Common Stock | 9 Months Ended |
Sep. 30, 2013 |
Stockholders' Equity Note [Abstract] | ' |
Common Stock | ' |
6 | COMMON STOCK |
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Upon formation, the Company was authorized to issue 50,000 shares of common stock with no par value. On September 7, 2007, the Company amended its articles of incorporation to increase the number of authorized common shares to 1,000,000. On September 7, 2007, the Company effected a 280 for 1 forward stock split pursuant to the Company’s Amended and Restated Articles of Incorporation. All share and per share data in the accompanying financial statements has been retroactively adjusted to reflect the stock split. |
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On November 28, 2007, the Company amended its Amended and Restated Articles of Incorporation to establish two classes of stock. The first class of stock is Class A Common Stock, par value $0.0166, of which 59,000,000 shares are authorized and the holders of the Class A Common Stock are entitled to one vote per share. The second class of stock is Class B Participating Cumulative Preferred Super Voting Stock, par value $0.0166, of which 1,000,000 shares are authorized. Each share of Class B preferred stock entitles the holder to one hundred votes, either in person or by proxy, at meetings of shareholders. The holders are permitted to vote their shares cumulatively as one class with the common stock. The Class B Participating Cumulative Preferred Super-voting Stock pays dividends at 6%. For the years ended December 31, 2012, 2011, 2010, 2009, 2008, and 2007, the board of directors did not declare any dividends. Total undeclared Class B Participating Cumulative Preferred Super-voting Stock dividends as of December 31, 2012, 2011, 2010, 2009, 2008, and 2007 were $110,737, $90,487, $70,237, $49,987 and $29,737, and $9,487, respectively. |
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Class A Common Stock |
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Issuances of the Company’s common stock during the years ended December 31, 2007, 2008, 2009, 2010, 2011, 2012 and the nine months ended September 30, 2013 included the following: |
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Shares Issued for Cash |
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During 2007, 224,000 shares of Class A common stock were issued for $36,000 cash with various prices per share ranging from $0.15 to $0.25. Additionally, the Company paid cash offering costs of $2,500. |
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During 2008, 2,352,803 shares of Class A common stock were issued for $360,250 cash with various prices per share ranging from $0.13 to $0.25. Additionally, the Company paid cash offering costs of $1,500. |
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In 2009, 3,688,438 shares of Class A common stock were issued for $437,435 cash with various prices per share ranging from $0.04 to $0.35. Additionally, the Company paid cash offering costs of $7,000. |
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In 2010, 2,138,610 shares of Class A common stock were issued for $442,181 cash with various prices per share ranging from $0.18 to $.35. |
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In 2011, 6,349,750 shares of Class A common stock were issued for $1,318,750 cash with various prices per share ranging from $0.20 to $.35. |
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In 2012, 1,530,000 shares of Class A common stock were issued for $153,000 cash with $.10 price per share. |
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In the quarter ended September 30, 2013, 357,143 shares of Class A common stock were sold for $12,500 cash with $0.04 price per share. The shares related to this sale were not issued as of September 30, 2013 and are recorded as stock payable at September 30, 2013. |
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Shares Issued for Services |
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In 2007, 14,000,000 vested shares of Class A common stock were issued to founders having a fair value of $232,400, based on a nominal value of $0.0166 per share. The $232,400 was expensed upon issuance as the shares were fully vested. |
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In 2007, 50,000 shares of Class A common stock were issued for legal services provided to the Company with a value of $7,500 or $0.15 per share, based on a Fair Market Value sales price. |
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In 2008, 169,000 shares of Class A common stock were issued for services having a fair value of $34,530 ranging from $0.13 to $0.25 per share, based on Fair Market Value sales prices. |
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In March 2009, 8,000 shares of Class A common stock were issued for services provided to the Company with a value of $2,400 or $0.07 per share, based on a Fair Market Value sales price. |
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In June 2009, 17,333 shares of Class A common stock were issued for services provided to the Company with a value of $2,600 or $0.15 per share, based on a Fair Market Value sales price. |
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In August 2009, 41,000 shares of Class A common stock were issued for services provided to the Company with a value of $6,150 or $0.15 per share, based on a Market Value sales price. |
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In February 2009, 500,000 shares of contingently returnable Class A common stock were issued to a consultant pursuant to an agreement whereby the consultant must establish a contract with a specific distributor and produce a sale of the Company’s product through such distribution channel. As of the date of the filing of this Quarterly Report on Form 10-Q, no sales have occurred under the contract and the shares are not considered issued or outstanding for accounting purposes. |
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In January 2010, 21,000 shares of Class A common stock were issued for services provided to the Company with a value of $5,250 or $0.25 per share, based on a Fair Market Value sales price. |
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In June 2010, 750,000 shares of Class A common stock were issued for services provided to the Company with a value of $270,200 at values ranging from $0.20 to $0.50 per share, based on a Fair Market Value sales price. |
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In July 2010, 250,000 shares of Class A common stock were issued for services provided to the Company with a value of 37,500 or $0.15 per share, based on a Fair Market Value sales price. |
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In December 2010, 55,000 shares of Class A common stock were issued to two vendors for services provided to the Company with a value of $28,050, based on based on a Fair Market Value sales price. |
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In June 2011, 815,000 shares of Class A common stock were issued for services provided to the Company with a value of $220,050 at $0.27 per share, based on a Fair Market Value sales price. |
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In August 2011, 50,000 shares of Class A common stock were issued for services provided to the Company with a value of $10,000 at $0.20 per share, based on a Fair Market Value sales price. |
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In November 2011, 100,000 Shares of Class A common stock were issued for services provided to the Company with a value of $20,000 at $0.20 per share, based on a Fair Market Value sales price. |
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In March 2012, 125,000 shares of Class A common stock were issued for services provided to the Company with a value of $12,500 at $0.10 per share, based on a Fair Market Value sales price. |
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In June 2012, 125,000 shares of Class A common stock were issued for services provided to the Company with a value of $12,500 at $0.10 per share, based on a Fair Market Value sales price. |
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In July 2012, 888,900 shares of Class A common stock were issued for services provided to the Company with a value of $88,890 at $0.10 per share, based on a Fair Market Value sales price. |
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In September 2012, 275,000 shares of Class A common stock were issued for services provided to the Company with a value of $33,500 at $0.10 per share, based on a Fair Market Value sales price. |
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In October 2012, 360,000 shares of Class A common stock were authorized for services provided to the Company with a value of $36,000 at $0.10 per share, based on a Fair Market Value sales price. As of September 30, 2013, the shares have not been issued and are recorded as stock payable. |
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In December 2012, 125,000 shares of Class A common stock were authorized for services provided to the Company with a value of $12,500 at $.10 per share, based on a Fair Market Value sales price. As of September 30, 2013, the shares have not been issued and are recorded as stock payable. |
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On January 30, 2013, the Company’s Chief Executive Officer and Chief Financial Officer were each granted 3,000,000 shares as compensation for services. The shares were valued at $600,000 based on Fair Market Value on the date of grant. |
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On February 27, 2013, 300,000 shares were issued for services provided to the Company with a value of $30,000 based on Fair Market Value on the date of grant. |
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On March 21, 2013, 360,000 shares were issued for services provided to the Company, fulfilling a stock payable of $36,000 that was accrued for through December 31, 2012. |
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During the quarter ended September 30, 2013, the Company authorized the issuance of an aggregate of 197,500 shares for services with a value of $19,750 based on Fair Market Value on the date of grant. The shares have not been issued as of September 30, 2013 and are recorded as stock payable. |
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During the quarter ended September 30, 2013, the Company issued 72,500 shares for services provided to the Company with a value of $1,204 based on Fair Market Value on the date of grant. |
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Shares Issued in Conversion of Other Liabilities |
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During 2008, 100,000 shares of Class A common stock were issued upon conversion of a $35,000 liability to a vendor. The shares were valued at $0.15 per share or $15,000, based on a contemporaneous cash sales price and the Company recorded a $20,000 gain on conversion of debt. |
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In July 2009, 139,944 shares of Class A common stock were issued upon conversion of a $48,980 liability from a vendor. The shares were valued at $16,793 or $0.12, based on a contemporaneous cash sales price. The Company agreed with the vendor, prior to conversion, that it would guarantee the value of the stock, when sold by the vendor, up to the dollar value for the 2009 liability converted ($48,980) and the above mentioned 2008 conversion as it was the same vendor ($35,000) and any difference in value, if less than the liability, would be paid in cash by the Company. As a result, the Company recorded the $48,980 conversion as a liability along with the prior year conversion of $35,000 which resulted in an additional loss on conversion of $35,000. The total cumulative liability to guarantee equity value from fiscal 2009 totaled $83,980 as relating to the above shares at December 31, 2009. These shares were actually issued in 2010; however the liability was recorded in 2009 based on this guarantee. |
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In August 2009, the Company converted $55,200 of loans due to a shareholder into 788,571 shares of common stock, which were valued at $118,286 or $0.15 per share, based on contemporaneous cash sales prices of the Company’s common stock. The Company recognized a loss on conversion of $62,637 and charged $449 to interest expense. |
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During 2010, 247,249 shares of Class A common stock were issued upon conversion of $39,272 of vendor liabilities. The shares were valued from $0.10 to $0.36 per share, based on a contemporaneous cash sales price and the Company recorded a $49,615 loss on conversion of debt. |
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On October 2011, the Company issued a Convertible Note which as a result taints all convertible instruments outstanding. As such the Company recorded a derivative liability of $40,498 for warrant outstanding. |
On May 16, 2012, the Company issued 137,931 shares of Class A Common Stock to convert $8,000 of the convertible note dated October 2011 into equity. The note was converted in accordance with the conversion terms; therefore, no gain or loss was recognized. |
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On March 5, 2013, the Company issued 591,133 shares of Class A Common Stock to convert $12,000 of the convertible note dated October 2011 into equity. Due to conversion within the terms of the note, no gain or loss was recognized. |
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On July 24, 2013, the Company issued 862,069 shares of Class A Common Stock to convert $15,000 of the convertible note dated October 2011 into equity. Due to conversion within the terms of the note, no gain or loss was recognized. |
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On July 25, 2013, the Company issued 1,000,000 shares of Class A Common Stock to convert $10,000 of the convertible note dated June 2013 into equity. Due to conversion within the terms of the note, no gain or loss was recognized. |
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In June 2013, the Company converted a $10,000 note to a related party into 500,000 shares of Common Stock at $0.02 per share. The note was converted in accordance with the conversion terms; therefore, no gain or loss was recognized. |
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In 2010, the Company issued 900,000 warrants to several investors. These warrants were issued in conjunction with certain issuances of common stock. These warrants expired on April 15, 2013. |
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Class B Participating Cumulative Preferred Super-voting Stock |
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Issuances of the Company’s preferred stock during the years ended December 31, 2007, 2008 and 2009 included the following: |
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Shares Issued for Cash |
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In 2007, 133,333 shares of Class B Preferred Stock were issued for $45,000 cash or $0.3375 per share. |
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Shares Issued for Services |
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In 2007, 866,667 shares of Class B Preferred Stock were issued to founders for services rendered during 2007 with a value of $0.3375 per share based on the above contemporaneous sale of Class B Preferred Stock. |
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2010 Equity Incentive Plan |
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In June 2010, the Company registered the issuance of up to 4,000,000 shares of Class A Common Stock pursuant to the Company’s 2010 Equity Incentive Plan. The Company’s Board of Directors authorized certain issuances of the Common Stock to employees upon effectiveness of a registration statement. The 2010 Equity Incentive Plan is intended to compensate employees for services rendered. The employees who will participate in the 2010 Equity Incentive Plan have agreed, or will agree in the future, to provide services to the Company for the purposes and consideration set forth in their respective written employment agreements. The services to be provided by the employees will not be rendered in connection with: (i) capital-raising transactions; (ii) direct or indirect promotion of Class A Common Shares; (iii) maintaining or stabilizing a market for Class A Common Shares. The Board of Directors may at any time alter, suspend or terminate the 2010 Equity Incentive Plan. |
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As of September 30, 2013, a total of 800,000 shares were approved under this 2010 Equity Incentive Plan for issuance by the Board of Directors to certain employees, namely, the Board approved the issuance of 200,000 shares each to Shawn Davis, Thomas Bianco, Paul Davis and Raymond Tai. As of September 30, 2013, none of the 800,000 shares have been granted or issued. |