Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Mar. 31, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'Digital Development Group Corp | ' |
Document Type | '10-K | ' |
Document Period End Date | 31-Dec-13 | ' |
Amendment Flag | 'false | ' |
Entity Central Index Key | '0001379699 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Common Stock, Shares Outstanding | ' | 106,340,371 |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Voluntary Filers | 'No | ' |
Entity Well-known Seasoned Issuer | 'No | ' |
Document Fiscal Year Focus | '2013 | ' |
Document Fiscal Period Focus | 'FY | ' |
Entity Public Float | ' | $1,882,211 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Current Assets | ' | ' |
Cash | $6,371 | $831 |
Prepaid expense | 217,287 | 332,977 |
Total current assets | 223,658 | 333,808 |
Equipment, net | ' | 15,429 |
Intangible assets, net | 0 | 247,142 |
Debt issuance costs | 84,810 | 127,214 |
TOTAL ASSETS | 308,468 | 723,593 |
Current Liabilities | ' | ' |
Bank overdraft | 0 | 1,616 |
Accounts payable | 340,864 | 28,889 |
Accrued liabilities | 805,152 | 143,840 |
Related party note payable | 126,160 | 0 |
Other liabilities | 0 | 60,000 |
Notes payable, net of discount | 2,286,869 | 612,190 |
Derivative liability | 4,272,031 | 137,353 |
Total current liabilities | 7,831,076 | 983,888 |
Contingent liability (note 11) | 1,137,708 | 143,488 |
TOTAL LIABILITIES | 8,968,784 | 1,127,376 |
STOCKHOLDERS' DEFICIT | ' | ' |
Common stock, 500,000,000 shares authorized, par value $0.001, 81,280,441 and 57,050,000 shares issued and outstanding | 81,280 | 57,050 |
Common stock subscribed | 45,000 | 0 |
Additional paid in capital (1) | 3,369,583 | 1,097,817 |
Accumulated deficit | -12,156,179 | -1,558,650 |
Total stockholders' deficit | -8,660,316 | -403,783 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $308,468 | $723,593 |
CONSOLIDATED_BALANCE_SHEETS_PA
CONSOLIDATED BALANCE SHEETS PARENTHETICALS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Parentheticals | ' | ' |
Common Stock, par value | $0.00 | $0.00 |
Common Stock, shares authorized | 500,000,000 | 500,000,000 |
Common Stock, shares issued | 81,280,441 | 57,050,000 |
Common Stock, shares outstanding | 81,280,441 | 57,050,000 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 11 Months Ended | 12 Months Ended |
Dec. 31, 2012 | Dec. 31, 2013 | |
Operating expenses | ' | ' |
General and administrative | $1,725,086 | $4,942,160 |
Total operating expenses | 1,725,086 | 4,942,160 |
Operating loss | -1,725,086 | -4,881,849 |
Other (income) expenses | ' | ' |
Interest expense | 682,554 | 1,345,414 |
(Gain) loss on derivative liability | -848,990 | 4,370,266 |
Revenue | ' | ' |
Net revenue | 0 | 60,311 |
Total other (income) expenses | -166,436 | 5,715,680 |
Loss before income taxes | -1,558,650 | -10,597,529 |
Net loss | ($1,558,650) | ($10,597,529) |
Earnings per share - basic and diluted | ($0.02) | ($0.16) |
Weighted average shares outstanding - basic and diluted (2) | 70,414,247 | 64,773,822 |
CONSOLIDATED_STATEMENT_OF_STOC
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT (USD $) | Common Stock Shares | Common Stock Amount | Stock Subscribed | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders' Deficit. |
USD ($) | USD ($) | USD ($) | USD ($) | |||
Balance at Jan. 25, 2012 | 73,500,000 | 73,500 | ' | -73,500 | ' | ' |
Recapitalization | -17,550,000 | -17,550 | ' | 17,550 | ' | ' |
Debt Beneficial conversion features | ' | ' | ' | $587,000 | ' | $587,000 |
Warrants issued | ' | ' | ' | 121,381 | ' | 121,381 |
Stock compensation | ' | ' | ' | 173,486 | ' | 173,486 |
Stock issued for services | 1,100,000 | 1,100 | ' | 271,900 | ' | 273,000 |
Net loss from Inception through to December 31, 2012 | ' | ' | ' | ' | -1,558,650 | -1,558,650 |
Balance at Dec. 31, 2012 | 57,050,000 | 57,050 | ' | 1,097,817 | -1,558,650 | -403,783 |
Shares issued upon conversion of debt and release of derivative liabiltiy during conversion | 18,665,692 | 18,666 | ' | 691,350 | ' | 710,016 |
Stock compensation | ' | ' | ' | 921,145 | ' | 921,145 |
Stock issued for cash | 2,134,067 | 2,134 | -20,000 | 105,103 | ' | 87,237 |
Stock issued for services | 8,730,682 | 8,731 | ' | 548,868 | ' | 557,599 |
Stock subscribed | ' | ' | 65,000 | ' | ' | 65,000 |
Stock cancelled | -5,300,000 | -5,300 | ' | 5,300 | ' | ' |
Net loss | ' | ' | ' | ' | ($10,597,529) | ($10,597,529) |
Balance at Dec. 31, 2013 | 81,280,441 | 81,280 | 45,000 | 3,369,583 | -12,156,179 | -8,660,316 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 11 Months Ended | 12 Months Ended |
Dec. 31, 2012 | Dec. 31, 2013 | |
Operating Activities | ' | ' |
Net loss | ($1,558,650) | ($10,597,529) |
Adjustments to reconcile net loss to cash flows used in operating activies | ' | ' |
Depreciation & amortization expense | 40,871 | 345,038 |
Stock based compensation | 173,486 | 921,145 |
Shares issued for services | 273,000 | 557,599 |
Interest expense - beneficial conversion features new note and discount amortization | 634,700 | 985,402 |
Interest expense - contingencies | 25,488 | 34,220 |
Change in fair value of derivative liability | -848,990 | 4,370,266 |
Amortization of debt issue costs | 0 | 42,404 |
Changes in operating assets and liabilities: | ' | ' |
Prepaid expense | -332,977 | 115,690 |
Accounts payable | 28,889 | 311,976 |
Accrued liabilities | 143,840 | 502,369 |
Contingent liability | ' | 960,000 |
Other accrued liabilities | 60,000 | 0 |
Cash flows used in operating activities | -1,360,343 | -1,451,420 |
Investing Activities | ' | ' |
Purchase of intangible assets | -247,142 | -65,049 |
Purchase of equipment | -56,300 | -17,418 |
Cash flows used in investing activities | -303,442 | -82,467 |
Financing Activities | ' | ' |
Bank overdraft | 1,616 | -1,616 |
Proceeds from notes payable | 1,663,000 | 1,335,091 |
Payment of Notes Payable | 0 | -72,445 |
Related party note payable | 0 | 126,160 |
Common stock subscription | 0 | 65,000 |
Stock issued for cash | 0 | 87,237 |
Cash flows provided by financing activities | 1,664,616 | 1,539,427 |
Change in cash during period | 831 | 5,540 |
Cash, beginning of period | 0 | 831 |
Cash, end of period | 831 | 6,371 |
Supplemental disclosure of cash flow information: | ' | ' |
Cash paid for interest | 0 | 0 |
Cash paid for income tax | 0 | 0 |
Non-cash transactions | ' | ' |
Convertible notes payable converted into common stock | $0 | $170,825 |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Dec. 31, 2013 | |
ORGANIZATION | ' |
ORGANIZATION | ' |
1. ORGANIZATION | |
Digital Development Group Corp. (the “Company”) (originally Regency Resources Inc.) was incorporated under the laws of the State of Nevada on December 11, 2006, with authorized capital stock of 200,000,000 shares at $0.001 par value. The Company was originally organized for the purpose of acquiring and developing mineral properties. Subsequent to a merger transaction described below, the Company ceased mineral exploration activities. | |
The Company entered into a binding letter of intent with Digitally Distributed Acquisition Corp., a Delaware corporation (“DDAC”), effective April 10, 2012 (the “LOI”), in connection with a proposed reverse acquisition transaction by and between the Company and DDAC whereby the Company acquired all of the shares of outstanding capital stock of DDAC in exchange for the issuance of a certain ownership interest in the Company to the shareholders of DDAC (the “Share Exchange”). DDAC is expected to have certain valuable products and intellectual property rights comprised of a web-based multi-tiered billing infrastructure and related to proprietary software and other means of syndicating and encoding media content that it will acquire from Digitally Distributed, LLC, (DDLLC), a Delaware limited liability company prior to or concurrently with the closing of the transaction. | |
On July 31, 2012, DDAC acquired from Digitally Distributed, LLC, a Delaware limited liability company ("DDLLC") (the “Merger”), certain tangible and intangible property including certain intellectual property related to a web-based multi-tiered billing infrastructure and to software and other means of syndicating and encoding media content, in exchange for the issuance by DDAC to DDLLC of 13,500,000 shares of DDAC common stock pursuant to a Subscription Agreement by and between DDAC and DDLLC dated July 31, 2012. | |
In accordance with the terms of Exchange Agreement, on the Closing Date, the Registrant issued 20,000,000 shares of its common stock to the Selling Shareholders in exchange for 100% of the issued and outstanding capital stock of DDAC (the "Exchange Transaction"). As a result of the Exchange Transaction, the Selling Shareholders acquired 21.39% of our issued and outstanding common stock, DDAC became our wholly-owned subsidiary, and the Registrant acquired the business and operations of DDAC. | |
The Company amended its Articles of Incorporation to change its name from Regency Resources, Inc. to the Digital Development Group Corp., effective May 2, 2012. |
REVERSE_MERGER_ACCOUNTING
REVERSE MERGER ACCOUNTING | 12 Months Ended |
Dec. 31, 2013 | |
REVERSE MERGER ACCOUNTING | ' |
REVERSE MERGER ACCOUNTING | ' |
2. REVERSE MERGER ACCOUNTING | |
The Merger was accounted for as a reverse-merger and recapitalization in accordance with generally accepted accounting principles in the United States (“GAAP”). DDAC is the acquirer for financial reporting purposes and Digital Development Group Corp. is the acquired company. DDAC was incorporated on January 25, 2012 (“Inception”). Consequently, the assets and liabilities and the operations that are reflected in the historical financial statements prior to the Merger are those of DDAC from Inception and are recorded at the historical cost basis of DDAC, and the consolidated financial statements after completion of the Merger include the assets and liabilities of the Company and DDAC; and historical operations of DDAC and the Company since the closing date of the Merger. Common stock and the corresponding capital of the Company pre-merger have been retroactively restated as capital stock shares reflecting the exchange ratio in the Merger. In conjunction with the Merger, DDAC received no cash and assumed no liabilities from Digital Development Group Corp. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2013 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | |
The accompanying audited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and include all the notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation of the consolidated financial statements have been included. | |
Going Concern | |
The Company has minimal revenue and has incurred losses since its inception on January 25, 2012 to December 31, 2013. The Company's continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and /or obtain additional financing from its stockholders and/or other third parties. | |
These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for the next fiscal year. The continuation of the Company as a going concern is dependent upon financial support from its stockholders and the ability of the Company to obtain necessary equity financing to continue operations. | |
There is no assurance that the Company will ever be profitable. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern. | |
Principles of Consolidation | |
The consolidated balance sheets include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. | |
Use of Estimates | |
In preparing these 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 consolidated financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates and assumptions included in the Company’s consolidated financial statements relate to the estimated life of equipment, valuation of long-lived assets, accruals for potential liabilities and valuation assumptions related to share based payments and the derivative liability related to the convertible notes payable. | |
Revenue Recognition | |
Revenues are recognized on monthly basis when subscriber sign up the services on the Company’s website. | |
Cash & Cash Equivalents | |
We consider cash equivalents with original maturities of 90 days or less to be cash equivalents. As of December 31, 2013 and 2012, we have no cash equivalents. | |
Prepaid Expense | |
Prepaid expenses represent prepaid services issued by shares to a consultant and amounts paid as an advance royalty to different content owners to obtain the rights to stream this content on the Company’s platform. Royalties are paid to the content owner as a percentage of revenues generated by the Company from streaming the licensed content. When the Company subsequently collects the subscription fees from customers, the advance royalties are recovered. Further participation in revenue is typically not paid to the content owner until such advances have been fully recovered. | |
Equipment | |
Equipment are stated at cost. Major improvements and betterments are capitalized. Maintenance and repairs are expensed as incurred. Depreciation is computed using the straight-line method over an estimated useful life of three years. The Company’s equipment were fully depreciated as of December 31, 2013. Depreciation expense for the year ended December 31, 2013 and the period from January 25, 2012 (Inception) through December 31, 2012 amounted to $32,847 and $40,871, respectively. | |
Intangible Assets | |
Costs related to the development of the Company’s proprietary video and content delivery service over the internet are capitalized. As of December 31, 2013, the internal use software is still under development and not placed in service. | |
We amortize the cost of intangible assets over their estimated useful lives, which range up to three years, unless such lives are deemed indefinite. Our domains and IP development has been amortized because the Company began its production in the first quarter of 2013. Amortization expenses for the year ended December 31, 2013 and the period from January 25, 2012 (Inception) through December 31, 2012 amounted to $90,993 and $0, respectively. The Company also amortized an additional $221,198 of intangible assets costs related to development cost during 2013. | |
Intangible assets are tested in each fiscal year for impairment, or more often if indicators warrant. There were no impairment charges related to intangible assets for the year ended December 31, 2013 and the period from January 25, 2012 (Inception) through December 31, 2012. | |
Fair Value of Financial Instruments | |
When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, we consider the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. We use the following three levels of inputs in determining the fair value of our assets and liabilities, focusing on the most observable inputs when available: | |
Level 1 -Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. | |
Level 2 -Quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability. | |
Level 3 -Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable. | |
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed is determined based on the lowest level input that is significant to the fair value measurement. The Company’s financial instruments include cash, prepaid expense and accrued liability. The estimated fair value of these instruments approximates its carrying amount due to the short maturity of these instruments. | |
Accounts Receivable Factoring | |
On October 1, 2013, the Company entered into an accounts receivable purchase agreement (the “Agreement”) with Summit Capital Investors, LLC (“Summit”), with an initial term of five years and renewing annually thereafter. The Company may obtain advances up to $300,000 from Summit and shall establish a separate merchant bank account in the name of Summit (the “Lockbox”) into which all of the Company’s monthly membership or accounts receivable shall be deposited. The funds in the lockbox account will be used to pay 120% of each advance received from Summit plus any other fees or costs. During 2013, total advances received from Summit amounted to $90,000 and total accounts receivable deposited in the lockbox account amounted to $23,593. As of December 31, 2013, the Company has payable related to this factoring agreement of $84,407 which was calculated based on 120% of advances received reduced by total accounts receivable deposited into the lockbox. All revenue from the Company will be paid directly into this bank account which is not under the Company’s ownership until the advances are paid off. | |
Income Taxes | |
The Company follows ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. | |
The Company’s deferred tax assets primarily consist of net operating loss carry-forwards and stock-based compensation. However, the Company established a full valuation allowance for these deferred tax assets as the Company has determined that it is more likely than not to fully realize these deferred tax assets prior to their expiration. | |
Stock Based Compensation | |
We may periodically grant stock options and issue warrants to employees and non-employees in non-capital raising transactions for services rendered and to obtain financing. We account for stock option grants and warrant issuance to employees based on Financial Accounting Standards Board (FASB) ASC Topic 718, “Compensation – Stock Compensation”, whereas the award is measured at its fair value at the date of grant and is amortized ratably over the vesting period. We account for stock option grants and warrant issued to non-employees in accordance with ASC Topic 505, “Equity”, whereas the value of the stock compensation is based upon the measurement date as determined at either (a) the date at which a performance commitment is reached, or (b) at the date at which the necessary performance to earn the equity instruments is complete. | |
Net Loss per Common Share | |
The Company computes net loss per share in accordance with ASC 260, "Earnings per Share". ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. | |
Recent Accounting Pronouncements | |
Adopted | |
Effective January 2013, we adopted FASB ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities (ASU 2011-11). The amendments in ASU 2011-11 require the disclosure of information on offsetting and related arrangements for financial and derivative instruments to enable users of its financial statements to understand the effect of those arrangements on its financial position. Amendments under ASU 2011-11 will be applied retrospectively for fiscal years, and interim periods within those years, beginning after January 1, 2013. The adoption of this update did not have a material impact on the consolidated financial statements. | |
Effective January 2013, we adopted FASB ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive (ASU 2013-02). This guidance is the culmination of the FASB’s deliberation on reporting reclassification adjustments from accumulated other comprehensive income (AOCI). The amendments in ASU 2013-02 do not change the current requirements for reporting net income or other comprehensive income. However, the amendments require disclosure of amounts reclassified out of AOCI in its entirety, by component, on the face of the statement of operations or in the notes thereto. Amounts that are not required to be reclassified in their entirety to net income must be cross-referenced to other disclosures that provide additional detail. This standard is effective prospectively for annual and interim reporting periods beginning after December 15, 2012. The adoption of this update did not have a material impact on the consolidated financial statements. | |
Not Adopted | |
In February 2013, the FASB issued ASU No. 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date. The amendments in ASU 2013-04 provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this Update is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance in this Update also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendment in this standard is effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. We are evaluating the effect, if any, adoption of ASU No. 2013-04 will have on our consolidated financial statements. | |
In April 2013, the FASB issued ASU No. 2013-07, Presentation of Financial Statements (Top 205): Liquidation Basis of Accounting. The objective of ASU No. 2013-07 is to clarify when an entity should apply the liquidation basis of accounting and to provide principles for the measurement of assets and liabilities under the liquidation basis of accounting, as well as any required disclosures. The amendments in this standard is effective prospectively for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. We are evaluating the effect, if any, adoption of ASU No. 2013-07 will have on our consolidated financial statements. | |
In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Top 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The objective of ASU No. 2013-11 is to provide guidance on the financial statement presentation of an unrecognized tax benefit when a net loss carryforward, similar tax loss, or tax credit carryforward exists. The amendments in this standard is effective for all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists for fiscal years, and interim periods beginning after December 15, 2013. We are evaluating the effect, if any, adoption of ASU No. 2013-11 will have on our consolidated financial statements. | |
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
Prepaid_Expenses
Prepaid Expenses | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Prepaid Expenses | ' | ||||||
Prepaid Expenses | ' | ||||||
4. PREPAID EXPENSES | |||||||
The components of prepaid expense were as follows: | |||||||
December 31, | December 31, | ||||||
2013 | 2012 | ||||||
Prepaid services | $ | 1,218 | $ | 216,667 | |||
Royalties advance | 216,069 | 116,310 | |||||
Total prepaid expense | $ | 217,287 | $ | 332,977 |
EQUIPMENT_NET
EQUIPMENT, NET | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
EQUIPMENT, NET: | ' | ||||||
EQUIPMENT, NET | ' | ||||||
5. EQUIPMENT, NET | |||||||
Equipment consists of the following: | |||||||
December 31, | December 31, | ||||||
2013 | 2012 | ||||||
Furniture and equipment | $ | 29,922 | $ | 15,429 | |||
Leasehold improvements | 2,925 | 40,871 | |||||
Less: Accumulated depreciation | -32,847 | -40,871 | |||||
Total property and equipment, net | $ | - | $ | 15,429 | |||
INTANGIBLE_ASSETS_NET
INTANGIBLE ASSETS, NET | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
INTANGIBLE ASSETS NET | ' | ||||||
INTANGIBLE ASSETS, NET | ' | ||||||
6. INTANGIBLE ASSETS, NET | |||||||
The components of intangible assets were as follows: | |||||||
December 31, | December 31, | ||||||
2013 | 2012 | ||||||
Content Delivery Asset | $ | 312,191 | $ | 247,142 | |||
Less: Accumulated amortization | -312,191 | - | |||||
Total intangible assets, net | $ | - | $ | 247,142 |
OTHER_ASSETS
OTHER ASSETS | 12 Months Ended |
Dec. 31, 2013 | |
OTHER ASSETS | ' |
OTHER ASSETS | ' |
7. OTHER ASSETS | |
The Company recorded an amount of $127,214 debt issuance cost as other assets from the issuance of a convertible promissory note payable to Stuart Subotnik of $240,000; and will be amortized over the term of the note to interest expense. Amortization expense for the year ended December 31, 2013 and the period from January 25, 2012 (Inception) through December 31, 2012 amounted to $42,404 and $0, respectively. The balance of debt issuance costs as of December 31, 2013 and 2012 are $84,810 and $127,214, respectively. | |
NOTES_PAYABLE_NET
NOTES PAYABLE, NET | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
NOTES PAYABLE, NET | ' | ||||||
NOTES PAYABLE, NET | ' | ||||||
8. NOTES PAYABLE, NET | |||||||
Notes payable consisted of the following: | |||||||
December 31, | December 31, | ||||||
2013 | 2012 | ||||||
Convertible notes payable to Coventry Capital, LLC, net of discount | $ | 960,000 | $ | 235,923 | |||
Convertible note payable to Stuart Subotnik, net of discount | 247,201 | 180,802 | |||||
Note payable to Ironridge | - | 150,000 | |||||
Asher Enterprises | 183,000 | - | |||||
Note payable to QuickLoan Funding | 65,010 | - | |||||
Notes payable to Charlie Sheen | 510,000 | - | |||||
Convertible note payable to Tonaquint, net of discount | 81,614 | - | |||||
Other notes payable, net of discount | 240,044 | 45,465 | |||||
Total notes payable, net of discount | $ | 2,286,869 | $ | 612,190 | |||
Coventry Capital, LLC Note | |||||||
During 2012, the Company issued a total of $950,000 convertible notes payable to Coventry Capital, LLC. These convertible promissory notes are payable on demand and carried an interest rate of 1% per month (simple interest), until the closing of the voluntary share exchange transaction contemplated under the letter of intent. Thereafter, the interest rate shall adjust to 3% per year, simple interest. Upon closing of the voluntary share exchange transaction contemplated under the letter of intent, the unpaid principal and any accrued and unpaid interest shall be immediately due and payable upon written demand by the holder at any time. | |||||||
At any time on or before the maturity date, the holder, at its sole discretion may elect to have all or part of the principal and the accrued and unpaid interest thereon, converted into a number of shares of common stock of the Company determined by dividing (i) the unpaid principal and any accrued and unpaid interest thereon, as of the conversion date, by (ii) the lower of (a) the price per share at which shares of capital stock of the Company are sold in any financing, or (b) $0.50 per share. A "financing" means the sale of shares of capital stock of the Company occurring within twenty four (24) months after the closing. | |||||||
The embedded conversion feature of these notes was recorded as a derivative liability due to the down-round protection of the conversion price. The Company recorded a debt discount of $714,077, representing the value of the embedded conversion feature. The Company recognized $714,077 and $0 of interest expense for the amortization of the discount during the year ended December 31, 2013 and the period from January 25, 2012 (Inception) through December 31, 2012, respectively. | |||||||
In January 2013, the Company borrowed an additional $10,000 from Coventry Capital, LLC. | |||||||
Stuart Subotnik Notes | |||||||
On September 10, 2012, the Company issued a $240,000 convertible note payable to Stuart Subotnik. This note was issued with 800,000 warrants and exercisable into the Company’s common stock. The warrants have a three year term and the exercise price is $0.30. The embedded conversion feature of this note and related warrants was recorded as a derivative liability due to the down-round protection of the conversion prices. The Company recorded a debt discount of $118,619, representing the value of the embedded conversion feature and additional debt discount of $121,381 for the fair value of the warrants. The Company recognized $66,399 and $40,802 of interest expense for the amortization of the discount during the year ended December 31, 2013 and the period from January 25, 2012 (Inception) through December 31, 2012, respectively. | |||||||
This convertible promissory note and unpaid interest are payable upon the earlier of i) at any time after three year anniversary of the issue date of this note at the written request of the holder to the Company or ii) when, upon or after the occurrence of an event of default. The note carries an interest rate of 8% per annum (simple interest). | |||||||
At any time on or before the maturity date, the holder, at its sole discretion may elect to have all or part of the principal and the accrued and unpaid interest thereon, converted into a number of shares of common stock of the Company. The conversion price is $0.30 per share. | |||||||
At any time which the volume weighted average pricing “VWAP” for the common stock is $1.00 or greater for a period of twenty consecutive trading days, then at the election of the Company in its sole discretion may elect to convert all of the outstanding amount of principal and accrued interest into shares of the common stock at $1.00 per share. | |||||||
During the last quarter of 2012, the Company issued additional notes payable to Mr. Subotnik in the aggregate amount of 140,000, These notes accrue interest at rates ranging from 8% to 12%. | |||||||
QuickLoan Funding | |||||||
On March 13, 2013, The Company, entered into a Convertible Promissory Note (the “Convertible Promissory Note”) with QuickLoan Funding, an accredited lender (the “Lender”). Under the terms of the Promissory Note, the Lender paid $110,000 to the Company upon execution of the Convertible Promissory Note, and the Lender may fund additional amounts in such amounts and at such dates as the Lender may choose in its sole discretion, up to an additional $150,000 above the initial $110,000 funded. Thereafter, the Lender may provide additional amounts only by mutual agreement with the Company, up to a total principal sum of $400,000. All amounts advanced by Lender are subject to a 10% original issue discount such that the total amount funded to the Company would be $360,000 if the Lender advances all funds under the Convertible Promissory Note. The maturity date is one year from the effective date of each payment by the Lender, and all outstanding principal and interest is due and payable by the Company on the maturity date. If the Company repays the Note in full within the first ninety days after the effective date, then the interest rate is zero percent. If the Company does not repay the Note in full within the first 90 days after the effective date, then a one-time interest charge of twelve percent shall be applied to the unpaid principal. In the second quarter of 2013, the Company received additional $20,700 from the lender. The original issue discount charged by the lender on the two advances made during 2013 totaled $14,522. Additionally, during the year ended December 31, 2013 the lender converted an amount of $38,610 into Company’s common stock. | |||||||
The Lender has the right, at any time from 180 days after the effective date, at its election, to convert all or part of the outstanding and unpaid principal and accrued interest under the Convertible Promissory Note into shares of Company common stock at the conversion price. The conversion price is the lesser of $0.20 per share, or 60% of the lowest trade price of the Company’s common stock in the 25 trading days prior to the date of conversion. The Lender also has piggyback registration rights to have the shares it would receive upon conversion of the Promissory Note included within the next registration statement which the Company may file with the Securities and Exchange Commission. | |||||||
The embedded conversion feature of these notes was recorded as a derivative liability due to the down-round protection of the conversion price. The Company recorded a debt discount of $130,700, representing the value of the embedded conversion feature. The Company recognized $89,098 and $0 of interest expense for the amortization of the discount during the year ended December 31, 2013 and the period from January 25, 2012 (Inception) through December 31, 2012, respectively. | |||||||
Charlie Sheen | |||||||
On April 16, 2013, the Company executed a Promissory Note (the “Promissory Note”) in favor of celebrity actor, Charlie Sheen, pursuant to which Charlie Sheen has loaned the Company $150,000. Under the terms of the Promissory Note, the principal accrues interest at the rate of 6% per annum and is due and payable on April 10, 2015, with interest only payments of $750 per month to commence on November 1, 2013. During the three months ended September 30, 2013, the Company borrowed an additional $360,000 from Mr. Sheen under the same terms as the Promissory Note. | |||||||
Tonaquint Convertible note | |||||||
On April 3, 2013, the Company, entered into a Securities Purchase Agreement, Secured Convertible Promissory Note, Security Agreement, Warrant, Deed of Trust, Deed of Trust Notes, Confession of Judgment and ancillary agreements (the “Financing Documents”) with Tonaquint, Inc., (the “Buyer”). | |||||||
Under the terms of the Financing Documents, the Buyer entered into the Secured Convertible Promissory Note in the principal amount of $340,000.00 (the “Note”). The Company is obligated to commence repayment of the Note on the 180th day after the Note issuance date by making monthly installments of $28,333. Provided certain equity conditions are met, the Company may repay the monthly installment payments through the issuance of Company common stock at the market price (the “Market Price”) which means 60% of the arithmetic average of the three (3) lowest volume weighted average pricing “VWAP” of the shares of Common Stock during the twenty (20) consecutive trading day period immediately preceding the date of repayment. Additionally, if the Company pays the installment payment in Company common stock, then 23 days following the installment payment date the Buyer shall receive additional shares of Company common stock if the Market Price on the 23 rd day is less than the Market Price on the installment payment date. The entire outstanding balance under the Note is due and payable 17 months after the date of issuance. The Note bears interest at the rate of eight percent (8%) per annum, provided that upon the occurrence of an event of default, interest shall accrue on the outstanding balance both before and after judgment at the rate of twenty-two percent (22%) per annum. The Note carries an original issue discount of $30,000. In addition, the Company agreed to pay $10,000 to the Buyer to cover the Buyer’s legal fees, accounting costs, due diligence, monitoring and other transaction costs, all of which amount is included in the initial principal balance of the Note. | |||||||
In consideration for the Note, the Buyer paid the Company (i) $100,000, and (ii) issued to the Company two Buyer Deed of Trust Notes in the amount of $100,000 each, one which will be prepaid by Buyer within 2 months and 4 months, respectively, of April 3, 2013 provided that an equity conditions failure has not occurred under the Note. The Note is secured by a Security Agreement executed by the Company and listing the Buyer Deed of Trust Notes as security for the Company’s obligations under the Financing Documents (the “Security Agreement”). Each of the Buyer Deed of Trust Notes is secured by a Deed of Trust (the “Deed of Trust”). The outstanding balance under the Note may be converted by the Buyer at any time into shares of Company common stock at the rate of $0.20 per share (the “Conversion Price”), subject to adjustment in the event of certain issuances of variable price or unrestricted securities by the Company after the date of the Note. Upon an event of default, the outstanding balance under the Note shall increase to 135% and will be immediately due and payable, and the Buyer may convert the outstanding balance into shares of Company common stock at the lower of the Conversion Price then in effect and the Market Price. The buyer also issue additional $10,660 note and converted $55,215 principal balance to common stock for the year ended December 31, 2013. | |||||||
The Company also issued Buyer a warrant to purchase up to 1,400,000 shares of Company common stock at an exercise price of $0.20 per share, subject to adjustment in the event of certain issuances of variable price and unrestricted securities by the Company after the date of the Note. The Warrants may be exercised for a term of 5 years and have a “cashless exercise” provision. | |||||||
The embedded conversion feature of this note and related warrants was recorded as a derivative liability due to the down-round protection of the conversion prices. The Company recorded a total debt discount of $111,412 representing the value of the embedded conversion feature of $23,804, additional debt discount of $47,608 for the fair value of the warrants, and $40,000 original issue discount and fees. The Company recognized $97,581 and $0 of interest expense for the amortization and write off of the discount during the year ended December 31, 2013 and the period from January 25, 2012 (Inception) through December 31, 2012, respectively. | |||||||
Asher Enterprises Note | |||||||
During 2013 the Company entered into several Note Purchase Agreement and Convertible Promissory Note with Asher Enterprises, Inc. pursuant to which Asher purchased a $183,000 Convertible Promissory Note (the “Asher Notes”). The Asher Notes accrues interest at the rate of 8% per annum; is due and payable in several dates in 2014; and may be converted by Asher at any time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 60% of the market price (as determined in the Asher Note) calculated at the time of conversion. The Asher Note Purchase Agreement and Note also contain certain representations, warranties, covenants and events of default. The Company is in default in this note because the Company did not file the 10-K on time according to SEC filing requirements. | |||||||
Other Notes Payable | |||||||
During the year ended December 31, 2013, the Company borrowed a net total of $240,044 from several individuals under notes payable. | |||||||
Related Party Note Payable | |||||||
Effective January 30, 2013, the Company entered into a Promissory Note with Martin W. Greenwald, the Company’s Chief Executive Officer, pursuant to which Mr. Greenwald has agreed to loan the Company up to $250,000 to fund Company operations. The Promissory Note provides that Mr. Greenwald may advance funds to the Company from to time to time, up to the amount of $250,000. The amounts advanced shall be due within one year from the date of the promissory note and shall accrue interest at 3% per annum. The Company has $126,160 outstanding under the loan agreement as December 31, 2013. | |||||||
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2013 | |
RELATED PARTY TRANSACTIONS | ' |
RELATED PARTY TRANSACTIONS | ' |
NOTE 9 – RELATED PARTY TRANSACTIONS | |
The Company entered into two employment agreements with Martin W. Greenwald and Joe Bretz, the CEO and President of the Company, respectively, since May 1, 2012 for an annual salary of $250,000 per year. The Company has outstanding payroll liabilities owed to them and recorded under accrued liabilities for $288,858 as of December 31, 2013. | |
The Company also hire Martin W. Greenwald’s daughter as a consultant and paid $18,983 for the year ended December 31, 2013. |
DERIVATIVE_LIABILITY
DERIVATIVE LIABILITY | 12 Months Ended | ||
Dec. 31, 2013 | |||
DERIVATIVE LIABILITY | ' | ||
DERIVATIVE LIABILITY | ' | ||
NOTE 10 – DERIVATIVE LIABILITY | |||
In April 2008, the FASB issued a pronouncement that provides guidance on determining what types of financial instruments or embedded features in instrument held by a reporting entity can be considered indexed to its own stock for the purpose of evaluating the first criteria of the scope exception in the pronouncement on accounting for derivatives. This pronouncement was effective for financial statements issued for fiscal years beginning after December 15, 2008. The adoption of these requirements can affect the accounting for warrants and many convertible instruments with provisions that protect holders from a decline in the stock price (or “down-round” provisions). For example, warrants or conversion features with such provisions are no longer recorded in equity. Down-round provisions reduce the exercise price of a warrant or convertible instrument if a company either issues equity shares for a price that is lower than the exercise price of those instruments or issues new warrants or convertible instruments that have a lower exercise price. | |||
We evaluated whether convertible debt and warrants issued to acquire stock of the Company contained provisions that protect holders from declines in the stock price or otherwise could result in modification of the exercise price under the respective convertible debt and warrant agreements. We determined that the conversion feature in the convertible notes issued during the year contained such provisions and we recorded the beneficial conversion features as derivative liability. Derivative liabilities were initially valued using the weighted-average Black-Scholes-Merton option pricing model, which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions; (i) dividend yield of 0%; (ii) expected volatility range of 114% - 175%; (iii) risk free rate range of 0.10% - 0.17% and (iv) expected term of 1 year. | |||
The following table represents the Company’s derivative liability activity for both the embedded conversion features and the warrants for the period from January 25, 2012 to December 31, 2013: | |||
Amount | |||
Derivative Liability balance, January 25, 2012 (inception) | $ | - | |
Issuance of derivative financial instrument in 2012 | 986,343 | ||
Change in derivative liability in 2012 | -848,990 | ||
Derivative Liability balance, January 1, 2013 | 137,353 | ||
Issuance of derivative financial instrument in 2013 | 278,211 | ||
Conversion of debt in 2013 | -513,799 | ||
Change in FMV of derivative liability | 4,370,266 | ||
Derivative liability balance, December 30, 2013 | $ | 4,272,031 |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2013 | |
COMMITMENTS AND CONTINGENCIES | ' |
COMMITMENTS AND CONTINGENCIES | ' |
NOTE 11 – COMMITMENTS AND CONTINGENCIES | |
Contingent liability | |
On December 19, 2011, DDLLC entered into two promissory notes with an accredited investor pursuant to which the Company issued two 14% convertible promissory notes (the "Notes") to advance of up to $280,000 to the Company. As of this date, the Company has only received $118,000 of the agreed to $280,000. | |
The Notes were offered and sold in reliance on the exemption from registration afforded by Rule 506 of Regulation D promulgated under Section 4(2) of the Securities Act of 1933, as amended. The Notes have a six-month term due June 16, 2012, and are convertible by the holder into Common Stock of a contemplated merger or acquisition and a subsequent newly formed company ("Acquireco") at a price of $0.10 per share. The Company may prepay all or a portion of the outstanding principal and interest under the Notes upon 10 days' written notice without penalty. The amount due under the Notes will become immediately due and payable if the Company fails to pay unpaid principal on the maturity date of June 16, 2012, any representation or warranty made by the Company is false, incorrect, incomplete or misleading, or the Company dissolves, liquidates, ceases operations, is unable to pay its debts when due, a receiver or trustee is appointed or bankruptcy proceedings are instituted. While any amount of the Note is outstanding, the borrower is obligated to the covenants of (i) paying no dividends | |
The Company is in default of these notes because it did not repay principal and accrued interest on the maturity date of June 16, 2012. Due to the default provisions of the Note, the Company will begin accruing interest at the default rate of 29% per annum from the maturity date going forward. In July 2012, the Company tried to begin negotiations with the investor; however, it has been unsuccessful in contacting the investor to date. The Company has recorded a contingent liability of $177,708 as of December 31, 2013, to reflect the obligation that it believes it owes to investor. The investor is claiming that the Company owes an additional $162,000 plus accrued interest but the Company never received the additional funds as described under the Notes and intends to defend against any position that the investor takes pertaining to the additional $162,000. The Company has treated this matter as a contingent liability because at this time the Company is uncertain as to how and when this matter will be resolved. The Company believes it has accrued its estimate in the consolidated financial statements of the most likely amount to be settled with the investor. | |
Ironridge | |
Effective December 19, 2012, the Company terminated the Securities Purchase Agreement, Registration Rights Agreement and Debenture dated November 6, 2012 (the “Financing Documents”) with Ironridge Media Co., a division of Ironridge Global IV, Ltd. (“Ironridge”), for the sale of up to $3,000,000 of Convertible Subordinated Debentures and Series A Preferred Stock. On January 11, 2013, Ironridge submitted a claim with JAMS, Inc. in Santa Monica, California for binding arbitration under the Financing Documents and requested that it be awarded damages relating to the termination of the Financing Documents. The Company submitted counter-claims in the JAMS arbitration claiming that it was fraudulently induced to enter into the Financing Documents, and that a fully performed oral stock purchase agreement caused the Financing Documents to be abandoned by the parties, justifying rescission of the financing documents. In May 2013, the Arbitrator in the JAMS arbitration announced an interim award to Ironridge shall recover from the Company in the amount of $850,000 plus attorney fees and costs. On July 10, 2013, the Arbitrator made the interim award final, and awarded Ironridge an additional $110,168 in attorneys’ fees and costs. The Company does not have adequate cash to pay the final arbitration award. The judgment resulting from the arbitration award would adversely affect the business, future operations and the financial condition of the Company, and may cause the Company to default under its existing loan obligations which would provide the lenders with the right for immediate repayment. The Company recorded an accrual of $960,000 under contingent liability in the accompanying consolidated balance sheet as of December 31, 2013 related to this case. | |
Sheen Agreement | |
On March 25, 2013, the Company entered into an Agreement with celebrity actor, Charlie Sheen, pursuant to which he has agreed to work with the Company to develop and promote his own channel and original content, and to promote and endorse the Company and its channels through various media. Under the terms of the Agreement, Mr. Sheen’s involvement with the Company is to include his creation of original content; his promotion and endorsement of the Company’s channels and the creation and promotion of the Charlie Sheen Channel; his personal appearances; the use of Mr. Sheen’s name, voice and likeness for promotional purposes; and the promotion of the Company and its channels across social media, including postings on Facebook and Twitter. The Agreement has a term of twelve months, unless extended as provided in the Agreement. | |
In consideration for his services, the Company has agreed to pay Charlie Sheen a $300,000 fee payable in installments. In addition, the Company has agreed to pay Mr. Sheen a percentage of Company gross revenues generated by the distribution and sale of original programming featuring Mr. Sheen and his affiliates, including gross revenues from the Charlie Sheen Channel and other pay per view events and episodes. In consideration of Mr. Sheen’s obligations, the Company has also agreed to issue to Mr. Sheen options to purchase up to seven million shares of the Company’s common stock as follows: options to purchase one million shares of the Company’s common stock vested upon the date of the Agreement, and options to purchase the remaining six million shares of the Company’s common stock shall vest in equal installments of one million shares every six months after the date of the Agreement, each exercisable at an exercise price of $0.10 per share. The Company and Charlie Sheen are in mutual dispute with regards to this agreement. | |
Operating lease | |
The Company leases office space under an operating lease, which began on July 1, 2012 and expired on November 15, 2013. The average rental payment including utilities and operating expenses for the facility is approximately $5,935 per month. Rent expense for the year ended December 31, 2013 and the period from January 25, 2012 to December 31, 2012 amounted to $46,945 and $33,210, respectively. Currently the Company is under a month-to-month payment term with the landlord. |
COMMON_STOCK
COMMON STOCK | 12 Months Ended |
Dec. 31, 2013 | |
COMMON STOCK | ' |
COMMON STOCK | ' |
NOTE 12 - COMMON STOCK | |
On July 31, 2012 (the "Closing Date"), the Company closed a voluntary share exchange transaction with Digitally Distributed Acquisition Corp., a Delaware corporation ("DDAC") and the shareholders of DDAC ("Selling Shareholders") pursuant to a Share Exchange Agreement dated as of July 31, 2012 (the "Exchange Agreement") by and among the Company, DDAC, and the Selling Shareholders. | |
In accordance with the terms of Exchange Agreement, on the Closing Date, the Registrant issued 20,000,000 shares of its common stock to the Selling Shareholders in exchange for 100% of the issued and outstanding capital stock of DDAC (the "Exchange Transaction"). As a result of the Exchange Transaction, the Selling Shareholders acquired 21.39% of our issued and outstanding common stock, DDAC became our wholly-owned subsidiary, and the Registrant acquired the business and operations of DDAC. Immediately after the Exchange Transaction, the Registrant had 93,500,000 shares of common stock issued and outstanding. | |
In connection with the closing of the previously announced Share Exchange Agreement dated as of July 31, 2012 by and among The Digital Development Group Corp. (the “Company”), Digitally Distributed Acquisition Corp. (“DDAC”), and the shareholders of DDAC, the Company cancelled a total of 37,550,000 shares of Company common stock effective as of September 10, 2012. | |
In December 2012, the Company issued a total of 1,100,000 shares of common stock to two individuals for services rendered. The Company recognized expenses of $56,333 for the value of the shares issued and record $216,667 as prepaid expense. | |
In 2013 the Company issued 8,730,682 common shares for services provided, these shares were valued at 557,599 and was recorded as professional and consulting fees in the accompanying statements of operations. | |
In 2013 the Company issued 2,134,067 commons shares for cash, total proceeds received amounted to $87,237. | |
In 2013 the Company issued a total of 18,665,692 common shares upon conversion of debt with a total amount of $170,825. | |
As of December 31, 2013, the Company has received $65,000 in stock subscription for the purchase of its common stock. |
STOCKBASED_COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended | |||||||||||||||
Dec. 31, 2013 | ||||||||||||||||
STOCK-BASED COMPENSATION | ' | |||||||||||||||
STOCK-BASED COMPENSATION | ' | |||||||||||||||
NOTE 13 – STOCK-BASED COMPENSATION | ||||||||||||||||
On January 3, 2013, our board of directors approved the adoption of The Digital Development Group Corp. 2013 Equity Incentive Plan (the "2013 Plan”). The 2013 Plan is intended to aid the Company in recruiting and retaining key employees, directors or consultants and to motivate them by providing incentives through the granting of awards of stock options or other stock-based awards. The 2013 Plan is administered by the board of directors. Directors, officers, employees and consultants of the Company and its affiliates are eligible to participate under the 2013 Plan. | ||||||||||||||||
Effective January 30, 2013, the Company approved the re-pricing of all of the 3,370,000 previously granted options under the Company’s 2012 Equity Incentive Plan from $0.451 per share to $0.11 per share. All of the other terms of the options remained unchanged. The fair value of the these options after re-pricing was lower than the fair value before re-pricing and accordingly the Company will continue to amortize the original fair value over the remaining vesting period in accordance with US GAAP. | ||||||||||||||||
On January 30, 2013, the Company granted a total of 950,000 options to employees under the 2012 Plan. The options have an exercise price of $0.11 per share; 400,000 of the options vested immediately and the remaining 550,000 options vest 1/12 monthly over a period of one year, and vest immediately upon a change of control of the Company; and have a 10 year term. | ||||||||||||||||
On March 25, 2013 and in connection with the Sheen Agreement, the Company has agreed to issue to Mr. Sheen options to purchase up to seven million shares of the Company’s common stock as follows: options to purchase one million shares of the Company’s common stock vested upon the date of the Agreement, and options to purchase the remaining six million shares of the Company’s common stock shall vest in equal installments of one million shares every six months after the date of the Agreement, each exercisable at an exercise price of $0.10 per share and have a 5 year term. | ||||||||||||||||
The fair value of each option award is estimated on the date of grant using the Black-Scholes valuation model and the assumptions in the following table. The expected volatility is based on the daily historical volatility of comparative companies, measured over the expected term of the option. The risk-free rate is based on the implied yield on a U.S. Treasury zero-coupon issue with a remaining term closest to the expected term of the option. The dividend yield reflects that the Company has not paid any cash dividends since inception and does not intend to pay any cash dividends in the foreseeable future. | ||||||||||||||||
The following assumptions were used to determine the fair value of the options at date of grant: | ||||||||||||||||
Expected volatility (%) | 93%-175% | |||||||||||||||
Risk free rate | 0.13%-0.38% | |||||||||||||||
Expected term | 1-2 years | |||||||||||||||
Dividend yield | 0% | |||||||||||||||
Total stock-based compensation expense included in general and administrative expense for the period from January 1, 2013 to December 31, 2013 was $921,145. | ||||||||||||||||
As of December 31, 2013, there was $349,781 of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted average period of 1 year. The Company’s current practice is to issue new shares to satisfy option exercises. Compensation expense for all stock-based compensation awards is recognized using the straight-line method. | ||||||||||||||||
A summary of stock option activity is as follows: | ||||||||||||||||
Weighted- | Average | |||||||||||||||
Average | Remaining | Aggregate | ||||||||||||||
Exercise | Contractual | Intrinsic | ||||||||||||||
Options | Price | Life (Years) | Value | |||||||||||||
Outstanding at January 25, 2012 | - | $ | - | - | $ | - | ||||||||||
Granted | 3,370,000 | 0.43 | 5.3 | - | ||||||||||||
Exercised | - | - | - | - | ||||||||||||
Forfeited or expired | - | - | - | - | ||||||||||||
Outstanding at December 31, 2012 | 3,370,000 | 0.43 | 5.3 | - | ||||||||||||
Granted | 7,950,000 | 0.1 | 4.81 | - | ||||||||||||
Exercised | - | - | - | - | ||||||||||||
Forfeited or expired | - | - | - | - | ||||||||||||
Outstanding at December 31, 2013 | 11,320,000 | $ | 0.1 | 5.97 | $ | - | ||||||||||
Exercisable at December 31, 2013 | 5,774,167 | $ | 0.11 | 7.3 | $ | - |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | |||||||||
Dec. 31, 2013 | ||||||||||
INCOME TAXES | ' | |||||||||
INCOME TAXES | ' | |||||||||
NOTE 14 – INCOME TAXES | ||||||||||
Our provisions for income taxes for the years ended December 31, 2013 and 2012, respectively, were as follows (using our blended effective Federal and State income tax rate of 35.0%): | ||||||||||
2013 | 2012 | |||||||||
Current Tax Provision: | ||||||||||
Federal and state | ||||||||||
Taxable income | $ | - | $ | - | ||||||
Total current tax provision | $ | - | $ | - | ||||||
Deferred Tax Provision: | ||||||||||
Federal and state | ||||||||||
Net loss carryforwards | $ | -12,156,000 | $ | -1,559,000 | ||||||
Change in valuation allowance | 12,156,000 | 1,559,000 | ||||||||
Total deferred tax provision | $ | - | $ | - | ||||||
Deferred tax assets at December 31, 2013 and 2012 consisted of the following: | ||||||||||
2013 | 2012 | |||||||||
Deferred tax assets: | ||||||||||
Net operating loss carryforwards | $ | 4,255,000 | $ | 546,000 | ||||||
Valuation allowance | -4,255,000 | -546,000 | ||||||||
Net deferred tax assets | $ | - | $ | - | ||||||
Internal Revenue Code Section 382 and similar California rules place a limitation on the amount of taxable income that can be offset by net operating loss carryforwards (“NOL”) after a change in control (generally greater than a 50% change in ownership). Transactions such as planned future sales of our common stock may be included in determining such a change in control. These factors give rise to uncertainty as to whether the net deferred tax assets are realizable. We have approximately $12,156,000 in NOL at December 31, 2013 that will begin to expire in 2031 for federal and state purposes and could be limited for use under IRC Section 382. We have recorded a valuation allowance against the entire net deferred tax asset balance due because we believe there exists a substantial doubt that we will be able to realize the benefits due to our lack of a history of earnings and due to possible limitations under IRC Section 382. A reconciliation of the expected tax benefit computed at the U.S. federal and state statutory income tax rates to our tax benefit for the years ended December 31, 2013 and 2012 is as follows: | ||||||||||
Years ended December 31, | ||||||||||
2013 | 2012 | |||||||||
Federal income tax rate at 35% | $ | -4,255,000 | 35.00% | $ | -546,000 | 35.00% | ||||
State income tax, net of federal benefit | - | -% | - | -% | ||||||
Change in valuation allowance | 4,255,000 | -35.00% | 546,000 | -35.00% | ||||||
Benefit for income taxes | $ | - | -% | $ | - | -% | ||||
We file income tax returns in the U.S. with varying statutes of limitations. Our policy is to recognize interest expense and penalties related to income tax matters as a component of our provision for income taxes. There were no accrued interest and penalties associated with uncertain tax positions as of December 31, 2013 and 2012. We have no unrecognized tax benefits and thus no interest or penalties included in the consolidated financial statements. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2013 | |
SUBSEQUENT EVENTS | ' |
SUBSEQUENT EVENTS | ' |
NOTE 15 – SUBSEQUENT EVENTS | |
On January 27, 2014, The Digital Development Group Corp., a Nevada corporation (the “Company”), entered into a Debt Conversion Agreement (the “Debt Conversion Agreement”) with Cemblance LTD (“Cemblance”) pursuant to which the Company and Cemblance agreed to convert $150,000 of outstanding Company debt into 4,000,000 shares of Company common stock. | |
On March 12, 2014, The Digital Development Group. Corp. (the “Company”) executed a Subscription Agreement with Stuart Subotnick pursuant to which the Company sold him 5,000,000 restricted shares of Company common stock in consideration for $75,000. Mr. Subotnick is an affiliate of the Company by nature of the percentage of shares of Company common stock which he beneficially owns. The issuance of shares was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the shares was an accredited investor. | |
On March 13, 2014, the Company used the proceeds from the above-referenced sale of Company securities to repay QuickLoan Funding the remaining balance of $68,78.89 outstanding of the $110,000 loaned to the Company on March 13, 2013. | |
ACCOUNTING_POLICIES_Policies
ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
ACCOUNTING POLICIES | ' |
Basis of Presentation | ' |
Basis of Presentation | |
The accompanying audited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and include all the notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation of the consolidated financial statements have been included. | |
Going Concern | ' |
Going Concern | |
The Company has minimal revenue and has incurred losses since its inception on January 25, 2012 to December 31, 2013. The Company's continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and /or obtain additional financing from its stockholders and/or other third parties. | |
These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for the next fiscal year. The continuation of the Company as a going concern is dependent upon financial support from its stockholders and the ability of the Company to obtain necessary equity financing to continue operations. | |
There is no assurance that the Company will ever be profitable. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern. | |
Principles of Consolidation | ' |
Principles of Consolidation | |
The consolidated balance sheets include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. | |
Use of Estimates | ' |
Use of Estimates | |
In preparing these 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 consolidated financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates and assumptions included in the Company’s consolidated financial statements relate to the estimated life of equipment, valuation of long-lived assets, accruals for potential liabilities and valuation assumptions related to share based payments and the derivative liability related to the convertible notes payable. | |
Revenue Recognition | ' |
Revenue Recognition | |
Revenues are recognized on monthly basis when subscriber sign up the services on the Company’s website. | |
Cash & Cash Equivalents Policy | ' |
Cash & Cash Equivalents | |
We consider cash equivalents with original maturities of 90 days or less to be cash equivalents. As of December 31, 2013 and 2012, we have no cash equivalents | |
Prepaid Expense | ' |
Prepaid Expense | |
Prepaid expenses represent prepaid services issued by shares to a consultant and amounts paid as an advance royalty to different content owners to obtain the rights to stream this content on the Company’s platform. Royalties are paid to the content owner as a percentage of revenues generated by the Company from streaming the licensed content. When the Company subsequently collects the subscription fees from customers, the advance royalties are recovered. Further participation in revenue is typically not paid to the content owner until such advances have been fully recovered. | |
Equipment Policy | ' |
Equipment | |
Equipment are stated at cost. Major improvements and betterments are capitalized. Maintenance and repairs are expensed as incurred. Depreciation is computed using the straight-line method over an estimated useful life of three years. The Company’s equipment were fully depreciated as of December 31, 2013. Depreciation expense for the year ended December 31, 2013 and the period from January 25, 2012 (Inception) through December 31, 2012 amounted to $32,847 and $40,871, respectively. | |
Intangible Assets Policy | ' |
Intangible Assets | |
Costs related to the development of the Company’s proprietary video and content delivery service over the internet are capitalized. As of December 31, 2013, the internal use software is still under development and not placed in service. | |
We amortize the cost of intangible assets over their estimated useful lives, which range up to three years, unless such lives are deemed indefinite. Our domains and IP development has been amortized because the Company began its production in the first quarter of 2013. Amortization expenses for the year ended December 31, 2013 and the period from January 25, 2012 (Inception) through December 31, 2012 amounted to $90,993 and $0, respectively. The Company also amortized an additional $221,198 of intangible assets costs related to development cost during 2013. | |
Intangible assets are tested in each fiscal year for impairment, or more often if indicators warrant. There were no impairment charges related to intangible assets for the year ended December 31, 2013 and the period from January 25, 2012 (Inception) through December 31, 2012. | |
Fair Value of Financial Instrument | ' |
Fair Value of Financial Instruments | |
When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, we consider the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. We use the following three levels of inputs in determining the fair value of our assets and liabilities, focusing on the most observable inputs when available: | |
Level 1 -Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. | |
Level 2 -Quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability. | |
Level 3 -Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable. | |
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed is determined based on the lowest level input that is significant to the fair value measurement. The Company’s financial instruments include cash, prepaid expense and accrued liability. The estimated fair value of these instruments approximates its carrying amount due to the short maturity of these instruments. | |
Accounts Receivable Factoring | ' |
Accounts Receivable Factoring | |
On October 1, 2013, the Company entered into an accounts receivable purchase agreement (the “Agreement”) with Summit Capital Investors, LLC (“Summit”), with an initial term of five years and renewing annually thereafter. The Company may obtain advances up to $300,000 from Summit and shall establish a separate merchant bank account in the name of Summit (the “Lockbox”) into which all of the Company’s monthly membership or accounts receivable shall be deposited. The funds in the lockbox account will be used to pay 120% of each advance received from Summit plus any other fees or costs. During 2013, total advances received from Summit amounted to $90,000 and total accounts receivable deposited in the lockbox account amounted to $23,593. As of December 31, 2013, the Company has payable related to this factoring agreement of $84,407 which was calculated based on 120% of advances received reduced by total accounts receivable deposited into the lockbox. All revenue from the Company will be paid directly into this bank account which is not under the Company’s ownership until the advances are paid off. | |
Income Taxes Policy | ' |
Income Taxes | |
The Company follows ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. | |
The Company’s deferred tax assets primarily consist of net operating loss carry-forwards and stock-based compensation. However, the Company established a full valuation allowance for these deferred tax assets as the Company has determined that it is more likely than not to fully realize these deferred tax assets prior to their expiration. | |
Stock Based Compensation Policy | ' |
Stock Based Compensation | |
We may periodically grant stock options and issue warrants to employees and non-employees in non-capital raising transactions for services rendered and to obtain financing. We account for stock option grants and warrant issuance to employees based on Financial Accounting Standards Board (FASB) ASC Topic 718, “Compensation – Stock Compensation”, whereas the award is measured at its fair value at the date of grant and is amortized ratably over the vesting period. We account for stock option grants and warrant issued to non-employees in accordance with ASC Topic 505, “Equity”, whereas the value of the stock compensation is based upon the measurement date as determined at either (a) the date at which a performance commitment is reached, or (b) at the date at which the necessary performance to earn the equity instruments is complete. | |
Loss per Share | ' |
Net Loss per Common Share | |
The Company computes net loss per share in accordance with ASC 260, "Earnings per Share". ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. | |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements | |
Adopted | |
Effective January 2013, we adopted FASB ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities (ASU 2011-11). The amendments in ASU 2011-11 require the disclosure of information on offsetting and related arrangements for financial and derivative instruments to enable users of its financial statements to understand the effect of those arrangements on its financial position. Amendments under ASU 2011-11 will be applied retrospectively for fiscal years, and interim periods within those years, beginning after January 1, 2013. The adoption of this update did not have a material impact on the consolidated financial statements. | |
Effective January 2013, we adopted FASB ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive (ASU 2013-02). This guidance is the culmination of the FASB’s deliberation on reporting reclassification adjustments from accumulated other comprehensive income (AOCI). The amendments in ASU 2013-02 do not change the current requirements for reporting net income or other comprehensive income. However, the amendments require disclosure of amounts reclassified out of AOCI in its entirety, by component, on the face of the statement of operations or in the notes thereto. Amounts that are not required to be reclassified in their entirety to net income must be cross-referenced to other disclosures that provide additional detail. This standard is effective prospectively for annual and interim reporting periods beginning after December 15, 2012. The adoption of this update did not have a material impact on the consolidated financial statements. | |
Not Adopted | |
In February 2013, the FASB issued ASU No. 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date. The amendments in ASU 2013-04 provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this Update is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance in this Update also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendment in this standard is effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. We are evaluating the effect, if any, adoption of ASU No. 2013-04 will have on our consolidated financial statements. | |
In April 2013, the FASB issued ASU No. 2013-07, Presentation of Financial Statements (Top 205): Liquidation Basis of Accounting. The objective of ASU No. 2013-07 is to clarify when an entity should apply the liquidation basis of accounting and to provide principles for the measurement of assets and liabilities under the liquidation basis of accounting, as well as any required disclosures. The amendments in this standard is effective prospectively for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. We are evaluating the effect, if any, adoption of ASU No. 2013-07 will have on our consolidated financial statements. | |
In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Top 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The objective of ASU No. 2013-11 is to provide guidance on the financial statement presentation of an unrecognized tax benefit when a net loss carryforward, similar tax loss, or tax credit carryforward exists. The amendments in this standard is effective for all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists for fiscal years, and interim periods beginning after December 15, 2013. We are evaluating the effect, if any, adoption of ASU No. 2013-11 will have on our consolidated financial statements. | |
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements |
Prepaid_Expenses_Tables
Prepaid Expenses (Tables) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Prepaid Expenses As Follows | ' | ||||||
Prepaid Expenses As Follows | ' | ||||||
The components of prepaid expense were as follows: | |||||||
December 31, | December 31, | ||||||
2013 | 2012 | ||||||
Prepaid services | $ | 1,218 | $ | 216,667 | |||
Royalties advance | 216,069 | 116,310 | |||||
Total prepaid expense | $ | 217,287 | $ | 332,977 | |||
PROPERTY_AND_EQUIPMENT_Tables
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
PROPERTY AND EQUIPMENT | ' | ||||||
PROPERTY AND EQUIPMENT | ' | ||||||
Equipment consists of the following: | |||||||
December 31, | December 31, | ||||||
2013 | 2012 | ||||||
Furniture and equipment | $ | 29,922 | $ | 15,429 | |||
Leasehold improvements | 2,925 | 40,871 | |||||
Less: Accumulated depreciation | -32,847 | -40,871 | |||||
Total property and equipment, net | $ | - | $ | 15,429 |
INTANGIBLE_ASSETS_Tables
INTANGIBLE ASSETS (Tables) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
INTANGIBLE ASSETS | ' | ||||||
Components of intangible assets were as follows | ' | ||||||
The components of intangible assets were as follows: | |||||||
December 31, | December 31, | ||||||
2013 | 2012 | ||||||
Content Delivery Asset | $ | 312,191 | $ | 247,142 | |||
Less: Accumulated amortization | -312,191 | - | |||||
Total intangible assets, net | $ | - | $ | 247,142 |
NOTES_PAYABLE_Tables
NOTES PAYABLE (Tables) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
NOTES PAYABLE | ' | ||||||
NOTES PAYABLE | ' | ||||||
Notes payable consisted of the following: | |||||||
December 31, | December 31, | ||||||
2013 | 2012 | ||||||
Convertible notes payable to Coventry Capital, LLC, net of discount | $ | 960,000 | $ | 235,923 | |||
Convertible note payable to Stuart Subotnik, net of discount | 247,201 | 180,802 | |||||
Note payable to Ironridge | - | 150,000 | |||||
Asher Enterprises | 183,000 | - | |||||
Note payable to QuickLoan Funding | 65,010 | - | |||||
Notes payable to Charlie Sheen | 510,000 | - | |||||
Convertible note payable to Tonaquint, net of discount | 81,614 | - | |||||
Other notes payable, net of discount | 240,044 | 45,465 | |||||
Total notes payable, net of discount | $ | 2,286,869 | $ | 612,190 |
Derivative_liability_activity_
Derivative liability activity (Tables) | 12 Months Ended | ||
Dec. 31, 2013 | |||
Derivative liability activity | ' | ||
Derivative liability activity | ' | ||
The following table represents the Company’s derivative liability activity for both the embedded conversion features and the warrants for the period from January 25, 2012 to December 31, 2013: | |||
Amount | |||
Derivative Liability balance, January 25, 2012 (inception) | $ | - | |
Issuance of derivative financial instrument in 2012 | 986,343 | ||
Change in derivative liability in 2012 | -848,990 | ||
Derivative Liability balance, January 1, 2013 | 137,353 | ||
Issuance of derivative financial instrument in 2013 | 278,211 | ||
Conversion of debt in 2013 | -513,799 | ||
Change in FMV of derivative liability | 4,370,266 | ||
Derivative liability balance, December 30, 2013 | $ | 4,272,031 |
Assumptions_were_used_to_deter
Assumptions were used to determine the fair value (Tables) | 12 Months Ended | ||
Dec. 31, 2013 | |||
Assumptions were used to determine the fair value | ' | ||
Assumptions were used to determine the fair value | ' | ||
The following assumptions were used to determine the fair value of the options at date of grant: | |||
Expected volatility (%) | 93%-175% | ||
Risk free rate | 0.13%-0.38% | ||
Expected term | 1-2 years | ||
Dividend yield | 0% | ||
A_summary_of_stock_option_acti
A summary of stock option activity is as follows (Tables) | 12 Months Ended | |||||||||||||||
Dec. 31, 2013 | ||||||||||||||||
Summary of stock option activity as follows | ' | |||||||||||||||
A summary of stock option activity is as follows | ' | |||||||||||||||
A summary of stock option activity is as follows: | ||||||||||||||||
Weighted- | Average | |||||||||||||||
Average | Remaining | Aggregate | ||||||||||||||
Exercise | Contractual | Intrinsic | ||||||||||||||
Options | Price | Life (Years) | Value | |||||||||||||
Outstanding at January 25, 2012 | - | $ | - | - | $ | - | ||||||||||
Granted | 3,370,000 | 0.43 | 5.3 | - | ||||||||||||
Exercised | - | - | - | - | ||||||||||||
Forfeited or expired | - | - | - | - | ||||||||||||
Outstanding at December 31, 2012 | 3,370,000 | 0.43 | 5.3 | - | ||||||||||||
Granted | 7,950,000 | 0.1 | 4.81 | - | ||||||||||||
Exercised | - | - | - | - | ||||||||||||
Forfeited or expired | - | - | - | - | ||||||||||||
Outstanding at December 31, 2013 | 11,320,000 | $ | 0.1 | 5.97 | $ | - | ||||||||||
Exercisable at December 31, 2013 | 5,774,167 | $ | 0.11 | 7.3 | $ | - | ||||||||||
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
INCOME TAXES (Tables): | ' | ||||||
Schedule of Components of Income Tax Expense (Benefit) | ' | ||||||
Our provisions for income taxes for the years ended December 31, 2013 and 2012, respectively, were as follows (using our blended effective Federal and State income tax rate of 35.0%): | |||||||
2013 | 2012 | ||||||
Current Tax Provision: | |||||||
Federal and state | |||||||
Taxable income | $ | - | $ | - | |||
Total current tax provision | $ | - | $ | - | |||
Deferred Tax Provision: | |||||||
Federal and state | |||||||
Net loss carryforwards | $ | -12,156,000 | $ | -1,559,000 | |||
Change in valuation allowance | 12,156,000 | 1,559,000 | |||||
Total deferred tax provision | $ | - | $ | - | |||
Schedule of Deferred Tax Assets and Liabilities | ' | ||||||
Deferred tax assets at December 31, 2013 and 2012 consisted of the following: | |||||||
2013 | 2012 | ||||||
Deferred tax assets: | |||||||
Net operating loss carryforwards | $ | 4,255,000 | $ | 546,000 | |||
Valuation allowance | -4,255,000 | -546,000 | |||||
Net deferred tax assets | $ | - | $ | - |
Organization_Consists_of_the_f
Organization Consists of the following (Details) | Jul. 31, 2012 | Dec. 11, 2006 |
Organization Consists of the following: | ' | ' |
Authorized capital stock shares | ' | 200,000,000 |
Capital stock shares par value | ' | 0.001 |
Shares of common stock pursuant to a subscription agreement | 13,500,000 | ' |
Registrant issued shares of its common stock | 20,000,000 | ' |
Percentage of cpital stock | 100.00% | ' |
Selling Shareholders acquired | 21.39% | ' |
Summary_of_accounting_policies
Summary of accounting policies (Details) (USD $) | 11 Months Ended | 12 Months Ended |
Dec. 31, 2012 | Dec. 31, 2013 | |
Summary of accounting policies | ' | ' |
Depreciation expense on equipment | $40,871 | $32,847 |
Amortization expenses for the year on intangible assets | 0 | 90,993 |
The Company also amortized additional intangible assets costs related to development cost | ' | 221,198 |
Total advances received from Summit during the year | ' | 90,000 |
Total accounts receivable deposited in the lockbox account during the year | ' | 23,593 |
The funds in the lockbox account will be used to pay a percentage of each advance received from Summit plus any other fees or costs | ' | 120.00% |
Company has payable related to this factoring agreement | ' | $84,407 |
Components_of_prepaid_expense_
Components of prepaid expense were as follows (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Components of prepaid expense were as follows | ' | ' |
Prepaid services | $1,218 | $216,667 |
Royalties advance | 216,069 | 116,310 |
Total prepaid expense | $217,287 | $332,977 |
Property_and_Equipment_Consist
Property and Equipment Consisted of the Following (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Property and Equipment Consisted of the Following | ' | ' |
Furniture and equipment | $29,922 | $15,429 |
Leasehold improvements | 2,925 | 40,871 |
Less: Accumulated depreciation | -32,847 | -40,871 |
Total property and equipment, net | ' | $15,429 |
Components_Intangible_Assets_a
Components Intangible Assets as Follows (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Components Intangible Assets as Follows | ' | ' |
Content Delivery Asset | $312,191 | $247,142 |
Less: Accumulated amortization | -312,191 | ' |
Total intangible assets, net | ' | $247,142 |
Other_Assets_as_Follows_Detail
Other Assets as Follows (Details) (USD $) | 11 Months Ended | 12 Months Ended |
Dec. 31, 2012 | Dec. 31, 2013 | |
Other Assets as Follows | ' | ' |
The Company recorded an amount of debt issuance cost as other assets | ' | $127,214 |
Issuance of a convertible promissory note payable to Stuart Subotnik | ' | 240,000 |
Amortization expense for the year of debt issuance cost | 0 | 42,404 |
The balance of debt issuance costs | $127,214 | $84,810 |
Notes_payable_consisted_of_the
Notes payable consisted of the following (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Notes payable consisted of the following | ' | ' |
Convertible notes payable to Coventry Capital, LLC, net of discount | $960,000 | $235,923 |
Convertible note payable to Stuart Subotnik, net of discount | 247,201 | 180,802 |
Note payable to Ironridge | ' | 150,000 |
Asher Enterprises | 183,000 | ' |
Note payable to QuickLoan Funding | 65,010 | ' |
Notes payable to Charlie Sheen | 510,000 | ' |
Convertible note payable to Tonaquint, net of discount | 81,614 | ' |
Other notes payable, net of discount | 240,044 | 45,465 |
Total notes payable, net of discount | $2,286,869 | $612,190 |
Coventry_Capital_LLC_Note_Deta
Coventry Capital, LLC Note (Details) (USD $) | 11 Months Ended | 12 Months Ended |
Dec. 31, 2012 | Dec. 31, 2013 | |
Coventry Capital, LLC Note | ' | ' |
The Company issued a total of convertible notes payable to Coventry Capital, LLC. | ' | $950,000 |
The Company recorded a debt discount | ' | 714,077 |
The Company recognized interest expense for the amortization of the discount | 0 | 714,077 |
The Company borrowed an additional from Coventry Capital, LLC. | ' | $10,000 |
Stuart_Subotnik_Notes_Details
Stuart Subotnik Notes (Details) (USD $) | 3 Months Ended | 11 Months Ended | 12 Months Ended |
Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2013 | |
Stuart Subotnik Notes | ' | ' | ' |
The Company issued a total of convertible notes payable to Stuart Subotnik | ' | ' | $240,000 |
This note was issued with warrants and exercisable into the Company's common stock | ' | ' | 800,000 |
The Company recorded a debt discount representing the value of the embedded conversion feature | ' | ' | 118,619 |
Additional debt discount for the fair value of the warrants | ' | ' | 121,381 |
The Company recognized interest expense for the amortization of the discount during the year | ' | 40,802 | 66,399 |
The Company issued additional notes payable to Mr. Subotnik in the aggregate amount | $140,000 | ' | ' |
QuickLoan_Funding_Details
QuickLoan Funding (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Mar. 13, 2013 | |
QuickLoan Funding | ' | ' |
Under the terms of the Promissory Note, the Lender paid | ' | $110,000 |
Lender may fund additional amounts in such amounts | 150,000 | ' |
The Lender may provide additional amounts only by mutual agreement with the Company, up to a total principal sum | 400,000 | ' |
The total amount funded to the Company under quick loans | 360,000 | ' |
All amounts advanced by Lender are subject to a original issue discount | 0.1 | ' |
In the second quarter of 2013, the Company received additional amount from the lender | 20,700 | ' |
The original issue discount charged by the lender on the two advances made | 14,522 | ' |
The lender converted an amount into Company's common stock. | 38,610 | ' |
The Company recorded a debt discount in an amount representing the value of the embedded conversion feature | 130,700 | ' |
The Company executed a Promissory Note in favor of celebrity actor, Charlie Sheen | 150,000 | ' |
The Company borrowed an additional sum from Mr. Sheen under the same terms as the Promissory Note | 360,000 | ' |
Under the terms of the Promissory Note, the principal accrues interest at the rate per annum | 6.00% | ' |
Interest payments per month | $750 | ' |
Tonaquint_Convertible_note_Det
Tonaquint Convertible note (Details) (USD $) | Dec. 31, 2013 | Apr. 03, 2013 | Dec. 31, 2012 |
Tonaquint Convertible note | ' | ' | ' |
Under the terms of the Financing Documents, the Buyer entered into the Secured Convertible Promissory Note in the principal amount | ' | $340,000 | ' |
The Note bears interest at the rate per annum | ' | 8.00% | ' |
Upon the occurrence of an event of default, interest shall accrue on the outstanding balance at the rate per annum | ' | 22.00% | ' |
The Note carries an original issue discount | ' | 30,000 | ' |
In addition, the Company agreed to pay to the Buyer to cover the Buyer's legal fees, accounting costs | ' | 10,000 | ' |
In consideration for the Note, the Buyer paid the Company | 100,000 | ' | ' |
Issued to the Company two Buyer Deed of Trust Notes in the amount each consisting | 100,000 | ' | ' |
Upon an event of default, the outstanding balance under the Note shall increase to and will be immediately due and payable | 1.35 | ' | ' |
The buyer also issue additional amount of note | 10,660 | ' | ' |
Converted principal balance of note to common stock | 55,215 | ' | ' |
The Company also issued Buyer a warrant to purchase shares of Company common stock | 1,400,000 | ' | ' |
Exercise price per share of common stock | $0.20 | ' | ' |
The embedded conversion feature of this note and related warrants was recorded a total debt discount | 111,412 | ' | ' |
Debt discount representing the value of the embedded conversion feature | 23,804 | ' | ' |
Additional debt discount for the fair value of the warrants recorded | 47,608 | ' | ' |
Original issue discount and fees recorded | 40,000 | ' | ' |
The Company recognized interest expense for the amortization and write off of the discount | $97,581 | ' | $0 |
Asher_Enterprises_Note_and_Oth
Asher Enterprises Note and Other Notes Payable (Details) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Asher Enterprises Note and Other Notes Payable | ' |
Asher purchased a Convertible Promissory Note | $183,000 |
The Company borrowed a net total from several individuals under notes payable | $240,044 |
The Asher Notes accrues interest at the rate per annum | 8.00% |
Related_Party_Note_Payable_Det
Related Party Note Payable (Details) (USD $) | Dec. 31, 2013 |
Related Party Note Payable | ' |
Greenwald has agreed to loan | $250,000 |
Advance funds up to the amount | 250,000 |
Outstanding under loan agreement | $126,160 |
Accrued Interest Rate Per Annum | 3.00% |
Related_party_employment_agree
Related party employment agreements (Details) (USD $) | Dec. 31, 2013 |
Related party employment agreements | ' |
The Company entered into two employment agreements with the CEO and President of the Company for an annual salary | $250,000 |
The Company has outstanding payroll liabilities owed to them and recorded under accrued liabilities | 288,858 |
The Company also hire Martin W. Greenwald's daughter as a consultant and paid | $18,983 |
Derivative_Liability_conversio
Derivative Liability conversion features and the warrants for the period (Details) (USD $) | 23 Months Ended |
Dec. 31, 2013 | |
Derivative Liability conversion features and the warrants for the period | ' |
Derivative Liability balance, January 25, 2012 (inception) | $0 |
Issuance of derivative financial instrument in 2012 | 986,343 |
Change in derivative liability in 2012 | -848,990 |
Derivative Liability balance, January 1, 2013 | 137,353 |
Issuance of derivative financial instrument in 2013 | 278,211 |
Conversion of debt in 2013 | -513,799 |
Change in FMV of derivative liability | 4,370,266 |
Derivative liability balance, December 30, 2013 | $4,272,031 |
Valuation_assumptions_using_th
Valuation assumptions using the Black-Scholes model (Details) | 12 Months Ended |
Dec. 31, 2013 | |
Valuation assumptions using the Black-Scholes model | ' |
Dividend yield | 0.00% |
Expected term in years | 1 |
Commitments_And_Contingencies_
Commitments And Contingencies Consists of the following (Details) (USD $) | Dec. 31, 2013 | Jul. 10, 2013 | Mar. 25, 2013 | Dec. 19, 2012 | Dec. 19, 2011 |
Commitments And Contingencies Consists of the following | ' | ' | ' | ' | ' |
Issued two convertible promissory notes | ' | ' | ' | ' | $280,000 |
Aggregate principal amount received | 118,000 | ' | ' | ' | ' |
Advance amount agreed | ' | ' | ' | ' | 280,000 |
Accruing interest at the default rate per annum | 29.00% | ' | ' | ' | ' |
Contingent liability, | 177,708 | ' | ' | ' | ' |
Owes an additional plus accrued interest | 162,000 | ' | ' | ' | ' |
Recorded a contingent liability | 162,000 | ' | ' | ' | ' |
Sale of of Convertible Subordinated Debentures and Series A Preferred Stock | ' | ' | ' | 3,000,000 | ' |
Recorded an accrual under accrued expenses | ' | ' | ' | ' | 960,000 |
Attorney Fees and costs (Ironridge) | ' | 850,000 | ' | ' | ' |
Additional attorney's fees and costs | ' | 110,168 | ' | ' | ' |
Agreed to pay Charlie Sheen a fee payable in installments | ' | ' | $300,000 | ' | ' |
Exercise price per share (options) | ' | ' | $0.10 | ' | ' |
Operating_lease_Details
Operating lease (Details) (USD $) | 11 Months Ended | 12 Months Ended |
Dec. 31, 2012 | Dec. 31, 2013 | |
Operating lease | ' | ' |
Operating expenses for the facility per month | ' | $5,935 |
Rent expense. | $33,210 | $46,945 |
CAPITAL_STOCK_TRANSACTIONS_Det
CAPITAL STOCK TRANSACTIONS (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 10, 2012 | Jul. 31, 2012 |
CAPITAL STOCK TRANSACTIONS | ' | ' | ' | ' |
The Registrant issued shares of its common stock to the Selling Shareholders in exchange | ' | ' | ' | 20,000,000 |
The Registrant had shares of common stock issued and outstanding | ' | ' | ' | 93,500,000 |
The Company cancelled a total of shares of Company common stock | ' | ' | 37,550,000 | ' |
Recorded as professional and consulting fees for the value of the shares issued | $557,599 | ' | ' | ' |
Common shares for services provided | 8,730,682 | 1,100,000 | ' | ' |
Common shares for cash, | 2,134,067 | ' | ' | ' |
Value of Common shares issued for cash, | 87,237 | ' | ' | ' |
Shares upon conversion of a note payable. | 18,665,692 | ' | ' | ' |
Value of Common shares issued upon conversion of a note payable | 170,825 | ' | ' | ' |
Recognized expenses for the value of the shares issued | ' | 56,333 | ' | ' |
Recorded as prepaid expense for the value of the shares issued | ' | 216,667 | ' | ' |
Subscription Received for purchase of common stock | $65,000 | ' | ' | ' |
Assumptions_used_to_determine_
Assumptions used to determine fair value of options at date of grant (Details) | 12 Months Ended |
Dec. 31, 2013 | |
Assumptions used to determine fair value of options at date of grant | ' |
Expected term | '1 to -2 years |
Dividend yield | 0.00% |
Summary_of_stock_option_activi
Summary of stock option activity as follows (Details) | Options | Weighted Average Exercise Price | Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value |
Outstanding at Jan. 25, 2012 | ' | ' | ' | 0 |
Granted | 3,370,000 | 0.43 | 5.3 | 0 |
Exercised | ' | ' | ' | 0 |
Forfeited or expired | ' | ' | ' | 0 |
Outstanding at Dec. 31, 2012 | 3,370,000 | 0.43 | 5.3 | 0 |
Outstanding at Dec. 31, 2012 | ' | ' | ' | ' |
Granted | 7,950,000 | 0.1 | 4.81 | 0 |
Exercised | ' | ' | ' | 0 |
Forfeited or expired | ' | ' | ' | 0 |
Exercisable at Dec. 31, 2013 | 5,774,167 | 0.11 | 7.3 | 0 |
Outstanding at Dec. 31, 2013 | 11,320,000 | 0.1 | 5.97 | 0 |
Provisions_for_income_taxes_we
Provisions for income taxes were as follows (Details) (USD $) | 11 Months Ended | 12 Months Ended |
Dec. 31, 2012 | Dec. 31, 2013 | |
Provisions for income taxes were as follows | ' | ' |
Federal and state Taxable income | $0 | $0 |
Total current tax provision | 0 | 0 |
Federal and state Net loss carryforwards | -1,559,000 | -12,156,000 |
Change in valuation allowance. | 1,559,000 | 12,156,000 |
Total deferred tax provision | $0 | $0 |
Deferred_tax_assets_consisted_
Deferred tax assets consisted of the following (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Deferred tax assets: | ' | ' |
Net operating loss carryforwards | $4,255,000 | $546,000 |
Valuation allowance | -4,255,000 | -546,000 |
Net deferred tax assets | $0 | $0 |
Reconciliation_of_federal_and_
Reconciliation of federal and state statutory income tax rates to our tax benefit (Details) (USD $) | 11 Months Ended | 12 Months Ended |
Dec. 31, 2012 | Dec. 31, 2013 | |
Reconciliation of federal and state statutory income tax rates to our tax benefit | ' | ' |
Federal income tax rate at 35% | ($546,000) | ($4,255,000) |
State income tax, net of federal benefit | 0 | 0 |
Change in valuation allowance | 546,000 | 4,255,000 |
Benefit for income taxes | $0 | $0 |
Subsequent_transactions_Detail
Subsequent transactions (Details) (USD $) | Mar. 13, 2014 | Mar. 12, 2014 | Jan. 27, 2014 |
Subsequent transactions | ' | ' | ' |
Amount of outstanding Company debt converted in to common stock | ' | ' | $150,000 |
Number of shares issued for conversion of debt | ' | ' | 4,000,000 |
Company executed a Subscription Agreement with Stuart Subotnick and issued restricted shares of Company common stock | ' | 5,000,000 | ' |
Proceeds of restricted shares | ' | 75,000 | ' |
QuickLoan Funding the remaining balance repaid | $6,878.89 | ' | ' |