Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Apr. 15, 2014 | Jun. 30, 2013 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'Massive Interactive, Inc. | ' | ' |
Entity Central Index Key | '0001481218 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-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? | 'No | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $913,048 |
Entity Common Stock, Shares Outstanding | ' | 61,176,197 | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
CURRENT ASSETS: | ' | ' |
Cash and cash equivalents | $1,121,181 | $26,354 |
Cash - restricted | 0 | 75,313 |
Accounts receivable - trade | 1,243,958 | 0 |
Other receivables | 47,267 | 0 |
Prepayments | 144,694 | 0 |
Work in progress | 76,729 | 0 |
Taxes refundable | 1,348,424 | 0 |
Total Current Assets | 3,982,253 | 101,667 |
PROPERTY AND EQUIPMENT, net | 242,092 | 0 |
Capitalized software costs, net | 4,295,887 | 0 |
Trade name | 59,654 | 0 |
Customer Relationships | 39,538 | 0 |
Other assets, net | 16,321 | 0 |
Assets of businesses held for sale | 0 | 8,610,293 |
Total non-current assets | 4,653,492 | 8,610,293 |
TOTAL ASSETS | 8,635,745 | 8,711,960 |
CURRENT LIABILITIES: | ' | ' |
Accounts payable | 422,392 | 848,013 |
Accrued expenses and other current liabilities | 330,236 | 0 |
Convertible notes payable | 151,466 | 1,750,615 |
Derivative liability | 29,317 | 405,473 |
Accrued compensation and related costs | 801,009 | 0 |
Deferred revenue | 2,103 | 0 |
Short-term borrowings | 357,640 | 208,093 |
Short-term borrowings, related parties | 921,415 | 1,376,320 |
Deferred tax liability | 190,371 | 0 |
Other current liabilities | 27,408 | 0 |
Total Current Liabilities | 3,233,357 | 4,588,514 |
LONG-TERM LIABILITIES | ' | ' |
Accrued compensation and other related costs – non-current | 80,733 | 0 |
Other long-term liabilities | 104,673 | 0 |
Liabilities of businesses held for sale | 0 | 1,661,676 |
Total long-term liabilities | 185,406 | 1,661,676 |
TOTAL LIABILITIES | 3,418,763 | 6,250,190 |
STOCKHOLDERS' EQUITY: | ' | ' |
Preferred A shares 1000 shares issued and outstanding at 12/31/2012 0 issued and outstanding at 12/31/2013 | 0 | 1 |
Preferred B shares 55 shares outstanding at 12/31/2013 and 0 at 12/31/2012 | 0 | 0 |
Common stock | 61,186 | 472 |
Additional paid-in capital | 45,423,175 | 36,255,685 |
Accumulated deficit | -40,001,523 | -33,794,388 |
Foreign currency translation adjustment | -265,856 | 0 |
Total Equity | 5,216,982 | 2,461,770 |
Total liabilities and stockholders' equity (deficit) | $8,635,745 | $8,711,960 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Revenues: | ' | ' |
Consultancy services | $35,424 | $0 |
License fee | 121,762 | 0 |
Project services | 1,064,653 | 0 |
Support services | 16,875 | 0 |
Other income | 26,534 | 0 |
TOTAL REVENUES | 1,265,248 | 0 |
OPERATING EXPENSES: | ' | ' |
General and administrative expenses | 1,871,686 | 790,797 |
Depreciation, depletion and amortization expense | 70,831 | 0 |
TOTAL OPERATING EXPENSES | 1,942,517 | 790,797 |
INCOME (LOSS) FROM OPERATIONS | -677,269 | -790,797 |
OTHER INCOME (EXPENSE) | ' | ' |
Other income | 1,608 | 930,972 |
Gain on conversion | 233,811 | 0 |
Gain (loss) on debt forgiveness | 179,154 | -98,163 |
Gain on bargain purchase | 726,010 | 0 |
Derivative income | 376,156 | 2,430,514 |
Interest Income | 389 | 0 |
Interest expense, net | -31,714 | -396,071 |
Amortization of debt discount | 0 | -2,064,402 |
Total other income | 1,485,414 | 802,850 |
Income from continuing operations before income taxes | 808,145 | 12,053 |
Income tax benefit | 119,613 | 0 |
Iincome from continuing operations | 927,758 | 12,053 |
Discontinued operations: Loss on discontinued operations | -7,134,893 | -82,490 |
Net loss | -6,207,135 | -70,437 |
Comprehensive income (loss): | ' | ' |
Foreign currency translation adjustment | -265,856 | 0 |
Total comprehensive income (loss) | ($6,472,991) | ($70,437) |
Basic and diluted loss per share: | ' | ' |
Net loss from continuing operations | $0.02 | $0.03 |
Net loss from discontinued operations | ($0.12) | ($0.18) |
Net loss | ($0.10) | ($0.15) |
Weighted average common shares - basic and diluted | 61,178,167 | 471,987 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net loss | ($6,207,135) | ($70,437) |
Add back: loss from discontinued operations | 7,134,893 | 82,490 |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ' | ' |
Depreciation and amortization | 70,831 | 0 |
Amortization of debt discount | 0 | 2,064,402 |
Common stock issued for services | 261,398 | 63,098 |
Common stock issued for interest expense | 134,294 | 0 |
Derivative income | -376,156 | -2,430,514 |
Gain on debt forgiveness | -179,154 | 0 |
Gain on debt conversion | -233,811 | 98,163 |
Gain on bargain purchase | -726,010 | 0 |
Changes in assets and liabilities: | ' | ' |
Accounts receivable and taxes refundable | 110,404 | -16,979 |
Other current assets | -51,575 | -350 |
Work in progress | -131,369 | 0 |
Accounts payable and accrued expenses | -318,339 | 220,034 |
Net cash provided by (used in) operating activities – continuing operations | -511,729 | 9,907 |
Net cash provided by (used in) operating activities – discontinued operations | -515,295 | 812,551 |
Net cash provided by (used in) operating activities | -1,027,024 | 822,458 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Capital Software Expenditures | -149,293 | 0 |
Cash paid for acquisitions, net of cash received | -2,930,631 | 0 |
Change in restricted cash | 75,313 | 0 |
Net cash (used in) provided by investing activities – continuing operations | -3,004,611 | 0 |
Net cash (used in) provided by investing activities – discontinued operations | 329,020 | -1,157,271 |
Net cash (used in) provided by investing activities | -2,675,591 | -1,157,271 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Payments on convertible notes payable | 0 | -538,896 |
Proceeds from advances - related parties | 155,918 | 101,093 |
Repayment of advances – related parties | -7,000 | 0 |
Proceeds from notes payable - related parties | 0 | 250,000 |
Proceeds from notes payable | 92,929 | 64,000 |
Repayment of notes payable | -768,814 | 0 |
Proceeds from sale of common stock | 55,000 | 0 |
Proceeds from sale of preferred stock | 5,445,000 | 0 |
Redemption of preferred stock | -1 | 0 |
Net cash (used in) provided by financing activities – continuing operations | 4,973,032 | -123,803 |
Net cash (used in) provided by financing activities – discontinued operations | 0 | 0 |
Net cash (used in) provided by financing activities | 4,973,032 | -123,803 |
Effect of exchange rates on cash and cash equivalents | -175,590 | 0 |
Net change in cash | 1,094,827 | -458,616 |
Cash and cash equivalents at beginning of year | 26,354 | 484,970 |
Cash and cash equivalents at end of year | 1,121,181 | 26,354 |
Supplemental cash flow information | ' | ' |
Cash paid for interest | 83,253 | 396,071 |
Cash paid for income taxes | 0 | 0 |
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES: | ' | ' |
Common stock issued for leasehold interests | 0 | 2,849,719 |
Common stock issued for notes payable and accrued interest | 1,636,679 | 83,725 |
Note payable issued for deposit | 0 | 50,000 |
Common stock issued for related party debts | $2,304,706 | $0 |
STOCKHOLDERS_EQUITY_DEFICIT
STOCKHOLDERS’ EQUITY (DEFICIT) (USD $) | Common Stock | Preferred B Shares | Additional Paid-In Capital | Accumulated Deficit | Foreign Currency Translation Adjustment | Total |
Beginning Balance, Amount at Dec. 31, 2011 | $453 | $1 | $36,108,881 | ($33,723,951) | ' | $2,385,384 |
Beginning Balance, Shares at Dec. 31, 2011 | 453,644 | 1,000 | ' | ' | ' | ' |
Common stock issued for services, Amount | 1 | ' | 63,097 | ' | ' | 63,098 |
Common stock issued for services, Shares | 755 | ' | ' | ' | ' | ' |
Common stock issued for convertible debt conversions, Amount | 18 | ' | 83,707 | ' | ' | 83,725 |
Common stock issued for convertible debt conversions, Shares | 17,588 | ' | ' | ' | ' | ' |
Net loss | ' | ' | ' | -70,437 | ' | -70,437 |
Ending Balance, Amount at Dec. 31, 2012 | 472 | 1 | 36,255,685 | -33,794,388 | ' | 2,461,770 |
Ending Balance, Shares at Dec. 31, 2012 | 471,987 | 1,000 | ' | ' | ' | ' |
Common stock issued for services, Amount | 23 | ' | 25,533 | ' | ' | 25,556 |
Common stock issued for services, Shares | 22,986 | ' | ' | ' | ' | ' |
Common stock issued for cash, Amount | 55,000 | ' | ' | ' | ' | 55,000 |
Common stock issued for cash, Shares | 55,000,000 | ' | ' | ' | ' | ' |
Common stock issued for convertible debt conversions, Amount | 1,997 | ' | 1,634,682 | ' | ' | 1,636,679 |
Common stock issued for convertible debt conversions, Shares | 1,989,194 | ' | ' | ' | ' | ' |
Issuance of preferred stock, Amount | ' | 3,694 | 7,507,275 | ' | ' | 7,510,969 |
Issuance of preferred stock, Shares | ' | 3,694,055 | ' | ' | ' | ' |
Redemption of preferred stock, Amount | ' | -1 | ' | ' | ' | -1 |
Redemption of preferred stock, Shares | ' | -1,000 | ' | ' | ' | ' |
Conversion of preferred stock, Amount | 3,694 | -3,694 | ' | ' | ' | ' |
Conversion of preferred stock, Shares | 3,694,000 | -3,694,000 | ' | ' | ' | ' |
Net loss | ' | ' | ' | -6,207,135 | -265,856 | -6,472,991 |
Ending Balance, Amount at Dec. 31, 2013 | $61,186 | ' | $45,423,175 | ($40,001,523) | ($265,856) | $5,216,982 |
Ending Balance, Shares at Dec. 31, 2013 | 61,178,167 | 55 | ' | ' | ' | ' |
1_Organization_History_and_Bus
1. Organization, History and Business Activity | 12 Months Ended |
Dec. 31, 2013 | |
Organization History And Business Activity | ' |
NOTE 1 - Description of Business | ' |
Massive Interactive, Inc. (the “Company”) a leading provider of innovative solutions for the management, delivery and streaming of Internet Protocol (IP)-based video and media assets. The Company’s comprehensive software platform enables enterprise customers to acquire, manage and distribute their video assets across just about every device used by consumers including Games Consoles, Smart TV’s, Tablets, Smart Phones, Internet-Enabled Set Top Boxes and other internet linked devices. The Company’s suite of products include, MDK, a cross-device software development solution, MUI, a cross devices suite of User Interfaces, MSM, a powerful video management Content Management System (CMS), and MVP, a complete end-to-end managed video platform. The Company’s offers its solutions over the Internet as a subscription service model using a software-as-a-service (SaaS) or an on-demand model, and by installing our software onsite for clients as part of an enterprise licensing model. The Company’s software address the unique needs found across different industry verticals, each with the shared aim of offering video to consumers across multiple devices. The verticals the Company addresses are across Telecommunications, Media, Technology, Hospitality, Automotive, Travel & Leisure and Publishing. The Company has an average ‘Win’ ratio of 92%, as its solutions significantly enhance the way its clients can monetize and manage their media assets by helping to drive sales and drastically reducing the overall cost of ownership of enterprise grade video management and merchandising for its customers. | |
In addition to the Company’s software business, it operates design services and technical services businesses. The Company’s Services work includes - creative interface design, branding strategies, strategic planning and technical/systems integration services. The Company currently provides its software solutions, professional and creative services internationally through its offices in New York, London, Prague and Sydney. | |
In the fourth quarter of 2013, as part of the acquisition of Massive Media Pty Ltd., the Company proceeded to exit the oil and gas operations related to the properties owned while the entity operated as Xtreme Oil and Gas (“Xtreme”). As such, the Company reported all activity related to Xtreme as discontinued operations beginning with our financial results presented in our Annual Report on this form 10-K for the year ended December 31, 2013. See Note 4. | |
Organizational History | |
Xtreme Technologies, Inc. was incorporated in the state of Washington in 2003 with a focus on telecommunications technologies. By early 2006 that business ceased operations and had no assets, becoming a shell company at that time. In December 2006, Xtreme Technologies, Inc. acquired Emerald Energy Partners, LLC for 7,960,000 shares of Common Stock and changed its name to Xtreme Oil & Gas, Inc. Immediately prior to its acquisition of Emerald Energy Partners, LLC, Xtreme Technologies, Inc. effected a one for 500 reverse stock split resulting in 185,516 shares outstanding. | |
The acquisition of Emerald Energy Partners, LLC is treated for accounting purposes as an acquisition of Xtreme Technologies, Inc. by Emerald Energy Partners and a re-capitalization of the limited liability company. With the acquisition of Emerald Energy Partners LLC, Xtreme began to acquire and to develop additional oil and gas properties. | |
On November 7, 2013, Xtreme sold 55 shares of redeemable preferred B stock and 55,000,000 of common stock to Southport Lane, LP, through its subsidiaries and Southport Equity II, LLC, a wholly owned subsidiary of Southport Lane, LP, respectively, in exchange for an aggregate of $5,500,000. | |
Southport Equity II now owns approximately 90% of the Company’s outstanding common stock and is the controlling shareholder of the Company. Southport Equity II, LLC used its available cash as capitalized by its parent, Southport Lane, LP, to fund its purchase of the common stock. There was no controlling party of the Company prior to this investment by Southport Equity II, LLC. | |
On November 15, 2013 Xtreme acquired all of the issued and outstanding capital stock of Massive Media Pty Ltd. (“Massive Media”) a proprietary limited company organized under the laws of New South Wales, Australia, from the shareholders of Massive in exchange for $4,167,190 pursuant to a stock purchase agreement dated October 17, 2013. Of the proceeds, approximately $866,000 was to be paid to settle certain debts of Massive Media simultaneously as part of the acquisition; the remaining proceeds of $3.3 million was transferred at settlement for the stock. | |
On November 25, 2013 Xtreme changed its name to Massive Interactive, Inc. | |
2_Significant_Accounting_Polic
2. Significant Accounting Policies | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Accounting Policies [Abstract] | ' | ||||||
2. Significant Accounting Policies | ' | ||||||
Basis of Presentation | |||||||
This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) and have been consistently applied in the preparation of the financial statements. | |||||||
Principles of Consolidation | |||||||
The consolidated financial statements include the financial statements of the Company and its subsidiaries, Massive Media Pty Ltd and Massive Interactive Media Ltd. As part of the acquisition of Massive Media Pty Ltd and its controlled entities by the Company, it discontinued all oil and gas operations related to properties owned in Texas and Oklahoma. Financial results related to the oil and gas operations is reported as discontinued operations beginning with the financial results as of December 31, 2013 (See Note 4). | |||||||
Use of Estimates | |||||||
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. | |||||||
On an ongoing basis, the Company evaluates its estimates, including those related to the accounts receivable allowance, the useful lives of long-lived assets and other intangible assets, and income taxes, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying value of assets and liabilities as well as reported revenue and expenses during the periods presented. | |||||||
Cash and Cash Equivalents | |||||||
Cash and cash equivalents represent cash on hand and deposits held at call with banks. The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. | |||||||
Fair Value of Financial Instruments | |||||||
Pursuant to the Accounting Standards Codification (“ASC”) No. 820, “Disclosures About Fair Value of Financial Instruments”, the Company records its financial assets and liabilities at fair value. ASC No. 820 provides a framework for measuring fair value, clarifies the definition of fair value and expands disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. ASC No. 820 establishes a three-tier hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: | |||||||
Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. | |||||||
Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the asset/liability’s anticipated life. | |||||||
Level 3—Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. | |||||||
The carrying values for cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued liabilities approximate their fair value due to their short maturities. | |||||||
Accounts Receivable | |||||||
Receivables from services are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. | |||||||
Management periodically reviews receivables for collectability. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Uncollectible receivables are charged off against the allowance account. No allowance for doubtful accounts was recorded as of December 31, 2013 and 2012, respectively. | |||||||
The Company did not have any off balance-sheet credit exposure relating to its customers, suppliers or others. | |||||||
Accounting for the Impairment of Long-Lived Assets | |||||||
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. Recoverability of the asset is measured by comparison of its carrying amount to the undiscounted cash flow that the asset or asset group is expected to generate. If such assets or asset groups are considered to be impaired, the loss recognized is the amount by which the carrying amount of the property, if any, exceeds its fair market value. | |||||||
The Company determined that there was no impairment of long-lived assets for the years ended December 31, 2013 and 2012. | |||||||
Concentration of Credit Risk | |||||||
Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable for which the carrying amounts approximate fair value. The Company places their cash and cash equivalents with financial institutions with high-credit ratings and quality. | |||||||
The Company conducts credit evaluations of customers and generally does not require collateral or other security from customers. The Company establishes an allowance for doubtful accounts primarily based upon the age of the receivables and factors relevant to determining the credit risk of specific customers. The amount of receivables ultimately not collected by the Company has generally been consistent with management’s expectations and the allowance established for doubtful accounts. | |||||||
Major customers | |||||||
The Company has two significant customers which individually accounted for 21.6% and 10.3%, respectively, of the revenues for the year ended December 31, 2013. The Company sales to its top five customers accounted for approximately 57% and 0% of revenues during the year ended December 31, 2013 and 2012, respectively. These customers accounted for approximately 59% and 0% of accounts receivable balance as of December 31, 2013 and 2012, respectively. | |||||||
Major suppliers | |||||||
The Company had purchases from seven vendors that accounted for approximately 52% and 0% of purchases during the period ended December 31, 2013 and year ended December 31, 2012, respectively. These vendors accounted for approximately 20% and 0% of accounts payable balance as of period ended December 31, 2013 and December 31, 2012, respectively. | |||||||
Segment Reporting | |||||||
ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Group’s chief operating decision maker is the Chief Executive Officer, who reviews consolidated results of operations prepared in accordance with US GAAP when making decisions about allocating resources and assessing performance of the Group; hence, the Group has only one operating segment, namely the software development services. | |||||||
Income Taxes | |||||||
The Company recognizes deferred income tax liabilities and assets for the expected future income tax consequences of temporary differences between financial accounting bases and income tax bases of assets and liabilities. Deferred income taxes are measured by applying currently enacted income tax rates. The Company accounts for uncertainty in income taxes for income tax positions taken or expected to be taken in an income tax return. Only income tax positions that meet the more-likely-than-not recognition threshold will be recognized. | |||||||
This process includes an analysis of whether tax positions the Company takes with regard to a particular item of income or deduction would meet the definition of an uncertain tax position under the standards. Management believes that tax positions taken by the Company with regard to income and deduction do not constitute any uncertain tax positions under the standards. | |||||||
Goods and Services Tax/Value Added Tax | |||||||
The Company's Australian operations are subject to the Goods and Services Tax on revenue sales of 10%. The Company's English operations are subject to the Value Added Tax on revenue sales of 20%. | |||||||
Revenue Recognition | |||||||
The Company recognizes revenue when it is realized and earned. Specifically, the Company recognizes revenue when services are performed and projects are completed and accepted by the customer. | |||||||
The Company recognizes revenue in accordance with the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (“ASC”) 985-605 “Software - Revenue Recognition”. | |||||||
Project Services Revenue | |||||||
Revenue derived from services primarily includes consulting, implementation, and training. Fees are primarily billed under time and materials arrangements and are recognized as services are performed. | |||||||
License Revenue | |||||||
License revenue in connection with license agreements for standard proprietary software is recognized upon delivery of the software, provided collection is considered probable and the fee is fixed or determinable. | |||||||
Maintenance Revenue | |||||||
Revenue derived from technical support contracts primarily includes telephone consulting and on-site support as well as error reporting and correction services. Maintenance contracts are typically sold for a separate fee with initial contractual period of one year with renewal for additional periods thereafter. Technical support service revenue is recognized ratably over the term of the service agreement. | |||||||
Deferred Revenue | |||||||
Deferred revenue represents advance payments or billings for software licenses, services, and maintenance. | |||||||
Cost of Revenues | |||||||
Cost of revenues for licenses includes amortization of capitalized computer software development costs. Costs for maintenance and services revenues include the cost of personnel to conduct implementations, customer support and consulting, and other personnel-related expenses. | |||||||
Foreign Currency Translation | |||||||
The functional currency of the Company is Australian Dollars (“AUD”), and the functional currency of Massive Interactive Media Ltd is Great British Pounds ("GBP"). | |||||||
For financial reporting purposes, the financial statements of the Company and its subsidiaries, which are prepared using each entity's functional currency, are translated into the Company’s reporting currency, the United States Dollar (“USD”). Assets and liabilities are translated using the exchange rate at each balance sheet date. Revenue and expenses are translated using average rates prevailing during each reporting period, and shareholders’ equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income in shareholders’ equity. | |||||||
The exchange rates applied are as follows: | |||||||
Year | Year | ||||||
2013 | 2012 | ||||||
Year end AUD to USD exchange rate | 0.8941 | 1.0362 | |||||
Year end GBP to USD exchange rate | 1.6561 | 1.6235 | |||||
Average AUD to USD exchange rate | 0.9578 | 1.0388 | |||||
Average GBP to USD exchange rate | 1.5669 | 1.5927 | |||||
Property and Equipment | |||||||
Furniture and office equipment, electronic equipment and motor vehicles are recorded at cost less accumulated depreciation. Depreciation is calculated based on estimated useful life of the assets. | |||||||
Rate | Method | ||||||
Motor Vehicles | 25% | Diminishing value | |||||
Furniture | 20% | Straight line | |||||
Office equipment | 33% | Diminishing value | |||||
Telecommunication equipment | 20% | Diminishing value | |||||
Purchased Software | 40% | Straight line | |||||
Leasehold improvements | 50% | Straight line | |||||
When furniture and office equipment, electronic equipment and motor vehicles are retired or otherwise disposed of, resulting gain or loss is included in net income or loss in the year of disposition for the difference between the net book value and proceeds received thereon. Maintenance and repairs which do not improve or extend the expected useful lives of the assets are charged to expenses as incurred. | |||||||
Impairment of Long-Lived Assets | |||||||
In accordance with Impairment or Disposal of Long-Lived Assets Subsections of FASB ASC Subtopic 360-10, Property, Plant, and Equipment - Overall, long-lived assets, such as property, plant and equipment, and purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. No impairment of long-lived assets was recognized for the period ended December 31, 2013 and year ended December 31, 2012 respectively. | |||||||
Capitalized Computer Software Development Costs | |||||||
The Company capitalizes software development costs in accordance with the FASB ASC Topic 985-20 Costs of Software to be Sold, Leased or Marketed. All software development costs are capitalized and reported at the lower of unamortized cost or net realizable value. Capitalization ceases when the product or enhancement is available for general release to customers. The Company makes ongoing evaluations of the recoverability of its capitalized software projects by comparing the net amount capitalized for each product to the estimated net realizable value of the product. If such evaluations indicate that the unamortized software development costs exceed the net realizable value, the Company writes off the amount by which the unamortized software development costs exceed net realizable value. The Company's capitalized computer software development costs are being amortized ratably based on the projected revenues associated with the related software or on a straight-line basis over five years, whichever method results in a higher level of amortization. | |||||||
Intangible Assets | |||||||
The Company amortizes intangible assets on a straight line basis over their estimated useful lives, generally as follows: four to nine years for technology, ten to twenty years for customer relationships and trade names, and one to five years for other intangible assets. | |||||||
Operating Leases | |||||||
Leases where substantially all the rewards and risks of ownership of assets remain with the lesser are accounted for as operating leases. Payments made under operating leases are charged to the consolidated statements of operations on a straight-line basis over the lease periods. | |||||||
The Company leases office rental spaces in Sydney, Australia and London, England. | |||||||
Bargain Purchase Gain | |||||||
For the year ended December 31, 2013, the Company recorded in its statement of operations a bargain purchase gain of $726,010 related to the acquisition of Massive Media, completed on November 15, 2013. This gain represented the excess of fair value of net assets acquired over the acquisition consideration. See Note 3 for additional information. | |||||||
Derivative Instruments | |||||||
The Company’s debt or equity instruments may contain embedded derivative instruments, such as conversion options, which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability. | |||||||
The identification of, and accounting for, derivative instruments is complex. The Company’s derivative instrument liabilities are re-valued at the end of each reporting period, with changes in the fair value of the derivative liability recorded as charges or credits to income, in the period in which the changes occur. For bifurcated conversion options that are accounted for as derivative instrument liabilities, the Company determines the fair value of these instruments using binomial option pricing model. That model requires assumptions related to the remaining term of the instrument and risk-free rates of return, the Company’s current Common Stock price and expected dividend yield, and the expected volatility of the Company’s Common Stock price over the life of the option. | |||||||
Deemed dividend | |||||||
We incur a deemed dividend on Series B Preferred Redeemable Stock. As the conversion rate was less than the deemed fair value of the Common Stock of $0.20, the Series B Preferred Redeemable Stock contains a beneficial conversion feature as described in ASC 470. The difference in the stated conversion price and estimated fair value of the Common Stock is accounted for as a beneficial conversion feature and affects EPS. The beneficial conversion feature is not material for the year ended December 31, 2013 due to the short period of time since the issuance of the Series B Preferred Redeemable Stock, and the beneficial conversion feature will be recognised as a deemed dividend in future public filings of the company. | |||||||
Earnings per Share | |||||||
Earnings per share is calculated in accordance with ASC 260, Earnings Per Share. Basic earnings per share is computed by dividing income attributable to holders of common stock by the weighted average number of common shares considered to be outstanding during the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The dilutive effect of outstanding common stock warrants is reflected in the diluted earnings per share by application of the treasury stock method when the impact is dilutive. | |||||||
Commitments and Contingencies | |||||||
In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, government investigations, product and environmental liability, and tax matters. In accordance with ASC 450-20, Accounting for Contingencies, the Company records accruals for such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Historically, the Company has not experienced any material service liability claims. | |||||||
Net Income (Loss) Attributable to Common Shares | |||||||
The Company is required to provide basic and dilutive earnings per common share information. The basic net loss per common share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss applicable to common stockholders, adjusted on an "as if converted" basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the years ended December 31, 2013 and 2012, there were no securities that would have had a dilutive effect. | |||||||
Reclassification | |||||||
Certain amounts in the 2012 financial statements have been reclassified to conform to the 2013 financial presentation. These reclassifications have no impact on net income (loss). | |||||||
Recent Accounting Pronouncements | |||||||
We have adopted recently issued accounting pronouncements and have determined that they have no material effect on our financial position, results of operations, or cash flow. We do not expect any recently issued but not yet adopted accounting pronouncements to have a material effect on our financial position, results of operations or cash flow. | |||||||
In July 2012, the FASB issued ASU No. 2012-02, Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”), allowing entities the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. If the qualitative assessment indicates it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, the quantitative impairment test is required. Otherwise, no testing is required. ASU 2012-02 is effective for reporting periods beginning January 1, 2013. The adoption of this update did not have a material impact on the consolidated financial statements but may have an impact in future periods. | |||||||
In February 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). ASU 2013-02 is intended to improve the reporting of reclassifications out of accumulated other comprehensive income. Accordingly, an entity is required to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under GAAP to be reclassified in its entirety to net income. For other amounts that are not required under GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under GAAP that provide additional detail about those amounts. ASU 2013-02 is effective for reporting periods beginning after December 15, 2012. The Company adopted ASU 2013-02 effective January 1, 2013 and the adoption did not have a material impact on the Company’s consolidated financial statements. |
3_Acquisition_of_Massive_Media
3. Acquisition of Massive Media | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Business Combinations [Abstract] | ' | ||||||||
3. Acquisition of Massive Media | ' | ||||||||
On November 15, 2013 the Company acquired all of the issued and outstanding capital stock of Massive Media, a proprietary limited company organized under the laws of New South Wales, Australia, from the shareholders of Massive Media in exchange for $3,301,907 in cash pursuant to a stock purchase agreement dated October 17, 2013. The Company’s preliminary valuations for the property, plant and equipment, inventory, and intangible assets were performed at the date of acquisition. Subsequent to the date of acquisition, the Company engaged a third party to perform a formal valuation of the intangible assets. As a result, it was determined that the Company had entered into a bargain purchase transaction, in which the fair value of the acquired assets exceeded the consideration transferred. | |||||||||
For the year ended December 31, 2013, the Company recorded in its statement of operations a bargain purchase gain of $726,010 related to the acquisition of Massive Media that was completed on November 15, 2013. This gain represents the excess of the fair value of the net assets acquired in the acquisition of Massive Media and reflecting loans provided by the incoming investor Southport Equity and its Directors Antaine Furlong and Ron Downey prior to the settlement date in November 2013. The capital provided allowed Massive Media to complete new product development and secure new agreements with customers during the protracted period prior to the settlement date in November 2013 and the gain reflects the increase in revenue and capitalized expenditures that occurred as a direct result of the capital infusion. | |||||||||
The final purchase consideration for the 2013 acquisition of Massive Media was calculated as follows: | |||||||||
Cash | $ | 3,301,907 | |||||||
Short-term borrowings - related parties assumed | 1,703,563 | ||||||||
Short-term borrowings assumed | 275,657 | ||||||||
Gain on purchase | 726,010 | ||||||||
Total consideration | $ | 6,007,137 | |||||||
The consideration transferred was allocated across the net assets of the Company as follows: | |||||||||
Fair Value | |||||||||
Cash and cash equivalents | $ | 371,276 | |||||||
Receivables, trade and other | 1,448,770 | ||||||||
Taxes Refundable | 1,317,842 | ||||||||
Property, plant and equipment, net | 250,621 | ||||||||
Capitalized software costs, net | 4,360,000 | ||||||||
Trade names, net | 60,000 | ||||||||
Customer relationships, net | 40,000 | ||||||||
Other assets | 109,440 | ||||||||
Accounts payable and accrued expenses | (1,529,128 | ) | |||||||
Deferred tax liability | (192,990 | ) | |||||||
Other liabilities | (228,694 | ) | |||||||
Net assets acquired | $ | 6,007,137 | |||||||
Unaudited pro forma results of operations data for the years ended December 31, 2013 and 2012 are shown below as if the Company and the entities described above had been combined on January 1, 2012. The pro forma results include estimates and assumptions which management believes are reasonable. However, pro forma results do not include any anticipated cost savings or other effects of the planned integration of these entities, and are not necessarily indicative of the results that would have occurred if the business combinations had been in effect on the dates indicated, or which may result in the future. The below table excludes balances for operations that were discontinued; see Note 4 below for additional information. | |||||||||
Unaudited Pro Forma Results of Operations | |||||||||
Years Ended December 31 | |||||||||
2013 | 2012 | ||||||||
Revenues from continuing operations | $ | 7,843,430 | $ | 4,365,345 | |||||
Loss from continuing operations | (1,665,171 | ) | (4,148,893 | ) | |||||
Net income(loss) from continuing operations | $ | 832,504 | $ | (1,926,669 | ) | ||||
Basic income (loss) per share: | $ | 0.01 | $ | (0.03 | ) | ||||
Diluted income (loss) per share: | $ | 0.01 | $ | (0.03 | ) | ||||
Pro-forma shares outstanding | 61,178,167 | 55,471,987 |
4_Discontinued_Operations_and_
4. Discontinued Operations and Assets Held for Sale | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Discontinued Operations and Disposal Groups [Abstract] | ' | ||||||||
4. Discontinued Operations and Assets Held for Sale | ' | ||||||||
In the fourth quarter of 2013, as part of the acquisition of Massive Media Pty Ltd., the Company’s management decided to exit the oil and gas operations related to the properties owned while the entity operated as Xtreme. The Company completed the sale of the Oklahoma and Kansas assets for approximately $341,000 in cash, plus the transfer of approximately $1.3 million in liabilities to the purchaser. In addition, the leases expired on all the remaining assets in Texas and Xtreme secured a release from the leaseholder for all future liabilities. | |||||||||
The following table shows the major classes assets and liabilities of the Company’s discontinued operations at December 31, 2013 and 2012. | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Current Assets: | |||||||||
Accounts receivable, net | $ | - | $ | 27,257 | |||||
Current assets of discontinued operations | $ | - | $ | 27,257 | |||||
Property and equipment, net | - | 8,525,149 | |||||||
Other assets | - | 57,887 | |||||||
Other assets of discontinued operations | $ | - | $ | 8,583,036 | |||||
Current Liabilities: | |||||||||
Accounts payable and accrued expenses | $ | - | $ | 963,258 | |||||
Deposits payable | - | 391,418 | |||||||
Short term borrowings | - | 7,000 | |||||||
Current liabilities of discontinued operations | $ | - | $ | 1,361,676 | |||||
Other Liabilities: | |||||||||
Asset retirement obligation | - | 300,000 | |||||||
Other liabilities of discontinued operations | $ | - | $ | 300,000 | |||||
The following table shows certain components of the results of operations of the Company’s discontinued operations: | |||||||||
2013 | 2012 | ||||||||
Revenues | $ | 9,053 | $ | 1,339,047 | |||||
(Loss) from discontinued operations | $ | (635,824 | ) | $ | (82,490 | ) | |||
(Loss) on disposal of discontinued operations | $ | (6,499,069 | ) | $ | — | ||||
(Loss) from discontinued operations | $ | (7,134,893 | ) | $ | (82,490 | ) | |||
Basic loss per share attributable to discontinued operations: | $ | (0.12 | ) | $ | (0.18 | ) | |||
Diluted loss per share attributable to discontinued operations: | $ | (0.12 | ) | $ | (0.18 | ) |
5_Accounts_receivable_trade
5. Accounts receivable b trade | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Receivables [Abstract] | ' | ||||||||
5. Accounts receivable b trade | ' | ||||||||
2013 | 2012 | ||||||||
Trade Debtors | $ | 1,215,411 | $ | - | |||||
Accrued Income | 28,547 | - | |||||||
Accounts receivable - trade | $ | 1,243,958 | $ | - |
6_Other_receivables
6. Other receivables | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
6. Other receivables | ' | ||||||||
2013 | 2012 | ||||||||
Employee Advance | $ | 40,834 | $ | - | |||||
Other Debtors | 6,433 | - | |||||||
Other receivables | $ | 47,267 | $ | - |
7_Prepayments
7. Prepayments | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
7. Prepayments | ' | ||||||||
At December 31, 2013 and December 31, 2012, prepayments consisted of: | |||||||||
2013 | 2012 | ||||||||
Prepaid expenses | $ | 144,694 | $ | - | |||||
$ | 144,694 | $ | - | ||||||
8_Property_and_Equipment
8. Property and Equipment | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
8. Property and Equipment | ' | ||||||||
Property and equipment, net consisted of the following at December 31: | |||||||||
2013 | 2012 | ||||||||
Furniture and Fixtures | $ | 22,132 | $ | - | |||||
Motor Vehicles | 44,560 | - | |||||||
Purchased Software | 58,588 | - | |||||||
Office Equipment | 125,341 | ||||||||
Property and Equipment - gross | 250,621 | - | |||||||
Less: Accumulated depreciation | (8,529 | ) | - | ||||||
Property and equipment, net | $ | 242,092 | $ | - | |||||
Depreciation expense totaled $8,529 and $0 for the years ended December 31, 2013 and 2012, respectively. | |||||||||
9_Other_assets_net
9. Other assets, net | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ||||||||
9. Other assets, net | ' | ||||||||
Other assets at December 31, 2013 and December 31, 2012 comprises of the following: | |||||||||
2013 | 2012 | ||||||||
Bonds | $ | 15,569 | $ | - | |||||
Other | 752 | - | |||||||
Other assets, net | $ | 16,321 | $ | - | |||||
Bonds for December 31, 2013 consisted primarily of office rental bonds/holding deposits. | |||||||||
10_Intangible_Assets
10. Intangible Assets | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||||
Intangible Assets | ' | ||||||||||||||||||||||||
Intangible assets consist of the following: | |||||||||||||||||||||||||
December 31, 2013 | December 31, 2012 | ||||||||||||||||||||||||
Gross | Accumulated | Net | Gross | Accumulated | Net | ||||||||||||||||||||
Amount | Amortization | Amount | Amount | Amortization | Amount | ||||||||||||||||||||
Capitalized Software Costs | $ | 4,360,000 | $ | (64,113 | ) | $ | 4,295,887 | $ | - | $ | - | $ | - | ||||||||||||
Tradenames | 60,000 | (346 | ) | 59,654 | - | - | - | ||||||||||||||||||
Customer Relationships | 40,000 | (462 | ) | 39,538 | - | - | - | ||||||||||||||||||
Total | $ | 4,460,000 | $ | (64,921 | ) | $ | 4,395,079 | $ | - | $ | - | $ | - | ||||||||||||
Amortization expense amounted to $64,921 and $0 for the years ended December 31, 2013 and 2012, respectively. | |||||||||||||||||||||||||
The following represents the Company’s expected amortization expense for the years ending December 31: | |||||||||||||||||||||||||
2014 | $ | 892,000 | |||||||||||||||||||||||
2015 | 892,000 | ||||||||||||||||||||||||
2016 | 892,000 | ||||||||||||||||||||||||
2017 | 892,000 | ||||||||||||||||||||||||
2018 | 827,079 | ||||||||||||||||||||||||
Total | $ | 4,395,079 |
11_Fair_Value_Measurements
11. Fair Value Measurements | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||
11. Fair Value Measurements | ' | ||||||||||||||||
Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. The Company evaluates the fair value of certain assets and liabilities using the following fair value hierarchy which ranks the quality and reliability of inputs, or assumptions, used in the determination of fair value: | |||||||||||||||||
• | Level 1 — quoted prices in active markets for identical assets and liabilities | ||||||||||||||||
• | Level 2 — inputs other than Level 1 quoted prices that are directly or indirectly observable | ||||||||||||||||
• | Level 3 — unobservable inputs that are not corroborated by market data | ||||||||||||||||
The Company evaluates assets and liabilities subject to fair value measurements on a recurring and nonrecurring basis to determine the appropriate level to classify them for each reporting period. This determination requires significant judgments to be made by the Company. The following table sets forth the Company’s assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2013 and 2012, by level within the fair value hierarchy: | |||||||||||||||||
Amounts at | Fair Value Measurement Using | ||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||
As of December 31, 2013 | |||||||||||||||||
Liabilities | |||||||||||||||||
Warrant liability | $ | 7,717 | $ | - | $ | - | $ | 7,717 | |||||||||
Note liability | 21,600 | - | - | 21,600 | |||||||||||||
As of December 31, 2012 | |||||||||||||||||
Liabilities | |||||||||||||||||
Warrant liability | $ | 178,403 | $ | - | $ | - | $ | 178,403 | |||||||||
Note liability | 227,070 | - | - | 227,070 | |||||||||||||
The carrying amounts of the Company’s long-term liabilities approximate their fair value because the interest rate is reflective of rates that the Company could currently obtain on debt with similar terms and conditions. See Note 14 for additional information about the changes in the fair value for the items above. | |||||||||||||||||
In connection with the issuance of certain convertible notes and warrants prior to December 31, 2012, the related conversion features were accounted for as derivative liabilities at the date of issuance and adjusted to fair value through earnings at each reporting date, due to anti-dilution reset features. The fair value was estimated on the date of grant using a binomial option-pricing model using the following weighted-average assumptions: expected dividend yield of 0%; expected volatility of 290%; risk-free interest rate of 0.05% and an expected holding period of 24 months for the Notes and 60 months for the Warrants. The resulting values, at the date of issuance, were allocated to the proceeds received and applied as a discount to the face value of the Notes and Warrants. The Company recorded a derivative expense on the Notes of $649,212 at inception and a further derivative expense on the Warrants of $2,431,437 at inception based on the guidance in ASC 815-10 and ASC 815-40-15 due to a reset feature on the exercise price. |
12_Accrued_Expenses_and_other_
12. Accrued Expenses and other current liabilities | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
12. Accrued Expenses and other current liabilities | ' | ||||||||
Accrued expenses and other current liabilities at December 31, 2013 and December 31, 2012 comprises of the following | |||||||||
2013 | 2012 | ||||||||
Credit Cards | $ | 16,763 | $ | - | |||||
Accrued Expenses | 313,473 | - | |||||||
Accrued Expenses and Other Current Liabilities | $ | 330,236 | $ | - | |||||
Accrued expenses constitute trade creditor balances where invoices have not yet been received. | |||||||||
13_Accrued_compensation_and_re
13. Accrued compensation and related costs | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Compensation Related Costs [Abstract] | ' | ||||||||
13. Accrued compensation and related costs | ' | ||||||||
Accrued compensation and related costs at December 31, 2013 and December 31, 2012 were as follows: | |||||||||
Current | 2013 | 2012 | |||||||
Payable to Staff | $ | 5,499 | $ | - | |||||
Long Service Leave Provision | 188,118 | - | |||||||
Annual Leave Provision | 328,842 | - | |||||||
Employee Pension Plan | 110,966 | - | |||||||
Federal Payroll Tax | 152,681 | - | |||||||
State Payroll Tax | 14,903 | - | |||||||
Accrued compensation and related costs | $ | 801,009 | $ | - | |||||
Non-Current | 2013 | 2012 | |||||||
Long Service Leave Provision-non current | $ | 80,733 | $ | - | |||||
Accrued compensation and related costs-non current | $ | 80,733 | $ | - | |||||
14_Borrowings
14. Borrowings | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||||||
14. Borrowings | ' | ||||||||||||||||
Convertible Notes Payable | |||||||||||||||||
On September 12, 2011, Xtreme raised $2,360,000 in convertible notes (the “9/12 Notes). The 9/12 Notes bear an interest rate of 12% per annum and matured on September 12, 2013. Under the convertible note agreements, the lender has the right to convert all or any part of the outstanding and unpaid principal and interest into shares of the Company’s common stock; provided however, that in no event shall the lender be entitled to convert any portion of the 9/12 Notes that would result in the beneficial ownership by it and its affiliates to be more than 9.99% of the outstanding shares of our common stock. The 9/12 Notes are convertible at a fixed conversion price of $0.28 per share. In addition, Xtreme issued warrants (the “Warrants”) to acquire 6,810,269 shares of the Company’s common stock at a strike price of $0.28 per share. The Warrants expire on September 12, 2016. The conversion price of the 9/12 Notes and Warrants will be reduced in the event the Company issues or sells any shares of common stock less than the conversion price. | |||||||||||||||||
Xtreme delayed scheduled payments on the 9/12 Notes for the seven months ending December 31, 2012. As a result the remaining 9/12 Notes totaling $151,466 as of December 31, 2013 remain in default. The Company is accruing interest at the default rate of 18% as a result. | |||||||||||||||||
The conversion features of the 9/12 Notes and Warrants are accounted for as derivative liabilities at the date of issuance and adjusted to fair value through earnings at each reporting date, due to anti-dilution reset features. The fair value was estimated on the date of grant using a binomial option-pricing model that incorporated the following weighted-average assumptions: expected dividend yield of 0%; expected volatility of 290%; risk-free interest rate of 0.05% and an expected holding period of 24 months for the 9/12 Notes and 60 months for the Warrants. The resulting values, at the date of issuance, were allocated to the proceeds received and applied as a discount to the face value of the 9/12 Notes and Warrants. Xtreme recorded a derivative expense on the 9/12 Notes of $649,212 at inception and a further derivative expense on the Warrants of $2,431,437 at inception based on the guidance in ASC 815-10 and ASC 815-40-15 due to a reset feature on the exercise price. | |||||||||||||||||
On December 31, 2012 Xtreme recognized a derivative liability for the 9/12 Notes and Warrants of $227,070 and a change in fair value of $416,987 for the year ended December 31, 2013, and redemptions of $(622,457) for the year ended December 31, 2013 resulting in a derivative liability of $21,600 at December 31, 2013. | |||||||||||||||||
On December 31, 2012 Xtreme recognized a derivative liability for the Warrants of $178,403 at December 31, 2012 and a change in fair value of $(170,686) for the year ended December 31, 2013, resulting in a derivative liability of $7,717 at December 31, 2013. | |||||||||||||||||
As of December 31, 2013, the balance of the 9/12 Notes is $151,466. | |||||||||||||||||
The following tables illustrate the fair value adjustments that were recorded related to the derivative financial instruments associated with the convertible debenture financings: | |||||||||||||||||
Year ended December 31, 2013 | |||||||||||||||||
Derivative liability | 12/31/12 | Fair Value Adjustments | Redemptions | Total | |||||||||||||
Notes | $ | 227,070 | $ | 416,987 | $ | (622,457 | ) | $ | 21,600 | ||||||||
Warrants | 178,403 | (170,686 | ) | - | 7,717 | ||||||||||||
$ | 405,473 | $ | 246,301 | $ | (622,457 | ) | $ | 29,317 | |||||||||
The derivative income of $376,156, included within the Consolidated Income Statement, is the net result of the redemptions of $(622,457) and the fair value adjustments of $246,301. | |||||||||||||||||
Short-term borrowings | |||||||||||||||||
The total available Trade finance facility with Bank of Queensland is $357,640. The repayment term is usually at 90 days or the payment receipt of the particular invoice security. The interest expense related to the Trade finance loan for the year ending December 31, 2013 and 2012 was $9,976 and $nil respectively. The amount outstanding as of December 31, 2013 and 2012 on this facility was $357,640 and $0, respectively. |
15_Borrowings_Related_Party
15. Borrowings b Related Party | 12 Months Ended |
Dec. 31, 2013 | |
Related Party Transactions [Abstract] | ' |
Borrowings b Related Party | ' |
During the year ended December 31, 2012, a director advanced $101,093 to Xtreme. Interest is accrued on these advances at the rate of 10% per annum. The advances and accrued interest are payable on demand and unsecured. This loan was settled through issuance of Preferred Shares, see Note 20 Stockholders’ Equity for additional information on the preferred A share issuance. | |
On June 8, 2012, Xtreme owed an officer $464,000 for the acquisition of their working interest in the Saltwater Disposal Well (Gotcheye SWD) and $36,000 for the acquisition of their working interests in the Lionheart. These amounts are included in accounts payable – related parties on the consolidated balance sheet as of December 31, 2012. This loan was settled through issuance of Preferred Shares, see Note 20 Stockholders’ Equity for additional information on the preferred A share issuance. | |
On June 8, 2012, Xtreme owed an employee $80,000 for the acquisition of their working interest in the Saltwater Disposal Well (Gotcheye SWD) and $3,600 for the acquisition of their working interests in the Lionheart. These amounts are included in accounts payable – related parties on the consolidated balance sheet as of December 31, 2012. This loan was settled through issuance of Preferred Shares, see Note 20 Stockholders’ Equity for additional information on the preferred A share issuance. | |
On June 8, 2012, Xtreme owed a director $42,720 for the acquisition of their working interest in the Saltwater Disposal Well (Gotcheye SWD). These amounts are included in accounts payable – related parties on the consolidated balance sheet as of December 31, 2012. This loan was settled through issuance of Preferred Shares, see Note 20 Stockholders’ Equity for additional information on the preferred A share issuance. | |
On June 11, 2012 a director loaned $50,000 to Xtreme. The loan is non-interest bearing and due on June 30, 2012 (“Maturity Date”). The Company shall pay the director $5,000 for underwriting fees, charges and other payments on the maturity date if the Company’s financing is completed. This loan was settled through issuance of Preferred Shares, see Note 20 Stockholders’ Equity for additional information on the preferred A share issuance. | |
On June 11, 2012 an officer loaned $200,000 to Xtreme. The loan is non-interest bearing and due on June 30, 2012 (“Maturity Date”). The Company shall pay the officer $20,000 for underwriting fees, charges and other payments on the maturity date if the Company’s financing is completed. This loan was settled through issuance of Preferred Shares, see Note 20 Stockholders’ Equity for additional information on the preferred A share issuance. | |
On June 11, 2012 an investor loaned $50,000 to Xtreme. The loan is non-interest bearing and due on June 30, 2012 (“Maturity Date”). The Company shall pay the investor $5,000 for underwriting fees, charges and other payments on the maturity date if the Company’s financing is completed. This loan was settled through issuance of Preferred Shares, see Note 20 Stockholders’ Equity for additional information on the preferred A share issuance. | |
During the year ended December 31, 2012, an investor loaned $50,000 to Xtreme for the down payment in the acquisition of Rick’s Transport Services business. There is no written loan agreement. The loan is non-interest bearing and due on demand. This loan was settled through issuance of Preferred Shares, see Note 20 Stockholders’ Equity for additional information on the preferred A share issuance. | |
During the year ended December 31, 2013, a director advanced $357,627 to the Company. Interest is accrued on these advances at the rate of 43% per annum. The advances and accrued interest are payable on demand and unsecured. This loan was repaid in January 2014. | |
During the year ended December 31, 2013, a director advanced $48,788 to the Company. Interest is accrued on these advances at the rate of 9% per annum. The advances and accrued interest are payable on demand and unsecured. | |
During the year ended December 31, 2013, an investor advanced $515,000 to the Company. Interest is accrued on these advances at the rate of 4% per annum. The advances and accrued interest are payable on demand and unsecured. This loan was repaid in January 2014. |
16_Taxes_Payable_Refundable
16. Taxes (Payable) Refundable | 12 Months Ended | |||||||||
Dec. 31, 2013 | ||||||||||
Notes to Financial Statements | ' | |||||||||
Taxes (Payable) Refundable | ' | |||||||||
2013 | 2012 | |||||||||
Goods and Services Taxes Payable | Australia | $ | (75,907 | ) | $ | - | ||||
Withholding Tax Payable | Australia | - | - | |||||||
Fringe Benefit Tax Payable | Australia | 813 | - | |||||||
Value Added Tax Payable | United Kingdom | (53,079 | ) | - | ||||||
Income Tax Refundable | Australia | 1,476,597 | - | |||||||
Taxes Refundable | $ | 1,348,424 | $ | - | ||||||
The above tax incentive is a Research and Development (R&D) tax incentive, which provides a tax offset for eligible R&D activities and is targeted toward R&D that benefits Australia. The incentive, being a refundable tax offset, is available for those entities engaging in eligible activities whose aggregated turnover is less than $20 million. In January 2014, $1,029,601 was received from the Australian Tax Office related to the Income Tax Receivable noted above, and the balance has been determined to be collectible by management. |
17_Income_Taxes
17. Income Taxes | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
17. Income Taxes | ' | ||||||||
Income tax expense for the years ended December 31, 2013 and 2012 is comprised of foreign income tax benefit of $(119,612) and $0, respectively. | |||||||||
The following summarizes the difference between the income tax expense and the amount computed by applying the statutory federal income tax rate of 34% to income before income tax: | |||||||||
Year Ended December 31, | 2013 | 2012 | |||||||
Federal income tax (benefit) at statutory rate | $ | (2,110,425 | ) | $ | (23,949 | ) | |||
Foreign taxes at less than federal statutory rate | (241,871 | ) | - | ||||||
Nondeductible expenses | (393,229 | ) | (89,926 | ) | |||||
Deferred true-ups | 4,192,702 | - | |||||||
Valuation allowance change | (1,566,789 | ) | 113,875 | ||||||
Total | $ | (119,612 | ) | $ | - | ||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets are comprised of the following at December 31: | |||||||||
At December 31, | 2013 | 2012 | |||||||
Investments | $ | 359,286 | $ | - | |||||
Loss carryforwards | 335,446 | 2,218,000 | |||||||
Intangibles | (190,371 | ) | - | ||||||
Total | 504,361 | 2,218,000 | |||||||
Valuation allowance | (694,732 | ) | (2,218,000 | ) | |||||
Net deferred tax assets (liabilities) | $ | (190,371 | ) | $ | - | ||||
In assessing the realizability of the Company’s deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management’s assessment is based on the weight of available evidence, including cumulative losses since inception and expected future losses and as such, management does not believe it is more likely than not that the deferred tax assets will be realized. Accordingly, a full valuation allowance has been established and no deferred tax assets and related tax benefit have been recognized in the accompanying financial statements. The valuation allowance decreased by $1,523,268 and increased by $113,000 during the years ended December 31, 2013 and 2012, respectively. The decrease in the valuation allowance is primarily attributable to the write-off of net operating loss carryforwards. | |||||||||
At December 31, 2013, the Company has net operating loss carryforwards of $987,607 available to reduce future taxable income, if any for federal and state income tax purposes, respectively. The net operating losses begin to expire in 2033. | |||||||||
Internal Revenue Code Section 382 places a limitation on the amount of taxable income that can be offset by net operating loss carrforwards and tax credits after a greater than 50% change in control in ownership. The Company’s capitalization described herein may have resulted in such a change. Utilization of the net operating loss carryforwards may be subject to an annual limitation under IRC Section 382 and similar state provisions. The annual limitation may result in the expiration of the net operating loss carryforwards before utilization. | |||||||||
18_Employee_defined_contributi
18. Employee defined contribution plan | 12 Months Ended |
Dec. 31, 2013 | |
Compensation and Retirement Disclosure [Abstract] | ' |
18. Employee defined contribution plan | ' |
Employees of the Company participate in government mandated defined contribution plan, pursuant to which certain pension benefits are provided to employees. The government mandate requires certain percentages of the employees’ salaries be paid into Trust accounts for the benefit of the employees. The Group has no legal obligation for the benefits beyond the contributions made. The total amounts for such employee benefits, which were expensed as incurred, were $63,386 and $0 for year to date December 31, 2013 and December 31, 2012, respectively. |
19_Commitments_and_Contingenci
19. Commitments and Contingencies | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Commitments And Contingencies | ' | ||||
Commitments and Contingencies | ' | ||||
Litigation | |||||
From time to time, the Company is involved in disputes or legal actions arising in the ordinary course of business. Management does not believe the outcome of such legal actions will have a material adverse effect on the Company’s financial position, results of operations or cash flows. | |||||
Leases | |||||
Total rent expense incurred by the Company was $46,513 for 2013 and $0 for 2012. | |||||
Leases where substantially all the rewards and risks of ownership of assets remain with the lesser are accounted for as operating leases. Payments made under operating leases are charged to the consolidated statements of operations on a straight-line basis over the lease periods. | |||||
The Company leases office spaces in Australia and in the UK under a lease agreement. The term expiry for the Australian office is May 31, 2015. The term expiry for the UK office is January 11, 2018. | |||||
2014 | $ | 219,192 | |||
2015 | 160,097 | ||||
2016 | 160,097 | ||||
2017 | 160,097 | ||||
2018 | 4,825 | ||||
Thereafter | - | ||||
$ | 704,308 | ||||
The Company has entered into commercial leases for company motor vehicles with a term expiring in September 16, 2016. Future minimum rental payments under this operating lease are as follows: | |||||
2014 | $ | 27,408 | |||
2015 | 27,408 | ||||
2016 | 77,275 | ||||
Thereafter | - | ||||
$ | 132,091 | ||||
The non-current portion of future payments on the commercial leases for company motor vehicles are recorded as Other Long-Term Liabilities on the Balance Sheet. On February 14th, 2014, one of the leased vehicles was sold and the amount of lease liability was repaid. The lease payment liability was reduced by $16,313 per year. |
20_Stockholders_equity
20. Stockholders' equity | 12 Months Ended | ||
Dec. 31, 2013 | |||
STOCKHOLDERS' EQUITY: | ' | ||
Stockholders' equity | ' | ||
Capital Structure | |||
The Company is authorized to issue up to 200,000,000 shares of common stock, $0.001 par value per share. The holders of the common stock do not have any preemptive right to subscribe for, or purchase, any shares of any class of stock. | |||
The Company is authorized to issue up to 50,000,000 shares of preferred stock, $0.001 par value per share of which 55 were issued and outstanding as of December 31, 2013. | |||
The Company has redeemed and canceled its one class of Non-transferable Preferred Stock. The Non-transferable Preferred Stock, consisting of 1,000 shares, was returned to the Company by Mr. McAndrew upon his resignation as the Company’s Chief Executive Officer. | |||
Common Stock | |||
In the first quarter of 2012, the Company issued 15,976 restricted shares of its common stock to consultants for $16,571 worth of services. The Company’s shares were valued at approximately $1.04 per share | |||
In the second quarter of 2012, the Company issued 73,673 restricted shares of its common stock to consultants valued at $44,413. The Company’s shares were valued at approximately $0.60 per share. | |||
In the third quarter of 2012, the Company issued 53,315 restricted shares of its common stock to consultants valued at $23,364. The Company’s shares were valued at approximately $0.44 per share. | |||
During the year ended December 31, 2012, Xtreme cancelled 67,500 shares of common stock previously issued to a consultant pursuant to a consulting agreement entered into on October 18, 2011. The cancelled shares are being included in the issued and outstanding shares of common stock as of December 31, 2012. | |||
In 2012, Xtreme issued 1,758,838 shares of common stock to convertible note holders in exchange for $83,725 of principal and interest, based upon the original terms of the convertible notes. | |||
In 2013, Xtreme issued 22,986 shares of its common stock to consultants for services rendered to Xtreme valued at $25,554. | |||
In 2013, Xtreme issued 1,409,174 shares of its common stock to various convertible note holders converting outstanding principal of $1,384,863 and accrued interest of $120,837, based upon the original terms of the convertible notes. | |||
In 2013, in association with the acquisition of Massive Media, the Company converted convertible notes of $121,586 into 578,980 shares of common stock and eliminated $20,000 of the derivative liability associated with the convertible notes. | |||
Reverse Split | |||
On August 17, 2013 Xtreme received approval to complete a 1 for 100 reverse split of all outstanding shares of Xtreme's Common Stock by filing a Certificate of Amendment with the Nevada Secretary of State. Each issued and outstanding share of Common Stock would automatically be changed into a fraction of a share of Common Stock in accordance with the ratio of 1 for 100. The par value of the Common Stock would remain unchanged at $0.001 per share, and the number of authorized shares of Common Stock would remain unchanged as well. Any fractional shares resulting from the Reverse Split have been rounded up to the nearest whole number. The reverse split became effective after filing a Certificate of Amendment with the Nevada Secretary of State and upon the completion of the review and comment process with FINRA on August 17, 2013. The Company has retroactively reflected the reverse split in the accompanying financial statements. | |||
Preferred Stock | |||
The shares of Preferred Stock, other than the Nontransferable Preferred Stock, could be issued from time to time by the Company’s Board of Directors in its sole discretion without further approval or authorization by the stockholders, in one or more series, each of which series could have any particular distinctive designations as well as relative rights and preferences as determined by the Board of Directors. The relative rights and preferences that may be determined by the Board of Directors in its discretion from time to time include but are not limited to the following: | |||
• | the rate of dividend and whether the dividends are to be cumulative and the priority, if any, of dividend payments relative to other series in the class; | ||
• | whether the shares of any such series may be redeemed, and if so, the redemption price and the terms and conditions of redemption; | ||
• | the amount payable with respect to such series in the event of voluntary or involuntary liquidation and the priority, if any, of each series relative to other series in the class with respect to amounts payable upon liquidation and sinking fund provision, if any, for the redemption or purchase of the shares of that series; and | ||
• | the terms and conditions, if any, on which the shares of a series may be converted into or exchanged for shares of any class, whether common or preferred, or into shares of any series of the same class, and if provision is made for conversion or exchange, the times, prices, rates, adjustments and other terms. | ||
On May 7, 2013 we issued a total of 3,694,000 shares of our preferred stock to the then current CFO, CEO, COO, Corporate Secretary, and three un-related third parties, in exchange for full mutual releases and extinguishment of $3,568,461 in liabilities owed to these individuals. The amount of shares issued to the CEO, COO, CFO, and Corporate Secretary were 1,250,000; 1,500,000; 400,000; and 84,000 shares, respectively, valued at $1,649,340. On August 17, 2013, the shares of preferred stock were converted into 3,694,000 shares of common stock. | |||
On November 7, 2013, Massive Interactive, Inc. sold 55 shares of redeemable preferred B stock and 55,000,000 of common stock to Southport Lane, LP, through its subsidiaries and Southport Equity II, LLC, a wholly owned subsidiary of Southport Lane, LP, respectively, in exchange for an aggregate of $5,500,000. The Preferred Stock accrues an annual dividend of $6,750 per share. The Preferred Stock is redeemable by the Company at any time prior to November 16, 2016. Southport Lane Equity II, LLC may convert the Preferred Stock following the 3rd anniversary of the date of issuance. The Preferred Stock is convertible at $.144, 120% of the closing bid price of the Company’s common stock on November 1, 2013. The conversion price changes for certain diluting issuances in accordance with the agreement. | |||
Securities issued for Working Interests | |||
In 2012, Xtreme issued working interests in the Saltwater Disposal Project valued at $2,585,719. | |||
21_Business_and_Geographic_Seg
21. Business and Geographic Segment Information | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
Business and Geographic Segment Information | ' | ||||||||
ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Group’s chief operating decision maker is the Chief Executive Officer, who reviews consolidated results of operations prepared in accordance with GAAP when making decisions about allocating resources and assessing performance of the Group; hence, the Group has only one operating segment, namely the software development services. | |||||||||
The Company’s revenues were generated in the following geographic regions: | |||||||||
2013 | 2012 | ||||||||
United Kingdom | $ | 571,531 | $ | - | |||||
Australia | 693,717 | - | |||||||
Consolidated total | $ | 1,265,248 | $ | - | |||||
Long-lived assets by geographic area consist of property and equipment and are as follows: | |||||||||
2013 | 2012 | ||||||||
United Kingdom | $ | 39,326 | $ | - | |||||
Australia | 202,766 | - | |||||||
Consolidated total | $ | 242,092 | $ | - | |||||
22_Legal_Matters
22. Legal Matters | 12 Months Ended |
Dec. 31, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Legal Matters | ' |
On December 1, 2009, Xtreme began legal proceedings in McLain County District Court in Purcell, Oklahoma against D. Deerman, L.P. alleging breach of contract and demanding payment for fees owed, oil and gas production revenue and other expenses on the Oil Creek property in excess of $75,000 based on its contracted ownership percentage. The suit also demanded an accounting discovery for all items in dispute. On December 31, 2009, Deerman filed a counterclaim in the same court claiming breach of contract for drilling the Oil Creek property and demanding payment of $235,000 for expenses incurred. Both parties resolved their respective claims in this action and the matters were dismissed with prejudice on May 24, 2013. | |
On March 30, 2010, each of Baker Hughes, Pan American Drilling and Native American Drilling began legal proceeding against Xtreme in Logan County District Court in Oklahoma demanding judgment for past due invoices in excess of $75,000. Xtreme disputed the amounts due based on contracted terms between the parties. Xtreme completed the settlement with Baker Hughes on June 15, 2013 and secured a full release and dismissal of the lawsuit with prejudice. |
23_Subsequent_Events
23. Subsequent Events | 12 Months Ended |
Dec. 31, 2013 | |
Notes to Financial Statements | ' |
Subsequent Events | ' |
On March 26, 2014, the Company entered into a binding letter of intent with its Chief Executive Officer, Ronald Downey, to acquire Wunderkind Group Pty Ltd. (“Wunderkind”). Mr. Downey is the majority shareholder of Wunderkind. | |
Under the terms of the Letter of Intent, the Company intends to purchase, directly or through a subsidiary, all the outstanding shares of Wunderkind in exchange for a convertible promissory note issued by the Company (the “Transaction”). | |
The principal amount of the promissory note will be $5.5 million and it will be convertible into 45% of the total shares of common stock issued and outstanding of the Company on a fully diluted post-Transaction basis. The Company shall have until April 26, 2014, to complete its financial, legal and business due diligence of Wunderkind and the Letter of Intent shall not be enforceable upon the discovery of any material non-disclosed information or event during the Company’s due diligence of Wunderkind. The closing of the Transaction is conditioned upon the approval and consent of the Company’s majority shareholder, Southport Lane Management, LLC, the Company’s board of directors, and Wunderkind’s board of directors, respectively. The closing is also subject to the Company obtaining a satisfactory fairness opinion with regard to Transaction. | |
24_Extinguishment_of_Liabiliti
24. Extinguishment of Liabilities | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Notes to Financial Statements | ' | ||||
24. Extinguishment of Liabilities | ' | ||||
During the year ended December 31, 2013, the Company redirected its primary operations through the acquisition of Massive Media Pty Ltd and discontinuation of its oil and gas operations. In connection with this redirection, the following table shows the movements in the Company’s liabilities for the year ended December 31, 2013 relating to the Xtreme business. | |||||
Total liabilities as of December 31, 2012 | $ | 6,250,190 | |||
Add/(less): | |||||
Liabilities extinguished in discontinued operations | (1,661,676 | ) | |||
Liabilities extinguished through issue of equity instruments | (3,728,203 | ) | |||
Liabilities settled in cash | (14,863 | ) | |||
Movement in derivative fair value (Derivative income in P&L) | (376,156 | ) | |||
Gain on debt forgiveness | (179,154 | ) | |||
Gain on conversion | (233,811 | ) | |||
Additional liabilities incurred during the year ended December 31, 2013 | 235,842 | ||||
Other movements | 18,757 | ||||
Total remaining liabilities as of December 31, 2013 | $ | 310,926 | |||
The equity and liability components reconcile to the Consolidated Balance Sheets and Consolidated Statements of Convertible Preferred Stock, Stockholders’ Equity (Deficit) as follows: | |||||
Total remaining liabilities as of December 31, 2013 comprising of: | |||||
Convertible note payable | $ | 151,466 | |||
Derivative liability | 29,317 | ||||
Accounts payable | 130,143 | ||||
$ | 310,926 | ||||
Total value of common and preferred stock issued during the year | $ | 9,228,203 | |||
Less: common & preferred stock issued to Southport Lane, LP | (5,500,000 | ) | |||
$ | 3,728,203 | ||||
1_Basis_of_Presentation_Polici
1. Basis of Presentation (Policies) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Basis Of Presentation Policies | ' | ||||||
Basis of Presentation | ' | ||||||
Basis of Presentation | |||||||
This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) and have been consistently applied in the preparation of the financial statements. | |||||||
Consolidation Policy | ' | ||||||
Principles of Consolidation | |||||||
The consolidated financial statements include the financial statements of the Company and its subsidiaries, Massive Media Pty Ltd and Massive Interactive Media Ltd. As part of the acquisition of Massive Media Pty Ltd and its controlled entities by the Company, it discontinued all oil and gas operations related to properties owned in Texas and Oklahoma. Financial results related to the oil and gas operations is reported as discontinued operations beginning with the financial results as of December 31, 2013 (See Note 4). | |||||||
Use of Estimates | ' | ||||||
Use of Estimates | |||||||
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. | |||||||
On an ongoing basis, the Company evaluates its estimates, including those related to the accounts receivable allowance, the useful lives of long-lived assets and other intangible assets, and income taxes, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying value of assets and liabilities as well as reported revenue and expenses during the periods presented. | |||||||
Cash and Cash Equivalents | ' | ||||||
Cash and Cash Equivalents | |||||||
Cash and cash equivalents represent cash on hand and deposits held at call with banks. The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. | |||||||
Fair Value of Financial Instruments | ' | ||||||
Fair Value of Financial Instruments | |||||||
Pursuant to the Accounting Standards Codification (“ASC”) No. 820, “Disclosures About Fair Value of Financial Instruments”, the Company records its financial assets and liabilities at fair value. ASC No. 820 provides a framework for measuring fair value, clarifies the definition of fair value and expands disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. ASC No. 820 establishes a three-tier hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: | |||||||
Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. | |||||||
Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the asset/liability’s anticipated life. | |||||||
Level 3—Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. | |||||||
The carrying values for cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued liabilities approximate their fair value due to their short maturities. | |||||||
Receivables | ' | ||||||
Accounts Receivable | |||||||
Receivables from services are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. | |||||||
Management periodically reviews receivables for collectability. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Uncollectible receivables are charged off against the allowance account. No allowance for doubtful accounts was recorded as of December 31, 2013 and 2012, respectively. | |||||||
The Company did not have any off balance-sheet credit exposure relating to its customers, suppliers or others. | |||||||
Accounting for the Impairment of Long-Lived Assets | ' | ||||||
Accounting for the Impairment of Long-Lived Assets | |||||||
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. Recoverability of the asset is measured by comparison of its carrying amount to the undiscounted cash flow that the asset or asset group is expected to generate. If such assets or asset groups are considered to be impaired, the loss recognized is the amount by which the carrying amount of the property, if any, exceeds its fair market value. | |||||||
The Company determined that there was no impairment of long-lived assets for the years ended December 31, 2013 and 2012. | |||||||
Concentration of Risk | ' | ||||||
Concentration of Credit Risk | |||||||
Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable for which the carrying amounts approximate fair value. The Company places their cash and cash equivalents with financial institutions with high-credit ratings and quality. | |||||||
The Company conducts credit evaluations of customers and generally does not require collateral or other security from customers. The Company establishes an allowance for doubtful accounts primarily based upon the age of the receivables and factors relevant to determining the credit risk of specific customers. The amount of receivables ultimately not collected by the Company has generally been consistent with management’s expectations and the allowance established for doubtful accounts. | |||||||
Major customers | ' | ||||||
Major customers | |||||||
The Company has two significant customers which individually accounted for 21.6% and 10.3%, respectively, of the revenues for the year ended December 31, 2013. The Company sales to its top five customers accounted for approximately 57% and 0% of revenues during the year ended December 31, 2013 and 2012, respectively. These customers accounted for approximately 59% and 0% of accounts receivable balance as of December 31, 2013 and 2012, respectively. | |||||||
Major suppliers | ' | ||||||
Major suppliers | |||||||
The Company had purchases from seven vendors that accounted for approximately 52% and 0% of purchases during the period ended December 31, 2013 and year ended December 31, 2012, respectively. These vendors accounted for approximately 20% and 0% of accounts payable balance as of period ended December 31, 2013 and December 31, 2012, respectively. | |||||||
Segment Reporting | ' | ||||||
Segment Reporting | |||||||
ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Group’s chief operating decision maker is the Chief Executive Officer, who reviews consolidated results of operations prepared in accordance with US GAAP when making decisions about allocating resources and assessing performance of the Group; hence, the Group has only one operating segment, namely the software development services. | |||||||
Income Taxes | ' | ||||||
Income Taxes | |||||||
The Company recognizes deferred income tax liabilities and assets for the expected future income tax consequences of temporary differences between financial accounting bases and income tax bases of assets and liabilities. Deferred income taxes are measured by applying currently enacted income tax rates. The Company accounts for uncertainty in income taxes for income tax positions taken or expected to be taken in an income tax return. Only income tax positions that meet the more-likely-than-not recognition threshold will be recognized. | |||||||
This process includes an analysis of whether tax positions the Company takes with regard to a particular item of income or deduction would meet the definition of an uncertain tax position under the standards. Management believes that tax positions taken by the Company with regard to income and deduction do not constitute any uncertain tax positions under the standards. | |||||||
Goods and Services Tax/Value Added Tax | ' | ||||||
Goods and Services Tax/Value Added Tax | |||||||
The Company's Australian operations are subject to the Goods and Services Tax on revenue sales of 10%. The Company's English operations are subject to the Value Added Tax on revenue sales of 20%. | |||||||
Revenue Recognition | ' | ||||||
Revenue Recognition | |||||||
The Company recognizes revenue when it is realized and earned. Specifically, the Company recognizes revenue when services are performed and projects are completed and accepted by the customer. | |||||||
The Company recognizes revenue in accordance with the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (“ASC”) 985-605 “Software - Revenue Recognition”. | |||||||
Project Services Revenue | ' | ||||||
Project Services Revenue | |||||||
Revenue derived from services primarily includes consulting, implementation, and training. Fees are primarily billed under time and materials arrangements and are recognized as services are performed. | |||||||
License Revenue | ' | ||||||
License Revenue | |||||||
License revenue in connection with license agreements for standard proprietary software is recognized upon delivery of the software, provided collection is considered probable and the fee is fixed or determinable. | |||||||
Maintenance Revenue | ' | ||||||
Maintenance Revenue | |||||||
Revenue derived from technical support contracts primarily includes telephone consulting and on-site support as well as error reporting and correction services. Maintenance contracts are typically sold for a separate fee with initial contractual period of one year with renewal for additional periods thereafter. Technical support service revenue is recognized ratably over the term of the service agreement. | |||||||
Deferred Revenue | ' | ||||||
Deferred Revenue | |||||||
Deferred revenue represents advance payments or billings for software licenses, services, and maintenance. | |||||||
Cost of Revenues | ' | ||||||
Cost of Revenues | |||||||
Cost of revenues for licenses includes amortization of capitalized computer software development costs. Costs for maintenance and services revenues include the cost of personnel to conduct implementations, customer support and consulting, and other personnel-related expenses. | |||||||
Foreign Currency Translation | ' | ||||||
Foreign Currency Translation | |||||||
The functional currency of the Company is Australian Dollars (“AUD”), and the functional currency of Massive Interactive Media Ltd is Great British Pounds ("GBP"). | |||||||
For financial reporting purposes, the financial statements of the Company and its subsidiaries, which are prepared using each entity's functional currency, are translated into the Company’s reporting currency, the United States Dollar (“USD”). Assets and liabilities are translated using the exchange rate at each balance sheet date. Revenue and expenses are translated using average rates prevailing during each reporting period, and shareholders’ equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income in shareholders’ equity. | |||||||
The exchange rates applied are as follows: | |||||||
Year | Year | ||||||
2013 | 2012 | ||||||
Year end AUD to USD exchange rate | 0.8941 | 1.0362 | |||||
Year end GBP to USD exchange rate | 1.6561 | 1.6235 | |||||
Average AUD to USD exchange rate | 0.9578 | 1.0388 | |||||
Average GBP to USD exchange rate | 1.5669 | 1.5927 | |||||
Property and Equipment | ' | ||||||
Property and Equipment | |||||||
Furniture and office equipment, electronic equipment and motor vehicles are recorded at cost less accumulated depreciation. Depreciation is calculated based on estimated useful life of the assets. | |||||||
Rate | Method | ||||||
Motor Vehicles | 25% | Diminishing value | |||||
Furniture | 20% | Straight line | |||||
Office equipment | 33% | Diminishing value | |||||
Telecommunication equipment | 20% | Diminishing value | |||||
Purchased Software | 40% | Straight line | |||||
Leasehold improvements | 50% | Straight line | |||||
When furniture and office equipment, electronic equipment and motor vehicles are retired or otherwise disposed of, resulting gain or loss is included in net income or loss in the year of disposition for the difference between the net book value and proceeds received thereon. Maintenance and repairs which do not improve or extend the expected useful lives of the assets are charged to expenses as incurred. | |||||||
Impairment of Long-Lived Assets | ' | ||||||
Impairment of Long-Lived Assets | |||||||
In accordance with Impairment or Disposal of Long-Lived Assets Subsections of FASB ASC Subtopic 360-10, Property, Plant, and Equipment - Overall, long-lived assets, such as property, plant and equipment, and purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. No impairment of long-lived assets was recognized for the period ended December 31, 2013 and year ended December 31, 2012 respectively. | |||||||
Capitalized Computer Software Development Costs | ' | ||||||
Capitalized Computer Software Development Costs | |||||||
The Company capitalizes software development costs in accordance with the FASB ASC Topic 985-20 Costs of Software to be Sold, Leased or Marketed. All software development costs are capitalized and reported at the lower of unamortized cost or net realizable value. Capitalization ceases when the product or enhancement is available for general release to customers. The Company makes ongoing evaluations of the recoverability of its capitalized software projects by comparing the net amount capitalized for each product to the estimated net realizable value of the product. If such evaluations indicate that the unamortized software development costs exceed the net realizable value, the Company writes off the amount by which the unamortized software development costs exceed net realizable value. The Company's capitalized computer software development costs are being amortized ratably based on the projected revenues associated with the related software or on a straight-line basis over five years, whichever method results in a higher level of amortization. | |||||||
Intangible Assets | ' | ||||||
Intangible Assets | |||||||
The Company amortizes intangible assets on a straight line basis over their estimated useful lives, generally as follows: four to nine years for technology, ten to twenty years for customer relationships and trade names, and one to five years for other intangible assets. | |||||||
Operating Leases | ' | ||||||
Operating Leases | |||||||
Leases where substantially all the rewards and risks of ownership of assets remain with the lesser are accounted for as operating leases. Payments made under operating leases are charged to the consolidated statements of operations on a straight-line basis over the lease periods. | |||||||
The Company leases office rental spaces in Sydney, Australia and London, England. | |||||||
Bargain Purchase Gain | ' | ||||||
Bargain Purchase Gain | |||||||
For the year ended December 31, 2013, the Company recorded in its statement of operations a bargain purchase gain of $726,010 related to the acquisition of Massive Media, completed on November 15, 2013. This gain represented the excess of fair value of net assets acquired over the acquisition consideration. See Note 3 for additional information. | |||||||
Derivative Instruments | ' | ||||||
Derivative Instruments | |||||||
The Company’s debt or equity instruments may contain embedded derivative instruments, such as conversion options, which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability. | |||||||
The identification of, and accounting for, derivative instruments is complex. The Company’s derivative instrument liabilities are re-valued at the end of each reporting period, with changes in the fair value of the derivative liability recorded as charges or credits to income, in the period in which the changes occur. For bifurcated conversion options that are accounted for as derivative instrument liabilities, the Company determines the fair value of these instruments using binomial option pricing model. That model requires assumptions related to the remaining term of the instrument and risk-free rates of return, the Company’s current Common Stock price and expected dividend yield, and the expected volatility of the Company’s Common Stock price over the life of the option. | |||||||
Deemed dividend | ' | ||||||
Deemed dividend | |||||||
We incur a deemed dividend on Series B Preferred Redeemable Stock. As the conversion rate was less than the deemed fair value of the Common Stock of $0.20, the Series B Preferred Redeemable Stock contains a beneficial conversion feature as described in ASC 470. The difference in the stated conversion price and estimated fair value of the Common Stock is accounted for as a beneficial conversion feature and affects EPS. The beneficial conversion feature is not material for the year ended December 31, 2013 due to the short period of time since the issuance of the Series B Preferred Redeemable Stock, and the beneficial conversion feature will be recognised as a deemed dividend in future public filings of the company. | |||||||
Earnings Per Share | ' | ||||||
Earnings per Share | |||||||
Earnings per share is calculated in accordance with ASC 260, Earnings Per Share. Basic earnings per share is computed by dividing income attributable to holders of common stock by the weighted average number of common shares considered to be outstanding during the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The dilutive effect of outstanding common stock warrants is reflected in the diluted earnings per share by application of the treasury stock method when the impact is dilutive. | |||||||
Commitments and Contingencies | ' | ||||||
Commitments and Contingencies | |||||||
In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, government investigations, product and environmental liability, and tax matters. In accordance with ASC 450-20, Accounting for Contingencies, the Company records accruals for such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Historically, the Company has not experienced any material service liability claims. | |||||||
Net Income (Loss) Attributable to Common Shares | ' | ||||||
Net Income (Loss) Attributable to Common Shares | |||||||
The Company is required to provide basic and dilutive earnings per common share information. The basic net loss per common share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss applicable to common stockholders, adjusted on an "as if converted" basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the years ended December 31, 2013 and 2012, there were no securities that would have had a dilutive effect. | |||||||
Reclassification | ' | ||||||
Reclassification | |||||||
Certain amounts in the 2012 financial statements have been reclassified to conform to the 2013 financial presentation. These reclassifications have no impact on net income (loss). | |||||||
Recent Accounting Pronouncements | ' | ||||||
Recent Accounting Pronouncements | |||||||
We have adopted recently issued accounting pronouncements and have determined that they have no material effect on our financial position, results of operations, or cash flow. We do not expect any recently issued but not yet adopted accounting pronouncements to have a material effect on our financial position, results of operations or cash flow. | |||||||
In July 2012, the FASB issued ASU No. 2012-02, Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”), allowing entities the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. If the qualitative assessment indicates it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, the quantitative impairment test is required. Otherwise, no testing is required. ASU 2012-02 is effective for reporting periods beginning January 1, 2013. The adoption of this update did not have a material impact on the consolidated financial statements but may have an impact in future periods. | |||||||
In February 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). ASU 2013-02 is intended to improve the reporting of reclassifications out of accumulated other comprehensive income. Accordingly, an entity is required to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under GAAP to be reclassified in its entirety to net income. For other amounts that are not required under GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under GAAP that provide additional detail about those amounts. ASU 2013-02 is effective for reporting periods beginning after December 15, 2012. The Company adopted ASU 2013-02 effective January 1, 2013 and the adoption did not have a material impact on the Company’s consolidated financial statements. | |||||||
2_Significant_Accounting_Polic1
2. Significant Accounting Policies (Tables) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Significant Accounting Policies Tables | ' | ||||||
Exchange rates | ' | ||||||
Year | Year | ||||||
2013 | 2012 | ||||||
Year end AUD to USD exchange rate | 0.8941 | 1.0362 | |||||
Year end GBP to USD exchange rate | 1.6561 | 1.6235 | |||||
Average AUD to USD exchange rate | 0.9578 | 1.0388 | |||||
Average GBP to USD exchange rate | 1.5669 | 1.5927 | |||||
Property and Equipment | ' | ||||||
Rate | Method | ||||||
Motor Vehicles | 25% | Diminishing value | |||||
Furniture | 20% | Straight line | |||||
Office equipment | 33% | Diminishing value | |||||
Telecommunication equipment | 20% | Diminishing value | |||||
Purchased Software | 40% | Straight line | |||||
Leasehold improvements | 50% | Straight line |
3_Acquisition_of_Massive_Media1
3. Acquisition of Massive Media (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Business Combinations [Abstract] | ' | ||||||||
Final purchase consideration for the 2013 acquisition of Massive Media | ' | ||||||||
The final purchase consideration for the 2013 acquisition of Massive Media was calculated as follows: | |||||||||
Cash | $ | 3,301,907 | |||||||
Short-term borrowings - related parties assumed | 1,703,563 | ||||||||
Short-term borrowings assumed | 275,657 | ||||||||
Gain on purchase | 726,010 | ||||||||
Total consideration | $ | 6,007,137 | |||||||
The consideration transferred was allocated across the net assets of the Company as follows: | |||||||||
Fair Value | |||||||||
Cash and cash equivalents | $ | 371,276 | |||||||
Receivables, trade and other | 1,448,770 | ||||||||
Taxes Refundable | 1,317,842 | ||||||||
Property, plant and equipment, net | 250,621 | ||||||||
Capitalized software costs, net | 4,360,000 | ||||||||
Trade names, net | 60,000 | ||||||||
Customer relationships, net | 40,000 | ||||||||
Other assets | 109,440 | ||||||||
Accounts payable and accrued expenses | (1,529,128 | ) | |||||||
Deferred tax liability | (192,990 | ) | |||||||
Other liabilities | (228,694 | ) | |||||||
Net assets acquired | $ | 6,007,137 | |||||||
Unaudited Pro Forma Results of Operations | |||||||||
Years Ended December 31 | |||||||||
2013 | 2012 | ||||||||
Revenues from continuing operations | $ | 7,843,430 | $ | 4,365,345 | |||||
Loss from continuing operations | (1,665,171 | ) | (4,148,893 | ) | |||||
Net income(loss) from continuing operations | $ | 832,504 | $ | (1,926,669 | ) | ||||
Basic income (loss) per share: | $ | 0.01 | $ | (0.03 | ) | ||||
Diluted income (loss) per share: | $ | 0.01 | $ | (0.03 | ) | ||||
Pro-forma shares outstanding | 61,178,167 | 55,471,987 |
4_Discontinued_Operations_and_1
4. Discontinued Operations and Assets Held for Sale (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Discontinued Operations and Disposal Groups [Abstract] | ' | ||||||||
Company's discontinued operations | ' | ||||||||
In the fourth quarter of 2013, as part of the acquisition of Massive Media Pty Ltd., the Company’s management decided to exit the oil and gas operations related to the properties owned while the entity operated as Xtreme. The Company completed the sale of the Oklahoma and Kansas assets for approximately $341,000 in cash, plus the transfer of approximately $1.3 million in liabilities to the purchaser. In addition, the leases expired on all the remaining assets in Texas and Xtreme secured a release from the leaseholder for all future liabilities. | |||||||||
The following table shows the major classes assets and liabilities of the Company’s discontinued operations at December 31, 2013 and 2012. | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Current Assets: | |||||||||
Accounts receivable, net | $ | - | $ | 27,257 | |||||
Current assets of discontinued operations | $ | - | $ | 27,257 | |||||
Property and equipment, net | - | 8,525,149 | |||||||
Other assets | - | 57,887 | |||||||
Other assets of discontinued operations | $ | - | $ | 8,583,036 | |||||
Current Liabilities: | |||||||||
Accounts payable and accrued expenses | $ | - | $ | 963,258 | |||||
Deposits payable | - | 391,418 | |||||||
Short term borrowings | - | 7,000 | |||||||
Current liabilities of discontinued operations | $ | - | $ | 1,361,676 | |||||
Other Liabilities: | |||||||||
Asset retirement obligation | - | 300,000 | |||||||
Other liabilities of discontinued operations | $ | - | $ | 300,000 | |||||
The following table shows certain components of the results of operations of the Company’s discontinued operations: | |||||||||
2013 | 2012 | ||||||||
Revenues | $ | 9,053 | $ | 1,339,047 | |||||
(Loss) from discontinued operations | $ | (635,824 | ) | $ | (82,490 | ) | |||
(Loss) on disposal of discontinued operations | $ | (6,499,069 | ) | $ | — | ||||
(Loss) from discontinued operations | $ | (7,134,893 | ) | $ | (82,490 | ) | |||
Basic loss per share attributable to discontinued operations: | $ | (0.12 | ) | $ | (0.18 | ) | |||
Diluted loss per share attributable to discontinued operations: | $ | (0.12 | ) | $ | (0.18 | ) | |||
5_Accounts_receivable_trade_Ta
5. Accounts receivable b trade (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Receivables [Abstract] | ' | ||||||||
Accounts receivable | ' | ||||||||
2013 | 2012 | ||||||||
Trade Debtors | $ | 1,215,411 | $ | - | |||||
Accrued Income | 28,547 | - | |||||||
Accounts receivable - trade | $ | 1,243,958 | $ | - |
6_Other_receivables_Tables
6. Other receivables (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
Other receivables | ' | ||||||||
2013 | 2012 | ||||||||
Employee Advance | $ | 40,834 | $ | - | |||||
Other Debtors | 6,433 | - | |||||||
Other receivables | $ | 47,267 | $ | - |
7_Prepayments_Tables
7. Prepayments (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Prepayments Tables | ' | ||||||||
Prepayments | ' | ||||||||
2013 | 2012 | ||||||||
Prepaid expenses | $ | 144,694 | $ | - | |||||
$ | 144,694 | $ | - |
8_Property_and_Equipment_Table
8. Property and Equipment (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property And Equipment Tables | ' | ||||||||
Property and equipment | ' | ||||||||
2013 | 2012 | ||||||||
Furniture and Fixtures | $ | 22,132 | $ | - | |||||
Motor Vehicles | 44,560 | - | |||||||
Purchased Software | 58,588 | - | |||||||
Office Equipment | 125,341 | ||||||||
Property and Equipment - gross | 250,621 | - | |||||||
Less: Accumulated depreciation | (8,529 | ) | - | ||||||
Property and equipment, net | $ | 242,092 | $ | - |
9_Other_assets_net_Tables
9. Other assets, net (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Other Assets Net Tables | ' | ||||||||
Other assets | ' | ||||||||
2013 | 2012 | ||||||||
Bonds | $ | 15,569 | $ | - | |||||
Other | 752 | - | |||||||
Other assets, net | $ | 16,321 | $ | - |
10_Intangible_Assets_Tables
10. Intangible Assets (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||||
Intangible assets | ' | ||||||||||||||||||||||||
December 31, 2013 | December 31, 2012 | ||||||||||||||||||||||||
Gross | Accumulated | Net | Gross | Accumulated | Net | ||||||||||||||||||||
Amount | Amortization | Amount | Amount | Amortization | Amount | ||||||||||||||||||||
Capitalized Software Costs | $ | 4,360,000 | $ | (64,113 | ) | $ | 4,295,887 | $ | - | $ | - | $ | - | ||||||||||||
Tradenames | 60,000 | (346 | ) | 59,654 | - | - | - | ||||||||||||||||||
Customer Relationships | 40,000 | (462 | ) | 39,538 | - | - | - | ||||||||||||||||||
Total | $ | 4,460,000 | $ | (64,921 | ) | $ | 4,395,079 | $ | - | $ | - | $ | - | ||||||||||||
Expected amortization expense | ' | ||||||||||||||||||||||||
2014 | $ | 892,000 | |||||||||||||||||||||||
2015 | 892,000 | ||||||||||||||||||||||||
2016 | 892,000 | ||||||||||||||||||||||||
2017 | 892,000 | ||||||||||||||||||||||||
2018 | 827,079 | ||||||||||||||||||||||||
Total | $ | 4,395,079 |
11_Fair_Value_Measurements_Tab
11. Fair Value Measurements (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||
Companybs assets and liabilities that were measured at fair value on a recurring basis | ' | ||||||||||||||||
Amounts at | Fair Value Measurement Using | ||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||
As of December 31, 2013 | |||||||||||||||||
Liabilities | |||||||||||||||||
Warrant liability | $ | 7,717 | $ | - | $ | - | $ | 7,717 | |||||||||
Note liability | 21,600 | - | - | 21,600 | |||||||||||||
As of December 31, 2012 | |||||||||||||||||
Liabilities | |||||||||||||||||
Warrant liability | $ | 178,403 | $ | - | $ | - | $ | 178,403 | |||||||||
Note liability | 227,070 | - | - | 227,070 |
12_Accrued_Expenses_and_other_1
12. Accrued Expenses and other current liabilities (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Accrued expenses and other current liabilities | ' | ||||||||
2013 | 2012 | ||||||||
Credit Cards | $ | 16,763 | $ | - | |||||
Accrued Expenses | 313,473 | - | |||||||
Accrued Expenses and Other Current Liabilities | $ | 330,236 | $ | - |
13_Accrued_compensation_and_re1
13. Accrued compensation and related costs (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Accrued Compensation And Related Costs Tables | ' | ||||||||
Accrued compensation and related costs | ' | ||||||||
Current | 2013 | 2012 | |||||||
Payable to Staff | $ | 5,499 | $ | - | |||||
Long Service Leave Provision | 188,118 | - | |||||||
Annual Leave Provision | 328,842 | - | |||||||
Employee Pension Plan | 110,966 | - | |||||||
Federal Payroll Tax | 152,681 | - | |||||||
State Payroll Tax | 14,903 | - | |||||||
Accrued compensation and related costs | $ | 801,009 | $ | - | |||||
Non-Current | 2013 | 2012 | |||||||
Long Service Leave Provision-non current | $ | 80,733 | $ | - | |||||
Accrued compensation and related costs-non current | $ | 80,733 | $ | - |
14_Borrowings_Tables
14. Borrowings (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Borrowings Tables | ' | ||||||||||||||||
Derivative liability | ' | ||||||||||||||||
Year ended December 31, 2013 | |||||||||||||||||
Derivative liability | 12/31/12 | Fair Value Adjustments | Redemptions | Total | |||||||||||||
Notes | $ | 227,070 | $ | 416,987 | $ | (622,457 | ) | $ | 21,600 | ||||||||
Warrants | 178,403 | (170,686 | ) | - | 7,717 | ||||||||||||
$ | 405,473 | $ | 246,301 | $ | (622,457 | ) | $ | 29,317 |
16_Taxes_Payable_Refundable_Ta
16. Taxes (Payable) Refundable (Tables) | 12 Months Ended | |||||||||
Dec. 31, 2013 | ||||||||||
Notes to Financial Statements | ' | |||||||||
Taxes (Payable) Refundable | ' | |||||||||
2013 | 2012 | |||||||||
Goods and Services Taxes Payable | Australia | $ | (75,907 | ) | $ | - | ||||
Withholding Tax Payable | Australia | - | - | |||||||
Fringe Benefit Tax Payable | Australia | 813 | - | |||||||
Value Added Tax Payable | United Kingdom | (53,079 | ) | - | ||||||
Income Tax Refundable | Australia | 1,476,597 | - | |||||||
Taxes Refundable | $ | 1,348,424 | $ | - |
17_Income_Taxes_Tables
17. Income Taxes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Schedule of income tax expense | ' | ||||||||
Year Ended December 31, | 2013 | 2012 | |||||||
Federal income tax (benefit) at statutory rate | $ | (2,110,425 | ) | $ | (23,949 | ) | |||
Foreign taxes at less than federal statutory rate | (241,871 | ) | - | ||||||
Nondeductible expenses | (393,229 | ) | (89,926 | ) | |||||
Deferred true-ups | 4,192,702 | - | |||||||
Valuation allowance change | (1,566,789 | ) | 113,875 | ||||||
Total | $ | (119,612 | ) | $ | - | ||||
Deferred tax assets | ' | ||||||||
At December 31, | 2013 | 2012 | |||||||
Investments | $ | 359,286 | $ | - | |||||
Loss carryforwards | 335,446 | 2,218,000 | |||||||
Intangibles | (190,371 | ) | - | ||||||
Total | 504,361 | 2,218,000 | |||||||
Valuation allowance | (694,732 | ) | (2,218,000 | ) | |||||
Net deferred tax assets (liabilities) | $ | (190,371 | ) | $ | - |
19_Commitments_and_Contingenci1
19. Commitments and Contingencies (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Commitments And Contingencies Tables | ' | ||||
Leases | ' | ||||
The Company leases office spaces in Australia and in the UK under a lease agreement. The term expiry for the Australian office is May 31, 2015. The term expiry for the UK office is January 11, 2018. | |||||
2014 | $ | 219,192 | |||
2015 | 160,097 | ||||
2016 | 160,097 | ||||
2017 | 160,097 | ||||
2018 | 4,825 | ||||
Thereafter | - | ||||
$ | 704,308 | ||||
The Company has entered into commercial leases for company motor vehicles with a term expiring in September 16, 2016. Future minimum rental payments under this operating lease are as follows: | |||||
2014 | $ | 27,408 | |||
2015 | 27,408 | ||||
2016 | 77,275 | ||||
Thereafter | - | ||||
$ | 132,091 |
21_Business_and_Geographic_Seg1
21. Business and Geographic Segment Information (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
Segment reporting | ' | ||||||||
The Company’s revenues were generated in the following geographic regions: | |||||||||
2013 | 2012 | ||||||||
United Kingdom | $ | 571,531 | $ | - | |||||
Australia | 693,717 | - | |||||||
Consolidated total | $ | 1,265,248 | $ | - | |||||
Long-lived assets by geographic area consist of property and equipment and are as follows: | |||||||||
2013 | 2012 | ||||||||
United Kingdom | $ | 39,326 | $ | - | |||||
Australia | 202,766 | - | |||||||
Consolidated total | $ | 242,092 | $ | - | |||||
24_Extinguishment_of_Liabiliti1
24. Extinguishment of Liabilities (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Notes to Financial Statements | ' | ||||
Extinguishment of Liabilities | ' | ||||
Total liabilities as of December 31, 2012 | $ | 6,250,190 | |||
Add/(less): | |||||
Liabilities extinguished in discontinued operations | (1,661,676 | ) | |||
Liabilities extinguished through issue of equity instruments | (3,728,203 | ) | |||
Liabilities settled in cash | (14,863 | ) | |||
Movement in derivative fair value (Derivative income in P&L) | (376,156 | ) | |||
Gain on debt forgiveness | (179,154 | ) | |||
Gain on conversion | (233,811 | ) | |||
Additional liabilities incurred during the year ended December 31, 2013 | 235,842 | ||||
Other movements | 18,757 | ||||
Total remaining liabilities as of December 31, 2013 | $ | 310,926 | |||
The equity and liability components reconcile to the Consolidated Balance Sheets and Consolidated Statements of Convertible Preferred Stock, Stockholders’ Equity (Deficit) as follows: | |||||
Total remaining liabilities as of December 31, 2013 comprising of: | |||||
Convertible note payable | $ | 151,466 | |||
Derivative liability | 29,317 | ||||
Accounts payable | 130,143 | ||||
$ | 310,926 | ||||
Total value of common and preferred stock issued during the year | $ | 9,228,203 | |||
Less: common & preferred stock issued to Southport Lane, LP | (5,500,000 | ) | |||
$ | 3,728,203 |
2_Significant_Accounting_Polic2
2. Significant Accounting Policies (Details Narrative) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Top five customers Revenue Concentration | ' | ' |
Percent concentration | 57.00% | 0.00% |
Seven vendors | ' | ' |
Percent concentration | 52.00% | 0.00% |
Seven vendors accounts payable balance | ' | ' |
Percent concentration | 20.00% | 0.00% |
Top five customers accounts receivable concentration | ' | ' |
Percent concentration | 59.00% | 0.00% |
3_Acquisition_of_Massive_Media2
3. Acquisition of Massive Media (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Acquisition Of Massive Media Details | ' | ' |
Cash | $3,301,907 | ' |
Short-term borrowings - related parties assumed | 1,703,563 | ' |
Short-term borrowings assumed | 275,657 | ' |
Gain on purchase | 726,010 | 0 |
Total consideration | $6,007,137 | ' |
3_Acquisition_of_Massive_Media3
3. Acquisition of Massive Media (Details 1) (USD $) | Dec. 31, 2013 |
Acquisition Of Massive Media Details 1 | ' |
Cash and cash equivalents | $371,276 |
Receivables, trade and other | 1,448,770 |
Taxes Refundable | 1,317,842 |
Property, plant and equipment, net | 250,621 |
Capitalized software costs, net | 4,360,000 |
Trade names, net | 60,000 |
Customer relationships, net | 40,000 |
Other assets | 109,440 |
Accounts payable and accrued expenses | -1,529,128 |
Deferred tax liability | -192,990 |
Other liabilities | -288,694 |
Net assets acquired | $6,007,137 |
3_Acquisition_of_Massive_Media4
3. Acquisition of Massive Media (Details 2) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Acquisition Of Massive Media Details 2 | ' | ' |
Revenues from continuing operations | $7,843,430 | $4,365,345 |
Loss from continuing operations | -1,665,171 | -4,148,893 |
Net income(loss) from continuing operations | $832,504 | ($1,926,669) |
Basic income (loss) per share: | $0.01 | ($0.03) |
Diluted income (loss) per share: | $0.01 | ($0.03) |
Pro-forma shares outstanding | 61,178,167 | 55,471,987 |
4_Discontinued_Operations_and_2
4. Discontinued Operations and Assets Held for Sale (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Current Assets: | ' | ' |
Accounts receivable, net | $0 | $27,257 |
Current assets of discontinued operations | 0 | 27,257 |
Property and equipment, net | 0 | 8,525,149 |
Other assets | 0 | 57,887 |
Other assets of discontinued operations | 0 | 8,583,036 |
Current Liabilities: | ' | ' |
Accounts payable and accrued expenses | 0 | 963,258 |
Deposits payable | 0 | 391,418 |
Short term borrowings | 0 | 7,000 |
Current liabilities of discontinued operations | 0 | 1,361,676 |
Other Liabilities: | ' | ' |
Asset retirement obligation | 0 | 300,000 |
Other liabilities of discontinued operations | $0 | $300,000 |
4_Discontinued_Operations_and_3
4. Discontinued Operations and Assets Held for Sale (Details 1) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Discontinued Operations And Assets Held For Sale Details 1 | ' | ' |
Revenues | $9,053 | $1,339,047 |
(Loss) from discontinued operations | -635,824 | -82,490 |
(Loss) on disposal of discontinued operations | -6,499,069 | 0 |
(Loss) from discontinued operations | ($7,134,893) | ($82,490) |
Basic loss per share attributable to discontinued operations: | ($0.12) | ($0.18) |
Diluted loss per share attributable to discontinued operations: | ($0.12) | ($0.18) |
5_Accounts_receivable_trade_De
5. Accounts receivable b trade (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Receivables [Abstract] | ' | ' |
Trade Debtors | $1,215,411 | $0 |
Accrued Income | 28,547 | 0 |
Accounts receivable - trade | $1,243,958 | $0 |
6_Other_receivables_Details
6. Other receivables (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Notes to Financial Statements | ' | ' |
Employee Advance | $40,834 | $0 |
Other Debtors | 6,433 | 0 |
Other receivables | $47,267 | $0 |
7_Prepayments_Details
7. Prepayments (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Prepayments Tables | ' | ' |
Prepaid expenses | $144,694 | $0 |
Total | $144,694 | $0 |
8_Property_and_Equipment_Detai
8. Property and Equipment (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Property And Equipment Tables | ' | ' |
Furniture and Fixtures | $22,132 | $0 |
Motor Vehicles | 44,560 | 0 |
Purchased Software | 58,588 | 0 |
Office Equipment | 125,341 | 0 |
Property and Equipment - gross | 250,621 | 0 |
Less: Accumulated depreciation | -8,529 | 0 |
Property and equipment, net | $242,092 | $0 |
9_Other_assets_net_Details
9. Other assets, net (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Other Assets Net Tables | ' | ' |
Bonds | $15,569 | $0 |
Other | 752 | 0 |
Other assets, net | $16,321 | $0 |
10_Intangible_Assets_Details
10. Intangible Assets (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Gross Amount | $4,460,000 | $0 |
Accumulated Amortization | -64,921 | 0 |
Net Amount | 4,395,079 | 0 |
Capitalized Software Costs | ' | ' |
Gross Amount | 4,360,000 | 0 |
Accumulated Amortization | -64,113 | 0 |
Net Amount | 4,295,887 | 0 |
Tradenames | ' | ' |
Gross Amount | 60,000 | 0 |
Accumulated Amortization | -346 | 0 |
Net Amount | 59,654 | 0 |
Customer Relationships | ' | ' |
Gross Amount | 40,000 | 0 |
Accumulated Amortization | -462 | 0 |
Net Amount | $39,538 | $0 |
10_Intangible_Assets_Details_1
10. Intangible Assets (Details 1) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ' |
2014 | $892,000 | ' |
2015 | 892,000 | ' |
2016 | 892,000 | ' |
2017 | 892,000 | ' |
2018 | 827,079 | ' |
Total | $4,395,079 | $0 |
11_Fair_Value_Measurements_Det
11. Fair Value Measurements (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Liabilities | ' | ' |
Warrant liability | $7,717 | $178,403 |
Note liability | 21,600 | 227,070 |
Level 1 | ' | ' |
Liabilities | ' | ' |
Warrant liability | 0 | 0 |
Note liability | 0 | 0 |
Level 2 | ' | ' |
Liabilities | ' | ' |
Warrant liability | 0 | 0 |
Note liability | 0 | 0 |
Level 3 | ' | ' |
Liabilities | ' | ' |
Warrant liability | 7,717 | 178,403 |
Note liability | $21,600 | $227,070 |
12_Accrued_Expenses_and_other_2
12. Accrued Expenses and other current liabilities (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Payables and Accruals [Abstract] | ' | ' |
Credit Cards | $16,763 | $0 |
Accrued Expenses | 313,473 | 0 |
Accrued Expenses and Other Current Liabilities | $330,236 | $0 |
13_Accrued_compensation_and_re2
13. Accrued compensation and related costs (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Current | ' | ' |
Payable to Staff | $5,499 | $0 |
Long Service Leave Provision | 188,118 | 0 |
Annual Leave Provision | 328,842 | 0 |
Employee Pension Plan | 110,966 | 0 |
Federal Payroll Tax | 152,681 | 0 |
State Payroll Tax | 14,903 | 0 |
Accrued compensation and related costs | 801,009 | 0 |
Non-Current | ' | ' |
Long Service Leave Provision-non current | 80,733 | 0 |
Accrued compensation and related costs-non current | $80,733 | $0 |
14_Borrowings_Details
14. Borrowings (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Derivative liability | $29,317 | $405,473 |
Fair Value Adjustments | 246,301 | ' |
Redemptions | -622,457 | ' |
Notes | ' | ' |
Derivative liability | 21,600 | 227,070 |
Fair Value Adjustments | 416,987 | ' |
Redemptions | -622,457 | ' |
Warrants | ' | ' |
Derivative liability | 7,717 | 178,403 |
Fair Value Adjustments | -170,686 | ' |
Redemptions | $0 | ' |
16_Taxes_Payable_Refundable_De
16. Taxes (Payable) Refundable (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Notes to Financial Statements | ' | ' |
Goods and Services Taxes Payable - Australia | ($75,907) | $0 |
Withholding Tax Payable - Australia | 0 | 0 |
Fringe Benefit Tax Payable - Australia | 813 | 0 |
Value Added Tax Payable - United Kingdom | -53,079 | 0 |
Income Tax Refundable - Australia | 1,476,597 | 0 |
Taxes Refundable | $1,348,424 | $0 |
19_Commitments_and_Contingenci2
19. Commitments and Contingencies (Details) (USD $) | Dec. 31, 2013 |
Office spaces in Australia and in the UK | ' |
2014 | $219,192 |
2015 | 160,097 |
2016 | 160,097 |
2017 | 160,097 |
2018 | 4,825 |
Thereafter | 0 |
Total | 704,308 |
Motor vehicles | ' |
2014 | 27,408 |
2015 | 27,408 |
2016 | 77,275 |
Thereafter | 0 |
Total | $132,091 |
21_Business_and_Geographic_Seg2
21. Business and Geographic Segment Information (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Revenues | $1,265,248 | $0 |
Long-lived assets | 242,092 | 0 |
United Kingdom | ' | ' |
Revenues | 571,531 | 0 |
Long-lived assets | 39,326 | 0 |
Australia | ' | ' |
Revenues | 693,717 | 0 |
Long-lived assets | $202,766 | $0 |