Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Nov. 11, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'iHookup Social, Inc. | ' |
Entity Central Index Key | '0001414043 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 389,739,563 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2014 | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
ASSETS | ' | ' |
Cash | $24,476 | $0 |
Accounts receivable | 5,673 | 0 |
Prepaid expenses | 180,008 | 0 |
Debt issue costs (Note 12) | 61,477 | 0 |
Total current assets | 271,634 | 0 |
TOTAL ASSETS | 271,634 | 0 |
Accounts payable | 594,405 | 16,109 |
Current portion of convertible debentures (Note 12) | 155,890 | 0 |
Promissory note (Note 6) | 253,863 | 0 |
Total Liabilities | 1,004,158 | 16,109 |
Going concern (Note 1) | ' | ' |
Commitments (Note 8) | ' | ' |
Subsequent events (Note 15) | ' | ' |
STOCKHOLDERS' DEFICIT | ' | ' |
Preferred stock, 50,000,000 shares authorized at par value of $0.0001, 2,299,042 shares issued and outstanding (Note 4) | 230 | 0 |
Common stock, 10,000,000,000 shares authorized at par value of $0.0001, 151,352,744 (December 31, 2013 – 541,250) shares issued and outstanding (Note 4) | 15,135 | 54 |
Additional paid-in capital | 2,647,664 | 4,946 |
Stock subscriptions receivable (Note 9) | -4,500 | -5,000 |
Deficit | -3,391,053 | -16,109 |
Total Stockholders' Deficit | -732,524 | -16,109 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $271,634 | $0 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, authorized shares | 50,000,000 | 50,000,000 |
Preferred stock, issued shares | 2,299,042 | 0 |
Preferred stock, outstanding shares | 2,299,042 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, Authorized | 10,000,000,000 | 10,000,000,000 |
Common stock, Issued | 151,352,744 | 541,250 |
Common stock, outstanding | 151,352,744 | 541,250 |
CONSOLIDATED_STATEMENT_OF_COMP
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS (USD $) | 3 Months Ended | 9 Months Ended | 10 Months Ended |
Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | |
Income Statement [Abstract] | ' | ' | ' |
REVENUES | $61,480 | $154,697 | $154,697 |
OPERATING EXPENSES | ' | ' | ' |
Accretion and interest expense | 297,753 | 771,893 | 771,893 |
Cost of revenue | 18,444 | 46,409 | 46,409 |
General and administrative (Note 9) | 313,164 | 1,010,962 | 1,027,071 |
Financing costs | 22,722 | 55,366 | 55,366 |
Product development | 154,845 | 329,054 | 329,054 |
Sales and marketing | 228,271 | 486,310 | 486,310 |
TOTAL OPERATING EXPENSES | 1,035,203 | 2,699,994 | 2,716,103 |
LOSS FROM OPERATIONS | -973,723 | -2,545,297 | -2,561,406 |
OTHER EXPENSES | ' | ' | ' |
Impairment loss (Note 13) | 0 | -293,750 | -293,750 |
Gain on extinguishment of debt (Note 3) | 0 | 76,359 | 76,359 |
NET LOSS AND COMPREHENSIVE LOSS | ($986,920) | ($2,762,688) | ($2,778,797) |
BASIC AND DILUTED LOSS PER SHARE | ($0.01) | ($0.05) | ' |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | 99,051,173 | 57,194,492 | ' |
CONSOLIDATED_STATEMENT_OF_STOC
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (USD $) | Common Stock | Preferred Stock | Additional Paid-In Capital | Common Stock Receivable | Deficit | Total |
Beginning Shares, Amount at Dec. 01, 2013 | $0 | ' | $0 | $0 | $0 | $0 |
Beginning Balance, Shares at Dec. 01, 2013 | 0 | ' | ' | ' | ' | ' |
Shares issued for cash, shares | 541,250 | ' | ' | ' | ' | ' |
Shares issued for cash, amount | 54 | ' | 4,946 | -5,000 | ' | 0 |
Net loss | ' | ' | ' | ' | -16,109 | -16,109 |
Ending Balance, Amount at Dec. 31, 2013 | 54 | ' | 4,946 | -5,000 | -16,109 | -16,109 |
Ending Balance, Shares at Dec. 31, 2013 | 541,250 | ' | ' | ' | ' | ' |
Issuance of preferred shares, shares | ' | 58,750 | ' | ' | ' | ' |
Issuance of preferred shares, amount | ' | 1 | 293,749 | ' | ' | 293,750 |
Conversion of preferred shares, shares | 50,992,370 | -259,708 | ' | ' | ' | ' |
Conversion of preferred shares, amount | 5,099 | -21 | -5,078 | ' | ' | ' |
Reverse acquisition transaction, shares | 11,041,292 | 2,500,000 | ' | ' | ' | ' |
Reverse acquisition transaction, amount | 1,103 | 250 | 478,206 | ' | -612,256 | -132,697 |
Share subscribed received | ' | ' | ' | 500 | ' | 500 |
Shares issued for services, shares | 7,026,389 | ' | ' | ' | ' | ' |
Shares issued for services, amount | 703 | ' | 429,281 | ' | ' | 429,984 |
Conversion of notes, Shares | 81,751,443 | ' | ' | ' | ' | ' |
Convertible notes (net) (Note 12) | 8,176 | ' | 1,446,560 | ' | ' | 1,454,736 |
Net loss | ' | ' | ' | ' | -2,762,688 | -2,762,688 |
Ending Balance, Amount at Sep. 30, 2014 | $15,135 | $230 | $2,647,664 | ($4,500) | ($3,391,053) | ($732,524) |
Ending Balance, Shares at Sep. 30, 2014 | 151,352,744 | 2,299,042 | ' | ' | ' | ' |
CONSOLIDATED_STATEMENT_OF_CASH
CONSOLIDATED STATEMENT OF CASH FLOW (USD $) | 9 Months Ended | 10 Months Ended |
Sep. 30, 2014 | Sep. 30, 2014 | |
Cash Flows from Operating Activities: | ' | ' |
Net loss | ($2,762,688) | ($2,778,797) |
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: | ' | ' |
Impairment loss | 293,750 | 293,750 |
Debt issue costs | 13,146 | 13,146 |
Interest on promissory note | 3,863 | 3,863 |
Accretion expense | 751,339 | 751,339 |
Gain on extinguishment of debt | -76,359 | -76,359 |
Shares issued for services | 228,066 | 228,066 |
Changes in Operating Assets and Liabilities | ' | ' |
Decrease (increase) in accounts receivable | -5,673 | -5,673 |
Decrease (increase) in advances to related parties | 0 | 0 |
Decrease (increase) in prepaid expenses | 21,910 | 21,910 |
Increase (decrease) in accounts payable | 419,745 | 435,853 |
Net Cash Used in Operating Activities | -1,112,900 | -1,112,900 |
Cash Flows provided by Investing Activities: | ' | ' |
Cash acquired in the Merger | 966 | 966 |
Net Cash Provided by Investing Activities | 966 | 966 |
Cash Flows from Financing Activities: | ' | ' |
Proceeds from convertible debentures (net) | 885,910 | 885,910 |
Proceeds from promissory notes | 250,000 | 250,000 |
Share subscriptions received | 500 | 500 |
Net Cash Provided by Financing Activities | 1,136,410 | 1,136,410 |
Net Increase (Decrease) in Cash | 24,476 | 24,476 |
Cash- Beginning | 0 | 0 |
Cash- Ending | 24,476 | 24,476 |
Supplemental Cash Flow Information: | ' | ' |
Cash paid for interest | 0 | 0 |
Cash paid for income taxes | 0 | 0 |
Non-cash Investing and Financing Items: | ' | ' |
Shares issued for conversion of debt (net) | $939,250 | $939,250 |
1_NATURE_OF_BUSINESS_AND_GOING
1. NATURE OF BUSINESS AND GOING CONCERN | 9 Months Ended |
Sep. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
NATURE OF BUSINESS AND GOING CONCERN | ' |
iHookup Social, Inc. (a development stage company), a Nevada corporation (the “Company”), was incorporated in the State of Nevada with a plan to produce user-friendly software that creates interactive digital yearbook software for schools, resulting in nominal revenue of $4,855. | |
Effective June 15, 2011, the Company completed a merger with its subsidiary, Titan Iron Ore Corp., a Nevada corporation, which was incorporated solely to effect a change in the Company’s name from “Digital Yearbook Inc.” to “Titan Iron Ore Corp.” The Company then began to pursue business in the area of mining exploration. | |
As previously reported in the Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on February 6, 2014, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) on February 3, 2014 with iHookup Operations Corp., a wholly-owned Delaware subsidiary of the Company (“Acquisition Sub”) and iHookup-DE, whereby iHookup-DE was the surviving entity and became the wholly-owned subsidiary of the Company. iHookup-DE’s former stockholders exchanged all of their 600,000 (12,000,000 pre-split) shares of outstanding common stock for 2,500,000 (50,000,000 pre-split) shares of the Company’s designated Series A Preferred Stock. | |
The transaction was regarded as a reverse merger (the “Merger”) whereby iHookup-DE was considered to be the accounting acquirer as its management retained control of the Company after the Merger. During the period ended March 31, 2014, the Merger was completed (see Note 14) and as a result, iHookup-DE acquired the net liabilities of the Company. The Company has discontinued its prior operations in mineral exploration and subsequent to period-end has conveyed all rights to its mineral properties to settle the outstanding promissory note payable. | |
As a result of the Merger, the Company ceased its prior operations and its business became the development and dissemination of a “proximity based” mobile-social media application that facilitates connections between people, utilizing the intelligence of global positioning system (“GPS”) and localized recommendations. | |
The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which implies that the Company would continue to realize its assets and discharge its liabilities in the normal course of business. The Company has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. As of September 30, 2014 the Company has a working capital deficiency of $732,524 and has accumulated deficit of $3,391,053 since inception and its operations continue to be funded primarily from sales of its stock and issuance of convertible debentures. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to obtain the necessary financing from sales of its stock financings. The 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. |
2_SUMMARY_OF_SIGNIFICANT_ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
Basis of Presentation | |
These consolidated financial statements include the accounts of iHookup Social, Inc. and its wholly owned subsidiary, iHookup-DE (see Note 14). | |
These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year end is December 31. | |
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation. Interim results are not necessarily indicative of the results that may be expected for a full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto. | |
On April 29, 2014, the Company completed a 20 for 1 common stock and preferred stock reverse stock split at a ratio of 20 to 1; the reverse stock split has been retroactively applied to all common stock, preferred stock, weighted average common stock, and loss per common stock disclosures. | |
Use of Estimates | |
The preparation of these statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to revenue recognition, useful life and recoverability of long-lived assets, valuation of mineral properties, deferred income tax asset valuations, financial instrument valuations, share based payments, other equity-based payments, and loss contingencies. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. | |
Revenue Recognition | |
The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured. | |
Advertising Costs | |
The Company’s policy regarding advertising is to expense advertising when incurred. | |
Cash and Cash Equivalents | |
The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. | |
Impairment of Long-Lived Assets | |
The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. | |
If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell. | |
Stock-based Compensation | |
The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation and ASC 505, Equity Based Payments to Non-Employees, which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based awards made to employees and directors, including stock options. | |
ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The Company uses the Black-Scholes option pricing model as its method in determining fair value. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to the Company’s expected stock price volatility over the terms of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the statement of operations over the requisite service period. | |
All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. | |
Mineral Property Costs | |
Mineral property exploration costs are expensed as incurred. Mineral property acquisition costs are capitalized. The Company assesses the carrying costs for impairment, whenever events or changes in circumstances indicate that the carrying cost may not be recoverable under ASC 360, Property, Plant, and Equipment at each reporting date. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs then incurred to develop such property, will be capitalized. Such costs will be amortized using the units-of-production method over the estimated recoverable reserves. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations. During the period ended September 30, 2014 the Company did not pursue any mineral property exploration activity. | |
Asset Retirement Obligations | |
The Company records asset retirement obligations in accordance with ASC 410-20, Asset Retirement Obligations, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated retirement costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and normal use of the asset. ASC 410-20 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through charges to operating expense. If the obligation is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss on settlement. As at September 30, 2014, the Company has not incurred any asset retirement obligation related to the exploration of its mineral property exploration activity. | |
Comprehensive Loss | |
ASC 220, Comprehensive Income establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. During the periods ended September 30, 2014 and December 31, 2013, the Company had no items that represent other comprehensive income. | |
Financial Instruments | |
FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to measure fair value, as required by ASC 820, must maximize the use of observable inputs and minimize the use of unobservable inputs. | |
The Company’s assessment of the significance of a particular input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. The carrying values of cash, accounts payable, and due to related parties approximate fair values because of the short-term maturity of these instruments. The fair value of the Company’s promissory note approximates carrying value as the underlying imputed interest rate approximates the estimated market rate. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. | |
Basic and Diluted Loss Per Share | |
The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. | |
Income Taxes | |
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. | |
Recent Accounting Pronouncements | |
In March 2013, ASC guidance was issued related to Foreign Currency Matters to clarify the treatment of cumulative translation adjustments when a parent sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity. The updated guidance also resolves the diversity in practice for the treatment of business combinations achieved in stages in a foreign entity. The update is effective prospectively for the Company’s fiscal year beginning January 1, 2014. There has been no significant impact on the Company’s consolidated financial statements as a result of adoption of this new accounting pronouncement. | |
In April 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which changes the criteria for determining which disposals can be presented as discontinued operations and modifies the related disclosure requirements. Under the new guidance, a discontinued operation is defined as a disposal of a component or group of components that represents a strategic shift that has, or will have, a major effect on an entity's operations and financial results. The revised guidance is effective for annual fiscal periods beginning after December 15, 2014. Early adoption is permitted. The Company is evaluating the impact the revised guidance will have on its consolidated financial statements. | |
In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40). Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosure. This ASU provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The amendments are effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. | |
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, “Revenue Recognition” and some cost guidance included in ASC Subtopic 605-35, Revenue Recognition -Construction-Type and Production-Type Contracts”. 2014-09 requires the disclosure of sufficient information to enable users of the financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. The Company will also be required to disclose information regarding significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. Early adoption is not allowed. ASU 2014-09 provides two methods of retrospective application. The first method would require the Company to apply ASU 2014-09 to each prior reporting period presented. The second method would require the Company to retrospectively apply with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. The Company is currently evaluating the impact that the adoption of ASU 2014-09 may have on its consolidated financial statements. | |
3_MINERAL_PROPERTIES
3. MINERAL PROPERTIES | 9 Months Ended |
Sep. 30, 2014 | |
Extractive Industries [Abstract] | ' |
MINERAL PROPERTIES | ' |
Wyoming Iron Complex Properties | |
The Company was formerly involved in mineral exploration activities for (i) the property located at Southwest Quarter of Section 22, Township 19 North, Range 71 West, 6th Principal Meridian, Albany County, Wyoming (“Leased Real Property”); and (ii) certain unpatented lode mining claims situated in an unorganized mining district, Albany County, Wyoming, in Sections 14 and 24, Township 19 North, Range 72 West, 6th Principal Meridian, the names of which and the place of record of the location notices thereof in the official records of the county recorder and the authorized office of the Bureau of Land Management (“Unpatented Mining Claims,” and together with the Leased Real Property, the “Wyoming Iron Complex”). The Company was assigned the rights to Wyoming Iron Complex in exchange for a promissory note. At the time of the Merger described in Note 14, the Company did not expect to go forward with any mining or mineral exploration activities at these sites. An impairment analysis was conducted at the time of the Merger and no impairment was recorded as the fair value of Wyoming Iron Complex (considered to be the carrying value of the promissory note) exceeded the carrying value. During the period ending September 30, 2014, the mineral property was surrendered to settle the outstanding promissory note as per Note 6, resulting in a gain of $76,359 on the extinguishment of debt. |
4_COMMON_AND_PREFERRED_STOCK
4. COMMON AND PREFERRED STOCK | 9 Months Ended |
Sep. 30, 2014 | |
Equity [Abstract] | ' |
COMMON AND PREFERRED STOCK | ' |
Issued during 2014: | |
During the nine month period ended September 30, 2014, the Company issued 81,751,443 shares of common stock to various convertible note holders for full and partial conversion of the notes (Note 12). | |
During the nine month period ended September 30, 2014, the Company issued 7,026,389 shares of common stock to various consultants in exchange for investor relations and advertising services. | |
During the nine month period ended September 30, 2014, the Company issued 50,992,370 shares of common stock to various holders of preferred stock upon conversion or such preferred stock. | |
On January 18, 2014, the Company designated 4,000,000 shares of its authorized 50,000,000 shares of Preferred Stock as “Series A Preferred Stock”. Each share of Series A Preferred Stock is convertible into such number of shares of common stock as is determined by dividing the Series A Original Issue Price by $5.00 ($0.25 pre-split). Each holder of Series A Preferred Stock is entitled to cast votes equal to nine times the total number of shares of common stock which are issued and outstanding, voting together with the holders of common stock as a single class. | |
5_SHARE_PURCHASE_WARRANTS
5. SHARE PURCHASE WARRANTS | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Notes to Financial Statements | ' | ||||||||
SHARE PURCHASE WARRANTS | ' | ||||||||
Weighted Average | |||||||||
Number | Exercise | ||||||||
of | Price | ||||||||
Warrants | $ | ||||||||
Warrants of the Company outstanding and exercisable as at the Merger | 85,850 | 17 | |||||||
Warrants expired during the period | (52,500 | ) | 15 | ||||||
Balance, September 30, 2014 | 33,350 | 20 | |||||||
Details of share purchase warrants outstanding as of September 30, 2014 are: | |||||||||
Number of Warrants Outstanding and Exercisable | |||||||||
Number | Exercise Price per Share | Expiry Date | |||||||
33,350 | $ | 20 | 10-Jan-15 | ||||||
33,350 | $ | 20 | |||||||
6_PROMISSORY_NOTE
6. PROMISSORY NOTE | 9 Months Ended |
Sep. 30, 2014 | |
Debt Disclosure [Abstract] | ' |
PROMISSORY NOTE | ' |
As part of the Merger described in Note 14, the Company acquired a Promissory Note due to Wyomex Limited Liability Company (“Wyomex”). On May 7, 2014, the carrying value of the Promissory Note was $1,282,370. On May 7, 2014, the Company entered into an arrangement to settle the Promissory Note by conveying the Strong Creek and Iron Mountain Properties described in Note 3 to Wyomex. The carrying value of the mineral properties on that date was $1,206,011 and the Company recorded a gain of $76,359. | |
As of June 25, 2014, the Company” entered into a Letter Agreement (the “Letter Agreement”) with Beaufort Capital Partners LLC (“Beaufort”), pursuant to which Beaufort agrees to loan (the “Loan”) up to $400,000 to the Company upon the Company’s written request. From June 25, 2014 to October 1, 2014 (the “Term”), the Loan may be made in monthly installments of One Hundred Thousand Dollars ($100,000) each and must be made within three (3) days of the receipt of the written request from the Company and evidenced by a Secured Promissory Note (the “Note”). Each Note shall be secured by a pledge of 8,000,000 shares of common stock of the Company provided by Copper Creek Holdings, LLC (“Copper Creek”), pledged under the terms and conditions of a Stock Pledge Agreement (the “Pledge”). | |
During the nine months ended September 30, 2014 and pursuant to the Letter Agreement, Company delivered written requests for installments in the aggregate of $250,000 and executed three Notes totaling $250,000. The Notes bear 1% interest per month, compounded monthly, and mature in six (6) months (“Maturity Date”). In the event that payment is not received within ten (10) days of the Maturity Date, then the Company shall be charged a late fee in an amount equal to 5% of the amount of such overdue payment, payable within five (5) days of the Maturity Date. An “Event of Default” is defined as (i) the failure of the Company to make the payments owed under the Notes in a timely manner, or (i) the initiation of bankruptcy proceedings by the Company. Upon an Event of Default, the unpaid principal balance of the Note shall be due and payable immediately, at Beaufort’s option. Additionally, if there is an Event of Default after the Maturity Date, interest shall accrue on the outstanding principal balance of the Notes at 10% per annum on the basis of a 360-day year (“Default Interest”), or if such Default Interest is not permitted by law, then the maximum rate of interest as permitted by applicable law. As of September 30, 2014 the Company recorded interest expense of $3,863 on these Notes. |
7_STOCKBASED_COMPENSATION
7. STOCK-BASED COMPENSATION | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||
STOCK-BASED COMPENSATION | ' | |||||||||||||
On November 22, 2011, the Board of Directors approved a stock option plan (“2011 Stock Option Plan”), the purpose of which is to enhance the Company’s stockholder value and financial performance by attracting, retaining and motivating the Company’s officers, directors, key employees, consultants and its affiliates and to encourage stock ownership by such individuals by providing them with a means to acquire a proprietary interest in the Company’s success through stock ownership. Under the 2011 Stock Option Plan, officers, directors, employees and consultants who provide services to the Company may be granted options to acquire common shares of the Company. The aggregate number of options authorized by the plan shall not exceed 497,370 common shares of the Company. | ||||||||||||||
The following table summarizes the options outstanding under the 2011 Stock Option Plan as of September 30, 2014: | ||||||||||||||
Option Price | ||||||||||||||
Expiry Date | Per Share | Number | ||||||||||||
21-Dec-21 | $ | 16.8 | 123,500 | |||||||||||
21-Dec-14 | 16.8 | 25,000 | ||||||||||||
21-Jun-22 | 4 | 50,000 | ||||||||||||
25-Jun-23 | 1.34 | 85,000 | ||||||||||||
$ | 9.9 | 283,500 | ||||||||||||
The Board of Directors and the stockholders holding a majority of the voting power approved a 2014 Equity Incentive Plan (the “2014 Plan”) on February 28, 2014, with a to be determined effective date. The purpose of the 2014 Plan is to assist the Company and its affiliates in attracting, retaining and providing incentives to employees, directors, consultants and independent contractors who serve the Company and its affiliates by offering them the opportunity to acquire or increase their proprietary interest in the Company and to promote the identification of their interests with those of the stockholders of the Company. The 2014 Plan will also be used to make grants to further reward and incentivize current employees and others. | ||||||||||||||
There are 12,067,859 shares of common stock (post-split) reserved for issuance under the 2014 Plan. The Board shall have the power and authority to make grants of stock options to employees, directors, consultants and independent contractors who serve the Company and its affiliates. Any stock options granted under the 2014 Plan shall have an exercise price equal to or greater than the fair market value of the Company’s shares of common stock. Unless otherwise determined by the Board of Directors, stock options shall vest over a four year period with 25% being vested after the end of one (1) year of service and the remainder vesting equally over a 36 month period. The Board may award options that may vest based upon the achievement of certain performance milestones. As of September 30, 2014, no options have been awarded under the 2014 Plan. | ||||||||||||||
The following table summarizes the Company’s stock options outstanding and exercisable: | ||||||||||||||
Number of Options | Weighted Average Exercise Price | Weighted- Average Remaining Contractual Term (years) | Aggregate Intrinsic Value | |||||||||||
$ | $ | |||||||||||||
Outstanding, December 31, 2013 | - | - | - | - | ||||||||||
Exercisable, December 31, 2013 | - | - | - | - | ||||||||||
Stock options of the Company outstanding and exercisable at the Merger | 283,500 | 9.9 | 7.16 | |||||||||||
Outstanding, September 30, 2014 | 283,500 | 9.9 | 7.16 | - | ||||||||||
Exercisable, September 30, 2014 | 283,500 | 9.9 | 7.16 | - | ||||||||||
8_COMMITMENTS
8. COMMITMENTS | 9 Months Ended | ||||||
Sep. 30, 2014 | |||||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||||
COMMITMENTS | ' | ||||||
The following table summarizes our significant contractual obligations as of September 30, 2014: | |||||||
2014 | 2015 | ||||||
Convertible Notes (1) | 88,922 | 930,354 | |||||
Operating Leases (2) | 3,338 | 5,564 | |||||
Service Contracts (3) | 41,997 | 16,997 | |||||
Employment Agreements (4) | 75,000 | 300,000 | |||||
Prommisory Notes (5) | - | 250,000 | |||||
209,257 | 1,502,914 | ||||||
(1) Principal and interest for various convertible notes due at the maturity date. | |||||||
(2) Rents payable for office space. | |||||||
(3) Service contracts for app and website hosting and investor relations services. | |||||||
(4) Employment agreements with related parties. | |||||||
(5) Principal and interest for various promissory notes due at the maturity date. |
9_RELATED_PARTY_TRANSACTIONS_A
9. RELATED PARTY TRANSACTIONS AND BALANCES | 9 Months Ended |
Sep. 30, 2014 | |
Related Party Transactions [Abstract] | ' |
RELATED PARTY TRANSACTIONS AND BALANCES | ' |
During the nine months ended September 30, 2014, the Company incurred $318,656 (2013: $nil) in salaries and management fees to current and former officers and directors with such costs being recorded as general and administrative expenses. | |
During the nine months ended September 30, 2014, the Company incurred $258,300 in app hosting, app development, office expenses, and rent to a company with two officers and directors in common with such costs being recorded as general and administrative and product development expenses. | |
During the nine months ended September 30, 2014, the Company incurred $2,800 in management fees, rent and office expenses to a company with an officer in common with such costs being recorded as general and administrative expenses. | |
During the nine months ended September 30, 2014, the Company paid $3,500 to the spouse of an officer and director with such costs being recorded as sales and marketing expenses. | |
As of September 30, 2014, the Company had a stock subscription receivable totaling $4,500 from an officer and director and from a company with an officer and director in common. | |
The above transactions were recorded at their exchange amounts, being the amounts agreed by the related parties. |
10_FAIR_VALUE_MEASUREMENT
10. FAIR VALUE MEASUREMENT | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||
FAIR VALUE MEASUREMENT | ' | ||||||||||||||||
ASC 820, Fair Value Measurements and Disclosures require an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: | |||||||||||||||||
Level 1 | |||||||||||||||||
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Valuations are based on quoted prices that are readily and regularly available in an active market and do not entail a significant degree of judgment. | |||||||||||||||||
Level 2 | |||||||||||||||||
Level 2 applies to assets or liabilities for which there are other than Level 1 observable inputs such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. | |||||||||||||||||
Level 2 instruments require more management judgment and subjectivity as compared to Level 1 instruments. For instance: determining which instruments are most similar to the instrument being priced requires management to identify a sample of similar securities based on the coupon rates, maturity, issuer, credit rating and instrument type, and subjectively select an individual security or multiple securities that are deemed most similar to the security being priced; and determining whether a market is considered active requires management judgment. | |||||||||||||||||
Level 3 | |||||||||||||||||
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The determination of fair value for Level 3 instruments requires the most management judgment and subjectivity. | |||||||||||||||||
Pursuant to ASC 825, cash is based on "Level 1" inputs. The Company believes that the recorded values of accounts payable approximate their current fair values because of their nature or respective relatively short durations. The fair value of the Company’s promissory note and convertible debentures approximates carrying value as the underlying imputed interest rate approximates the estimated current market rate for similar instruments. | |||||||||||||||||
Assets measured at fair value on a recurring basis were presented on the Company’s balance sheet as of September 30, 2014, as follows: | |||||||||||||||||
Fair Value Measurements Using | |||||||||||||||||
Quoted Prices in | |||||||||||||||||
Significant | |||||||||||||||||
Active Markets | Other | Significant | |||||||||||||||
For Identical | Observable | Unobservable | Balance as of | ||||||||||||||
Instruments | Inputs | Inputs | 30-Sep-14 | ||||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||
$ | $ | $ | $ | ||||||||||||||
Assets: | |||||||||||||||||
Cash (recurring basis) | 24,476 | — | — | 24,476 | |||||||||||||
As of September 30, 2014, there were no liabilities measured at fair value on a recurring basis presented on the Company’s balance sheet. |
11_CONVERTIBLE_DEBENTURES
11. CONVERTIBLE DEBENTURES | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
CONVERTIBLE DEBENTURES | ' | ||||||||
Issuance | Principal | Discount | Carrying Value | Interest Rate | Maturity Date | ||||
a | ) | 24-Feb-14 | - | - | - | 8 | % | 26-Nov-14 | |
b | ) | 17-Feb-14 | 7,000 | 4,115 | 2,885 | 8 | % | 17-Feb-15 | |
c | ) | 2-Apr-13 | 5,054 | - | 5,054 | 0 | % | 2-Jan-13 | |
d | ) | 16-Apr-14 | 44,444 | 4,619 | 2,825 | 12 | % | 16-Apr-15 | |
d | ) | 3-Sep-14 | 44,444 | 27,089 | 17,355 | 12 | % | 3-Sep-15 | |
e | ) | 6-Feb-14 | 25,000 | 18,933 | 6,067 | 8 | % | 6-Feb-15 | |
e | ) | 6-Feb-14 | 7,267 | 5,029 | 2,238 | 8 | % | 6-Feb-15 | |
e | ) | 17-Feb-14 | 21,000 | 12,549 | 8,451 | 8 | % | 17-Feb-15 | |
e | ) | 18-Mar-14 | 50,000 | 44,000 | 6,000 | 8 | % | 18-Mar-15 | |
e | ) | 21-May-14 | 75,000 | 71,788 | 3,212 | 8 | % | 21-May-15 | |
f | ) | 5-Mar-14 | 24,000 | - | 24,000 | 8 | % | 7-Sep-14 | |
g | ) | 18-Mar-14 | 25,000 | 21,693 | 3,307 | 8 | % | 18-Mar-15 | |
h | ) | 4-Apr-14 | 53,000 | 43,713 | 9,287 | 8 | % | 8-Jan-15 | |
h | ) | 11-Apr-14 | 37,500 | 30,910 | 6,590 | 8 | % | 16-Jan-15 | |
h | ) | 22-May-14 | 53,000 | 24,718 | 28,282 | 8 | % | 27-Feb-15 | |
h | ) | 16-Jun-14 | 63,000 | 50,099 | 12,901 | 8 | % | 18-Mar-15 | |
i | ) | 9-May-14 | 35,000 | 30,495 | 4,505 | 8 | % | 9-Feb-15 | |
j | ) | 16-Jun-14 | 55,000 | 46,057 | 8,943 | 12 | % | 11-Dec-14 | |
k | ) | 9-May-14 | 29,500 | 27,082 | 2,418 | 8 | % | 14-May-15 | |
L | ) | 11-Jul-14 | 80,000 | 78,430 | 1,570 | 12 | % | 10-Jul-15 | |
734,209 | 578,319 | 155,890 | |||||||
a) | The Company entered into several convertible promissory notes (“Asher Notes”) with Asher Enterprises Inc. (“Asher”). Any outstanding principal amount can be converted, in whole or in part, into common stock at the option of the holder at any time after 6 months from the issuance date at a conversion price per share equal to 60% of the average price of the lowest 5 day trading days during the 10 trading days preceding the conversion. The Asher Notes cannot be converted, to the extent that Asher Enterprises Inc. and its affiliates would beneficially own in excess of 4.99% of the Company’s outstanding common stock. | ||||||||
The convertible debenture may be repaid by the Company as follows: | |||||||||
· | Outstanding principal multiplied by 130% together with accrued interest and unpaid interest thereon if prepaid within a period of 60 days beginning on the issuance date; | ||||||||
· | Outstanding principal multiplied by 135% together with accrued interest and unpaid interest thereon if prepaid during the period beginning 61 days following the issuance date and ending on the date that is 90 days following the issuance date; | ||||||||
· | Outstanding principal multiplied by 140% together with accrued interest and unpaid interest thereon if prepaid during the period beginning 91 days following the issuance date and ending on the date that is 120 days following the issuance date; | ||||||||
· | Outstanding principal multiplied by 150% together with accrued interest and unpaid interest thereon if prepaid during the period beginning 121 days following the issuance date and ending on the date that is 180 days following the issuance date; | ||||||||
· | Outstanding principal multiplied by 175% together with accrued interest and unpaid interest thereon if prepaid during the period beginning 181 days following the issuance date through the maturity date. | ||||||||
· | In the event of default, the amount of principal and interest not paid when due bear default interest at the rate of 22% per annum and the Asher Notes becomes immediately due and payable. Should that occur the Company is liable to pay the holder 150% of the then outstanding principal and interest. | ||||||||
As of September 30, 2014, this note has been fully repaid. | |||||||||
b) | The Company entered into four convertible promissory notes (“GEL Notes”) with GEL Properties, LLC (“GEL”). Any outstanding principal amount can be converted, in whole or in part, into common stock at the option of the holder at any time after 6 months from the issuance date at a conversion price per share equal to 60% of the lowest closing bid price during the 5 trading days preceding the conversion. The GEL Notes cannot be converted, to the extent that GEL would beneficially own in excess of 4.99% of the Company’s outstanding common stock. | ||||||||
The convertible debenture may be repaid by the Company as follows: | |||||||||
· | Outstanding principal multiplied by 130% together with accrued interest and unpaid interest thereon if prepaid within a period of 90 days beginning on the issuance date; | ||||||||
· | Outstanding principal multiplied by 140% together with accrued interest and unpaid interest thereon if prepaid during the period beginning 91 days following the issuance date and ending on the date that is 180 days following the issuance date; | ||||||||
· | Outstanding principal multiplied by 150% together with accrued interest and unpaid interest thereon if prepaid during the period beginning 181 days following the issuance date through the maturity date. | ||||||||
· | In the event of default, the amount of principal and interest not paid when due bear default interest at the rate of 24% per annum and the GEL Notes becomes immediately due and payable. | ||||||||
c) | On April 2, 2013, the Company entered into a convertible bridge note with GCA Strategic Investment Fund Limited (“GCA”). On December 31, 2013 the Company entered in a letter agreement with GCA, in which the original maturity date of September 20, 2013 was extended to January 2, 2014. | ||||||||
The unpaid principal portion and accrued interest on the convertible bridge note is convertible in whole or in part as follows: | |||||||||
· | Conversion price per share equal to the lower of : | ||||||||
(i) | 100% of the average price of the Company’s common stock for the 5 trading days preceding the conversion days | ||||||||
(ii) | 70% of the daily average price of the Company’s common stock for the 10 trading days preceding the conversion date. | ||||||||
· | The holders must not convert more than 33 1/3% of the initial principal sum into shares of the Company’s common stock at a price below $0.08 per share during any calendar month. | ||||||||
GCA does not have the right to convert the convertible bridge note, to the extent that GCA and its affiliates would beneficially own in excess of 9.99% of the Company’s outstanding common stock. | |||||||||
In the event the Company elects to prepay the convertible bridge note in full or in part, the Company is required to pay principal, interest and any other amounts owing multiplied by 130%. The convertible bridge note also contains a mandatory partial prepayment requirement should the Company obtain certain future net financings in excess of $300,000, and under other conditions. | |||||||||
d) | During the period ended December 31, 2013 the Company entered into a one year promissory note with JMJ Financial. The total amount that may be borrowed is $275,000, which includes an upfront fee of 10%. No interest will be applied to the principal balance for the first 90 days after cash advance. After the first 90 days, an interest charge of 12% will be immediately applied to the principal and the 10% upfront fee. | ||||||||
On delivery of consideration, the lender may convert all or part of the unpaid principal and upfront fee into common stock at its sole discretion. All balances outstanding have a variable conversion price equal to the lesser of $0.07 or 60% of the market price. The market price is defined as the lowest trade price in the 25 days prior to the conversion date. The lender is limited to holding no more than 4.99% of the issued and outstanding common stock at the time of conversion. | |||||||||
After the expiration of 90 days following the delivery date of any consideration, the Company will have no right of prepayment. | |||||||||
e) | The Company entered into a convertible promissory note (“LG Note”) with LG Properties, LLC (“LG”). Any outstanding principal amount can be converted, in whole or in part, into common stock at the option of the holder at any time after 6 months from the issuance date at a conversion price per share equal to 50% of the average of the two lowest closing bid prices during the 5 trading days preceding the conversion. The LG Note cannot be converted, to the extent that LG would beneficially own in excess of 4.99% of the Company’s outstanding common stock. | ||||||||
The convertible debenture may be repaid by the Company as follows: | |||||||||
· | Outstanding principal multiplied by 130% together with accrued interest and unpaid interest thereon if prepaid within a period of 90 days beginning on the issuance date; | ||||||||
· | Outstanding principal multiplied by 140% together with accrued interest and unpaid interest thereon if prepaid during the period beginning 91 days following the issuance date and ending on the date that is 180 days following the issuance date; | ||||||||
· | Outstanding principal multiplied by 150% together with accrued interest and unpaid interest thereon if prepaid during the period beginning 181 days following the issuance date through the maturity date. | ||||||||
· | In the event of default, the amount of principal and interest not paid when due bear default interest at the rate of 24% per annum and the LG Notes becomes immediately due and payable. | ||||||||
f) | The Company entered into two convertible debentures agreements with Beaufort Ventures, PLC (“Beaufort”). Any outstanding principal amount can be converted, in whole or in part, into common stock at the option of the holder at any time after 6 months from the issuance date at a conversion price per share equal to 58% of the lowest intra-day trading price during the 10 trading days preceding the conversion date. Interest on any unpaid principal balance of this Note shall be repaid at the rate of 8% per annum. | ||||||||
The convertible debenture may be repaid by the Company as follows: | |||||||||
· | Outstanding principal multiplied by 130% together with accrued interest and unpaid interest thereon if prepaid within a period of 90 days beginning on the issuance date; | ||||||||
· | Outstanding principal multiplied by 140% together with accrued interest and unpaid interest thereon if prepaid during the period beginning 91 days following the issuance date and ending on the date that is 180 days following the issuance date; | ||||||||
g) | The Company entered into a convertible debenture agreement with Coventry Enterprises, LLC (“Coventry”). Any outstanding principal amount can be converted, in whole or in part, into common stock at the option of the holder at any time after 6 months from the issuance date at a conversion price per share equal to 50% of the lowest fifteen closing bid prices preceding the conversion. | ||||||||
The convertible debenture may be repaid by the Company as follows: | |||||||||
· | Outstanding principal multiplied by 150% together with accrued interest and unpaid interest thereon if prepaid within a period of 181 days beginning on the issuance date; | ||||||||
h) | The Company entered into several convertible promissory notes (“KBM Notes”) with KBM Worldwide Inc. (“KBM”). Any outstanding principal amount can be converted, in whole or in part, into common stock at the option of the holder at any time after 6 months from the issuance date at a conversion price per share equal to 65% of the average price of the lowest 3 day trading days during the 10 trading days preceding the conversion. The KBM Notes cannot be converted, to the extent that KBM Worldwide Inc. and its affiliates would beneficially own in excess of 4.99% of the Company’s outstanding common stock. | ||||||||
The convertible debenture may be repaid by the Company as follows: | |||||||||
· | Outstanding principal multiplied by 110% together with accrued interest and unpaid interest thereon if prepaid within a period of 30 days beginning on the issuance date; | ||||||||
· | Outstanding principal multiplied by 115% together with accrued interest and unpaid interest thereon if prepaid during the period beginning 31 days following the issuance date and ending on the date that is 60 days following the issuance date; | ||||||||
· | Outstanding principal multiplied by 120% together with accrued interest and unpaid interest thereon if prepaid during the period beginning 61 days following the issuance date and ending on the date that is 90 days following the issuance date; | ||||||||
· | Outstanding principal multiplied by 125% together with accrued interest and unpaid interest thereon if prepaid during the period beginning 91 days following the issuance date and ending on the date that is 120 days following the issuance date; | ||||||||
· | Outstanding principal multiplied by 135% together with accrued interest and unpaid interest thereon if prepaid during the period beginning 121 days following the issuance date and ending on the date that is 180 days following the issuance date. The Company may not prepay the KBM Note after the 180th day following the issue date. | ||||||||
· | In the event of default, the amount of principal and interest not paid when due bear default interest at the rate of 22% per annum and the KBM Notes becomes immediately due and payable. Should that occur the Company is liable to pay the holder 150% of the then outstanding principal and interest. | ||||||||
i) | The Company entered into a securities purchase agreement (the “Auctus SPA”) with Auctus Private Equity Fund, LLC (“Auctus”), pursuant to which the Company sold to Auctus a $35,000 face value 8% Convertible Note (the “Auctus Note”) with a term of nine months (the “Auctus Maturity Date”). Interest accrues daily on the outstanding principal amount of the AUCTUS Note at a rate per annual equal to 8% on the basis of a 365-day year. The principal amount of the note and interest is payable on the Auctus Maturity Date. The note is convertible into common stock beginning six months after the issue date (the “Issue date”), at the holder’s option, at a 45% discount to the average of the two lowest closing bid prices of the common stock during the 25 trading day period prior to conversion. In the event the Company prepays the note in full, the Company is required to pay off all principal, interest and any other amounts owing multiplied by (i) 125% if prepaid during the period commencing on the Issue Date through 30 days thereafter, (ii) 130% if prepaid 31 days following the closing through 60 days following the Issue Date, (iii) 135% if prepaid 61 days following the closing through 90 days following the Issue Date, (iv) 140% if prepaid 91 days following the Issue Date through 120 days following the Issue Date, (v) 145% if prepaid 121 days following the Issue Date through 150 days following the Issue Date, and (vi) 150% if prepaid 151 days following the Issue Date through the 180 days following the Issue Date. The Company may not prepay the note after the 180th day following the Issue Date. In the event of default, the amount of principal and interest not paid when due bear default interest at the rate of 22% per annum and the note becomes immediately due and payable. Should that occur the Company is liable to pay the holder 150% of the then outstanding principal and interest. Auctus does not have the right to convert the Note, to the extent that Auctus and its affiliates would beneficially own in excess of 4.99% of our outstanding common stock. | ||||||||
j) | The Company entered into a Convertible Note Purchase Agreement with JSJ Investments Inc. (“JSJ”), pursuant to which the Company sold to JSJ a $55,000 face value 12% Convertible Note (the “JSJ Note”) with a term of six months (the “JSJ Maturity Date”). Interest accrues daily on the outstanding principal amount of the JSJ Note at a rate per annual equal to 12% on the basis of a 365-day year. The principal amount of the JSJ Note and interest is payable on the JSJ Maturity Date. The JSJ Note is convertible into common stock, subject to Rule 144, at any time after the issue date, at JSJ’s option, at a 50% discount to the average of the three lowest trades on the previous 20 days before the date of the conversion notice or to the average of the three lowest trades on the previous 20 days before the date of execution of the JSJ Note. If the shares are not delivered to JSJ within three business days of the Company’s receipt of the conversion notice, a penalty of an additional 25% in the number of shares to be converted will incur on the fourth business day, and each day thereafter until the shares are delivered. . Upon the Maturity Date and JSJ’s consent to exercise such provision, there is a 150% cash redemption premium on the principal amount only. In the event of default, the amount of principal and interest not paid when due bear default interest at the rate of 12% per annum and the JSJ Note becomes immediately due and payable. | ||||||||
k) | The Company issued a one-year, 8% Convertible Redeemable Note (the “Union Note”) to Union Capital LLC (“Union”) pursuant to which Union funded $29,500 at closing on May 15, 2014. The Company also issued a separate 8% Convertible Redeemable Notes dated May 14,2014, in the amount of $29,500 to Union (the “Union Back-End Note”), in exchange for which Union issued to the Company an 8% secured promissory note in the amount of $29,500 (the “Union Payment Note”), to secure funding under the Union Back End Note. Payment to the Company under the Union Payment Note will be no later than January 14, 2015. The term of the Union Note and the Union Back End Note is one year, upon which the outstanding principal amount is payable. The amount funded plus accrued interest under the Union Note and Union Back End Note is convertible into common stock at any time after the requisite rule 144 holding period, at the holder’s option, at a conversion price equal to 55% of the lowest closing bid price in the 15 trading days previous to the conversion. In the event the Company redeems the Note in full, the Company is required to pay off all principal, interest and any other amounts owing multiplied by 150% if prepaid during the period commencing on the Issue Date through 180 days thereafter. There shall be no redemption after the 180th day the Note has been issued. In the event of default, the amount of principal and interest not paid when due bear default interest at the rate of 24% per annum and the note becomes immediately due and payable. | ||||||||
l) | On July 11, 2014, and with a closing date of July 16, 2014, the Company entered into a Convertible Note Purchase Agreement with Eastmore Capital LLC (“Eastmore”), pursuant to which the Company sold to Eastmore an $80,000 face value 12% Convertible Note (the “Eastmore Note”) with a maturity date of July 10, 2015 (the “Eastmore Maturity Date”). Interest accrues daily on the outstanding principal amount of the Eastmore Note at a rate per annum equal to 12% on the basis of a 365-day year. The principal amount of the Eastmore Note and interest is payable on the Eastmore Maturity Date. The Eastmore Note is convertible into common stock, subject to Rule 144, at any time after the issue date, at the lower of (i) the closing sale price of the common stock on the on the trading day immediately preceding the closing date, and (ii) 50% of the lowest sale price for the common stock during the ten (10) consecutive trading days immediately preceding the conversion date. If the shares are not delivered to Eastmore within three business days of the Company’s receipt of the conversion notice, the Company will pay Eastmore a penalty of $1,000 per day for each day that the the Company fails to deliver such common stock through willful acts designed to hinder the delivery of common stock to Eastmore. Eastmore does not have the right to convert the note, to the extent that it would beneficially own in excess of 4.9% of our outstanding common stock. The Company shall have the right, exercisable on not less than five (5) trading days prior written notice to Eastmore, to prepay the outstanding balance on this note for $120,000 plus any and all accrued and unpaid interest on the unpaid principal amount. In the event of default, the amount of principal and interest not paid when due bear default interest at the rate of 24% per annum and the Eastmore Note becomes immediately due and payable. In connection with the Eastmore Note, the Company paid Eastmore $2,500 for its legal fees and expenses and paid third party brokers a $10,000 fee. | ||||||||
The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at September 30, 2014 the conversion features would not meet derivative classification. | |||||||||
At September 30, 2014, the convertible debentures are unsecured. During the nine months ended September 30, 2014, $939,260 of convertible debentures were settled by issuing 81,751,443 shares of common stock of the Company. | |||||||||
During the nine months ended September 30, 2014, $190,000 of convertible debentures were settled through payment of cash and issuance of new convertible debentures. | |||||||||
During the nine months ended September 30, 2014, the Company incurred $103,720 in transaction costs in connection with the issuance of the convertible debentures. | |||||||||
12_ASSET_PURCHASE_AGREEMENT
12. ASSET PURCHASE AGREEMENT | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
ASSET PURCHASE AGREEMENT | ' |
Pursuant to an asset purchase agreement dated January 18, 2014, the Company purchased the iHookup mobile application, its name, intellectual property, user database, certain domain names, and Apple developer from CheckMate Mobile, Inc., a Delaware corporation (“CheckMate”) for a purchase price of $293,750. The Company paid the purchase price by issuing 58,750 (1,175,000 pre-split) shares of its Series A Preferred Stock. Subsequent to the purchase, the assets were considered impaired, resulting in an impairment loss. On February 3, 2014, as part of the Merger described in Note 14, all outstanding Series A Preferred Stock of iHookup-DE held by CheckMate was converted into common stock of iHookup-DE at ratio of 1 to 1. |
13_MERGER
13. MERGER | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Business Combinations [Abstract] | ' | ||||
MERGER | ' | ||||
As previously reported in the Current Report on Form 8-K filed with the SEC on February 6, 2014, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) on February 3, 2014 with iHookup Operations Corp., a wholly-owned Delaware subsidiary of the Company (“Acquisition Sub”) and iHookup-DE, whereby iHookup-DE was the surviving entity and became the wholly-owned subsidiary of the Company. iHookup-DE’s former stockholders exchanged all of their 600,000 (12,000,000 pre-split) shares of outstanding common stock for 2,500,000 (50,000,000 pre-split) shares of the Company’s designated Series A Preferred Stock. Each share of the Company’s common stock entitles its holder to one (1) vote on each matter submitted to its stockholders. The holders of the Series A Preferred Stock are entitled to cast votes equal to nine (9) times the total number of shares of common stock which are issued and outstanding, voting together with the holders of common stock as a single class. The Series A Preferred Stock is convertible into nine (9) times the number of common stock outstanding until the closing of a Qualified Financing (i.e. the sale and issuance of our equity securities that results in gross proceeds in excess of $2,500,000). As a result of the transaction, the former stockholders of iHookup-DE received a controlling interest in the Company. | |||||
For accounting purposes, the Merger has been treated as a reverse recapitalization, rather than a business combination. Accordingly, for accounting purposes iHookup-DE is considered the acquirer and surviving entity in the reverse recapitalization. The accompanying historical financial statements prior to the Merger are those of iHookup-DE. | |||||
The consolidated financial statements present the previously issued shares of the Company pre-Merger (“Titan”) common stock as having been issued pursuant to the Merger on February 3, 2014, with the consideration for such issuance being the estimated fair value of the Titan shares issued, based on the number of equity interest iHookup-DE would have had to give to Titan to retain the same percentage equity interest in the combined entity that results from the Merger. The excess of the consideration issued over the net assets of Titan is recognized as an adjustment to deficit. As of the date of the Merger, Titan was in a net liability position. | |||||
$ | |||||
Preferred shares issued | 68,366 | ||||
Net liabilities acquired | (543,891 | ) | |||
Adjustment to deficit | 475,525 |
14_SUBSEQUENT_EVENTS
14. SUBSEQUENT EVENTS | 9 Months Ended | |
Sep. 30, 2014 | ||
Subsequent Events [Abstract] | ' | |
SUBSEQUENT EVENTS | ' | |
a) | Subsequent to September 30, 2014 the Company issued 230,463,742 shares in connection with conversion of convertible notes in the amount of $311,354. | |
b) | Subsequent to September 30, 2014 the Company issued 26,213,933 shares of common stock in connection with conversion of preferred shares. | |
c) | Subsequent to September 30, 2014 the Company issued 7,923,077 shares of common stock for services in connection with financial services agreements. | |
d) | Subsequent to September 30, 2014 the Company entered into a Securities Purchase Agreement (the “Coventry SPA”) with Coventry Enterprises, LLC (“Coventry”), pursuant to which the Company issued two Convertible Notes (together, the “Notes”) in the amount of $75,000 each, at a rate of 8% per annum. Amounts funded are convertible into shares of the common stock of the Company, $0.0001 par value per share (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in such Notes. The first of the two Convertible Notes (the “Coventry Note”) was paid by the Buyer on October 8, 2014. The second Convertible Note (the “Coventry Back-End Note”) shall initially be paid for by an offsetting $75,000 promissory note issued to the Company by the Buyer (“Buyer Note”), provided that prior to the conversion of the Coventry Back-End Note, the Buyer must have paid off the Buyer Note in cash. Payment to the Company under the Buyer Note must be no later than October 7, 2015. The Buyer Note will be initially secured by the pledge of the Coventry Back-End Note. | |
The term of the Coventry Note and the Coventry Back-End Note is one year, upon which the outstanding principal and interest is payable. The amount funded plus accrued interest under the Coventry Note and Coventry Back-End Note is convertible into Common Stock at any time after the requisite Rule 144 holding period (subject to the condition above for the Coventry Back-End Note), at a conversion price equal to 50% of the lowest closing bid price in the 15 trading days previous to the conversion. In the event the Company redeems the Coventry Note in full, the Company is required to pay off all principal, interest and any other amounts owing multiplied by 150% if prepaid prior to the 180th day after its issuance. There shall be no redemption after the 180th day. The Coventry Back-End Note may not be prepaid, except that if the Coventry Back-End Note is redeemed by the Company within six months of its issuance, all obligations of the Company and Coventry under the Coventry Back-End Note and the Buyer Note will be deemed satisfied and such notes shall automatically be deemed cancelled and of no further force or effect. In the event of default, the amount of principal and accrued interest will bear default interest at a rate of 16% per annum, or the highest rate of interest permitted by law, and the Notes shall become immediately due and payable. In connection with the Coventry Note, the Company paid $3,750 in legal fees and expenses. Upon the cash payment of the Buyer Note, the Company will pay an additional $3,750 in legal fees and expenses for the Coventry Back-End Note. | ||
e) | Subsequent to September 30, 2014 the Company entered into a securities purchase agreement with KBM Worldwide Inc. (“KBM”), pursuant to which the Company sold to KBM a $43,000 face value 8% Convertible Note (the “KBM Note”) with a term of nine months (the “KBM Maturity Date”). Interest accrues daily on the outstanding principal amount of the KBM Note at a rate per annual equal to 8% on the basis of a 365-day year. The principal amount of the note and interest is payable on the KBM Maturity Date. The note is convertible into common stock beginning six months after the issue date (the “Issue date”), at the holder’s option, at a 45% discount to the average of the three lowest closing bid prices of the common stock during the 10 trading day period prior to conversion. In the event the Company prepays the note in full, the Company is required to pay off all principal, interest and any other amounts owing multiplied by (i) 110% if prepaid during the period commencing on the Issue Date through 30 days thereafter, (ii) 115% if prepaid 31 days following the closing through 60 days following the Issue Date, (iii) 120% if prepaid 61 days following the closing through 90 days following the Issue Date, (iv) 125% if prepaid 91 days following the Issue Date through 120 days following the Issue Date, and (v) 135% if prepaid 121 days following the Issue Date through the 180 days following the Issue Date. The Company may not prepay the note after the 180th day following the Issue Date. In the event of default, the amount of principal and interest not paid when due bear default interest at the rate of 22% per annum and the note becomes immediately due and payable. Should that occur the Company is liable to pay the holder 150% of the then outstanding principal and interest. KBM does not have the right to convert the Note, to the extent that KBM and its affiliates would beneficially own in excess of 4.99% of our outstanding common stock. KBM has a right of first refusal to participate in future financings below $45,000 for a period of 12 months. The Company paid KBM $3,000 for its legal fees and expenses. | |
f) | Subsequent to September 30, 2014 the Company entered a convertible note purchase agreement with an effective date of July 1, 2014 with Bingham McCutchen LLP (“Bingham”), pursuant to which the Company sold to Bingham an 8% Convertible Notes (the “Notes”) with a value of $40,465. Interest on this Note shall be computed on the basis of a 365-day year and actual days elapsed. | |
Unless previously converted as provided for below, the Note will automatically mature and the entire outstanding principal amount, together with accrued interest, shall become due and payable upon date that is the earlier of: (i) a sale of equity securities of the Company in an amount equal to or in excess of $1,000,000 (“ Qualified Financing”); (ii) nine (9) months from the date of issuance; or (iii) an event of default that is followed by written notice by the Company (such first date to occur being the “Maturity Date”). | ||
The Note may not be prepaid in whole or in part by the Company. | ||
Bingham shall have the following conversion rights. If the Company issues and sells shares of capital stock in a Qualified Financing, then all then-outstanding principal and all accrued and unpaid interest on the Note (the “Conversion Amount”) shall automatically be converted into fully paid and non-assessable shares of the kind of Equity Securities issued and sold in such Qualified Financing, at a conversion rate equal to 85% of the price at which the Equity Securities were issued and sold in the Qualified Financing (the “Conversion Price”). The number of Equity Securities to be issued to the Holder upon a Qualified Financing shall be equal to the quotient obtained by dividing the Conversion Amount by the Conversion Price. The Equity Securities issued to the Holder upon conversion of this Note in accordance with a Qualified Financing shall have the same rights, preferences and privileges as the Equity Securities issued to investors in the Qualified Financing. | ||
In connection with the Note, the Company has approved the acquisition of such note from Bingham by Carebourn Capital LP (“Carebourn”). | ||
2_SUMMARY_OF_SIGNIFICANT_ACCOU1
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Basis of Presentation | ' |
Basis of Presentation | |
These consolidated financial statements include the accounts of iHookup Social, Inc. and its wholly owned subsidiary, iHookup-DE (see Note 14). | |
These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year end is December 31. | |
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation. Interim results are not necessarily indicative of the results that may be expected for a full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto. | |
On April 29, 2014, the Company completed a 20 for 1 common stock and preferred stock reverse stock split at a ratio of 20 to 1; the reverse stock split has been retroactively applied to all common stock, preferred stock, weighted average common stock, and loss per common stock disclosures. | |
Use of Estimate | ' |
Use of Estimates | |
The preparation of these statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to revenue recognition, useful life and recoverability of long-lived assets, valuation of mineral properties, deferred income tax asset valuations, financial instrument valuations, share based payments, other equity-based payments, and loss contingencies. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. | |
Revenue Recognition | ' |
Revenue Recognition | |
The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured. | |
Advertising Costs | ' |
Advertising Costs | |
The Company’s policy regarding advertising is to expense advertising when incurred. | |
Cash and Cash Equivalents | ' |
Cash and Cash Equivalents | |
The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. | |
Impairment of Long-Lived Assets | ' |
Impairment of Long-Lived Assets | |
The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. | |
If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell. | |
Stock-based Compensation | ' |
Stock-based Compensation | |
The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation and ASC 505, Equity Based Payments to Non-Employees, which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based awards made to employees and directors, including stock options. | |
ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The Company uses the Black-Scholes option pricing model as its method in determining fair value. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to the Company’s expected stock price volatility over the terms of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the statement of operations over the requisite service period. | |
All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. | |
Mineral Property Costs | ' |
Mineral Property Costs | |
Mineral property exploration costs are expensed as incurred. Mineral property acquisition costs are capitalized. The Company assesses the carrying costs for impairment, whenever events or changes in circumstances indicate that the carrying cost may not be recoverable under ASC 360, Property, Plant, and Equipment at each reporting date. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs then incurred to develop such property, will be capitalized. Such costs will be amortized using the units-of-production method over the estimated recoverable reserves. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations. During the period ended September 30, 2014 the Company did not pursue any mineral property exploration activity. | |
Asset Retirement Obligations | ' |
Asset Retirement Obligations | |
The Company records asset retirement obligations in accordance with ASC 410-20, Asset Retirement Obligations, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated retirement costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and normal use of the asset. ASC 410-20 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through charges to operating expense. If the obligation is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss on settlement. As at September 30, 2014, the Company has not incurred any asset retirement obligation related to the exploration of its mineral property exploration activity. | |
Comprehensive Loss | ' |
Comprehensive Loss | |
ASC 220, Comprehensive Income establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. During the periods ended September 30, 2014 and December 31, 2013, the Company had no items that represent other comprehensive income. | |
Financial Instruments | ' |
Financial Instruments | |
FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to measure fair value, as required by ASC 820, must maximize the use of observable inputs and minimize the use of unobservable inputs. | |
The Company’s assessment of the significance of a particular input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. The carrying values of cash, accounts payable, and due to related parties approximate fair values because of the short-term maturity of these instruments. The fair value of the Company’s promissory note approximates carrying value as the underlying imputed interest rate approximates the estimated market rate. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. | |
Basic and Diluted Loss Per Share | ' |
Basic and Diluted Loss Per Share | |
The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. | |
Income Taxes | ' |
Income Taxes | |
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. | |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements | |
In March 2013, ASC guidance was issued related to Foreign Currency Matters to clarify the treatment of cumulative translation adjustments when a parent sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity. The updated guidance also resolves the diversity in practice for the treatment of business combinations achieved in stages in a foreign entity. The update is effective prospectively for the Company’s fiscal year beginning January 1, 2014. There has been no significant impact on the Company’s consolidated financial statements as a result of adoption of this new accounting pronouncement. | |
In April 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which changes the criteria for determining which disposals can be presented as discontinued operations and modifies the related disclosure requirements. Under the new guidance, a discontinued operation is defined as a disposal of a component or group of components that represents a strategic shift that has, or will have, a major effect on an entity's operations and financial results. The revised guidance is effective for annual fiscal periods beginning after December 15, 2014. Early adoption is permitted. The Company is evaluating the impact the revised guidance will have on its consolidated financial statements. | |
In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40). Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosure. This ASU provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The amendments are effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. | |
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, “Revenue Recognition” and some cost guidance included in ASC Subtopic 605-35, Revenue Recognition -Construction-Type and Production-Type Contracts”. 2014-09 requires the disclosure of sufficient information to enable users of the financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. The Company will also be required to disclose information regarding significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. Early adoption is not allowed. ASU 2014-09 provides two methods of retrospective application. The first method would require the Company to apply ASU 2014-09 to each prior reporting period presented. The second method would require the Company to retrospectively apply with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. The Company is currently evaluating the impact that the adoption of ASU 2014-09 may have on its consolidated financial statements. | |
5_SHARE_PURCHASE_WARRANTS_Tabl
5. SHARE PURCHASE WARRANTS (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Notes to Financial Statements | ' | ||||||||
Share Purchase Warrants | ' | ||||||||
Weighted Average | |||||||||
Number | Exercise | ||||||||
of | Price | ||||||||
Warrants | $ | ||||||||
Warrants of the Company outstanding and exercisable as at the Merger | 85,850 | 17 | |||||||
Warrants expired during the period | (52,500 | ) | 15 | ||||||
Balance, September 30, 2014 | 33,350 | 20 | |||||||
Share purchase warrants outstanding | ' | ||||||||
Number of Warrants Outstanding and Exercisable | |||||||||
Number | Exercise Price per Share | Expiry Date | |||||||
33,350 | $ | 20 | 10-Jan-15 | ||||||
33,350 | $ | 20 |
7_STOCKBASED_COMPENSATION_Tabl
7. STOCK-BASED COMPENSATION (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||
Options outstanding | ' | |||||||||||||
Option Price | ||||||||||||||
Expiry Date | Per Share | Number | ||||||||||||
21-Dec-21 | $ | 16.8 | 123,500 | |||||||||||
21-Dec-14 | 16.8 | 25,000 | ||||||||||||
21-Jun-22 | 4 | 50,000 | ||||||||||||
25-Jun-23 | 1.34 | 85,000 | ||||||||||||
$ | 9.9 | 283,500 | ||||||||||||
Stock option activity | ' | |||||||||||||
Number of Options | Weighted Average Exercise Price | Weighted- Average Remaining Contractual Term (years) | Aggregate Intrinsic Value | |||||||||||
$ | $ | |||||||||||||
Outstanding, December 31, 2013 | - | - | - | - | ||||||||||
Exercisable, December 31, 2013 | - | - | - | - | ||||||||||
Stock options of the Company outstanding and exercisable at the Merger | 283,500 | 9.9 | 7.16 | |||||||||||
Outstanding, September 30, 2014 | 283,500 | 9.9 | 7.16 | - | ||||||||||
Exercisable, September 30, 2014 | 283,500 | 9.9 | 7.16 | - |
8_COMMITMENTS_Tables
8. COMMITMENTS (Tables) | 9 Months Ended | ||||||
Sep. 30, 2014 | |||||||
Commitments Tables | ' | ||||||
Commitments | ' | ||||||
2014 | 2015 | ||||||
Convertible Notes (1) | 88,922 | 930,354 | |||||
Operating Leases (2) | 3,338 | 5,564 | |||||
Service Contracts (3) | 41,997 | 16,997 | |||||
Employment Agreements (4) | 75,000 | 300,000 | |||||
Prommisory Notes (5) | - | 250,000 | |||||
209,257 | 1,502,914 |
10_FAIR_VALUE_MEASUREMENT_Tabl
10. FAIR VALUE MEASUREMENT (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||
Fair value on recurring and nonrecurring basis | ' | ||||||||||||||||
Fair Value Measurements Using | |||||||||||||||||
Quoted Prices in | |||||||||||||||||
Significant | |||||||||||||||||
Active Markets | Other | Significant | |||||||||||||||
For Identical | Observable | Unobservable | Balance as of | ||||||||||||||
Instruments | Inputs | Inputs | 30-Sep-14 | ||||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||
$ | $ | $ | $ | ||||||||||||||
Assets: | |||||||||||||||||
Cash (recurring basis) | 24,476 | — | — | 24,476 | |||||||||||||
11_CONVERTIBLE_DEBENTURES_Tabl
11. CONVERTIBLE DEBENTURES (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Convertible Debt | ' | ||||||||
Issuance | Principal | Discount | Carrying Value | Interest Rate | Maturity Date | ||||
a | ) | 24-Feb-14 | - | - | - | 8 | % | 26-Nov-14 | |
b | ) | 17-Feb-14 | 7,000 | 4,115 | 2,885 | 8 | % | 17-Feb-15 | |
c | ) | 2-Apr-13 | 5,054 | - | 5,054 | 0 | % | 2-Jan-13 | |
d | ) | 16-Apr-14 | 44,444 | 4,619 | 2,825 | 12 | % | 16-Apr-15 | |
d | ) | 3-Sep-14 | 44,444 | 27,089 | 17,355 | 12 | % | 3-Sep-15 | |
e | ) | 6-Feb-14 | 25,000 | 18,933 | 6,067 | 8 | % | 6-Feb-15 | |
e | ) | 6-Feb-14 | 7,267 | 5,029 | 2,238 | 8 | % | 6-Feb-15 | |
e | ) | 17-Feb-14 | 21,000 | 12,549 | 8,451 | 8 | % | 17-Feb-15 | |
e | ) | 18-Mar-14 | 50,000 | 44,000 | 6,000 | 8 | % | 18-Mar-15 | |
e | ) | 21-May-14 | 75,000 | 71,788 | 3,212 | 8 | % | 21-May-15 | |
f | ) | 5-Mar-14 | 24,000 | - | 24,000 | 8 | % | 7-Sep-14 | |
g | ) | 18-Mar-14 | 25,000 | 21,693 | 3,307 | 8 | % | 18-Mar-15 | |
h | ) | 4-Apr-14 | 53,000 | 43,713 | 9,287 | 8 | % | 8-Jan-15 | |
h | ) | 11-Apr-14 | 37,500 | 30,910 | 6,590 | 8 | % | 16-Jan-15 | |
h | ) | 22-May-14 | 53,000 | 24,718 | 28,282 | 8 | % | 27-Feb-15 | |
h | ) | 16-Jun-14 | 63,000 | 50,099 | 12,901 | 8 | % | 18-Mar-15 | |
i | ) | 9-May-14 | 35,000 | 30,495 | 4,505 | 8 | % | 9-Feb-15 | |
j | ) | 16-Jun-14 | 55,000 | 46,057 | 8,943 | 12 | % | 11-Dec-14 | |
k | ) | 9-May-14 | 29,500 | 27,082 | 2,418 | 8 | % | 14-May-15 | |
L | ) | 11-Jul-14 | 80,000 | 78,430 | 1,570 | 12 | % | 10-Jul-15 | |
734,209 | 578,319 | 155,890 |
13_MERGER_Tables
13. MERGER (Tables) | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Business Combinations [Abstract] | ' | ||||
Merger | ' | ||||
$ | |||||
Preferred shares issued | 68,366 | ||||
Net liabilities acquired | (543,891 | ) | |||
Adjustment to deficit | 475,525 |
1_NATURE_OF_BUSINESS_AND_GOING1
1. NATURE OF BUSINESS AND GOING CONCERN (Details Narrative) (USD $) | Sep. 30, 2014 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Working Capital Deficiency | ($732,524) |
Accumulated losses | ($3,391,053) |
3_MINERAL_PROPERTIES_Details
3. MINERAL PROPERTIES (Details) (USD $) | 3 Months Ended | 9 Months Ended | 10 Months Ended |
Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | |
Mineral Properties Details | ' | ' | ' |
Gain on extinguishment of debt (Note 3) | $0 | $76,359 | $76,359 |
5_SHARE_PURCHASE_WARRANTS_Shar
5. SHARE PURCHASE WARRANTS - Share Purchase Warrants (Details) (Warrants, USD $) | 9 Months Ended | ||
Sep. 30, 2014 | Feb. 03, 2014 | ||
Warrants | ' | ' | |
Warrants of the Company outstanding and exercisable as at the Merger | ' | 85,850 | |
Warrants expired during the period | -52,500 | ' | |
Number of Warrants Outstanding | 33,350 | [1] | ' |
Weighted Average Exercise Price | ' | ' | |
Warrants of the Company outstanding and exercisable as at the Merger | ' | $17 | |
Warrants expired during the period | $15 | ' | |
Weighted Average Exercise Price Outstanding, Ending | $20 | ' | |
[1] | Expiry date: January 10, 2015 |
5_SHARE_PURCHASE_WARRANTS_Deta
5. SHARE PURCHASE WARRANTS (Details 1) (Warrants, USD $) | Sep. 30, 2014 | |
Warrants | ' | |
Shares outstanding | 33,350 | [1] |
Weighted average exercise price of share outstanding | $20 | |
[1] | Expiry date: January 10, 2015 |
7_STOCKBASED_COMPENSATION_Deta
7. STOCK-BASED COMPENSATION (Details) (USD $) | Sep. 30, 2014 |
Stock Options One [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Weighted average exercise price of share outstanding | $16.80 |
Shares outstanding | 123,500 |
Stock Options Two [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Weighted average exercise price of share outstanding | $16.80 |
Shares outstanding | 25,000 |
Stock Options Three [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Weighted average exercise price of share outstanding | $4 |
Shares outstanding | 50,000 |
Stock Options Four [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Weighted average exercise price of share outstanding | $1.34 |
Shares outstanding | 85,000 |
Stock Options [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Weighted average exercise price of share outstanding | $9.90 |
Shares outstanding | 283,500 |
7_STOCKBASED_COMPENSATION_Stoc
7. STOCK-BASED COMPENSATION - Stock option activity (Details) (Stock Options, USD $) | 9 Months Ended | ||
Sep. 30, 2014 | Feb. 03, 2014 | Dec. 31, 2013 | |
Stock Options | ' | ' | ' |
Shares outstanding | 283,500 | ' | 0 |
Shares exercisable | 283,500 | ' | 0 |
Stock options of the Company outstanding and exercisable at the Merger | ' | 283,500 | ' |
Weighted average exercise price of share outstanding | $9.90 | ' | ' |
Weighted average exercise price of share exercisable | $9.90 | ' | ' |
Weighted average exercise price stock options of the Company outstanding and exercisable at the Merger | $9.90 | ' | ' |
Weighted-average remaining contractual term (years) | '7 years 1 month 28 days | ' | ' |
Aggregate intrinsic value of share outstanding | $0 | ' | $0 |
Aggregate intrinsic value of share exercisable | $0 | ' | $0 |
8_COMMITMENTS_Details_Narrativ
8. COMMITMENTS (Details Narrative) (USD $) | Sep. 30, 2015 | Sep. 30, 2014 |
Convertible notes | ' | ' |
Contractual obligations | $930,354 | $88,922 |
Operating Leases | ' | ' |
Contractual obligations | 5,564 | 3,338 |
Service Contracts | ' | ' |
Contractual obligations | 16,997 | 41,997 |
Employments Agreements | ' | ' |
Contractual obligations | 300,000 | 75,000 |
Prommisory Notes (5) | ' | ' |
Contractual obligations | 250,000 | ' |
Contractual Obligations | ' | ' |
Contractual obligations | $1,502,914 | $209,257 |
9_RELATED_PARTY_TRANSACTIONS_A1
9. RELATED PARTY TRANSACTIONS AND BALANCES (Details) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Services | ' |
Related party sales and marketing expenses | $3,500 |
Management Firm | ' |
Related party transactions | 2,800 |
Officers and Directors | ' |
Related party transactions | 258,300 |
Current and Former Officers and Directors | ' |
Related party transactions | $318,656 |
10_FAIR_VALUE_MEASUREMENT_Deta
10. FAIR VALUE MEASUREMENT (Details) (USD $) | Sep. 30, 2014 |
Fair Value Inputs Level1 [Member] | ' |
Assets | ' |
Cash | $24,476 |
Fair Value Inputs Level2 [Member] | ' |
Assets | ' |
Cash | 0 |
Fair Value Inputs Level3 [Member] | ' |
Assets | ' |
Cash | 0 |
Fair Value Measurements Recurring [Member] | ' |
Assets | ' |
Cash | $24,476 |
11_CONVERTIBLE_DEBENTURES_Conv
11. CONVERTIBLE DEBENTURES - Convertible Debt (Details) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Principal | $734,209 |
Discount | 578,319 |
Carrying Value | 155,890 |
24-Feb-14 | ' |
Issuance | 24-Feb-14 |
Principal | ' |
Discount | ' |
Carrying Value | ' |
Interest Rate | 8.00% |
Maturity Date | 26-Nov-14 |
February 17, 2014 (1) | ' |
Issuance | 17-Feb-14 |
Principal | 7,000 |
Discount | 4,115 |
Carrying Value | 2,885 |
Interest Rate | 8.00% |
Maturity Date | 17-Feb-15 |
2-Apr-13 | ' |
Issuance | 2-Apr-13 |
Principal | 5,054 |
Discount | ' |
Carrying Value | 5,054 |
Interest Rate | 0.00% |
Maturity Date | 2-Jan-13 |
16-Apr-14 | ' |
Issuance | 16-Apr-14 |
Principal | 44,444 |
Discount | 4,619 |
Carrying Value | 2,825 |
Interest Rate | 12.00% |
Maturity Date | 16-Apr-15 |
3-Sep-14 | ' |
Issuance | 3-Sep-14 |
Principal | 44,444 |
Discount | 27,089 |
Carrying Value | 17,355 |
Interest Rate | 12.00% |
Maturity Date | 3-Sep-15 |
February 6, 2014 (1) | ' |
Issuance | 6-Feb-14 |
Principal | 25,000 |
Discount | 18,933 |
Carrying Value | 6,067 |
Interest Rate | 8.00% |
Maturity Date | 6-Feb-15 |
February 6, 2014 (2) | ' |
Issuance | 6-Feb-14 |
Principal | 7,267 |
Discount | 5,029 |
Carrying Value | 2,238 |
Interest Rate | 8.00% |
Maturity Date | 6-Feb-15 |
February 17, 2014 (2) | ' |
Issuance | 17-Feb-14 |
Principal | 21,000 |
Discount | 12,549 |
Carrying Value | 8,451 |
Interest Rate | 8.00% |
Maturity Date | 17-Feb-15 |
March 18, 2014 (1) | ' |
Issuance | 18-Mar-14 |
Principal | 50,000 |
Discount | 44,000 |
Carrying Value | 6,000 |
Interest Rate | 8.00% |
Maturity Date | 18-Mar-15 |
21-May-14 | ' |
Issuance | 21-May-14 |
Principal | 75,000 |
Discount | 71,788 |
Carrying Value | 3,212 |
Interest Rate | 8.00% |
Maturity Date | 21-May-15 |
March 5, 2014 (1) | ' |
Issuance | 5-Mar-14 |
Principal | 24,000 |
Discount | ' |
Carrying Value | 24,000 |
Interest Rate | 8.00% |
Maturity Date | 7-Sep-14 |
March 18, 2014 (2) | ' |
Issuance | 18-Mar-14 |
Principal | 25,000 |
Discount | 21,693 |
Carrying Value | 3,307 |
Interest Rate | 8.00% |
Maturity Date | 18-Mar-15 |
4-Apr-14 | ' |
Issuance | 4-Apr-14 |
Principal | 53,000 |
Discount | 43,713 |
Carrying Value | 9,287 |
Interest Rate | 8.00% |
Maturity Date | 8-Jan-15 |
11-Apr-14 | ' |
Issuance | 11-Apr-14 |
Principal | 37,500 |
Discount | 30,910 |
Carrying Value | 6,590 |
Interest Rate | 8.00% |
Maturity Date | 16-Jan-15 |
22-May-14 | ' |
Issuance | 22-May-14 |
Principal | 53,000 |
Discount | 24,718 |
Carrying Value | 28,282 |
Interest Rate | 8.00% |
Maturity Date | 27-Feb-15 |
June 16, 2014 (1) | ' |
Issuance | 16-Jun-14 |
Principal | 63,000 |
Discount | 50,099 |
Carrying Value | 12,901 |
Interest Rate | 8.00% |
Maturity Date | 18-Mar-15 |
May 9, 2014 (1) | ' |
Issuance | 9-May-14 |
Principal | 35,000 |
Discount | 30,495 |
Carrying Value | 4,505 |
Interest Rate | 8.00% |
Maturity Date | 9-Feb-15 |
June 16, 2014 (2) | ' |
Issuance | 16-Jun-14 |
Principal | 55,000 |
Discount | 46,057 |
Carrying Value | 8,943 |
Interest Rate | 12.00% |
Maturity Date | 11-Dec-14 |
May 9, 2014 (2) | ' |
Issuance | 9-May-14 |
Principal | 29,500 |
Discount | 27,082 |
Carrying Value | 2,418 |
Interest Rate | 8.00% |
Maturity Date | 14-May-15 |
11-Jul-14 | ' |
Issuance | 11-Jul-14 |
Principal | 80,000 |
Discount | 78,430 |
Carrying Value | $1,570 |
Interest Rate | 12.00% |
Maturity Date | 10-Jul-15 |
13_ASSET_PURCHASE_AGREEMENT_De
13. ASSET PURCHASE AGREEMENT (Details Narrative) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Acquisition Purchase price | $293,750 |
Shares issued for acquisition | 58,750 |
14_MERGER_Details
14. MERGER (Details) (USD $) | Sep. 30, 2014 |
Business Combinations [Abstract] | ' |
Preferred shares issued | 68,366 |
Net liabilities acquired | ($543,891) |
Adjustment to deficit | $475,525 |
14_MERGER_Details_Narrative
14. MERGER (Details Narrative) | 9 Months Ended |
Sep. 30, 2014 | |
Pre-split | ' |
Conversion of shares | -50,000,000 |
Merger | ' |
Conversion of shares | 2,500,000 |
SUBSEQUENT_EVENTS_Details_Narr
SUBSEQUENT EVENTS (Details Narrative) (USD $) | Sep. 30, 2014 |
Principal | $734,209 |