Document_Entity_and_Informatio
Document Entity and Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Apr. 10, 2014 | Jun. 30, 2013 | |
Document Entity And Information [Abstract] | ' | ' | ' |
Entity Registrant Name | 'INFORMATION SYSTEMS ASSOCIATES, INC. | ' | ' |
Entity Central Index Key | '0001396536 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $461,879 |
Entity Common Stock, Shares Outstanding | ' | 103,440,769 | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
BALANCE_SHEETS
BALANCE SHEETS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Current Assets | ' | ' |
Cash and cash equivalents | $166 | ' |
Accounts receivable, net | 26,696 | 35,708 |
Prepaid expenses | 29,792 | 5,439 |
Total Current Assets | 56,654 | 41,147 |
Property and equipment, net | 12,591 | 18,306 |
Other assets | 1,690 | 4,690 |
TOTAL ASSETS | 70,935 | 64,143 |
Current Liabilities | ' | ' |
Checks written in excess of cash balance | ' | 3,880 |
Accounts payable | 246,528 | 175,265 |
Accounts payable - related parties | ' | 6,158 |
Accrued payroll | 31,646 | ' |
Notes payable - related parties | 330,087 | 229,025 |
Notes payable - shareholder | 50,000 | 50,000 |
Notes payable (Convertible OID), net of discounts - related parties | 66,000 | 24,953 |
Notes payable (Convertible OID), net of discounts - shareholders | ' | 69,542 |
Notes payable (OID) - net of discounts, shareholder | 142,684 | ' |
Notes payable (Third Party) | 45,000 | ' |
Loan payable to factor | ' | 24,587 |
Loans payable - insurance | ' | 4,612 |
Line of credit | 39,979 | 37,028 |
Deferred revenue | 31,182 | 38,445 |
Accrued interest | 20,380 | 11,508 |
Total Current Liabilities | 1,003,486 | 675,003 |
Long-term liabilities | ' | ' |
Notes payable (OID) - net of discounts, shareholders | ' | 143,866 |
Total Liabilities | 1,003,486 | 818,869 |
Commitments and contingencies (Note 12) | ' | ' |
Stockholders' Deficit | ' | ' |
Preferred stock $.001 par value, 1,000,000 shares authorized, -0- and -0- shares issued and outstanding at December 31, 2013 and December 31, 2012, respectively | ' | ' |
Additional paid in capital | 4,420,460 | 3,880,195 |
Common Stock to be Issued- Class A Stock, 8,332,500 shares | 8,333 | ' |
Subscription Receivable | -100,000 | ' |
Accumulated deficit | -5,352,286 | -4,703,719 |
Total Stockholders' Deficit | -932,551 | -754,726 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | 70,935 | 64,143 |
Common Stock, Class A [Member] | ' | ' |
Stockholders' Deficit | ' | ' |
Common stock | 79,442 | 57,298 |
Common Stock, Class B [Member] | ' | ' |
Stockholders' Deficit | ' | ' |
Common stock | $11,500 | $11,500 |
BALANCE_SHEETS_Parenthetical
BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2013 | Aug. 01, 2013 | Dec. 31, 2012 |
Preferred Stock, par value per share | $0.00 | ' | $0.00 |
Preferred Stock, shares authorized | 1,000,000 | ' | 1,000,000 |
Preferred Stock, shares issued | 0 | ' | 0 |
Preferred stock, shares outstanding | 0 | ' | 0 |
Common Stock, Class A [Member] | ' | ' | ' |
Common stock, par value per share | $0.00 | $0.00 | $0.00 |
Common stock, shares authorized | 450,000,000 | 450,000,000 | 450,000,000 |
Common stock, shares issued | 79,442,019 | 64,373,253 | 57,298,251 |
Common stock, shares outstanding | 79,442,019 | 64,373,253 | 57,298,251 |
Common Stock to be Issued | 8,332,500 | ' | ' |
Common Stock, Class B [Member] | ' | ' | ' |
Common stock, par value per share | $0.00 | $0.00 | $0.00 |
Common stock, shares authorized | 50,000,000 | 50,000,000 | 50,000,000 |
Common stock, shares issued | 11,500,000 | 11,500,000 | 11,500,000 |
Common stock, shares outstanding | 11,500,000 | 11,500,000 | 11,500,000 |
STATEMENTS_OF_OPERATIONS
STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Revenue | ' | ' |
Software and hardware sales | $74,814 | $112,535 |
Services | 532,782 | 504,653 |
Total Revenue | 607,596 | 617,188 |
Cost of Revenue | ' | ' |
Software and hardware | 12,361 | 60,424 |
Services | 263,884 | 328,721 |
Total Cost of Revenue | 276,245 | 389,145 |
Gross Profit | 331,351 | 228,043 |
Operating Expenses | ' | ' |
Administrative and general | 235,446 | 188,522 |
Salaries and employee benefits | 456,067 | 552,889 |
Professional fees | 94,273 | 63,359 |
Total Operating Expenses | 785,786 | 804,770 |
Loss Before Other Income (Expense) | -454,435 | -576,727 |
Other Income (Expense) | ' | ' |
Finance fees earned on sales | 9,231 | ' |
Gain on Settlement | 13,981 | ' |
Factoring fees | -25,667 | -14,421 |
Interest expense | -191,677 | -273,847 |
Total Other Expense | -194,132 | -288,268 |
Net Loss | ($648,567) | ($864,995) |
Basic and Fully Diluted Loss per Share: | ' | ' |
Basic and fully diluted | ($0.01) | ($0.01) |
Weighted average common shares outstanding | 77,871,040 | 67,805,902 |
STATEMENTS_OF_CHANGES_IN_STOCK
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (USD $) | Total | Preferred Stock [Member] | Common Stock [Member] | Common Stock - Issuable [Member] | Additional Paid-in Capital [Member] | Subscription Receivable [Member] | Accumulated Deficit [Member] |
Balance at Dec. 31, 2011 | ($170,246) | ' | $63,198 | ' | $3,605,280 | ' | ($3,838,724) |
Balance, shares at Dec. 31, 2011 | ' | ' | 63,198,252 | ' | ' | ' | ' |
Issuance of stock for services | 10,000 | ' | 100 | ' | 9,900 | ' | ' |
Issuance of stock for services, shares | ' | ' | 100,000 | ' | ' | ' | ' |
Options issued for services | 4,000 | ' | ' | ' | 4,000 | ' | ' |
Conversion of notes payable | 137,500 | ' | 5,500 | ' | 132,000 | ' | ' |
Conversion of notes payable, shares | ' | ' | 5,499,999 | ' | ' | ' | ' |
Beneficial Conversion Feature on Convertible Notes | 54,722 | ' | ' | ' | 54,722 | ' | ' |
Detachable Warrants issued with Convertible Notes | 74,293 | ' | ' | ' | 74,293 | ' | ' |
Net Loss | -864,995 | ' | ' | ' | ' | ' | -864,995 |
Balance at Dec. 31, 2012 | -754,726 | ' | 68,798 | ' | 3,880,195 | ' | -4,703,719 |
Balance, shares at Dec. 31, 2012 | ' | ' | 68,798,251 | ' | ' | ' | ' |
Issuance of stock for services | 59,500 | ' | 10,500 | ' | 49,000 | ' | ' |
Issuance of stock for services, shares | ' | ' | 10,500,000 | ' | ' | ' | ' |
Stock options | 16,388 | ' | ' | ' | 16,388 | ' | ' |
Warrants Reset expense | 31,500 | ' | ' | ' | 31,500 | ' | ' |
Shares for additional investment | 1,833 | ' | 250 | ' | 1,583 | ' | ' |
Shares for additional investment, shares | ' | ' | 250,000 | ' | ' | ' | ' |
Conversion of notes payable | 106,564 | ' | 6,394 | ' | 100,170 | ' | ' |
Conversion of notes payable, shares | ' | ' | 6,393,768 | ' | ' | ' | ' |
Shares for cash investment | 60,000 | ' | 5,000 | 8,333 | 146,666 | -100,000 | ' |
Shares for cash investment, shares | ' | ' | 5,000,000 | 8,332,500 | ' | ' | ' |
Contributed services | 194,958 | ' | ' | ' | 194,958 | ' | ' |
Net Loss | -648,567 | ' | ' | ' | ' | ' | -648,567 |
Balance at Dec. 31, 2013 | ($932,551) | ' | $90,942 | $8,333 | $4,420,460 | ($100,000) | ($5,352,286) |
Balance, shares at Dec. 31, 2013 | ' | ' | 90,942,019 | 8,332,500 | ' | ' | ' |
STATEMENTS_OF_CASH_FLOWS
STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Cash Flows from Operating Activities | ' | ' |
Net Loss | ($648,567) | ($864,995) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Depreciation | 5,715 | 7,177 |
Amortization of software | ' | 27,017 |
Amortization of prepaids | ' | 16,538 |
Amortization of prepaid consulting shares for services | 29,708 | 22,500 |
Amortization of discounts | 67,755 | 24,953 |
Gain on Settlement | -13,981 | ' |
Officers contributed salaries | 194,958 | ' |
Options issued for services | 16,388 | 4,000 |
Stock issued for Director's services | ' | 10,000 |
Amortization of beneficial conversion value and warrant discounts | 1,833 | 217,972 |
Bad Debt Expense | 5,490 | ' |
Expense for warrant term modifications | 31,500 | ' |
Interest and default penalty on convertible note | 24,063 | ' |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | 3,522 | 148,524 |
Prepaids | 5,439 | ' |
Other assets | 3,000 | ' |
Accounts payable | 85,243 | 41,185 |
Accounts payable - related party | -6,156 | 628 |
Accrued expenses | 31,647 | 125,694 |
Accrued interest | 8,872 | 10,612 |
Deferred revenue | -7,263 | 38,445 |
Net Cash Used in Operating Activities | -160,834 | -169,750 |
Cash Flows from Financing Activities | ' | ' |
Proceeds (Repayments) from checks written in excess of cash balances | -3,880 | 3,880 |
Proceeds from notes - related parties | 175,597 | ' |
Repayments of notes - related parties | -74,534 | ' |
Proceeds from shareholder | 60,000 | 135,000 |
Repayment to shareholder | ' | -10,000 |
Repayment of convertible notes, shareholders | -14,932 | ' |
Proceeds from factor, net of repayments | -24,587 | -90,539 |
Proceed from notes related parties | ' | 284,094 |
Repayment of notes related parties | ' | -145,764 |
Insurance premium repayments | -4,613 | -9,792 |
Proceeds from line of credit facility | 39,981 | 164,192 |
Repayments of line of credit facility | -37,032 | -162,309 |
Proceeds from third party note | 45,000 | ' |
Net Cash Provided by Financing Activities | 161,000 | 168,762 |
Net Change in Cash and Cash Equivalents | 166 | -988 |
Cash and Cash Equivalents at Beginning of year | ' | 988 |
Cash and Cash Equivalents at End of year | 166 | ' |
Supplemental disclosure of cash flow information: | ' | ' |
Cash paid for interest | 87,592 | 25,500 |
Cash paid for taxes | ' | ' |
Non-cash investing and financing activity: | ' | ' |
Conversion of convertible notes and accrued interest | 106,563 | ' |
Common stock issued for prepaid services | 59,500 | ' |
Premium financing | ' | 10,230 |
Conversion of officer's accrued payroll to loans | ' | 125,694 |
Conversion of note payable to common stock | ' | 137,500 |
Original issue discount related to notes payable | ' | 41,000 |
Beneficial conversion feature and warrants related to notes payable | ' | $129,015 |
NATURE_OF_OPERATIONS_AND_SUMMA
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ' | ||||||||||
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||
NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||
Nature of Operations | |||||||||||
Information Systems Associates, Inc. (Company) was incorporated under the laws of the State of Florida on May 31, 1994. The Company provides Mobile Data Center Management™ systems and turnkey data center management solutions to customers. Our products and services include data center asset/inventory management, data center management software and data center data collection. Utilizing its proprietary and patented technology, OSPI® (On Site Physical Inventory®), customers are able to manage data centers on a mobile basis, bringing data center management out of the office and into the data center. | |||||||||||
Cash and Cash Equivalents | |||||||||||
For the purposes of the Statement of Cash Flows, the Company considers liquid investments with an original maturity of three months or less to be a cash equivalent. | |||||||||||
Use of Estimates | |||||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. Most significant estimates in the accompanying financial statements include the allowance on accounts receivable, valuation of deferred tax assets, valuation of warrants issued with debt, valuation of beneficial conversion features in convertible debt, valuation of stock-based awards, valuation of long-lived assets for impairment and the measurement and useful lives of property and equipment. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. | |||||||||||
Concentrations | |||||||||||
Cash Concentrations: | |||||||||||
Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. We have not experienced any losses related to these balances. There were no amounts on deposit in excess of federally insured limits at December 31, 2013 and 2012. | |||||||||||
Significant Customers and Concentration of Credit Risk: | |||||||||||
A significant portion of revenues is derived from certain customer relationships. The following is a summary of customers that each represents greater than 10% of total revenues in 2013 and 2012 and total accounts receivable at December 31, 2013 and 2012, respectively: | |||||||||||
2013 | 2012 | ||||||||||
Revenue | Accounts Receivable | Revenue | Accounts Receivable | ||||||||
Customer A | 49% | Customer A | 68% | Customer A | 48% | Customer A | 90% | ||||
Customer B | 18% | Customer B | 22% | Customer B | 17% | ||||||
Customer C | 14% | ||||||||||
Fair Value of Financial Instruments and Fair Value Measurements | |||||||||||
We measure our financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amounts approximate fair value due to their short maturities. Amounts recorded for subordinated notes payable, net of discount, and loans payable also approximate fair value because current interest rates available to us for debt with similar terms and maturities are substantially the same. | |||||||||||
ASC Topic 820 provides guidance with respect to valuation techniques to be utilized in the determination of fair value of assets and liabilities. Approaches include, (i) the market approach (comparable market prices), (ii) the income approach (present value of future income or cash flow), and (iii) the cost approach (cost to replace the service capacity of an asset or replacement cost). ASC Topic 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. | |||||||||||
The following is a brief description of those three levels: | |||||||||||
Level 1: | |||||||||||
Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. | |||||||||||
Level 2: | |||||||||||
Inputs, other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. | |||||||||||
Level 3: | |||||||||||
Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. | |||||||||||
Accounts Receivable and Factoring | |||||||||||
Accounts receivable are stated at estimated net realizable value. Accounts receivable are comprised of balances due from customers net of estimated allowances for uncollectible accounts. In determining the collections on the account, historical trends are evaluated and specific customer issues are reviewed to arrive at appropriate allowances. | |||||||||||
The Company accounts for the transfer of our accounts receivable to a third party in accordance with ASC 860-10-40-5 "Transfers and Servicing". ASC 860-10 requires that several conditions be met in order to present the sale of accounts receivable net of related debt in the asset section of our balance sheet. Even though we have isolated the transferred (sold) assets and we have the legal right to transfer our assets (accounts receivable) we do not meet the third test of effective control since our accounts receivable sales agreement requires us to be liable in the event of default by one of our customers. Because we do not meet all three conditions, we do not qualify for sale treatment and our debt incurred with respect to the sale of our accounts receivable is presented as a secured loan liability on our balance sheet. | |||||||||||
Property and Equipment | |||||||||||
Property and equipment is stated at cost, less accumulated depreciation. Depreciation is provided by the straight-line method over the estimated economic life of the property and equipment (three to ten years). When assets are sold or retired, their costs and accumulated depreciation are eliminated from the accounts and any gain or loss resulting from their disposal is included in the statement of operations. Leasehold improvements are expensed over the term of our lease. | |||||||||||
The Company recognizes an impairment loss on property and equipment when evidence, such as the sum of expected future cash flows (undiscounted and without interest charges), indicates that future operations will not produce sufficient revenue to cover the related future costs, including depreciation, and when the carrying amount of the asset cannot be realized through sale. Measurement of the impairment loss is based on the fair value of the assets. | |||||||||||
Software Development Costs | |||||||||||
Internal Use Software: | |||||||||||
The Company accounts for costs incurred to develop or purchase computer software for internal use in accordance with FASB ASC 350-40 "Internal-Use Software" or ASC 350-50 "Website Costs". As required by ASC 350-40, the Company capitalizes the costs incurred during the application development stage, which include costs to design the software configuration and interfaces, coding, installation, and testing. | |||||||||||
Costs incurred during the preliminary project stage along with post-implementation stages of internal use computer software are expensed as incurred. Capitalized development costs are amortized over a period of one to three years. Costs incurred to maintain existing product offerings are expensed as incurred. The capitalization and ongoing assessment of recoverability of development costs requires considerable judgment by management with respect to certain external factors, including, but not limited to, technological and economic feasibility, and estimated economic life. | |||||||||||
Software to be sold or leased: | |||||||||||
Costs incurred in connection with the development of software products are accounted for in accordance with the Financial Accounting Standards Board Accounting Standards Codification ("ASC") 985-20 Costs of Software to Be Sold, Leased or Marketed." Costs incurred prior to the establishment of technological feasibility are charged to research and development expense. Software development costs are capitalized after a product is determined to be technologically feasible and is in the process of being developed for market and capitalization ceases after the general release of the software. Amortization of capitalized software development costs begins upon initial product shipment. Capitalized software development costs are amortized over the estimated life of the related product using the straight-line method. The Company evaluates its software assets for impairment whenever events or change in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of software assets to be held and used is measured by a comparison of the carrying amount of the asset to the future net undiscounted cash flows expected to be generated by the asset. If such software assets are considered to be impaired, the impairment to be recognized is the excess of the carrying amount over the fair value of the software asset. | |||||||||||
Software maintenance costs are charged to expense as incurred. The cost of the software and the related accumulated amortization are removed from the accounts upon retirement of the software with any resulting loss being recorded in operations. | |||||||||||
Long-Lived Assets | |||||||||||
The Company evaluates the recoverability of its property, equipment, and other long-lived assets in accordance with FASB ASC 360 "Property, Plant and Equipment", which requires recognition of impairment of long-lived assets in the event the net book value of such assets exceed the estimated future undiscounted cash flows attributable to such assets or the business to which such intangible assets relate. | |||||||||||
Revenue Recognition | |||||||||||
The Company recognizes revenue in accordance with Security Exchange Commission (SEC) Staff Accounting Bulletin No. 104, "Revenue Recognition" and Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 985-605-25 which addresses Revenue Recognition for the software industry. The general criteria for revenue recognition under ASC 985-605 for our Company which sells software licenses which do not require any significant modification or customization is that revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. | |||||||||||
The Company generates revenue from three sources: (1) Professional Services (consulting & auditing); (2) Software Licensing with optional hardware sales; and (3) Customer Service (training & maintenance/support). | |||||||||||
For sales arrangements that do not involve multiple elements: | |||||||||||
-1 | |||||||||||
Revenues for professional services, which are of short term duration, are recognized when services are completed, | |||||||||||
-2 | |||||||||||
Through December 31, 2013 software license sales have been one time sales of a perpetual license to use our software product and the customer also has the option to purchase third party manufactured handheld devices from us if they purchase our software license. Accordingly the revenue is recognized upon delivery of the software and delivery of the hardware, as applicable, to the customer, | |||||||||||
-3 | |||||||||||
Training sales are one time upfront short term training sessions and are recognized after the service has been performed, | |||||||||||
-4 | |||||||||||
Maintenance/support is an optional product sold to our software license customers under one year contracts. Accordingly, maintenance payments received upfront are deferred and recognized over the contract term. | |||||||||||
Arrangements with customers may involve multiple elements of the above sources. Training and maintenance on software products will generally occur after the software product sale while other services may occur before or after the software product sale and may not relate to the software product. | |||||||||||
Each element is accounted for separately when each element has value to the customer on a stand-alone basis and there is Company specific objective evidence of selling price of each deliverable. For revenue arrangements with multiple deliverables, the Company allocates the total customer arrangement to the separate units of accounting based on their relative selling prices as determined by the price for the items when sold separately. Once the selling price is allocated, the revenue for each element is recognized using the general and specific criteria under GAAP as discussed above for elements sold in non-multiple element arrangements. A delivered item or items that do not qualify as a separate unit of accounting within the arrangement are combined with the other applicable undelivered items within the arrangement. The allocation of arrangement consideration and the recognition of revenue is then determined for those combined deliverables as a single unit of accounting. The Company sells it various services and software and hardware products at established prices on a standalone basis which provides Company specific objective evidence of selling price for purposes of multiple element relative selling price allocation. All elements in multiple element arrangements with Company customers qualify as separate units of account for revenue recognition purposes. | |||||||||||
Sales Return Reserve Policy | |||||||||||
Our return policy generally allows our end users to return purchased hardware products for refund or in exchange for new products. We estimate a reserve for sales returns, if any, and record that reserve amount as a reduction of sales and as a sales return reserve liability. | |||||||||||
Warranty Reserve Policy | |||||||||||
The Company is a distributor of products and warranties are the responsibility of the manufacturer. Therefore the Company does not record a record a reserve for product warranty. | |||||||||||
Cost of Revenue | |||||||||||
Cost of revenue includes hardware costs, amortization of capitalized software and labor costs for services. | |||||||||||
Share-Based Compensation | |||||||||||
We follow the fair value recognition provisions of ASC 718, "Compensation - Stock Compensation". The fair values of share-based payments are estimated on the date of grant using the Black-Scholes option pricing model, based on weighted average assumptions. Expected volatility is based on historical volatility of our common stock. We have elected to use the simplified method described in the Securities and Exchange Commission Staff Accounting Bulletin Topic 14C to estimate the expected term of employee stock options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. Compensation expense is recognized on a straight-line basis over the requisite service period of the award. | |||||||||||
The assumptions used in calculating the fair value of stock-based awards represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future. | |||||||||||
Advertising Expenses | |||||||||||
Advertising costs are expensed as incurred. For the years ended December 31, 2013 and 2012 advertising expenses totaled $0 and $2,361, respectively. | |||||||||||
Income Taxes | |||||||||||
We use the asset and liability method to account for income taxes. Under this method, deferred income taxes are determined based on the differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements which will result in taxable or deductible amounts in future years and are measured using the currently enacted tax rates and laws. A valuation allowance is provided to reduce net deferred tax assets to the amount that, based on available evidence, is more likely than not to be realized. | |||||||||||
The Company follows the provisions of ASC 740-10, Accounting for Uncertain Income Tax Positions. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. | |||||||||||
Earnings (Loss) Per Share | |||||||||||
Basic earnings per share (EPS) are computed by dividing net (loss) by the weighted average number of common shares outstanding. The dilutive EPS adds the dilutive effect of stock options, warrants and other stock equivalents. As of December 31, 2013 and 2012, outstanding warrants to purchase an aggregate of 29,859,375 and 19,860,000 shares of Class A stock respectively and outstanding options to purchase 1,000,000 and 350,000 shares of Class B stock respectively were excluded from the computation of dilutive earnings per share because the inclusion would have been anti-dilutive. These warrants and options may dilute future earnings per share. The Company also has convertible debt convertible into 3,959,921 shares of common stock that may dilute future earnings. | |||||||||||
Recent Issued Accounting Standards | |||||||||||
We have implemented all new accounting standards that are in effect and that may impact our financial statements and do not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations. |
GOING_CONCERN
GOING CONCERN | 12 Months Ended |
Dec. 31, 2013 | |
GOING CONCERN [Abstract] | ' |
GOING CONCERN | ' |
NOTE 2 - GOING CONCERN | |
As reflected in the accompanying financial statements, the Company had a net loss and cash used in operations for the year ended December 31, 2013 of $648,567 and $160,834, respectively. The working capital deficit, stockholders' deficit and accumulated deficit as of December 31, 2013 was $946,832, $932,551 and $5,352,286, respectively. These matters raise substantial doubt about the Company's ability to continue as a going concern. | |
The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its business plan and raise capital. During 2013 management arranged with a related party for an increase in a working capital line of credit from $200,000 to $300,000 to finance on-going projects. Management has been supplementing this line of credit with short term loans from friends and family, postponement of salary payments by officers with subsequent forgiveness of accrued amounts and extensions on payments to certain suppliers. Although our overall debt level has increased, we were successful in getting most of our convertible note holders to convert into common stock. | |
Our management continues to engage in discussions with the capital markets to raise additional funds for expansion including software development and marketing. Our business strategy is to focus on growing our software and customer services businesses. Our target market is expected to grow to more than $1.7 billion by 2016. We will focus on growing at the same rate as the market and expanding our customer base both in numbers of customers and average revenue per customer as our offerings deliver greater value. Part of the increase in our debt relates to costs for developing a new software product which is expected to be released sometime in 2014. This new product is anticipated to provide an increase in recurring revenues and subsequently narrow and eventually eliminate the ongoing losses as sustainable profitability is achieved. | |
Management believes that the actions presently being taken provide the opportunity for the Company to continue as a going concern. Ultimately, the continuation of the Company as a going concern is dependent upon the ability of the Company to generate sufficient revenue and to attain profitable operations. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
ACCOUNTS_RECEIVABLE_AND_FACTOR
ACCOUNTS RECEIVABLE AND FACTORING | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
ACCOUNTS RECEIVABLE AND FACTORING [Abstract] | ' | ||||||||
ACCOUNTS RECEIVABLE AND FACTORING | ' | ||||||||
NOTE 3 - ACCOUNTS RECEIVABLE AND FACTORING | |||||||||
In December 2011 the Company entered into an agreement with a Factoring company whereby the Company will assign, in the Factor's sole discretion, selected accounts receivable to the Factor in exchange for initial cash funding ("factor advances") for up to 80% of the factored receivable. The minimum 20% reserve held back by the Factor is released after collection of the account receivable by the Factor. The company pays a 3% factor fee for each factored receivable. Since the factoring agreement provides for full recourse against the Company for factored accounts receivable that are not collected by the Factor for any reason, and the collection of such accounts receivable are fully secured by substantially all assets of the Company, the factoring advances have been treated as secured loans on the accompanying balance sheets. The total accounts receivable factored in 2013 and 2012 was $479,248 and $334,641 respectively. The factor fees paid in 2013 and 2012 were $25,667 and $14,421,respectively. The Company intends to reduce or eliminate the use of Factoring in 2014 due to the high cost of this facility. Total outstanding accounts receivable factored at December 31, 2013 and 2012 which is included in Accounts Receivable on the accompanying balance sheets was $0 and $30,734, respectively. | |||||||||
The Company has total Accounts Receivable as of December 31, 2013 and 2012 as follows: | |||||||||
As of | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Accounts Receivable | $ | 32,186 | $ | 4,974 | |||||
Factored Accounts Receivable | - | 30,734 | |||||||
Allowance for Doubtful Accounts | (5,490 | ) | - | ||||||
Accounts Receivable, net | $ | 26,696 | $ | 35,708 |
PROPERTY_EQUIPMENT_AND_SOFTWAR
PROPERTY, EQUIPMENT AND SOFTWARE | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
PROPERTY, EQUIPMENT AND SOFTWARE [Abstract] | ' | ||||||||
PROPERTY, EQUIPMENT AND SOFTWARE | ' | ||||||||
NOTE 4 - PROPERTY, EQUIPMENT AND SOFTWARE | |||||||||
Property and Equipment | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Computer software (purchased) | $ | 590 | $ | 590 | |||||
Website development costs | 10,072 | 10,072 | |||||||
Furniture, fixtures, and equipment | 40,712 | 40,712 | |||||||
Leasehold improvements | 1,664 | 1,664 | |||||||
53,038 | 53,038 | ||||||||
Less accumulated depreciation and amortization | (40,447 | ) | (34,732 | ) | |||||
$ | 12,591 | $ | 18,306 | ||||||
Depreciation expense was $5,715 and $7,177 for the years ended December 31, 2013 and 2012 respectively. | |||||||||
Software | |||||||||
Version 3 of the Company's "On Site Physical Inventory" (OSPI) product has been released. The Company has capitalized the cost of the OSPI software pursuant to the guidelines of ASC 985-20 "Costs of Software to be Sold, Leased or Marketed". | |||||||||
As of | |||||||||
December 31, | |||||||||
2012 | |||||||||
Software development costs | $ | 36,022 | |||||||
Less: accumulated amortization | (36,022 | ) | |||||||
$ | - | ||||||||
Amortization expense was $27,017 for the year ended December 31, 2012. |
NOTES_PAYABLE_Related_Parties
NOTES PAYABLE - Related Parties | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
NOTE PAYABLE [Abstract] | ' | ||||||||||||||
NOTES PAYABLE - Related Parties | ' | ||||||||||||||
NOTE 5 - NOTES PAYABLE - Related Parties | |||||||||||||||
The Company's notes payable to related parties classified as current at December 31, 2013 and 2012 consist of the following: | |||||||||||||||
As of | |||||||||||||||
December 31, | |||||||||||||||
2013 | 2012 | ||||||||||||||
Notes Payable | Principal | Interest* | Principal | Interest* | |||||||||||
Related party | $ | 274,078 | 2.50% | $ | 85,755 | 2.50% | |||||||||
Related party | 20,000 | 1.50% | 25,000 | 1.50% | |||||||||||
President & COO | - | - | 32,602 | - | |||||||||||
CEO | 36,009 | - | 85,668 | - | |||||||||||
Total | $ | 330,087 | $ | 229,025 | |||||||||||
------- | |||||||||||||||
* interest rate per month | |||||||||||||||
On August 30, 2012 a company that is majority owned by a foreign investor and personal friend of the Company's President and COO, entered into an arrangement with the Company to loan up to $100,000 (subsequently increased to $300,000) on a revolving basis at an interest rate of 2.5% per month based on purchase orders or invoices that have not been previously factored. The initial deposit for this loan came from the Company's President and COO pursuant to the investor, who is a foreign national, setting up an appropriate entity to handle further transactions. Further, the Company's President and COO has personally guaranteed the loan. At December 31, 2013 and December 31, 2012 there was outstanding principal balance of $274,078 and $85,755, respectively. Accrued interest at December 31, 2013 and December 31, 2012 was $17,923 and $8,669, respectively. | |||||||||||||||
On June 27, 2012 an individual whom the Company's President and COO has significant influence over, loaned the Company $10,000 at an interest rate of 1.5% interest per month payable monthly. Between July 13, 2012 and July 24, 2012 the related party advanced an additional $15,000 (the 2012 advances). On January 1, 2013, the Company received $19,400 from this related party in exchange for forty-five day original issue discount note with a face value of $20,000 and a maturity date of February 15, 2013 (the 2013 note). The original discount interest rate was 2% per month. On February 15, 2013, the related party agreed to extend the 2013 note for an additional thirteen days, through March 1, 2013 on the same terms and conditions. The original discount interest of $200 was paid to the lender on February 15, 2013. On March 1, 2013, the related party agreed to extend the note for an additional month, through March 31, 2013 on the same terms and conditions. On April 1, 2013, the related party agreed to extend the note for an additional month, through April 30, 2013 on the same terms and conditions. On May 1, 2013, the related party agreed to extend the note for an additional month, through May 31, 2013 on the same terms and conditions. On June 1, 2013, the related party agreed to extend the note for an additional month, through June 30, 2013 on the same terms and conditions at which time the 2013 note was paid in full. At December 31, 2013 and December 31, 2012, there were outstanding principal balances of $20,000 and $25,000, respectively related to the 2012 advances. Accrued interest at December 30, 2013 and December 31, 2012 was $0 and $407, respectively. | |||||||||||||||
On May 31, 2012 the Company's President and COO made a $30,000 short-term advance to the Company. During the second and third quarter, additional advances totaling $50,975 were made. No interest was due on these short-term advances. At December 31, 2012 the advances had been paid in full. During the third quarter the Company deferred $71,012 of payroll for this officer and recorded the amount as a non-interest bearing loan payable. The Company paid down the loan by $39,788 leaving a balance at December 31, 2012 of $31,224. During the third quarter the officer used his personal credit card to purchase a Company computer in the amount of $1,378 which is recorded as a loan payable. The Company paid these loans as sufficient funds became available. At December 31, 2013 and December 31, 2012 this officer had an outstanding loan balance of $0 and $32,602, respectively. | |||||||||||||||
On May 28, 2011, the Company's Chairman and CEO advanced the Company $25,000 in exchange for a promissory note, bearing an annual interest of 6% and a repayment term of seven months. On January 1, 2012, the note was extended for a further 12 months. As of December 31, 2012 the note and accrued interest was paid in full. During the second quarter of 2012, the Company reclassified $30,265 of accounts payable balances due to the CEO, to loan payable - officer. These balances were a result of Company expenses charged to the CEO's personal credit cards. The Company was previously paying the credit card companies directly for these expenses incurred. During the third quarter 2012 the company recorded accrued payroll for this officer. The resultant net pay was converted to a non-interest bearing loan payable in the amount of $54,682. The Company pays these loans as sufficient funds become available. At December 31, 2013 and December 31, 2012 this officer had an outstanding loan balance of $36,009 and $85,668, respectively. |
NOTE_PAYABLE_Shareholder
NOTE PAYABLE - Shareholder | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
NOTE PAYABLE [Abstract] | ' | ||||||||||||||
NOTE PAYABLE - Shareholder | ' | ||||||||||||||
NOTE 6 - NOTE PAYABLE - Shareholder | |||||||||||||||
The Company's notes payable to shareholder classified as current at December 31, 2013 and 2012 consists of the following: | |||||||||||||||
As of | |||||||||||||||
December 31, | |||||||||||||||
2013 | 2012 | ||||||||||||||
Notes Payable | Principal | Interest* | Principal | Interest* | |||||||||||
Shareholder | $ | 50,000 | 3.00% | $ | 50,000 | 3.00% | |||||||||
Total | $ | 50,000 | $ | 50,000 | |||||||||||
------- | |||||||||||||||
* interest rate per month | |||||||||||||||
On January 11, 2012 a shareholder loaned the Company $35,000 at 3% interest per month for one year. On April 13 2012, the shareholder loaned additional principal to the Company in the aggregate amount $25,000. On June 28, 2012, the Company made a $10,000 principal payment on the note. On January 1, 2013, the Company entered into a new agreement with the shareholder to rollover an existing line of credit in the amount of $50,000. The original line of credit was for a total of $60,000 and ISA repaid $10,000 of that obligation during 2012. The new note maintains similar terms and conditions but with a reduction in the monthly fee from 3% to 2.5%. At December 31, 2013 and December 31, 2012 the principal balance on the note was $50,000 and $50,000, respectively. At December 31, 2013 and December 31, 2012 the accrued interest on the note balance was $2,457 and $2,432, respectively. |
NOTE_PAYABLE_CONVERTIBLE_Relat
NOTE PAYABLE, CONVERTIBLE - Related Party | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||
NOTE PAYABLE [Abstract] | ' | ||||||||||||||||||||||||
NOTE PAYABLE, CONVERTIBLE - Related Party | ' | ||||||||||||||||||||||||
NOTE 7 - NOTE PAYABLE, CONVERTIBLE - Related Party | |||||||||||||||||||||||||
As of | |||||||||||||||||||||||||
December 31, | |||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Notes Payable - Convertible | Principal | Unamort | Principal, | Principal | Unamort | Principal, | |||||||||||||||||||
Disc | Net of | Disc | Net of | ||||||||||||||||||||||
Discount | Discount | ||||||||||||||||||||||||
Related Party Affiliate | $ | 66,000 | $ | - | $ | 66,000 | $ | 66,000 | $ | (41,047 | ) | $ | 24,953 | ||||||||||||
$ | 66,000 | $ | - | $ | 66,000 | $ | 66,000 | $ | (41,047 | ) | $ | 24,953 | |||||||||||||
On June 20 and 28, 2012, a related party who is an affiliate of the President and COO, made a non interest bearing short-term loan to the Company in the amount of $60,000. On August 15, 2012, this loan was exchanged for a one year original issue discount convertible note with detachable warrants. The face value of the note is $66,000. The $6,000 original issue discount is expensed as interest over the term of the note. The convertible note payable is now convertible into 3,959,921 shares of the Company's Class A common stock at a conversion rate of $0.0167 per share because of the anti-dilution provisions contained in the note and in effect due to the forward split undertaken by the company in August 2013. The Company has valued the beneficial conversion feature attached to the note using the intrinsic value method at a relative fair value of $28,571. The five-year warrants to purchase 3,959,921 shares of the Company's Class A common stock at an exercise price of $0.033 were valued at a relative fair value of $31,429 based on using the Black-Scholes pricing model assuming a dividend yield of 0%, an expected volatility of 462.61%, and a risk free interest rate of .102%. The beneficial conversion feature and the relative fair value of the warrants are recorded as an increase to additional paid in capital and a discount to the note to be amortized to interest expense over the term of the note. On August 15, 2013, this note became due and payable. ISA is technically in default though no written notice has been received from the related party. The company is in discussions with the related party regarding either converting the note or extending it for further periods. As of the date of this report discussions continue. The net value of the note at December 31, 2013 and December 31, 2012 was $66,000 and $24,953, respectively. |
NOTES_PAYABLE_CONVERTIBLE_Shar
NOTES PAYABLE, CONVERTIBLE - Shareholders | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||
NOTE PAYABLE [Abstract] | ' | ||||||||||||||||||||||||
NOTES PAYABLE, CONVERTIBLE - Shareholders | ' | ||||||||||||||||||||||||
NOTE 8 - NOTES PAYABLE, CONVERTIBLE - Shareholders | |||||||||||||||||||||||||
As of | |||||||||||||||||||||||||
December 31, | |||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Notes Payable - Convertible | Principal | Conversion | Principal, | Principal | Unamort | Principal, | |||||||||||||||||||
to | Net of | Disc | Net of | ||||||||||||||||||||||
Common | Discount | Discount | |||||||||||||||||||||||
Stock | |||||||||||||||||||||||||
Shareholder | $ | 68,750 | $ | (68,750 | ) | $ | - | $ | 68,750 | $ | (10,171 | ) | $ | 58,579 | |||||||||||
Shareholder | 13,750 | (13,750 | ) | - | 13,750 | (2,787 | ) | 10,963 | |||||||||||||||||
$ | 82,500 | $ | (82,500 | ) | $ | - | $ | 82,500 | $ | (12,958 | ) | $ | 69,542 | ||||||||||||
On July 18th, 2011 the Company received $125,000 from a shareholder in exchange for a one year original issue discount convertible note with detachable warrants. The face value of the note is $137,500. The $12,500 original issue discount is expensed as interest over the term of the note. The convertible note payable is convertible into 4,125,000 shares of the Company's common stock at a conversion rate of $0.033 per share. The Company has valued the beneficial conversion feature attached to the note using the intrinsic value method at $62,500. The five-year warrants to purchase 3,750,000 shares of the Company's common stock at an exercise price of $0.033 were valued at their relative fair value of $62,500 based on using the Black-Scholes pricing model assuming a dividend yield of 0%, an expected volatility of 347.62%, and a risk free interest rate of 1.46%. The beneficial conversion feature and the relative fair value of the warrants are recorded as an increase to additional paid in capital and a discount to the note. During the first quarter 2012, the shareholder made an additional investment of $62,500. On February 24, 2012, as a condition for this further investment, the conversion price of the note issued on July 18, 2011 was reduced to $.025 and an equivalent reduction in the exercise price of the warrants was executed. This modification qualifies for treatment as a debt extinguishment for financial accounting purposes and all remaining discounts were expensed. The exercise price exceeded the stock price on the date of modification; therefore no beneficial conversion value was recorded for the new note. On March 6, 2012 the shareholder converted this note in the amount of $137,500, at the contractual conversion rate of $.025, into 5,499,999 shares of Class A common stock. | |||||||||||||||||||||||||
On February 24, 2012, the Company received $62,500 from a shareholder in exchange for a one year original issue discount convertible note with detachable warrants. The face value of the note is $68,750. The $6,250 original issue discount is recorded as debt discount and expensed as interest over the term of the note. The Company has valued the beneficial conversion feature attached to the note using the intrinsic value method at $24,606. The five-year warrants to purchase 3,750,000 shares of the Company's Class A common stock at an exercise price of $0.033 were valued at a relative fair value of $37,894 based on using the Black-Scholes pricing model assuming a dividend yield of 0%, an expected volatility of 462.61%, and a risk free interest rate of .89%. The beneficial conversion feature and the relative fair value of the warrants are recorded as an increase to additional paid in capital and a discount to the note. On February 24, 2013, this note became due and payable. On August 1st, 2013, a settlement agreement was reached to convert a convertible note in the amount of $68,750 plus default penalty and interest of $24,063 for a total of $92,813, which was expensed, into 5,568,768 shares of common stock. The conversion occurred at the contractual conversion rate of $0.01667 based on the anti-dilution provision triggered by the recent 3:1 forward split and a $0.05 conversion rate. The net value of the note at December 31, 2013 and December 31, 2012 was $0 and $58,579, respectively. | |||||||||||||||||||||||||
On May 11, 2012, the Company received an additional investment of $12,500 from a shareholder in exchange for a one year original issue discount convertible note with detachable warrants. The face value of the note is $13,750. The $1,250 original issue discount is expensed as interest over the term of the note. The Company has valued the beneficial conversion feature attached to the note using the intrinsic value method at $1,545. The five-year warrants to purchase 825,000 shares of the Company's Class A common stock at an exercise price of $0.017 were valued at the relative fair value of $4,970 based on using the Black-Scholes pricing model assuming a dividend yield of 0%, an expected volatility of 462.61%, and a risk free interest rate of .096%. The beneficial conversion feature and the relative fair value of the warrants are recorded as an increase to additional paid in capital and a discount to the note. This note was converted in July of 2013 (See Note 14). The net value of the note at December 31, 2013 and December 31, 2012 was $0 and $10,963, respectively. |
NOTE_PAYABLE_OID_Shareholder
NOTE PAYABLE - OID - Shareholder | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||
NOTE PAYABLE [Abstract] | ' | ||||||||||||||||||||||||
NOTE PAYABLE - OID - LONG TERM LIABILITY - Shareholder | ' | ||||||||||||||||||||||||
NOTE 9 - NOTE PAYABLE - OID- Shareholder | |||||||||||||||||||||||||
As of | |||||||||||||||||||||||||
December 31, | |||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Notes Payable - OID | Principal | Unamort | Principal, | Principal* | Unamort | Principal, | |||||||||||||||||||
Disc | Net of | Disc | Net of | ||||||||||||||||||||||
Discount | Discount | ||||||||||||||||||||||||
Shareholder | $ | 150,068 | $ | (7,384 | ) | $ | 142,684 | $ | 165,000 | $ | (21,134 | ) | $ | 143,866 | |||||||||||
------- | |||||||||||||||||||||||||
* 2011 Note Payable - Convertible, OID | |||||||||||||||||||||||||
On July 15th, 2011 the Company received $125,000 from a shareholder in exchange for a one year original issue discount convertible note with detachable warrants. The face value of the note was $137,500. The $12,500 original issue discount was recorded as debt discount and expensed as interest over the term of the note. The convertible note payable was convertible into 4,125,000 shares of the Company's common stock at a conversion rate of $0.33 per share. The Company valued the beneficial conversion feature attached to the note using the intrinsic value method at $62,500. The five-year warrants to purchase 3,750,000 shares of the Company's common stock at an exercise price of $0.33 were valued at the relative fair value of $62,500 based on using the Black-Scholes pricing model assuming a dividend yield of 0%, an expected volatility of 347.62%, and a risk free interest rate of 1.46%. The beneficial conversion feature and the relative fair value of the warrants were recorded as an increase to additional paid in capital and a discount to the note. The net liability of $63,664 was included as a current liability at December 31, 2011. On July 15, 2012, the maturity date, the $137,500 note was exchanged for a new two year original discount secured note with no conversion rights. The note is secured by the Company's intellectual property, notably the patent for OSPI. In exchange for the security the investor agreed to waive the conversion rights and cancel the warrants issued with the original note. The face value of the note is $165,000. The $27,500 original issue discount is expensed as interest over the term of the note. On February 8, 2013, the Company entered into an Inter-creditor Agreement with Liquid Capital Exchange, Inc. (the Company's factor) and the shareholder The Inter-creditor Agreement resolves a definition dispute concerning UCC's filed by both parties to protect their collateral. A part of this agreement calls for the shareholder to receive 5% of all factor advances to the company until such time the shareholder loan is paid in full. Additionally, until the loan is paid, if there is a trigger notice (loan is due or is called), the factor will pay to the shareholder all factor holdback amounts after collection of the related accounts receivable, less any factor fees. The net value of the note at December 31, 2013 and 2012 is $142,684 and $143,866 respectively. |
NOTE_PAYABLE_THIRD_PARTY
NOTE PAYABLE - THIRD PARTY | 12 Months Ended |
Dec. 31, 2013 | |
NOTE PAYABLE - THIRD PARTY [Abstract] | ' |
NOTE PAYABLE - THIRD PARTY | ' |
NOTE 10 - NOTE PAYABLE - THIRD PARTY | |
On May 7, 2013 a third party, having a personal relationship with the Company's President and COO, loaned the Company $45,000 at 1.5% interest per month for six months. On November 8, 2013, this note was extended for a further 3 months with the same terms and conditions. As of December 31, 2013 and December 31, 2012 the balance on the note was $45,000 and $0, respectively. There was no accrued interest due as of December 31, 2013. |
NOTE_PAYABLE_LINE_OF_CREDIT_AN
NOTE PAYABLE - LINE OF CREDIT AND INSURANCE | 12 Months Ended |
Dec. 31, 2013 | |
NOTE PAYABLE [Abstract] | ' |
NOTE PAYABLE - LINE OF CREDIT AND INSURANCE | ' |
NOTE 11 - NOTE PAYABLE - LINE OF CREDIT AND INSURANCE | |
Line of Credit: | |
The Company has a line of credit with Wells Fargo Bank. The line of credit provides for borrowings up to $40,000. The balance as of December 31, 2013 and December 31, 2012 was $39,979 and $37,028, respectively. The interest rate is the Prime Rate plus 3%. The CEO of the Company is the personal guarantor. | |
Insurance: | |
On March 1, 2012, the Company incurred additional short term financings of $4,436 for the purchase of Errors & Omissions insurance. The interest rate on the financing was 6.96% and will mature in February 2013. On August 31, 2012, the Company incurred short term financing of $5,794 for the purchase of Directors' & Officers' insurance. The interest rate on the financing was 6.96% and matured July 2013. As of December 31, 2013 and 2012, the balance on the notes incurred for insurance financing was $0 and $4,612, respectively. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
COMMITMENTS AND CONTINGENCIES [Abstract] | ' | ||||
COMMITMENTS AND CONTINGENCIES | ' | ||||
NOTE 12 - COMMITMENTS AND CONTINGENCIES | |||||
Operating lease | |||||
On April 25, 2011, the Company entered into a 3 year escalating lease agreement for 1,352 square feet commencing July, 2011. The monthly rental rate is $1,800, $1,920 and $2,040 for the lease years ending July 31, 2012, 2013 and 2014, respectively. The Company incurred $1,664 in leasehold improvements prior to occupancy and paid a security deposit of $1,690. | |||||
On September 19, 2011, the Company entered into a 1 year sublease for 2,000 square feet in Las Vegas, Nevada. The sublease commenced on October 15, 2011 and requires monthly payments of $3,000. A security deposit of $3,000 was paid to the landlord. The $3,000 security deposit was forfeited in 2013. | |||||
Rent expense for the years ended December 31, 2013 and 2012 was $26,527 and $55,034, respectively. Management is currently in payment negotiations with the property owner to come to terms with the renewal of the lease to begin after the current lease is completed. | |||||
Five Year Minimum Lease Payment Schedule | |||||
Year | |||||
2014 | $ | 14,280 | |||
2015 | - | ||||
2016 | - | ||||
2017 | - | ||||
2018 | - | ||||
Total | $ | 14,280 |
RELATED_PARTIES
RELATED PARTIES | 12 Months Ended |
Dec. 31, 2013 | |
RELATED PARTIES [Abstract] | ' |
RELATED PARTIES | ' |
NOTE 13 - RELATED PARTIES | |
As of December 13, 2013 and 2012 there were various notes and loans payable to related parties (see Notes 5 and 7). |
STOCKHOLDERS_DEFICIT
STOCKHOLDERS' DEFICIT | 12 Months Ended |
Dec. 31, 2013 | |
STOCKHOLDERS' DEFICIT [Abstract] | ' |
STOCKHOLDERS' DEFICIT | ' |
NOTE 14 - STOCKHOLDERS' DEFICIT | |
Common stock issued for 3:1 forward split of Class A Common Stock | |
On August 1, 2013, the Company issued 42,915,502 shares of Common Stock - Class A to non-affiliate shareholders, pursuant to a recapitalization. (See Note 17) | |
Common stock issued for cash | |
On October 24, 2013, the Company issued 5,000,000 shares of Class A common stock at $0.012 per share to one accredited investor in exchange for $60,000. The Company also issued 3,750,000 warrants with the investment (See Note 15). | |
On December 22, 2013, the Company entered into an agreement to issue 8,332,500 shares of Class A common stock at $0.012 per share to one accredited investor in exchange for $100,000. The company received the funds in early January 2014 and issued the 8,332,500 shares. The Company also issued 6,249,375 warrants with this offering (See Note 15). | |
Common stock issued for the conversion of notes | |
On May 10th, 2013 the Board of Directors adopted the resolution to issue a shareholder 250,000 Class A shares as a condition of an additional investment. The Company originally issued the shareholder 750,000 Class A shares, at $0.033 per share, for a $25,000 investment on July 14th, 2011. This July 14, 2011, investment was repriced at $0.025 per share resulting in the additional 250,000 shares. These shares were issued on May 23rd, 2013. The Company recorded an additional expense of $1,833 related to the share issuance based on the quoted share price on the grant date of $0.007. | |
On May 11, 2013, the shareholder verbally requested to convert a $13,750 note into 825,000 shares Class A common stock at the contractual conversion rate. The shares were issued during the third quarter when the Company received the appropriate conversion notice (See Note 8). | |
On August 1st, 2013, a settlement agreement was reached to convert a convertible note in the amount of $68,750 plus default penalty and interest of $24,063, which was expensed, into 5,568,768 shares of Class A common stock. The conversion occurred at the contractual conversion rate of $0.01667 (See Note 8). | |
On March 6, 2012, a convertible note in the amount of $137,500 was converted into 5,499,999 shares of Class A common stock at the contractual conversion rate $0.025 per share (See Note 8). | |
Common stock based payments for services | |
On July 17, 2013, the Company granted a consulting firm 6,000,000 restricted shares of Class A common stock for a one year agreement. The purpose of the agreement is to provide consultation to the Company with respect to various fund raising and other capital market activities related to international sources of funding. 2,000,000 shares were issued on August 23, 2013. As a result of the reclassification of the Company's common stock and subsequent dividend, an additional 4,000,000 shares were issued on August 30, 2013. The shares were valued at $0.006667 or $40,000 based on the quoted trading price on the grant date and the company recorded a prepaid expense to be amortized over the one-year term of the agreement. | |
On June 1, 2013, the Company granted a consulting firm 4,500,000 Class A common shares for a one year investor relations agreement. The shares were issued September 26, 2013. The shares were valued at $0.004333 or $19,500 based on the quoted trading price on the grant date and the company recorded a prepaid expense to be amortized over the one-year term of the agreement. | |
On January 2, 2012, the Company granted 100,000 shares of Class B common stock valued at their fair value of $10,000 to an independent director in payment of director fees for the coming year which was fully expensed as of December 31, 2012. |
STOCK_PURCHASE_WARRANTS_AND_OP
STOCK PURCHASE WARRANTS AND OPTIONS | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
STOCK PURCHASE WARRANTS AND OPTIONS [Abstract] | ' | |||||||||||||
STOCK PURCHASE WARRANTS AND OPTIONS | ' | |||||||||||||
NOTE 15 - STOCK PURCHASE WARRANTS AND OPTIONS | ||||||||||||||
Warrants | ||||||||||||||
Following is a summary of warrants for Class A common shares outstanding: | ||||||||||||||
31-Dec-13 | 31-Dec-12 | |||||||||||||
Shares | Weighted Avg | Shares | Weighted Avg | |||||||||||
Exercise Price | Exercise Price | |||||||||||||
Outstanding at beginning of year | 19,860,000 | $ | 0.031 | 14,700,000 | $ | 0.033 | ||||||||
Granted | 9,999,375 | $ | 0.012 | 13,410,000 | $ | 0.02 | ||||||||
Exercised | - | - | - | - | ||||||||||
Forfeited | - | - | 8,250,000 | $ | 0.031 | |||||||||
Expired | - | - | - | - | ||||||||||
Outstanding at end of year | 29,859,375 | $ | 0.031 | 19,860,000 | $ | 0.031 | ||||||||
Exercisable at end of year | 29,859,375 | $ | 0.031 | 19,860,000 | $ | 0.031 | ||||||||
Weighted average grant date fair value | $ | 0.016 | $ | 0.016 | ||||||||||
Weighted average remaining contractual term | 3.02 | 3.77 | ||||||||||||
On October 24, 2013, warrants to purchase 3,750,000 shares of Class A common stock at $0.012 per share were issued to an accredited investor in conjunction with a private offering (See Note 14). | ||||||||||||||
On December 22, 2013, warrants to purchase 6,249,375 shares of Class A common stock at $0.012 per share were issued to an accredited investor in conjunction with a private offering. (See Note 14). | ||||||||||||||
On August 15, 2012, warrants to purchase 3,960,000 shares of Class A common stock at $0.033 per share were issued to a related party in conjunction with a convertible note. The warrants were valued using the Black-Scholes model with a dividend rate of 0%, volatility of 462.61%, risk free interest rate of 0.102% and a term of 5 years. | ||||||||||||||
On May 11, 2012 warrants to purchase 825,000 shares of Class A common stock at $0.033 per share were issued to an existing accredited investor in conjunction with a convertible note. As consideration for this further investment, the 750,000 existing warrants with a strike price $0.033 were cancelled and reissued with a strike price of $0.025 per share. The new and existing warrants were both valued on the modification date using the Black-Scholes model with a dividend rate of 0%, volatility of 462.61%, a risk free interest rate of 0.89% and a term of 5 years and 3 years, respectively. There was no additional expense resulting from the modification. | ||||||||||||||
On February 24, 2012 warrants to purchase 4,125,000 shares of Class A common stock at $0.033 per share were issued to an existing accredited investor in conjunction with a convertible note. As consideration for this further investment, the 3,750,000 existing warrants with a strike price $.033 were cancelled and reissued with a strike price of $0.025 per share. The new and existing warrants were valued on the modification date using the Black-Scholes model with a dividend rate of 0%, volatility of 462.61%, a risk free interest rate of 0.89% and a term of 5 years. There was no additional expense resulting from the modification. | ||||||||||||||
Options | ||||||||||||||
Following is a summary of options outstanding: | ||||||||||||||
31-Dec-13 | 31-Dec-12 | |||||||||||||
Shares | Weighted Avg | Shares | Weighted Avg | |||||||||||
Exercise Price | Exercise Price | |||||||||||||
Outstanding at beginning of year | 350,000 | $ | 0.035 | - | - | |||||||||
Granted | 650,000 | $ | 0.02 | 350,000 | $ | 0.035 | ||||||||
Exercised | - | - | - | - | ||||||||||
Forfeited | - | - | - | - | ||||||||||
Expired | - | - | - | - | ||||||||||
Outstanding at end of year | 1,000,000 | $ | 0.03 | 350,000 | $ | 0.035 | ||||||||
Exercisable at end of year | 100,000 | $ | 0.035 | 100,000 | $ | 0.035 | ||||||||
Weighted average grant date fair value | $ | 0.03 | $ | 0.04 | ||||||||||
Weighted average remaining contractual term | 4.11 | 4.59 | ||||||||||||
The total unrecognized option expense to be recorded over the remaining 2 years is $6,667. | ||||||||||||||
On January 1, 2013 the Company granted options to purchase 650,000 shares of Class B common stock to its independent directors. The options have an exercise price of $0.02 per share, a five-year term, vest on January 1, 2014¸ and are subject to continuing service as a director. The options were valued using the Black-Scholes model using a volatility of 508.21%, an expected term of 5 years and an interest rate of 0.76%. The options are valued at $14,500 and are being recognized as expense over the requisite service period. | ||||||||||||||
On August 2, 2012, the Company issued options to purchase 250,000 shares of Class B common stock valued at $0.04 per options for a total of $10,000 to its President and CFO. The options vest equally every six months over a three year period. The options were valued using the Black-Scholes model with a dividend rate of 0%, volatility of 462.61%, risk free interest rate of 0.61% and a term of 5 years. The expense in 2012 was not material. | ||||||||||||||
On August 2, 2012, the Company issued options to purchase 100,000 shares of Class B common stock to its new Chief Operating Officer. The options vest equally every six months over a three year period. The options were valued at $0.04 per option using the Black-Scholes model with a dividend rate of 0%, volatility of 462.61%, risk free rate of 0.61% and a term of 5 years. On December 21, 2012, the COO was terminated. As part of the settlement agreement, all 100,000 options immediately vested and the Company recognized $4,000 total expense. |
COMMON_STOCK_TO_BE_ISSUED
COMMON STOCK TO BE ISSUED | 12 Months Ended |
Dec. 31, 2013 | |
COMMON STOCK TO BE ISSUED [Abstract] | ' |
COMMON STOCK TO BE ISSUED | ' |
NOTE 16 - COMMON STOCK TO BE ISSUED | |
As of December 31, 2013, the Company had not received the payment for the subscription agreement therefore has recorded the 8,332,500 shares of Class A Common Stock in 'Common Stock to be Issued' (See Note 14). |
RECAPITALIZATION
RECAPITALIZATION | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
RECAPITALIZATION [Abstract] | ' | |||||||||||||
RECAPITALIZATION | ' | |||||||||||||
NOTE 17 - RECAPITALIZATION | ||||||||||||||
The Company has affected a recapitalization by splitting the common stock into two classes - Class A common stock to be held by all shareholders except for those parties who may be deemed to be affiliates, namely all officers, directors and holders of more than 10% of the outstanding shares and Class B shareholders who are the presumed affiliates. The only difference between Class A and Class B is that Class A shareholders will no longer have voting rights while Class B shareholders retain voting rights. Each share of Class B Stock shall be convertible into one share of Class A Stock at the option of the holder beginning 90 days after the date this Second Amendment has been filed with the Florida Secretary of State. | ||||||||||||||
On August 1st, 2013 the Company filed the Second Articles of Amendment (the "Second Amendment") creating the two classes, and also declared a two-for-one stock dividend to holders of Class A common stock of record on August 1, 2013 (the "Record Date"). Shareholders that held one share of common stock on the Record Date, now own three shares. No dividend was declared for holders of what is now Class B common stock. The stock dividend was approved by the Board of Directors as a way of thanking the Company's shareholders for their patience and rewarding them for giving management additional time to establish a path to profitability. | ||||||||||||||
All future dividends and distributions will be shared without regard to the creation of classes. The recapitalization occurred by the written consent of holders of more than the majority of our outstanding shares, based upon the recommendation of the Board of Directors. Following obtaining that consent, on August 1, 2013, the Company filed the Second Amendment with the Florida Secretary of State, creating the two classes and also increasing the number of authorized shares to 450,000,000 shares of Class A common stock, 50,000,000 of Class B common stock and reducing the number of shares of preferred stock to 1,000,000 shares. The Company increased the number of authorized shares of capital stock in order to accommodate the dividend described in the above paragraph and also permit the Company to have the ability to raise additional funds in order to support our future growth and fund our operations. | ||||||||||||||
This change in capital structure was recorded retroactive in the accompanying Financial Statements for all periods presented. The following table summarizes the recapitalization: | ||||||||||||||
Recapitalization | ||||||||||||||
1-Aug-13 | ||||||||||||||
Before | After | |||||||||||||
Par | Authorized | Par | Authorized | |||||||||||
Value | Shares | Value | Shares | |||||||||||
Authorized Shares | ||||||||||||||
Preferred stock | 0.001 | 2,000,000 | 0.001 | 1,000,000 | ||||||||||
Common Stock | 0.001 | 50,000,000 | 0.001 | - | ||||||||||
Common Stock - Class A | 0.001 | - | 0.001 | 450,000,000 | ||||||||||
Common Stock - Class B | 0.001 | - | 0.001 | 50,000,000 | ||||||||||
Total Authorized Shares | 52,000,000 | 501,000,000 | ||||||||||||
Issued and Outstanding | ||||||||||||||
Preferred stock | 0.001 | - | 0.001 | - | ||||||||||
Common Stock | 0.001 | 32,957,751 | 0.001 | - | ||||||||||
Common Stock - Class A | 0.001 | - | 0.001 | 64,373,253 | ||||||||||
Common Stock - Class B | 0.001 | - | 0.001 | 11,500,000 | ||||||||||
Total Authorized Shares | 32,957,751 | 75,873,253 |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
INCOME TAXES [Abstract] | ' | ||||||||
INCOME TAXES | ' | ||||||||
NOTE 18 - INCOME TAXES | |||||||||
The Company files income tax returns in the U.S. federal jurisdiction and various states. There was no income tax expense in 2013 and 2012 due to the Company's net taxable losses. The Company had net operating loss carry forwards of approximately $4,513,000 as of December 31, 2013 available to offset taxable income through 2033. The valuation allowance increased by $854,986 in 2013. The Company has established a 100% valuation allowance. | |||||||||
The Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years before 2008. None of the tax years subject to examination are currently under examination by a tax authority and the Company has not received notice of the intent by any tax authority to commence an examination. | |||||||||
The Company adopted the provisions of FIN No. 48 on January 1, 2009. As a result of the implementation of FIN No. 48, the Company did not recognize any liability for unrecognized tax benefits, since the Company has concluded that all of its tax positions are highly certain of being upheld upon examination by federal or state tax authorities. | |||||||||
The significant components of the Company's deferred tax account balances are as follows: | |||||||||
Year ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Deferred tax assets: | |||||||||
Net operating losses | $ | 1,698,286 | $ | 777,970 | |||||
Allowance for bad debts | 2,066 | - | |||||||
Stock options | 6,167 | - | |||||||
Capital loss carryover | - | 10,496 | |||||||
Common Stock for Services | - | 10,000 | |||||||
Deferred revenue | - | 38,445 | |||||||
Valuation allowance | (1,691,298 | ) | (835,637 | ) | |||||
Net deferred tax assets | $ | 15,221 | $ | 1,274 | |||||
Total deferred tax liabilities | (15,221 | ) | (1,274 | ) | |||||
Total net deferred taxes | $ | - | $ | - | |||||
Reconciliation of the differences between income tax benefit computed at the federal statutory tax rate of 34% and 15% for 2013 and 2012, respectively and the provision for income tax benefit for the years ended December 31, 2013 and 2012 is as follows: | |||||||||
Year ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Income tax (loss) at federal statutory rate | (34.00 | )% | (15.00 | )% | |||||
State taxes, net of federal benefit | (3.63 | )% | (4.08 | )% | |||||
Nondeductible items | (93.37 | )% | 12.9 | % | |||||
Changes in valuation allowance | 131 | % | 6.18 | % | |||||
0 | % | 0 | % |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2013 | |
SUBSEQUENT EVENTS [Abstract] | ' |
SUBSEQUENT EVENTS | ' |
NOTE 19 - SUBSEQUENT EVENTS | |
On January 1, 2014 the Company granted options to purchase 500,000 shares of common stock to its non-executive directors. The options have an exercise price of $0.02 per share, a five-year term, vest on January 1, 2015¸ and are subject to continuing service as a director. The options were valued using the Black-Scholes model using a volatility of 294%, an expected term of 5 years and an interest rate of 0.76%. The options are valued at $10,000 and will be recognized as an expense over the requisite service period. | |
On Jan 22, 2014, the Company approved the issuance of 1,000,000 options to an independent financial consultant to act as an advisor to the Company with respect to international capital markets strategy. The consultant received no other cash or stock compensation and continues to work closely with the Company on matters directly pertaining to capitalization. The options have an exercise price of $0.018 per share, a five-year term, vesting immediately. The options were valued using the Black-Scholes model using a volatility of 294%, an expected term of 5 years and an interest rate of 0.76%. The options are valued at $18,000 and will be immediately expensed. | |
On February 14, 2014, the Company issued 4,166,250 shares of Class A common stock at $0.012 per share to one accredited investor in exchange for $50,000. The Company also issued 3,124,688, warrants with the investment. | |
On March 26, 2014, Information System Associates, Inc. (the "Company") elected Mr. Hagai Lerer to the Company's Board of Directors with the effective date of April 1, 2014. As compensation for his services as a director, Mr. Lerer received 150,000 options of the Company stock at $0.012 vesting on June 30, 2014. The options were valued using the Black-Scholes model using a volatility of 294%, an expected term of 5 years and an interest rate of 0.76%. The options are valued at $1,800 and will be recognized as expense over the requisite service period. |
NATURE_OF_OPERATIONS_AND_SUMMA1
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policy) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ' | ||||||||||
Nature of Operations | ' | ||||||||||
Nature of Operations | |||||||||||
Information Systems Associates, Inc. (Company) was incorporated under the laws of the State of Florida on May 31, 1994. The Company provides Mobile Data Center Management™ systems and turnkey data center management solutions to customers. Our products and services include data center asset/inventory management, data center management software and data center data collection. Utilizing its proprietary and patented technology, OSPI® (On Site Physical Inventory®), customers are able to manage data centers on a mobile basis, bringing data center management out of the office and into the data center. | |||||||||||
Cash and Cash Equivalents | ' | ||||||||||
Cash and Cash Equivalents | |||||||||||
For the purposes of the Statement of Cash Flows, the Company considers liquid investments with an original maturity of three months or less to be a cash equivalent. | |||||||||||
Use of Estimates | ' | ||||||||||
Use of Estimates | |||||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. Most significant estimates in the accompanying financial statements include the allowance on accounts receivable, valuation of deferred tax assets, valuation of warrants issued with debt, valuation of beneficial conversion features in convertible debt, valuation of stock-based awards, valuation of long-lived assets for impairment and the measurement and useful lives of property and equipment. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. | |||||||||||
Concentrations | ' | ||||||||||
Concentrations | |||||||||||
Cash Concentrations: | |||||||||||
Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. We have not experienced any losses related to these balances. There were no amounts on deposit in excess of federally insured limits at December 31, 2013 and 2012. | |||||||||||
Significant Customers and Concentration of Credit Risk: | |||||||||||
A significant portion of revenues is derived from certain customer relationships. The following is a summary of customers that each represents greater than 10% of total revenues in 2013 and 2012 and total accounts receivable at December 31, 2013 and 2012, respectively: | |||||||||||
2013 | 2012 | ||||||||||
Revenue | Accounts Receivable | Revenue | Accounts Receivable | ||||||||
Customer A | 49% | Customer A | 68% | Customer A | 48% | Customer A | 90% | ||||
Customer B | 18% | Customer B | 22% | Customer B | 17% | ||||||
Customer C | 14% | ||||||||||
Fair Value of Financial Instruments and Fair Value Measurements | ' | ||||||||||
Fair Value of Financial Instruments and Fair Value Measurements | |||||||||||
We measure our financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amounts approximate fair value due to their short maturities. Amounts recorded for subordinated notes payable, net of discount, and loans payable also approximate fair value because current interest rates available to us for debt with similar terms and maturities are substantially the same. | |||||||||||
ASC Topic 820 provides guidance with respect to valuation techniques to be utilized in the determination of fair value of assets and liabilities. Approaches include, (i) the market approach (comparable market prices), (ii) the income approach (present value of future income or cash flow), and (iii) the cost approach (cost to replace the service capacity of an asset or replacement cost). ASC Topic 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. | |||||||||||
The following is a brief description of those three levels: | |||||||||||
Level 1: | |||||||||||
Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. | |||||||||||
Level 2: | |||||||||||
Inputs, other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. | |||||||||||
Level 3: | |||||||||||
Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. | |||||||||||
Accounts Receivable and Factoring | ' | ||||||||||
Accounts Receivable and Factoring | |||||||||||
Accounts receivable are stated at estimated net realizable value. Accounts receivable are comprised of balances due from customers net of estimated allowances for uncollectible accounts. In determining the collections on the account, historical trends are evaluated and specific customer issues are reviewed to arrive at appropriate allowances. | |||||||||||
The Company accounts for the transfer of our accounts receivable to a third party in accordance with ASC 860-10-40-5 "Transfers and Servicing". ASC 860-10 requires that several conditions be met in order to present the sale of accounts receivable net of related debt in the asset section of our balance sheet. Even though we have isolated the transferred (sold) assets and we have the legal right to transfer our assets (accounts receivable) we do not meet the third test of effective control since our accounts receivable sales agreement requires us to be liable in the event of default by one of our customers. Because we do not meet all three conditions, we do not qualify for sale treatment and our debt incurred with respect to the sale of our accounts receivable is presented as a secured loan liability on our balance sheet. | |||||||||||
Property and Equipment | ' | ||||||||||
Property and Equipment | |||||||||||
Property and equipment is stated at cost, less accumulated depreciation. Depreciation is provided by the straight-line method over the estimated economic life of the property and equipment (three to ten years). When assets are sold or retired, their costs and accumulated depreciation are eliminated from the accounts and any gain or loss resulting from their disposal is included in the statement of operations. Leasehold improvements are expensed over the term of our lease. | |||||||||||
The Company recognizes an impairment loss on property and equipment when evidence, such as the sum of expected future cash flows (undiscounted and without interest charges), indicates that future operations will not produce sufficient revenue to cover the related future costs, including depreciation, and when the carrying amount of the asset cannot be realized through sale. Measurement of the impairment loss is based on the fair value of the assets. | |||||||||||
Software Development Costs | ' | ||||||||||
Software Development Costs | |||||||||||
Internal Use Software: | |||||||||||
The Company accounts for costs incurred to develop or purchase computer software for internal use in accordance with FASB ASC 350-40 "Internal-Use Software" or ASC 350-50 "Website Costs". As required by ASC 350-40, the Company capitalizes the costs incurred during the application development stage, which include costs to design the software configuration and interfaces, coding, installation, and testing. | |||||||||||
Costs incurred during the preliminary project stage along with post-implementation stages of internal use computer software are expensed as incurred. Capitalized development costs are amortized over a period of one to three years. Costs incurred to maintain existing product offerings are expensed as incurred. The capitalization and ongoing assessment of recoverability of development costs requires considerable judgment by management with respect to certain external factors, including, but not limited to, technological and economic feasibility, and estimated economic life. | |||||||||||
Software to be sold or leased: | |||||||||||
Costs incurred in connection with the development of software products are accounted for in accordance with the Financial Accounting Standards Board Accounting Standards Codification ("ASC") 985-20 Costs of Software to Be Sold, Leased or Marketed." Costs incurred prior to the establishment of technological feasibility are charged to research and development expense. Software development costs are capitalized after a product is determined to be technologically feasible and is in the process of being developed for market and capitalization ceases after the general release of the software. Amortization of capitalized software development costs begins upon initial product shipment. Capitalized software development costs are amortized over the estimated life of the related product using the straight-line method. The Company evaluates its software assets for impairment whenever events or change in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of software assets to be held and used is measured by a comparison of the carrying amount of the asset to the future net undiscounted cash flows expected to be generated by the asset. If such software assets are considered to be impaired, the impairment to be recognized is the excess of the carrying amount over the fair value of the software asset. | |||||||||||
Software maintenance costs are charged to expense as incurred. The cost of the software and the related accumulated amortization are removed from the accounts upon retirement of the software with any resulting loss being recorded in operations. | |||||||||||
Long-Lived Assets | ' | ||||||||||
Long-Lived Assets | |||||||||||
The Company evaluates the recoverability of its property, equipment, and other long-lived assets in accordance with FASB ASC 360 "Property, Plant and Equipment", which requires recognition of impairment of long-lived assets in the event the net book value of such assets exceed the estimated future undiscounted cash flows attributable to such assets or the business to which such intangible assets relate. | |||||||||||
Revenue Recognition | ' | ||||||||||
Revenue Recognition | |||||||||||
The Company recognizes revenue in accordance with Security Exchange Commission (SEC) Staff Accounting Bulletin No. 104, "Revenue Recognition" and Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 985-605-25 which addresses Revenue Recognition for the software industry. The general criteria for revenue recognition under ASC 985-605 for our Company which sells software licenses which do not require any significant modification or customization is that revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. | |||||||||||
The Company generates revenue from three sources: (1) Professional Services (consulting & auditing); (2) Software Licensing with optional hardware sales; and (3) Customer Service (training & maintenance/support). | |||||||||||
For sales arrangements that do not involve multiple elements: | |||||||||||
-1 | |||||||||||
Revenues for professional services, which are of short term duration, are recognized when services are completed, | |||||||||||
-2 | |||||||||||
Through December 31, 2013 software license sales have been one time sales of a perpetual license to use our software product and the customer also has the option to purchase third party manufactured handheld devices from us if they purchase our software license. Accordingly the revenue is recognized upon delivery of the software and delivery of the hardware, as applicable, to the customer, | |||||||||||
-3 | |||||||||||
Training sales are one time upfront short term training sessions and are recognized after the service has been performed, | |||||||||||
-4 | |||||||||||
Maintenance/support is an optional product sold to our software license customers under one year contracts. Accordingly, maintenance payments received upfront are deferred and recognized over the contract term. | |||||||||||
Arrangements with customers may involve multiple elements of the above sources. Training and maintenance on software products will generally occur after the software product sale while other services may occur before or after the software product sale and may not relate to the software product. | |||||||||||
Each element is accounted for separately when each element has value to the customer on a stand-alone basis and there is Company specific objective evidence of selling price of each deliverable. For revenue arrangements with multiple deliverables, the Company allocates the total customer arrangement to the separate units of accounting based on their relative selling prices as determined by the price for the items when sold separately. Once the selling price is allocated, the revenue for each element is recognized using the general and specific criteria under GAAP as discussed above for elements sold in non-multiple element arrangements. A delivered item or items that do not qualify as a separate unit of accounting within the arrangement are combined with the other applicable undelivered items within the arrangement. The allocation of arrangement consideration and the recognition of revenue is then determined for those combined deliverables as a single unit of accounting. The Company sells it various services and software and hardware products at established prices on a standalone basis which provides Company specific objective evidence of selling price for purposes of multiple element relative selling price allocation. All elements in multiple element arrangements with Company customers qualify as separate units of account for revenue recognition purposes. | |||||||||||
Sales Return Reserve Policy | ' | ||||||||||
Sales Return Reserve Policy | |||||||||||
Our return policy generally allows our end users to return purchased hardware products for refund or in exchange for new products. We estimate a reserve for sales returns, if any, and record that reserve amount as a reduction of sales and as a sales return reserve liability. | |||||||||||
Warranty Reserve Policy | ' | ||||||||||
Warranty Reserve Policy | |||||||||||
The Company is a distributor of products and warranties are the responsibility of the manufacturer. Therefore the Company does not record a record a reserve for product warranty. | |||||||||||
Cost of Revenue | ' | ||||||||||
Cost of Revenue | |||||||||||
Cost of revenue includes hardware costs, amortization of capitalized software and labor costs for services. | |||||||||||
Share-Based Compensation | ' | ||||||||||
Share-Based Compensation | |||||||||||
We follow the fair value recognition provisions of ASC 718, "Compensation - Stock Compensation". The fair values of share-based payments are estimated on the date of grant using the Black-Scholes option pricing model, based on weighted average assumptions. Expected volatility is based on historical volatility of our common stock. We have elected to use the simplified method described in the Securities and Exchange Commission Staff Accounting Bulletin Topic 14C to estimate the expected term of employee stock options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. Compensation expense is recognized on a straight-line basis over the requisite service period of the award. | |||||||||||
The assumptions used in calculating the fair value of stock-based awards represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future. | |||||||||||
Advertising Expenses | ' | ||||||||||
Advertising Expenses | |||||||||||
Advertising costs are expensed as incurred. For the years ended December 31, 2013 and 2012 advertising expenses totaled $0 and $2,361, respectively. | |||||||||||
Income Taxes | ' | ||||||||||
Income Taxes | |||||||||||
We use the asset and liability method to account for income taxes. Under this method, deferred income taxes are determined based on the differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements which will result in taxable or deductible amounts in future years and are measured using the currently enacted tax rates and laws. A valuation allowance is provided to reduce net deferred tax assets to the amount that, based on available evidence, is more likely than not to be realized. | |||||||||||
The Company follows the provisions of ASC 740-10, Accounting for Uncertain Income Tax Positions. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. | |||||||||||
Earnings (Loss) Per Share | ' | ||||||||||
Earnings (Loss) Per Share | |||||||||||
Basic earnings per share (EPS) are computed by dividing net (loss) by the weighted average number of common shares outstanding. The dilutive EPS adds the dilutive effect of stock options, warrants and other stock equivalents. As of December 31, 2013 and 2012, outstanding warrants to purchase an aggregate of 29,859,375 and 19,860,000 shares of Class A stock respectively and outstanding options to purchase 1,000,000 and 350,000 shares of Class B stock respectively were excluded from the computation of dilutive earnings per share because the inclusion would have been anti-dilutive. These warrants and options may dilute future earnings per share. The Company also has convertible debt convertible into 3,959,921 shares of common stock that may dilute future earnings. | |||||||||||
Recent Issued Accounting Standards | ' | ||||||||||
Recent Issued Accounting Standards | |||||||||||
We have implemented all new accounting standards that are in effect and that may impact our financial statements and do not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations. |
NATURE_OF_OPERATIONS_AND_SUMMA2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ' | ||||||||||
Significant Customers and Concentration of Credit Risk | ' | ||||||||||
The following is a summary of customers that each represents greater than 10% of total revenues in 2013 and 2012 and total accounts receivable at December 31, 2013 and 2012, respectively: | |||||||||||
2013 | 2012 | ||||||||||
Revenue | Accounts Receivable | Revenue | Accounts Receivable | ||||||||
Customer A | 49% | Customer A | 68% | Customer A | 48% | Customer A | 90% | ||||
Customer B | 18% | Customer B | 22% | Customer B | 17% | ||||||
Customer C | 14% |
ACCOUNTS_RECEIVABLE_AND_FACTOR1
ACCOUNTS RECEIVABLE AND FACTORING (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
ACCOUNTS RECEIVABLE AND FACTORING [Abstract] | ' | ||||||||
Schedule of Accounts Receivable | ' | ||||||||
The Company has total Accounts Receivable as of December 31, 2013 and 2012 as follows: | |||||||||
As of | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Accounts Receivable | $ | 32,186 | $ | 4,974 | |||||
Factored Accounts Receivable | - | 30,734 | |||||||
Allowance for Doubtful Accounts | (5,490 | ) | - | ||||||
Accounts Receivable, net | $ | 26,696 | $ | 35,708 |
PROPERTY_EQUIPMENT_AND_SOFTWAR1
PROPERTY, EQUIPMENT AND SOFTWARE (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
PROPERTY, EQUIPMENT AND SOFTWARE [Abstract] | ' | ||||||||
Schedule of Property and Equipment | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Computer software (purchased) | $ | 590 | $ | 590 | |||||
Website development costs | 10,072 | 10,072 | |||||||
Furniture, fixtures, and equipment | 40,712 | 40,712 | |||||||
Leasehold improvements | 1,664 | 1,664 | |||||||
53,038 | 53,038 | ||||||||
Less accumulated depreciation and amortization | (40,447 | ) | (34,732 | ) | |||||
$ | 12,591 | $ | 18,306 | ||||||
Schedule of Software | ' | ||||||||
As of | |||||||||
December 31, | |||||||||
2012 | |||||||||
Software development costs | $ | 36,022 | |||||||
Less: accumulated amortization | (36,022 | ) | |||||||
$ | - |
NOTES_PAYABLE_Related_Parties_
NOTES PAYABLE - Related Parties (Tables) | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
NOTE PAYABLE [Abstract] | ' | ||||||||||||||
Schedule of Notes Payable to Related Parties, Current | ' | ||||||||||||||
The Company's notes payable to related parties classified as current at December 31, 2013 and 2012 consist of the following: | |||||||||||||||
As of | |||||||||||||||
December 31, | |||||||||||||||
2013 | 2012 | ||||||||||||||
Notes Payable | Principal | Interest* | Principal | Interest* | |||||||||||
Related party | $ | 274,078 | 2.50% | $ | 85,755 | 2.50% | |||||||||
Related party | 20,000 | 1.50% | 25,000 | 1.50% | |||||||||||
President & COO | - | - | 32,602 | - | |||||||||||
CEO | 36,009 | - | 85,668 | - | |||||||||||
Total | $ | 330,087 | $ | 229,025 | |||||||||||
------- | |||||||||||||||
* interest rate per month |
NOTE_PAYABLE_Shareholder_Table
NOTE PAYABLE - Shareholder (Tables) | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
NOTE PAYABLE [Abstract] | ' | ||||||||||||||
Schedule of Notes Payables to Shareholders, Current | ' | ||||||||||||||
The Company's notes payable to shareholder classified as current at December 31, 2013 and 2012 consists of the following: | |||||||||||||||
As of | |||||||||||||||
December 31, | |||||||||||||||
2013 | 2012 | ||||||||||||||
Notes Payable | Principal | Interest* | Principal | Interest* | |||||||||||
Shareholder | $ | 50,000 | 3.00% | $ | 50,000 | 3.00% | |||||||||
Total | $ | 50,000 | $ | 50,000 | |||||||||||
------- | |||||||||||||||
* interest rate per month |
NOTE_PAYABLE_CONVERTIBLE_Relat1
NOTE PAYABLE, CONVERTIBLE - Related Party (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||
NOTE PAYABLE [Abstract] | ' | ||||||||||||||||||||||||
Schedule of Convertible Notes Payable to Related Parties | ' | ||||||||||||||||||||||||
As of | |||||||||||||||||||||||||
December 31, | |||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Notes Payable - Convertible | Principal | Unamort | Principal, | Principal | Unamort | Principal, | |||||||||||||||||||
Disc | Net of | Disc | Net of | ||||||||||||||||||||||
Discount | Discount | ||||||||||||||||||||||||
Related Party Affiliate | $ | 66,000 | $ | - | $ | 66,000 | $ | 66,000 | $ | (41,047 | ) | $ | 24,953 | ||||||||||||
$ | 66,000 | $ | - | $ | 66,000 | $ | 66,000 | $ | (41,047 | ) | $ | 24,953 |
NOTES_PAYABLE_CONVERTIBLE_Shar1
NOTES PAYABLE, CONVERTIBLE - Shareholders (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||
NOTE PAYABLE [Abstract] | ' | ||||||||||||||||||||||||
Schedule of Convertible Notes Payable to Shareholders | ' | ||||||||||||||||||||||||
As of | |||||||||||||||||||||||||
December 31, | |||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Notes Payable - Convertible | Principal | Conversion | Principal, | Principal | Unamort | Principal, | |||||||||||||||||||
to | Net of | Disc | Net of | ||||||||||||||||||||||
Common | Discount | Discount | |||||||||||||||||||||||
Stock | |||||||||||||||||||||||||
Shareholder | $ | 68,750 | $ | (68,750 | ) | $ | - | $ | 68,750 | $ | (10,171 | ) | $ | 58,579 | |||||||||||
Shareholder | 13,750 | (13,750 | ) | - | 13,750 | (2,787 | ) | 10,963 | |||||||||||||||||
$ | 82,500 | $ | (82,500 | ) | $ | - | $ | 82,500 | $ | (12,958 | ) | $ | 69,542 |
NOTE_PAYABLE_OID_Shareholder_T
NOTE PAYABLE - OID - Shareholder (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||
NOTE PAYABLE [Abstract] | ' | ||||||||||||||||||||||||
Schedule of Convertible Original Issue Discount Notes Payable | ' | ||||||||||||||||||||||||
As of | |||||||||||||||||||||||||
December 31, | |||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Notes Payable - OID | Principal | Unamort | Principal, | Principal* | Unamort | Principal, | |||||||||||||||||||
Disc | Net of | Disc | Net of | ||||||||||||||||||||||
Discount | Discount | ||||||||||||||||||||||||
Shareholder | $ | 150,068 | $ | (7,384 | ) | $ | 142,684 | $ | 165,000 | $ | (21,134 | ) | $ | 143,866 | |||||||||||
------- | |||||||||||||||||||||||||
* 2011 Note Payable - Convertible, OID |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
COMMITMENTS AND CONTINGENCIES [Abstract] | ' | ||||
Schedule of Future Minimum Payments Under Operating Leases | ' | ||||
Five Year Minimum Lease Payment Schedule | |||||
Year | |||||
2014 | $ | 14,280 | |||
2015 | - | ||||
2016 | - | ||||
2017 | - | ||||
2018 | - | ||||
Total | $ | 14,280 |
STOCK_PURCHASE_WARRANTS_AND_OP1
STOCK PURCHASE WARRANTS AND OPTIONS (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
STOCK PURCHASE WARRANTS AND OPTIONS [Abstract] | ' | |||||||||||||
Schedule of Warrants Outstanding | ' | |||||||||||||
Following is a summary of warrants for Class A common shares outstanding: | ||||||||||||||
31-Dec-13 | 31-Dec-12 | |||||||||||||
Shares | Weighted Avg | Shares | Weighted Avg | |||||||||||
Exercise Price | Exercise Price | |||||||||||||
Outstanding at beginning of year | 19,860,000 | $ | 0.031 | 14,700,000 | $ | 0.033 | ||||||||
Granted | 9,999,375 | $ | 0.012 | 13,410,000 | $ | 0.02 | ||||||||
Exercised | - | - | - | - | ||||||||||
Forfeited | - | - | 8,250,000 | $ | 0.031 | |||||||||
Expired | - | - | - | - | ||||||||||
Outstanding at end of year | 29,859,375 | $ | 0.031 | 19,860,000 | $ | 0.031 | ||||||||
Exercisable at end of year | 29,859,375 | $ | 0.031 | 19,860,000 | $ | 0.031 | ||||||||
Weighted average grant date fair value | $ | 0.016 | $ | 0.016 | ||||||||||
Weighted average remaining contractual term | 3.02 | 3.77 | ||||||||||||
Schedule of Stock Option Activity | ' | |||||||||||||
Following is a summary of options outstanding: | ||||||||||||||
31-Dec-13 | 31-Dec-12 | |||||||||||||
Shares | Weighted Avg | Shares | Weighted Avg | |||||||||||
Exercise Price | Exercise Price | |||||||||||||
Outstanding at beginning of year | 350,000 | $ | 0.035 | - | - | |||||||||
Granted | 650,000 | $ | 0.02 | 350,000 | $ | 0.035 | ||||||||
Exercised | - | - | - | - | ||||||||||
Forfeited | - | - | - | - | ||||||||||
Expired | - | - | - | - | ||||||||||
Outstanding at end of year | 1,000,000 | $ | 0.03 | 350,000 | $ | 0.035 | ||||||||
Exercisable at end of year | 100,000 | $ | 0.035 | 100,000 | $ | 0.035 | ||||||||
Weighted average grant date fair value | $ | 0.03 | $ | 0.04 | ||||||||||
Weighted average remaining contractual term | 4.11 | 4.59 |
RECAPITALIZATION_Tables
RECAPITALIZATION (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
RECAPITALIZATION [Abstract] | ' | |||||||||||||
Schedule of Recapitalization by Class of Stock | ' | |||||||||||||
The following table summarizes the recapitalization: | ||||||||||||||
Recapitalization | ||||||||||||||
1-Aug-13 | ||||||||||||||
Before | After | |||||||||||||
Par | Authorized | Par | Authorized | |||||||||||
Value | Shares | Value | Shares | |||||||||||
Authorized Shares | ||||||||||||||
Preferred stock | 0.001 | 2,000,000 | 0.001 | 1,000,000 | ||||||||||
Common Stock | 0.001 | 50,000,000 | 0.001 | - | ||||||||||
Common Stock - Class A | 0.001 | - | 0.001 | 450,000,000 | ||||||||||
Common Stock - Class B | 0.001 | - | 0.001 | 50,000,000 | ||||||||||
Total Authorized Shares | 52,000,000 | 501,000,000 | ||||||||||||
Issued and Outstanding | ||||||||||||||
Preferred stock | 0.001 | - | 0.001 | - | ||||||||||
Common Stock | 0.001 | 32,957,751 | 0.001 | - | ||||||||||
Common Stock - Class A | 0.001 | - | 0.001 | 64,373,253 | ||||||||||
Common Stock - Class B | 0.001 | - | 0.001 | 11,500,000 | ||||||||||
Total Authorized Shares | 32,957,751 | 75,873,253 |
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
INCOME TAXES [Abstract] | ' | ||||||||
Schedule of Deferred Tax Assets | ' | ||||||||
The significant components of the Company's deferred tax account balances are as follows: | |||||||||
Year ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Deferred tax assets: | |||||||||
Net operating losses | $ | 1,698,286 | $ | 777,970 | |||||
Allowance for bad debts | 2,066 | - | |||||||
Stock options | 6,167 | - | |||||||
Capital loss carryover | - | 10,496 | |||||||
Common Stock for Services | - | 10,000 | |||||||
Deferred revenue | - | 38,445 | |||||||
Valuation allowance | (1,691,298 | ) | (835,637 | ) | |||||
Net deferred tax assets | $ | 15,221 | $ | 1,274 | |||||
Total deferred tax liabilities | (15,221 | ) | (1,274 | ) | |||||
Total net deferred taxes | $ | - | $ | - | |||||
Schedule of Effective Income Tax Rate Reconciliation | ' | ||||||||
Reconciliation of the differences between income tax benefit computed at the federal statutory tax rate of 34% and 15% for 2013 and 2012, respectively and the provision for income tax benefit for the years ended December 31, 2013 and 2012 is as follows: | |||||||||
Year ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Income tax (loss) at federal statutory rate | (34.00 | )% | (15.00 | )% | |||||
State taxes, net of federal benefit | (3.63 | )% | (4.08 | )% | |||||
Nondeductible items | (93.37 | )% | 12.9 | % | |||||
Changes in valuation allowance | 131 | % | 6.18 | % | |||||
0 | % | 0 | % |
NATURE_OF_OPERATIONS_AND_SUMMA3
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ' | ' |
Advertising expense | ' | $2,361 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Number of shares issued, if debt is converted | 3,959,921 | ' |
Minimum [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Estimated Useful Lives | '3 years | ' |
Maximum [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Estimated Useful Lives | '10 years | ' |
Stock Options [Member] | Common Stock, Class B [Member] | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Shares excluded from the computation of dilutive earnings per share | 1,000,000 | 350,000 |
Warrant [Member] | Common Stock, Class A [Member] | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Shares excluded from the computation of dilutive earnings per share | 29,859,375 | 19,860,000 |
NATURE_OF_OPERATIONS_AND_SUMMA4
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Concentration Risk) (Details) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Sales Revenue, Services, Net [Member] | Customer A [Member] | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Concentration Risk, Percentage | 49.00% | 48.00% |
Sales Revenue, Services, Net [Member] | Customer B [Member] | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Concentration Risk, Percentage | 18.00% | 17.00% |
Sales Revenue, Services, Net [Member] | Customer C [Member] | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Concentration Risk, Percentage | ' | 14.00% |
Accounts Receivable [Member] | Customer A [Member] | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Concentration Risk, Percentage | 68.00% | 90.00% |
Accounts Receivable [Member] | Customer B [Member] | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Concentration Risk, Percentage | 22.00% | ' |
GOING_CONCERN_Details
GOING CONCERN (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
GOING CONCERN [Abstract] | ' | ' | ' |
Net loss | $648,567 | $864,995 | ' |
Net cash used in operations | 160,834 | 169,750 | ' |
Working capital deficit | 946,832 | ' | ' |
Stockholders' deficit | 932,551 | 754,726 | 170,246 |
Accumulated deficit | 5,352,286 | 4,703,719 | ' |
Target market growth | 1,700,000,000 | ' | ' |
Related party financed working capital for on-going projects, lower limit estimate | 200,000 | ' | ' |
Related party financed working capital for on-going projects, upper limit estimate | $300,000 | ' | ' |
ACCOUNTS_RECEIVABLE_AND_FACTOR2
ACCOUNTS RECEIVABLE AND FACTORING (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Factoring fees | $25,667 | $14,421 |
Accounts receivable included on the balance sheet | 26,696 | 35,708 |
Initial cash funding - factor advances | 80.00% | ' |
Reserve held back by the Factor is released after collection of the account receivable by the Factor | 20.00% | ' |
Factor fee for each factored receivable | 3.00% | ' |
Factoring [Member] | ' | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Total accounts receivable factored | 479,248 | 334,641 |
Accounts receivable included on the balance sheet | ' | $30,734 |
ACCOUNTS_RECEIVABLE_AND_FACTOR3
ACCOUNTS RECEIVABLE AND FACTORING (Accounts Receivable) (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Allowance for Doubtful Accounts | ($5,490) | ' |
Accounts receivable, net | 26,696 | 35,708 |
Accounts Receivable [Member] | ' | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Accounts receivable, net | 32,186 | 4,974 |
Factored Accounts Receivable [Member] | ' | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Accounts receivable, net | ' | $30,734 |
PROPERTY_EQUIPMENT_AND_SOFTWAR2
PROPERTY, EQUIPMENT AND SOFTWARE (Schedule of Property and Equipment) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, Plant and Equipment, Gross | $53,038 | $53,038 |
Less accumulated depreciation and amortization | -40,447 | -34,732 |
Property and equipment (net) | 12,591 | 18,306 |
Depreciation expense | 5,715 | 7,177 |
Computer software (purchased) [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, Plant and Equipment, Gross | 590 | 590 |
Website Development [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, Plant and Equipment, Gross | 10,072 | 10,072 |
Furniture, fixtures, and equipment [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, Plant and Equipment, Gross | 40,712 | 40,712 |
Leasehold Improvements [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, Plant and Equipment, Gross | $1,664 | $1,664 |
PROPERTY_EQUIPMENT_AND_SOFTWAR3
PROPERTY, EQUIPMENT AND SOFTWARE (Schedule of Software) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
PROPERTY, EQUIPMENT AND SOFTWARE [Abstract] | ' | ' |
Software development costs | ' | $36,022 |
Less: accumulated amortization | ' | -36,022 |
Finite-Lived Intangible Assets, Net, Total | ' | ' |
Amortization of software | ' | $27,017 |
NOTES_PAYABLE_Related_Parties_1
NOTES PAYABLE - Related Parties (Details) (USD $) | 12 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | 6 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | ||||||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Aug. 30, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Feb. 28, 2013 | Jan. 31, 2013 | Jul. 31, 2012 | Jun. 30, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Jan. 02, 2013 | 31-May-12 | Sep. 30, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | 31-May-11 | Dec. 31, 2013 | Dec. 31, 2012 | Jun. 30, 2012 | |||||||||
Related Party One [Member] | Related Party One [Member] | Related Party One [Member] | Related Party Two [Member] | Related Party Two [Member] | Related Party Two [Member] | Related Party Two [Member] | Related Party Two [Member] | Related Party Two [Member] | Related Party Two [Member] | President & COO [Member] | President & COO [Member] | President & COO [Member] | President & COO [Member] | CEO And Chairman [Member] | CEO And Chairman [Member] | CEO And Chairman [Member] | CEO And Chairman [Member] | |||||||||||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||
Notes payable - related parties | $330,087 | $229,025 | ' | $274,078 | $85,755 | ' | ' | ' | ' | $20,000 | $25,000 | $20,000 | ' | ' | ' | $32,602 | ' | $36,009 | $85,668 | $30,265 | ||||||||
Maximum amount of revolving note payable | ' | ' | 100,000 | 300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||
Proceeds from notes - related parties | 175,597 | ' | ' | ' | ' | ' | 19,400 | 15,000 | 10,000 | ' | ' | ' | 30,000 | 50,975 | ' | ' | 25,000 | ' | ' | ' | ||||||||
Repayments of related party debt | 74,534 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 39,788 | ' | ' | ' | ' | ||||||||
Interest rate on loan | ' | ' | 2.50% | 2.50% | [1] | 2.50% | [1] | ' | 2.00% | 1.50% | 1.50% | 1.50% | [1] | 1.50% | [1] | ' | ' | ' | ' | [1] | ' | [1] | 6.00% | ' | [1] | ' | [1] | ' |
Accrued interest | 20,380 | 11,508 | ' | 17,923 | 8,669 | ' | ' | ' | ' | ' | 407 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||
Deferred compensation | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 71,012 | ' | 31,224 | ' | ' | 54,682 | ' | ||||||||
Equipment expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,378 | ' | ' | ' | ' | ||||||||
Interest repaid | ' | ' | ' | ' | ' | $200 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||
[1] | interest rate per month |
NOTE_PAYABLE_Shareholder_Detai
NOTE PAYABLE - Shareholder (Details) (USD $) | 1 Months Ended | ||||||
Jun. 30, 2012 | Apr. 30, 2012 | Jan. 31, 2012 | Dec. 31, 2013 | Jan. 02, 2013 | Dec. 31, 2012 | Jan. 11, 2012 | |
Short-term Debt [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Notes payable - shareholder | ' | ' | ' | $50,000 | ' | $50,000 | ' |
Accrued interest | ' | ' | ' | 20,380 | ' | 11,508 | ' |
Line of credit | ' | ' | ' | 39,979 | ' | 37,028 | ' |
Shareholder [Member] | ' | ' | ' | ' | ' | ' | ' |
Short-term Debt [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Notes payable - shareholder | ' | ' | ' | 50,000 | 50,000 | 50,000 | ' |
Proceeds from shareholder | ' | 25,000 | 35,000 | ' | ' | ' | ' |
Stated interest rate | ' | ' | ' | 2.50% | 2.50% | 3.00% | 3.00% |
Accrued interest | ' | ' | ' | 2,457 | ' | 2,432 | ' |
Payments on notes payable - shareholders | 10,000 | ' | ' | ' | ' | ' | ' |
Line of credit | ' | ' | ' | ' | $60,000 | ' | ' |
NOTE_PAYABLE_CONVERTIBLE_Relat2
NOTE PAYABLE, CONVERTIBLE - Related Party (Details) (USD $) | 12 Months Ended | 1 Months Ended | |||
Dec. 31, 2013 | Dec. 31, 2012 | Jun. 30, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | |
Notes Payable Convertible Related Parties [Member] | Notes Payable Convertible Related Parties [Member] | Notes Payable Convertible Related Parties [Member] | |||
Short-term Debt [Line Items] | ' | ' | ' | ' | ' |
Principal | ' | ' | ' | $66,000 | $66,000 |
Unamortized discount | ' | ' | ' | ' | -41,047 |
Principal, net of Discount | 66,000 | 24,953 | ' | 66,000 | 24,953 |
Original issue discount | ' | ' | 6,000 | ' | ' |
Number of shares issued, if debt is converted | 3,959,921 | ' | 3,959,921 | ' | ' |
Conversion price | ' | ' | $0.02 | ' | ' |
Value of beneficial conversion options | ' | ' | 28,571 | ' | ' |
Number of common stock entitled to purchase | ' | ' | 3,959,921 | ' | ' |
Exercise price of warrants | ' | ' | $0.03 | ' | ' |
Expected dividend yields | ' | ' | 0.00% | ' | ' |
Fair value assumption, expected volatility | ' | ' | 462.61% | ' | ' |
Fair value assumption, risk-free interest rate | ' | ' | 0.10% | ' | ' |
Fair value of warrants | ' | ' | 31,429 | ' | ' |
Proceeds from convertible notes, third parties | ' | ' | $60,000 | ' | ' |
NOTES_PAYABLE_CONVERTIBLE_Shar2
NOTES PAYABLE, CONVERTIBLE - Shareholders (Details) (USD $) | 12 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | 3 Months Ended | 1 Months Ended | 1 Months Ended | 1 Months Ended | 1 Months Ended | |||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Mar. 31, 2012 | Jul. 18, 2011 | Mar. 31, 2012 | Feb. 29, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Feb. 24, 2012 | 31-May-11 | Dec. 31, 2013 | Dec. 31, 2012 | 11-May-12 | Feb. 24, 2012 | 31-May-12 | 11-May-12 | Feb. 29, 2012 | Dec. 31, 2013 | Aug. 01, 2013 | Dec. 31, 2012 | 31-May-13 | Aug. 31, 2013 | Aug. 01, 2013 | |
Common Class A [Member] | Shareholder A [Member] | Shareholder A [Member] | Shareholder A [Member] | Shareholder A [Member] | Shareholder A [Member] | Shareholder A [Member] | Shareholder A [Member] | Shareholder B [Member] | Shareholder B [Member] | Shareholder B [Member] | Shareholder B [Member] | Shareholder B [Member] | Shareholder B [Member] | Shareholder B [Member] | Notes Payable Convertible Shareholders [Member] | Notes Payable Convertible Shareholders [Member] | Notes Payable Convertible Shareholders [Member] | Notes Payable Convertible Shareholders [Member] | Notes Payable Convertible Shareholders [Member] | Settlement [Member] | Settlement [Member] | |||
Warrant [Member] | Warrant [Member] | Common Class A [Member] | ||||||||||||||||||||||
Short-term Debt [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Principal | ' | ' | ' | $137,500 | ' | ' | ' | $68,750 | $68,750 | ' | ' | $13,750 | $13,750 | ' | ' | ' | ' | ' | $82,500 | ' | $82,500 | ' | ' | ' |
Unamortized discount | ' | ' | ' | ' | ' | ' | ' | -68,750 | -10,171 | ' | ' | -13,750 | -2,787 | ' | ' | ' | ' | ' | -82,500 | ' | -12,958 | ' | ' | ' |
Convertible notes, net of unamortized discount | ' | 69,542 | ' | ' | ' | ' | ' | ' | 58,579 | ' | ' | ' | 10,963 | ' | ' | ' | ' | ' | ' | 92,813 | 69,542 | ' | ' | 68,750 |
Original issue discount | ' | ' | ' | 12,500 | ' | 6,250 | ' | ' | ' | ' | 1,250 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares issued, if debt is converted | 3,959,921 | ' | ' | 4,125,000 | ' | ' | ' | ' | ' | ' | 275,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Conversion price | ' | ' | ' | $0.03 | ' | ' | ' | ' | ' | $0.05 | ' | ' | ' | $0.02 | ' | ' | ' | ' | ' | $0.02 | ' | ' | ' | ' |
Value of beneficial conversion options | ' | ' | ' | 62,500 | ' | 24,606 | ' | ' | ' | ' | 1,545 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of common stock entitled to purchase | ' | ' | ' | 3,750,000 | ' | ' | ' | ' | ' | 3,750,000 | ' | ' | ' | 825,000 | 3,750,000 | ' | 825,000 | ' | ' | ' | ' | ' | ' | ' |
Exercise price of warrants | ' | ' | ' | $0.03 | $0.08 | $0.03 | ' | ' | ' | ' | $0.05 | ' | ' | ' | ' | $0.33 | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants term | ' | ' | ' | '5 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued from conversion of convertible debt | ' | ' | ' | ' | 1,833,333 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 825,000 | 5,568,768 | ' |
Conversion of note payable, amount converted | ' | ' | ' | ' | 137,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 13,750 | ' | ' |
Conversion of notes payable, shares | ' | ' | 5,499,999 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expected dividend yields | ' | ' | ' | 0.00% | ' | 0.00% | ' | ' | ' | ' | 0.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value assumption, expected volatility | ' | ' | ' | 347.62% | ' | 462.61% | ' | ' | ' | ' | 462.61% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value assumption, risk-free interest rate | ' | ' | ' | 1.46% | ' | 0.89% | ' | ' | ' | ' | 0.10% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of warrants | ' | ' | ' | 62,500 | ' | ' | ' | ' | ' | 37,894 | ' | ' | ' | 4,970 | ' | ' | 4,970 | ' | ' | ' | ' | ' | ' | ' |
Proceeds from notes payable (convertible), net - shareholders | ' | ' | ' | 125,000 | ' | 37,894 | 62,500 | ' | ' | ' | 12,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest and default penalty on convertible note | $24,063 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $24,063 | ' |
Forward stock split, conversion ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3 | ' | ' | ' | ' | ' | ' |
NOTE_PAYABLE_OID_Shareholder_D
NOTE PAYABLE - OID - Shareholder (Details) (USD $) | 12 Months Ended | 1 Months Ended | ||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Mar. 06, 2012 | Jul. 31, 2012 | Jul. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Jul. 15, 2012 | Dec. 31, 2011 | Jul. 15, 2011 | |
Common Class A [Member] | Shareholder C [Member] | Shareholder C [Member] | Shareholder C [Member] | Shareholder C [Member] | Shareholder C [Member] | Shareholder C [Member] | Shareholder C [Member] | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Principal | ' | ' | ' | ' | ' | $150,068 | $165,000 | $165,000 | ' | $4,125,000 |
Unamortized discount | ' | ' | ' | ' | ' | -7,384 | -21,134 | ' | ' | ' |
Principal, net of discount | ' | 143,866 | ' | ' | ' | 142,684 | 143,866 | ' | 63,664 | ' |
Original issue discount | ' | ' | ' | 27,500 | 12,500 | ' | ' | ' | ' | ' |
Number of shares issued, if debt is converted | 3,959,921 | ' | ' | ' | 4,125,000 | ' | ' | ' | ' | ' |
Conversion price per share | ' | $0.08 | $0.03 | ' | ' | ' | ' | ' | ' | $0.33 |
Value of beneficial conversion options | ' | ' | ' | ' | 62,500 | ' | ' | ' | ' | ' |
Number of common stock entitled to purchase | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,750,000 |
Exercise price of warrants | ' | ' | ' | ' | $0.33 | ' | ' | ' | ' | ' |
Fair value assumption, dividend yield | ' | ' | ' | ' | 0.00% | ' | ' | ' | ' | ' |
Expected volatility | ' | ' | ' | ' | 347.62% | ' | ' | ' | ' | ' |
Risk-free interest rate | ' | ' | ' | ' | 1.46% | ' | ' | ' | ' | ' |
Proceeds from notes payable (convertible), net - shareholders | ' | ' | ' | ' | $125,000 | ' | ' | ' | ' | ' |
Factor Advance Fee To Pay Loan | ' | ' | ' | ' | ' | ' | ' | 5.00% | ' | ' |
NOTE_PAYABLE_THIRD_PARTY_Detai
NOTE PAYABLE - THIRD PARTY (Details) (USD $) | Dec. 31, 2013 | 7-May-13 | Dec. 31, 2012 |
Short-term Debt [Line Items] | ' | ' | ' |
Total current notes payable outstanding | $50,000 | ' | $50,000 |
Accrued interest | 20,380 | ' | 11,508 |
Third Party [Member] | ' | ' | ' |
Short-term Debt [Line Items] | ' | ' | ' |
Principal | ' | 45,000 | ' |
Stated interest rate | ' | 1.50% | ' |
Total current notes payable outstanding | 45,000 | ' | ' |
Accrued interest | ' | ' | ' |
NOTE_PAYABLE_LINE_OF_CREDIT_AN1
NOTE PAYABLE - LINE OF CREDIT AND INSURANCE (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
NOTE PAYABLE [Abstract] | ' | ' |
Line of credit, maximum borrowing amount | $40,000 | ' |
Line of credit | 39,979 | 37,028 |
Prime rate spread | 3.00% | 3.00% |
Loans payable - insurance | ' | 4,612 |
Loan To Finance E&O Insurance [Member] | ' | ' |
Short-term Debt [Line Items] | ' | ' |
Principal | ' | 4,436 |
Stated interest rate | ' | 6.96% |
Loan To Finance Directors And Officers Insurance [Member] | ' | ' |
Short-term Debt [Line Items] | ' | ' |
Principal | ' | $5,794 |
Stated interest rate | ' | 6.96% |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | 12 Months Ended | 1 Months Ended | 1 Months Ended | ||||||
Dec. 31, 2013 | Dec. 31, 2012 | Apr. 30, 2011 | Sep. 30, 2011 | Sep. 19, 2011 | Sep. 30, 2011 | Apr. 30, 2011 | Apr. 30, 2011 | Apr. 30, 2011 | |
Escalating Lease [Member] | Sublease [Member] | Sublease [Member] | Sublease Monthly Payment [Member] | Monthly Rental Lease Rate Year Ending July 2012 [Member] | Monthly Rental Lease Rate Year Ending July 2013 [Member] | Monthly Rental Lease Rate Year Ending July 2014 [Member] | |||
Operating Leased Assets [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Security deposit | ' | ' | $1,690 | ' | $3,000 | ' | ' | ' | ' |
Rent expense | 26,527 | 55,034 | ' | ' | ' | 3,000 | 1,800 | 1,920 | 2,040 |
Leasehold improvement expense | ' | ' | $1,664 | ' | ' | ' | ' | ' | ' |
Lease commencement date | ' | ' | 1-Jul-11 | 15-Oct-11 | ' | ' | ' | ' | ' |
Area of leased premises | ' | ' | '1352 square feet | '2000 square feet | ' | ' | ' | ' | ' |
Lease term | ' | ' | '3 years | '1 year | ' | ' | ' | ' | ' |
COMMITMENTS_AND_CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Minimum Lease Payments) (Details) (USD $) | Dec. 31, 2013 |
Minimum Lease Payment | ' |
2014 | $14,280 |
2015 | ' |
2016 | ' |
2017 | ' |
2018 | ' |
Total | $14,280 |
STOCKHOLDERS_DEFICIT_Common_St
STOCKHOLDERS' DEFICIT (Common Stock Issued for 3:1 Forward Split of Class A Common Stock and Common stock issued for cash (Details) (USD $) | 12 Months Ended | 1 Months Ended | |||
Dec. 31, 2013 | Dec. 31, 2012 | Aug. 31, 2013 | Dec. 31, 2013 | Oct. 31, 2013 | |
Common Class A [Member] | Common Class A [Member] | Common Class A [Member] | |||
Accredited Investor [Member] | Accredited Investor [Member] | ||||
Class of Stock [Line Items] | ' | ' | ' | ' | ' |
Common stock issued for 3:1 forward split | ' | ' | 42,915,502 | ' | ' |
Common stock issued for cash, shares | ' | ' | ' | 8,332,500 | 5,000,000 |
Common stock issued for cash, value | ' | ' | ' | $100,000 | $60,000 |
Common stock issued for cash, price per share | ' | ' | ' | $0.01 | $0.01 |
Warrants granted | 9,999,375 | 13,410,000 | ' | 6,249,375 | 3,750,000 |
Recovered_Sheet1
STOCKHOLDERS' DEFICIT (Common stock issued for the conversion of notes) (Details) (USD $) | 12 Months Ended | 1 Months Ended | 1 Months Ended | 1 Months Ended | ||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Mar. 31, 2012 | Mar. 06, 2012 | 31-May-13 | Jul. 31, 2011 | 23-May-13 | Jul. 14, 2011 | Aug. 01, 2013 | Dec. 31, 2012 | 31-May-13 | Aug. 31, 2013 | Aug. 01, 2013 | Aug. 01, 2013 | |
Common Class A [Member] | Common Class A [Member] | Shareholder One [Member] | Shareholder One [Member] | Shareholder One [Member] | Shareholder One [Member] | Notes Payable Convertible Shareholders [Member] | Notes Payable Convertible Shareholders [Member] | Notes Payable Convertible Shareholders [Member] | Settlement Agreement [Member] | Settlement Agreement [Member] | Settlement Agreement [Member] | |||
Common Class A [Member] | Common Class A [Member] | Common Class A [Member] | Common Class A [Member] | Common Class A [Member] | Common Class A [Member] | |||||||||
Short-term Debt [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Conversion of note payable, amount converted | ' | ' | ' | ' | ' | $25,000 | ' | ' | ' | ' | $13,750 | ' | ' | ' |
Conversion of notes payable, shares issued and issuable | ' | ' | ' | ' | 250,000 | 750,000 | ' | ' | ' | ' | 825,000 | 5,568,768 | ' | ' |
Conversion price per share | ' | $0.08 | ' | $0.03 | ' | ' | $0.03 | $0.03 | ' | ' | ' | ' | ' | $0.02 |
Common stock, price per share | ' | ' | ' | ' | ' | ' | $0.01 | ' | ' | ' | ' | ' | ' | ' |
Convertible note payable | ' | 69,542 | ' | ' | ' | ' | ' | ' | 92,813 | 69,542 | ' | ' | 68,750 | ' |
Interest and default penalty on convertible note | 24,063 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 24,063 | ' | ' |
Share issuance expense | ' | ' | ' | ' | 1,833 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Conversion of notes payable | $106,564 | $137,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Conversion of notes payable, shares | ' | ' | 5,499,999 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
STOCKHOLDERS_DEFICIT_Common_St1
STOCKHOLDERS' DEFICIT (Common Stock Based Payments for Services) (Details) (USD $) | 12 Months Ended | 1 Months Ended | |||||||
Dec. 31, 2013 | Dec. 31, 2012 | Mar. 06, 2012 | Jan. 31, 2013 | Jan. 31, 2012 | Aug. 31, 2013 | Jul. 31, 2013 | Jun. 30, 2013 | Jul. 17, 2013 | |
Common Class A [Member] | Non - executive directors [Member] | Non - executive directors [Member] | Consulting Firm [Member] | Consulting Firm [Member] | Consulting Firm [Member] | Consulting Firm [Member] | |||
Common Class B [Member] | Common Class B [Member] | Common Class A [Member] | Common Class A [Member] | Common Class A [Member] | Common Class A [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock issued for services, shares | ' | ' | ' | ' | 100,000 | ' | 6,000,000 | ' | ' |
Stock issued for services | $59,500 | $10,000 | ' | ' | $10,000 | $4,000,000 | $40,000 | ' | ' |
Quoted trading price on grant date | ' | ' | ' | ' | ' | ' | ' | $0.00 | $0.01 |
Stock option granted | ' | ' | ' | 650,000 | ' | ' | ' | 4,500,000 | ' |
Value of shares issued on grant date | ' | ' | ' | ' | ' | ' | ' | 19,500 | ' |
Convertible note payable | ' | $69,542 | ' | ' | ' | ' | ' | ' | ' |
Conversion price per share | ' | $0.08 | $0.03 | ' | ' | ' | ' | ' | ' |
STOCK_PURCHASE_WARRANTS_AND_OP2
STOCK PURCHASE WARRANTS AND OPTIONS (Warrant Activity) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
STOCK PURCHASE WARRANTS AND OPTIONS [Abstract] | ' | ' |
Outstanding at beginning of year | 19,860,000 | 14,700,000 |
Granted | 9,999,375 | 13,410,000 |
Exercised | ' | ' |
Forfeited | ' | 8,250,000 |
Expired | ' | ' |
Outstanding at end of year | 29,859,375 | 19,860,000 |
Exercisable at end of year | 29,859,375 | 19,860,000 |
Weighted average exercise price | $0.03 | $0.03 |
Granted | $0.01 | $0.02 |
Exercised | ' | ' |
Forfeited | ' | $0.03 |
Expired | ' | ' |
Weighted average exercise price | $0.03 | $0.03 |
Exercisable at end of year | $0.03 | $0.03 |
Weighted average grant date fair value | $0.02 | $0.02 |
Weighted average remaining contractual term | '3 years 7 days | '3 years 9 months 7 days |
STOCK_PURCHASE_WARRANTS_AND_OP3
STOCK PURCHASE WARRANTS AND OPTIONS (Stock Option Activity) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
STOCK PURCHASE WARRANTS AND OPTIONS [Abstract] | ' | ' |
Outstanding at beginning of year | 350,000 | ' |
Granted | 650,000 | 350,000 |
Exercised | ' | ' |
Forfeited | ' | ' |
Expired | ' | ' |
Outstanding at end of year | 1,000,000 | 350,000 |
Exercisable at end of year | 100,000 | 100,000 |
Weighted average exercise price, Outstanding at beginning of year | $0.04 | ' |
Granted | $0.02 | $0.04 |
Exercised | ' | ' |
Forfeited | ' | ' |
Expired | ' | ' |
Weighted average exercise price, Outstanding at end of year | $0.03 | $0.04 |
Exercisable at end of year | $0.04 | $0.04 |
Weighted average grant date fair value | $0.03 | $0.04 |
Weighted average remaining contractual term | '4 years 1 month 10 days | '4 years 7 months 2 days |
STOCK_PURCHASE_WARRANTS_AND_OP4
STOCK PURCHASE WARRANTS AND OPTIONS (Warrants - Narrative) (USD $) | 12 Months Ended | 1 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | |||||||||
Dec. 31, 2013 | Dec. 31, 2012 | 31-May-12 | 31-May-12 | Feb. 29, 2012 | Dec. 22, 2013 | Oct. 24, 2013 | 11-May-12 | Feb. 24, 2012 | 31-May-12 | 31-May-12 | Aug. 15, 2012 | Aug. 31, 2012 | Aug. 15, 2012 | |
Accredited Investor [Member] | Accredited Investor [Member] | Accredited Investor [Member] | Accredited Investor [Member] | Accredited Investor [Member] | Accredited Investor [Member] | Accredited Investor [Member] | Accredited Investor [Member] | Accredited Investor [Member] | Warrants Issued To Related Party [Member] | Warrants Issued To Related Party [Member] | Warrants Issued To Related Party [Member] | |||
Common Stock, Class A [Member] | Common Stock, Class A [Member] | Common Stock, Class A [Member] | Common Stock, Class A [Member] | Common Stock, Class A [Member] | Common Stock, Class A [Member] | Common Stock, Class A [Member] | Common Stock, Class A [Member] | Common Stock, Class A [Member] | Common Stock, Class A [Member] | |||||
Minimum [Member] | Maximum [Member] | |||||||||||||
Class of Warrant or Right [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of common stock entitled to purchase | ' | ' | 750,000 | ' | ' | 6,249,375 | 3,750,000 | 825,000 | 4,125,000 | ' | ' | 1,320,000 | ' | 3,960,000 |
Share Price | ' | ' | $0.03 | ' | ' | $0.01 | $0.01 | $0.03 | $0.03 | ' | ' | $0.10 | ' | $0.03 |
Fair value assumption, dividend yield | ' | ' | 0.00% | 0.00% | 0.00% | ' | ' | ' | ' | ' | ' | 0.00% | 0.00% | ' |
Fair value assumption, expected volatility | ' | ' | 462.61% | 462.61% | 462.61% | ' | ' | ' | ' | ' | ' | 462.61% | 462.61% | ' |
Fair value assumption, risk-free interest rate | ' | ' | 0.89% | 0.89% | 0.89% | ' | ' | ' | ' | ' | ' | 0.10% | 0.10% | ' |
Fair value assumption, expected lives | ' | ' | '5 years | '3 years | '5 years | ' | ' | ' | ' | '3 years | '5 years | '5 years | '5 years | ' |
Exercise price of warrant issued | ' | ' | ' | ' | ' | ' | ' | 0.025 | 0.025 | ' | ' | ' | ' | ' |
Warrants cancelled | ' | ' | ' | 750,000 | 3,750,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
STOCK_PURCHASE_WARRANTS_AND_OP5
STOCK PURCHASE WARRANTS AND OPTIONS (Stock Options - Narrative) (Details) (USD $) | 12 Months Ended | 1 Months Ended | 1 Months Ended | 1 Months Ended | 1 Months Ended | ||||
Dec. 31, 2013 | Aug. 31, 2012 | Aug. 02, 2012 | Dec. 31, 2012 | Aug. 31, 2012 | Aug. 02, 2012 | Jan. 31, 2013 | Jan. 02, 2013 | Jan. 31, 2013 | |
Stock Options Issued To President And CFO [Member] | Stock Options Issued To President And CFO [Member] | Stock Options Issued To New COO [Member] | Stock Options Issued To New COO [Member] | Stock Options Issued To New COO [Member] | Independent directors [Member] | Independent directors [Member] | Independent directors [Member] | ||
Common Class B [Member] | Common Class B [Member] | Common Class B [Member] | Common Class B [Member] | Common Class B [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock option granted | ' | 250,000 | ' | ' | 100,000 | ' | ' | ' | 650,000 |
Share-based compensation | ' | ' | ' | $4,000 | ' | ' | $14,500 | ' | ' |
Total unrecognized option expense | 6,667 | ' | ' | ' | ' | ' | ' | ' | ' |
Total unrecognized option expense term in years | '2 years | ' | ' | ' | ' | ' | ' | ' | ' |
Expiration period | ' | ' | ' | ' | ' | ' | '5 years | ' | ' |
Options issued total value | ' | $10,000 | ' | ' | ' | ' | ' | ' | ' |
Exercise price | ' | ' | ' | ' | ' | ' | ' | $0.02 | ' |
Common stock, price per share | ' | ' | $0.04 | ' | ' | $0.04 | ' | ' | ' |
Volatility | ' | 462.61% | ' | ' | 462.61% | ' | 508.21% | ' | ' |
Expected life in years | ' | '5 years | ' | ' | '5 years | ' | '5 years | ' | ' |
Risk free interest rate | ' | 0.61% | ' | ' | 0.61% | ' | 0.76% | ' | ' |
Vesting period | ' | '3 years | ' | ' | ' | ' | ' | ' | ' |
Dividend yield | ' | 0.00% | ' | ' | 0.00% | ' | ' | ' | ' |
Options vested | ' | ' | ' | 100,000 | ' | ' | ' | ' | ' |
COMMON_STOCK_TO_BE_ISSUED_Deta
COMMON STOCK TO BE ISSUED (Details) (Common Stock, Class A [Member]) | Dec. 31, 2013 |
Common Stock, Class A [Member] | ' |
Class of Stock [Line Items] | ' |
Common Stock to be Issued | 8,332,500 |
RECAPITALIZATION_Details
RECAPITALIZATION (Details) (USD $) | Dec. 31, 2013 | Aug. 01, 2013 | Dec. 31, 2012 |
Class of Stock [Line Items] | ' | ' | ' |
Preferred Stock, par value per share | $0.00 | ' | $0.00 |
Preferred Stock, shares authorized | 1,000,000 | ' | 1,000,000 |
Preferred Stock, shares issued | 0 | ' | 0 |
Preferred stock, shares outstanding | 0 | ' | 0 |
Common Stock [Member] | Scenario, Previously Reported [Member] | ' | ' | ' |
Class of Stock [Line Items] | ' | ' | ' |
Common stock, par value per share | ' | $0.00 | ' |
Common stock, shares authorized | ' | 50,000,000 | ' |
Common stock, shares issued | ' | 32,957,751 | ' |
Common stock, shares outstanding | ' | 32,957,751 | ' |
Common Class A [Member] | ' | ' | ' |
Class of Stock [Line Items] | ' | ' | ' |
Common stock, par value per share | $0.00 | $0.00 | $0.00 |
Common stock, shares authorized | 450,000,000 | 450,000,000 | 450,000,000 |
Common stock, shares issued | 79,442,019 | 64,373,253 | 57,298,251 |
Common stock, shares outstanding | 79,442,019 | 64,373,253 | 57,298,251 |
Common Class B [Member] | ' | ' | ' |
Class of Stock [Line Items] | ' | ' | ' |
Common stock, par value per share | $0.00 | $0.00 | $0.00 |
Common stock, shares authorized | 50,000,000 | 50,000,000 | 50,000,000 |
Common stock, shares issued | 11,500,000 | 11,500,000 | 11,500,000 |
Common stock, shares outstanding | 11,500,000 | 11,500,000 | 11,500,000 |
Preferred Stock [Member] | ' | ' | ' |
Class of Stock [Line Items] | ' | ' | ' |
Preferred Stock, par value per share | ' | $0.00 | ' |
Preferred Stock, shares authorized | ' | 1,000,000 | ' |
Preferred Stock, shares issued | ' | 0 | ' |
Preferred stock, shares outstanding | ' | 0 | ' |
Preferred Stock [Member] | Scenario, Previously Reported [Member] | ' | ' | ' |
Class of Stock [Line Items] | ' | ' | ' |
Preferred Stock, par value per share | ' | $0.00 | ' |
Preferred Stock, shares authorized | ' | 2,000,000 | ' |
Preferred Stock, shares issued | ' | 0 | ' |
Preferred stock, shares outstanding | ' | 0 | ' |
Aggregate Preferred And Common Stock [Member] | ' | ' | ' |
Class of Stock [Line Items] | ' | ' | ' |
Aggregate preferred and common stock shares authorized | ' | 501,000,000 | ' |
Aggregate preferred and common stock shares issued and outstanding | ' | 75,873,253 | ' |
Aggregate Preferred And Common Stock [Member] | Scenario, Previously Reported [Member] | ' | ' | ' |
Class of Stock [Line Items] | ' | ' | ' |
Aggregate preferred and common stock shares authorized | ' | 52,000,000 | ' |
Aggregate preferred and common stock shares issued and outstanding | ' | 32,957,751 | ' |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
INCOME TAXES [Abstract] | ' |
Net operating loss carry forwards | $4,513,000 |
Operating loss carry forwards availability | 31-Dec-33 |
Change in valuation allowance | $854,986 |
INCOME_TAXES_Deferred_Tax_Asse
INCOME TAXES (Deferred Tax Assets) (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Deferred tax assets: | ' | ' |
Net operating losses | $1,698,286 | $777,970 |
Allowance for bad debts | 2,066 | ' |
Stock options | 6,167 | ' |
Capital loss carryover | ' | 10,496 |
Common Stock for Services | ' | 10,000 |
Deferred revenue | ' | 38,445 |
Valuation allowance | -1,691,298 | -835,637 |
Net deferred tax assets | 15,221 | 1,274 |
Total deferred tax liabilities | -15,221 | -1,274 |
Total net deferred taxes | ' | ' |
INCOME_TAXES_Reconciliation_of
INCOME TAXES (Reconciliation of Effective Tax Rate) (Details) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
INCOME TAXES [Abstract] | ' | ' |
Income tax (loss) at federal statutory rate | -34.00% | -15.00% |
State income tax, net of federal tax benefit | -3.36% | -4.08% |
Nondeductible items | -93.37% | 12.90% |
Changes in valuation allowance | 131.00% | 6.18% |
Effective income tax rate | 0.00% | 0.00% |
SUBSEQUENT_EVENTS_Details
SUBSEQUENT EVENTS (Details) (USD $) | 12 Months Ended | 1 Months Ended | 1 Months Ended | ||||
Dec. 31, 2013 | Dec. 31, 2012 | Feb. 28, 2014 | Feb. 14, 2014 | Mar. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 | |
Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | |||
Non - executive directors [Member] | Non - executive directors [Member] | Independent financial consultant [Member] | |||||
Subsequent Event [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Options granted | 650,000 | 350,000 | ' | ' | 150,000 | 500,000 | 1,000,000 |
Expiration period | ' | ' | ' | ' | ' | '5 years | ' |
Exercise price of stock options granted | $0.02 | $0.04 | ' | ' | $0.01 | $0.02 | $0.02 |
Warrants granted | 9,999,375 | 13,410,000 | 3,124,688 | ' | ' | ' | ' |
Volatility | ' | ' | ' | ' | 294.00% | 294.00% | 294.00% |
Expected life in years | ' | ' | ' | ' | '5 years | '5 years | '5 years |
Risk free interest rate | ' | ' | ' | ' | 0.76% | 0.76% | 0.76% |
Fair value of options granted | ' | ' | ' | ' | $1,800 | $10,000 | $18,000 |
Shares issued | ' | ' | 4,166,250 | ' | ' | ' | ' |
Shares issued, value | $60,000 | ' | $50,000 | ' | ' | ' | ' |
Shares Issued, Price Per Share | ' | ' | ' | $0.01 | ' | ' | ' |