beginning of Period | 11,942 | 35,892 |
Reclassification of derivative liability upon conversion of debt to equity | ||
Change in fair value of derivative liability | -7,006 | -23,950 |
Balance at End of Period | $4,936 | $11,942 |
BASIS_OF_PRESENTATION_AND_SUMM5
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Dilutive common stock equivalents | 100,358,330 | 298,330 |
Convertible Preferred Stock [Member] | ||
Dilutive common stock equivalents | 100,053,330 | 53,330 |
Stock Option [Member] | ||
Dilutive common stock equivalents | 60,000 | |
Stock Warrant [Member] | ||
Dilutive common stock equivalents | 245,000 | 245,000 |
BASIS_OF_PRESENTATION_AND_SUMM6
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | 32 Months Ended | 0 Months Ended | ||
Mar. 28, 2014 | Apr. 21, 2010 | Dec. 31, 2014 | Dec. 31, 2014 | Mar. 28, 2014 | Dec. 31, 2013 | |
State of incorporation | Delaware | Delaware | Nevada | |||
Date of Incorporation | 1-Jan-97 | 21-Apr-10 | ||||
Date of Merger | 28-Mar-14 | |||||
Reverse stock split | 0.145833333 | 2:01 | ||||
Insurance by the FDIC, maximum | $250,000 | $250,000 | ||||
Prepaid expenses, current | 232,222 | 232,222 | ||||
Prepaid expenses, noncurrent | $1,987,455 | $1,987,455 | ||||
Intangible asset, amortization period | 10 years | |||||
Series A Preferred Stock [Member] | ||||||
Reverse stock split | Each share of the CompanyBs Series A Preferred Stock issued and outstanding immediately prior to the effective date changed and converted into 1/150th fully paid and non-assessable shares of the Great West Series A Preferred Stock; | |||||
Series D Preferred Stock | ||||||
Reverse stock split | Each share of the CompanyBs Series D Preferred Stock issued and outstanding immediately prior to the effective date changed and converted into 1/150th fully paid and non-assessable shares of the Great West Series B Preferred Stock; | |||||
Equity Option [Member] | ||||||
Reverse stock split | All options to purchase shares of the CompanyBs Common Stock issued and outstanding immediately prior to the effective date changed and converted into equivalent options to purchase 1/150th of a share of Great West Common Stock at an exercise price of $0.0001 per share; | |||||
Warrant [Member] | ||||||
Reverse stock split | All warrants to purchase shares of the CompanyBs Common Stock issued and outstanding immediately prior to the effective date changed and converted into equivalent warrants to purchase 1/150th of a share of Great West Common Stock at 150 times the exercise price of such converted warrants; and | |||||
Common Stock | ||||||
Reverse stock split | Each share of the CompanyBs Common Stock issued and outstanding immediately prior to the effective date changed and converted into 1/150th fully paid and non-assessable shares of Great West Common Stock; | |||||
Orbital Satcom [Member] | ||||||
State of incorporation | Nevada | |||||
Date of Incorporation | 14-Nov-14 | |||||
GreatWest [Member] | Common Stock | ||||||
Reverse stock split | Each share of Great West Common Stock issued and outstanding immediately prior to the Effective Date were canceled and returned to the status of authorized but unissued Great West Common Stock. |
GOING_CONCERN_CONSIDERATIONS_D
GOING CONCERN CONSIDERATIONS (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Going Concern Considerations Details Narrative | ||
Accumulated (deficit) | ($49,513,552) | ($48,969,044) |
Working capital (deficit) | 379,000 | |
Net (Loss) | ($411,234) | $624,118 |
PREPAID_LICENSE_FEES_Details
PREPAID LICENSE FEES (Details) (USD $) | Dec. 31, 2014 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
2015 | $222,222 |
2016 | 222,222 |
2017 | 222,222 |
2018 | 222,222 |
2019 and thereafter | 1,320,789 |
Total | $2,209,677 |
PREPAID_LICENSE_FEES_Details_N
PREPAID LICENSE FEES (Details Narrative) (USD $) | 12 Months Ended | 0 Months Ended | |
Dec. 31, 2014 | Dec. 10, 2014 | Dec. 31, 2013 | |
Amortization expense | $12,545 | ||
Prepaid expenses, current | 232,222 | ||
Prepaid expenses, noncurrent | 1,987,455 | ||
GTC Agreement [Member] | |||
Shares issued inconsideration of agreement | 2,222,222 | ||
Discount provided | 25.00% | ||
Fair value shares issued | $1 | ||
Prepaid expenses, current | 222,222 | ||
Prepaid expenses, noncurrent | $1,987,455 |
INTANGIBLE_ASSETS_Details
INTANGIBLE ASSETS (Details) (USD $) | Dec. 31, 2014 |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2015 | $25,000 |
2016 | 25,000 |
2017 | 25,000 |
2018 | 25,000 |
2019 and thereafter | 150,000 |
Total | $250,000 |
INTANGIBLE_ASSETS_Details_Narr
INTANGIBLE ASSETS (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Purchase price of contract | $250,000 |
CONVERTIBLE_DEBENTURES_AND_NOT1
CONVERTIBLE DEBENTURES AND NOTES PAYABLE (Details Narrative) (USD $) | 12 Months Ended | 0 Months Ended | 1 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Oct. 15, 2014 | Nov. 08, 2013 | Dec. 31, 2013 | Nov. 08, 2014 | |
Accrued Interest | $0 | $98,275 | $98,275 | |||
Amortization of debt discount | 33,272 | |||||
Balance payable, convertible debt | 0 | |||||
Series D Preferred Stock | ||||||
Debt converted to shares, shares | 4,250,000 | |||||
Convertible Debt [Member] | ||||||
Debt Instrument face amount | 137,500 | |||||
Interest Rate | 6.00% | |||||
Conversion Price per share | $7.50 | |||||
Debt converted to shares, face amount | 137,500 | |||||
Debt converted to shares, shares | 30,556 | |||||
Interest expense | 38,500 | |||||
Accrued Interest | 38,500 | |||||
Convertible Notes [Member] | ||||||
Conversion Price per share | $7.50 | $4.50 | ||||
Modified notes payable | 105,882 | |||||
Debt converted to shares, shares | 23,529 | |||||
Interest expense | 29,647 | |||||
Accrued Interest | $98,275 |
STOCKHOLDERS_EQUITY_DEFICIT_De
STOCKHOLDERS' EQUITY (DEFICIT) (Details) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Equity [Abstract] | |
Balance at beginning of period | |
Granted | 60,000 |
Exercised | |
Forfeited | |
Cancelled | 60,000 |
Options, Outstanding, Number | 60,000 |
Stock option/warrant outstanding, Weighted Average Exercise Price, Beginning Balance | |
Stock option/warrant outstanding, Weighted Average Exercise Price, Granted | $0.02 |
Stock option/warrant outstanding, Weighted Average Exercise Price, Ending Balance | $0.02 |
Stock option/warrant outstanding, Weighted Average Exercise Price, Exercisable, Ending Balance | $0.02 |
Weighted average fair value of options granted during the period | $0.30 |
Weighted Average Remaining Contractual Life (Years), Granted options | 4 years |
Weighted Average Remaining Contractual Life (Years), outstanding | 3 years 3 days |
STOCKHOLDERS_EQUITY_DEFICIT_De1
STOCKHOLDERS' EQUITY (DEFICIT) (Details 1) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Warrants outstanding at end of period | 245,000 | 245,000 |
Warrant $3.75 [Member] | ||
Warrant exercise price | $0.38 | |
Warrants outstanding at end of period | 240,000 | |
Weighted Average Remaining Contractual Life | 3 months 14 days | |
Number exercisable at end of period | 240,000 | |
Weighted Average Exercise Price | $3.75 | |
Warrant $4.50 [Member] | ||
Warrant exercise price | $4.50 | |
Warrants outstanding at end of period | 5,000 | |
Weighted Average Remaining Contractual Life | 2 years 4 months 9 days | |
Number exercisable at end of period | 5,000 | |
Weighted Average Exercise Price | $4.50 | |
Warrant Total [Member] | ||
Warrant exercise price | $3.77 | |
Warrants outstanding at end of period | 245,000 | |
Weighted Average Remaining Contractual Life | 1 year 9 months 7 days | |
Number exercisable at end of period | 245,000 | |
Weighted Average Exercise Price | $3.77 |
STOCKHOLDERS_EQUITY_DEFICIT_De2
STOCKHOLDERS' EQUITY (DEFICIT) (Details Narrative) (USD $) | 1 Months Ended | 12 Months Ended | 0 Months Ended | ||
Nov. 14, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Oct. 15, 2014 | Mar. 25, 2015 | |
Preferred stock, shares authorized | 20,000,000 | 10,000,000 | |||
Preferred stock par value | $0.00 | $0.00 | |||
Common stock, shares authorized | 200,000,000 | 200,000,000 | |||
Common stock par value | $0.00 | $0.00 | |||
Common stock, shares issued | 13,733,172 | 1,510,975 | |||
Common stock, shares outstanding | 13,733,172 | 1,510,975 | |||
Volatility rate | 35.70% | ||||
Expected term | 2 years 4 months 9 days | ||||
Risk-free interest rate | 0.67% | ||||
Stock options, value | $260,000 | ||||
Warrants outstanding at end of period | 245,000 | 245,000 | |||
Private placement units sold | 50,000 | 10,000,000 | |||
Private placement unit price | $2 | ||||
Gross proceeds from private placement | 100,000 | 500,000 | |||
Common shares issued in Private Placement | 2,000,000 | 8,000,000 | |||
Shares issued upon conversion of debt, debt amount cancelled | 243,382 | ||||
Preferred stock, Series B | |||||
Preferred stock, shares authorized | 30,000 | ||||
Preferred stock par value | $0.00 | ||||
Preferred stock, shares outstanding | 6,666 | 6,666 | |||
Preferred stock, Series C | |||||
Preferred stock, shares authorized | 4,000,000 | 4,000,000 | |||
Preferred stock par value | $0.00 | ||||
Preferred stock, shares outstanding | 0 | 0 | |||
Series D Preferred Stock | |||||
Preferred stock, shares authorized | 5,000,000 | ||||
Preferred stock par value | $0.00 | ||||
Preferred stock, shares outstanding | 5,000,000 | 0 | |||
Shares issued upon conversion of debt | 4,250,000 | ||||
Series D Preferred Stock | Convertible Debt [Member] | |||||
Shares issued upon conversion of debt | 750,000 | ||||
Shares issued upon conversion of debt, debt amount cancelled | 35,000 | ||||
Deemed dividend | 133,274 | ||||
Series D Preferred Stock | Convertible Debt 2 [Member] | |||||
Shares issued upon conversion of debt | 4,250,000 | ||||
Shares issued upon conversion of debt, debt amount cancelled | 98,275 | ||||
Preferred Stock Series A | |||||
Preferred stock, shares authorized | 20,000 | ||||
Preferred stock par value | $0.00 | ||||
Preferred stock, shares outstanding | 20,000 | ||||
Bhansali | |||||
Non-employee director monthly fees | 1,000 | ||||
Non-employee option issued | 30,000 | ||||
Exercise price, per share, for common stock | $0.02 | ||||
Severance payment | 2,500 | ||||
Volatility rate | 260.00% | ||||
Expected term | 4 years | ||||
Risk-free interest rate | 0.81% | ||||
Uribe | |||||
Non-employee director monthly fees | 1,000 | ||||
Non-employee option issued | 30,000 | ||||
Exercise price, per share, for common stock | $0.02 | ||||
Valued common shares at the fair market value, per share | $3 | ||||
Severance payment | 2,500 | ||||
Valued common shares at the fair market value | 179,834 | ||||
Volatility rate | 260.00% | ||||
Expected term | 4 years | ||||
Risk-free interest rate | 0.81% | ||||
Stock based consulting expense | 179,834 | ||||
Bleak [Member] | |||||
Shares cancelled, number of shares | 230,000 | ||||
Shares cancelled, value | 23 | ||||
2014 Plan | |||||
Share based compensation, shares issuable | 34,000,000 | ||||
Share based compensation, vesting terms | issuance no later than sixty (60) days following the date of shareholder approval of the Plan in connection with (i) a private placement of the CompanyBs securities in which the Corporation receives gross proceeds of at least $1,000,000 and (ii) an acquisition of at least 50 mining leases and/or claims in the Holbrook Basin. | ||||
Stock based consulting expense | 179,834 | ||||
Stock options, value | $80,000 |
LOAN_PAYABLE_RELATED_PARTY_Det
LOAN PAYABLE -RELATED PARTY (Details Narrative) (USD $) | 3 Months Ended | 1 Months Ended | |
30-May-14 | Nov. 07, 2014 | Dec. 31, 2014 | |
Net proceeds from a loan | $35,000 | ||
Related party loan | $35,000 | $0 | |
Discharge of Debt 2 [Member] | |||
Preferred shares issued in cancellation of debt | 4,250,000 | ||
Discharge of Debt 1 [Member] | |||
Preferred shares issued in cancellation of debt | 750,000 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Income Tax Disclosure [Abstract] | ||
Tax benefit computed at "expected" statutory rate | ($139,800) | $212,200 |
State income taxes, net of benefit | -13,100 | 38,111 |
Permanent differences: | ||
Stock based compensation and consulting | 61,100 | |
Loss (gain) from change in fair value of derivative liability | -2,300 | -11,088 |
Amortization of debt discount and other non-cash interest | 34,482 | |
Increase (decrease) in valuation allowance | -94,100 | -273,705 |
Net income tax benefit |
INCOME_TAXES_Detail_1
INCOME TAXES (Detail 1) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred tax assets: | ||
Net operating loss carryforward | $9,824,400 | $9,730,279 |
Total deferred tax assets | 9,824,400 | 9,730,279 |
Deferred tax liabilities: | ||
Book basis of property and equipment in excess of tax basis | ||
Total deferred tax liabilities | ||
Net deferred tax asset before valuation allowance | 9,824,400 | 9,730,279 |
Less: valuation allowance | -9,824,400 | -9,730,279 |
Net deferred tax asset |
INCOME_TAXES_Details_Narrative
INCOME TAXES (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforward | $9,824,400 | $9,730,279 |
Increase in valuation allowance | $94,000 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Aug. 01, 2011 | Jun. 01, 2011 | |
Management fee payable | $25,000 | $15,000 | ||
MJI [Member] | ||||
Management fees | 0 | 225,000 | ||
Debt forgiveness | 175,000 | |||
Gain on settlement of debt | 1,089,253 | |||
Bond [Member] | ||||
Debt forgiveness | 196,619 | |||
Gain on settlement of debt | $196,619 |
DERIVATIVE_LIABILITIES_Details
DERIVATIVE LIABILITIES (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Expected volatility | 35.70% | |
Expected term | 2 years 4 months 9 days | |
Risk-free interest rate (annual) | 0.67% | |
Expected dividend yield | $0 | |
Minimum [Member] | ||
Expected volatility | 235.00% | |
Expected term | 5 months 23 days | |
Risk-free interest rate (annual) | 0.90% | |
Maximum [Member] | ||
Expected volatility | 320.00% | |
Expected term | 3 years 7 months 10 days | |
Risk-free interest rate (annual) | 1.39% |
DERIVATIVE_LIABILITIES_Details1
DERIVATIVE LIABILITIES (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Notes to Financial Statements | |||
Derivative liabilities | $4,936 | $11,942 | $50,888 |
Loss resulting from increase in fair value of convertible instrument | ($7,006) | ($32,614) |