Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Nov. 10, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'Propell Technologies Group, Inc. | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Entity Central Index Key | '0001434110 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Common Stock, Shares Outstanding | ' | 241,421,828 |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Voluntary Filers | 'No | ' |
Entity Well-known Seasoned Issuer | 'No | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Current Assets | ' | ' |
Cash | $131,991 | $28,423 |
Accounts receivable | 891 | ' |
Prepaid expenses and other current assets | 28,456 | 17,104 |
Total Current Assets | 161,338 | 45,527 |
Non-Current assets | ' | ' |
Plant and Equipment, net | 247,300 | 122,381 |
Intangibles, net | 315,000 | ' |
Deposits | 2,200 | 2,200 |
Total non-current assets | 564,500 | 124,581 |
Total Assets | 725,838 | 170,108 |
Current Liabilities | ' | ' |
Accounts payable | 166,595 | 186,576 |
Accrued liabilities and other payables | 245,546 | 60,093 |
Notes payable | 3,000 | 3,000 |
Convertible notes payable, net | ' | 668,887 |
Derivative financial liabilities | ' | 237,799 |
Total Current Liabilities | 415,141 | 1,156,355 |
Long Term Liabilities | ' | ' |
Notes Payable. | 112,477 | 106,532 |
Convertible notes payable, net. | 19,204 | 181,519 |
Total Long Term Liabilities | 131,681 | 288,051 |
Total Liabilities | 546,822 | 1,444,406 |
Stockholders' Equity/(Deficit) | ' | ' |
Preferred stock, $0.001 par value, 10,000,000 authorized shares, 4,500,000 and 5,000,000 shares undesignated and unissued, respectively. | ' | 0 |
Series A-1 Convertible Preferred Stock, $0.001 par value; 5,000,000 shares designated, 3,887,500 issued and outstanding. (liquidation preference $311,000) | 3,888 | 3,888 |
Series B Convertible, Redeemable Preferred Stock, $0.001 par value; 500,000 shares designated; 75,000 and 0 issued and outstanding (liquidation preference $900,000 and $0) | 75 | ' |
Common stock, $0.001 par value; 500,000,000 shares authorized, 241,421,828 and 205,297,714 shares issued and outstanding, respectively. | 241,422 | 205,298 |
Additional paid-in capital | 8,877,250 | 3,910,188 |
Accumulated deficit | -8,943,619 | -5,393,672 |
Total Stockholders' Equity/(Deficit) | 179,016 | -1,274,298 |
Total Liabilities and Stockholders' Equity/(Deficit) | $725,838 | $170,108 |
CONSOLIDATED_BALANCE_SHEETS_PA
CONSOLIDATED BALANCE SHEETS PARENTHETICALS (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Parentheticals | ' | ' |
Preferred Stock, par value | $0.00 | $0.00 |
Preferred Stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred Stock, shares undesignated | 4,500,000 | 5,000,000 |
Preferred Stock, shares unissued | 4,500,000 | 5,000,000 |
Series A-1 Convertible Preferred stock, par value | $0.00 | $0.00 |
Series A-1 Convertible Preferred stock, shares designated | 5,000,000 | 5,000,000 |
Series A-1 Convertible Preferred stock, shares issued | 3,887,500 | 3,887,500 |
Series A-1 Convertible Preferred stock, shares outstanding | 3,887,500 | 3,887,500 |
Series A-1 Preferred Stock, liquidation preferencee | $311,000 | $311,000 |
Series B Convertible Preferred stock, par value | $0.00 | $0.00 |
Series B Convertible Preferred stock, shares designated | 500,000 | 0 |
Series B Convertible Preferred stock, shares issued | 75,000 | 0 |
Series B Convertible Preferred stock, shares outstanding | 75,000 | 0 |
Series B Preferred Stock, liquidation preference | $900,000 | $0 |
Common Stock, par value | $0.00 | $0.00 |
Common Stock, shares authorized | 500,000,000 | 500,000,000 |
Common Stock, shares issued | 241,421,828 | 205,297,714 |
Common Stock, shares outstanding | 241,421,828 | 205,297,714 |
UNAUDITED_CONDENSED_CONSOLIDAT
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Revenues: | ' | ' | ' | ' |
Net Revenues | ' | $31,856 | $85,008 | $46,113 |
Cost of Goods Sold | 34,620 | 31,173 | 136,645 | 42,320 |
Gross (Loss)/Profit | -34,620 | 683 | -51,637 | 3,793 |
Consulting fees | 53,181 | ' | 140,405 | ' |
Research & development | ' | 9,899 | ' | 48,044 |
Stock based compensation | 619,125 | 492,532 | 1,741,849 | 1,154,201 |
Sales and Marketing | 1,943 | -3,366 | 6,026 | 45,479 |
Professional Fees | 65,898 | 243,374 | 200,931 | 509,303 |
General and administrative | 228,455 | -43,670 | 574,844 | 718,315 |
Depreciation and amortization | 23,959 | 8,136 | 49,308 | 21,810 |
Total Expenses | 992,561 | 706,905 | 2,713,363 | 2,497,152 |
Loss from Operations | -1,027,181 | -706,222 | -2,765,000 | -2,493,359 |
Other Income | 150,000 | 78,446 | 150,000 | 82,291 |
Debt forgiveness | ' | ' | ' | 1,000 |
Amortization of debt discount | -4,477 | -232,570 | -333,404 | -232,570 |
Call option expense | ' | -5,500 | ' | -5,500 |
Change in fair value of derivative liabilities | -33,345 | -111,015 | -430,956 | -111,015 |
Interest Expense | -3,832 | -48,340 | -170,587 | -121,360 |
Other Income (expenses),net | 108,346 | -318,979 | -784,947 | -387,154 |
Loss before Provision for Income Taxes | -918,835 | -1,025,201 | -3,549,947 | -2,880,513 |
Provision for Income Taxes | ' | ' | ' | 0 |
Net Loss | -918,835 | -1,025,201 | -3,549,947 | -2,880,513 |
Deemed preferred stock dividend | ' | ' | -1,604,335 | ' |
Net loss to common stockholders | ($918,835) | ($1,025,201) | ($5,154,282) | ($2,880,513) |
Net Loss Per Share - Basic and Diluted | $0 | ($0.01) | ($0.02) | ($0.03) |
Weighted Average Number of Shares Outstanding - Basic and Diluted | 239,473,781 | 137,414,954 | 225,460,411 | 108,815,197 |
UNAUDITED_CONDENSED_CONSOLIDAT1
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY/(DEFICIT) (USD $) | Preferred Stock Shares Series A Share | Preferred Stock Shares Series A Amount | Preferred Stock Shares Series B Share | Preferred Stock Shares Series B Amount | Common Stock Shares | Common Stock Amount | Additional Paid-In Capital | Accumulated Deficit | Total Shareholders deficit |
USD ($) | USD ($) | USD ($) | |||||||
Balance at Dec. 31, 2013 | 3,887,500 | 3,888 | ' | ' | 205,297,714 | 205,298 | 3,910,188 | -5,393,672 | -1,274,298 |
Conversion of notes and accrued interest thereon to common stock | ' | ' | ' | ' | 27,510,118 | 27,510 | 1,537,792 | ' | 1,565,302 |
Subscription for Series B Convertible, Redeemable Preferred Stock | ' | ' | 75,000 | 75 | ' | ' | 749,925 | ' | 750,000 |
Issuance of shares in terms of a private placement | ' | ' | ' | ' | 7,353,329 | 7,353 | 1,095,647 | ' | 1,103,000 |
Issuance of shares for services | ' | ' | ' | ' | 1,260,667 | 1,261 | 301,086 | ' | 302,347 |
Share issue expenses | ' | ' | ' | ' | ' | ' | ($156,890) | ' | ($156,890) |
Equity based compensation | ' | ' | ' | ' | ' | ' | 1,439,502 | ' | 1,439,502 |
Net loss for the nine months ended September 30, 2014 | ' | ' | ' | ' | ' | ' | ' | ($3,549,947) | ($3,549,947) |
Balance at Sep. 30, 2014 | 3,887,500 | 3,888 | 75,000 | 75 | 241,421,828 | 241,422 | 8,877,250 | -8,943,619 | 179,016 |
UNAUDITED_CONDENSED_CONSOLIDAT2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net loss for the period | ($3,549,947) | ($2,880,513) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Depreciation expenses. | 14,308 | 21,010 |
Amortization expense | 35,000 | 800 |
Amortization of debt discount | 333,404 | 232,570 |
Stock option compensation charge | 1,439,502 | 1,154,201 |
Stock issued for services rendered | 302,347 | 72,000 |
Stock based call option | ' | 5,500 |
Derivative financial liability | 430,956 | 111,015 |
Gain on winding up of subsidiary | ' | -34,321 |
Gain on forgiveness of debt by licensor | -150,000 | ' |
Changes in Assets and Liabilities | ' | ' |
Accounts receivable | -891 | -15,560 |
Prepaid expenses | -11,352 | -13,020 |
Accounts payable | -19,981 | 94,260 |
Accrued liabilities and other payables | -14,547 | -37,929 |
Accrued interest | 39,834 | 121,360 |
Cash Used in Operating Activities | -1,151,367 | -1,168,627 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Purchase of property and equipment | -139,227 | -6,119 |
NET CASH USED IN INVESTING ACTIVITIES | -139,227 | -6,119 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Proceeds on Series B Preferred stock issued | 750,000 | ' |
Proceeds on common stock issued, net of issue expenses | 946,110 | ' |
Repayment of notes | -461,948 | ' |
Proceeds from notes payable and advances | 160,000 | 1,231,000 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 1,394,162 | 1,231,000 |
NET INCREASE IN CASH | 103,568 | 56,254 |
CASH AT BEGINNING OF PERIOD | 28,423 | 70 |
CASH AT END OF PERIOD | 131,991 | 56,324 |
CASH PAID FOR INTEREST AND TAXES: | ' | ' |
Cash paid for income taxes | ' | 1,500 |
Cash paid for interest | 130,753 | ' |
NON-CASH INVESTING AND FINANCING ACTIVITIES | ' | ' |
Licenses acquired not yet paid for | 200,000 | ' |
Assets acquired in reverse merger | ' | 2,658 |
Liabilities acquired in reverse merger | ' | 1,447,091 |
Contributed assets | ' | 37,301 |
Conversion of debt to equity | 794,150 | 19,750 |
Conversion of interest on debt to equity | $102,397 | ' |
ORGANIZATION_AND_DESCRIPTION_O
ORGANIZATION AND DESCRIPTION OF BUSINESS | 9 Months Ended | ||
Sep. 30, 2014 | |||
ORGANIZATION AND DESCRIPTION OF BUSINESS | ' | ||
ORGANIZATION AND DESCRIPTION OF BUSINESS | ' | ||
1 | ORGANIZATION AND DESCRIPTION OF BUSINESS | ||
a) | Organization | ||
Propell Technologies Group, Inc. (formerly known as Propell Corporation) (the “Company”), is a Delaware corporation originally formed on January 29, 2008 as CA Photo Acquisition Corp. On April 10, 2008 Crystal Magic, Inc. (“CMI”), a Florida Corporation, merged with an acquisition subsidiary of Propell’s, and the Company issued an aggregate of 180,000 shares to the former shareholders of CMI. On May 6, 2008, the Company acquired both Mountain Capital, LLC (doing business as Arrow Media Solutions) (“AMS”) and Auleron 2005, LLC (doing business as Auleron Technologies) (“AUL”) and made each a wholly owned subsidiary and issued a total of 41,897 shares of the Company’s common stock to the members of Mountain Capital, LLC and a total of 2,722 shares of the Company’s common stock to the members of AUL. In 2010 AUL and AMS were dissolved and the operations of CMI were discontinued. On February 4, 2013, the Company entered into a Share Exchange Agreement with Novas Energy (USA), Inc. (“Novas”) whereby the Company exchanged 100,000,000 shares of its common stock for 100,000,000 shares of common stock in Novas. After the consummation of the share exchange, Novas became a wholly owned subsidiary of the Company. As a result of the share exchange the shareholders of Novas obtained the majority of the outstanding shares of the Company. As such, the exchange is accounted for as a reverse merger or recapitalization of the Company and Novas was considered the acquirer for accounting purposes. | |||
b) | Description of the business | ||
The Company, through its wholly owned subsidiary, Novas, is an innovative technology and services company whose aim is to radically improve oil production by introducing modern and innovative technologies. Novas has a unique and patent pending, Plasma-Pulse Treatment (“PPT”) technology, which is a new Enhanced Oil Recovery methodology and process that has been developed to be environmentally friendly, mobile, time efficient and extremely cost effective. PPT has the potential to drive new and renewed revenue for energy producers and become a new standard for the entire petroleum industry. | |||
ACCOUNTING_POLICIES_AND_ESTIMA
ACCOUNTING POLICIES AND ESTIMATES | 9 Months Ended | ||
Sep. 30, 2014 | |||
ACCOUNTING POLICIES AND ESTIMATES | ' | ||
ACCOUNTING POLICIES AND ESTIMATES | ' | ||
2 | ACCOUNTING POLICIES AND ESTIMATES | ||
a) | Basis of Presentation | ||
The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, these unaudited condensed financial statements do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments (consisting only of normal recurring adjustments), which we consider necessary, for a fair presentation of those financial statements. The results of operations and cash flows for the three months and nine months ended September 30, 2014 may not necessarily be indicative of results that may be expected for any succeeding quarter or for the entire fiscal year. The information contained in this quarterly report on Form 10-Q should be read in conjunction with our audited financial statements included in our annual report on Form 10-K as of and for the year ended December 31, 2013 as filed with the Securities and Exchange Commission (the “SEC”). | |||
Significant accounting policies are described in Note 2 to the consolidated financial statements included in Item 8 of our annual report on Form 10-K as of December 31, 2013. | |||
The preparation of unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions, which are evaluated on an ongoing basis, that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the amounts of revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and judgments. In particular, significant estimates and judgments include those related to: the estimated useful lives for plant and equipment, the fair value of warrants and stock options granted for services or compensation, estimates of the probability and potential magnitude of contingent liabilities, derivative liabilities, the valuation allowance for deferred tax assets due to continuing operating losses, those related to revenue recognition and the allowance for doubtful accounts. | |||
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited consolidated financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from our estimates. | |||
All amounts referred to in the notes to the unaudited consolidated financial statements are in United States Dollars ($) unless stated otherwise. | |||
b) | Principles of Consolidation | ||
The unaudited consolidated financial statements include the financial statements of the Company and its subsidiary in which it has a majority voting interest. All significant inter-company accounts and transactions have been eliminated in the unaudited consolidated financial statements. The entities included in these unaudited consolidated financial statements are as follows: | |||
Propell Technologies Group, Inc. – Parent Company | |||
Novas Energy USA Inc. | |||
c) | Contingencies | ||
Certain conditions may exist as of the date the unaudited consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. | |||
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed. | |||
d) | Fair Value of Financial Instruments | ||
The Company adopted the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: | |||
Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. | |||
Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other then quoted prices that are observable, and inputs derived from or corroborated by observable market data. | |||
Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. | |||
The carrying amounts reported in the balance sheets for cash, accounts receivable, prepaid expenses, deposits, accounts payable, accrued liabilities, notes payable, and convertible notes payable approximate fair value due to the relatively short period to maturity for these instruments. The Company did not identify any assets or liabilities that are required to be presented on the balance sheets at fair value in accordance with the accounting guidance. | |||
ASC 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments. | |||
e) | Risks and Uncertainties | ||
The Company's operations will be subject to significant risk and uncertainties including financial, operational, regulatory and other risks associated, including the potential risk of business failure. The recent global economic crisis has caused a general tightening in the credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, and extreme volatility in credit, equity and fixed income markets. These conditions not only limit the Company’s access to capital, but also make it difficult for its customers, vendors and the Company to accurately forecast and plan future business activities. | |||
The Company’s operations are carried out in the USA and Mexico. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the USA and Mexico and by the general state of those economies. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, and rates and methods of taxation, among other things. | |||
f) | Recent Accounting Pronouncements | ||
In June 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers”. The update gives entities a single comprehensive model to use in reporting information about the amount and timing of revenue resulting from contracts to provide goods or services to customers. The proposed ASU, which would apply to any entity that enters into contracts to provide goods or services, would supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. Additionally, the update would supersede some cost guidance included in Subtopic 605-35, Revenue Recognition – Construction-Type and Production-Type Contracts. The update removes inconsistencies and weaknesses in revenue requirements and provides a more robust framework for addressing revenue issues and more useful information to users of financial statements through improved disclosure requirements. In addition, the update improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. The update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition. | |||
In June 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation”. The update removes all incremental financial reporting requirements from GAAP for development stage entities, including the removal of Topic 915 from the FASB Accounting Standards Codification. In addition, the update adds an example disclosure in Risks and Uncertainties (Topic 275) to illustrate one way that an entity that has not begun planned principal operations could provide information about the risks and uncertainties related to the company’s current activities. Furthermore, the update removes an exception provided to development stage entities in Consolidations (Topic 810) for determining whether an entity is a variable interest entity—which may change the consolidation analysis, consolidation decision, and disclosure requirements for a company that has an interest in a company in the development stage. The update is effective for the annual reporting periods beginning after December 15, 2014, including interim periods within that reporting period. | |||
We have elected to adopt the provisions of this ASU early, accordingly all of the past disclosures and presentations on development stage accounting have been eliminated. | |||
In June 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-12, “Compensation – Stock Compensation ( Topic 718 ); Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period”. The amendments in this ASU apply to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. For all entities, the amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The effective date is the same for both public business entities and all other entities. | |||
Entities may apply the amendments in this ASU either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this update as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition. | |||
In August 2014, the FASB issued Accounting Standards Update “ASU” 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued. | |||
The amendments in this Update are effective for public and nonpublic entities for annual periods ending after December 15, 2016. Early adoption is permitted. We are evaluating the impact that this ASU will have on our disclosures. | |||
Any new accounting standards, not disclosed above, that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. | |||
g) | Reporting by Segment | ||
No segmental information is presented as the Company has disposed of its historical virtual trading store business which had minimal revenues. The Company is focusing on developing its Novas Energy, Plasma Pulse Technology for the petroleum industry. | |||
Revenues to date are insignificant. | |||
h) | Cash and Cash Equivalents | ||
The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. At September 30, 2014 and December 31, 2013, respectively, the Company had no cash equivalents. | |||
The Company minimizes credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. At September 30, 2014 and December 31, 2013, the balance did not exceed the federally insured limit. | |||
i) | Accounts Receivable and Allowance for Doubtful Accounts | ||
Accounts receivable are reported at realizable value, net of allowances for doubtful accounts, which is estimated and recorded in the period the related revenue is recorded. The Company has a standardized approach to estimate and review the collectability of its receivables based on a number of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience is an integral part of the estimation process related to allowances for doubtful accounts. In addition, the Company regularly assesses the state of its billing operations in order to identify issues, which may impact the collectability of these receivables or reserve estimates. Revisions to the allowance for doubtful accounts estimates are recorded as an adjustment to bad debt expense. Receivables deemed uncollectible are charged against the allowance for doubtful accounts at the time such receivables are written-off. Recoveries of receivables previously written-off are recorded as credits to the allowance for doubtful accounts. There were no recoveries during the period ended September 30, 2014. | |||
j) | Inventory | ||
The Company had no inventory as of September 30, 2014 and December 31, 2013. | |||
k) | Plant and Equipment | ||
Plant and equipment is stated at cost, less accumulated depreciation. Plant and equipment with costs greater than $1,000 are capitalized and depreciated. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful lives of the assets are as follows: | |||
Description | Estimated Useful Life | ||
Office equipment and furniture | 2 years | ||
Leasehold improvements and fixtures | Lesser of estimated useful life or life of lease | ||
Plant and equipment | 2 to 3 years | ||
The cost of repairs and maintenance is expensed as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. | |||
l) | Intangibles | ||
All of our intangible assets are subject to amortization. We evaluate the recoverability of intangible assets periodically by taking into account events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired. Where intangibles are deemed to be impaired we recognize an impairment loss measured as the difference between the estimated fair value of the intangible and its book value. | |||
i) License Agreements | |||
License agreements acquired by the Company are reported at acquisition value less accumulated amortization and impairments. | |||
ii) Amortization | |||
Amortization is reported in the income statement on a straight-line basis over the estimated useful life of the intangible assets, unless the useful life is indefinite. Amortizable intangible assets are amortized from the date that they are available for use. The estimated useful life of the license agreement is five years which is the expected period for which we expect to derive a benefit from the underlying license agreements | |||
m) | Long-Term Assets | ||
Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. | |||
n) | Revenue Recognition | ||
The Company records revenue when all of the following have occurred: (1) persuasive evidence of an arrangement exists, (2) the service is completed without further obligation, (3) the sales price to the customer is fixed or determinable, and (4) collectability is reasonably assured. | |||
o) | Share-Based Payment Arrangements | ||
Generally, all forms of share-based payments, including stock option grants, restricted stock grants and stock appreciation rights are measured at their fair value on the awards’ grant date, based on the estimated number of awards that are ultimately expected to vest. Share-based compensation awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. The expense resulting from share-based payments is recorded in operating expenses in the unaudited consolidated statement of operations. | |||
p) | Income Taxes | ||
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A full valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. It is the Company’s policy to classify interest and penalties on income taxes as interest expense or penalties expense. As of September 30, 2014, there have been no interest or penalties incurred on income taxes. | |||
q) | Net Loss per Share | ||
Basic net loss per share is computed on the basis of the weighted average number of common shares outstanding during the period. | |||
Diluted net loss per share is computed on the basis of the weighted average number of common shares and common share equivalents outstanding. Dilutive securities having an anti-dilutive effect on diluted net loss per share are excluded from the calculation (See Note 14, below). | |||
Dilution is computed by applying the treasury stock method for options and warrants. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common shares at the average market price during the period. | |||
Dilution is computed by applying the if-converted method for convertible preferred shares. Under this method, convertible preferred stock is assumed to be converted at the beginning of the period (or at the time of issuance, if later), and preferred dividends (if any) will be added back to determine income applicable to common stock. The shares issuable upon conversion will be added to weighted average number of common shares outstanding. Conversion will be assumed only if it reduces earnings per share (or increases loss per share). | |||
Any common shares issued as a result of the issue of stock options and warrants would come from newly issued common shares from our remaining authorized shares. | |||
r) | Comprehensive income | ||
Comprehensive income is defined as the change in equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investments from owners and distributions to owners. Comprehensive income for the periods presented includes net loss. | |||
s) | Related parties | ||
Parties are considered to be related to the Company if the parties that, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company, or own in aggregate, on a fully diluted basis 5% or more of the Company’s stock. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions are recorded at fair value of the goods or services exchanged. Property purchased from a related party is recorded at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected as a distribution to related party. | |||
GOING_CONCERN
GOING CONCERN | 9 Months Ended | |
Sep. 30, 2014 | ||
GOING CONCERN: | ' | |
GOING CONCERN | ' | |
3 | GOING CONCERN | |
As shown in the accompanying financial statements, the Company incurred a net loss of $3,549,947 during the nine months ended September 30, 2014. As of September 30, 2014, the Company had an accumulated deficit of $8,943,619. The Company had a working capital deficiency of $253,803 as of September 30, 2014. These operating losses and working capital deficiency create an uncertainty about the Company’s ability to continue as a going concern. Although no assurances can be given, management of the Company believes that potential additional issuances of equity or other potential financing will provide the necessary funding for the Company to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The Company is economically dependent upon future capital contributions or financing to fund ongoing operations. | ||
Management continues to seek funding to pursue its business plans. Such funding may be obtained in the form of debt or equity financing, debt/equity hybrid instruments such as convertible debt, or a combination thereof. As such, the Company could incur additional leverage on its balance sheet and/or significant dilution of the current shareholders. There can be no assurance that the Company will be successful in obtaining the financing or funding necessary to continue as a going concern. |
PREPAID_EXPENSES_AND_OTHER_CUR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
PREPAID EXPENSES AND OTHER CURRENT ASSETS | ' | ||||||||
PREPAID EXPENSES AND OTHER CURRENT ASSETS | ' | ||||||||
4 | PREPAID EXPENSES AND OTHER CURRENT ASSETS | ||||||||
Prepaid expenses consisted of the following as of September 30, 2014 and December 31, 2013: | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Prepaid equipment rental | $ | 7,156 | $ | 1,533 | |||||
Prepaid insurance | 7,970 | 10,848 | |||||||
Prepaid professional fees | 13,286 | 4,144 | |||||||
Other | 44 | 579 | |||||||
$ | 28,456 | $ | 17,104 |
PLANT_AND_EQUIPMENT
PLANT AND EQUIPMENT | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
PLANT AND EQUIPMENT | ' | ||||||||
PLANT AND EQUIPMENT | ' | ||||||||
5 | PLANT AND EQUIPMENT | ||||||||
Plant and Equipment consisted of the following as of September 30, 2014 and December 31, 2013: | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Capital work in progress | $ | - | $ | 105,000 | |||||
Plasma Pulse Tool | 240,720 | - | |||||||
Furniture and equipment | 26,643 | 26,643 | |||||||
Field equipment | 19,627 | 16,120 | |||||||
Computer equipment | 1,500 | 3,041 | |||||||
Total cost | 288,490 | 150,804 | |||||||
Less: accumulated depreciation | (41,190 | ) | (28,423 | ) | |||||
Plant and equipment, net | $ | 247,300 | $ | 122,381 | |||||
Depreciation expense was $14,308 and $21,010 for the nine months ended September 30, 2014 and 2013, respectively. | |||||||||
INTANGIBLES
INTANGIBLES | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
INTANGIBLES | ' | ||||||||
INTANGIBLES | ' | ||||||||
6 | INTANGIBLES | ||||||||
Licenses | |||||||||
Novas licenses the “Plasma-Pulse Technology” (“the Technology”) from Novas Energy Group Limited, the Licensor, pursuant to the terms of an exclusive perpetual royalty bearing license it entered into in January 2013, which was amended on March, 2014. The amended license agreement provides Novas with the exclusive right to develop, use, market and commercialize the Technology for itself and/or third parties, sublicense and provide services to third parties related to the Technology in the United States and Mexico including all of its states, districts, territories, possessions and protectorates. The amended license agreement also provides Novas with the right to design and have manufactured the apparatus and to make modifications and improvements to the Technology provided that the Licensor is provided a non-exclusive license to any such improvements and modifications and any patent rights of Novas related to the Technology. The license is limited to the United States and Mexico. It also provides that Novas will pay the Licensor royalties equal to seven and a half percent (7.5%) of Net Service Sales (as defined in the license agreement) and Non-Royalty Sublicensing Consideration (as defined in the license agreement) and provides for a minimum royalty payment of $500,000 per year from United States operations and $500,000 per year from Mexican operations; however, no minimum royalty payment is due prior to the three year anniversary of the license agreement for revenue derived from the United States operations and no minimum royalty is due prior to December 31, 2015 for revenue derived from Mexico. Revenue derived from operations in one territory can be used to satisfy obligations for minimum royalty payments in the other territory. All royalty payments made by Novas as well as sublicensing revenue paid by Novas to the Licensor are credited towards the minimum royalty payment. If the minimum royalty is not timely paid, the Licensor has the right to terminate the license with respect to a particular territory and if the minimum royalty payment for both territories is not paid, to terminate the license agreement. Novas was obligated to pay an initial license fee of $150,000 on or prior to June 30, 2014, this fee was subsequently waived by the Licensor with effect from July 30, 2014, and an additional $200,000 on or prior to June 30, 2015 for the additional rights under the amended license agreement. The Licensor is responsible for the cost of filing prosecuting and maintaining the patents and Novas is responsible for costs of obtaining marketing approvals. The Licensor has the right to terminate the license agreement upon Novas’ breach or default. If the Licensor dissolves, becomes insolvent or engages in or is the subject of any other bankruptcy proceeding then the technology and patent rights in the United States shall become our property. | |||||||||
Intangibles consisted of the following as of September 30, 2014 and December 31, 2013: | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
License agreements | $ | 350,000 | $ | - | |||||
Website development | 8,000 | 8,000 | |||||||
Total cost | 358,000 | 8,000 | |||||||
Less: accumulated amortization | (43,000 | ) | (8,000 | ) | |||||
Intangibles, net | $ | 315,000 | $ | - | |||||
Amortization expense was $35,000 and $800 for the nine months ended September 30, 2014 and 2013, respectively. | |||||||||
The minimum commitments due under the license agreement for the next five years are summarized as follows: | |||||||||
Amount | |||||||||
2015 | 700,000 | ||||||||
2016 | 1,000,000 | ||||||||
2017 | 1,000,000 | ||||||||
2018 | 1,000,000 | ||||||||
$ | 3,700,000 | ||||||||
ACCRUED_LIABILITIES_AND_OTHER_
ACCRUED LIABILITIES AND OTHER PAYABLES | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
ACCRUED LIABILITIES AND OTHER PAYABLES | ' | ||||||||
ACCRUED LIABILITIES AND OTHER PAYABLES | ' | ||||||||
7 | ACCRUED LIABILITIES AND OTHER PAYABLES | ||||||||
Accrued liabilities consisted of the following as of September 30, 2014 and December 31, 2013: | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Short-term | |||||||||
Payroll liabilities | $ | 42,074 | $ | 55,918 | |||||
Accrued Royalties | 3,472 | 1,758 | |||||||
License fees payable | 200,000 | - | |||||||
Other | - | 2,417 | |||||||
Total Accrued Liabilities and other payables | $ | 245,546 | $ | 60,093 |
DEFERRED_REVENUE
DEFERRED REVENUE | 9 Months Ended | |
Sep. 30, 2014 | ||
DEFERRED REVENUE | ' | |
DEFERRED REVENUE | ' | |
8 | DEFERRED REVENUE | |
Novas entered into an agreement with a third party to provide oil recovery services in Mexico for an initial period of twenty four months, which may be extended at the option of Novas based upon the attainment of a minimum number of well treatments. The revenue invoiced in terms of this agreement consisted of a limited time technology license fee, administrative fees, cost recovery fees and consumable usage fees. These fees, other than cost recovery fees, were initially to be recognized over the initial term of the agreement, cost recovery fees were recognized as the expense was incurred. | ||
On May 30, 2014 we cancelled this agreement due to the inability of the third party to execute under the agreement. |
NOTES_PAYABLE
NOTES PAYABLE | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
NOTES PAYABLE | ' | ||||||||||||||||
NOTES PAYABLE | ' | ||||||||||||||||
9 | NOTES PAYABLE | ||||||||||||||||
Notes payable consisted of the following as of September 30, 2014 and December 31, 2013: | |||||||||||||||||
Description | InterestRate | Maturity | September 30,2014 | 31-Dec-13 | |||||||||||||
Short-Term | |||||||||||||||||
Owl Holdings | - | - | $ | 3,000 | $ | 3,000 | |||||||||||
Long-Term | |||||||||||||||||
JAZ-CEH Holdings, LLC | 7.5 | % | 31-Oct-15 | 105,000 | 105,000 | ||||||||||||
Accrued interest | 7,477 | 1,532 | |||||||||||||||
Total Long-Term Notes Payable | 112,477 | 106,532 | |||||||||||||||
Total Notes Payable | $ | 115,477 | $ | 109,532 | |||||||||||||
Owl Holdings | |||||||||||||||||
The note payable advanced by Owl Holdings to the Company has no interest rate and is repayable on demand. | |||||||||||||||||
JAZ-CEH Holdings, LLC | |||||||||||||||||
In October 2013, Novas Energy USA, Inc, entered into an unsecured promissory note with JAZ-CEH Holdings LLC with a face value of $105,000. The note bears interest at 7.5% per annum and matures on October 31, 2015. | |||||||||||||||||
SHORTTERM_CONVERTIBLE_NOTES_PA
SHORT-TERM CONVERTIBLE NOTES PAYABLE | 9 Months Ended | ||||||||||||||
Sep. 30, 2014 | |||||||||||||||
SHORT-TERM CONVERTIBLE NOTES PAYABLE | ' | ||||||||||||||
SHORT-TERM CONVERTIBLE NOTES PAYABLE | ' | ||||||||||||||
10 | SHORT-TERM CONVERTIBLE NOTES PAYABLE | ||||||||||||||
Short Term Convertible Notes payable consisted of the following as of September 30, 2014 and December 31, 2013: | |||||||||||||||
InterestRate | Maturity | September 30,2014 | December 31,2013 | ||||||||||||
Dart Union | 6 | % | On demand | $ | - | $ | 20,000 | ||||||||
Dart Union | 6 | % | On demand | - | 25,000 | ||||||||||
Dart Union | 6 | % | On demand | - | 20,000 | ||||||||||
Accrued Interest | - | 4,221 | |||||||||||||
Total Dart Union | - | 69,221 | |||||||||||||
JMJ Financial | 12 | % | 1-Jul-14 | - | 97,440 | ||||||||||
JMJ Financial | 12 | % | 25-Sep-14 | - | 64,960 | ||||||||||
JMJ Financial | 12 | % | 8-Dec-14 | - | 64,960 | ||||||||||
Unamortized debt discount, fees and interest expense | - | (36,306 | ) | ||||||||||||
Total JMJ Financial | - | 191,054 | |||||||||||||
Asher Enterprises | 8 | % | 1-May-14 | - | 53,000 | ||||||||||
Asher Enterprises | 8 | % | 6-Jun-14 | - | 42,500 | ||||||||||
Asher Enterprises | 8 | % | 7-Jul-14 | - | 32,500 | ||||||||||
Accrued Interest | - | 3,545 | |||||||||||||
Total Asher Enterprises | - | 131,545 | |||||||||||||
Gel Properties | 6 | % | 1-Aug-14 | - | 52,500 | ||||||||||
Gel Properties | 6 | % | 1-Jun-14 | - | - | ||||||||||
Gel Properties | 6 | % | 1-Aug-14 | - | - | ||||||||||
Accrued Interest | - | 1,320 | |||||||||||||
Total Gel Properties | - | 53,820 | |||||||||||||
Vista Capital Investments | 12 | % | 4-Sep-14 | - | 30,800 | ||||||||||
Vista Capital Investments | 12 | % | 18-Dec-14 | - | 30,800 | ||||||||||
Unamortized debt discount and interest expense | - | (9,544 | ) | ||||||||||||
Total Vista Capital Investments | - | 52,056 | |||||||||||||
LG Capital Funding, LLC | 12 | % | 20-Jun-14 | - | 63,448 | ||||||||||
Unamortized debt discount and interest expense | - | (14,269 | ) | ||||||||||||
Total LG Capital Funding, LLC | - | 49,179 | |||||||||||||
Tonaquint, Inc. | 10 | % | 11-Oct-14 | - | 155,650 | ||||||||||
Unamortized debt discount and interest expense | - | (33,638 | ) | ||||||||||||
Total Tonaquint, Inc. | - | 122,012 | |||||||||||||
Total Short-Term Notes Payable | $ | - | $ | 668,887 | |||||||||||
Dart Union | |||||||||||||||
The convertible notes payable to Dart Union consisted of three convertible notes in the aggregate principal amount of $65,000. These notes were unsecured, bore interest at the rate of six percent (6%) per annum and were repayable on demand. The notes were convertible at a conversion price equal to the higher of $0.05 per share or a 50% discount to the 3-day average closing price of the Company’s Common Stock for the three (3) business days immediately preceding the date of a conversion request from the holder. | |||||||||||||||
Effective April 1, 2014, the three convertible notes in the aggregate principal amount of $65,000 together with interest thereon of $5,183 totaling $70,183 were converted into 1,403,660 common shares at a conversion price of $0.05 per share. | |||||||||||||||
JMJ Financial | |||||||||||||||
On July 1, 2013, the Company borrowed $75,000 from JMJ Financial (“JMJ”) pursuant to an unsecured convertible promissory note. The terms of the note provided for no interest charge for 90 days and thereafter a once-off interest charge of 12%, amounting to $10,440, was added to the face value of the note. In addition, the note has an original issue discount of 10% and a closing and due diligence fee of 6% of the amount advanced; together these amounted to $12,000 and were added to the face value of the note. The note was convertible into common stock at any time, at the holder’s option, in whole or in part, at a conversion price equal to the lesser of $0.65 or 60% of the lowest trade price in the 25 trading days prior to conversion. The note matured on July 1, 2014. | |||||||||||||||
On January 7, 2014, January 21, 2014, February 10, 2014 and February 27, 2014, the $75,000 borrowed on July 1, 2013, including interest, original issue discount and fees, amounting to $97,440, was converted into an aggregate of 1,045,179 common shares of the Company at an average issue price of $0.09 per share (60% of the lowest trade price in the 25 trading days prior to conversion). | |||||||||||||||
On September 26, 2013, the Company borrowed $50,000 from JMJ pursuant to an unsecured convertible promissory note. The terms of the note provided for no interest charge for 90 days and thereafter a once-off interest charge of 12%, amounting to $6,960, was added to the face value of the note. In addition, the note has an original issue discount of 10% and a closing and due diligence fee of 6% of the amount advanced; together these amounted to $8,000 and were added to the face value of the note. The note was convertible into common stock at any time, at the holder’s option, in whole or in part, at a conversion price equal to the lesser of $0.65 or 60% of the lowest trade price in the 25 trading days prior to conversion. The note matures on September 25, 2014. | |||||||||||||||
On March 26, 2014, the funds of $50,000 borrowed on September 26, 2013, including interest, original issue discount and fees, amounting to a total of $64,960, was converted into 721,778 common shares of the Company at an issue price of $0.09 per share (60% of the lowest trade price in the 25 trading days prior to conversion). | |||||||||||||||
On December 9, 2013, the Company borrowed $50,000 from JMJ pursuant to an unsecured convertible promissory note. The terms of the note provided for no interest charge for 90 days and thereafter a once-off interest charge of 12%, amounting to $6,960, was added to the face value of the note. In addition, the note has an original issue discount of 10% and a closing and due diligence fee of 6% of the amount advanced; together these amounted to $8,000 and were added to the face value of the note. The note was convertible into common stock at any time, at the holder’s option, in whole or in part, at a conversion price equal to the lesser of $0.65 or 60% of the lowest trade price in the 25 trading days prior to conversion. The note matures on December 8, 2014. | |||||||||||||||
On March 6, 2014, the funds of $50,000 borrowed on December 9, 2013, including interest, original issue discount and fees, amounting to a total of $64,960, was repaid for $58,000 before the once-off interest charge of $6,960 came into effect. | |||||||||||||||
The Company has no further obligations under this note. | |||||||||||||||
JMJ may make further advances under the promissory note up to $275,000 (net $250,000 after an original issue discount of 10% or $25,000). Each note matures one year from the date of advance. The promissory note also requires payment of a closing and due diligence fee equal to 6% of the amount of each advance. | |||||||||||||||
Asher Enterprises | |||||||||||||||
On July 29, 2013, the Company issued an unsecured convertible note to Asher Enterprises with a face value of $53,000, in exchange for $50,000 cash, net of $3,000 in legal fees. The note was convertible into common stock of the Company and bore interest at the rate of 8% per annum, which interest was payable in cash or common stock, at the election of the holder, and matured on May 1, 2014. The conversion price, as well as the formula for determining the number of shares needed to repay the note and any interest thereon was 58% of the average of the lowest closing price for any three trading days during the last ten day trading period prior to conversion or payment of interest. The holder could only convert the note following the expiration of 180 days from the date of issuance, July 29, 2013. The holder was not entitled to exercise any conversion right that would result in the holder owning more than 9.99% of the Company’s common stock. This note could be prepaid by the Company from the date of issuance to 180 days after issuance date at a prepayment penalty ranging from 112% to 135% of the balance outstanding, including interest thereon, dependent upon the age of the note. | |||||||||||||||
On February 7, 2014, the unsecured promissory note issued to Asher Enterprises on July 29, 2013 with a face value of $53,000, was repaid for $73,687, inclusive of interest, fees and an early settlement penalty accrued thereon. The Company has no further obligations under this note. | |||||||||||||||
On September 4, 2013, the Company issued an unsecured convertible note to Asher Enterprises with a face value of $42,500, in exchange for $40,000 cash, net of $2,500 in legal fees. The note was convertible into common stock of the Company and bore interest at the rate of 8% per annum, which interest was payable in cash or common stock, at the election of the holder, and matured on June 6, 2014. The conversion price, as well as the formula for determining the number of shares needed to repay the note and any interest thereon was 58% of the average of the lowest closing price for any three trading days during the last ten day trading period prior to conversion or payment of interest. The holder could only convert the note following the expiration of 180 days from the date of issuance, September 4, 2013. The holder was not entitled to any conversion right that would result in the holder owning more than 9.99% of the Company’s common stock. This note could be prepaid by the Company from the date of issuance to 180 days after issuance date at a prepayment penalty ranging from 112% to 135% of the balance outstanding, including interest thereon, dependent upon the age of the note. | |||||||||||||||
On February 21, 2014, the unsecured promissory note issued to Asher Enterprises on September 4, 2013 with a face value of $42,500 was repaid for $58,884, inclusive of interest, fees and an early settlement penalty accrued thereon. The Company has no further obligations under this note. | |||||||||||||||
On October 3, 2013, the Company issued an unsecured convertible note to Asher Enterprises with a face value of $32,500, in exchange for $30,000 cash, net of $2,500 in legal fees. The note was convertible into common stock of the Company and bore interest at the rate of 8% per annum, which interest was payable in cash or common stock, at the election of the holder, and matured on July 7, 2014. The conversion price, as well as the formula for determining the number of shares needed to repay the note and any interest thereon was 58% of the average of the lowest closing price for any three trading days during the last ten day trading period prior to conversion or payment of interest. The holder could only convert the note following the expiration of 180 days from the date of issuance, October 3, 2013. The holder was not entitled to any conversion right that would result in the holder owning more than 9.99% of the Company’s common stock. This note may be prepaid by the Company from the date of issuance to 180 days after issuance date at a prepayment penalty ranging from 112% to 135% of the balance outstanding, including interest thereon, dependent upon the age of the note. | |||||||||||||||
On March 28, 2014, the unsecured promissory note issued to Asher Enterprises on October 3, 2013 with a face value of $32,500 was repaid for $45,086, inclusive of interest, fees and an early settlement penalty accrued thereon. The Company has no further obligations under this note. | |||||||||||||||
Gel Properties | |||||||||||||||
On July 30, 2013, the Company issued a convertible note, face value $52,500, in exchange for $50,000 cash, net of $2,500 in legal fees. The note was convertible into common stock of the Company and bore interest at the rate of 6% per annum, which interest was payable in common stock, and matured on August 1, 2014. The conversion price, as well as the formula for determining the number of shares needed to pay the interest on the note, was 65% of the lowest closing price for any five trading days prior to conversion or payment of interest. The holder could only convert the note following the expiration of the requisite holding period under Rule 144 of the Securities Act of 1933. Payments of interest (in common stock pursuant to the formula outlined above) was to be made upon demand by the holder at any time in the holder’s discretion following the expiration of the requisite Rule 144 holding period. The note was redeemable by the Company at any time within 6 months from the date of issuance, July 30, 2013, at a 20% premium over the principal amount due within the first 30-days, which premium escalates by 3% every 30 days to a maximum of 35%. | |||||||||||||||
On February 10, 2014, the unsecured promissory note issued to Gel Properties on July 30, 2013 with a face value of $52,500, was repaid for $72,538, inclusive of interest, fees and an early settlement penalty accrued thereon. The Company has no further obligations under this note. | |||||||||||||||
On July 30, 2013, the Company issued two convertible notes, each having a face value of $50,000 (the “Convertible Notes”) in exchange for two $50,000 “back end” notes (the “Back End Notes”). The Back End Notes were secured by a pledge account which had an aggregate appraised value of not less than $100,000. The Back End Notes were due and payable on June 1, 2014 and August 1, 2014 respectively. The Convertible Notes were convertible into common stock of the Company and each bore interest at the rate of 6% per annum, which interest was payable in common stock, and matured on August 1, 2015. The conversion price, as well as the formula for determining the number of shares needed to pay the interest on the note, was 65% of the lowest closing price for any five trading days prior to conversion or payment of interest. The holder could only convert the note following the expiration of the requisite holding period under Rule 144 of the Securities Act of 1933. Payments of interest (in common stock pursuant to the formula outlined above) was to be made upon demand by the holder at any time at the holder’s discretion following the expiration of the requisite Rule 144 holding period. The Convertible Notes were redeemable by the Company at any time at a premium over the principal amount due of 50%. The Company had the right to call and not allow funding of the Back End Notes by offsetting the Convertible Notes against the Back End Notes. In consideration of this call right the Company issued 12,500 shares of its common stock to the issuer of the Back End Notes. The shares were held in escrow to be released if the Company elects, prior to April 1, 2014, to call the Back End Notes. | |||||||||||||||
On January 16, 2014, the two $50,000 “back end” notes were exercised for proceeds of $95,000, net of $5,000 in legal fees. | |||||||||||||||
On March 11, 2014, one of the two $50,000 secured “back end” promissory note exercised on January 16, 2014, was repaid for $62,950, inclusive of interest and an early settlement penalty accrued thereon. The Company has no further obligations under this note. | |||||||||||||||
On April 11, 2014, the second $50,000 secured “back end” promissory note was repaid for $65,708, inclusive of interest and an early settlement penalty accrued thereon. The Company has no further obligations under this note. | |||||||||||||||
Vista Capital Investments | |||||||||||||||
On September 5, 2013, the Company borrowed $25,000 from Vista Capital Investments (“Vista”) pursuant to an unsecured convertible promissory note. The terms of the note provided for a once-off interest charge of 12% amounting to $3,300 added to the face value of the note. In addition, the note had an original issue discount of 10% of the amount advanced which amounted to $2,500 and was added to the face value of the note. The note was convertible into common stock at any time, at the holder’s option, in whole or in part, at a conversion price equal to the lesser of $0.33 or 60% of the lowest trade price in the 25 trading days prior to conversion. The note matured on September 5, 2014. The holder was not entitled to exercise any conversion right that would result in the holder owning more than 4.99% of the Company’s common stock. The Note was redeemable by the Company within 90 days of the issuance date, after a 10 day notice period, in which notice period the holder could elect to exercise the conversion feature of the note, at a premium over the principal amount due of 50%, plus any interest earned thereon. As long as the note was outstanding, the holder, at its option, had the right to adopt any future, more favorable financing or conversion terms on any subsequent financings conducted by the Company or any of its subsidiaries. | |||||||||||||||
On March 12, 2014, the funds of $25,000 borrowed on September 5, 2013, including interest, original issue discount and fees, amounting to a total of $30,800, was converted into 366,667 Common shares of the Company at an issue price of $0.084 per share (60% of the lowest trade price in the 25 trading days prior to conversion). | |||||||||||||||
On December 19, 2013, the Company borrowed $25,000 from Vista pursuant to an unsecured convertible promissory note. The terms of the note provided for a once-off interest charge of 12% amounting to $3,300 added to the face value of the note. In addition, the note had an original issue discount of 10% of the amount advanced which amounted to $2,500 and was added to the face value of the note. The note was convertible into common stock at any time, at the holder’s option, in whole or in part, at a conversion price equal to the lesser of $0.33 or 60% of the lowest trade price in the 25 trading days prior to conversion. The note matured on December 18, 2014. The holder was not entitled to exercise any conversion right that would result in the holder owning more than 4.99% of the Company’s common stock. The Note was redeemable by the Company within 90 days of the issuance date, after a 10 day notice period, in which notice period the holder could elect to exercise the conversion feature of the note, at a premium over the principal amount due of 50%, plus any interest earned thereon. As long as the note was outstanding, the holder, at its option, had the right to adopt any future, more favorable financing or conversion terms on any subsequent financings conducted by the Company or any of its subsidiaries. | |||||||||||||||
On March 17, 2014, the funds of $25,000 borrowed on December 19, 2013, including interest, original issue discount and fees, amounting to a total of $30,800, was converted into 354,023 Common shares of the Company at an issue price of $0.087 per share (60% of the lowest trade price in the 25 trading days prior to conversion). | |||||||||||||||
Vista may make further advances under the promissory note up to $250,000 (net $225,000 after an original issue discount of 10% or $25,000). Each note matures one year from the date of advance. | |||||||||||||||
LG Capital Funding, LLC | |||||||||||||||
On October 10, 2013, the Company received, a net $45,000 from LG Capital Funding, LLC (“LG”), after the payment of a $5,000 commission to a third party and legal fees amount to $1,500, pursuant to an unsecured convertible promissory note with a face value of $51,500. The terms of the note provided for an original issue discount of 10% amounting to $5,150 and no interest charge for 90 days, thereafter a once-off interest charge of 12% amounting to $6,798 was added to the face value of the note. The note was convertible into common stock at any time, at the holder’s option, in whole or in part, at a conversion price equal to the lesser of $0.65 or 60% of the lowest trade price in the 25 trading days prior to conversion. The note matured on June 20, 2014. The holder was not entitled to exercise any conversion right that would result in the holder owning more than 4.99% of the Company’s common stock. The Convertible Note was redeemable by the Company within 90 days of the issuance date, after a 3 day notice period, in which notice period the holder could elect to exercise the conversion feature of the note, at a premium over the principal amount due of 22%, plus any interest earned thereon, subject to the holders approval. The conversion price of the note had anti-dilutive provisions which would reduce the cap on the conversion price for any subsequent share issuances in certain circumstances. The Company had certain covenants which restricted it from the following; i) payment of dividends or other distributions, in cash or otherwise; ii) restrictions on stock repurchases; iii) the incurrence of debt other than in the ordinary course of business or to repay the note or borrowings not exceeding $1,000,000; iv) the sale of a significant portion of the assets outside of the ordinary course of business; and v) lend money unless committed to prior to this note, made in the ordinary course of business or in excess of $100,000, without the note holders consent. | |||||||||||||||
On March 31, 2014, the unsecured promissory note issued to LG with a face value of $51,500 was repaid for $95,172, inclusive of interest, original issue discounts and early settlement penalty accrued thereon. The Company has no further obligations under this note. | |||||||||||||||
Tonaquint, Inc. | |||||||||||||||
On October 11, 2013, the Company received, a net $112,500 from Tonaquint, Inc. (“Tonaquint”), after the payment of a $12,500 commission to a third party, pursuant to a convertible promissory note, with a one-year maturity and a face value of $141,500, inclusive of an original issue discount and fees amounting to $16,500. There was no interest charge for the first 90 days and thereafter a once-off interest charge of 10% amounting to $14,150 was added to the face value of the note. The note was convertible into common stock six months after the issue date, at the holder’s option, in whole or in part, at a conversion price equal to 60% of the lowest trade price in the 25 trading days prior to conversion. The holder was not entitled to exercise any conversion right that would result in the holder owning more than 9.99% of the Company’s common stock. The Convertible Note was redeemable by the Company within 90 days of the issuance date at no penalty. | |||||||||||||||
On April 11, 2014, May 1, 2014, May 20, 2014, June 4, 2014, June 20, 2014, July 7, 2014 and July 28, 2014, Tonaquint converted the note outstanding of $155,650 borrowed on October 11, 2013, including interest, original issue discount and fees into 1,283,576 Common shares of the Company at an average issue price of $0.12 per share (60% of the lowest trade price in the 25 trading days prior to conversion). |
DERIVATIVE_FINANCIAL_LIABILITY
DERIVATIVE FINANCIAL LIABILITY | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
DERIVATIVE FINANCIAL LIABILITY | ' | ||||||||
DERIVATIVE FINANCIAL LIABILITY | ' | ||||||||
11 | DERIVATIVE FINANCIAL LIABILITY | ||||||||
Certain of the short-term convertible notes disclosed in note 10 above, had variable priced conversion rights with no fixed floor price and would re-price dependent on the share price performance over varying periods of time. This gave rise to a derivative financial liability, which was valued at $207,186 at inception of the convertible notes using a Black-Scholes valuation model. The value of this derivative financial liability is re-assessed at each financial reporting period, with any movement thereon recorded in the statement of operations in the period in which it is incurred or the convertible debt is converted into equity. | |||||||||
The derivative financial liability was no longer required upon the conversion of the remaining short term convertible notes with variable priced conversion rights on July 28, 2014, resulting in a net credit to the unaudited consolidated statement of operations of $237,799 and a net charge of $(668,755) for convertible debt converted to equity, totaling a net charge of $(430,956) for the nine months ended September 30, 2014. | |||||||||
September 30,2014 | December31, 2013 | ||||||||
Opening balance | $ | 237,799 | $ | - | |||||
Conversion of derivative liability for stock issued at a discount | (668,755 | ) | - | ||||||
Fair value adjustments to derivative financial liability | 430,956 | 237,799 | |||||||
$ | - | $ | 237,799 | ||||||
The following assumptions were used in the Black-Scholes valuation model: | |||||||||
Nine months endedSeptember 30, 2014 | Year endedDecember 31, 2013 | ||||||||
Stock price over the period | $0.14 – $0.50 | $0.20 –$ 0.94 | |||||||
Risk free interest rate | 0.11% to 0.13 | % | 0.09% to 0.16 | % | |||||
Expected life of short-term notes payable | 1 to 10 months | 8 to 12 months | |||||||
Expected volatility | 119.45 | % | 114.14 | % | |||||
Expected dividend rate | 0 | % | 0 | % | |||||
LONGTERM_CONVERTIBLE_NOTES_PAY
LONG-TERM CONVERTIBLE NOTES PAYABLE | 9 Months Ended | ||||||||||||||
Sep. 30, 2014 | |||||||||||||||
LONG-TERM CONVERTIBLE NOTES PAYABLE: | ' | ||||||||||||||
LONG-TERM CONVERTIBLE NOTES PAYABLE | ' | ||||||||||||||
12 | LONG-TERM CONVERTIBLE NOTES PAYABLE | ||||||||||||||
Long Term Convertible Notes payable consisted of the following as of September 30, 2014 and December 31, 2013: | |||||||||||||||
Description | InterestRate | Maturity | September 30,2014 | December31,2013 | |||||||||||
Notes payable | 6 | % | 19-Nov-17 | $ | 39,375 | $ | 388,875 | ||||||||
Accrued interest | 4,550 | 95,124 | |||||||||||||
Unamortized debt discount | (24,721 | ) | (302,480 | ) | |||||||||||
Total long-Term Convertible Notes Payable | $ | 19,204 | $ | 181,519 | |||||||||||
The convertible notes payable consist of notes issued to a number of private principals (“the Notes”). The Notes bear interest at the rate of 6% per annum and are due on November 19, 2017. The Notes are convertible into common stock at a fixed conversion price of $0.02 per share. | |||||||||||||||
Effective April 1, 2014, convertible notes with an aggregate principle amount of $349,500 inclusive of interest thereon of $97,202 totaling $446,702 was converted into 22,335,124 common shares at a conversion price of $0.02 per share. |
STOCKHOLDERS_DEFICIT
STOCKHOLDERS' DEFICIT | 9 Months Ended | ||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||
STOCKHOLDERS' DEFICIT | ' | ||||||||||||||||||||||
STOCKHOLDERS' DEFICIT | ' | ||||||||||||||||||||||
13 | STOCKHOLDERS’ EQUITY/(DEFICIT) | ||||||||||||||||||||||
a) | Common Stock | ||||||||||||||||||||||
The Company has authorized 500,000,000 common shares with a par value of $0.001 each, and issued and outstanding 241,421,828 shares of common stock as of September 30, 2014. | |||||||||||||||||||||||
The following common shares were issued by the Company during the nine months ended September 30, 2014: | |||||||||||||||||||||||
i) | an aggregate of 27,510,118 shares of Common Stock to convertible note holders upon conversion of an aggregate of $1,565,302 of short and long-term convertible notes, inclusive of certain interest and, mark-to-market derivative adjustments thereon, at an average share price of $0.06 per share; | ||||||||||||||||||||||
ii) | an aggregate of 1,260,667 Common shares issued to consultants and advisors for services at an average issue price of $0.24 per share, the market value of our common stock when the shares were issued. | ||||||||||||||||||||||
iii) | In terms of a private placement agreement entered into on April 15, 2014 between the Company and a placement agent (“the Placement Agent”), the Placement Agent agreed to assist the Company in raising financing. The financing could be in the form of debt or equity funding offered to qualified investors only and was in the form of equity. The Placement Agent received a fee of 10% of the gross proceeds raised together with a 3% expense recovery fee. In addition to this the Placement Agent was issued warrants equal to 15% of the total number of shares issued to the investors , on the same terms and conditions of those warrants issued to investors. After the completion of the last funding the Company is obligated to file an S-1 registration statement on Form S-1 registering the common stock issue in the offering and the common stock underlying the warrants within 90 days of the completion of the funding. | ||||||||||||||||||||||
During the period June 2014 to August 2014, pursuant to the private placement agreement and individual Securities Purchase Agreements entered into, new, qualified investors, acquired 7,353,329 common units of the Company at a price of $0.15 per unit, each unit consisting of one share of Common Stock and a five year warrant exercisable for one half of a share of common stock at an exercise price of $0.25 per share, for net proceeds of $946,110 after deducting placement agent fees and other share issue expenses of $146,890. A further $10,000 was paid to the Placement Agent as fees in terms of the agreement. The placement agent was also issued five year warrants to purchase 1,654,499 shares of common stock at an exercise price of $0.25 per share. | |||||||||||||||||||||||
b) | Preferred Stock | ||||||||||||||||||||||
The Company has 10,000,000 authorized preferred shares with a par value of $0.001 each with 5,000,000 preferred shares designated as Series A-1 Convertible Preferred Stock (“Series A-1 Shares”), with 3,887,500 Series A-1 Shares issued and outstanding which are convertible into 38,875,000 shares of common stock. | |||||||||||||||||||||||
On March 14, 2014, the Company amended its articles of incorporation by designating 500,000 of the remaining 5,000,000 undesignated preferred shares as Series B Convertible Redeemable Preferred Stock (“Series B Shares”), with 75,000 Series B Shares issued and outstanding, which are convertible into 7,500,000 shares of common stock. | |||||||||||||||||||||||
The remaining 4,500,000 preferred shares remain undesignated. | |||||||||||||||||||||||
i) | Series A-1 Convertible Preferred Stock | ||||||||||||||||||||||
The rights, privileges and preferences of the Series A-1 Shares are summarized as follows; | |||||||||||||||||||||||
Conversion | |||||||||||||||||||||||
Each Series A-1 Share has the following conversion rights: | |||||||||||||||||||||||
(a) | Each share of the Series A-1Shares is convertible into ten shares of Common Stock. | ||||||||||||||||||||||
(b) | There shall be no adjustment made to the conversion ratio of the Series A-1 Shares for any stock split, stock dividend, combination, reclassification or other similar event. | ||||||||||||||||||||||
Company Redemption | |||||||||||||||||||||||
The Series A-1Shares are non-redeemable by the Company. | |||||||||||||||||||||||
Voting Rights | |||||||||||||||||||||||
Each holder of Series A-1 Shares is entitled to vote on all matters submitted to a vote of the stockholders of the Company and shall be entitled to that number of votes equal to the number of shares of Common Stock into which such holder’s shares of Series A-1 Shares could then be converted. | |||||||||||||||||||||||
Dividends | |||||||||||||||||||||||
Until such time that any dividend is paid to the holders of Common Stock, the holders of Series A-1 Shares shall be entitled to a dividend in an amount per share equal to that which such holders would have been entitled to receive had they converted all of the shares of Series A-1 Shares into Common Stock immediately prior to the payment of such dividend | |||||||||||||||||||||||
Liquidation Preference | |||||||||||||||||||||||
Each share of Series A-1 Shares is entitled to a liquidation preference of $.08 per share | |||||||||||||||||||||||
No Circumvention | |||||||||||||||||||||||
The approval of the holders of at least 2/3 (66.6%) of the outstanding shares of the Series A-1 Shares, voting together separately as a class, is required for: | |||||||||||||||||||||||
(a) | the merger, sale of all, or substantially all of the assets or intellectual property, recapitalization, or reorganization of the Company; | ||||||||||||||||||||||
(b) | the authorization or issuance of any equity security having any right, preference or priority superior to or on a parity with the Series A-1 Shares; | ||||||||||||||||||||||
(c) | the redemption, repurchase or acquisition of any of the Company’s equity securities or the payment of any dividends or distributions thereon; | ||||||||||||||||||||||
(d) | any amendment or repeal of the Company’s Articles of Incorporation or Bylaws that would have an adverse affect on the rights, preferences or privileges of the Series A-1 Shares; and | ||||||||||||||||||||||
(e) | the making of any loan or advance to any person except in the ordinary course of business. | ||||||||||||||||||||||
ii) | Series B Convertible Preferred Stock | ||||||||||||||||||||||
The rights, privileges and preferences of the Series B Shares are summarized as follows: | |||||||||||||||||||||||
Conversion | |||||||||||||||||||||||
The holders of the Series B Preferred Shares shall have conversion rights as follows: | |||||||||||||||||||||||
(a) | Each share of the Series B Shares shall be convertible at any time prior to the issuance of a redemption notice by the Company into such number of shares of Common Stock by dividing the Stated value ($10) of the Series B Share by $0.10 and shall be subject to adjustment for dividends or distributions made in common stock, the issue of securities convertible into common stock, stock splits, reverse stock splits, or reclassifications of common stock. No adjustments will be made to the conversion rights or conversion price for any reorganization other than to be entitled to receive the same benefits as if the shares were converted immediately prior to such reorganization. No conversion will take place if the holder of the Series B Shares will beneficially own in excess of 4.99% of the shares of Common Stock outstanding immediately after conversion. As of the date hereof, each Series B Share converts into 100 shares of common stock. | ||||||||||||||||||||||
(b) | The conversion right of the holders of Series B Shares shall be exercised by the surrender of the certificates representing shares to be converted to the Company, accompanied by written notice electing conversion. | ||||||||||||||||||||||
(c) | No fractional shares of Common Stock or script shall be issued upon conversion of Series B Shares. The Company shall pay a cash adjustment in respect to such fractional interest based upon the fair value of a share of Common Stock, as determined in good faith by the Company’s Board of Directors. | ||||||||||||||||||||||
(d) | All shares of Common Stock issued upon conversion of Series B Shares will upon issuance be validly issued, fully paid and non-assessable. All certificates representing Series B Shares surrendered for conversion shall be appropriately canceled on the books of the Company and the shares so converted represented by such certificates shall be restored to the status of authorized but unissued shares of preferred stock of the Company. | ||||||||||||||||||||||
Company Redemption | |||||||||||||||||||||||
The Company shall have the right, at any time after the date the Series B Shares have been issued, to redeem all or a portion of any Holder's Series B Shares at a price per Series B Share equal to the issue price per Series B Share multiplied by 120%. | |||||||||||||||||||||||
Voting Rights | |||||||||||||||||||||||
Each holder of Series B Shares shall be entitled to vote on all matters submitted to a vote of the stockholders of the Company and shall be entitled to votes equal to the number of shares of Common Stock into which Series B Shares could be converted, and the holders of shares of Series B Shares and Common Stock shall vote together as a single class on all matters submitted to the stockholders of the Company. | |||||||||||||||||||||||
Dividends | |||||||||||||||||||||||
(a) | The holders of the Series B Shares shall be entitled to receive cumulative dividends at the rate of eight percent per annum of the issue price per share, accrued daily and payable annually in arrears on December 31st of each year (“Dividend Date”). Such dividends shall accrue on any given share from the day of original issuance of such share. Such dividends shall be cumulative, whether or not declared by the Board of Directors, but shall be non-compounding. | ||||||||||||||||||||||
(b) | Any dividend payable on a dividend payment date may be paid, at the option of the Company, either (i) in cash or (ii) in shares of common stock at an issue price of $0.10 per common share. | ||||||||||||||||||||||
(c) | Nothing contained herein shall be deemed to establish or require any payment or other charges in excess of the maximum permitted by applicable law. | ||||||||||||||||||||||
(d) | In the event that pursuant to applicable law or contract the Company shall be prohibited or restricted from paying in cash the full dividends to which the holders of the Series B Shares shall be entitled, the cash amount available pursuant to applicable law or contract shall be distributed among the holders of the Series B Shares ratably in proportion to the full amounts to which they would otherwise be entitled and any remaining amount due to holders of the Series B Shares shall be payable in cash. | ||||||||||||||||||||||
Liquidation Preference | |||||||||||||||||||||||
In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, the holders of the Series B Shares shall be entitled to receive, prior and in preference to any distribution of any assets of the Company to the holders of any other preferred stock of the Company and subordinate to any distribution to the Series A-1 Shares, and prior and in preference to any distribution of any assets of the Company to the holders of the Common Stock, the amount of 120% of the issue price per share. | |||||||||||||||||||||||
No Circumvention | |||||||||||||||||||||||
The Company shall not amend its certificate of incorporation, or participate in any reorganization, sale or transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action for the purpose of avoiding or seeking to avoid the observance or performance of any of the terms to be observed or performed by the Company. | |||||||||||||||||||||||
On March 27, 2014, we entered into a Securities Purchase Agreement with an individual, pursuant to which the individual agreed to purchase and we agreed to sell 75,000 Series B Shares at an issue price of $10 per share for net proceeds of $750,000. Of the total proceeds of $750,000, $550,000 was received on deposit, prior to the issuance of the Series B Preferred shares. | |||||||||||||||||||||||
The proceeds received above, were primarily used to settle the following convertible notes outstanding (Refer note 10 above): | |||||||||||||||||||||||
i. | On February 7, 2014, the unsecured promissory note issued to Asher Enterprises on July 29, 2013 with a face value of $53,000, was repaid for $73,687, inclusive of interest, fees and an early settlement penalty accrued thereon. | ||||||||||||||||||||||
ii. | On February 10, 2014, the unsecured promissory note issued to Gel Properties on July 30, 2013 with a face value of $52,500, was repaid for $72,538, inclusive of interest, fees and an early settlement penalty accrued thereon. | ||||||||||||||||||||||
iii. | On February 21, 2014, the unsecured promissory note issued to Asher Enterprises on September 4, 2013 with a face value of $42,500 was repaid for $58,884, inclusive of interest, fees and an early settlement penalty accrued thereon. | ||||||||||||||||||||||
iv. | On March 6, 2014, the funds of $50,000 borrowed from JMJ Financial on December 9, 2013, including interest, original issue discount and fees, amounting to a total of $64,960, was repaid for $58,000 before the once-off interest charge of $6,960 came into effect. | ||||||||||||||||||||||
v. | On March 11, 2014, one of the two $50,000 “back end” promissory notes issued to GEL Properties and exercised on January 16, 2014, was repaid for $62,950, inclusive of interest and an early settlement penalty accrued thereon. | ||||||||||||||||||||||
vi. | On March 28, 2014, the unsecured promissory note issued to Asher Enterprises on October 3, 2013 with a face value of $32,500 was repaid for $45,086, inclusive of interest, fees and an early settlement penalty accrued thereon. | ||||||||||||||||||||||
vii. | On March 31, 2014, the unsecured promissory note issued to LG Capital Funding, LLC, with a face value of $51,500 was repaid for $95,172, inclusive of interest, original issue discounts and early settlement penalty accrued thereon. | ||||||||||||||||||||||
viii. | On April 11, 2014, the second $50,000 “back end” promissory note issued to GEL Properties was repaid for $65,708, inclusive of interest and an early settlement penalty accrued thereon. | ||||||||||||||||||||||
We have undeclared dividends on the Series B Preferred stock amounting to $30,740 as of September 30, 2014. The beneficial conversion feature of these undeclared dividends will be recorded upon the declaration of these dividends. | |||||||||||||||||||||||
c) | Stock Option Plan | ||||||||||||||||||||||
The Company’s Board of Directors approved the Company’s 2008 Stock Option Plan (the “Stock Plan”) for the issuance of up to 5,000,000 shares of common stock to be granted through incentive stock options, nonqualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, restricted stock units and other stock-based awards to officers, other employees, directors and consultants of the Company and its subsidiaries. After the reverse stock split in August 2012, a total of 100,000 shares were available for grant. Subsequent to the reverse split the Board of Directors approved an increase in the number of awards available for grant to 2,100,000 shares. The exercise price of stock options under the Stock Plan is determined by the Board of Directors, and may be equal to or greater than the fair market value of the Company’s common stock on the date the option is granted. Options become exercisable over various periods from the date of grant, and generally expire ten years after the grant date. At September 30, 2014 and December 31, 2013, there were 452,960 options issued and outstanding, respectively, under the Stock Plan. In addition, the Company issued 11,000,000 options to two of its Officers which are not covered under this plan (see section d) – “Non-Plan Stock Options” for further description of these options) | |||||||||||||||||||||||
The vesting provisions for these stock options have various terms as follows: | |||||||||||||||||||||||
· | Monthly, over one to three years | ||||||||||||||||||||||
· | Immediately, upon grant | ||||||||||||||||||||||
No options were issued during the current period. | |||||||||||||||||||||||
d) | Non-Plan Stock Options | ||||||||||||||||||||||
In March of 2013, the Company granted to its Chief Executive Officer options (that are not covered by the Company’s Stock Option Plan) to purchase 10,000,000 shares of the Company’s common stock with an exercise price equal to $0.25 per share. Vesting was immediate as to 2,500,012 of the options and the balance of the options vest, pro rata, on a monthly basis, over 36 months. | |||||||||||||||||||||||
In March of 2013, the Company granted to one of its directors options (that are not covered by the Company’s Stock Option Plan) to purchase 1,000,000 shares of the Company’s common stock with an exercise price equal to $0.25 per share. Vesting was immediate as to 250,012 of the options and the balance of the options vest pro rata, on a monthly basis, over 36 months. | |||||||||||||||||||||||
The following assumptions were used to value the plan and non-plan options issued using the Black-Scholes valuation model: | |||||||||||||||||||||||
Year endedDecember 31, 2013 | |||||||||||||||||||||||
Stock price over the period | $0.50 –$ 0.65 | ||||||||||||||||||||||
Risk free interest rate | 1.41% to 2.71 | % | |||||||||||||||||||||
Expected life of options | 5 to 10 years | ||||||||||||||||||||||
Expected volatility | 127.99% to 150.0 | % | |||||||||||||||||||||
Expected dividend rate | 0 | % | |||||||||||||||||||||
In the event of the employees’ termination, the Company will cease to recognize compensation expense. | |||||||||||||||||||||||
The Company has applied fair value accounting for all share based payment awards since inception. The fair value of each option or warrant granted is estimated on the date of grant using the Black-Scholes option-pricing model. There is no deferred compensation recorded upon initial grant date, instead, for employees, the fair value of the share-based payment is recognized ratably over the stated vesting period. For consultants, the fair value is recognized as expense immediately. | |||||||||||||||||||||||
The Company has recorded an expense of $1,439,502 and $1,657,273 for the nine months ended September 30, 2014 and the year ended December 31, 2013 relating to options issued. | |||||||||||||||||||||||
PROPELL TECHNOLOGIES | |||||||||||||||||||||||
The options outstanding and exercisable at September 30, 2014 are as follows: | |||||||||||||||||||||||
Options Outstanding | Options Exercisable | ||||||||||||||||||||||
ExercisePrice | NumberOutstanding | WeightedAverageRemainingContractualLife | WeightedAverageExercisePrice | NumberExercisable | WeightedAverageExercisePrice | WeightedAverageRemainingContractualLife | |||||||||||||||||
$ | 25 | 2,500 | 3.60 years | $ | 25 | 2,500 | $ | 25 | 3.60 years | ||||||||||||||
$ | 13.5 | 5,480 | 4.71 years | $ | 13.5 | 5,480 | $ | 13,50 | 4.71 years | ||||||||||||||
$ | 12.5 | 2,000 | 6.04 years | $ | 12.5 | 2,000 | $ | 12.5 | 6.04 years | ||||||||||||||
$ | 8.5 | 30,500 | 6.75 years | $ | 8.5 | 30,500 | $ | 8.5 | 6.75 years | ||||||||||||||
$ | 5 | 14,800 | 7.04 years | $ | 5 | 14,500 | $ | 5 | 7.04 years | ||||||||||||||
$ | 0.25 | 11,000,000 | 3.43 years | $ | 0.25 | 7,104,172 | $ | 0.25 | 3.43 years | ||||||||||||||
$ | 0.65 | 55,386 | 6.84 years | $ | 0.65 | 55,386 | $ | 0.65 | 6.84 years | ||||||||||||||
$ | 0.63 | 57,144 | 3.75 years | $ | 0.63 | 57,144 | $ | 0.63 | 3.75 years | ||||||||||||||
$ | 0.51 | 285,150 | 5.54 years | $ | 0.51 | 285,150 | $ | 0.51 | 5.54 years | ||||||||||||||
11,452,960 | 3.52 years | $ | 0.3 | 7,556,832 | $ | 0.33 | 3.56 years | ||||||||||||||||
No options were granted for the nine months ended September 30, 2014. During the year ended December 31, 2013, awards granted under the Plan were incentive stock options. A summary of all of our option activity during the period January 1, 2013 to September 30, 2014 is as follows: | |||||||||||||||||||||||
Shares | Exerciseprice pershare | Weightedaverageexerciseprice | |||||||||||||||||||||
Outstanding January 1, 2013 | 55,280 | $ | 5.00 to 25.00 | $ | 8.49 | ||||||||||||||||||
Granted – plan options | 397,680 | 0.51 to 0.65 | 0.54 | ||||||||||||||||||||
Granted – non plan options | 11,000,000 | 0.25 | 0.25 | ||||||||||||||||||||
Forfeited/Cancelled | - | - | - | ||||||||||||||||||||
Exercised | - | - | - | ||||||||||||||||||||
Outstanding December 31, 2013 | 11,452,960 | $ | 0.25 to 25.00 | $ | 0.3 | ||||||||||||||||||
Granted – plan options | - | - | - | ||||||||||||||||||||
Granted – non plan options | - | - | - | ||||||||||||||||||||
Forfeited/Cancelled | - | - | - | ||||||||||||||||||||
Exercised | - | - | - | ||||||||||||||||||||
Outstanding September 30, 2014 | 11,452,960 | $ | 0.25 to 25,00 | 0.3 | |||||||||||||||||||
Stock options outstanding as of September 30, 2014 as disclosed in the above table, have an intrinsic value of $0. | |||||||||||||||||||||||
e) | Warrants | ||||||||||||||||||||||
In terms of the recent private placement which took place between June 27, 2014 and August 8, 2014, as disclosed under (a) above, the new investors were entitled to a half warrant exercisable for one share of common stock per unit issued. The new, qualified, investors subscribed for a total of 7,353,329 units, each unit consisting of one share of common stock and one half warrant per share, resulting in the issue of 3,676,665 full warrants which are exercisable for shares of common stock at an exercise price of $0.25 per share. In addition to this, the placement agent is entitled to warrant units equal to 15% of the total shares issued under the Placement Agent Agreement. Each warrant unit consists of one warrant (“First Warrant”) and one half warrant upon exercise of the First Warrant, which are exercisable for shares of common stock at an exercise price of $0.25 per share. This resulted in the issue of 1,654,499 warrants to the Placement Agent. | |||||||||||||||||||||||
The warrants outstanding and exercisable at September 30, 2014 are as follows: | |||||||||||||||||||||||
Warrants Outstanding | Warrants Exercisable | ||||||||||||||||||||||
ExercisePrice | NumberOutstanding | WeightedAverageRemainingContractualLife | WeightedAverageExercisePrice | NumberExercisable | WeightedAverageExercisePrice | WeightedAverageRemainingContractualLife | |||||||||||||||||
$ | 0.3 | 375,000 | 4.08 years | $ | 0.3 | 375,000 | $ | 0.3 | 4.08 years | ||||||||||||||
$ | 0.25 | 2,277,167 | 4.74 years | $ | 0.25 | 2,277,167 | $ | 0.25 | 4.74 years | ||||||||||||||
$ | 0.25 | 1,508,333 | 4.84 years | $ | 0.25 | 1,508,333 | $ | 0.25 | 4.84 years | ||||||||||||||
$ | 0.25 | 1,545,665 | 4.85 years | $ | 0.25 | 1,545,665 | $ | 0.25 | 4.85 years | ||||||||||||||
$ | 0.25 | 633,333 | 4.90 years | $ | 0.25 | 633,333 | $ | 0.25 | 4.90 years | ||||||||||||||
6,339,498 | 6,339,498 | ||||||||||||||||||||||
NET_LOSS_PER_SHARE
NET LOSS PER SHARE | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
NET LOSS PER SHARE | ' | ||||||||
NET LOSS PER SHARE | ' | ||||||||
14 | NET LOSS PER SHARE | ||||||||
Basic loss per share is based on the weighted-average number of common shares outstanding during each period. Diluted loss per share is based on basic shares as determined above plus common stock equivalents, including convertible preferred shares and convertible notes as well as the incremental shares that would be issued upon the assumed exercise of in-the-money stock options and warrants using the treasury stock method. The computation of diluted net loss per share does not assume the issuance of common shares that have an anti-dilutive effect on net loss per share. For the nine months ended September 30, 2014 and 2013, respectively, all stock options and warrants, convertible preferred stock and convertible notes were excluded from the computation of diluted net loss per share. | |||||||||
Dilutive shares which could exist pursuant to the exercise of outstanding stock instruments and which were not included in the calculation because their affect would have been anti-dilutive are as follows: | |||||||||
Nine months endedSeptember 30, 2014(Shares) | Nine months endedSeptember 30, 2013(Shares) | ||||||||
Options to purchase shares of common stock | 11,452,960 | 11,452,960 | |||||||
Warrants to purchase shares of common stock | 6,339,498 | - | |||||||
Convertible preferred Series A-1 shares | 38,875,000 | 38,875,000 | |||||||
Convertible preferred Series B shares | 7,500,000 | - | |||||||
Convertible long-term notes | 1,968,750 | 74,012,500 | |||||||
Convertible short-term notes* | - | - | |||||||
66,136,208 | 124,340,460 | ||||||||
* Convertible short term notes have variable conversion pricing dependent upon share prices prior to conversion, see note 10 above. | |||||||||
As of September 30, 2013, short-term notes amounting to $402,948 are convertible into common shares at discounts ranging from 50% to 65% of average trading prices immediately prior to conversion. The closing share price as of September 30, 2013 was $0.36. There were no short-term convertible notes outstanding at September 30, 2014. | |||||||||
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended | ||
Sep. 30, 2014 | |||
RELATED PARTY TRANSACTIONS | ' | ||
RELATED PARTY TRANSACTIONS | ' | ||
15 | RELATED PARTY TRANSACTIONS | ||
There are no material or disclosable related party transactions. | |||
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
COMMITMENTS AND CONTINGENCIES | ' | ||||
COMMITMENTS AND CONTINGENCIES | ' | ||||
16 | COMMITMENTS AND CONTINGENCIES | ||||
The Company entered into an Agreement with an Investor Relations entity (“IR Entity”) on December 13, 2013 (“the effective date”), whereby the IR Entity will provide investor relations services for a period of one year from the effective date for a consideration consisting of the following; i) a cash consideration of $2,500 per month and, ii) the issue of 174,600 shares of common stock, issued as follows; 43,650 shares on conclusion of the agreement and a further 130,950 shares over the nine month period January to September 2014. The issuance of stock has not taken place as yet. | |||||
It is unlikely that the common stock will be issued to this IR Entity due to the non-performance of its obligations under the agreement. | |||||
The Company disposed of its Crystal Magic, Inc. subsidiary effective December 31, 2013. In terms of the sale agreement entered into by the Company, the purchaser has been indemnified against all liabilities whether contingent or otherwise, claimed by third parties, this includes claims by creditors of the Company amounting to $372,090 and claims against long-term liabilities of $848,916. Management does not consider it likely that these claims will materialize and accordingly no provision has been made for these contingent liabilities. | |||||
The Company leases approximately 2,300 square feet of office space in Houston, Texas on a month to month basis for $2,200 per month. | |||||
The Company sub-leases approximately 748 square feet of loft space in Houston, Texas from a related party on a month to month basis for $1,675 per month. | |||||
The minimum commitments due under the amended license agreement entered into on January 30, 2013, for the next five years, are summarized as follows: | |||||
Amount | |||||
2015 | 700,000 | ||||
2016 | 1,000,000 | ||||
2017 | 1,000,000 | ||||
2018 | 1,000,000 | ||||
$ | 3,700,000 | ||||
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 9 Months Ended | ||
Sep. 30, 2014 | |||
SUBSEQUENT EVENTS | ' | ||
SUBSEQUENT EVENTS | ' | ||
17 | SUBSEQUENT EVENTS | ||
On October 31, 2014, the Company received, a net $95,000 from LG Capital Funding, LLC (“LG”), after the payment of a $5,000 legal fee, pursuant to an unsecured convertible promissory note with a face value of $107,000, including an original issue discount of 7% amounting to $7,000. The note bears interest at the rate of 8% per annum commencing on October 31, 2014. The note is convertible into common stock at any time, at the holder’s option, in whole or in part, at a conversion price equal to 62% of the lowest closing bid price in the 10 trading days prior to conversion. The note matures on October 31, 2015. The holder is not entitled to exercise any conversion right that would result in the holder owning more than 9.9% of the Company’s common stock. The Convertible Note is redeemable by the Company within 180 days of the issuance date. The note has change of control provisions to protect the note holder and has certain covenants governing the event of default in terms of the note. | |||
LG further provided a “Back-end” fully secured collateralized note of $100,000 which will bear interest at the rate of 8% per annum. This note is to be funded by LG by no later than January 31, 2015, unless advised otherwise by the Company. The company may repay this note at any time. | |||
In accordance with ASC 855-10, the Company has analyzed its operations subsequent to September 30, 2014 to the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these financial statements other than as set forth above. | |||
Accounting_policies_Policies
Accounting policies (Policies) | 9 Months Ended | ||
Sep. 30, 2014 | |||
Accounting policies (Policies) | ' | ||
Basis of Presentation | ' | ||
a) | Basis of Presentation | ||
The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, these unaudited condensed financial statements do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments (consisting only of normal recurring adjustments), which we consider necessary, for a fair presentation of those financial statements. The results of operations and cash flows for the three months and nine months ended September 30, 2014 may not necessarily be indicative of results that may be expected for any succeeding quarter or for the entire fiscal year. The information contained in this quarterly report on Form 10-Q should be read in conjunction with our audited financial statements included in our annual report on Form 10-K as of and for the year ended December 31, 2013 as filed with the Securities and Exchange Commission (the “SEC”). | |||
Significant accounting policies are described in Note 2 to the consolidated financial statements included in Item 8 of our annual report on Form 10-K as of December 31, 2013. | |||
The preparation of unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions, which are evaluated on an ongoing basis, that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the amounts of revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and judgments. In particular, significant estimates and judgments include those related to: the estimated useful lives for plant and equipment, the fair value of warrants and stock options granted for services or compensation, estimates of the probability and potential magnitude of contingent liabilities, derivative liabilities, the valuation allowance for deferred tax assets due to continuing operating losses, those related to revenue recognition and the allowance for doubtful accounts. | |||
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited consolidated financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from our estimates. | |||
All amounts referred to in the notes to the unaudited consolidated financial statements are in United States Dollars ($) unless stated otherwise. | |||
Principles of Consolidation | ' | ||
b) | Principles of Consolidation | ||
The unaudited consolidated financial statements include the financial statements of the Company and its subsidiary in which it has a majority voting interest. All significant inter-company accounts and transactions have been eliminated in the unaudited consolidated financial statements. The entities included in these unaudited consolidated financial statements are as follows: | |||
Propell Technologies Group, Inc. – Parent Company | |||
Novas Energy USA Inc. | |||
Contingencies, Policy | ' | ||
c) | Contingencies | ||
Certain conditions may exist as of the date the unaudited consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. | |||
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed. | |||
Fair Value of Financial Instruments | ' | ||
d) | Fair Value of Financial Instruments | ||
The Company adopted the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: | |||
Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. | |||
Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other then quoted prices that are observable, and inputs derived from or corroborated by observable market data. | |||
Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. | |||
The carrying amounts reported in the balance sheets for cash, accounts receivable, prepaid expenses, deposits, accounts payable, accrued liabilities, notes payable, and convertible notes payable approximate fair value due to the relatively short period to maturity for these instruments. The Company did not identify any assets or liabilities that are required to be presented on the balance sheets at fair value in accordance with the accounting guidance. | |||
ASC 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments. | |||
Risks and Uncertainties | ' | ||
e) | Risks and Uncertainties | ||
The Company's operations will be subject to significant risk and uncertainties including financial, operational, regulatory and other risks associated, including the potential risk of business failure. The recent global economic crisis has caused a general tightening in the credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, and extreme volatility in credit, equity and fixed income markets. These conditions not only limit the Company’s access to capital, but also make it difficult for its customers, vendors and the Company to accurately forecast and plan future business activities. | |||
The Company’s operations are carried out in the USA and Mexico. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the USA and Mexico and by the general state of those economies. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, and rates and methods of taxation, among other things. | |||
Recent Accounting Pronouncements, Policy | ' | ||
f) | Recent Accounting Pronouncements | ||
In June 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers”. The update gives entities a single comprehensive model to use in reporting information about the amount and timing of revenue resulting from contracts to provide goods or services to customers. The proposed ASU, which would apply to any entity that enters into contracts to provide goods or services, would supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. Additionally, the update would supersede some cost guidance included in Subtopic 605-35, Revenue Recognition – Construction-Type and Production-Type Contracts. The update removes inconsistencies and weaknesses in revenue requirements and provides a more robust framework for addressing revenue issues and more useful information to users of financial statements through improved disclosure requirements. In addition, the update improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. The update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition. | |||
In June 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation”. The update removes all incremental financial reporting requirements from GAAP for development stage entities, including the removal of Topic 915 from the FASB Accounting Standards Codification. In addition, the update adds an example disclosure in Risks and Uncertainties (Topic 275) to illustrate one way that an entity that has not begun planned principal operations could provide information about the risks and uncertainties related to the company’s current activities. Furthermore, the update removes an exception provided to development stage entities in Consolidations (Topic 810) for determining whether an entity is a variable interest entity—which may change the consolidation analysis, consolidation decision, and disclosure requirements for a company that has an interest in a company in the development stage. The update is effective for the annual reporting periods beginning after December 15, 2014, including interim periods within that reporting period. | |||
We have elected to adopt the provisions of this ASU early, accordingly all of the past disclosures and presentations on development stage accounting have been eliminated. | |||
In June 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-12, “Compensation – Stock Compensation ( Topic 718 ); Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period”. The amendments in this ASU apply to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. For all entities, the amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The effective date is the same for both public business entities and all other entities. | |||
Entities may apply the amendments in this ASU either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this update as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition. | |||
In August 2014, the FASB issued Accounting Standards Update “ASU” 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued. | |||
The amendments in this Update are effective for public and nonpublic entities for annual periods ending after December 15, 2016. Early adoption is permitted. We are evaluating the impact that this ASU will have on our disclosures. | |||
Any new accounting standards, not disclosed above, that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. | |||
Reporting Segment, Policy | ' | ||
g) | Reporting by Segment | ||
No segmental information is presented as the Company has disposed of its historical virtual trading store business which had minimal revenues. The Company is focusing on developing its Novas Energy, Plasma Pulse Technology for the petroleum industry. | |||
Revenues to date are insignificant. | |||
Cash and Cash Equivalents policy | ' | ||
h) | Cash and Cash Equivalents | ||
The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. At September 30, 2014 and December 31, 2013, respectively, the Company had no cash equivalents. | |||
The Company minimizes credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. At September 30, 2014 and December 31, 2013, the balance did not exceed the federally insured limit. | |||
Accounts Receivable and Allowance for Doubtful Accounts | ' | ||
i) | Accounts Receivable and Allowance for Doubtful Accounts | ||
Accounts receivable are reported at realizable value, net of allowances for doubtful accounts, which is estimated and recorded in the period the related revenue is recorded. The Company has a standardized approach to estimate and review the collectability of its receivables based on a number of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience is an integral part of the estimation process related to allowances for doubtful accounts. In addition, the Company regularly assesses the state of its billing operations in order to identify issues, which may impact the collectability of these receivables or reserve estimates. Revisions to the allowance for doubtful accounts estimates are recorded as an adjustment to bad debt expense. Receivables deemed uncollectible are charged against the allowance for doubtful accounts at the time such receivables are written-off. Recoveries of receivables previously written-off are recorded as credits to the allowance for doubtful accounts. There were no recoveries during the period ended September 30, 2014. | |||
Inventory Policy | ' | ||
j) | Inventory | ||
The Company had no inventory as of September 30, 2014 and December 31, 2013. | |||
Plant and Equipment Policy | ' | ||
k) | Plant and Equipment | ||
Plant and equipment is stated at cost, less accumulated depreciation. Plant and equipment with costs greater than $1,000 are capitalized and depreciated. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful lives of the assets are as follows: | |||
Description | Estimated Useful Life | ||
Office equipment and furniture | 2 years | ||
Leasehold improvements and fixtures | Lesser of estimated useful life or life of lease | ||
Plant and equipment | 2 to 3 years | ||
The cost of repairs and maintenance is expensed as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. | |||
Intangibles | ' | ||
l) | Intangibles | ||
All of our intangible assets are subject to amortization. We evaluate the recoverability of intangible assets periodically by taking into account events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired. Where intangibles are deemed to be impaired we recognize an impairment loss measured as the difference between the estimated fair value of the intangible and its book value. | |||
i) License Agreements | |||
License agreements acquired by the Company are reported at acquisition value less accumulated amortization and impairments. | |||
ii) Amortization | |||
Amortization is reported in the income statement on a straight-line basis over the estimated useful life of the intangible assets, unless the useful life is indefinite. Amortizable intangible assets are amortized from the date that they are available for use. The estimated useful life of the license agreement is five years which is the expected period for which we expect to derive a benefit from the underlying license agreements | |||
Long Term Assets | ' | ||
m) | Long-Term Assets | ||
Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. | |||
Revenue Recognition | ' | ||
n) | Revenue Recognition | ||
The Company records revenue when all of the following have occurred: (1) persuasive evidence of an arrangement exists, (2) the service is completed without further obligation, (3) the sales price to the customer is fixed or determinable, and (4) collectability is reasonably assured. | |||
Share-Based Payment Arrangements | ' | ||
o) | Share-Based Payment Arrangements | ||
Generally, all forms of share-based payments, including stock option grants, restricted stock grants and stock appreciation rights are measured at their fair value on the awards’ grant date, based on the estimated number of awards that are ultimately expected to vest. Share-based compensation awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. The expense resulting from share-based payments is recorded in operating expenses in the unaudited consolidated statement of operations. | |||
Income Taxes policy | ' | ||
p) | Income Taxes | ||
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A full valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. It is the Company’s policy to classify interest and penalties on income taxes as interest expense or penalties expense. As of September 30, 2014, there have been no interest or penalties incurred on income taxes. | |||
Net Loss per Share | ' | ||
q) | Net Loss per Share | ||
Basic net loss per share is computed on the basis of the weighted average number of common shares outstanding during the period. | |||
Diluted net loss per share is computed on the basis of the weighted average number of common shares and common share equivalents outstanding. Dilutive securities having an anti-dilutive effect on diluted net loss per share are excluded from the calculation (See Note 14, below). | |||
Dilution is computed by applying the treasury stock method for options and warrants. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common shares at the average market price during the period. | |||
Dilution is computed by applying the if-converted method for convertible preferred shares. Under this method, convertible preferred stock is assumed to be converted at the beginning of the period (or at the time of issuance, if later), and preferred dividends (if any) will be added back to determine income applicable to common stock. The shares issuable upon conversion will be added to weighted average number of common shares outstanding. Conversion will be assumed only if it reduces earnings per share (or increases loss per share). | |||
Any common shares issued as a result of the issue of stock options and warrants would come from newly issued common shares from our remaining authorized shares. | |||
Comprehensive Income, Policy | ' | ||
r) | Comprehensive income | ||
Comprehensive income is defined as the change in equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investments from owners and distributions to owners. Comprehensive income for the periods presented includes net loss. | |||
Related parties, Policy | ' | ||
s) | Related parties | ||
Parties are considered to be related to the Company if the parties that, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company, or own in aggregate, on a fully diluted basis 5% or more of the Company’s stock. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions are recorded at fair value of the goods or services exchanged. Property purchased from a related party is recorded at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected as a distribution to related party. |
Schedule_of_prepaid_expenses_T
Schedule of prepaid expenses (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Schedule of prepaid expenses: | ' | ||||||||
Schedule of prepaid expenses | ' | ||||||||
Prepaid expenses consisted of the following as of September 30, 2014 and December 31, 2013: | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Prepaid equipment rental | $ | 7,156 | $ | 1,533 | |||||
Prepaid insurance | 7,970 | 10,848 | |||||||
Prepaid professional fees | 13,286 | 4,144 | |||||||
Other | 44 | 579 | |||||||
$ | 28,456 | $ | 17,104 |
PLANT_AND_EQUIPMENT_Tables
PLANT AND EQUIPMENT (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
PLANT AND EQUIPMENT | ' | ||||||||
Equipment and property | ' | ||||||||
Plant and Equipment consisted of the following as of September 30, 2014 and December 31, 2013: | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Capital work in progress | $ | - | $ | 105,000 | |||||
Plasma Pulse Tool | 240,720 | - | |||||||
Furniture and equipment | 26,643 | 26,643 | |||||||
Field equipment | 19,627 | 16,120 | |||||||
Computer equipment | 1,500 | 3,041 | |||||||
Total cost | 288,490 | 150,804 | |||||||
Less: accumulated depreciation | (41,190 | ) | (28,423 | ) | |||||
Plant and equipment, net | $ | 247,300 | $ | 122,381 | |||||
Depreciation expense was $14,308 and $21,010 for the nine months ended September 30, 2014 and 2013, respectively. | |||||||||
Intangibles_license_agreement_
Intangibles license agreement (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Intangibles license agreement | ' | ||||||||
Intangibles license agreement | ' | ||||||||
Intangibles consisted of the following as of September 30, 2014 and December 31, 2013: | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
License agreements | $ | 350,000 | $ | - | |||||
Website development | 8,000 | 8,000 | |||||||
Total cost | 358,000 | 8,000 | |||||||
Less: accumulated amortization | (43,000 | ) | (8,000 | ) | |||||
Intangibles, net | $ | 315,000 | $ | - | |||||
Amortization expense was $35,000 and $800 for the nine months ended September 30, 2014 and 2013, respectively. | |||||||||
The minimum commitments due under the license agreement for the next five years are summarized as follows: | |||||||||
Amount | |||||||||
2015 | 700,000 | ||||||||
2016 | 1,000,000 | ||||||||
2017 | 1,000,000 | ||||||||
2018 | 1,000,000 | ||||||||
$ | 3,700,000 |
Accrued_payables_Tables
Accrued payables (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Accrued payables | ' | ||||||||
Accrued payables | ' | ||||||||
Accrued liabilities consisted of the following as of September 30, 2014 and December 31, 2013: | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Short-term | |||||||||
Payroll liabilities | $ | 42,074 | $ | 55,918 | |||||
Accrued Royalties | 3,472 | 1,758 | |||||||
License fees payable | 200,000 | - | |||||||
Other | - | 2,417 | |||||||
Total Accrued Liabilities and other payables | $ | 245,546 | $ | 60,093 |
Notes_Payables_Tables
Notes Payables (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Notes Payables | ' | ||||||||||||||||
Notes Payables | ' | ||||||||||||||||
Notes payable consisted of the following as of September 30, 2014 and December 31, 2013: | |||||||||||||||||
Description | InterestRate | Maturity | September 30,2014 | 31-Dec-13 | |||||||||||||
Short-Term | |||||||||||||||||
Owl Holdings | - | - | $ | 3,000 | $ | 3,000 | |||||||||||
Long-Term | |||||||||||||||||
JAZ-CEH Holdings, LLC | 7.5 | % | 31-Oct-15 | 105,000 | 105,000 | ||||||||||||
Accrued interest | 7,477 | 1,532 | |||||||||||||||
Total Long-Term Notes Payable | 112,477 | 106,532 | |||||||||||||||
Total Notes Payable | $ | 115,477 | $ | 109,532 |
Convertible_Notes_Payable_Tabl
Convertible Notes Payable (Tables) | 9 Months Ended | ||||||||||||||
Sep. 30, 2014 | |||||||||||||||
Convertible Notes Payable {1} | ' | ||||||||||||||
Convertible Notes Payable | ' | ||||||||||||||
Short Term Convertible Notes payable consisted of the following as of September 30, 2014 and December 31, 2013: | |||||||||||||||
InterestRate | Maturity | September 30,2014 | December 31,2013 | ||||||||||||
Dart Union | 6 | % | On demand | $ | - | $ | 20,000 | ||||||||
Dart Union | 6 | % | On demand | - | 25,000 | ||||||||||
Dart Union | 6 | % | On demand | - | 20,000 | ||||||||||
Accrued Interest | - | 4,221 | |||||||||||||
Total Dart Union | - | 69,221 | |||||||||||||
JMJ Financial | 12 | % | 1-Jul-14 | - | 97,440 | ||||||||||
JMJ Financial | 12 | % | 25-Sep-14 | - | 64,960 | ||||||||||
JMJ Financial | 12 | % | 8-Dec-14 | - | 64,960 | ||||||||||
Unamortized debt discount, fees and interest expense | - | (36,306 | ) | ||||||||||||
Total JMJ Financial | - | 191,054 | |||||||||||||
Asher Enterprises | 8 | % | 1-May-14 | - | 53,000 | ||||||||||
Asher Enterprises | 8 | % | 6-Jun-14 | - | 42,500 | ||||||||||
Asher Enterprises | 8 | % | 7-Jul-14 | - | 32,500 | ||||||||||
Accrued Interest | - | 3,545 | |||||||||||||
Total Asher Enterprises | - | 131,545 | |||||||||||||
Gel Properties | 6 | % | 1-Aug-14 | - | 52,500 | ||||||||||
Gel Properties | 6 | % | 1-Jun-14 | - | - | ||||||||||
Gel Properties | 6 | % | 1-Aug-14 | - | - | ||||||||||
Accrued Interest | - | 1,320 | |||||||||||||
Total Gel Properties | - | 53,820 | |||||||||||||
Vista Capital Investments | 12 | % | 4-Sep-14 | - | 30,800 | ||||||||||
Vista Capital Investments | 12 | % | 18-Dec-14 | - | 30,800 | ||||||||||
Unamortized debt discount and interest expense | - | (9,544 | ) | ||||||||||||
Total Vista Capital Investments | - | 52,056 | |||||||||||||
LG Capital Funding, LLC | 12 | % | 20-Jun-14 | - | 63,448 | ||||||||||
Unamortized debt discount and interest expense | - | (14,269 | ) | ||||||||||||
Total LG Capital Funding, LLC | - | 49,179 | |||||||||||||
Tonaquint, Inc. | 10 | % | 11-Oct-14 | - | 155,650 | ||||||||||
Unamortized debt discount and interest expense | - | (33,638 | ) | ||||||||||||
Total Tonaquint, Inc. | - | 122,012 | |||||||||||||
Total Short-Term Notes Payable | $ | - | $ | 668,887 |
Recovered_Sheet1
Derivative financial liability assessment (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Derivative financial liability assessment: | ' | ||||||||
Schedule of Derivative Liabilities at Fair Value | ' | ||||||||
The derivative financial liability was no longer required upon the conversion of the remaining short term convertible notes with variable priced conversion rights on July 28, 2014, resulting in a net credit to the unaudited consolidated statement of operations of $237,799 and a net charge of $(668,755) for convertible debt converted to equity, totaling a net charge of $(430,956) for the nine months ended September 30, 2014. | |||||||||
September 30,2014 | December31, 2013 | ||||||||
Opening balance | $ | 237,799 | $ | - | |||||
Conversion of derivative liability for stock issued at a discount | (668,755 | ) | - | ||||||
Fair value adjustments to derivative financial liability | 430,956 | 237,799 | |||||||
$ | - | $ | 237,799 | ||||||
Derivatives, Valuation Assumptions | ' | ||||||||
The following assumptions were used in the Black-Scholes valuation model: | |||||||||
Nine months endedSeptember 30, 2014 | Year endedDecember 31, 2013 | ||||||||
Stock price over the period | $0.14 – $0.50 | $0.20 –$ 0.94 | |||||||
Risk free interest rate | 0.11% to 0.13 | % | 0.09% to 0.16 | % | |||||
Expected life of short-term notes payable | 1 to 10 months | 8 to 12 months | |||||||
Expected volatility | 119.45 | % | 114.14 | % | |||||
Expected dividend rate | 0 | % | 0 | % |
Schedule_of_Convertible_Notes_
Schedule of Convertible Notes payable (Tables) | 9 Months Ended | ||||||||||||||
Sep. 30, 2014 | |||||||||||||||
Schedule of Convertible Notes payable: | ' | ||||||||||||||
Schedule of Convertible Notes payable | ' | ||||||||||||||
Long Term Convertible Notes payable consisted of the following as of September 30, 2014 and December 31, 2013: | |||||||||||||||
Description | InterestRate | Maturity | September 30,2014 | December31,2013 | |||||||||||
Notes payable | 6 | % | 19-Nov-17 | $ | 39,375 | $ | 388,875 | ||||||||
Accrued interest | 4,550 | 95,124 | |||||||||||||
Unamortized debt discount | (24,721 | ) | (302,480 | ) | |||||||||||
Total long-Term Convertible Notes Payable | $ | 19,204 | $ | 181,519 |
Stock_option_Activity_Tables
Stock option Activity (Tables) | 9 Months Ended | ||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||
Compensation Related Costs, Share Based Payments: | ' | ||||||||||||||||||||||
Following assumptions were used to value the plan and non-plan options issued | ' | ||||||||||||||||||||||
The following assumptions were used to value the plan and non-plan options issued using the Black-Scholes valuation model: | |||||||||||||||||||||||
Year endedDecember 31, 2013 | |||||||||||||||||||||||
Stock price over the period | $0.50 –$ 0.65 | ||||||||||||||||||||||
Risk free interest rate | 1.41% to 2.71 | % | |||||||||||||||||||||
Expected life of options | 5 to 10 years | ||||||||||||||||||||||
Expected volatility | 127.99% to 150.0 | % | |||||||||||||||||||||
Expected dividend rate | 0 | % | |||||||||||||||||||||
Schedule of options outstanding and exercisable | ' | ||||||||||||||||||||||
The options outstanding and exercisable at September 30, 2014 are as follows: | |||||||||||||||||||||||
Options Outstanding | Options Exercisable | ||||||||||||||||||||||
ExercisePrice | NumberOutstanding | WeightedAverageRemainingContractualLife | WeightedAverageExercisePrice | NumberExercisable | WeightedAverageExercisePrice | WeightedAverageRemainingContractualLife | |||||||||||||||||
$ | 25 | 2,500 | 3.60 years | $ | 25 | 2,500 | $ | 25 | 3.60 years | ||||||||||||||
$ | 13.5 | 5,480 | 4.71 years | $ | 13.5 | 5,480 | $ | 13,50 | 4.71 years | ||||||||||||||
$ | 12.5 | 2,000 | 6.04 years | $ | 12.5 | 2,000 | $ | 12.5 | 6.04 years | ||||||||||||||
$ | 8.5 | 30,500 | 6.75 years | $ | 8.5 | 30,500 | $ | 8.5 | 6.75 years | ||||||||||||||
$ | 5 | 14,800 | 7.04 years | $ | 5 | 14,500 | $ | 5 | 7.04 years | ||||||||||||||
$ | 0.25 | 11,000,000 | 3.43 years | $ | 0.25 | 7,104,172 | $ | 0.25 | 3.43 years | ||||||||||||||
$ | 0.65 | 55,386 | 6.84 years | $ | 0.65 | 55,386 | $ | 0.65 | 6.84 years | ||||||||||||||
$ | 0.63 | 57,144 | 3.75 years | $ | 0.63 | 57,144 | $ | 0.63 | 3.75 years | ||||||||||||||
$ | 0.51 | 285,150 | 5.54 years | $ | 0.51 | 285,150 | $ | 0.51 | 5.54 years | ||||||||||||||
11,452,960 | 3.52 years | $ | 0.3 | 7,556,832 | $ | 0.33 | 3.56 years | ||||||||||||||||
Stock options outstanding | ' | ||||||||||||||||||||||
A summary of all of our option activity during the period January 1, 2013 to September 30, 2014 is as follows: | |||||||||||||||||||||||
Shares | Exerciseprice pershare | Weightedaverageexerciseprice | |||||||||||||||||||||
Outstanding January 1, 2013 | 55,280 | $ | 5.00 to 25.00 | $ | 8.49 | ||||||||||||||||||
Granted – plan options | 397,680 | 0.51 to 0.65 | 0.54 | ||||||||||||||||||||
Granted – non plan options | 11,000,000 | 0.25 | 0.25 | ||||||||||||||||||||
Forfeited/Cancelled | - | - | - | ||||||||||||||||||||
Exercised | - | - | - | ||||||||||||||||||||
Outstanding December 31, 2013 | 11,452,960 | $ | 0.25 to 25.00 | $ | 0.3 | ||||||||||||||||||
Granted – plan options | - | - | - | ||||||||||||||||||||
Granted – non plan options | - | - | - | ||||||||||||||||||||
Forfeited/Cancelled | - | - | - | ||||||||||||||||||||
Exercised | - | - | - | ||||||||||||||||||||
Outstanding September 30, 2014 | 11,452,960 | $ | 0.25 to 25,00 | 0.3 | |||||||||||||||||||
Schedule of warrants outstanding and exercisable | ' | ||||||||||||||||||||||
The warrants outstanding and exercisable at September 30, 2014 are as follows: | |||||||||||||||||||||||
Warrants Outstanding | Warrants Exercisable | ||||||||||||||||||||||
ExercisePrice | NumberOutstanding | WeightedAverageRemainingContractualLife | WeightedAverageExercisePrice | NumberExercisable | WeightedAverageExercisePrice | WeightedAverageRemainingContractualLife | |||||||||||||||||
$ | 0.3 | 375,000 | 4.08 years | $ | 0.3 | 375,000 | $ | 0.3 | 4.08 years | ||||||||||||||
$ | 0.25 | 2,277,167 | 4.74 years | $ | 0.25 | 2,277,167 | $ | 0.25 | 4.74 years | ||||||||||||||
$ | 0.25 | 1,508,333 | 4.84 years | $ | 0.25 | 1,508,333 | $ | 0.25 | 4.84 years | ||||||||||||||
$ | 0.25 | 1,545,665 | 4.85 years | $ | 0.25 | 1,545,665 | $ | 0.25 | 4.85 years | ||||||||||||||
$ | 0.25 | 633,333 | 4.90 years | $ | 0.25 | 633,333 | $ | 0.25 | 4.90 years | ||||||||||||||
6,339,498 | 6,339,498 | ||||||||||||||||||||||
Schedule_of_Earnings_Per_Share
Schedule of Earnings Per Share, Basic and Diluted (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Schedule of Earnings Per Share, Basic and Diluted: | ' | ||||||||
Schedule of Earnings Per Share, Basic and Diluted | ' | ||||||||
Dilutive shares which could exist pursuant to the exercise of outstanding stock instruments and which were not included in the calculation because their affect would have been anti-dilutive are as follows: | |||||||||
Nine months endedSeptember 30, 2014(Shares) | Nine months endedSeptember 30, 2013(Shares) | ||||||||
Options to purchase shares of common stock | 11,452,960 | 11,452,960 | |||||||
Warrants to purchase shares of common stock | 6,339,498 | - | |||||||
Convertible preferred Series A-1 shares | 38,875,000 | 38,875,000 | |||||||
Convertible preferred Series B shares | 7,500,000 | - | |||||||
Convertible long-term notes | 1,968,750 | 74,012,500 | |||||||
Convertible short-term notes* | - | - | |||||||
66,136,208 | 124,340,460 | ||||||||
Minimum_commitments_due_under_
Minimum commitments due under the amended license agreement (Tables) | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Minimum commitments due under the amended license agreement | ' | ||||
Minimum commitments due under the amended license agreement | ' | ||||
The minimum commitments due under the amended license agreement entered into on January 30, 2013, for the next five years, are summarized as follows: | |||||
Amount | |||||
2015 | 700,000 | ||||
2016 | 1,000,000 | ||||
2017 | 1,000,000 | ||||
2018 | 1,000,000 | ||||
$ | 3,700,000 |
ORGANIZATION_AND_DESCRIPTION_D
ORGANIZATION AND DESCRIPTION (Details) | Feb. 04, 2013 | 6-May-08 | Apr. 10, 2008 |
ORGANIZATION AND DESCRIPTION | ' | ' | ' |
Shares to the former shareholders of CMI. | ' | ' | 180,000 |
Common stock to the members of Mountain Capital, LLC | ' | 41,897 | ' |
Common stock to the members of AUL | ' | 2,722 | ' |
Company entered into a Share Exchange Agreement with Novas Energy (USA), Inc. shares of its common stock | 100,000,000 | ' | ' |
Company entered into a Share Exchange Agreement with for shares of common stock in Novas | 100,000,000 | ' | ' |
Going_Concern_Details
Going Concern (Details) (USD $) | Sep. 30, 2014 |
Going Concern | ' |
Incurred a net loss | $3,549,947 |
Accumulated deficit | 8,943,619 |
Working capital deficiency | $253,803 |
PREPAID_EXPENSES_Details
PREPAID EXPENSES. (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Prepaid expenses consisted of the following | ' | ' |
Prepaid equipment rental | $7,156 | $1,533 |
Prepaid insurance | 7,970 | 10,848 |
Prepaid professional fees | 13,286 | 4,144 |
Other. | 44 | 579 |
Total prepaid expenses | $28,456 | $17,104 |
Propertyequipment_Details
Property,equipment (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Property,equipment | ' | ' |
Capital work in progress | ' | $105,000 |
Plasma Pulse Tool | 240,720 | ' |
Furniture and equipment | 26,643 | 26,643 |
Field equipment | 19,627 | 16,120 |
Computer equipment | 1,500 | 3,041 |
Total cost. | 288,490 | 150,804 |
Less: accumulated depreciation | 41,190 | 28,423 |
Plant and equipment, net | $247,300 | $122,381 |
Depreciation_Expense_and_Amort
Depreciation Expense and Amortization expense (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Property and Equipment Depreciation Expense | ' | ' |
Depreciation expenses. | $14,308 | $21,010 |
Amortization expense | $35,000 | $800 |
Licenses_DETAILS
Licenses (DETAILS) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Licenses | ' |
Minimum royalty payment of per year | $500,000 |
Minimum royalty operations | 500,000 |
Initial license fee | 150,000 |
Additional license fee | $200,000 |
INTANGIBLES_Details
INTANGIBLES (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Intangibles consists of the following: | ' | ' |
License agreements | $350,000 | ' |
Website development | 8,000 | 8,000 |
Total cost | 358,000 | 8,000 |
Less: accumulated amortization | 43,000 | 8,000 |
Intangibles, net | $315,000 | ' |
Accrued_liabilities_Details
Accrued liabilities. (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
ACCRUED LIABILITIES AS FOLLOWS: | ' | ' |
Payroll liabilities | $42,074 | $55,918 |
Accrued Royalties | 3,472 | 1,758 |
License fees payable | 200,000 | ' |
Other liabilities | ' | 2,417 |
Total Accrued Liabilities and other payables | $245,546 | $60,093 |
Notes_payable_consisted_of_the
Notes payable consisted of the following (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Short-Term | ' | ' |
Owl Holdings | $3,000 | $3,000 |
JAZ-CEH Holdings, LLC | 105,000 | 105,000 |
Accrued interest on Long-Term Notes Payable | 7,477 | 1,532 |
Total Long-Term Notes Payable | 112,477 | 106,532 |
Total Notes Payable | 115,477 | 109,532 |
Unsecured promissory note with JAZ-CEH Holdings LLC with a face value | $105,000 | $105,000 |
Note bears interest per annum | 7.50% | 7.50% |
Short_Term_Convertible_Notes_p
Short Term Convertible Notes payable consisted of the following (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Short Term Convertible Notes payable consisted of the following | ' | ' |
Dart Union Notes at Interest Rate 6% | ' | $20,000 |
Dart Union Notes at Interest Rate 6% | ' | 25,000 |
Dart Union Notes at Interest Rate 6% | ' | 20,000 |
Accrued Interest | ' | 4,221 |
Total Dart Union | ' | 69,221 |
JMJ Financial Notes at Interest Rate 12% | ' | 97,440 |
JMJ Financial Notes at Interest Rate 12% | ' | 64,960 |
JMJ Financial Notes at Interest Rate 12% | ' | 64,960 |
Unamortized debt discount, fees and interest expense | ' | -36,306 |
Total JMJ Financial | ' | 191,054 |
Asher Enterprises Notes at Interest Rate 8% | ' | 53,000 |
Asher Enterprises Notes at Interest Rate 8% | ' | 42,500 |
Asher Enterprises Notes at Interest Rate 8% | ' | 32,500 |
Accrued Interest | ' | 3,545 |
Total Asher Enterprises | ' | 131,545 |
Gel Properties Notes at Interest Rate 6% | ' | 52,500 |
Gel Properties Notes at Interest Rate 6% | ' | 52,500 |
Accrued Interest | ' | 1,320 |
Total Gel Properties | ' | 53,820 |
Vista Capital Investments Notes at Interest Rate 12% | ' | 30,800 |
Vista Capital Investments Notes at Interest Rate 12% | ' | 30,800 |
Unamortized debt discount and interest expense | ' | -9,544 |
Total Vista Capital Investments | ' | 52,056 |
LG Capital Funding, LLC Notes at Interest Rate 12% | ' | 63,448 |
Unamortized debt discount and interest expense | ' | -14,269 |
Total LG Capital Funding, LLC | ' | 49,179 |
Tonaquint, Inc. Notes at Interest Rate 10% | ' | 155,650 |
Unamortized debt discount and interest expense | ' | -33,638 |
Total Tonaquint, Inc. | ' | 122,012 |
Total Short-Term Notes Payable | $0 | $668,887 |
Dart_Union_convertible_notes_p
Dart Union convertible notes payable (Details) (USD $) | Apr. 01, 2014 |
Dart Union convertible notes payable | ' |
Dart Union consist of three convertible notes in the aggregate principal amount | $65,000 |
These notes are unsecured, bear interest at the rate of percent per annum | 6.00% |
The notes are convertible at a conversion price equal to the higher of price per share | $0.05 |
Percentage of discount to the 3-day average closing price of the Company's Common Stock for the three (3) business days immediately preceding the date of a conversion request from the holder. | 50.00% |
Effective April 1, 2014, the three convertible notes in the aggregate principal amount converted into common shares | 1,403,660 |
Common shares at a conversion price per share | $0.05 |
JMJ_Financial_convertible_note
JMJ Financial convertible notes payable (Details) (USD $) | Sep. 30, 2014 | Mar. 06, 2014 | Dec. 09, 2013 | Sep. 26, 2013 | Jul. 31, 2013 |
JMJ Financial convertible notes payable | ' | ' | ' | ' | ' |
Company borrowed from JMJ Financial pursuant to an unsecured convertible promissory note | ' | ' | $50,000 | $50,000 | $75,000 |
The terms of the JMJ Financial note provided for no interest charge for no of days | ' | ' | 90 | 90 | 90 |
Interest charge on JMJ Financial note | ' | ' | 12.00% | 12.00% | 12.00% |
Interest was added to the face value of the note | ' | ' | 6,960 | 6,960 | 10,440 |
Note has an original issue discount | ' | ' | 10.00% | 10.00% | 10.00% |
Closing and due diligence fee of the amount advanced | ' | ' | 6.00% | 6.00% | 6.00% |
Interest added to the face value of the note on the amount advanced | ' | ' | 6,960 | 6,960 | 10,440 |
The note is convertible into common stock at any time, at the holder's option, equal to the lesser of $0.65 or 60% of the lowest trade pricein no of days prior to conversion | ' | ' | 25 | 25 | 25 |
On January 7, 2014, January 21, 2014, February 10, 2014 and February 27, 2014 amount borrowed amounting to $97,440, was converted into common shares (in shares) | 1,045,179 | ' | ' | ' | ' |
Funds borrowed on September 26, 2013 converted into common shares (in shares) | ' | ' | ' | 721,778 | ' |
Funds of $50,000 borrowed on December 9, 2013 amounting to a total of $64,960, was repaid before the once-off interest charge came into effect | ' | 58,000 | ' | ' | ' |
JMJ may make further advances under the promissory note up to a gross amount | ' | 275,000 | ' | ' | ' |
Original issue discount of 10% on further advances | ' | 25,000 | ' | ' | ' |
Net proceeds of further advances | ' | $250,000 | ' | ' | ' |
The promissory note also requires payment of a closing and due diligence fee equal to the percentage of the amount of each advance. | ' | 6.00% | ' | ' | ' |
Asher_Enterprises_convertible_
Asher Enterprises convertible notes payable (Details) (USD $) | Mar. 28, 2014 | Feb. 21, 2014 | Oct. 03, 2013 | Sep. 04, 2013 | Jul. 29, 2013 |
Asher Enterprises convertible notes payable | ' | ' | ' | ' | ' |
Company issued an unsecured convertible note to Asher Enterprises with a face value of amount | ' | ' | $32,500 | $42,500 | $53,000 |
Cash proceeds of unsecured convertible note to Asher Enterprises | ' | ' | 30,000 | 40,000 | 50,000 |
Legal fees of unsecured convertible note to Asher Enterprises | ' | ' | 2,500 | 2,500 | 3,000 |
Interest at the rate of per annum on Asher Enterprises convertible notes payable | ' | ' | 8.00% | 8.00% | 8.00% |
The holder may only convert the note following the expiration of days from the date of issuance | ' | ' | 180 | 180 | 180 |
The prepayment penalty will amount to the percent of the balance outstanding on Asher Enterprises convertible notes payable minimum | ' | ' | 112.00% | 112.00% | 112.00% |
The prepayment penalty will amount to the percent of the balance outstanding on Asher Enterprises convertible notes payable maximum | ' | ' | 135.00% | 135.00% | 135.00% |
Unsecured promissory note issued to Asher Enterprises was repaid for | $45,086 | $58,884 | ' | ' | $73,687 |
Gel_Properties_convertible_not
Gel Properties convertible notes payable (Details) (USD $) | Apr. 11, 2014 | Mar. 11, 2014 | Jan. 16, 2014 | Jul. 30, 2013 |
Gel Properties convertible notes payable | ' | ' | ' | ' |
Company issued a convertible noteto Gel Properties with a face value | ' | ' | ' | $52,500 |
Cash proceeds of unsecured convertible note to Gel Properties | ' | ' | ' | 50,000 |
Legal fees of unsecured convertible note to Gel Properties | ' | ' | ' | 2,500 |
Interest at the rate of per annum on Gel Properties convertible notes payable | ' | ' | ' | 6.00% |
The note is redeemable by the Company at any time within 6 months from the date of issuance at a premium over the principal amount due | ' | ' | ' | 20.00% |
Escalated price of the principal amount dueafter thirty days | ' | ' | ' | 35.00% |
Company issued two convertible notes, each having a face value of as back end notes | ' | ' | ' | 50,000 |
The Convertible Notes are convertible into common stock of the Company and each bear interest at the rate of 6% per annum | ' | ' | ' | 6.00% |
In consideration of this call right the Company issued shares of its common stock to the issuer of the Back End Notes | ' | ' | ' | 12,500 |
Secured "back end" promissory note was repaid for | 65,708 | 62,950 | ' | ' |
Notes were exercised for proceeds | ' | ' | $95,000 | ' |
Vista_Capital_Investments_conv
Vista Capital Investments convertible notes payable (Details) (USD $) | Dec. 19, 2013 | Sep. 05, 2013 |
Vista Capital Investments convertible notes payable | ' | ' |
Company borrowed from Vista Capital Investments pursuant to an unsecured convertible promissory note | $25,000 | $25,000 |
The terms of the note provided for a once-off interest charge in percent | 12.00% | 12.00% |
The terms of the note provided for a once-off interest charge in amount | 3,300 | 3,300 |
The note has an original issue discount of the amount advanced in percent | 10.00% | 10.00% |
The note has an original issue discount of the amount advanced in amount | 2,500 | 2,500 |
On March 12, 2014, the funds borrowed on September 5, 2013 were converted into 366,667 Common shares of the Company | ' | 366,667 |
On March 17, 2014, the funds borrowed on December 19, 2013 were converted into 354,023 common shares of the Company. | 354,023 | ' |
Vista may make further advances under the promissory note up to an amount | ' | 250,000 |
Original issue discount of 10% equal to an amount | ' | 25,000 |
Net amount of further advances made by Vista | ' | 225,000 |
Borrowed under unsecured promissory note | $250,000 | $250,000 |
LG_Capital_Funding_LLC_convert
LG Capital Funding, LLC convertible notes payable (Details) (USD $) | Mar. 31, 2014 | Oct. 03, 2013 |
LG Capital Funding, LLC convertible notes payable | ' | ' |
Company received, a net from LG Capital Funding, LLC | ' | $45,000 |
Commission to a third party | ' | 5,000 |
legal fees amount | ' | 1,500 |
Company borrowed from LG Capital Funding, LLC pursuant to an unsecured convertible promissory note. | ' | 51,500 |
The terms of the note provided for no interest charge for days | ' | 90 |
Once-off interest charge of 12% amounting to is already added to the face value of the note | ' | 6,798 |
The note has an original issue discount of 10% amounting to | ' | 5,150 |
Net cash proceeds of on issuance of the note of LG Capital Funding, LLC | ' | 51,500 |
The note LG Capital Funding, LLC is convertible into common stock at any time, at the holder's option, equal to the lesser of $0.65 or 60% of the lowest trade pricein no of days prior to conversion | ' | 25 |
The incurrence of debt other than in the ordinary course of business or to repay the note or borrowings not exceeding | ' | 1,000,000 |
Lend money unless committed to prior to this note, made in the ordinary course of business | ' | 100,000 |
Unsecured promissory note issued to LG with a face value | 51,500 | ' |
Unsecured promissory note issued to LG was repaid for | $95,172 | ' |
Tonaquint_Inc_convertible_note
Tonaquint, Inc. convertible notes payable (Details) (USD $) | Sep. 30, 2014 | Oct. 11, 2013 |
Tonaquint, Inc. convertible notes payable | ' | ' |
Company received, a net from Tonaquint, Inc. | ' | $112,500 |
Commission to a third party | ' | 12,500 |
Company borrowed from Tonaquint, Inc. pursuant to an unsecured convertible promissory note. | ' | 141,500 |
Original issue discount and fees amounting | ' | 16,500 |
Once-off interest charge | ' | 10.00% |
Once-off interest charge of 10% amounting | ' | $14,150 |
The note Tonaquint, Inc. is convertible into common stock at any time, at the holder's option, equal to the lesser of $0.65 or 60% of the lowest trade pricein no of days prior to conversion | ' | 25 |
Tonaquint converted the note outstanding borrowed on October 11, 2013 into common shares | 155,650 | ' |
Tonaquint converted the remaining note outstanding borrowed on October 11, 2013 into common shares | 1,283,576 | ' |
Value_of_the_derivative_financ
Value of the derivative financial liability re-assessed (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Value of the derivative financial liability re-assessed | ' | ' |
Opening balance of value of the derivative financial liability | $237,799 | ' |
Derivative financial liability arising on short-term notes with variable conversion prices | -668,755 | ' |
Fair value adjustments | 430,956 | 237,799 |
Net value of the derivative financial liability | ' | $237,799 |
Assumptions_used_in_the_BlackS
Assumptions used in the Black-Scholes valuation model (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | |
Assumptions used in the Black-Scholes valuation model | ' | ' |
Stock price over the period | '0.14 to 0.50 | '0.20 to 0.94 |
Risk free interest rate | ' | ' |
0.11% to 0.13% | 0.09% to 0.16% | |
Expected life of short-term notes payable | '1 to 10 months | '8 to 12 months |
Expected volatility | 119.45% | 114.14% |
Expected dividend rate | 0.00% | 0.00% |
Long_Term_Notes_payable_consis
Long Term Notes payable consisted of the following (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Long Term Notes payable consisted of the following | ' | ' |
Notes payable at interest rate 6% | $39,375 | $388,875 |
Accrued interest on notes payable. | 4,550 | 95,124 |
Unamortized debt discount on notes payable. | 24,721 | 302,480 |
Total long-Term Convertible Notes Payable | $19,204 | $181,519 |
Long_Term_Convertible_Notes_pa
Long Term Convertible Notes payable issues (Details) (USD $) | Sep. 30, 2014 | Apr. 01, 2014 |
Long Term Convertible Notes payable issues | ' | ' |
Note bears interest at the rate per annum | 6.00% | ' |
Notes are convertible into common stock at a fixed conversion price per share | $0.02 | $0.02 |
Aggregate Principal amount of note | ' | $349,500 |
Principal amount of note converted | ' | 446,702 |
Accrued interest on note converted | ' | 97,202 |
Principal amount of note converted in to common shares | ' | $22,335,124 |
Preferred_Stock_Transactions_D
Preferred Stock Transactions (DETAILS) (USD $) | Sep. 30, 2014 | Mar. 14, 2014 |
Preferred Stock Transactions | ' | ' |
Preferred Stock authorized | 10,000,000 | ' |
Preferred Stock par value | $0.00 | ' |
Preferred shares designated as Series A-1 Convertible Preferred Stock | 5,000,000 | ' |
Series A-1 Shares issued and outstanding | 3,887,500 | ' |
Convertible shares of common stock | 3,887,500 | 7,500,000 |
Undesignated shares of preferred stock designated | ' | 500,000 |
Undesignated preferred shares as Series B Convertible | ' | 500,000 |
Series B Shares issued and outstanding | ' | 75,000 |
Balance of preferred shares undesignated | 4,500,000 | ' |
Series A-1 Shares is entitled to a liquidation preference per share | $0.08 | ' |
Common_Stock_Issued_and_outsta
Common Stock Issued and outstanding shares (Details) (USD $) | Sep. 30, 2014 |
Issued and outstanding shares: | ' |
Company has issued and outstanding shares of common stock as on date | 241,421,828 |
Company has authorized shares of common stock | 500,000,000 |
Shares of common stock par value | $0.00 |
Aggregate shares of Common Stock issued to convertible note holders upon conversion of short and long-term convertible notes | 27,510,118 |
Aggregate value of short and long-term convertible notes converted | $1,565,302 |
Per share value of Common Stock issued to convertible note holders upon conversion of short and long-term convertible notes | $0.06 |
Aggregate Common shares issued to consultants and advisors for services | 1,260,667 |
Average issue price per share issued to consultants and advisors for services | $0.24 |
Common units of the Company issued to new, qualified investors pursuant to the private placement agreement | 7,353,329 |
Per unit value of Common units of the Company issued to new, qualified investors | $0.15 |
Exercise price per share of a five year warrant exercisable for one half of a share of common stock | $0.25 |
Net proceeds of issue after deducting placement agent fees and other share issue expenses | 946,110 |
Amount of placement agent fees and other share issue expenses | $146,890 |
The placement agent was also issued five year warrants to purchase shares of common stock | 1,654,499 |
Stock_Option_Plan_Transactions
Stock Option Plan Transactions (Details) | Sep. 30, 2014 | Dec. 31, 2013 | Aug. 01, 2012 |
Stock Option Plan Transactions | ' | ' | ' |
Options issued and outstanding under the Stock Plan | 452,960 | 452,960 | ' |
Company issued options to two of its Officers not covered under this plan | 11,000,000 | 11,000,000 | ' |
After the reverse stock split shares were available for grant | ' | ' | 100,000 |
Increase in the number of awards available for grant | ' | ' | 2,100,000 |
NonPlan_Stock_Options_Details
Non-Plan Stock Options (Details) (USD $) | Mar. 31, 2013 |
Non-Plan Stock Options | ' |
Company granted to its Chief Executive Officer options to purchase shares of the Company's common stock | 10,000,000 |
Company granted to one of its directors options to purchase shares of the Company's common stock | 1,000,000 |
Exercise price equal to per share | $0.25 |
Options vested immediately | 2,750,024 |
Balance of the options vest pro rata, on a monthly basis, over a period | 36 |
Assumptions_used_in_the_BlackS1
Assumptions used in the Black-Scholes valuation model for stock options (Details) | 9 Months Ended |
Sep. 30, 2014 | |
Assumptions used in the Black-Scholes valuation model for stock options | ' |
Stock price over the period | '0.50 to 0.65 |
Risk free interest rate | ' |
1.41% to 2.71% | |
Expected life of options | '5 to 10 years |
Expected volatility | ' |
127.99% to 150.0% | |
Expected dividend rate | 0.00% |
Summary_of_options_outstanding
Summary of options outstanding and exercisable (Details) | Number Outstanding | Weighted Average Remaining Contractual Life (Options Outstanding) | Weighted-Average Exercise Price (Options Outstanding) | Number Exercisable | Weighted-Average Exercise Price (Number Exercisable) | Weighted Average Remaining Contractual Life (Number Exercisable) |
Balance of options outstanding and exercisable at Dec. 31, 2013 | 0 | ' | ' | ' | ' | ' |
Exercise Price 25.00 | 2,500 | 3.6 | 25 | 2,500 | 25 | 3.6 |
Exercise Price 13.50 | 5,480 | 4.71 | 13.5 | 5,480 | 1,350 | 4.71 |
Exercise Price 12.50 | 2,000 | 6.04 | 12.5 | 2,000 | 12.5 | 6.04 |
Exercise Price 8.50 | 30,500 | 6.75 | 8.5 | 30,500 | 8.5 | 6.75 |
Exercise Price 5.00 | 14,800 | 7.04 | 5 | 14,500 | 5 | 7.04 |
Exercise Price 0.25 | 11,000,000 | 3.43 | 0.25 | 7,104,172 | 0.25 | 3.43 |
Exercise Price 0.65 | 55,386 | 6.84 | 0.65 | 55,386 | 0.65 | 6.84 |
Exercise Price 0.63 | 57,144 | 3.75 | 0.63 | 57,144 | 0.63 | 3.75 |
Exercise Price 0.51 | 285,150 | 5.54 | 0.51 | 285,150 | 0.51 | 5.54 |
Exercise Price total | 11,452,960 | 3.52 | 0.3 | 7,556,832 | 0.33 | 3.56 |
Balance of options outstanding and exercisable;. at Sep. 30, 2014 | 0 | ' | ' | ' | ' | ' |
Balance of options outstanding and exercisable at Sep. 30, 2014 | 0 | ' | ' | ' | ' | ' |
Summary_of_Stock_options_outst
Summary of Stock options outstanding (Details) | Shares | Exercise price per share | Weighted average exercise price |
Outstanding Stock options range of Exercise price per share 5.00 to 25.00 at Dec. 31, 2012 | 55,280 | ' | 8.49 |
Granted - plan options range of Exercise price per share 0.51 to 0.65 | 397,680 | ' | 0.54 |
Granted - non plan options | 11,000,000 | 0.25 | 0.25 |
Forfeited/Cancelled | 0 | ' | ' |
Exercised | ' | 0 | ' |
Outstanding Stock options range of Exercise price per share 0.25 to 25,00 at Dec. 31, 2013 | 11,452,960 | ' | 0.3 |
Granted - plan options | 0 | ' | ' |
Granted - non plan options | 0 | ' | ' |
Forfeited/Cancelled | 0 | ' | ' |
Exercised | 0 | ' | ' |
Outstanding Stock options range of Exercise price per share 0.25 to 25,00 at Sep. 30, 2014 | 11,452,960 | ' | 0.3 |
Warrants_outstanding_and_exerc
Warrants outstanding and exercisable As Follows (Details) | Sep. 30, 2014 |
Warrants Outstanding | ' |
Warrants outstanding and exercisable with exercise price 0.3 | 375,000 |
Warrants outstanding and exercisable with exercise price 0.25 | 2,277,167 |
Warrants outstanding and exercisable with exercise price 0.25 | 1,508,333 |
Warrants outstanding and exercisable with exercise price 0.25 | 1,545,665 |
Warrants outstanding and exercisable with exercise price 0.25 | 633,333 |
Total Warrants outstanding and exercisable | 6,339,498 |
Warrants outstanding and exercisable with exercise price 0.3 | 375,000 |
Warrants outstanding and exercisable with exercise price 0.25 | 2,277,167 |
Warrants outstanding and exercisable with exercise price 0.25 | 1,508,333 |
Warrants outstanding and exercisable with exercise price 0.25 | 1,545,665 |
Warrants outstanding and exercisable with exercise price 0.25 | 633,333 |
Total Warrants outstanding and exercisable | 6,339,498 |
Weighted Average Remaining Contractual Life (Warrants Outstanding) | ' |
Warrants outstanding and exercisable with exercise price 0.3 | 4.08 |
Warrants outstanding and exercisable with exercise price 0.25 | 4.74 |
Warrants outstanding and exercisable with exercise price 0.25 | 4.84 |
Warrants outstanding and exercisable with exercise price 0.25 | 4.85 |
Warrants outstanding and exercisable with exercise price 0.25 | 4.9 |
Warrants outstanding and exercisable with exercise price 0.3 | 4.08 |
Warrants outstanding and exercisable with exercise price 0.25 | 4.74 |
Warrants outstanding and exercisable with exercise price 0.25 | 4.84 |
Warrants outstanding and exercisable with exercise price 0.25 | 4.85 |
Warrants outstanding and exercisable with exercise price 0.25 | 4.9 |
Weighted-Average Exercise Price (Warrants Outstanding) | ' |
Warrants outstanding and exercisable with exercise price 0.3 | 0 |
Warrants outstanding and exercisable with exercise price 0.25 | 0 |
Warrants outstanding and exercisable with exercise price 0.25 | 0 |
Warrants outstanding and exercisable with exercise price 0.25 | 0 |
Warrants outstanding and exercisable with exercise price 0.25 | 0 |
Warrants outstanding and exercisable with exercise price 0.3 | 0 |
Warrants outstanding and exercisable with exercise price 0.25 | 0 |
Warrants outstanding and exercisable with exercise price 0.25 | 0 |
Warrants outstanding and exercisable with exercise price 0.25 | 0 |
Warrants outstanding and exercisable with exercise price 0.25 | 0 |
Warrants Exercisable | ' |
Warrants outstanding and exercisable with exercise price 0.3 | 375,000 |
Warrants outstanding and exercisable with exercise price 0.25 | 2,277,167 |
Warrants outstanding and exercisable with exercise price 0.25 | 1,508,333 |
Warrants outstanding and exercisable with exercise price 0.25 | 1,545,665 |
Warrants outstanding and exercisable with exercise price 0.25 | 633,333 |
Total Warrants outstanding and exercisable | 6,339,498 |
Warrants outstanding and exercisable with exercise price 0.3 | 375,000 |
Warrants outstanding and exercisable with exercise price 0.25 | 2,277,167 |
Warrants outstanding and exercisable with exercise price 0.25 | 1,508,333 |
Warrants outstanding and exercisable with exercise price 0.25 | 1,545,665 |
Warrants outstanding and exercisable with exercise price 0.25 | 633,333 |
Total Warrants outstanding and exercisable | 6,339,498 |
Weighted-Average Exercise Price (Warrants Exercisable) | ' |
Warrants outstanding and exercisable with exercise price 0.3 | 0 |
Warrants outstanding and exercisable with exercise price 0.25 | 0 |
Warrants outstanding and exercisable with exercise price 0.25 | 0 |
Warrants outstanding and exercisable with exercise price 0.25 | 0 |
Warrants outstanding and exercisable with exercise price 0.25 | 0 |
Warrants outstanding and exercisable with exercise price 0.3 | 0 |
Warrants outstanding and exercisable with exercise price 0.25 | 0 |
Warrants outstanding and exercisable with exercise price 0.25 | 0 |
Warrants outstanding and exercisable with exercise price 0.25 | 0 |
Warrants outstanding and exercisable with exercise price 0.25 | 0 |
Weighted Average Remaining Contractual Life (Warrants Exercisable) | ' |
Warrants outstanding and exercisable with exercise price 0.3 | 4.08 |
Warrants outstanding and exercisable with exercise price 0.25 | 4.74 |
Warrants outstanding and exercisable with exercise price 0.25 | 4.84 |
Warrants outstanding and exercisable with exercise price 0.25 | 4.85 |
Warrants outstanding and exercisable with exercise price 0.25 | 4.9 |
Warrants outstanding and exercisable with exercise price 0.3 | 4.08 |
Warrants outstanding and exercisable with exercise price 0.25 | 4.74 |
Warrants outstanding and exercisable with exercise price 0.25 | 4.84 |
Warrants outstanding and exercisable with exercise price 0.25 | 4.85 |
Warrants outstanding and exercisable with exercise price 0.25 | 4.9 |
Outstanding_stock_instruments_
Outstanding stock instruments which were not included in the calculation per share (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
NET LOSS PER SHARE {2} | ' | ' |
Options to purchase shares of common stock | 11,452,960 | 11,452,960 |
Warrants to purchase shares of common stock | 6,339,498 | ' |
Convertible preferred Series A-1 shares | 38,875,000 | 38,875,000 |
Convertible preferred Series B shares | 7,500,000 | ' |
Convertible long-term notes shares | 1,968,750 | 74,012,500 |
Total shares | 66,136,208 | 124,340,460 |
Short-term notes amounting to are convertible into common shares at discounts ranging from 50% to 65% of average trading prices | ' | $402,948 |
Closing share price | ' | $0.36 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES TRANSACTIONS (Details) (USD $) | Dec. 31, 2013 | Dec. 13, 2013 |
COMMITMENTS AND CONTINGENCIES TRANSACTIONS: | ' | ' |
Investor relations services for a period of one year from the effective date for a cash consideration per month | ' | $2,500 |
Shares of common stock, issued | ' | 174,600 |
Claims by creditors of the Company amounting | 372,090 | ' |
Claims against long-term liabilities | 848,916 | ' |
Shares on conclusion of the agreement | ' | 43,650 |
Shares over the nine month period January to September 2014 | ' | 130,950 |
leases approximately 2,300 square feet of office space in Houston per month | 2,200 | ' |
Sub-leases approximately 748 square feet of loft space in Houston | $1,675 | ' |
Minimum_commitments_due_summar
Minimum commitments due summarized as follows (Details) (USD $) | Sep. 30, 2014 |
Minimum commitments due summarized as follows | ' |
Minimum commitments due 2015 | $700,000 |
Minimum commitments due 2016 | 1,000,000 |
Minimum commitments due 2017 | 1,000,000 |
Minimum commitments due 2018 | 1,000,000 |
Total Minimum commitments due | $3,700,000 |
Subsequent_Transactions_with_L
Subsequent Transactions with LG Capital Funding, LLC (Details) (USD $) | Oct. 31, 2014 |
Subsequent Transactions with LG Capital Funding, LLC | ' |
Company received, a net amount of an unsecured convertible promissory note | $95,000 |
Legal fee paid on unsecured convertible promissory note | 5,000 |
Unsecured convertible promissory note with a face valueissued to LG Capital Funding, LLC | 107,000 |
Original issue discount of note in percentage | 7.00% |
Original issue discount of note in amount | 7,000 |
Conversion price of notes equal to a percentage of of the lowest closing bid price in the 10 trading days prior to conversion | 62.00% |
Back-end fully secured collateralized note provided | $100,000 |
Interest rate of fully secured collateralized note | 8.00% |