Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Jun. 30, 2014 | Aug. 14, 2014 | |
Document and Entity Information: | ' | ' |
Entity Registrant Name | 'LAS VEGAS RAILWAY EXPRESS, INC. | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Jun-14 | ' |
Amendment Flag | 'false | ' |
Entity Central Index Key | '0001405227 | ' |
Current Fiscal Year End Date | '--03-31 | ' |
Entity Common Stock, Shares Outstanding | ' | 26,702,072 |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Voluntary Filers | 'No | ' |
Entity Well-known Seasoned Issuer | 'No | ' |
Document Fiscal Year Focus | '2015 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
CONDENSED_BALANCE_SHEETS
CONDENSED BALANCE SHEETS (USD $) | Jun. 30, 2014 | Mar. 31, 2014 |
ASSETS: | ' | ' |
Cash | $43,413 | $87,910 |
Other current assets | 88,986 | 101,250 |
Total current assets | 132,399 | 189,160 |
Property and equipment, net of accumulated depreciation | 699,328 | 684,407 |
Other assets | ' | ' |
Other assets | 21,500 | 22,385 |
Total other assets | 21,500 | 22,385 |
Total assets | 853,227 | 895,952 |
Liabilities and Stockholders' Deficit | ' | ' |
Short term notes payable | ' | 13,333 |
Accounts payable and accrued expenses | 480,231 | 442,711 |
Derivative liability | 1,519,753 | 1,198,018 |
Notes payable - related parties | 59,000 | ' |
Current portion of convertible notes payable, net of discount | 1,942,060 | 1,271,984 |
Total current liabilities | 4,001,044 | 2,926,046 |
Long-term portion of convertible debt, net of current portion | 257,625 | 150,000 |
TOTAL LIABILITIES | 4,258,669 | 3,076,046 |
Commitments and contingencies | ' | ' |
Stockholders' deficit | ' | ' |
Common stock, $0.0001 par value, 200,000,000 shares authorized, 24,075,114 and 16,041,143 shares issued and outstanding as of June 30, 2014 (unaudited) and March 31, 2014, respectively | 2,408 | 1,604 |
Additional paid-in capital | 32,707,028 | 29,445,945 |
Common stock payable | 66,485 | ' |
Accumulated deficit | -36,181,363 | -31,627,643 |
Total stockholders' deficit | -3,405,442 | -2,180,094 |
Total stockholders' deficit Total liabilities and stockholders' deficit | $853,227 | $895,952 |
BALANCE_SHEET_PARENTHETICAL
BALANCE SHEET PARENTHETICAL (USD $) | Jun. 30, 2014 | Mar. 31, 2014 |
CONDENSED BALANCE SHEETS | ' | ' |
Common stock par value | $0.00 | $0.00 |
Common stock shares authorized | 200,000,000 | 200,000,000 |
Common stock shares issued | 24,075,114 | 16,041,143 |
Common stock shares outstanding | 24,075,114 | 16,041,143 |
CONDENSED_STATEMENT_OF_OPERATI
CONDENSED STATEMENT OF OPERATIONS (USD $) | 3 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Operating Expenses: | ' | ' |
Compensation and payroll taxes | $2,866,004 | $849,329 |
Selling, general and administrative | 384,050 | 208,123 |
Professional fees | 769,388 | 581,788 |
Depreciation expense | 2,436 | 1,434 |
Total expenses | 4,021,878 | 1,640,674 |
Loss from operations | -4,021,878 | -1,640,674 |
Other income (expense) | ' | ' |
Interest expense | -1,402,041 | -2,521,627 |
Change in derivative liability | 870,199 | 950,245 |
Total other income (expense) | -531,842 | -1,571,382 |
Net loss from operations before provision for income taxes | -4,553,720 | -3,212,056 |
Provision for income taxes | ' | -4,491 |
Net loss | ($4,553,720) | ($3,216,547) |
Net loss per share, basic and diluted | ($0.34) | ($0.40) |
Weighted average number of common shares outstanding, basic and diluted | 13,357,337 | 8,003,338.95 |
CONDENSED_STATEMENT_OF_CASH_FL
CONDENSED STATEMENT OF CASH FLOWS (USD $) | 3 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Cash flows from operating activities | ' | ' |
Net loss | ($4,553,720) | ($3,216,547) |
Depreciation and amortization | 2,436 | 1,434 |
Amortization of discounts on note payable | 1,041,344 | 2,305,550 |
Amortization of debt offering costs | ' | 155,391 |
Deferred tax provision | ' | 4,491 |
Change in value of derivative liability | -870,199 | -950,245 |
Stock issued and subscribed for services | 511,869 | 400,905 |
Stock option compensation | 2,446,615 | ' |
Stock issued in connection with exchange agreements | 103,388 | ' |
Warrants issued for services | 82,354 | 221,789 |
Change in Other current assets | 12,264 | 20,531 |
Change in Other assets | 885 | -3,349 |
Liabilities of discontinued operations, net | ' | -109,000 |
Accounts payable and accrued expenses | 129,443 | 104,303 |
Net cash used in operating activities | -1,093,321 | -1,064,747 |
Cash flows from investing activities | ' | ' |
Purchases of property and equipment | -17,357 | -107,565 |
Net cash used in investing activities | -17,357 | -107,565 |
Cash flows from financing activities | ' | ' |
Proceeds from exercise of stock options | 514 | ' |
Proceeds from convertible notes payable | 1,006,667 | 880,000 |
Proceeds from notes payable - related parties | 59,000 | ' |
Net cash provided by financing activities | 1,066,181 | 880,000 |
Net change in cash | -44,497 | -292,312 |
Cash, beginning of the period | 87,910 | 1,262,615 |
Cash, end of the period | 43,413 | 970,303 |
Interest paid | ' | ' |
Income taxes paid | ' | ' |
Stock issued as payment of accounts payable | 38,771 | ' |
Stock issued for debt and accrued interest | $84,929 | $270,911 |
1_Organization_and_Basis_of_Pr
(1) Organization and Basis of Presentation | 3 Months Ended |
Jun. 30, 2014 | |
Notes | ' |
(1) Organization and Basis of Presentation | ' |
(1) Organization and basis of presentation | |
Basis of Financial Statement Presentation: | |
The accompanying unaudited interim financial statements of Las Vegas Railway Express, Inc. (the "Company") have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. These statements reflect all normal and recurring adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. However, the results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the year ending March 31, 2015 or any other future period. These interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2014. | |
Going Concern: | |
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has net losses of $4,553,720 for the three months ended June 30, 2014. The Company also has an accumulated deficit of $36,181,363 and a negative working capital of $3,868,645 as of June 30, 2014, as well as outstanding convertible notes payable of $2,959,792. Management believes that it will need additional equity or debt financing to be able to implement the business plan. Given the lack of revenue, capital deficiency and negative working capital, there is substantial doubt about the Company’s ability to continue as a going concern. | |
Management is attempting to raise additional equity and debt to sustain operations until it can market its services and achieves profitability. The successful outcome of future activities cannot be determined at this time and there are no assurances that, if achieved, the Company will have sufficient funds to execute its intended business plan or generate positive operating results. | |
The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. | |
2_Summary_of_Significant_Accou
(2) Summary of Significant Accounting Policies | 3 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Notes | ' | ||||||||||||
(2) Summary of Significant Accounting Policies | ' | ||||||||||||
(2) Summary of Significant Accounting Policies | |||||||||||||
Risks and Uncertainties: | |||||||||||||
The Company operates in an industry that is subject to intense competition and potential government regulations. Significant changes in regulations and the inability of the Company to establish contracts with rail services providers could have a materially adverse impact on the Company’s operations. | |||||||||||||
Use of Estimates: | |||||||||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. | |||||||||||||
Property and Equipment: | |||||||||||||
Property and equipment are recorded at historical cost and depreciated on a straight-line basis over their estimated useful lives of approximately five years once the individual assets are placed in service. The Company expenses all purchases of equipment with individual costs of under $500, and these amounts are not material to the financial statements. | |||||||||||||
Long-Lived Assets: | |||||||||||||
In accordance with FASB ASC 360-10, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. The Company’s management believes there has been no impairment of its long-lived assets during the three months ended June 30, 2014 or 2013. There can be no assurance, however, that market conditions will not change or demand for the Company’s business model will continue. Either of these could result in future impairment of long-lived assets. | |||||||||||||
Income Taxes: | |||||||||||||
Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The deferred tax assets of the Company relate primarily to operating loss carryforwards for federal income tax purposes. A full valuation allowance for deferred tax assets has been provided because the Company believes it is not more likely than not that the deferred tax asset will be realized. Realization of deferred tax assets is dependent on the Company generating sufficient taxable income in future periods. | |||||||||||||
The Company periodically evaluates its tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years, as defined by the statute of limitations, based on their technical merits. As of June 30, 2014 and March 31, 2014, the Company has not established a liability for uncertain tax positions. | |||||||||||||
Basic and Diluted Loss Per Share: | |||||||||||||
In accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 260, “Earnings Per Share,” the basic loss per common share is computed by dividing the net loss available to common stockholders after preferred stock dividends, by the weighted average common shares outstanding during the period. Diluted earnings per share reflect per share amounts that would have resulted if diluted potential common stock had been converted to common stock. Common stock equivalents have not been included in the earnings per share computation for the three months ended June 30, 2014 and 2013 as the amounts are anti-dilutive. As of June 30, 2014, the Company had 1,770,969 outstanding options which were excluded from the computation of net income per share because they are anti-dilutive. As of June 30, 2014, the Company also had convertible debt of $2,959,792 which was excluded from the computation. As of June 30, 2014, the Company had 2,315,649 outstanding warrants which were also excluded from the computation because they were anti-dilutive. | |||||||||||||
Share Based Payment: | |||||||||||||
The Company issues stock, options and warrants as share-based compensation to employees and non-employees. | |||||||||||||
The Company accounts for its share-based compensation to employees in accordance FASB ASC 718. Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period. | |||||||||||||
The Company accounts for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50 “Equity - Based Payments to Non-Employees.” Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The final fair value of the share-based payment transaction is determined at the performance completion date. For interim periods, the fair value is estimated and the percentage of completion is applied to that estimate to determine the cumulative expense recorded. | |||||||||||||
The Company values stock compensation based on the market price on the measurement date. As described above, for employees this is the date of grant, and for non-employees, this is the date of performance completion. | |||||||||||||
The Company values stock options and warrants that do not qualify as derivative instruments using the Black-Scholes option pricing model. Assumptions used in the Black-Scholes model to value options and warrants issued during the three months ended June 30, 2014 are as follows. There were no options or warrants granted during the three months ended June 30, 2013 that were valued using the Black-Scholes model. | |||||||||||||
Three Months Ended | |||||||||||||
June 30, | |||||||||||||
2014 | |||||||||||||
Expected life in years | 2.5 | ||||||||||||
Stock price volatility | 170.94% - 178.31% | ||||||||||||
Risk free interest rate | 0.76% - 0.95% | ||||||||||||
Expected dividends | NA | ||||||||||||
Forfeiture rate | 0% | ||||||||||||
Certain warrants qualify as derivative instruments and are valued using the binomial lattice method. See discussion below regarding accounting for derivative liabilities. | |||||||||||||
Derivative Liabilities: | |||||||||||||
In connection with the private placement of convertible notes beginning in February 2013, the Company became contingently obligated to issue shares of common stock in excess of the 200 million authorized under the Company’s certificate of incorporation. Consequently, the ability to settle these obligations with shares would be unavailable causing these obligations to potentially be settled in cash. This condition creates a derivative liability. | |||||||||||||
The Company has a sequencing policy regarding share settlement wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares. | |||||||||||||
On December 2, 2013, the Company effected a one-for-twenty reverse stock split of the Company’s issued and outstanding common stock shares. As a result, the Company’s outstanding shares of common stock and common stock equivalents no longer exceeded the number of authorized shares. As a result, as of December 2, 2013, these instruments that were accounted for as derivative liabilities were reclassified as equity. | |||||||||||||
The Company also has certain warrants and embedded conversion options in notes payable with elements that qualify as derivatives. The warrants have anti-dilution clauses that prevent calculation of the ultimate number of shares that may be issued upon exercise, and four outstanding notes payable that had a variable conversion feature that similarly prevented the calculation of the number of shares into which they were convertible. | |||||||||||||
The Company values these warrants and embedded conversion options in notes payable using the binomial lattice method. The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the condensed statement of operations (see Note 6). | |||||||||||||
Fair Value of Financial Instruments: | |||||||||||||
The Company's financial instruments as defined by FASB ASC 825-10-50 include cash, notes payable and derivative liabilities. Derivative liabilities are recorded at fair value. The principal balance of notes payable approximates fair value because current interest rates and terms offered to the Company for similar debt are substantially the same. | |||||||||||||
FASB ASC 820 defines fair value, establishes a framework for measuring fair value, in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. FASB ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows: | |||||||||||||
Level 1. Observable inputs such as quoted prices in active markets; | |||||||||||||
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and | |||||||||||||
Level 3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions. | |||||||||||||
In determining the appropriate fair value of the goodwill and derivative liabilities, the Company used the following input levels for its valuation methodology. | |||||||||||||
Fair Value | Fair Value Measurements at June 30, 2014 | ||||||||||||
as of | Using Fair Value Heirarchy | ||||||||||||
30-Jun-14 | Level 1 | Level 2 | Level 3 | ||||||||||
Liabilities: | |||||||||||||
Derivative liability | $ | 1,519,753 | $ | - | $ | 1,519,753 | $ | - | |||||
New Accounting Pronouncements: | |||||||||||||
There are no recent accounting pronouncements that management believes will have a material impact on the Company's present or future consolidated financial statements | |||||||||||||
3_Property_and_Equipment
(3) Property and Equipment | 3 Months Ended | |||||
Jun. 30, 2014 | ||||||
Notes | ' | |||||
(3) Property and Equipment | ' | |||||
(3) Property and Equipment | ||||||
Property and equipment consisted of the following. | ||||||
June 30, | March 31, | |||||
2014 | 2014 | |||||
(Unaudited) | ||||||
Office equipment | $ | 65,084 | $ | 61,611 | ||
Computer software | 24,167 | 24,167 | ||||
Transportation equipment under construction | 635,686 | 621,802 | ||||
724,937 | 707,580 | |||||
Less: accumulated depreciation | (25,609) | (23,173) | ||||
$ | 699,328 | $ | 684,407 | |||
4_Notes_Payable
(4) Notes Payable | 3 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
Notes | ' | |||||||
(4) Notes Payable | ' | |||||||
(4) Notes payable | ||||||||
A summary of outstanding notes payable is as follows: | ||||||||
June 30, | March 31, | |||||||
2014 | 2014 | |||||||
(Unaudited) | ||||||||
Secured promissory notes, dated May 17, 2011 through | ||||||||
May 17, 2012 to an investor bearing interest at 8% per annum, | ||||||||
payable on May 17, 2012. | $ | - | $ | 13,333 | ||||
Total outstanding notes payable | $ | - | $ | 13,333 | ||||
The above note payable was repaid in full during the three months ended June 30, 2014. Debt Securities Assignment and Purchase agreement (see Note 7). | ||||||||
5_Convertible_Notes_Payable
(5) Convertible Notes Payable | 3 Months Ended | ||||||
Jun. 30, 2014 | |||||||
Notes | ' | ||||||
(5) Convertible Notes Payable | ' | ||||||
(5) Convertible Notes Payable | |||||||
On October 1, 2013, the Company entered into a promissory note with JMJ Financial which provides for the Company to borrow up to $350,000 in principal (the “JMJ Note”). As of March 31, 2014, the Company had borrowed $150,000 under this Promissory Note. Outstanding borrowings mature two years from the effective date of each payment. If the outstanding balance of the note is repaid by the Company on or before 90 days from the effective date of the borrowing, the interest charged is 0%. However, if the Company does not repay the note within 90 days, a one-time interest charge of 12% shall be applied to the outstanding principal sum. The outstanding balance of the note may be converted into common stock at the option of the debt holder at a rate equal to $0.90 per share, or 60% of the lowest trading price in the 25 days trading days previous to the conversion date, subject to other adjustments in the agreement. During the three months ended June 30, 2014, the Company borrowed an additional $40,000 under the JMJ Note. During the three months ended June 30, 2014, JMJ Financial converted $69,785 of outstanding principal into 785,000 shares of common stock under the terms of the agreement. As of June 30, 2014, the outstanding balance of the JMJ Note amounted to $120,125. | |||||||
On November 22, 2013, the Company, entered into and closed a purchase agreement (the “Purchase Agreement”) with an institutional investor, pursuant to which the Company sold to the investor a senior secured convertible promissory note in the principal amount of $1,750,000 (the “Note”), and warrants to purchase 300,000 shares of common stock (the “Warrants”), for an aggregate purchase price of $1,750,000. The Note was scheduled to mature on June 30, 2014, bears interest at the rate of 10% per year payable on maturity in cash or shares of common stock at the Company’s option (subject to certain conditions), and is convertible into shares of the Company’s common stock at a conversion price equal to $0.70, subject to adjustment in the event of future stock splits, stock dividends, and similar transactions, or in the event of subsequent equity sales by the Company at a price lower than the conversion price then in effect. The Company’s obligations under the Note are secured by substantially all of the Company’s assets. The Warrants have a five year term, are exercisable on a cash or cashless basis, and have an exercise price equal to $1.00, subject to adjustment in the event of future stock splits, stock dividends, and similar transactions, or in the event of subsequent equity sales by the Company at a price lower than the exercise price then in effect. | |||||||
On April 11, 2014, the Company entered into a Note Exchange Agreement with the debt holder holding the $1,750,000 Note originally issued on November 22, 2013 under the Purchase Agreement. Under the terms of the Note Exchange Agreement, the original senior secured convertible promissory note and accrued interest is cancelled and replaced with a new note for $2,000,000. The new note matures on November 30, 2014, bears interest at the rate of 10% per year payable on maturity in cash or shares of common stock at the Company’s option (subject to certain conditions), and is convertible into shares of the Company’s common stock at a conversion price equal to $0.45, subject to adjustments in the event of future stock splits, stock dividends, and similar transactions, or in the event of subsequent equity sales by the Company at a price lower than the conversion price then in effect. Under the new note, the Company’s obligations are secured by substantially all of the Company’s assets, excluding any railcar assets. The difference between the book value of the principal and accrued interest of the old note of $1,818,055 and the value of the new note of $2,000,000 of $181,944 was recorded as interest expense during the three months ended June 30, 2014. | |||||||
On March 24, 2014, the Company entered into a Convertible Promissory Note with Iconic Holdings, LLC (the “Iconic Note”) in which the Company has access to borrow a total principal amount of $165,000. All borrowings incur interest at a rate of 8% per annum, which is payable as of the maturity date of March 24, 2015. The initial borrowing made by the Company amounted to $55,000, which represented the amount outstanding on the Iconic Note as of March 31, 2014. At the option of the debt holder, the outstanding balance may be converted at any time into shares of the Company’s common stock at a conversion rate equal to the lower of $0.50 or 60% of the lowest trading price of the Company’s common stock during the 25 consecutive trading days prior to conversion election date. During the three months ended June 30, 2014, the Company borrowed an additional $100,000 under the Iconic Note. The outstanding principal balance as of June 30, 2014 amounted to $155,000. | |||||||
On March 25, 2014, the Company entered into a convertible note agreement with KBM Worldwide, Inc. (the “KBM Note”) for total principal borrowings of $68,000, which represented the amount outstanding as of June 30, 2014 and March 31, 2014. The amounts are due nine months after the issuance of the note on December 25, 2014, and bear interest at a rate of 8% per annum. At the option of the debt holder, beginning 180 days after the issuance of the note, the debt holder may convert the outstanding balance of the KBM Note into shares of the Company’s common stock at a conversion rate equal to 61% of the average of the lowest three closing trading prices during the 10 trading day period prior to the conversion election date. | |||||||
On April 2, 2014, the Company entered into a convertible promissory note for $100,000 with Beaufort Capital Partners LLC with a maturity date of October 2, 2014. The note is convertible into shares of the Company’s common stock at a discount of 42% of the lowest traded price during the 5 trading days preceding the conversion date. | |||||||
On April 11, 2014, the Company entered into a Note Exchange Agreement with the debt holder holding the $1,750,000 senior secured convertible promissory note originally issued on November 22, 2013 under the Purchase Agreement. Under the terms of the Note Exchange Agreement, the original senior secured convertible promissory note is cancelled and replaced with a new note for $2,000,000. The new note matures on November 30, 2014, bears interest at the rate of 10% per year payable on maturity in cash or shares of common stock at the Company’s option (subject to certain conditions), and is convertible into shares of the Company’s common stock at a conversion price equal to $0.45, subject to adjustments in the event of future stock splits, stock dividends, and similar transactions, or in the event of subsequent equity sales by the Company at a price lower than the conversion price then in effect. Under the new note, the Company’s obligations are secured by substantially all of the Company’s assets, excluding any railcar assets. | |||||||
On April 17, 2014, the Company entered into a convertible note payable with Vista Capital Investments, LLC providing for borrowings up to $250,000 with a maturity date of April 17, 2016. The note has a one-time interest charge of 12% and is due on the maturity date. The outstanding balance of the note along with accrued interest is convertible into shares of the Company’s common stock at a rate equal to the lesser of $0.25 or 60% of the lowest trade occurring during the 25 trading days preceding the conversion date. The Company received borrowings under this convertible note payable of $50,000 in April 2014, which represented the outstanding balance as of June 30, 2014. | |||||||
On April 30, 2014, the Company entered into a convertible note payable with Redwood Management, LLC providing for total borrowings of $250,000, which is payable in 3 installments of $83,333, one upon execution of the note, one due one month after execution, and one due two months after execution. Interest on the note equals 10% of the total principal balance, regardless of how long the note is outstanding for. The Company received payments of $83,333 on May 5, 2014 and on May 30, 2014. The convertible note matures 6 months after the issuance, at which point the outstanding principal and interest is due. The outstanding balance related to this note amounted to $166,667 as of June 30, 2014. | |||||||
On May 6, 2014, the Company entered into a convertible note payable with KBM Worldwide, Inc. providing for total borrowings of $32,500 which accrue interest at a rate of 8% per annum. The convertible note matures and is due in full on February 12, 2015 along with any unpaid accrued interest. The outstanding principal and accrued interest is convertible into shares of common stock at the option of the holder at a conversion rate equal to 61% of the average of the lowest 3 trading prices during the 10 trading days prior to the conversion. | |||||||
On May 12, 2014, the Company entered into a secured convertible promissory note with Typenex Co-Investment, LLC (the “Typenex Note”) providing for total borrowings up to $335,000 which accrue interest at a rate of 10% per annum. All outstanding borrowings mature and are due in 20 months from the issuance date. The Company received an initial payment of $87,500 on the note issuance date. The outstanding principal and interest is convertible into shares of common stock at the option of the holder at a conversion rate equal to the lesser of $0.35 per share or 60% of the average of the 3 lowest closing bid prices in the 20 trading days preceding the conversion date. If the average of the 3 lowest closing bid prices is less than $0.10, then the conversion factor is reduced from 60% to 55%. The debt holder was also issued warrants on May 12, 2014 in connection with this note payable granting the right to purchase a number of common stock shares equal to $167,500 divided by the market price (defined as the higher of the closing price on the issuance date or the volume weighted average price of the stock for the trading day that is 2 days prior to the exercise date) at an exercise price of $0.35 per share. The outstanding balance related to this note amounted to $87,500 as of June 30, 2014. | |||||||
On May 28, 2014, the Company issued into a convertible promissory note with Beaufort Capital Partners LLC providing for borrowings of $125,000. The convertible promissory note matures on August 28, 2014, at which point the Company owes $187,500 which includes a total of $62,500 in interest expense. The outstanding amounts are convertible into shares of common stock at the option of the holder at a conversion rate equal to 60% of the lowest traded price during the prior 20 trading days from the date of the conversion. | |||||||
On June 13, 2014, the Company entered a convertible debenture agreement with Group 10 Holdings, LLC providing for total borrowing of $55,000 which accrue interest at the rate of 12% per annum. All borrowings mature and are due in one year from the issuance date. The debenture is convertible into shares of common stock at the option of the holder at the conversion rate lesser of 55% discount of the lowest closing bid price during the 25 trading days prior to the date of notice conversion or $0.25 per share. In connection with the agreement, the Company issued 50,000 shares of common stock as a commitment fee. The fair value of the common stock issued amounted to $8,500 and has been recorded as a discount to the note payable. The amount is being amortized into interest expense through the maturity date of June 13, 2015. | |||||||
The above warrants issued with the Purchase Agreement and Typenex Note have anti-dilution clauses and variable exercise rates that prevent calculation of the ultimate number of shares that may be issued upon exercise, and all of the outstanding convertible note balances described above have variable conversion features that similarly prevented the calculation of the number of shares into which they were convertible. As a result, the Company accounts for both the conversion feature associated with these notes and the warrants as derivatives. The Company values these warrants and conversion features using the binomial lattice method. The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the statement of operations. | |||||||
The following summarizes the book value of the convertible notes payable outstanding as of June 30, 2014 and March 31, 2014. | |||||||
June 30, | March 31, | ||||||
2014 | 2014 | ||||||
(Unaudited) | |||||||
Principal balance of convertible notes payable outstanding | $ | 2,959,792 | $ | 2,023,000 | |||
Less: discount on convertible notes payable | (760,107) | (601,016) | |||||
Convertible notes payable, net | $ | 2,199,685 | $ | 1,421,984 | |||
Future scheduled maturities of these notes payable are as follows: | |||||||
Year Ended | |||||||
June 30, | |||||||
2015 | $ | 2,702,167 | |||||
2016 | 257,625 | ||||||
Total | $ | 2,959,792 |
6_Derivative_Instruments
(6) Derivative Instruments | 3 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Notes | ' | ||||||||||||
(6) Derivative Instruments | ' | ||||||||||||
(6) Derivative Instruments | |||||||||||||
Excess Shares | |||||||||||||
In connection with the private placement of convertible notes beginning in February 2013, the Company became contingently obligated to issue shares of common stock in excess of the 200 million shares authorized under the Company’s certificate of incorporation. Consequently, the ability to settle these obligations with shares would be unavailable causing these obligations to potentially be settled in cash. This condition creates a derivative liability. | |||||||||||||
The Company had a sequencing policy regarding share settlement wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split or anti-dilution, to have an issuance date to coincide with the event giving rise to the additional shares. | |||||||||||||
Using this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued subsequent to November 30, 2012 were classified as derivative liabilities. On December 2, 2013, the Company effected a one-for-twenty reverse stock split of the Company’s issued and outstanding common stock shares. As a result, the Company’s outstanding shares of common stock and common stock equivalents no longer exceeded the number of authorized shares. As a result, as of December 2, 2013, these instruments that were accounted for as derivative liabilities were reclassified as equity. | |||||||||||||
Other Derivatives | |||||||||||||
The Company has certain warrants and notes payable with elements that qualify as derivatives. The warrants have anti-dilution clauses that prevent calculation of the ultimate number of shares that may be issued upon exercise, and the notes payables have variable conversion features that similarly prevented the calculation of the number of shares into which they were convertible. | |||||||||||||
The derivative liability, as it relates to the different instruments, is shown in the following table. | |||||||||||||
Three Months Ended June 30, 2014 | Three Months Ended June 30, 2013 | ||||||||||||
Conversion Feature | Conversion Feature | ||||||||||||
of | of | ||||||||||||
Warrants | Notes Payable | Total | Warrants | Notes Payable | Total | ||||||||
Beginning balance, April 1 | $ 205,248 | $ 992,770 | $ 1,198,018 | $ 1,663,394 | $ 1,518,143 | $ 3,181,537 | |||||||
Additional issuances | 148,903 | 1,043,031 | 1,191,934 | 2,472,282 | 1,364,711 | 3,836,993 | |||||||
Exercised/converted | - | - | - | - | (266,459) | (266,459) | |||||||
Change in derivative liability | (247,591) | (622,608) | (870,199) | 22,441 | (972,686) | (950,245) | |||||||
Ending balance, June 30 | $ 106,560 | $ 1,413,193 | $ 1,519,753 | $ 4,158,117 | $ 1,643,709 | $ 5,801,826 | |||||||
The derivative liability was valued using the binomial lattice method with the following inputs. | |||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||
June 30, 2014 | June 30, 2013 | ||||||||||||
Expected life in years | 0.25 - 5 years | 0.59 - 4.43 years | |||||||||||
Stock price volatility | 160.4% - 256.7% | 112.3% - 270.1% | |||||||||||
Discount rate | 0.04% - 1.68% | 0.09% - 1.20% | |||||||||||
Expected dividends | None | None | |||||||||||
Forfeiture rate | 0% | 0% | |||||||||||
7_Equity
(7) Equity | 3 Months Ended |
Jun. 30, 2014 | |
Notes | ' |
(7) Equity | ' |
(7) Equity | |
Common Stock | |
The Company is authorized to issue 200,000,000 shares of common stock and no other class of stock at this time. The holders of common stock are entitled to one vote per share on all matters submitted to a vote of stockholders and are not entitled to cumulate their votes in the election of directors. The holders of common stock are entitled to any dividends that may be declared by the Board of Directors out of funds legally available therefore subject to the prior rights of holders of any outstanding shares of preferred stock and any contractual restrictions we have against the payment of dividends on common stock. In the event of our liquidation or dissolution, holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preferences of any outstanding shares of preferred stock. Holders of common stock have no preemptive or other subscription rights and no right to convert their common stock into any other securities. | |
During the three months ended June 30, 2013, the Company issued an aggregate of 270,911 shares of common stock for the conversion of $270,911 in convertible notes payable and accrued interest. This included 200,000 shares of common stock for the conversion of a $200,000 convertible note payable held by a related party entity owned by a Director of the Company. During the three months ended June 30, 2014 the Company issued an aggregate of 785,000 of common stock for the conversion of $69,875 of outstanding notes payable. | |
During the three months ended June 30, 2013, the Company issued an aggregate of 129,500 shares of common stock as payment for services, directors’ and employee compensation resulting in total expense of $318,550. During the three months ended June 30, 2014, the Company issued an aggregate of 1,390,000 shares of common stock as payment for services, directors’ and employee compensation resulting in an expense of $511,870. The fair value of the directors’ and employees’ service was determined by the closing price of the stock on date of grant and board of director minutes authorizing the shares. | |
During the three months ended June 30, 2013, the Company issued 9,823 shares of common stock for the exercise of warrants. There were no warrants exercised during the three months ended June 30, 2014. | |
During the three months ended June 30, 2014, the Company issued 5,144,054 shares of common stock for the exercise of stock options. There were no stock options exercised during the three months ended June 30, 2013. | |
On May 30, 2014, the Company entered into a Debt Securities Assignment and Purchase agreement, along with a Securities Exchange and Settlement Agreement with Beaufort Capital Partners LLC (“Beaufort”). Per the terms of the agreements, the Company assigned $38,771 of outstanding accounts payable to Beaufort, in exchange for allowing Beaufort to convert the amounts into common stock, at a date of their choosing, at a rate equal to 40% of the lowest traded price over the 20 days previous to the conversion date. During the three months ended June 30, 2014, Beaufort elected to convert the amount into 646,176 shares of common stock per the terms of the agreement. The difference between the conversion amount of $38,771 and the fair value of the shares issued amounted to $103,388, and was recorded as interest expense during the three months ended June 30, 2014. | |
On May 30, 2014, the Company entered into additional Debt Securities Assignment and Purchase and Securities Exchange and Settlement Agreements with Beaufort which provide for the assignment of $66,485 of liabilities from the Company to Beaufort, including $51,432 of outstanding account payables, outstanding note payable balance of $13,333 (see Note 4) and $1,720 of accrued interest. In connection with the agreements, the amounts are payable to Beaufort in common stock at a date of Beaufort’s choosing, at a rate equal to 40% of the lowest traded price over the 20 days previous to the conversion date. As of June 30, 2014, the amount of $66,485 is still outstanding as Beaufort has not elected to convert the amounts yet. As the amounts are required to be paid in common stock, the Company has classified these amounts as a component of stockholders equity on the accompanying condensed balance sheet as of June 30, 2014. | |
Warrants | |
During the three months ended June 30, 2013, the Company issued an aggregate of 880,000 warrants in connection with the Convertible Notes issued during the period, as well as 238,000 warrants for the payment of commissions associated with acquiring the Convertible Notes. These warrants have been accounted for as derivative liabilities (see Note 6). | |
During the three months ended June 30, 2013, the Company issued an additional 100,000 warrants as payment of directors’ services. The warrants have been accounted for as derivative liabilities (see Note 6). | |
During the three months ended June 30, 2014, the Company issued warrants in connection with the Typenex Note (see Note 5) granting the debt holder the right to purchase a number of common stock shares equal to $167,500 divided by the market price (defined as the higher of the closing price on the issuance date or the volume weighted average price of the stock for the trading day that is 2 days prior to the exercise date) at an exercise price of $0.35 per share. The warrants have been accounted for as derivative liabilities (see Note 6). | |
8_Stock_Option_Plan
(8) Stock Option Plan | 3 Months Ended | |||||||||||||
Jun. 30, 2014 | ||||||||||||||
Notes | ' | |||||||||||||
(8) Stock Option Plan: | ' | |||||||||||||
(8) Stock Option Plan: | ||||||||||||||
The Company’s 2011 Stock Option Plan provides for the grant of 1,000,000 incentive or non-statutory stock options to purchase common stock. Employees, who share the responsibility for the management growth or protection of the business of the Company and certain non-employees, are eligible to receive options which are approved by a committee of the Board of Directors. These options vest over five years and are exercisable for a ten-year period from the date of the grant. As of June 30, 2014 and March 31, 2014, the Company had 100,000 fully vested options outstanding under the 2011 Stock Option Plan at an exercise price of $10.00 per share. The options expire in November 2018. | ||||||||||||||
On April 1, 2014, the Company adopted the 2014 Stock Option Plan which provides for the grant of options to certain members of management totaling an aggregate of 20% of the total issued and outstanding shares of common stock. The options are considered granted on each day that the Company issues shares, at which point the Company values the options using the Black-Scholes method and records the applicable share-based compensation expense. On April 1, 2014, the Company also issued stock options to directors as compensation which provides for the purchase of an aggregate total of 2,000,000 shares of common stock. All options granted have an exercise price of $0.0001 per share. The stock options are fully vested on the date of issuance and have a contractual life of 5 years. | ||||||||||||||
The following is a summary of the Company’s stock option activity. | ||||||||||||||
Weighted- | Average | |||||||||||||
Average | Remaining | Aggregate | ||||||||||||
Exercise | Contractual | Intrinsic | ||||||||||||
Options | Price | Life (Years) | Value | |||||||||||
Outstanding at March 31, 2014 | 100,000 | $ | 10.00 | 4.59 | $ | - | ||||||||
Granted | 6,815,023 | 0.0001 | 2,446,581 | |||||||||||
Exercised | (5,144,054) | 0.0001 | 1,268,912 | |||||||||||
Outstanding at June 30, 2014 (unaudited) | 1,770,969 | $ | 0.56 | 4.73 | $ | 166,930 | ||||||||
Vested and expected to vest | ||||||||||||||
at June 30, 2014 | 1,770,969 | $ | 0.56 | 4.73 | $ | 166,930 | ||||||||
Exercisable at June 30, 2014 | 1,770,969 | $ | 0.56 | 4.73 | $ | 166,930 | ||||||||
As of June 30, 2014, the Company had no unvested stock options or unrecognized stock option expense. The weighted average grant date fair value of $0.36 per option. | ||||||||||||||
The following table summarizes information about stock options outstanding and exercisable at June 30, 2014. | ||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||
Average | Average | Average | ||||||||||||
Exercise | Number | Remaining | Exercise | Number | Exercise | |||||||||
Price | of Shares | Life (Years) | Price | of Shares | Price | |||||||||
$ | 10.00 | 100,000 | 4.34 | $ | 10.00 | 100,000 | $ | 10.00 | ||||||
0.0001 | 1,670,969 | 4.76 | 0.0001 | 1,670,969 | 0.0001 | |||||||||
1,770,969 | 1,770,969 | |||||||||||||
Related_Party_Transactions_Dis
Related Party Transactions Disclosure | 3 Months Ended |
Jun. 30, 2014 | |
Notes | ' |
Related Party Transactions Disclosure | ' |
(9) Related Party Transactions | |
During the three months ended June 30, 2014, the Company entered into short-term borrowings with the Chief Financial Officer and Chief Executive Officer amounting to a total of $59,000. The outstanding amounts accrue interest at a rate of 10% per month and are payable on demand. | |
10_Subsequent_Events
(10) Subsequent Events | 3 Months Ended |
Jun. 30, 2014 | |
Notes | ' |
(10) Subsequent Events | ' |
(10) Subsequent Events | |
On July 1, 2014, the Company entered into a convertible promissory note with KBM Worldwide, Inc. for borrowings of $32,500 which bear interest at a rate of 8% per annum. The outstanding borrowings and accrued interest are payable on March 19, 2015. The outstanding amounts are convertible into shares of common stock at the debt holder’s option at a conversion rate equal to 61% of the average of the lowest three trading prices during the 10 trading days prior to the conversion. | |
On July 18, 2014, the Company entered into a convertible note payable with LG Capital Funding, LLC providing for total borrowings of $90,000, which is payable in 2 installments of $45,000, one upon execution of the note and one is the back end. Interest on the note equals 8% of the total principal balance. The Company received payment of $45,000 on July 22, 2014. The convertible note matures 12 months after the issuance, at which point the outstanding principal and interest is due. The outstanding amounts are convertible into shares of common stock at a conversion rate equal to 57% of the lowest trading price during the fifteen trading days prior to the conversion. | |
On July 24, 2014, the Company entered into a security purchase agreement with ADAR BAYS, LLC providing for total borrowings of $71,000, with the first note being of $36,000 and the second note being in the amount of $35,000. Interest on the note equals 8% of the total principal balance. The Company received payment of $36,000 on July 28, 2014. The convertible note matures 12 months after the issuance, at which point the outstanding principal and interest is due. The outstanding amounts are convertible into shares of common stock at a conversion rate equal to 57% of the lowest trading price during the fifteen trading days prior to the conversion. |
2_Summary_of_Significant_Accou1
(2) Summary of Significant Accounting Policies: Risks and Uncertainties (Policies) | 3 Months Ended |
Jun. 30, 2014 | |
Policies | ' |
Risks and Uncertainties: | ' |
Risks and Uncertainties: | |
The Company operates in an industry that is subject to intense competition and potential government regulations. Significant changes in regulations and the inability of the Company to establish contracts with rail services providers could have a materially adverse impact on the Company’s operations. | |
2_Summary_of_Significant_Accou2
(2) Summary of Significant Accounting Policies: Use of Estimates (Policies) | 3 Months Ended |
Jun. 30, 2014 | |
Policies | ' |
Use of Estimates: | ' |
Use of Estimates: | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. |
2_Summary_of_Significant_Accou3
(2) Summary of Significant Accounting Policies: Property and Equipment (Policies) | 3 Months Ended |
Jun. 30, 2014 | |
Policies | ' |
Property and Equipment: | ' |
Property and Equipment: | |
Property and equipment are recorded at historical cost and depreciated on a straight-line basis over their estimated useful lives of approximately five years once the individual assets are placed in service. The Company expenses all purchases of equipment with individual costs of under $500, and these amounts are not material to the financial statements. |
2_Summary_of_Significant_Accou4
(2) Summary of Significant Accounting Policies: Long-Lived Assets Policy (Policies) | 3 Months Ended |
Jun. 30, 2014 | |
Policies | ' |
Long-Lived Assets Policy | ' |
Long-Lived Assets: | |
In accordance with FASB ASC 360-10, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. The Company’s management believes there has been no impairment of its long-lived assets during the three months ended June 30, 2014 or 2013. There can be no assurance, however, that market conditions will not change or demand for the Company’s business model will continue. Either of these could result in future impairment of long-lived assets. |
2_Summary_of_Significant_Accou5
(2) Summary of Significant Accounting Policies: Income Taxes (Policies) | 3 Months Ended |
Jun. 30, 2014 | |
Policies | ' |
Income Taxes | ' |
Income Taxes: | |
Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The deferred tax assets of the Company relate primarily to operating loss carryforwards for federal income tax purposes. A full valuation allowance for deferred tax assets has been provided because the Company believes it is not more likely than not that the deferred tax asset will be realized. Realization of deferred tax assets is dependent on the Company generating sufficient taxable income in future periods. | |
The Company periodically evaluates its tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years, as defined by the statute of limitations, based on their technical merits. As of June 30, 2014 and March 31, 2014, the Company has not established a liability for uncertain tax positions. |
2_Summary_of_Significant_Accou6
(2) Summary of Significant Accounting Policies: Basic and Diluted Loss Per Share (Policies) | 3 Months Ended |
Jun. 30, 2014 | |
Policies | ' |
Basic and Diluted Loss Per Share: | ' |
Basic and Diluted Loss Per Share: | |
In accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 260, “Earnings Per Share,” the basic loss per common share is computed by dividing the net loss available to common stockholders after preferred stock dividends, by the weighted average common shares outstanding during the period. Diluted earnings per share reflect per share amounts that would have resulted if diluted potential common stock had been converted to common stock. Common stock equivalents have not been included in the earnings per share computation for the three months ended June 30, 2014 and 2013 as the amounts are anti-dilutive. As of June 30, 2014, the Company had 1,770,969 outstanding options which were excluded from the computation of net income per share because they are anti-dilutive. As of June 30, 2014, the Company also had convertible debt of $2,959,792 which was excluded from the computation. As of June 30, 2014, the Company had 2,315,649 outstanding warrants which were also excluded from the computation because they were anti-dilutive. | |
2_Summary_of_Significant_Accou7
(2) Summary of Significant Accounting Policies: Derivative Liabilities (Policies) | 3 Months Ended |
Jun. 30, 2014 | |
Policies | ' |
Derivative Liabilities | ' |
Derivative Liabilities: | |
In connection with the private placement of convertible notes beginning in February 2013, the Company became contingently obligated to issue shares of common stock in excess of the 200 million authorized under the Company’s certificate of incorporation. Consequently, the ability to settle these obligations with shares would be unavailable causing these obligations to potentially be settled in cash. This condition creates a derivative liability. | |
The Company has a sequencing policy regarding share settlement wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares. | |
On December 2, 2013, the Company effected a one-for-twenty reverse stock split of the Company’s issued and outstanding common stock shares. As a result, the Company’s outstanding shares of common stock and common stock equivalents no longer exceeded the number of authorized shares. As a result, as of December 2, 2013, these instruments that were accounted for as derivative liabilities were reclassified as equity. | |
The Company also has certain warrants and embedded conversion options in notes payable with elements that qualify as derivatives. The warrants have anti-dilution clauses that prevent calculation of the ultimate number of shares that may be issued upon exercise, and four outstanding notes payable that had a variable conversion feature that similarly prevented the calculation of the number of shares into which they were convertible. | |
The Company values these warrants and embedded conversion options in notes payable using the binomial lattice method. The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the condensed statement of operations (see Note 6). |
2_Summary_of_Significant_Accou8
(2) Summary of Significant Accounting Policies: Fair Value of Financial Instruments, Policy (Policies) | 3 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Policies | ' | ||||||||||||
Fair Value of Financial Instruments, Policy | ' | ||||||||||||
Fair Value of Financial Instruments: | |||||||||||||
The Company's financial instruments as defined by FASB ASC 825-10-50 include cash, notes payable and derivative liabilities. Derivative liabilities are recorded at fair value. The principal balance of notes payable approximates fair value because current interest rates and terms offered to the Company for similar debt are substantially the same. | |||||||||||||
FASB ASC 820 defines fair value, establishes a framework for measuring fair value, in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. FASB ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows: | |||||||||||||
Level 1. Observable inputs such as quoted prices in active markets; | |||||||||||||
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and | |||||||||||||
Level 3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions. | |||||||||||||
In determining the appropriate fair value of the goodwill and derivative liabilities, the Company used the following input levels for its valuation methodology. | |||||||||||||
Fair Value | Fair Value Measurements at June 30, 2014 | ||||||||||||
as of | Using Fair Value Heirarchy | ||||||||||||
30-Jun-14 | Level 1 | Level 2 | Level 3 | ||||||||||
Liabilities: | |||||||||||||
Derivative liability | $ | 1,519,753 | $ | - | $ | 1,519,753 | $ | - | |||||
2_Summary_of_Significant_Accou9
(2) Summary of Significant Accounting Policies: New Accounting Pronouncements (Policies) | 3 Months Ended |
Jun. 30, 2014 | |
Policies | ' |
New Accounting Pronouncements: | ' |
New Accounting Pronouncements: | |
There are no recent accounting pronouncements that management believes will have a material impact on the Company's present or future consolidated financial statements | |
3_Property_and_Equipment_Sched
(3) Property and Equipment: Schedule of Other Assets, Noncurrent (Tables) | 3 Months Ended | |||||
Jun. 30, 2014 | ||||||
Tables/Schedules | ' | |||||
Schedule of Other Assets, Noncurrent | ' | |||||
June 30, | March 31, | |||||
2014 | 2014 | |||||
(Unaudited) | ||||||
Office equipment | $ | 65,084 | $ | 61,611 | ||
Computer software | 24,167 | 24,167 | ||||
Transportation equipment under construction | 635,686 | 621,802 | ||||
724,937 | 707,580 | |||||
Less: accumulated depreciation | (25,609) | (23,173) | ||||
$ | 699,328 | $ | 684,407 | |||
4_Notes_Payable_Schedule_of_Lo
(4) Notes Payable: Schedule of Long-term Debt Instruments (Tables) | 3 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
Tables/Schedules | ' | |||||||
Schedule of Long-term Debt Instruments | ' | |||||||
June 30, | March 31, | |||||||
2014 | 2014 | |||||||
(Unaudited) | ||||||||
Secured promissory notes, dated May 17, 2011 through | ||||||||
May 17, 2012 to an investor bearing interest at 8% per annum, | ||||||||
payable on May 17, 2012. | $ | - | $ | 13,333 | ||||
Total outstanding notes payable | $ | - | $ | 13,333 |
5_Convertible_Notes_Payable_Sc
(5) Convertible Notes Payable: Schedule Of Convertible Notes Payable (Tables) | 3 Months Ended | ||||||
Jun. 30, 2014 | |||||||
Tables/Schedules | ' | ||||||
Schedule Of Convertible Notes Payable | ' | ||||||
June 30, | March 31, | ||||||
2014 | 2014 | ||||||
(Unaudited) | |||||||
Principal balance of convertible notes payable outstanding | $ | 2,959,792 | $ | 2,023,000 | |||
Less: discount on convertible notes payable | (760,107) | (601,016) | |||||
Convertible notes payable, net | $ | 2,199,685 | $ | 1,421,984 | |||
5_Convertible_Notes_Payable_Sc1
(5) Convertible Notes Payable: ScheduleOfFutureMaturitiesOfNotesPayable (Tables) | 3 Months Ended | |||
Jun. 30, 2014 | ||||
Tables/Schedules | ' | |||
ScheduleOfFutureMaturitiesOfNotesPayable | ' | |||
Year Ended | ||||
June 30, | ||||
2015 | $ | 2,702,167 | ||
2016 | 257,625 | |||
Total | $ | 2,959,792 |
6_Derivative_Instruments_Sched
(6) Derivative Instruments: Schedule of Derivative Liabilities at Fair Value (Tables) | 3 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Tables/Schedules | ' | ||||||||||||
Schedule of Derivative Liabilities at Fair Value | ' | ||||||||||||
Three Months Ended June 30, 2014 | Three Months Ended June 30, 2013 | ||||||||||||
Conversion Feature | Conversion Feature | ||||||||||||
of | of | ||||||||||||
Warrants | Notes Payable | Total | Warrants | Notes Payable | Total | ||||||||
Beginning balance, April 1 | $ 205,248 | $ 992,770 | $ 1,198,018 | $ 1,663,394 | $ 1,518,143 | $ 3,181,537 | |||||||
Additional issuances | 148,903 | 1,043,031 | 1,191,934 | 2,472,282 | 1,364,711 | 3,836,993 | |||||||
Exercised/converted | - | - | - | - | (266,459) | (266,459) | |||||||
Change in derivative liability | (247,591) | (622,608) | (870,199) | 22,441 | (972,686) | (950,245) | |||||||
Ending balance, June 30 | $ 106,560 | $ 1,413,193 | $ 1,519,753 | $ 4,158,117 | $ 1,643,709 | $ 5,801,826 |
6_Derivative_Instruments_Warra
(6) Derivative Instruments: Warrant Value Assumptions Schedule (Tables) | 3 Months Ended | ||||
Jun. 30, 2014 | |||||
Tables/Schedules | ' | ||||
Warrant Value Assumptions Schedule | ' | ||||
Three Months Ended | Three Months Ended | ||||
June 30, 2014 | June 30, 2013 | ||||
Expected life in years | 0.25 - 5 years | 0.59 - 4.43 years | |||
Stock price volatility | 160.4% - 256.7% | 112.3% - 270.1% | |||
Discount rate | 0.04% - 1.68% | 0.09% - 1.20% | |||
Expected dividends | None | None | |||
Forfeiture rate | 0% | 0% |
8_Stock_Option_Plan_Schedule_o
(8) Stock Option Plan: Schedule of Stock Option Activity (Tables) | 3 Months Ended | |||||||||
Jun. 30, 2014 | ||||||||||
Tables/Schedules | ' | |||||||||
Schedule of Stock Option Activity | ' | |||||||||
The following is a summary of the Company’s stock option activity. | ||||||||||
Weighted- | Average | |||||||||
Average | Remaining | Aggregate | ||||||||
Exercise | Contractual | Intrinsic | ||||||||
Options | Price | Life (Years) | Value | |||||||
Outstanding at March 31, 2014 | 100,000 | $ | 10.00 | 4.59 | $ | - | ||||
Granted | 6,815,023 | 0.0001 | 2,446,581 | |||||||
Exercised | (5,144,054) | 0.0001 | 1,268,912 | |||||||
Outstanding at June 30, 2014 (unaudited) | 1,770,969 | $ | 0.56 | 4.73 | $ | 166,930 | ||||
Vested and expected to vest | ||||||||||
at June 30, 2014 | 1,770,969 | $ | 0.56 | 4.73 | $ | 166,930 | ||||
Exercisable at June 30, 2014 | 1,770,969 | $ | 0.56 | 4.73 | $ | 166,930 |
8_Stock_Option_Plan_Schedule_o1
(8) Stock Option Plan: Schedule of Stock Options Outstanding and Exercisable (Tables) | 3 Months Ended | |||||||||||||
Jun. 30, 2014 | ||||||||||||||
Tables/Schedules | ' | |||||||||||||
Schedule of Stock Options Outstanding and Exercisable | ' | |||||||||||||
The following table summarizes information about stock options outstanding and exercisable at June 30, 2014. | ||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||
Average | Average | Average | ||||||||||||
Exercise | Number | Remaining | Exercise | Number | Exercise | |||||||||
Price | of Shares | Life (Years) | Price | of Shares | Price | |||||||||
$ | 10.00 | 100,000 | 4.34 | $ | 10.00 | 100,000 | $ | 10.00 | ||||||
0.0001 | 1,670,969 | 4.76 | 0.0001 | 1,670,969 | 0.0001 | |||||||||
1,770,969 | 1,770,969 |
1_Organization_and_Basis_of_Pr1
(1) Organization and Basis of Presentation (Details) (USD $) | 3 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Details | ' | ' |
Net loss | $4,553,720 | $3,216,547 |
Accumulated Other Comprehensive Income (Loss), Net of Tax | 36,181,363 | ' |
Negative working capital | 3,868,645 | ' |
Convertible Notes Payable Outstanding | $2,959,792 | ' |
Recovered_Sheet1
(2) Summary of Significant Accounting Policies: Basic and Diluted Loss Per Share (Details) (USD $) | 3 Months Ended |
Jun. 30, 2014 | |
Details | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,770,969 |
Convertible Debt | $2,959,792 |
Warrants and Rights Outstanding | $2,315,649 |
3_Property_and_Equipment_Sched1
(3) Property and Equipment: Schedule of Other Assets, Noncurrent (Details) (USD $) | Jun. 30, 2014 | Mar. 31, 2014 |
Property, Plant and Equipment, Gross | $724,937 | $707,580 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | -25,609 | -23,173 |
Property and equipment, net of accumulated depreciation | 699,328 | 684,407 |
Computer Software, Intangible Asset | ' | ' |
Property, Plant and Equipment, Gross | 24,167 | 24,167 |
Office Equipment | ' | ' |
Property, Plant and Equipment, Gross | 65,084 | 61,611 |
Railroad Transportation Equipment | ' | ' |
Property, Plant and Equipment, Gross | $635,686 | $621,802 |
4_Notes_Payable_Schedule_of_Lo1
(4) Notes Payable: Schedule of Long-term Debt Instruments (Details) (USD $) | Mar. 31, 2014 |
Details | ' |
Secured promissory notes, dated May 17, 2011 through May 17, 2012 to an investor bearing interest at 8% per annum, payable on May 17, 2012 | $13,333 |
Short term notes payable | $13,333 |
5_Convertible_Notes_Payable_Sc2
(5) Convertible Notes Payable: Schedule Of Convertible Notes Payable (Details) (USD $) | Jun. 30, 2014 | Mar. 31, 2014 |
Details | ' | ' |
Principal balance of convertible notes payable outstanding | $2,959,792 | $2,023,000 |
Convertible notes payable discount | -760,107 | -601,016 |
Convertible Notes Payable, Noncurrent | $2,199,685 | $1,421,984 |
5_Convertible_Notes_Payable_Sc3
(5) Convertible Notes Payable: ScheduleOfFutureMaturitiesOfNotesPayable (Details) (USD $) | Jun. 30, 2014 |
Details | ' |
Long-term Debt of Registrant, Maturities, Repayments of Principal in Remainder of Fiscal Year | $2,702,167 |
Long-term Debt of Registrant, Maturities, Repayments of Principal in Rolling Year Two | 257,625 |
Total notes payable | $2,959,792 |
6_Derivative_Instruments_Sched1
(6) Derivative Instruments: Schedule of Derivative Liabilities at Fair Value (Details) (USD $) | 3 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Derivative liability | $1,519,753 | $5,801,826 |
Derivative liability | 1,198,018 | 3,181,537 |
Warrants | ' | 1,663,394 |
Additional Issuances Derivative Liability | 1,191,934 | 3,836,993 |
Exercised/converted Derivative Liability | ' | -266,459 |
Derivative Liability Change | -870,199 | -950,245 |
Warrant | ' | ' |
Derivative liability | 106,560 | 4,158,117 |
Derivative liability | 205,248 | ' |
Additional Issuances Derivative Liability | 148,903 | 2,472,282 |
Derivative Liability Change | -247,591 | 22,441 |
Debt | ' | ' |
Derivative liability | 1,413,193 | 1,643,709 |
Derivative liability | 992,770 | 1,518,143 |
Additional Issuances Derivative Liability | 1,043,031 | 1,364,711 |
Exercised/converted Derivative Liability | ' | -266,459 |
Derivative Liability Change | ($622,608) | ($972,686) |
6_Derivative_Instruments_Warra1
(6) Derivative Instruments: Warrant Value Assumptions Schedule (Details) (USD $) | 3 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Details | ' | ' |
WarrantValueAssumptionsExpectedLife | '0.25 - 5 years | '0.59 - 4.43 years |
WarrantValueAssumptionsStockPriceVolatility | '160.4% - 256.7% | '112.3% - 270.1% |
Warrant Value Assumption Discount Rate | '0.04% - 1.68% | '0.09% - 1.20% |
WarrantValueAssumptionsExpectedDividends | $0 | $0 |
WarrantValueAssumptionsForfeitureRate | 0.00% | 0.00% |
7_Equity_Details
(7) Equity (Details) (USD $) | 3 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Mar. 31, 2014 | |
Details | ' | ' | ' |
Common stock shares authorized | 200,000,000 | ' | 200,000,000 |
Shares issued from converted debt | 270,911 | ' | ' |
Convertible notes payable and accrued interest | $270,911 | ' | ' |
Shares converted held by related party entity | 200,000 | ' | ' |
Convertible note payable held by related party entity | 200,000 | ' | ' |
Shares issued as payment of notes payable | 785,000 | ' | ' |
Outstanding notes payable and accrued interest | 69,875 | ' | ' |
Shares issued for services | 129,500 | 1,390,000 | ' |
Services expense | $511,870 | $318,550 | ' |
Shares issued for warrants | ' | 9,823 | ' |
Shares issued for private placement | 5,144,054 | ' | ' |
Warrants issued in connection with convertible notes | ' | 880,000 | ' |
Warrants issued for payments of commissions | ' | 238,000 | ' |
Warrants issued for payments of directors' services | ' | 100,000 | ' |
8_Stock_Option_Plan_Details
(8) Stock Option Plan (Details) (USD $) | 3 Months Ended | |
Jun. 30, 2014 | Mar. 31, 2014 | |
Details | ' | ' |
Grant of Stock Options Under Plan | 1,000,000 | ' |
Outstanding Employee Stock Options | 100,000 | 100,000 |
Grant Date Market Price of Company's Stock | $10 | ' |
Related_Party_Transactions_Dis1
Related Party Transactions Disclosure (Details) (USD $) | 3 Months Ended |
Jun. 30, 2014 | |
Details | ' |
Proceeds from notes payable - related parties | $59,000 |