Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2012 |
Accounting Policies [Abstract] | ' |
Going Concern Considerations | ' |
Going Concern Considerations |
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The accompanying financial statements have been prepared assuming the Company will continue as a going concern. Because of the recurring operating losses and the excess of current liabilities over current assets, there is substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on attaining profitable operations, restructuring its financial obligations, and obtaining additional outside financing. The Company has funded losses from operations primarily from the issuance of debt and the sale of the Company’s common stock. The Company believes that the issuance of debt and the sale of the Company’s common stock will continue to fund operating losses in the short-term until the Company can generate revenues sufficient to fund its operations. |
Use of Estimates | ' |
Use of Estimates |
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The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions principally relate to the fair value and forfeiture rates of stock based transactions, and long-lived asset depreciation and amortization, and potential impairment. |
Cash and Cash Equivalents | ' |
Cash and Cash Equivalents |
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Cash equivalents include short-term, highly liquid investments with maturities of three months or less at the time of acquisition. |
Concentration of Risk | ' |
Concentration of Risk |
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A financial instrument which potentially subjects the Company to concentrations of credit risk is cash. The Company places its cash with financial institutions deemed by management to be of high credit quality. The Federal Deposit Insurance Corporation (“FDIC”) provides basic deposit coverage with limits to $250,000 per owner. At December 31, 2012, there were no uninsured deposits. |
Financial Instruments | ' |
Financial Instruments |
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Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. ASC 820-10 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. FASB ASC 820 establishes a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels: |
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Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and must be used to measure fair value whenever available. |
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Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. |
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Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. For example, level 3 inputs would relate to forecasts of future earnings and cash flows used in a discounted future cash flows method. |
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The recorded amounts of financial instruments, including cash equivalents accounts payable, other payables and due to shareholders, approximate their market values as of December 31, 2012. |
Income Taxes | ' |
Income Taxes |
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We account for income taxes under the provision of Accounting Standards Codification 740, “Income Taxes”, or ASC 740. As of December 31, 2012 and 2011, there were no unrecognized tax benefits included in the consolidated balance sheets that would, if recognized, affect the effective tax rate. Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense. We had no accrual for interest or penalties on our balance sheets at December 31, 2012 and 2011, respectively and have not recognized interest and/or penalties in the consolidated statement of operations for the years ended December 31, 2012 and 2011. We are subject to taxation in the United States and California. |
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The Company is subject to taxation in the United States and California. The Company does not have any income tax provision for the years ended December 31, 2012 and 2011 due to current and historical losses. |
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The provision for income taxes using the statutory federal income tax rate of 34% in 2012 and 2011 as compared to the company’s effective tax rate is summarized as follows: |
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| | for the year ended | | | for the year ended | |
| | December 31, | | | December 31, | |
| | 2012 | | | 2011 | |
Federal taxes | | $ | (5,924 | ) | | $ | (28,264 | ) |
State taxes | | | (1,671 | ) | | | (7,971 | ) |
Taxes | | | - | | | | - | |
Change in Valuation Allowance | | | 7,595 | | | | 36,236 | |
Income Tax Expense | | $ | - | | | $ | - | |
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At December 31, 2012 and 2011, the Company had deferred tax assets of $4,047,649 and $4,040,055, respectively. Due to uncertainties surrounding the Company’s ability to generate future taxable income to realize these assets, a full valuation allowance has been established to offset the net deferred tax asset. Additionally, the future utilization of the Company’s net operating loss to offset future taxable income may be subject to an annual limitation, pursuant to Internal Revenue Code Section 382, as a result of ownership changes that may have occurred previously or that could occur in the future. The Company has not performed a Section 382 analysis to determine the limitation of the net operating loss and research and development credit carry forwards. |
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Significant components of the company’s deferred tax assets are as follows: |
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| | December 31, | | | December 31, | |
| | 2012 | | | 2011 | |
NOL Carryforward | | $ | 4,047,649 | | | $ | 4,040,055 | |
Valuation Allowance | | | (4,047,649 | ) | | | (4,040,055 | ) |
Net deferred tax assets | | $ | - | | | $ | - | |
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Realization of the deferred tax assets is dependent upon the generation of future taxable income, the amount and timing of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by approximately $7,595 and $36,236 in 2012 and 2011, respectively. |
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As of December 31, 2012, the Company had federal and California net operating loss carryforwards of approximately $12 million. The federal and California tax loss carry forwards will begin to expire in 2025 and 2020, respectively, unless previously utilized. |
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The impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has 50% or less likelihood of being sustained upon examination. The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded. |
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The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties at December 31, 2012 and 2011, and has not recognized interest and/or penalties in the consolidated statements of operations for the years ended December 31, 2012 and 2011. The Company’s tax years for 2011 and forward are subject to examination by the United States and state tax authorities due to the carry forward of unutilized net operating losses |
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The tax years that remain subject to examination by major taxing jurisdictions are those for the years ended December 31, 2006-2012. |
Basic Net Loss per Share of Common Stock | ' |
Basic Net Loss per Share of Common Stock |
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In accordance with US GAAP, basic net loss per common share is based on the weighted average number of shares outstanding during the periods presented. Diluted earnings per share are computed using weighted average number of common shares plus dilutive common share equivalents outstanding during the period. There is a total of $0 and $316,036 in convertible notes and accrued interest outstanding at December 31, 2012 and 2011, respectively, which are convertible into 0 and 1,529,907,108 shares of common stock, respectively, the common stock equivalents resulting from the issuance of these stock options have not been included in the per share calculations because such inclusion would be anti-dilutive. |
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| | for the year ended | | | for the year ended | |
| | December 31, | | | December 31, | |
| | 2012 | | | 2011 | |
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Numerator – (loss) | | $ | (24,588 | ) | | $ | (91,102 | ) |
Denominator – weighted avg. number of shares outstanding | | | 2,750,000 | | | | 935,098 | |
Loss per share – basic and diluted | | $ | (0.01 | ) | | $ | (0.10 | ) |