Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2013 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'Organic Alliance, Inc. | ' |
Entity Central Index Key | '0001442634 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 18,473,554 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2013 | ' |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheet (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Assets | ' | ' |
Cash | $1,431 | $159,346 |
Accounts receivable, net | ' | 211,288 |
Inventory | ' | 139,888 |
Prepaid expenses and other current assets | 9,752 | 98,074 |
Total current assets | 11,183 | 608,596 |
Total Assets | 11,183 | 608,596 |
Current liabilities: | ' | ' |
Accounts payable | 1,537,313 | 993,240 |
Due to factor | 118,561 | 213,778 |
Accrued expenses and other current liabilities | 1,828,834 | 1,734,863 |
Derivative liabilities | 1,393,054 | 432,030 |
Notes payable to related parties and others, net of discounts | 4,972,257 | 3,936,955 |
Total current liabilities | 9,850,019 | 7,310,866 |
Stockholders' Deficiency: | ' | ' |
Preferred stock, no stated value; 10,000,000 shares authorized; -0- shares issued and outstanding as of September 30, 2013 and December 31, 2012 | 0 | 0 |
Common stock, $.0001 par value, 100,000,000 shares authorized, 18,473,554 and 17,795,376 shares issued and outstanding as of September 30, 2013 and December 31, 2012,respectively. In addition,36,300,000 and 0 shares issued in reserve and outstanding at September 30, 2013 and December 31, 2012, respectively. | 1,848 | 1,780 |
Additional paid-in capital | 14,287,582 | 13,872,597 |
Accumulated deficit | -22,478,147 | ' |
Deficit accumulated during the development stage | -1,650,119 | -20,576,647 |
Total stockholders' deficiency | -9,838,836 | -6,702,270 |
Total Liabilities and Stockholders' Deficiency | $11,183 | $608,596 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheet (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Statement of Financial Position [Abstract] | ' | ' |
Preferred stock, par value | $0 | $0 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 18,473,554 | 17,795,376 |
Common stock, shares outstanding | 18,473,554 | 17,795,376 |
Common stock in reserve, shares issued | 36,300,000 | ' |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Revenue | ' | $335,456 | $981,205 | $1,301,757 |
Cost of sales | ' | 304,274 | 861,180 | 1,177,694 |
Gross margin | ' | 31,182 | 120,025 | 124,063 |
General and administrative expenses | 297,235 | 564,486 | 1,809,087 | 2,118,500 |
Operating loss | -297,235 | -533,304 | -1,689,062 | -1,994,437 |
Other expense (income) : | ' | ' | ' | ' |
Interest expense | 252,434 | 806,428 | 1,055,501 | 1,612,249 |
Change in fair value of derivative liability | 1,100,450 | 2,274,621 | 807,056 | 4,272,565 |
Total other expense (income) | 1,352,884 | 3,081,049 | 1,862,557 | 5,884,814 |
Net loss | -1,650,119 | -3,614,353 | -3,551,619 | -7,879,251 |
Basic and diluted loss per share | ($0.08) | ($0.21) | ($0.18) | ($0.46) |
Weighted average number of common shares outstanding - basic and diluted | 19,629,743 | 16,971,814 | 19,519,853 | 17,228,350 |
Development Stage [Member] | ' | ' | ' | ' |
Revenue | ' | ' | ' | ' |
Cost of sales | ' | ' | ' | ' |
Gross margin | ' | ' | ' | ' |
General and administrative expenses | 297,235 | ' | ' | ' |
Operating loss | -297,235 | ' | ' | ' |
Other expense (income) : | ' | ' | ' | ' |
Interest expense | 252,434 | ' | ' | ' |
Change in fair value of derivative liability | 1,100,450 | ' | ' | ' |
Total other expense (income) | 1,352,884 | ' | ' | ' |
Net loss | ($1,650,119) | ' | ' | ' |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | |
Cash flows from operating activities: | ' | ' | ' |
Net loss | ($1,650,119) | ($3,551,619) | ($7,879,251) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' | ' |
Common stock issued for services | ' | 55,000 | 47,250 |
Share-based compensation | ' | 330,266 | 587,456 |
Non-cash interest | ' | 535,570 | 77,172 |
Provision for doubtful accounts | ' | 2,001 | -500 |
Change in fair value of derivative liability | ' | 843,338 | 4,272,565 |
Amortization on discount of note payable | ' | 433,638 | 1,067,539 |
Changes in operating assets and liabilities: | ' | ' | ' |
Accounts receivable | ' | 209,287 | -79,679 |
Inventory | ' | 139,888 | -244,630 |
Prepaid expenses and other current assets | ' | 88,322 | -37,955 |
Accounts payable | ' | 544,073 | -99,560 |
Accrued expenses and other current liabilities | ' | 127,543 | 242,629 |
Net cash used in operating activities | ' | -242,693 | -2,046,964 |
Cash flows from financing activities | ' | ' | ' |
Proceeds from notes and loans payable | ' | 190,995 | 2,055,000 |
Principal payments on note payable | ' | -11,000 | -8,000 |
Cash Overdraft | ' | ' | ' |
Net advances (repayments) from/to factor | ' | -95,217 | 66,755 |
Net cash provided by financing activities | ' | 84,778 | 2,113,755 |
Net (decrease) increase in cash | ' | -157,915 | 66,791 |
Cash - beginning of the period | ' | 159,346 | 5,852 |
Cash - end of the period | 1,431 | 1,431 | 72,643 |
Supplemental disclosures: | ' | ' | ' |
Interest paid | ' | 85,145 | 467,538 |
Supplemental disclosure for non-cash financing activities: | ' | ' | ' |
Discount on notes payable | ' | 113,901 | 1,343,248 |
Reclassification of derivative liabilities upon conversion of note | ' | ' | 1,787,541 |
Issuance of common stock to convert notes payable | ' | ' | 12,380 |
Issuance of common stock to settle liability | ' | 33,572 | 1,146,702 |
Development Stage [Member] | ' | ' | ' |
Cash flows from operating activities: | ' | ' | ' |
Net loss | -1,650,119 | ' | ' |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' | ' |
Common stock issued for services | ' | ' | ' |
Share-based compensation | 31,277 | ' | ' |
Non-cash interest | 181,941 | ' | ' |
Provision for doubtful accounts | 2,001 | ' | ' |
Change in fair value of derivative liability | 1,136,732 | ' | ' |
Amortization on discount of note payable | 30,196 | ' | ' |
Changes in operating assets and liabilities: | ' | ' | ' |
Accounts receivable | 36,577 | ' | ' |
Inventory | 75,228 | ' | ' |
Prepaid expenses and other current assets | 60,975 | ' | ' |
Accounts payable | 51,856 | ' | ' |
Accrued expenses and other current liabilities | 11,555 | ' | ' |
Net cash used in operating activities | -31,781 | ' | ' |
Cash flows from financing activities | ' | ' | ' |
Proceeds from notes and loans payable | 96,167 | ' | ' |
Principal payments on note payable | ' | ' | ' |
Cash Overdraft | -34,536 | ' | ' |
Net advances (repayments) from/to factor | -28,419 | ' | ' |
Net cash provided by financing activities | 33,212 | ' | ' |
Net (decrease) increase in cash | 1,431 | ' | ' |
Supplemental disclosures: | ' | ' | ' |
Interest paid | 39,151 | ' | ' |
Supplemental disclosure for non-cash financing activities: | ' | ' | ' |
Discount on notes payable | 84,500 | ' | ' |
Reclassification of derivative liabilities upon conversion of note | ' | ' | ' |
Issuance of common stock to convert notes payable | ' | ' | ' |
Issuance of common stock to settle liability | ' | ' | ' |
Nature_of_Business
Nature of Business | 9 Months Ended | |
Sep. 30, 2013 | ||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | |
Nature of Business | ' | |
1 | NATURE OF BUSINESS | |
Organic Alliance, Inc. is a global grower and marketer of organic, Fair Trade and conventional fresh fruits and vegetables. By establishing collaborative relationships with key growers, the Company has built a vertically integrated supply chain that enables it to support its customers with an increasing variety of certified sustainable products, sensible pricing, steady supply and inspiring multi-media stories from our many producing communities. | ||
History - NB Design & Licensing, Inc. (“NB Design”), a Nevada corporation, was organized in September 2001. Its former parent, New Bridge Products, Inc., incorporated in August 1995 as a manufacturer of minivans, filed a petition in bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. Its Plan of Reorganization was approved by the U.S. Bankruptcy Court for the District of Arizona in September 2002, and NB Design was discharged from bankruptcy in October 2002. NB Design was inactive from October 2002 to April 29, 2008. | ||
Organic Alliance, Inc., a Texas corporation (“Organic Texas”) was organized on February 19, 2008 to sell organically grown fruits and vegetables. During the second quarter of 2009, it ceased being a development stage company when it commenced its operations. | ||
On April 29, 2008, NB Design acquired all 10,916,917 issued and outstanding shares of common stock of Organic Texas for 464,999 shares of the NB Design’s common stock. Organic Texas thereupon became a wholly-owned subsidiary of NB Design. The business of Organic Texas is the only business of NB Design. The Company operates in California. | ||
The acquisition of Organic Texas, a private operating company, by NB Design, a non-operating public shell corporation with nominal net assets, was accounted for as a reverse capitalization in accordance with the Securities and Exchange Commission’s (“SEC”) Division of Corporate Financial Reporting manual Topic 12 “Reverse Acquisition and Reverse Capitalization”. As such, the acquisition was treated as a capital transaction rather than a business combination, and no goodwill was recorded. NB Design was the legal acquirer because it issued its equity interests, and Organic Texas was the legal acquiree because its equity interests were acquired. However, NB Design was the acquiree and Organic Texas was the acquirer for accounting purposes. Organic Texas is treated as the continuing reporting entity that acquired the registrant, NB Design. The pre-acquisition financial statements of Organic Texas are treated as the historical financial statements of the consolidated companies. | ||
On June 2, 2008, NB Design changed its name to Organic Alliance, Inc. On August 29, 2008, Organic Texas changed its name to Organic Texas, Inc. All references throughout this report to “Organic Alliance, Inc.” or the “Company” refers to Organic Alliance, Inc. and its wholly-owned subsidiary, Organic Texas, except where the context makes clear that the reference is only to Organic Alliance, Inc. | ||
On July 1, 2013, the Company temporarily suspended operations and elected to enter the development stage. The Company will be pursuing other business opportunities in addition to the organic and Fair Trade certified fruits and vegetables global market. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Summary of Significant Accounting Policies | ' | ||||||||
2 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||
Development Stage – The Company is considered to be in the development stage as defined in ASC 915, “Accounting and Reporting by Development Stage Enterprises”. | |||||||||
On July 1, 2013, the Company temporarily suspended operations and elected to enter the development stage. All inventories and deposits from the former operations were written off as of July 1, 2013. | |||||||||
Due to unfavorable financing conditions and inability to obtain suitable financing, the Company has determined that it will develop other markets in addition to the organic and Fair Trade certified fruits and vegetables global market. | |||||||||
Basis of Presentation - The Company's unaudited condensed consolidated financial statements have been prepared on an accrual basis of accounting, in conformity with accounting principles generally accepted in the United States of America (US GAAP) for interim financial information applicable for a going concern, which assumes that the Company will realize its assets and discharge its liabilities in the ordinary course of the business, and in accordance with the instructions for Form 10-Q and Article 10 of Regulation S-X promulgated under the Securities Exchange Act of 1934, as amended. Certain information and disclosures included in the financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations. | |||||||||
In the opinion of management, the condensed consolidated financial statements contain all material adjustments, consisting | |||||||||
only of normal recurring adjustments necessary to present fairly the financial condition, results of operations, and cash flows of the Company for the interim periods presented. | |||||||||
The results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results of operations for the full year. These financial statements and related footnotes should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission on June 13, 2013. | |||||||||
Use of Estimates - The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates that are particularly sensitive to change in the near term include, but are not limited to, realization of deferred tax assets, allowance for doubtful accounts, and assumptions used in derivative valuations and share based payment transactions. Actual results could differ from those estimates. | |||||||||
Principles of Consolidation - The consolidated financial statements include the accounts of Organic Alliance, Inc. and its wholly-owned subsidiary, Organic Texas, Inc. (collectively, the “Company”). All significant inter-company transactions and balances have been eliminated in consolidation. | |||||||||
Allowance for Doubtful Accounts - An allowance for uncollectible accounts receivable is recorded based on a combination of aging analysis, past practices and any specific troubled accounts. The Company’s produce is sold to the Company’s customers for cash or on credit terms which are established in accordance with local and industry practices and typically require payment within 10 to 30 days of delivery. Accounts are written off when uncollectibility is confirmed. Subsequent recoveries, if any, are credited to the allowance account. The allowance for doubtful accounts amounted to $7,001 and $5,000 at September 30, 2013 and December 31, 2012, respectively. | |||||||||
In addition, the Company factors its receivables with full recourse and, as a result, accounts for the factoring akin to a secured borrowing, maintaining the gross receivable asset and due to factor liability on its books and records. In connection with the factoring of its receivables, the Company estimates an allowance for factoring fees associated with the collections. These fees range from 3% to 5% depending on the actual timing of the collection. The actual recognition and amount of such fees may differ from the estimates depending upon the timing of collections. The Company has not factored any receivables since May 2013. | |||||||||
Inventory - Inventory is stated at the lower of cost (first-in, first-out) or market. All inventories were written off as of July 1, 2013. At December 31. 2012, inventory included principally produce the Company purchased from growers ($34,547) and packaging materials ($105,341). The Company held $139,888 of inventory as of December 31, 2012. | |||||||||
Income Taxes - The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes”. Under this method, income tax expense is recognized for the amount of (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. | |||||||||
Fair Value of Financial Instruments - The carrying amounts of financial instruments, including cash, receivables, accounts payable and accrued expenses approximated fair value as of the balance sheet dates presented, because of the relatively short maturity dates on these instruments. The carrying amounts of the notes payable issued approximate fair value as of the balance sheet dates presented, because interest rates and other terms on these instruments approximate terms currently available on similar instruments. | |||||||||
Derivative Financial Instruments - The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the instrument could be required within 12 months of the balance sheet date. | |||||||||
The accounting treatment of derivative financial instruments requires that the Company record the conversion option and related warrants at their fair values as of the inception date of the agreements, and at fair value as of each subsequent balance sheet date. As a result of entering into the convertible notes, the Company is required to classify certain non-employee warrants as derivative liabilities and record them at their fair values at each balance sheet date. Any change in fair value was recorded as a change in the fair value of derivative liabilities for each reporting period at each balance sheet date. The Company reassesses the classification at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. | |||||||||
The fair value of conversion options at a fixed number of shares are recorded using the intrinsic value method. Conversion options at variable rates and any options and warrants with ratchet provisions are deemed to contain a “down-round protection”. Accordingly, they do not meet the scope exception for treatment as a derivative under ASC 815 since “down-round protection” is not an input into the calculation of the fair value of the equity instruments and cannot be considered “indexed to the Company’s own stock”, which is a requirement for the scope exception as outlined under ASC 815. | |||||||||
The Company signed convertible notes and has determined that a conversion option is embedded in the note and it is required to bifurcate the conversion option from the host contract under ASC 815 and account for the derivatives at fair value. The estimated fair value of the conversion option was determined using the binomial model. The fair value of the conversion option will be classified as a liability until the debt is converted by the note holders or paid back by the Company. The fair value will be affected by changes in inputs to that model including our stock price, expected stock price volatility, the contractual term, and the risk-free interest rate. The Company will continue to classify the fair value of the conversion option as a liability until the conversion option is exercised, expires or is amended in a way that would no longer require these conversion options to be classified as a liability, whichever comes first. The Company has adopted a sequencing policy that reclassifies contracts (from equity to assets or liabilities) with the most recent inception date first. Thus any available shares are allocated first to contracts with the most recent inception dates. | |||||||||
For the binomial lattice options pricing model, the Company used the following assumptions and weighted average fair value ranges for the nine months ended September 30: | |||||||||
2013 | 2012 | ||||||||
Risk-free interest rate | 0.02%-0.63% | 0.14%-0.31% | |||||||
Dividend yield | N/A | N/A | |||||||
Expected volatility | 26.4%-48.7% | 31.6%-56.0% | |||||||
Expected life in months and years | 3 months – 2.8 years | 3 months – 4.3 years | |||||||
Since the Company’s common is thinly traded, the expected volatility is based on the average historical stock volatility data for three similar public companies over the expected term of the derivative financial instrument. | |||||||||
Revenue Recognition - Revenue is recorded when (1) the customer accepts delivery of the product, title has been transferred, and the Company has no significant obligations remaining to be performed; (2) a final understanding as to specific nature and terms of the agreed upon transaction has occurred; (3) price is fixed and (4) collection is reasonably assured. | |||||||||
Share Based Compensation – The Company accounts for share-based compensation in accordance with the fair value recognition provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 718. For employees and directors, the fair value of the award is measured on the grant date, and for non-employees the fair value of the award is generally re-measured on interim financial reporting dates until the service period is complete. | |||||||||
Option valuation models require the input of highly subjective assumptions, including the expected life of the option, and such assumptions can materially affect the fair value estimate. The fair value of share-based payment awards was estimated using the Black-Scholes option pricing model. The Company uses historical data to estimate option exercise and employee termination within the valuation model; separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. | |||||||||
For the Black-Scholes pricing model, the Company used the following assumptions and weighted average fair value ranges for the nine months ended September 30: | |||||||||
2013 | 2012 | ||||||||
Risk-free interest rate | 0.34%-2.54% | 0.32%-2.54% | |||||||
Dividend yield | N/A | N/A | |||||||
Expected volatility | 34.7%-54.2% | 36.4%-50.2% | |||||||
Expected life in years | 7-Mar | 2.5-7 | |||||||
Concentrations - The Company maintains cash balances at various high quality federally insured financial institutions, with balances at times, in excess of federally insured limits. Management believes that the financial institutions that hold the Company’s deposits are financially sound and therefore pose a minimum credit risk. The Company has not experienced any losses in such accounts. | |||||||||
The Company had no sales, receivables or purchases during the three months ended September 30, 2013. | |||||||||
Net Loss Per Share - Basic loss per share was computed using the weighted average number of outstanding common shares. Diluted loss per share includes the effect of dilutive common stock equivalents from the assumed exercise of options, warrants and convertible notes. Common stock equivalents were excluded in the computation of diluted loss per share since their inclusion would be anti-dilutive. | |||||||||
In accordance with ASC 260 “Earnings per Share”, the Company has given effect to the issuance of warrants to purchase approximately 1,100,000 shares of the Company’s common stock as of September 30, 2013 and 2012, exercisable at $0.01. These warrants have been included in computing the basic net loss per share for the three and nine months ended September 30, 2013 and 2012. Additionally, included in the Company’s weighted average shares outstanding are 56,189 shares earned, but not issued, as at September 30, 2013 and 2012. | |||||||||
Total common stock equivalents which were excluded (since their inclusion would be anti-dilutive) are those shares issuable upon the exercise of warrants, options and the conversion of convertible notes, as of September 30, 2013 and 2012 were as follows: | |||||||||
September 30, | |||||||||
2013 | 2012 | ||||||||
Options | 7,717,896 | 4,455,177 | |||||||
Warrants | 14,004,927 | 9,104,403 | |||||||
Convertible notes (1) | 89,155,749 | 4,938,403 | |||||||
Total Common stock equivalents | 110,878,572 | 18,497,983 | |||||||
Due to the insufficient authorized but unissued shares of common stock to meet the required amount of shares for options, warrants and convertible instruments, the Company has accounted for the excess in common stock equivalents as a derivative liability in accordance with FASB ASC 815 Derivatives and Hedging. Accordingly, the derivative is marketed to market through earnings at the end of each reporting period. For the three and nine months ended September 30, 2013 the Company has recorded an expense of $25,047, as a part of the derivative liability on the accompanying condensed balance sheet. | |||||||||
-1 | At September 30, 2013, the Company reserved 36,300,000 shares of Common Stock from its authorized shares, which covers 8,442,099 shares of common stock issuable upon conversion of certain convertible notes. The remaining 80,713,650 shares of common stock issuable upon conversion of convertible notes are not covered by reserve shares. There were no reserves shares at September 30, 2012. | ||||||||
Recently Issued Accounting Standards | |||||||||
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements. |
Going_Concern
Going Concern | 9 Months Ended | |
Sep. 30, 2013 | ||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | |
Going Concern | ' | |
3 | . GOING CONCERN | |
The condensed consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America applicable for a going concern, which assume that the Company will realize its assets and discharge its liabilities in the ordinary course of business. As of September 30, 2013, the Company had limited cash, a working capital deficit of approximately $9,839,000, accumulated losses of approximately $24,128,000 since its inception of which $1,650,119 are deficits accumulated during the development stage, and has $320,622 of payroll tax liabilities inclusive of penalties and interest withheld from wages paid which have yet to be remitted to the taxing authorities and are delinquent. The Company currently is delinquent with its payroll tax filings since December 31, 2008; however, since April 1, 2012 the Company has been remitting payroll tax on a current basis. The Company ceased paying payroll beginning May 1, 2013. Most employees were furloughed or resigned by May 31, 2013. At September 30, 2013, the Company was not compliant with the repayments terms of various notes payable for an aggregate of approximately $4,838,000 including accrued interest. Its ability to continue as a going concern is dependent upon the ability of the Company to obtain the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due, and increasing its revenue in order to achieve profitable operations. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that the Company will be able to continue as a going concern. These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. | ||
The Company intends to overcome the circumstances that impact its ability to remain a going concern through pursing new business opportunities, with interim cash flow deficiencies being addressed through additional equity and debt financing. The Company anticipates raising additional funds through public or private financing, strategic relationships or other arrangements in the near future to support its business operations; however the Company does not have commitments from third parties for a sufficient amount of additional capital, the Company cannot be certain that any such financing will be available on acceptable terms, or at all, and its failure to raise capital when needed could limit its ability to continue or resume its operations. The Company’s ability to obtain additional funding will determine its ability to continue as a going concern. Furthermore, additional equity financing may be dilutive to the holders of the Company’s common stock, and debt financing, if available, may involve restrictive covenants or may require that the Company relinquish valuable rights. |
Due_to_Factor
Due to Factor | 9 Months Ended | |
Sep. 30, 2013 | ||
Receivables [Abstract] | ' | |
Due to Factor | ' | |
4 | . DUE TO FACTOR | |
On November 1, 2010, the Company signed a one year agreement with a financial services company for the purchase and sale of accounts receivables which expired on October 31, 2011. The agreement is continuing on a month to month basis. The financial services company commenced funding during February 2011. The financial services company advances up to 80% of qualified customer invoices, less applicable discount fees, and holds the remaining 20% as a reserve until the customer pays the financial services company. The released reserves are used to fund other vendor purchases or returned to the Company. The Company is charged 3% for the first 30 days outstanding plus 1/10 of 1% daily for funds outstanding over 30 days. Uncollectable customer invoices are charged back to the Company. At September 30, 2013 and December 31, 2012 the advances from the factor, inclusive of fees, amounted to $118,561 and $213,778, respectively. Advances from the factor are collateralized by substantially all assets of the Company. The Company is in default of this agreement. | ||
Preferred_Stock
Preferred Stock | 9 Months Ended | |
Sep. 30, 2013 | ||
Equity [Abstract] | ' | |
Preferred Stock | ' | |
5 | . PREFERRED STOCK | |
The Company’s articles of incorporation authorize its Board of Directors to issue up to 10,000,000 shares of preferred stock in one or more series without stockholder approval. Each such series of preferred stock may have such number of shares, designations, preferences, voting powers, qualifications, and special or relative rights or privileges as are determined by The Company’s Board of Directors. At September 30, 2013 and December 31 2012, no shares of preferred stock were issued or outstanding. |
Equity_Transactions
Equity Transactions | 9 Months Ended |
Sep. 30, 2013 | |
Equity [Abstract] | ' |
Equity Transactions | ' |
6. EQUITY TRANSACTIONS | |
During March 2013, the Company issued 500,000 shares of the Company’s common stock to a consultant for investor and public relations services. The fair value of the award was fully vested on the date of issuance and accordingly the Company recorded a charge for stock based compensation of $55,000 or $0.11 per share in the accompanying condensed consolidated statements of operations. |
Notes_payable_Loans_and_Deriva
Notes payable, Loans and Derivative Liabilities | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Notes payable, Loans and Derivative Liabilities | ' | ||||||||
7 | NOTES PAYABLE, LOANS AND DERIVATIVE LIABILITIES | ||||||||
Notes payable to related parties and others, net of discounts consist of the following: | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
(unaudited) | |||||||||
Notes Payable (net of debt discount $0 and $133,827 at September 30, 2013 and December 31, 2012, respectively) (A) | $ | 2,995,390 | $ | 2,512,753 | |||||
Notes Payable – Related Parties (net of debt discount of $0 and $47,673 at September 30, 2013 and December 31, 2012, respectively) (B) | 671,257 | 509,696 | |||||||
Convertible Notes Payable (net of debt discount of $79,298and $217,535 at September 30, 2013 and at December 31, 2012, respectively) (C) | 1,305,610 | 914,506 | |||||||
Totals | $ | 4,972,257 | $ | 3,936,955 | |||||
(A) | Notes Payable | ||||||||
i. | In May 2010, an individual advanced to the Company $20,000 bearing interest at 6% per annum. As a financing incentive, the individual received a warrant to purchase 20,000 shares of the Company’s common stock at $1.00 per share. The warrants expired in November 2011. The gross proceeds of the note were recorded net of a debt discount of $9,200. The debt discount consisted of the relative fair value of the warrant of $9,200 and is accreted to interest expense ratably over the term of the note. The promissory note matured on November 17, 2011. The unpaid balance, including accrued interest, was $23,944 and $23,046 at September 30, 2013 and December 31, 2012, respectively. The Company is not compliant with the repayment terms of the note. | ||||||||
ii. | On February 3, 2011, the Company signed a $500,000 promissory note with a maturity date of August 2, 2012, and has a stated interest rate of 15% per annum. As a financing incentive, the lender received a three-year warrant vesting on January 31, 2011, to purchase 452,354 shares of common stock at an exercise price of $0.01 per share, and also received a five-year warrant, vesting on June 30, 2011, to purchase 452,354 shares at an exercise price of $0.01 per share. The gross proceeds from the sale of the note of $500,000 were recorded net of a discount of $137,703. The debt discount consisted of $137,703 related to the fair value of the warrants and is accreted to interest expense ratably over the term of the note which amounted to $63,114 for the nine months ended September 30, 2012. The Company has not made any note payments and received a waiver from the lender on September 1, 2011 that deferred payment until September 1, 2012 and increased the interest rate to 21% beginning April 4, 2011, the date of the first event of default. The unpaid balance, including accrued interest, was $777,069 and $698,534 at September 30, 2013 and December 31, 2012, respectively. The Company is not compliant with the repayment terms of the note. | ||||||||
iii. | On August 1, 2012, the Company issued a $60,000 promissory note with an original issue discount of 20%. The promissory note is due on the earlier of (i) the closing by the Company of a financing or series of financings for aggregate cash proceeds of at least $1,850,000, or, (ii) July 31, 2013. As a financing incentive, the lender received a three-year warrant, vesting immediately, to purchase 50,000 shares of common stock at an exercise price of $0.50 per share. The gross proceeds from the sale of the note of $60,000 were recorded net of a discount of $11,088. The debt discount consisted of $11,088 related to the fair value of the warrant and is accreted to interest expense ratably over the term of the note which amounted to $11,088 for the year ended December 31, 2012. Since the Company satisfied the requirement of item (i) and raised $1,875,000 after August 1, 2012, the discount was recognized over the shorter maturity term. The carrying value of the unpaid balance was $60,000 at September 30, 2013 and December 31, 2012. The Company is not compliant with the repayment terms of the note. | ||||||||
iv. | On August 7, 2012, the Company issued a $30,000 promissory note with an original issue discount of 20%. The promissory note is due on the earlier of (i) the closing by the Company of a financing or series of financings for aggregate cash proceeds of at least $1,850,000, or, (ii) August 6, 2013. As a financing incentive, the lender received a three-year warrant, vesting immediately, to purchase 25,000 shares of common stock at an exercise price of $0.50 per share. The gross proceeds from the sale of the note of $30,000 were recorded net of a discount of $3,406. The debt discount consisted of $3,406 related to the fair value of the warrant and is accreted to interest expense ratably over the term of the note which amounted to $3,406 for the year ended December 31, 2012. Since the Company satisfied the requirement of item (i) and raised $1,875,000 after August 7, 2012, the discount was recognized over the shorter maturity term. The carrying value of the unpaid balance was $30,000 at September 30, 2013 and December 31, 2012. The Company is not compliant with the repayment terms of the note. | ||||||||
v. | On August 22, 2012, the Company issued a $60,000 promissory note with an original issue discount of 20%. The promissory note is due on the earlier of (i) the closing by the Company of a financing or series of financings for aggregate cash proceeds of at least $1,850,000, or, (ii) August 21, 2013. As a financing incentive, the lender received a three-year warrant, vesting immediately, to purchase 50,000 shares of common stock at an exercise price of $0.50 per share. The gross proceeds from the sale of the note of $60,000 were recorded net of a discount of $9,495. The debt discount consisted of $9,495 related to the fair value of the warrant and is accreted to interest expense ratably over the term of the note which amounted to $9,495 for the year ended December 31, 2012. Since the Company satisfied the requirement of item (i) and raised $1,875,000 after August 22, 2012, the discount was recognized over the shorter maturity term. The carrying value of the unpaid balance was $60,000 September 30, 2013 and December 31, 2012. The Company is not compliant with the repayment terms of the note. | ||||||||
vi. | In December 2012, the Company commenced an offering of secured promissory notes for an aggregate principal amount of $2,500,000 with three-year warrants to purchase an aggregate of 5,000,000 shares our common stock (two shares for each $1 of the principal amount of the notes purchased) exercisable at $0.50 per share. The notes bear interest at 18% and have a maturity date of September 30, 2013. Notes in the aggregate principal amount of $1,000,000 and warrants to purchase an aggregate of 2,000,000 common shares were sold in the offering. In addition, the investment banker who facilitated the sale of the notes and warrants received a three-year warrant to purchase 200,000 shares of our common stock (10% of the number of shares of common stock issuable upon exercise of the warrants sold in the offering) exercisable at $0.50 per share. The fair value of the three-year warrants issued in connection with the notes on the date of issuance aggregated $32,202, and was recorded as debt discount. The debt discount was amortized through the term of the notes and amounted to $28,257 for the nine months ended September 30, 2013. The unpaid balance, including accrued interest, was $1,134,630 and $1,000,000 at September 30, 2013 and December 31, 2012, respectively. The Company is not compliant with the repayment terms of the note. | ||||||||
vii. | On May 8, 2013, the Company issued a $30,000 promissory note with an original issue discount of 20%. The promissory note is due on the earlier of (i) the closing by the Company of a financing or series of financings for aggregate cash proceeds of at least $1,850,000, or, (ii) July 5, 2013. As a financing incentive, the lender received a three-year warrant, vesting immediately, to purchase 25,000 shares of common stock at an exercise price of $0.10 per share. The gross proceeds from the sale of the note of $30,000 were recorded net of a discount of $928. The debt discount consisted of $928 related to the fair value of the warrant and is accreted to interest expense ratably over the term of the note which amounted to $80 and $928 for the three months and nine months ended September 30, 2013, respectively. The Company repaid $10,000 during May and June 2013. The carrying value of the unpaid balance was $20,000 at September 30, 2013. The Company is not compliant with the repayment terms of the note. | ||||||||
viii. | On July 9, 2013, an individual advanced to the Company $10,000. The advance is evidenced by a promissory note payable with interest at 18% and is due on demand. The unpaid balance, including accrued interest, was $10,409 at September 30, 2013. | ||||||||
(B) | Notes Payable – Related Parties | ||||||||
i. | In September 2008, Earnest Mathis, a former shareholder, advanced to the Company $15,000. The advance is evidenced by a promissory note bearing interest at 10% per annum. The promissory note matured on September 13, 2009. The unpaid balance, including accrued interest, was $22,568 and $21,446 at September 30, 2013 and December 31, 2012, respectively. The Company is not compliant with the repayment terms of the note. | ||||||||
ii. | In November 2009 and February 2010, Morrison Partners, LLC (an affiliate of Thomas Morrison, former CEO and Chairman of the Board of Directors of the Company), advanced to the Company $10,000 and $15,000, respectively. The advances are evidenced by promissory notes bearing interest at 5% per annum. The November advance provides for the issuance of 2,770 shares of the Company’s common stock as a financing incentive. The Company recorded a debt discount of $2,935 for the relative fair value of the common stock. The discount was accreted over the life of the note. | ||||||||
The November 2009 and February 2010 notes were due on June 30, 2010 and September 30, 2010, respectively. The unpaid balance, including accrued interest, was $29,661 and $28,726 at September 30, 2013 and December 31, 2012, respectively. The shares have not been issued to Morrison Partners, LLC, and the Company is not in compliance with the repayment terms of the notes. | |||||||||
iii. | During March, 2010 through October 2011, a former employee of the Company loaned to the Company $65,958, of which $16,000 and $49,958 was advanced during 2011 and 2010, respectively. The loans are evidenced by promissory notes payable with interest at 5% and are due on demand. The Company repaid $9,000 during 2010 and $8,000 during April 2012. In addition, the former employee will be issued 47,690 shares of the Company’s common stock upon repayment of the promissory notes as additional consideration. The Company will record a fair value for these shares on the measurement date as a charge to interest expense. The unpaid balance, including accrued interest, was $56,381 and $54,551 at September 30, 2013 and December 31, 2012, respectively. | ||||||||
iv. | On October 17, 2011, the Company entered into a $400,000 convertible multi-draw term loan facility with an entity owned by a related party. The loan bears interest at 21% and has a maturity date of the earlier of an event of default or April 17, 2012. The Company has not made a note payment and is currently negotiating an extension of such loan. At the time of any new debt or equity financing of the Company, the loan balance, including principal and interest, may be converted into the number of fully paid and non-assessable debt instruments, shares/or units to be issued in the financing. In addition, with each drawdown the related party received a three-year warrant to purchase 2.5 shares of the Company’s common stock for each $1.00 of principal loaned at such time, up to 1,000,000 shares in the aggregate for all drawdowns. Each warrant has an exercise price of $0.10 per share, is vested upon issuance, and expires on October 17, 2014. The Company received $125,000 and $275,000 in gross proceeds during the years ended December 31, 2012 and December 31, 2011, respectively. The Company issued warrants to purchase an aggregate of 312,500 and 687,500 shares of the Company’s common stock during the years ended December 31, 2012 and December 31, 2011, respectively. The unpaid balance of the loan, including accrued interest, was $462,828 and $400,000 at September 30, 2013 and December 31, 2012, respectively. The Company is not compliant with the repayment terms of the note. | ||||||||
The conversion price of the outstanding loan amounts was not fixed and determinable on the date of issuance and, as such in accordance with ASC Topic 815 “Derivatives and Hedging” (“ASC 815”), the embedded conversion option on the date of issuance was valued using the binomial lattice options pricing model and recorded as derivative liabilities. The fair value of the three-year warrants on the date of issuance aggregated $105,363, and was recorded as debt discount. The debt discount was fully amortized through the term of the loan and amounted to $85,342 for the nine months ended September 30, 2012. | |||||||||
During December 2012 the Company amended the notes to remove the conversion right and extend the due date to June 30, 2013, and to amend the warrants to remove certain anti-dilution provisions. For executing the agreement, the holder was granted a three-year warrant to purchase 1,000,000 shares of the Company’s common stock, equal to two and one-half times the principal amount of the note amended, exercisable at $0.20 per share. The Company evaluated the change in cash flows in connection with the December amendment and determined that there was a greater than 10% change between the present value of the existing debt and the amended debt. As a result, the fair value of the three-year warrants aggregated $49,439 and were recorded as a discount to the modified debt and will be accreted over the remaining term of the modified debt and recognized as interest expense. The debt discount on the modified debt amounted to $42,376 for the nine months ended September 30, 2013. | |||||||||
v. | On February 28, 2012, Michael Rosenthal, Chairman of the Company’s Board of Directors, advanced the Company $50,000. The advance is evidenced by a promissory note bearing interest at 21% and has a maturity date of the earlier of an event of default or August 28, 2012. In addition, Mr. Rosenthal received a three-year warrant to purchase 125,000 shares of the Company’s common stock at an exercise price of $0.10 per share. The Company recorded a debt discount of $7,997 to the face value of the note based upon the fair values of the warrants. The discount was being accreted over the life of the note which amounted to $2,592 and $7,997 for the three and nine months ended September 30, 2012, respectively. The unpaid balance, including accrued interest, was $60,500 and $52,647 at September 30, 2013 and December 31, 2012, respectively. The Company is not compliant with the repayment terms of the note. | ||||||||
During December 2012 the Company amended the note to extend the due date to June 30, 2013. For executing the agreement, the holder was granted a three-year warrant to purchase 125,000 shares of the Company’s common stock, equal to two and one-half times the principal amount of the note amended, exercisable at $0.20 per share. The Company evaluated the change in cash flows in connection with the December amendment and determined that there was a greater than 10% change between the present value of the existing debt and the amended debt. As a result, the fair value of the three-year warrants aggregated $6,180 and were recorded as a discount to the modified debt and will be accreted over the remaining term of the modified debt and recognized as interest expense. The debt discount on the modified debt amounted to $5,298 nine months ended September 30, 2013. | |||||||||
vi. | During April 2013 and June 2013, Barry Brookstein, CFO, loaned to the Company $37,050. The loan is evidenced by a promissory note payable with interest at 18% and is due on demand. The unpaid balance, including accrued interest, was $39,319 at September 30, 2013. | ||||||||
(C) Convertible Notes Payable | |||||||||
i. | On July 30, 2010, an individual advanced the Company $8,000. The advance is evidenced by a promissory note bearing interest at 6% per annum and maturing on March 2, 2011. The holder, at any time, may convert the promissory note into shares of the Company’s common stock at $0.05 per share. The Company calculated the fair value of the beneficial conversion feature using the Black-Scholes pricing model on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $8,000, and was recorded as debt discount. The debt discount was amortized through the term of the note. The unpaid balance, including accrued interest, was $9,523 and $9,164 at September 30, 2013 and December 31, 2012, respectively. The Company is not compliant with the repayment terms of the note. | ||||||||
ii. | On April 28, 2011, the Company issued a $70,588 convertible promissory note with an original issue discount of 15%. The convertible promissory note has a maturity date of the earlier of (i) the Company raising debt or equity financing of $600,000 or more, or (ii) May 31, 2011. The note may be converted into the Company’s common stock by the holder at $0.05 per share. As a financing incentive, the lender received a five-year warrant, vesting April 28, 2011, to purchase 705,882 shares of the Company’s common stock at an exercise price of $0.25 per share. The Company has not made a note payment, and the Company received a waiver from the lender on September 1, 2011 that defers payment until May 31, 2012 and waives the provision for payment upon the Company’s closing a debt or equity financing of $600,000 or more. The unpaid balance on the note was $70,588 at September 30, 2013 and December 31, 2012. The Company is not compliant with the repayment terms of the note. | ||||||||
The conversion price of the note and five-year warrants was not fixed and determinable on the date of issuance and as such in accordance with ASC Topic 815 “Derivatives and Hedging” (“ASC 815”), the embedded conversion options of the note and warrants on the date of issuance were valued using the binomial lattice options pricing model and recorded as derivative liabilities. The fair value of the conversion option and five-year warrants issued in connection with the note on the date of issuance aggregated $60,000, and were recorded as debt discount. The debt discount was amortized through the term of the note. | |||||||||
During December 2012 the Company amended the note to remove the conversion right and extend the due date to June 30, 2013, and to amend the warrants to remove certain anti-dilution provisions. For executing the agreement, the holder was granted a three-year warrant to purchase 61,856 shares of the Company’s common stock, exercisable at $0.18 per share. The Company evaluated the change in cash flows in connection with the December amendment and determined that there was a less than 10% change between the present value of the existing debt and the amended debt. As a result, the fair value of the new three-year warrants of $4,923 was expensed on the date of the amendment. | |||||||||
On July 15, 2011, the Company issued a $109,822 convertible promissory note with an original issue discount of 15% that consolidated various demand notes from September 2010 through July 2011. The convertible promissory note has a maturity date of the earlier of (i) the Company raising debt or equity financing of $600,000 or more, or (ii) August 31, 2011. The loan holder advanced an additional $1,750 in September 2011. The note may be converted into the Company’s common stock by the holder at $0.05 per share. As a financing incentive, the lender received a five-year warrant, vesting July 15, 2011, to purchase 1,098,220 shares of the Company’s common stock at an exercise price of $0.25 per share. The Company repaid $1,784 during 2012. The unpaid balance was $109,789 at September 30, 2013 and December 31, 2012. The Company is not compliant with the repayment terms of the note. | |||||||||
The conversion price of the note and five-year warrants were not fixed and determinable on the date of issuance and as such in accordance with ASC Topic 815 “Derivatives and Hedging” (“ASC 815”), the embedded conversion options of the note and warrants on the date of issuance were valued using the binomial lattice options pricing model and recorded as derivative liabilities. The fair value of the conversion option and five-year warrants issued in connection with the note on the date of issuance aggregated $95,497, and were recorded as debt discount. The debt discount was amortized through the term of the note. | |||||||||
iii. | In March 2012, the Company commenced an offering of secured promissory notes for an aggregate principal amount of $1,000,000 with three-year warrants to purchase an aggregate of 2,500,000 shares the Company’s common stock (2.5 shares for each $1 of the principal amount of the notes purchased) exercisable at $0.10 per share. The notes bear interest at 18% and have various maturity dates beginning September 2, 2012. At the time of any new debt or equity financing by the Company, the principal and interest then due under the notes may be converted into the number of fully paid and non-assessable debt instruments, shares/or units issued in the financing. Notes in the aggregate principal amount of $850,000 and warrants to purchase an aggregate of 2,125,000 common shares were sold in the offering. In addition, the investment banker who facilitated the sale of the notes and warrants received a three-year warrant to purchase 212,500 shares of the Company’s common stock (10% of the number of shares of common stock issuable upon exercise of the warrants sold in the offering) exercisable at $0.10 per share. The unpaid balance, included accrued interest was $963,356 and $850,000 at September 30, 2013 and December 31, 2012, respectively. Since only a portion of the March 2012 secured promissory notes are convertible into shares of the Company’s common stock, the note value is split to reflect $879,338 in section A and $84,018 in section C at September 30, 2013, and $775,000 in Section A and $75,000 in section C at December 31, 2012 in the Note 7 table above. The Company is not compliant with the repayment terms of the notes. | ||||||||
The conversion price of the note and three-year warrants were not fixed and determinable on the date of issuance and as such in accordance with ASC Topic 815 “Derivatives and Hedging” (“ASC 815”), the embedded conversion options of the note and warrants on the date of issuance were valued using the binomial lattice options pricing model and recorded as derivative liabilities. The fair value of the conversion option and three-year warrants issued in connection with the note on the date of issuance aggregated $789,073, and was recorded as debt discount. The debt discount was fully amortized through the term of the notes and amounted to $443,655 and $789,073 for the three and nine months ended September 30, 2012, respectively. | |||||||||
During October 2012 the Company amended the notes to remove the conversion right and extend the due date to June 30, 2013, and to amend the warrants to remove certain anti-dilution provisions. Holders of an aggregate of | |||||||||
$775,000 of principal agreed to such amendments and were granted a warrant to purchase 1,550,000 shares of our common stock equal to two times the principal amount of the note amended, exercisable at $0.50 per share. | |||||||||
The Company evaluated the change in cash flows in connection with the October amendment and determined that there was a greater than 10% change between the present value of the existing debt and the amended debt. As a result, the fair value of the three-year warrants aggregated $140,759 and were recorded as a discount to the modified debt and will be accreted over the remaining term of the modified debt and recognized as interest expense. The accretion of the debt discount on the modified debt amounted to $105,570 for the nine months ended September 30, 2013. | |||||||||
iv. | In August 2012, the Company commenced an offering of secured promissory notes for an aggregate principal amount of $3,000,000 with three-year warrants to purchase an aggregate of 6,000,000 shares of the Company’s common stock (two shares for each $1 of the principal amount of the notes purchased) exercisable at $0.50 per share. The notes bear interest at 18% and have various maturity dates beginning March 13, 2013. At the time of any new debt or equity financing by the Company, the principal and interest then due under the notes may be converted into the number of fully paid and non-assessable debt instruments, shares/or units issued in the financing. During year ended December 31, 2012, notes in the aggregate principal amount of $875,000 and warrants to purchase an aggregate of 1,750,000 shares of the Company’s common stock were sold in the offering. In addition, the investment banker who facilitated the sale of the notes and warrants received a three-year warrant to purchase 175,000 shares of the Company’s common stock (10% of the number of shares of common stock issuable upon exercise of the warrants sold in the offering) exercisable at $0.50 per share. The unpaid balance, included accrued interest was $992,801 and $875,000 at September 30, 2013 and December 31, 2012, respectively. The Company is not compliant with the repayment terms of the note. | ||||||||
The conversion price of the note and three-year warrants were not fixed and determinable on the date of issuance and as such in accordance with ASC Topic 815 “Derivatives and Hedging” (“ASC 815”), the embedded conversion options of the note and warrants on the date of issuance were valued using the binomial lattice options pricing model and recorded as derivative liabilities. The fair value of the conversion option and three-year warrants issued in connection with the note on the date of issuance aggregated $499,186, and were recorded as debt discount. The debt discount was amortized through the term of the notes and amounted to $64, 116 for the three months ended September 30, 2012 and $217,535 and $64,116 for the nine months ended September 30, 2013 and September 30, 2012, respectively. | |||||||||
v. | During May 2013, the Company issued a $500,000 convertible promissory note with an original issue discount of $50,000. The convertible promissory note is due one year from each advance. After 90 days from each advance, a one-time 12% interest charge shall also be added to note. At any time, the outstanding principle and interest may be converted into fully paid and non-assessable shares of the Company’s common stock. The conversion price shall be 60% of the lowest closing price of the stock for the twenty-five (25) business days preceding the conversion notice. As of December 31, 2013, the Company has been advanced $40,000 on this note. In addition, the agreement requires the Company reserve 28,000,000 shares of the Company’s common stock for issuance upon conversion of the convertible promissory note. The unpaid balance, included accrued interest was $47,445 at September 30, 2013. | ||||||||
The conversion price of the note was not fixed and determinable on the date of issuance and as such in accordance with ASC Topic 815 “Derivatives and Hedging” (“ASC 815”), the embedded conversion options of the note and warrants on the date of issuance were valued using the binomial lattice options pricing model and recorded as derivative liabilities. The fair value of the conversion option issued in connection with the note on the dates of issuance was $61,033, and $40,000 was recorded as a debt discount and the excess balance was booked directly to interest expense. The debt discount was amortized through the term of the notes and amounted to $7,118 and $10,677 for the three and nine months ended September 30, 2013, respectively. | |||||||||
vi. | During July 2013, the Company issued a $53,000 convertible promissory note bearing interest at 8% per annum. The convertible promissory note is due on March 10, 2014 and may be converted at any time into fully paid and non-assessable shares of the Company’s common stock. The conversion price shall be 51% of the closing price for the average three lowest trading days during the previous thirty (30) trading days preceding the conversion notice. In addition, the agreement requires the Company reserve 6,500,000 shares of the Company’s common stock for issuance upon full conversion of the convertible promissory note. The unpaid balance, included accrued interest was $54,045 at September 30, 2013. | ||||||||
The conversion price of the note was not fixed and determinable on the date of issuance and as such in accordance with ASC Topic 815 “Derivatives and Hedging” (“ASC 815”), the embedded conversion options of the note on the date of issuance was valued using the binomial lattice options pricing model and recorded as a derivative liability. The fair value of the conversion option issued in connection with the note on the dates of issuance was $68,488, and $53,000 was recorded as a debt discount and the excess balance was booked directly to interest expense. The debt discount was amortized through the term of the notes and amounted to $18,706 for the three and nine months ended September 30, 2013. | |||||||||
During August 2013, the Company issued a $16,500 convertible promissory note bearing interest at 8% per annum. The convertible promissory note is due on May 8, 2014 and may be converted at any time into fully paid and non-assessable shares of the Company’s common stock. The conversion price shall be 51% of the closing price for the average three lowest trading days during the previous ten (10) trading days preceding the conversion notice. In addition, the agreement requires the Company reserve 1,800,000 shares of the Company’s common stock for issuance upon full conversion of the convertible promissory note. The unpaid balance, included accrued interest was $16,699 at September 30, 2013. | |||||||||
The conversion price of the note was not fixed and determinable on the date of issuance and as such in accordance with ASC Topic 815 “Derivatives and Hedging” (“ASC 815”), the embedded conversion options of the note on the date of issuance was valued using the binomial lattice options pricing model and recorded as a derivative liability. The fair value of the conversion option issued in connection with the note on the dates of issuance was $19,734, and $16,500 was recorded as a debt discount and the excess balance was booked directly to interest expense. The debt discount was amortized through the term of the notes and amounted to $3,667 for the three and nine months ended September 30, 2013. | |||||||||
Fair_Value_Measures
Fair Value Measures | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||
Fair Value Measures | ' | ||||||||||||||||
8. FAIR VALUE MEASURES | |||||||||||||||||
ASC 820 “Fair Value Measurements and Disclosures” defines fair value, establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Standard clarifies that the exchange price is the price in an orderly transaction between market participants to sell an asset or transfer a liability at the measurement date, and emphasizes that fair value is a market-based measurement and not an entity-specific measurement. | |||||||||||||||||
ASC 820 establishes the following hierarchy used in fair value measurements and expands the required disclosures of assets and liabilities measured at fair value: | |||||||||||||||||
· | Level 1 – Inputs use quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. | ||||||||||||||||
· | Level 2 – Inputs use other inputs that are observable, either directly or indirectly. These inputs include quoted prices for similar assets and liabilities in active markets as well as other inputs such as interest rates and yield curves that are observable at commonly quoted intervals. | ||||||||||||||||
· | Level 3 – Inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset or liability. | ||||||||||||||||
In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment. | |||||||||||||||||
The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2013 and December 31, 2012, respectively: | |||||||||||||||||
Fair Value Measurements | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Derivative liabilities: | |||||||||||||||||
30-Sep-13 | $ | — | $ | — | $ | 1,393,054 | $ | 1,393,054 | |||||||||
31-Dec-12 | $ | — | $ | — | $ | 432,030 | $ | 432,030 | |||||||||
The 2013 and 2012 derivative liabilities are measured at fair value using the binomial lattice options pricing model, and are classified within Level 3 of the valuation hierarchy. The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities that are measured at fair value on a recurring basis: | |||||||||||||||||
Nine months Ended | Year Ended | ||||||||||||||||
30-Sep-13 | 31-Dec-12 | ||||||||||||||||
Fair value, beginning of period | $ | 432,030 | $ | 155,813 | |||||||||||||
Derivative liabilities recorded during the period | 153,968 | 1,323,548 | |||||||||||||||
Reclassification to equity upon conversion of note | — | (1,787,542 | ) | ||||||||||||||
Reclassification to equity upon amendment of notes and warrants | — | (1,152,144 | ) | ||||||||||||||
Net unrealized (gain) loss on derivative financial instruments | 807,056 | 1,892,355 | |||||||||||||||
Fair value, end of period | $ | 1,393,054 | $ | 432,030 | |||||||||||||
Stock_options_and_Warrants
Stock options and Warrants | 9 Months Ended | ||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||
Temporary Equity Disclosure [Abstract] | ' | ||||||||||||||||||
Stock options and Warrants | ' | ||||||||||||||||||
9. STOCK OPTIONS AND WARRANTS | |||||||||||||||||||
Stock Options – Employment Letter Agreement: | |||||||||||||||||||
On July 3, 2011, in conjunction with Chris White’s employment as the Company’s Vice President of Global Supply Chain, the Company granted Mr. White a seven-year option to purchase 2,950,000 shares of the Company’s common stock at $0.20 per share. The option vested as to 1,180,000 shares on the date of grant, and vests as to 295,000 on each of the first six semi-annual anniversaries of the grant date. The fair value of the option was approximately $317,400. During May 2013, Mr. White resigned from the Company and in accordance with the terms of his non-qualified stock option agreement, all the option shares vest immediately with a revised expiration date of November 17, 2013. | |||||||||||||||||||
On January 6, 2012, in conjunction with Mark Zeller’s employment as the Company’s North American Director of Sales, the Company granted Mr. Zeller a five-year option to purchase 1,500,000 shares of the Company’s common stock at $0.20 per share. The option vested as to 250,000 on the date of grant, and vests as to 416,667 on each of the first three anniversaries of the grant date. The fair value of the option was approximately $44,000. On May 1, 2012, Mr. Zeller resigned from the Company and the option terminated in accordance with its terms. | |||||||||||||||||||
On April 24, 2012, in conjunction with Roger Zardo’s employment as the Company’s Director of National Procurement, the Company granted Mr. Zardo a three-year option to purchase 325,000 shares of the Company’s common stock at $0.25 per share. The option vested as to 100,000 on the date of grant, vests as to 75,000 shares on each of the first two anniversaries of the grant date, and vests as to 75,000 shares on November 28, 2014. The fair value of the option was approximately $18,400. During March 2013, Mr. Zardo resigned from the Company and the option terminated in accordance with its terms. | |||||||||||||||||||
On May 18, 2012, in conjunction with Jack Connelly’s employment as the Company’s Director of National Sales, the Company granted Mr. Connelly a three-year option to purchase 500,000 shares of the Company’s common stock at $0.25 per share. The option vested as to 100,000 on the date of grant, vests as to 134,000 shares on each of the first two anniversaries of the grant date, and vests as to the final 132,000 shares on November 29, 2014. The fair value of the option was approximately $33,900. On July 1, 2013, Mr. Connelly resigned from the Company and in accordance with the terms of his non-qualified stock option agreement, all the option shares vest immediately with a revised expiration date of December 31, 2013. | |||||||||||||||||||
On August 31, 2012, in conjunction with George Borzilleri’s employment as the Company’s Manager, National Retail Sales, the Company granted Mr. Borzilleri a three-year option to purchase 396,427 shares of the Company’s common stock at $0.35 per share. The option vested as to 135,714 shares on the date of grant, vests as to 86,904 shares on each of the first two anniversaries of the grant date, and vests as to the final 86,905 shares on March 6, 2015. The fair value of the option was approximately $102,524. On July 1, 2013, Mr. Borzilleri resigned from the Company and in accordance with the terms of his non-qualified stock option agreement, all the option shares vest immediately with a revised expiration date of December 31, 2013. | |||||||||||||||||||
On October 5, 2012, Chris White, the Company’s Vice President of Global Supply was granted a seven year non-qualified stock option to purchase 3,837,719 shares of the Company’s common stock at $0.62 per share. The fair value of the option was $1,221,493. The option vests as follows: | |||||||||||||||||||
750,000 shares vest immediately. | |||||||||||||||||||
750,000 shares vest upon receipt of certificates issued by IMO Control (Institute for Marker Ecology) certifying compliance with IMO Controls ‘For Life’ Fair Trade standards for three key Company suppliers. | |||||||||||||||||||
750,000 shares vest upon the launch by Mr. White of an internal “alpha” demonstration website that contains certain functionality. | |||||||||||||||||||
198,250 shares vest on each of the next 8 quarter dates starting January 6, 2013 through October 6,, 2014. The final quarterly vesting will be 199,969 shares. | |||||||||||||||||||
The Company recognized stock based compensation expense associated with stock options included in general and administrative expenses on the condensed consolidated statement of operations of $0 and $35,099 for the three months ended September 30, 2013 and 2012, respectively, and $294,276 and $97,922 for the nine months ended September 30, 2013 and 2012, respectively for these awards. | |||||||||||||||||||
Options Summary: | |||||||||||||||||||
A summary of option activity during the nine months ended September 30, 2013 and the year ended December 31, 2012 is presented below: | |||||||||||||||||||
Weighted | |||||||||||||||||||
Weighted | Average | ||||||||||||||||||
Average | Remaining | ||||||||||||||||||
Exercise | Contractual | Intrinsic | |||||||||||||||||
Shares | Price | Term | Value | ||||||||||||||||
Balance at December 31, 2011 | 2,983,750 | $ | 0.31 | 4 | $ | — | |||||||||||||
Granted | 6,559,146 | 0.46 | 3.55 | — | |||||||||||||||
Exercised | — | — | — | — | |||||||||||||||
Forfeited | (1,500,000 | ) | 0.2 | — | — | ||||||||||||||
Balance at December 31, 2012 | 8,042,896 | 0.45 | 3.47 | 88,500 | |||||||||||||||
Granted | — | — | — | — | |||||||||||||||
Exercised | — | — | — | — | |||||||||||||||
Forfeited | (325,000 | ) | 0.25 | — | — | ||||||||||||||
Balance at September 30, 2013 | 7,717,896 | $ | 0.46 | 0.18 | $ | — | |||||||||||||
Exercisable at September 30, 2013 | 7,191,183 | $ | 0.46 | 0.18 | $ | — | |||||||||||||
The Company has fully amortized all stock options. | |||||||||||||||||||
Common Stock Warrants: | |||||||||||||||||||
During June 2013, a consultant was granted a three-year warrant to purchase 250,000 shares of our Company’s common stock at $0.15 per share for accounting services to our Company. The warrant vests immediately. | |||||||||||||||||||
Warrant transactions during the nine months ended September 30, 2013 and the year ended December 31, 2012 were as follows: | |||||||||||||||||||
Weighted | Average | ||||||||||||||||||
Average | Remaining | ||||||||||||||||||
Number of | Exercise | Life | Intrinsic | ||||||||||||||||
Warrants | Price | In Years | Value | ||||||||||||||||
Balance, December 31, 2011 | 5,862,140 | $ | 0.12 | ||||||||||||||||
Granted | 10,775,000 | 0.34 | |||||||||||||||||
Exercised | (2,039,735 | ) | 0.1 | ||||||||||||||||
Forfeited | (103,064 | ) | 0.1 | ||||||||||||||||
Balance, December 31, 2012 | 14,494,341 | $ | 0.28 | ||||||||||||||||
Granted | 610,586 | 0.18 | |||||||||||||||||
Exercised | — | — | |||||||||||||||||
Forfeited | — | — | |||||||||||||||||
Balance, September 30, 2013 | 15,104,927 | $ | 0.28 | 2.14 | $ | 23,758 | |||||||||||||
Exercisable, September 30, 2013 | 15,104,927 | $ | 0.28 | 2.14 | $ | 23,758 | |||||||||||||
The intrinsic value is calculated on the difference between the fair market value of the Company’s restricted stock, which was $0.03 per share as of September 30, 2013, and the exercise price of the warrants. | |||||||||||||||||||
The following table presents information related to warrants at September 30, 2013: | |||||||||||||||||||
Warrants Outstanding | Warrants Exercisable | ||||||||||||||||||
Weighted | |||||||||||||||||||
Average | Exercisable | ||||||||||||||||||
Exercise | Number of | Remaining Life | Number of | ||||||||||||||||
Price | Warrants | In Years | Warrants | ||||||||||||||||
$ | 0.01 | 452,354 | 2.33 | 452,354 | |||||||||||||||
0.1 | 692,802 | 2.38 | 692,802 | ||||||||||||||||
0.25 | 705,882 | 2.58 | 705,882 | ||||||||||||||||
0.25 | 575,000 | 2.71 | 575,000 | ||||||||||||||||
0.01 | 452,355 | 2.75 | 452,355 | ||||||||||||||||
0.25 | 1,098,220 | 2.79 | 1,098,220 | ||||||||||||||||
0.001 | 195,291 | 1 | 195,291 | ||||||||||||||||
0.1 | 1,000,000 | 1.13 | 1,000,000 | ||||||||||||||||
0.1 | 125,000 | 1.42 | 125,000 | ||||||||||||||||
0.25 | 300,000 | 1.42 | 300,000 | ||||||||||||||||
0.1 | 1,197,437 | 1.46 | 1,197,437 | ||||||||||||||||
0.5 | 50,000 | 1.83 | 50,000 | ||||||||||||||||
0.5 | 25,000 | 1.83 | 25,000 | ||||||||||||||||
0.5 | 50,000 | 1.92 | 50,000 | ||||||||||||||||
0.5 | 25,000 | 1.92 | 25,000 | ||||||||||||||||
0.25 | 250,000 | 1.75 | 250,000 | ||||||||||||||||
0.5 | 1,870,000 | 1.92 | 1,870,000 | ||||||||||||||||
0.5 | 55,000 | 2 | 55,000 | ||||||||||||||||
0.5 | 1,550,000 | 2.08 | 1,550,000 | ||||||||||||||||
0.5 | 1,125,000 | 2.17 | 1,125,000 | ||||||||||||||||
0.5 | 1,000,000 | 2.17 | 1,000,000 | ||||||||||||||||
0.25 | 1,200,000 | 2.25 | 1,200,000 | ||||||||||||||||
0.5 | 500,000 | 2.25 | 500,000 | ||||||||||||||||
0.1 | 25,000 | 2.63 | 25,000 | ||||||||||||||||
0.2 | 335,586 | 4.21 | 335,587 | ||||||||||||||||
0.15 | 250,000 | 2.67 | 250,000 | ||||||||||||||||
15,104,927 | 2.14 | 15,104,927 | |||||||||||||||||
Related_Party_Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2013 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions | ' |
10. RELATED PARTY TRANSACTIONS | |
Consulting Agreement | |
On July 1, 2008, the Company signed a 16-month consulting agreement with a related party. The consulting services include financial advisory, investment relations and certain administrative and other services for $6,250 monthly fees. At September 30, 2013 and December 31, 2012, the Company owed $100,000 related to above consulting services, which is included in accrued expenses and other current liabilities in the condensed consolidated balance sheets. | |
Employee Warrants | |
On February 29, 2012, an employee was granted a three year warrant to purchase 300,000 shares of the Company’s common stock for services rendered. The warrant vested upon grant, and was exercisable at $0.25 per share. The Company recorded a charge for $6,149 to stock based compensation for the nine months ended September 30, 2012. |
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended | |
Sep. 30, 2013 | ||
Commitments and Contingencies Disclosure [Abstract] | ' | |
Commitments and Contingencies | ' | |
11 | . COMMITMENTS AND CONTINGENCIES | |
Agreements | ||
During October 2012 we leased approximately 1,641 square feet of office space located at 2030 Addison Street, Berkeley, CA for approximately $4,200 per month under a 29 month agreement with rental payments commencing on January 1, 2013. The rental fee escalated to approximately $4,350 on April 1, 2013 and approximately $4,500 on April 1, 2014. The lease was terminated on August 31, 2013. | ||
Legal matters | ||
In the normal course of business, the Company is, and in the future may be, subject to various disputes, claims, lawsuits, and administrative proceedings arising in the ordinary course of business with respect to commercial, product liability, employment, and other matters, which could involve substantial amounts of damages. In the opinion of management, any liability related to any such known proceedings would not have a material adverse effect on the business or financial condition of the Company. Additionally, from time to time, the Company may pursue litigation against third parties to enforce or protect the Company’s rights under the Company’s trademarks, trade secrets and intellectual property rights generally. | ||
During 2010, the Company was served with a lawsuit for the Company’s past due liabilities. The lawsuit was Peri & Sons, plaintiff, vs. Organic Alliance, Inc. and Parker Booth, defendants, for past due produce liabilities. An agreement was reached and the Company has been making payments to the plaintiff. The Company was dismissed from the action and signed a confession of judgment. Over half of the past due amount has been paid with a balance of approximately $21,000 remaining. The Company has accrued for this balance. | ||
On June 20, 2013, the Company was served a lawsuit for a disputed loan issued by the Company. The lawsuit was Austin Noll Jr. plaintiff, vs. Organic Alliance, Inc. and DOES 1 through 50, defendants, for a $50,000 loan issued in July 2009. The case will be reviewed by the Company’s legal counsel. In July 2010, the Company issued stock to a third party with the obligation to pay Mr. Noll. The Company’s position is the loan was repaid by the Company in July 2010. | ||
On July 30, 2013, the Company was served with a lawsuit for past due liabilities of the Company. The lawsuit was Tom Ver. LLC d/b/a MexFresh Produce, plaintiff, vs. Organic Alliance, Inc., et al, for past due produce liabilities of $53,863.53. The lawsuit was filed in the United States District Court of the Northern District of California. . The case will be reviewed by the Company’s legal counsel. | ||
On August 1, 2013, the Company received a “Notice of Labor Laws Violation” under California Labor Code 2699, 2699.3 and 2699.5. The notice was file by an employee, Kenneth Horwitz and all current and former employees against Organic Alliance, Inc. Parker Booth, CEO and Barry Brookstein, CFO. The notice alleges various California labor laws violations and seeks wages and penalties from the Company, Mr. Booth and Mr. Brookstein. The notice will be reviewed by the Company’s legal counsel. | ||
Accrued_Expenses_and_other_Lia
Accrued Expenses and other Liabilities | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Accrued Expenses and other Liabilities | ' | ||||||||
12 | ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||||||||
Accrued expenses and other current liabilities consist of the following: | |||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Due to consultant (Note 10) | $ | 100,000 | $ | 100,000 | |||||
Payroll and payroll taxes payable (A) | 1,692,089 | 1,399,049 | |||||||
Other accrued liabilities | 36,745 | 235,814 | |||||||
$ | 1,828,834 | $ | 1,734,863 | ||||||
(A) | As of September 30, 2013 and December 31, 2012, the Company has unpaid payroll taxes including penalties and interest of $320,622 and $286,027, respectively, which have yet to be remitted to the taxing authorities and returns have yet to be filed. | ||||||||
Subsequent_Events
Subsequent Events | 9 Months Ended | |
Sep. 30, 2013 | ||
Subsequent Events [Abstract] | ' | |
Subsequent Events | ' | |
13 | SUBSEQUENT EVENTS | |
During December 2013, the Company issued a $13,000 convertible promissory note bearing interest at 8% per annum. The convertible promissory note is due on September 15, 2014 and may be converted at any time into fully paid and non-assessable shares of the Company’s common stock. The conversion price shall be 51% of the closing price for the average three lowest trading days during the previous ten (10) trading days preceding the conversion notice. In addition, the agreement requires the Company reserve 20,000,000 shares of the Company’s common stock for issuance upon full conversion of the convertible promissory note. The conversion price of the note was not fixed and determinable on the date of issuance and as such in accordance with ASC Topic 815 “Derivatives and Hedging” (“ASC 815”), the embedded conversion options of the note on the date of issuance was valued using the binomial lattice options pricing model and recorded as a derivative liability. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Development Stage | ' | ||||||||
Development Stage – The Company is considered to be in the development stage as defined in ASC 915, “Accounting and Reporting by Development Stage Enterprises”. | |||||||||
On July 1, 2013, the Company temporarily suspended operations and elected to enter the development stage. All inventories and deposits from the former operations were written off as of July 1, 2013. | |||||||||
Due to unfavorable financing conditions and inability to obtain suitable financing, the Company has determined that it will develop other markets in addition to the organic and Fair Trade certified fruits and vegetables global market. | |||||||||
Basis of Presentation | ' | ||||||||
Basis of Presentation - The Company's unaudited condensed consolidated financial statements have been prepared on an accrual basis of accounting, in conformity with accounting principles generally accepted in the United States of America (US GAAP) for interim financial information applicable for a going concern, which assumes that the Company will realize its assets and discharge its liabilities in the ordinary course of the business, and in accordance with the instructions for Form 10-Q and Article 10 of Regulation S-X promulgated under the Securities Exchange Act of 1934, as amended. Certain information and disclosures included in the financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations. | |||||||||
In the opinion of management, the condensed consolidated financial statements contain all material adjustments, consisting | |||||||||
only of normal recurring adjustments necessary to present fairly the financial condition, results of operations, and cash flows of the Company for the interim periods presented. | |||||||||
The results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results of operations for the full year. These financial statements and related footnotes should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission on June 13, 2013. | |||||||||
Use of estimates | ' | ||||||||
Use of Estimates - The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates that are particularly sensitive to change in the near term include, but are not limited to, realization of deferred tax assets, allowance for doubtful accounts, and assumptions used in derivative valuations and share based payment transactions. Actual results could differ from those estimates. | |||||||||
Principles of Consolidation | ' | ||||||||
Principles of Consolidation - The consolidated financial statements include the accounts of Organic Alliance, Inc. and its wholly-owned subsidiary, Organic Texas, Inc. (collectively, the “Company”). All significant inter-company transactions and balances have been eliminated in consolidation. | |||||||||
Allowance for Doubtful Accounts | ' | ||||||||
Allowance for Doubtful Accounts - An allowance for uncollectible accounts receivable is recorded based on a combination of aging analysis, past practices and any specific troubled accounts. The Company’s produce is sold to the Company’s customers for cash or on credit terms which are established in accordance with local and industry practices and typically require payment within 10 to 30 days of delivery. Accounts are written off when uncollectibility is confirmed. Subsequent recoveries, if any, are credited to the allowance account. The allowance for doubtful accounts amounted to $7,001 and $5,000 at September 30, 2013 and December 31, 2012, respectively. | |||||||||
In addition, the Company factors its receivables with full recourse and, as a result, accounts for the factoring akin to a secured borrowing, maintaining the gross receivable asset and due to factor liability on its books and records. In connection with the factoring of its receivables, the Company estimates an allowance for factoring fees associated with the collections. These fees range from 3% to 5% depending on the actual timing of the collection. The actual recognition and amount of such fees may differ from the estimates depending upon the timing of collections. The Company has not factored any receivables since May 2013. | |||||||||
Inventory | ' | ||||||||
Inventory - Inventory is stated at the lower of cost (first-in, first-out) or market. All inventories were written off as of July 1, 2013. At December 31. 2012, inventory included principally produce the Company purchased from growers ($34,547) and packaging materials ($105,341). The Company held $139,888 of inventory as of December 31, 2012. | |||||||||
Income Tax | ' | ||||||||
Income Taxes - The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes”. Under this method, income tax expense is recognized for the amount of (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. | |||||||||
Fair Value of Financial Instruments | ' | ||||||||
Fair Value of Financial Instruments - The carrying amounts of financial instruments, including cash, receivables, accounts payable and accrued expenses approximated fair value as of the balance sheet dates presented, because of the relatively short maturity dates on these instruments. The carrying amounts of the notes payable issued approximate fair value as of the balance sheet dates presented, because interest rates and other terms on these instruments approximate terms currently available on similar instruments. | |||||||||
Derivative Financial Instruments | ' | ||||||||
Derivative Financial Instruments - The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the instrument could be required within 12 months of the balance sheet date. | |||||||||
The accounting treatment of derivative financial instruments requires that the Company record the conversion option and related warrants at their fair values as of the inception date of the agreements, and at fair value as of each subsequent balance sheet date. As a result of entering into the convertible notes, the Company is required to classify certain non-employee warrants as derivative liabilities and record them at their fair values at each balance sheet date. Any change in fair value was recorded as a change in the fair value of derivative liabilities for each reporting period at each balance sheet date. The Company reassesses the classification at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. | |||||||||
The fair value of conversion options at a fixed number of shares are recorded using the intrinsic value method. Conversion options at variable rates and any options and warrants with ratchet provisions are deemed to contain a “down-round protection”. Accordingly, they do not meet the scope exception for treatment as a derivative under ASC 815 since “down-round protection” is not an input into the calculation of the fair value of the equity instruments and cannot be considered “indexed to the Company’s own stock”, which is a requirement for the scope exception as outlined under ASC 815. | |||||||||
The Company signed convertible notes and has determined that a conversion option is embedded in the note and it is required to bifurcate the conversion option from the host contract under ASC 815 and account for the derivatives at fair value. The estimated fair value of the conversion option was determined using the binomial model. The fair value of the conversion option will be classified as a liability until the debt is converted by the note holders or paid back by the Company. The fair value will be affected by changes in inputs to that model including our stock price, expected stock price volatility, the contractual term, and the risk-free interest rate. The Company will continue to classify the fair value of the conversion option as a liability until the conversion option is exercised, expires or is amended in a way that would no longer require these conversion options to be classified as a liability, whichever comes first. The Company has adopted a sequencing policy that reclassifies contracts (from equity to assets or liabilities) with the most recent inception date first. Thus any available shares are allocated first to contracts with the most recent inception dates. | |||||||||
For the binomial lattice options pricing model, the Company used the following assumptions and weighted average fair value ranges for the nine months ended September 30: | |||||||||
2013 | 2012 | ||||||||
Risk-free interest rate | 0.02%-0.63% | 0.14%-0.31% | |||||||
Dividend yield | N/A | N/A | |||||||
Expected volatility | 26.4%-48.7% | 31.6%-56.0% | |||||||
Expected life in months and years | 3 months – 2.8 years | 3 months – 4.3 years | |||||||
Since the Company’s common is thinly traded, the expected volatility is based on the average historical stock volatility data for three similar public companies over the expected term of the derivative financial instrument. | |||||||||
Revenue Recognition | ' | ||||||||
Revenue Recognition - Revenue is recorded when (1) the customer accepts delivery of the product, title has been transferred, and the Company has no significant obligations remaining to be performed; (2) a final understanding as to specific nature and terms of the agreed upon transaction has occurred; (3) price is fixed and (4) collection is reasonably assured. | |||||||||
Share Based Compensation | ' | ||||||||
Share Based Compensation – The Company accounts for share-based compensation in accordance with the fair value recognition provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 718. For employees and directors, the fair value of the award is measured on the grant date, and for non-employees the fair value of the award is generally re-measured on interim financial reporting dates until the service period is complete. | |||||||||
Option valuation models require the input of highly subjective assumptions, including the expected life of the option, and such assumptions can materially affect the fair value estimate. The fair value of share-based payment awards was estimated using the Black-Scholes option pricing model. The Company uses historical data to estimate option exercise and employee termination within the valuation model; separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. | |||||||||
For the Black-Scholes pricing model, the Company used the following assumptions and weighted average fair value ranges for the nine months ended September 30: | |||||||||
2013 | 2012 | ||||||||
Risk-free interest rate | 0.34%-2.54% | 0.32%-2.54% | |||||||
Dividend yield | N/A | N/A | |||||||
Expected volatility | 34.7%-54.2% | 36.4%-50.2% | |||||||
Expected life in years | 7-Mar | 2.5-7 | |||||||
Concentration | ' | ||||||||
Concentrations - The Company maintains cash balances at various high quality federally insured financial institutions, with balances at times, in excess of federally insured limits. Management believes that the financial institutions that hold the Company’s deposits are financially sound and therefore pose a minimum credit risk. The Company has not experienced any losses in such accounts. | |||||||||
The Company had no sales, receivables or purchases during the three months ended September 30, 2013. | |||||||||
Net Loss Per Share | ' | ||||||||
Net Loss Per Share - Basic loss per share was computed using the weighted average number of outstanding common shares. Diluted loss per share includes the effect of dilutive common stock equivalents from the assumed exercise of options, warrants and convertible notes. Common stock equivalents were excluded in the computation of diluted loss per share since their inclusion would be anti-dilutive. | |||||||||
In accordance with ASC 260 “Earnings per Share”, the Company has given effect to the issuance of warrants to purchase approximately 1,100,000 shares of the Company’s common stock as of September 30, 2013 and 2012, exercisable at $0.01. These warrants have been included in computing the basic net loss per share for the three and nine months ended September 30, 2013 and 2012. Additionally, included in the Company’s weighted average shares outstanding are 56,189 shares earned, but not issued, as at September 30, 2013 and 2012. | |||||||||
Total common stock equivalents which were excluded (since their inclusion would be anti-dilutive) are those shares issuable upon the exercise of warrants, options and the conversion of convertible notes, as of September 30, 2013 and 2012 were as follows: | |||||||||
September 30, | |||||||||
2013 | 2012 | ||||||||
Options | 7,717,896 | 4,455,177 | |||||||
Warrants | 14,004,927 | 9,104,403 | |||||||
Convertible notes (1) | 89,155,749 | 4,938,403 | |||||||
Total Common stock equivalents | 110,878,572 | 18,497,983 | |||||||
Due to the insufficient authorized but unissued shares of common stock to meet the required amount of shares for options, warrants and convertible instruments, the Company has accounted for the excess in common stock equivalents as a derivative liability in accordance with FASB ASC 815 Derivatives and Hedging. Accordingly, the derivative is marketed to market through earnings at the end of each reporting period. For the three and nine months ended September 30, 2013 the Company has recorded an expense of $25,047, as a part of the derivative liability on the accompanying condensed balance sheet. | |||||||||
-1 | At September 30, 2013, the Company reserved 36,300,000 shares of Common Stock from its authorized shares, which covers 8,442,099 shares of common stock issuable upon conversion of certain convertible notes. The remaining 80,713,650 shares of common stock issuable upon conversion of convertible notes are not covered by reserve shares. There were no reserves shares at September 30, 2012. | ||||||||
Recently Issued Accounting Standards | ' | ||||||||
Recently Issued Accounting Standards | |||||||||
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Binomial lattice options pricing model | ' | ||||||||
2013 | 2012 | ||||||||
Risk-free interest rate | 0.02%-0.63% | 0.14%-0.31% | |||||||
Dividend yield | N/A | N/A | |||||||
Expected volatility | 26.4%-48.7% | 31.6%-56.0% | |||||||
Expected life in months and years | 3 months – 2.8 years | 3 months – 4.3 years | |||||||
Share Based Compensation Assumptions | ' | ||||||||
2013 | 2012 | ||||||||
Risk-free interest rate | 0.34%-2.54% | 0.32%-2.54% | |||||||
Dividend yield | N/A | N/A | |||||||
Expected volatility | 34.7%-54.2% | 36.4%-50.2% | |||||||
Expected life in years | 7-Mar | 2.5-7 | |||||||
Common Stock Equivalents | ' | ||||||||
September 30, | |||||||||
2013 | 2012 | ||||||||
Options | 7,717,896 | 4,455,177 | |||||||
Warrants | 14,004,927 | 9,104,403 | |||||||
Convertible notes (1) | 89,155,749 | 4,938,403 | |||||||
Total Common stock equivalents | 110,878,572 | 18,497,983 |
Notes_payable_Loans_and_Deriva1
Notes payable, Loans and Derivative Liabilities (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Notes payable | ' | ||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
(unaudited) | |||||||||
Notes Payable (net of debt discount $0 and $133,827 at September 30, 2013 and December 31, 2012, respectively) (A) | $ | 2,995,390 | $ | 2,512,753 | |||||
Notes Payable – Related Parties (net of debt discount of $0 and $47,673 at September 30, 2013 and December 31, 2012, respectively) (B) | 671,257 | 509,696 | |||||||
Convertible Notes Payable (net of debt discount of $79,298and $217,535 at September 30, 2013 and at December 31, 2012, respectively) (C) | 1,305,610 | 914,506 | |||||||
Totals | $ | 4,972,257 | $ | 3,936,955 |
Fair_Value_Measures_Tables
Fair Value Measures (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||
Fair Value Measures on a recurring basis | ' | ||||||||||||||||
Fair Value Measurements | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Derivative liabilities: | |||||||||||||||||
30-Sep-13 | $ | — | $ | — | $ | 1,393,054 | $ | 1,393,054 | |||||||||
31-Dec-12 | $ | — | $ | — | $ | 432,030 | $ | 432,030 | |||||||||
Fair value liability on recurring basis | ' | ||||||||||||||||
Nine months Ended | Year Ended | ||||||||||||||||
30-Sep-13 | 31-Dec-12 | ||||||||||||||||
Fair value, beginning of period | $ | 432,030 | $ | 155,813 | |||||||||||||
Derivative liabilities recorded during the period | 153,968 | 1,323,548 | |||||||||||||||
Reclassification to equity upon conversion of note | — | (1,787,542 | ) | ||||||||||||||
Reclassification to equity upon amendment of notes and warrants | — | (1,152,144 | ) | ||||||||||||||
Net unrealized (gain) loss on derivative financial instruments | 807,056 | 1,892,355 | |||||||||||||||
Fair value, end of period | $ | 1,393,054 | $ | 432,030 |
Stock_options_and_Warrants_Tab
Stock options and Warrants (Tables) | 9 Months Ended | ||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||
Temporary Equity Disclosure [Abstract] | ' | ||||||||||||||||||
Options Summary | ' | ||||||||||||||||||
Weighted | |||||||||||||||||||
Weighted | Average | ||||||||||||||||||
Average | Remaining | ||||||||||||||||||
Exercise | Contractual | Intrinsic | |||||||||||||||||
Shares | Price | Term | Value | ||||||||||||||||
Balance at December 31, 2011 | 2,983,750 | $ | 0.31 | 4 | $ | — | |||||||||||||
Granted | 6,559,146 | 0.46 | 3.55 | — | |||||||||||||||
Exercised | — | — | — | — | |||||||||||||||
Forfeited | (1,500,000 | ) | 0.2 | — | — | ||||||||||||||
Balance at December 31, 2012 | 8,042,896 | 0.45 | 3.47 | 88,500 | |||||||||||||||
Granted | — | — | — | — | |||||||||||||||
Exercised | — | — | — | — | |||||||||||||||
Forfeited | (325,000 | ) | 0.25 | — | — | ||||||||||||||
Balance at September 30, 2013 | 7,717,896 | $ | 0.46 | 0.18 | $ | — | |||||||||||||
Exercisable at September 30, 2013 | 7,191,183 | $ | 0.46 | 0.18 | $ | — | |||||||||||||
Common Stock Warrant Summary | ' | ||||||||||||||||||
Weighted | Average | ||||||||||||||||||
Average | Remaining | ||||||||||||||||||
Number of | Exercise | Life | Intrinsic | ||||||||||||||||
Warrants | Price | In Years | Value | ||||||||||||||||
Balance, December 31, 2011 | 5,862,140 | $ | 0.12 | ||||||||||||||||
Granted | 10,775,000 | 0.34 | |||||||||||||||||
Exercised | (2,039,735 | ) | 0.1 | ||||||||||||||||
Forfeited | (103,064 | ) | 0.1 | ||||||||||||||||
Balance, December 31, 2012 | 14,494,341 | $ | 0.28 | ||||||||||||||||
Granted | 610,586 | 0.18 | |||||||||||||||||
Exercised | — | — | |||||||||||||||||
Forfeited | — | — | |||||||||||||||||
Balance, September 30, 2013 | 15,104,927 | $ | 0.28 | 2.14 | $ | 23,758 | |||||||||||||
Exercisable, September 30, 2013 | 15,104,927 | $ | 0.28 | 2.14 | $ | 23,758 | |||||||||||||
Warrants | ' | ||||||||||||||||||
Warrants Outstanding | Warrants Exercisable | ||||||||||||||||||
Weighted | |||||||||||||||||||
Average | Exercisable | ||||||||||||||||||
Exercise | Number of | Remaining Life | Number of | ||||||||||||||||
Price | Warrants | In Years | Warrants | ||||||||||||||||
$ | 0.01 | 452,354 | 2.33 | 452,354 | |||||||||||||||
0.1 | 692,802 | 2.38 | 692,802 | ||||||||||||||||
0.25 | 705,882 | 2.58 | 705,882 | ||||||||||||||||
0.25 | 575,000 | 2.71 | 575,000 | ||||||||||||||||
0.01 | 452,355 | 2.75 | 452,355 | ||||||||||||||||
0.25 | 1,098,220 | 2.79 | 1,098,220 | ||||||||||||||||
0.001 | 195,291 | 1 | 195,291 | ||||||||||||||||
0.1 | 1,000,000 | 1.13 | 1,000,000 | ||||||||||||||||
0.1 | 125,000 | 1.42 | 125,000 | ||||||||||||||||
0.25 | 300,000 | 1.42 | 300,000 | ||||||||||||||||
0.1 | 1,197,437 | 1.46 | 1,197,437 | ||||||||||||||||
0.5 | 50,000 | 1.83 | 50,000 | ||||||||||||||||
0.5 | 25,000 | 1.83 | 25,000 | ||||||||||||||||
0.5 | 50,000 | 1.92 | 50,000 | ||||||||||||||||
0.5 | 25,000 | 1.92 | 25,000 | ||||||||||||||||
0.25 | 250,000 | 1.75 | 250,000 | ||||||||||||||||
0.5 | 1,870,000 | 1.92 | 1,870,000 | ||||||||||||||||
0.5 | 55,000 | 2 | 55,000 | ||||||||||||||||
0.5 | 1,550,000 | 2.08 | 1,550,000 | ||||||||||||||||
0.5 | 1,125,000 | 2.17 | 1,125,000 | ||||||||||||||||
0.5 | 1,000,000 | 2.17 | 1,000,000 | ||||||||||||||||
0.25 | 1,200,000 | 2.25 | 1,200,000 | ||||||||||||||||
0.5 | 500,000 | 2.25 | 500,000 | ||||||||||||||||
0.1 | 25,000 | 2.63 | 25,000 | ||||||||||||||||
0.2 | 335,586 | 4.21 | 335,587 | ||||||||||||||||
0.15 | 250,000 | 2.67 | 250,000 | ||||||||||||||||
15,104,927 | 2.14 | 15,104,927 |
Accrued_Expenses_and_other_Lia1
Accrued Expenses and other Liabilities (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Accrued Liabilities | ' | ||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Due to consultant (Note 10) | $ | 100,000 | $ | 100,000 | |||||
Payroll and payroll taxes payable (A) | 1,692,089 | 1,399,049 | |||||||
Other accrued liabilities | 36,745 | 235,814 | |||||||
$ | 1,828,834 | $ | 1,734,863 |
Nature_of_Business_Details_Nar
Nature of Business (Details Narrative) | 0 Months Ended |
Apr. 29, 2008 | |
Notes to Financial Statements | ' |
Common Stock, Shares for Mergers | 10,916,917 |
Common Stock, shares acquired | 464,999 |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details Narrative) (USD $) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Allowance for Doubtful Accounts | $7,001 | $5,000 |
Inventory from growers | ' | -34,547 |
Packing materials | ' | -105,341 |
Inventory | ' | $139,888 |
Minimum | ' | ' |
Days of payment | 10 | ' |
Factoring Accounts Receivable, fees | 3.00% | ' |
Maximum | ' | ' |
Days of payment | 30 | ' |
Factoring Accounts Receivable, fees | 5.00% | ' |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies Fair Value Assumptions (Details Narrative) (Binomial lattice) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Minimum | ' | ' |
Risk-free rate interest rate | 0.02% | 0.14% |
Dividend yield | 0.00% | 0.00% |
Expected volatility | 26.40% | 31.60% |
Expected life in months and years | '0 years 3 months 0 days | '0 years 3 months 0 days |
Maximum | ' | ' |
Risk-free rate interest rate | 0.63% | 0.31% |
Dividend yield | 0.00% | 0.00% |
Expected volatility | 48.70% | 56.00% |
Expected life in months and years | '2 years 8 months 0 days | '4 years 3 months 0 days |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies Share Based Compensation (Details Narrative) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Minimum | ' | ' |
Risk -free interest rates | 0.34% | 0.32% |
Dividend yield | 0 | 0 |
Expected Volatility | 34.70% | 36.40% |
Expected life in years | '3 years 0 months 0 days | '2 years 5 months 0 days |
Maximum | ' | ' |
Risk -free interest rates | 2.54% | 2.54% |
Dividend yield | 0 | 0 |
Expected Volatility | 54.20% | 50.20% |
Expected life in years | '7 years 0 months 0 days | '7 years 0 months 0 days |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies Net Loss Per Share (Details Narrative) (USD $) | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | ||
Common stock in reserve, shares issued | 36,300,000 | ' | |
Common stock issued upon conversion of certain convertible notes | 8,442,099 | [1] | ' |
Earnings Per Share | ' | ' | |
Options | 7,717,896 | 4,455,177 | |
Warrants | 14,004,927 | 9,104,403 | |
Convertible notes | 89,155,749 | 4,938,403 | |
Common Stock Equivalents | 110,878,572 | 18,497,983 | |
Warrants Issued | 1,100,000 | 1,100,000 | |
Exercise Price | $0.01 | $0.01 | |
Shares earned, not issued | 56,189 | 56,189 | |
[1] | 80,713,650 shares of common stock issuable upon conversion of convertible notes are not covered by reserve shares. |
Going_Concern_Details_Narrativ
Going Concern (Details Narrative) (USD $) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Going Concern Details Narrative Usd | ' | ' |
Working Capital Deficit | $9,839,000 | ' |
Accumulated Losses | 24,128,000 | ' |
Deficit accumulated during the development stage | 1,650,119 | ' |
Payroll tax liability | 320,622 | 286,027 |
Aggregate notes payable | $4,838,000 | ' |
Due_to_Factor_Details_Narrativ
Due to Factor (Details Narrative) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Notes to Financial Statements | ' | ' |
Factor, Accounts Receivable percentage | 80.00% | ' |
Collateral, Accounts Receivable percentage | 20.00% | ' |
Advances from Accounts Receivable | $118,561 | $213,778 |
Preferred_Stock_Details_Narrat
Preferred Stock (Details Narrative) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Notes to Financial Statements | ' | ' |
Preferred stock, par value | $0 | $0 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Equity_Transactions_Details_Na
Equity Transactions (Details Narrative) (USD $) | 3 Months Ended | |
Mar. 31, 2013 | Mar. 30, 2013 | |
Equity [Abstract] | ' | ' |
Common stock issued for services (in shares) | 500,000 | ' |
Common stock issued for services | $55,000 | ' |
Share price | ' | $0.11 |
Notes_payable_Loans_and_Deriva2
Notes payable, Loans and Derivative Liabilities - Notes payable (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Notes to Financial Statements | ' | ' |
Notes Payable (net of debt discount $0 and $133,827 at September 30, 2013 and December 31, 2012, respectively) (A) | $2,995,390 | $2,512,753 |
Notes Payable- Related Parties (net of debt discount of $0 and $47,673 at September 30, 2013 and December 31, 2012, respectively) (B) | 671,257 | 509,696 |
Convertible Notes Payable (net of debt discount of $79,298and $217,535 at September 30, 2013 and at December 31, 2012, respectively) (C) | 1,305,610 | 914,506 |
Total | $4,972,257 | $3,936,955 |
Notes_payable_Loans_and_Deriva3
Notes payable, Loans and Derivative Liabilities - Notes payable (Details) (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Notes Payable | ' | ' |
Debt Discount | $0 | $133,827 |
Notes Payable Related Party | ' | ' |
Debt Discount | 0 | 47,673 |
Convertible Notes Payable | ' | ' |
Debt Discount | $79,298 | $217,535 |
Notes_payable_Loans_and_Deriva4
Notes payable, Loans and Derivative Liabilities:Notes Payable(Details Narrative) (Notes Payable, USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Note 1 | ' | ' |
Date Issued | '2010-05 | ' |
Note Payable Issued | $20,000 | ' |
Interest Rate | 6.00% | ' |
Warrants Issued | 20,000 | ' |
Conversion Price | $1 | ' |
Expiration date | '2011-11 | ' |
Debt Discount | 9,200 | ' |
Note Payable | 23,944 | 23,046 |
Note 2 | ' | ' |
Date Issued | 3-Feb-11 | ' |
Note Payable Issued | 500,000 | ' |
Interest Rate | 15.00% | ' |
Warrants Issued | 452,354 | ' |
Conversion Price | $0.01 | ' |
Debt Discount | 137,703 | ' |
Debt Discount Interest Expense | ' | 63,114 |
Vesting Terms | '3 years and 5 years | ' |
Note Payable | 777,069 | 698,534 |
Default | '21% interest rate | ' |
Note 3 | ' | ' |
Date Issued | 1-Aug-12 | ' |
Note Payable Issued | 60,000 | ' |
Discount rate | 20.00% | ' |
Warrants Issued | 50,000 | ' |
Conversion Price | $0.50 | ' |
Debt Discount | 11,088 | ' |
Debt Discount Interest Expense | 11,088 | ' |
Vesting Terms | '3 years | ' |
Aggregate cash proceeds | 1,875,000 | ' |
Note Payable | 60,000 | ' |
Note 4 | ' | ' |
Date Issued | 7-Aug-12 | ' |
Note Payable Issued | 30,000 | ' |
Discount rate | 20.00% | ' |
Warrants Issued | 25,000 | ' |
Conversion Price | $0.50 | ' |
Debt Discount | 3,406 | ' |
Debt Discount Interest Expense | 3,406 | ' |
Vesting Terms | '3 years | ' |
Aggregate cash proceeds | 1,875,000 | ' |
Note Payable | 30,000 | 30,000 |
Note 5 | ' | ' |
Date Issued | 22-Aug-12 | ' |
Note Payable Issued | 60,000 | ' |
Discount rate | 20.00% | ' |
Warrants Issued | 50,000 | ' |
Conversion Price | $0.50 | ' |
Debt Discount | 9,495 | ' |
Debt Discount Interest Expense | 9,495 | ' |
Vesting Terms | '3 years | ' |
Aggregate cash proceeds | 1,850,000 | ' |
Note Payable | 60,000 | 60,000 |
Note 6 | ' | ' |
Date Issued | 31-Dec-12 | ' |
Note Payable Issued | 2,500,000 | ' |
Interest Rate | 18.00% | ' |
Warrants Issued | 5,000,000 | ' |
Conversion Price | $0.50 | ' |
Expiration date | '2013-06 | ' |
Debt Discount | ' | 32,202 |
Debt Discount Interest Expense | 28,257 | ' |
Aggregate cash proceeds | ' | 1,000,000 |
Warrants sold | ' | 2,000,000 |
Additional warrants issued | ' | 200,000 |
Note Payable | 1,134,630 | 1,000,000 |
Note 7 | ' | ' |
Date Issued | 8-May-13 | ' |
Discount rate | 20.00% | ' |
Warrants Issued | 30,000 | ' |
Conversion Price | $0.10 | ' |
Debt Discount | 928 | ' |
Debt Discount Interest Expense | 928 | ' |
Vesting Terms | '3 years | ' |
Aggregate cash proceeds | 1,850,000 | ' |
Note Payable | 20,000 | ' |
Payments on notes payable | 10,000 | ' |
Note 8 | ' | ' |
Date Issued | 9-Jul-13 | ' |
Note Payable Issued | 10,000 | ' |
Discount rate | 18.00% | ' |
Note Payable | $10,409 | ' |
Notes_payable_Loans_and_Deriva5
Notes payable, Loans and Derivative Liabilities:Notes Payable-Related Party(Details Narrative) (USD $) (Notes Payable Related Party, USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Note 1 | ' | ' |
Date | '2008-09 | ' |
Note Payable Issued | $15,000 | ' |
Interest Rate | 10.00% | ' |
Expiration date | 13-Sep-09 | ' |
Note Payable | 22,568 | 21,446 |
Note 2 | ' | ' |
Date | '2009-11 | ' |
Note Payable Issued | 10,000 | ' |
Date | '2010-02 | ' |
Additional Note payable issued | 15,000 | ' |
Interest Rate | 5.00% | ' |
Warrants Authorized | 2,770 | ' |
Expiration date | 30-Jun-10 | ' |
Expiration date | 30-Sep-10 | ' |
Debt Discount | 2,935 | ' |
Note Payable | 29,661 | 28,726 |
Note 3 | ' | ' |
Date | '2010-03 | ' |
Note Payable Issued | 16,000 | ' |
Date | '2011-10 | ' |
Additional Note payable issued | 49,958 | ' |
Interest Rate | 5.00% | ' |
Warrants Authorized | ' | 47,690 |
Payments on notes payable | 9,000 | ' |
Additional payments on notes payable | 8,000 | ' |
Note Payable | 56,381 | 54,551 |
Note 4 | ' | ' |
Date | 17-Oct-11 | ' |
Note Payable Issued | 400,000 | ' |
Interest Rate | 21.00% | ' |
Shares to purchase | 2.5 | ' |
Per loan amount | 1 | ' |
Warrants Authorized | 1,000,000 | ' |
Gross proceeds | 125,000 | ' |
Additional gross proceeds | 275,000 | ' |
Warrants Issued | '312,500 | ' |
Additonal Warrants Issued | '687,500 | ' |
Conversion Price | $0.10 | ' |
Conversion price on modified note | $0.20 | ' |
Expiration date | 17-Apr-12 | ' |
Expiration Date - on Modified Note | 30-Jun-13 | ' |
Debt Discount | 85,342 | ' |
Debt Discount on modified note | 42,376 | ' |
Vesting Terms | '3 years | ' |
Warrants Fair Market Value | 105,363 | ' |
Warrant Issued - on Modified Note | 49,439 | ' |
Note Payable | 462,828 | 400,000 |
Note 5 | ' | ' |
Date | 28-Feb-12 | ' |
Note Payable Issued | 50,000 | ' |
Interest Rate | 21.00% | ' |
Warrants Issued | '125,000 | ' |
Conversion Price | $0.10 | ' |
Conversion price on modified note | $0.20 | ' |
Expiration date | 28-Aug-12 | ' |
Expiration Date - on Modified Note | 30-Jun-13 | ' |
Debt Discount | 7,997 | ' |
Debt Discount on modified note | 6,180 | ' |
Vesting Terms | '3 years | ' |
Warrant Issued - on Modified Note | 5,298 | ' |
Note Payable | 60,500 | 52,647 |
Note 6 | ' | ' |
Date | '2013-04 | ' |
Note Payable Issued | 37,050 | ' |
Interest Rate | 18.00% | ' |
Note Payable | $39,319 | ' |
Notes_payable_Loans_and_Deriva6
Notes payable, Loans and Derivative Liabilities:Notes Payable-Related Party Additional(Details Narrative) (Notes Payable Related Party, USD $) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2013 | Sep. 30, 2013 | |
Note 4 | ' | ' |
Debt Discount Interest Expense | ' | $85,342 |
Debt Discount Interest Expense - on Modified Note | ' | 42,376 |
Note 5 | ' | ' |
Debt Discount Interest Expense | 2,592 | 7,997 |
Debt Discount Interest Expense - on Modified Note | ' | $5,298 |
Notes_payable_Loans_and_Deriva7
Notes payable, Loans and Derivative Liabilities:Notes Payable-Convertible Notes Payable (Details Narrative) (USD $) (Convertible Notes Payable, USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Note 1 | ' | ' |
Date Issued | 30-Jul-10 | ' |
Convertible Promissory Note | $8,000 | ' |
Interest rate | 6.00% | ' |
Debt Discount | 8,000 | ' |
Conversion price | $0.05 | ' |
Note Payable | 9,164 | 9,523 |
Note 2 | ' | ' |
Date Issued | 28-Apr-11 | ' |
Convertible Promissory Note | 70,588 | 0 |
Discount rate | 15.00% | ' |
Equity financing to be raised | 600,000 | ' |
Debt Discount | 60,000 | ' |
Conversion price | $0.05 | ' |
Vesting Terms | '5 years | ' |
Warrant Issue Date | 28-Apr-11 | ' |
Warrant to purchase common stock | 705,882 | ' |
Exercise price | 0.25 | ' |
Note Payable | 70,588 | 70,588 |
Note 2 Amended Note | ' | ' |
Vesting Terms | ' | '3 years |
Warrant Issue Date | ' | 30-Jun-12 |
Warrant to purchase common stock | ' | 61,856 |
Debt discount | ' | 4,923 |
Note 3 | ' | ' |
Date Issued | 15-Jul-11 | ' |
Convertible Promissory Note | 109,822 | 0 |
Discount rate | 15.00% | ' |
Equity financing to be raised | 600,000 | ' |
Debt Discount | 95,497 | ' |
Payment on note payable | 1,784 | ' |
Conversion price | $0.05 | ' |
Vesting Terms | '5 years | ' |
Warrant to purchase common stock | 1,098,220 | ' |
Exercise price | 0.25 | ' |
Debt discount | 95,497 | ' |
Note Payable | 109,789 | 109,789 |
Note 4 | ' | ' |
Date Issued | 31-Mar-12 | ' |
Convertible Promissory Note | 1,000,000 | 0 |
Interest rate | 18.00% | ' |
Maturity date beginning | 2-Sep-12 | ' |
Debt Discount | 789,073 | ' |
Past due payment on note | 78,329 | ' |
Vesting Terms | '5 years | ' |
Warrant to purchase common stock | 2,500,000 | ' |
Exercise price | 0.1 | ' |
Note Payable | 963,356 | 850,000 |
Note Payable A | 879,338 | 775,000 |
Note Payable C | 84,018 | 75,000 |
Note 4 Sold in Offering | ' | ' |
Convertible Promissory Note | 850,000 | ' |
Vesting Terms | '3 years | ' |
Warrant to purchase common stock | 2,337,500 | ' |
Exercise price | 0.1 | ' |
Note 4 Modifed Note | ' | ' |
Convertible Promissory Note | 775,000 | ' |
Expiration Date | 30-Jun-13 | ' |
Debt Discount | 140,759 | ' |
Warrant to purchase common stock | 1,550,000 | ' |
Exercise price | 0.5 | ' |
Note 5 | ' | ' |
Date Issued | 31-Aug-12 | ' |
Convertible Promissory Note | 3,000,000 | 0 |
Interest rate | 18.00% | ' |
Debt Discount | 499,186 | ' |
Warrant Issue Date | 13-May-13 | ' |
Warrant to purchase common stock | 6,000,000 | ' |
Exercise price | 0.5 | ' |
Note Payable | 992,801 | 875,000 |
Note 5 Sold in Offering | ' | ' |
Convertible Promissory Note | 875,000 | ' |
Vesting Terms | '3 years | ' |
Warrant to purchase common stock | 1,750,000 | ' |
Exercise price | 0.5 | ' |
Note 6 | ' | ' |
Date Issued | 1-May-13 | ' |
Convertible Promissory Note | 500,000 | ' |
Interest rate | 12.00% | ' |
Debt Discount | 50,000 | ' |
Fair Market Value | 61,033 | 40,000 |
Shares reserved for issuance of common stock | 28,000,000 | ' |
Debt discount | 3,559 | ' |
Note Payable | 47,445 | ' |
Note 7 | ' | ' |
Date Issued | 1-Jul-13 | ' |
Convertible Promissory Note | 53,000 | ' |
Interest rate | 8.00% | ' |
Conversion price | $0.51 | ' |
Shares reserved for issuance of common stock | 6,500,000 | ' |
Note Payable | $54,045 | ' |
Notes_payable_Loans_and_Deriva8
Notes payable, Loans and Derivative Liabilities:Notes Payable-Convertible Notes Payable Additional (Details Narrative) (Convertible Notes Payable, USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Note 4 | ' | ' | ' | ' |
Debt Discount Interest Expense | $443,655 | ' | $789,073 | ' |
Note 4 Modifed Note | ' | ' | ' | ' |
Debt Discount Interest Expense | ' | ' | 105,570 | ' |
Note 5 | ' | ' | ' | ' |
Debt Discount Interest Expense | ' | 64,116 | 217,535 | 64,116 |
Note 6 | ' | ' | ' | ' |
Debt Discount Interest Expense | $7,118 | $10,677 | $7,118 | $10,677 |
FAIR_VALUE_MEASUREMENTS_Liabil
FAIR VALUE MEASUREMENTS - Liability measured at fair value on a recurring basis (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Warrant derivative liability | $1,393,054 | $432,030 | $155,813 |
Level 1 | ' | ' | ' |
Warrant derivative liability | 0 | 0 | ' |
Level 2 | ' | ' | ' |
Warrant derivative liability | 0 | 0 | ' |
Level 3 | ' | ' | ' |
Warrant derivative liability | $1,393,054 | $432,030 | ' |
FAIR_VALUE_MEASUREMENTS_Liabil1
FAIR VALUE MEASUREMENTS - Liability measured at fair value on a recurring basis Additional (Details) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Fair Value Measurements - Liability Measured At Fair Value On Recurring Basis Additional Details | ' | ' |
Fair value, beginning of period | $432,030 | $155,813 |
Derivative liabilities recorded during the period | 153,968 | 1,323,548 |
Reclassification to equity upon conversion of note | ' | -1,787,542 |
Reclassification to equity upon amendment of notes and warrants | ' | -1,152,144 |
Net unrealized (gain) loss on derivative financial instruments | 807,056 | 1,892,355 |
Fair value, end of period | $1,393,054 | $432,030 |
Stock_options_and_Warrants_Det
Stock options and Warrants (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | |||||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Oct. 05, 2012 | Jul. 03, 2011 | Jan. 06, 2012 | Apr. 24, 2012 | 18-May-12 | Aug. 31, 2012 | |
Vice President | Vice President | Director of Sales | Director | Director of National Sales | Manager, National Retail Sales | |||||
Options | ' | ' | ' | ' | 3,837,719 | 2,950,000 | 1,500,000 | 325,000 | 500,000 | 396,427 |
Per Share | ' | ' | ' | ' | $0.62 | $0.20 | $0.20 | $0.25 | $0.25 | $0.35 |
Life | ' | ' | ' | ' | '7 years | '7 years | '5 years | '3 years | '3 years | '3 years |
Options Vested | ' | ' | ' | ' | 2,250,000 | 1,180,000 | 250,000 | 100,000 | 100,000 | 135,714 |
Options vest each three months | ' | ' | ' | ' | 198,250 | ' | ' | ' | ' | ' |
Options vest each six months | ' | ' | ' | ' | ' | 295,000 | ' | ' | ' | ' |
Options vest each year | ' | ' | ' | ' | ' | ' | 416,667 | 75,000 | 134,000 | 86,904 |
Fair Value options | ' | ' | ' | ' | $1,221,493 | $317,400 | $44,000 | $18,400 | $33,900 | $102,524 |
Stock Based Compensation Expense | $0 | $35,099 | $294,276 | $97,922 | ' | ' | ' | ' | ' | ' |
Stock_options_and_Warrants_Opt
Stock options and Warrants - Options Summary (Details) (Options, USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Options | ' | ' |
Stock Options | ' | ' |
Beginning Balance | 8,042,896 | 2,983,750 |
Granted | ' | 6,559,146 |
Exercised | ' | 0 |
Forfeited/cancelled | -325,000 | -1,500,000 |
Common Stock Options, Outstanding | 7,717,896 | 8,042,896 |
Ending Balance | 7,191,183 | ' |
Weighted Average Exercise Price | ' | ' |
Beginning Balance | $0.45 | $0.31 |
Granted | ' | $0.46 |
Exercised | ' | $0 |
Forfeited/cancelled | $0.25 | $0.20 |
Ending Balance | $0.46 | $0.45 |
Exercisable at September 30, 2013 | $0.46 | ' |
Weighted Remaining Contractual Life (Years) | ' | ' |
Beginning Balance | '3 years 4 months 7 days | '4 years |
Granted | ' | '3 years 5 months 5 days |
Ending Balance | '1 year 8 months 0 days | '3 years 4 months 7 days |
Exercisable at September 30, 2013 | '1 year 8 months 0 days | ' |
Intrinsic Value | ' | ' |
Outstanding | $88,500 | ' |
Balance | ' | 88,500 |
Stock Based Compensation Balance | ' | ' |
Stock_options_and_Warrants_Com
Stock options and Warrants - Common Stock Warrant Summary (Details) (Common Stock Warrants, USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Common Stock Warrants | ' | ' |
Warrant Activity | ' | ' |
Beginning Balance | 14,494,341 | 5,862,140 |
Granted | 610,586 | 10,775,000 |
Exercised | ' | -2,039,735 |
Forfeited/cancelled | ' | -103,064 |
Balance outstanding and exercisable, Number of Warrants | 15,104,927 | 14,494,341 |
Weighted Average Exericse Price | ' | ' |
Beginning Balance | $0.28 | $0.12 |
Granted | $0.15 | $0.34 |
Exercised | ' | $0.10 |
Forfeited/cancelled | ' | $0.10 |
Ending Balance | $0.28 | $0.28 |
Weighted Remaining Contractual Life (Years) | ' | ' |
Exercisable at September 30, 2013 | '2 years 1 month 4 days | ' |
Intrinsic Value | ' | ' |
Balance | $23,758 | ' |
Exercisable at September 30, 2013 | $23,758 | ' |
Intinsic value per share | $0.03 | ' |
Stock_options_and_Warrants_War
Stock options and Warrants - Warrants (Details) | 9 Months Ended |
Sep. 30, 2013 | |
Total Warrants | ' |
Number of Warrants Outstanding and Exercisable | 15,104,927 |
Weighted Average Remaining Life in years | '2 years 1 month 4 days |
452,354 | ' |
Exercise Price | 0.01 |
Number of Warrants Outstanding and Exercisable | 452,354 |
Weighted Average Remaining Life in years | '2 years 3 months 3 days |
692,802 | ' |
Exercise Price | 0.1 |
Number of Warrants Outstanding and Exercisable | 692,802 |
Weighted Average Remaining Life in years | '2 years 3 months 8 days |
705,882 | ' |
Exercise Price | 0.25 |
Number of Warrants Outstanding and Exercisable | 705,882 |
Weighted Average Remaining Life in years | '2 years 5 months 8 days |
575,000 | ' |
Exercise Price | 0.25 |
Number of Warrants Outstanding and Exercisable | 575,000 |
Weighted Average Remaining Life in years | '2 years 7 months 1 day |
452,355 | ' |
Exercise Price | 0.01 |
Number of Warrants Outstanding and Exercisable | 452,355 |
Weighted Average Remaining Life in years | '2 years 7 months 5 days |
1.098,220 | ' |
Exercise Price | 0.25 |
Number of Warrants Outstanding and Exercisable | 1,098,220 |
Weighted Average Remaining Life in years | '2 years 7 months 9 days |
195,291 | ' |
Exercise Price | 0.001 |
Number of Warrants Outstanding and Exercisable | 195,291 |
Weighted Average Remaining Life in years | '1 year 0 months 0 days |
1,000,000 | ' |
Exercise Price | 0.1 |
Number of Warrants Outstanding and Exercisable | 1,000,000 |
Weighted Average Remaining Life in years | '1 year 1 month 3 days |
125,000 | ' |
Exercise Price | 0.1 |
Number of Warrants Outstanding and Exercisable | 125,000 |
Weighted Average Remaining Life in years | '1 year 4 months 2 days |
300,000 | ' |
Exercise Price | 0.25 |
Number of Warrants Outstanding and Exercisable | 300,000 |
Weighted Average Remaining Life in years | '1 year 4 months 72 days |
1,197,437 | ' |
Exercise Price | 0.1 |
Number of Warrants Outstanding and Exercisable | 1,197,437 |
Weighted Average Remaining Life in years | '1 year 4 months 6 days |
50,000 | ' |
Exercise Price | 0.5 |
Number of Warrants Outstanding and Exercisable | 50,000 |
Weighted Average Remaining Life in years | '1 year 8 months 3 days |
25,000 | ' |
Exercise Price | 0.5 |
Number of Warrants Outstanding and Exercisable | 25,000 |
Weighted Average Remaining Life in years | '1 year 8 months 3 days |
50,000 | ' |
Exercise Price | 0.5 |
Number of Warrants Outstanding and Exercisable | 50,000 |
Weighted Average Remaining Life in years | '1 year 9 months 2 days |
25,000 | ' |
Exercise Price | 0.5 |
Number of Warrants Outstanding and Exercisable | 25,000 |
Weighted Average Remaining Life in years | '1 year 9 months 2 days |
250,000 | ' |
Exercise Price | 0.25 |
Number of Warrants Outstanding and Exercisable | 250,000 |
Weighted Average Remaining Life in years | '1 year 7 months 5 days |
1,870,000 | ' |
Exercise Price | 0.5 |
Number of Warrants Outstanding and Exercisable | 1,870,000 |
Weighted Average Remaining Life in years | '1 year 9 months 2 days |
55,000 | ' |
Exercise Price | 0.5 |
Number of Warrants Outstanding and Exercisable | 55,000 |
Weighted Average Remaining Life in years | '2 years 0 months 0 days |
1,550,000 | ' |
Exercise Price | 0.5 |
Number of Warrants Outstanding and Exercisable | 1.55 |
Weighted Average Remaining Life in years | '2 years 0 months 8 days |
1,125,000 | ' |
Exercise Price | 0.5 |
Number of Warrants Outstanding and Exercisable | 1,125,000 |
Weighted Average Remaining Life in years | '2 years 1 month 7 days |
1,000,000 | ' |
Exercise Price | 0.5 |
Number of Warrants Outstanding and Exercisable | 1,000,000 |
Weighted Average Remaining Life in years | '2 years 1 month 7 days |
1,200,000 | ' |
Exercise Price | 0.25 |
Number of Warrants Outstanding and Exercisable | 1,200,000 |
Weighted Average Remaining Life in years | '2 years 2 months 5 days |
500,000 | ' |
Exercise Price | 0.5 |
Number of Warrants Outstanding and Exercisable | 500,000 |
Weighted Average Remaining Life in years | '2 years 2 months 5 days |
25,000 | ' |
Exercise Price | 0.1 |
Number of Warrants Outstanding and Exercisable | 25,000 |
Weighted Average Remaining Life in years | '2 years 6 months 3 days |
335,586 | ' |
Exercise Price | 0.2 |
Number of Warrants Outstanding and Exercisable | 335,586 |
Weighted Average Remaining Life in years | '4 years 2 months 1 day |
250,000 | ' |
Exercise Price | 0.15 |
Number of Warrants Outstanding and Exercisable | 250,000 |
Weighted Average Remaining Life in years | '2 years 6 months 7 days |
Related_Party_Transactions_Det
Related Party Transactions (Details Narrative) (USD $) | 0 Months Ended | 1 Months Ended | 9 Months Ended | ||
Jul. 01, 2008 | Sep. 30, 2013 | Dec. 31, 2012 | Feb. 29, 2012 | Sep. 30, 2013 | |
Employee | Employee | ||||
Monthly Consulting Fees | $6,250 | ' | ' | ' | ' |
Consulting Fees | ' | 100,000 | 100,000 | ' | ' |
Warrants Issued | ' | ' | ' | 300,000 | ' |
Per Share | ' | ' | ' | $0.25 | ' |
Life | ' | ' | ' | '3 years | ' |
Stock Based Compensation Expense | ' | ' | ' | ' | $6,149 |
Commitments_Leases_Details
Commitments - Leases (Details) (USD $) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2013 | Jun. 30, 2015 | Mar. 30, 2014 | |
Commitments - Leases Details | ' | ' | ' |
Monthly rent | $4,200 | $4,500 | $4,350 |
Commitments_and_Contingencies_
Commitments and Contingencies Litigation (Details Narrative) (USD $) (USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Lawsuit 1 | ' |
Litigation | ' |
Damages Sought | $21,000 |
Lawsuit 2 | ' |
Litigation | ' |
Damages Sought | 50,000 |
Lawsuit 3 | ' |
Litigation | ' |
Damages Sought | $53,863 |
Accrued_Expenses_and_other_Lia2
Accrued Expenses and other Liabilities - Accrued Liabilities (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Accrued expenses and other current liabilities | $1,828,834 | $1,734,863 |
Payroll tax liabilities | 320,622 | 286,027 |
Consultant | ' | ' |
Accrued expenses and other current liabilities | 100,000 | 100,000 |
Payroll and payroll taxes payable | ' | ' |
Accrued expenses and other current liabilities | 1,692,089 | 1,399,049 |
Other Accrued Liabilites | ' | ' |
Accrued expenses and other current liabilities | $36,745 | $235,814 |
Subsequent_Events_Details_Narr
Subsequent Events (Details Narrative) (Convertible Promissory Note, USD $) | 0 Months Ended |
Dec. 31, 2013 | |
Convertible Promissory Note | ' |
Note Payable | $13,000 |
Interest Rate | 8.00% |
Shares reserved for issuance of common stock | 20,000,000 |