Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Nov. 13, 2013 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'EWaste Systems, Inc. | ' |
Entity Central Index Key | '0001488309 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 244,523,180 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2013 | ' |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Current Assets | ' | ' |
Cash | ' | $139 |
Accounts receivable, net of allowance for bad debts of $38,061 and 0, respectively | ' | ' |
Inventory | 536,984 | ' |
Other current assets | ' | ' |
Marketable securities, available-for-sale | 1,595,000 | ' |
Total Current Assets | ' | 139 |
License fees receivables | ' | ' |
Intangible assets | ' | ' |
Investments | ' | ' |
Other assets | ' | ' |
Total Assets | ' | 139 |
Current Liabilities | ' | ' |
Accounts payable and accrued expenses | ' | 339,684 |
Accounts payable - related party | ' | 1,247,355 |
Checks in excess of bank | ' | ' |
Short-term notes payable | ' | 175,000 |
Short-term related party convertible notes payable, net | ' | 12,000 |
Short-term convertible notes payable, net | ' | 13,334 |
Derivative liability on short-term convertible notes payable | 245,008 | 61,545 |
Total Current Liabilities | ' | 1,848,918 |
Long-Term Liabilities | ' | ' |
Long-term convertible notes payable, net | ' | 177,187 |
Total Long-Term Liabilities | ' | 177,187 |
Total Liabilities | ' | 2,026,105 |
Stockholders' Equity (Deficiency) | ' | ' |
Preferred Series A stock, $0.001 par value; 9,500,000 shares authorized, 1,903 and 0 shares issued and outstanding, respectively | ' | ' |
Common stock, $0.001 par value; 490,000,000 shares authorized, 242,781,629 and 106,504,926 shares issued and outstanding, respectively | ' | 106,505 |
Additional paid-in capital | ' | 904,032 |
Accumulated other comprehensive income | ' | ' |
Accumulated deficit | ' | -3,036,503 |
Total Stockholders' Equity (Deficiency) | ' | -2,025,966 |
Total Liabilities and Stockholders' Equity (Deficiency) | ' | 139 |
Restated [Member] | ' | ' |
Current Assets | ' | ' |
Cash | 44,988 | 139 |
Accounts receivable, net of allowance for bad debts of $38,061 and 0, respectively | 2,645,213 | ' |
Inventory | 536,984 | ' |
Other current assets | 1,009 | ' |
Marketable securities, available-for-sale | 1,595,000 | ' |
Total Current Assets | 4,823,194 | ' |
License fees receivables | 375,000 | ' |
Intangible assets | 345,605 | ' |
Investments | 285,573 | ' |
Other assets | 1,942 | ' |
Total Assets | 5,831,314 | ' |
Current Liabilities | ' | ' |
Accounts payable and accrued expenses | 2,153,861 | ' |
Accounts payable - related party | 1,216,222 | ' |
Checks in excess of bank | 1,258,168 | ' |
Short-term notes payable | 360,428 | ' |
Short-term related party convertible notes payable, net | 12,000 | ' |
Short-term convertible notes payable, net | 35,197 | ' |
Derivative liability on short-term convertible notes payable | 245,008 | ' |
Total Current Liabilities | 5,280,884 | ' |
Long-Term Liabilities | ' | ' |
Long-term convertible notes payable, net | 166,925 | ' |
Total Long-Term Liabilities | 166,925 | ' |
Total Liabilities | 5,447,809 | ' |
Stockholders' Equity (Deficiency) | ' | ' |
Preferred Series A stock, $0.001 par value; 9,500,000 shares authorized, 1,903 and 0 shares issued and outstanding, respectively | 2 | ' |
Preferred Series B stock, $0.001 par value; 500,000 shares authorized, 195,000 and 0 shares issued and outstanding, respectively | 195 | ' |
Common stock, $0.001 par value; 490,000,000 shares authorized, 242,781,629 and 106,504,926 shares issued and outstanding, respectively | 242,782 | ' |
Additional paid-in capital | 5,634,977 | ' |
Accumulated other comprehensive income | 705 | ' |
Accumulated deficit | -5,495,156 | ' |
Total Stockholders' Equity (Deficiency) | 383,505 | ' |
Total Liabilities and Stockholders' Equity (Deficiency) | $5,831,314 | ' |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Stockholders' Equity (Deficiency) | ' | ' |
Preferred stock Series A, par value | $0.00 | $0.00 |
Preferred stock Series A, shares authorized | 9,500,000 | 9,500,000 |
Preferred stock Series A, shares issued | 1,903 | 0 |
Preferred stock Series A, shares outstanding | 1,903 | 0 |
Preferred stock Series B, par value | $0.00 | $0.00 |
Preferred stock Series B, shares authorized | 500,000 | 500,000 |
Preferred stock Series B, shares issued | 195,000 | 0 |
Preferred stock Series B, shares outstanding | 195,000 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 490,000,000 | 490,000,000 |
Common stock, shares issued | 242,781,629 | 106,504,926 |
Common stock, shares outstanding | 242,781,629 | 106,504,926 |
Allowance for Bad Debt | $38,061 | $0 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Product sales revenue | ' | ' | ' | ' |
Service revenue | ' | ' | ' | ' |
Revenues from license fees | ' | ' | ' | ' |
Total Revenues | ' | ' | ' | ' |
Cost of sales | ' | ' | ' | ' |
Gross Margin | ' | ' | ' | ' |
Operating Expenses | ' | ' | ' | ' |
Officer and director compensation | 317,709 | 241,582 | 556,340 | 608,024 |
Professional fees | ' | 12,436 | ' | 91,402 |
General and administrative | ' | 1,965 | ' | 39,190 |
Total Operating Expenses | ' | 255,983 | ' | 738,616 |
Loss from Operations | ' | -255,983 | ' | -738,616 |
Other Income/(Expenses) | ' | ' | ' | ' |
Interest expense | -599,712 | -19,231 | -816,060 | -27,298 |
Gain on derivative liability | ' | 2,593 | ' | 9,964 |
Currency exchange gain | ' | ' | ' | ' |
Loss on settlement of contingent consideration | ' | ' | ' | -66,671 |
Total Other Income/(Expenses) | ' | -16,638 | ' | -84,005 |
Loss from Operations before Income Taxes | ' | -272,621 | ' | -822,621 |
Provision for Income Taxes | ' | ' | ' | ' |
Net Loss from Continuing Operations | ' | -272,621 | ' | -822,621 |
Loss from Discontinued Operations, net of Income Taxes | ' | -30,659 | ' | -89,068 |
Loss on disposal of discontinued operations | ' | -46,609 | ' | -46,609 |
Net Loss | ' | -349,889 | ' | -958,298 |
Other Comprehensive Income | ' | ' | ' | ' |
Foreign currency translation adjustments | ' | ' | ' | ' |
Total Other Comprehensive Income | ' | -349,889 | ' | -958,298 |
Basic and Diluted Loss per Share from Continuing Operations | ' | $0 | ' | ($0.01) |
Basic and Diluted loss per Share from Discontinued Operations | ' | $0 | ' | $0 |
Net loss per share - Basic and Diluted | ' | $0 | ' | ($0.01) |
Weighted average number of shares outstanding during the period - Basic and Diluted | ' | 102,872,317 | ' | 101,632,600 |
Restated [Member] | ' | ' | ' | ' |
Product sales revenue | 2,076,130 | ' | 3,753,818 | ' |
Service revenue | 3,254,310 | ' | 4,017,934 | ' |
Revenues from license fees | ' | ' | 525,000 | ' |
Total Revenues | 5,330,440 | ' | 8,296,752 | ' |
Cost of sales | 3,999,856 | ' | 6,536,621 | ' |
Gross Margin | 1,330,584 | ' | 1,760,131 | ' |
Operating Expenses | ' | ' | ' | ' |
Officer and director compensation | 317,709 | ' | 556,340 | ' |
Professional fees | 1,958,179 | ' | 2,542,605 | ' |
General and administrative | 665,833 | ' | 747,918 | ' |
Total Operating Expenses | 2,941,721 | ' | 3,846,863 | ' |
Loss from Operations | -1,611,137 | ' | -2,086,732 | ' |
Other Income/(Expenses) | ' | ' | ' | ' |
Interest expense | -599,712 | ' | -816,060 | ' |
Gain on derivative liability | 386,522 | ' | 438,990 | ' |
Currency exchange gain | ' | ' | 5,149 | ' |
Loss on settlement of contingent consideration | ' | ' | ' | ' |
Total Other Income/(Expenses) | -213,190 | ' | -371,921 | ' |
Loss from Operations before Income Taxes | -1,824,327 | ' | -2,458,653 | ' |
Provision for Income Taxes | ' | ' | ' | ' |
Net Loss from Continuing Operations | -1,824,327 | ' | -2,458,653 | ' |
Loss from Discontinued Operations, net of Income Taxes | ' | ' | ' | ' |
Loss on disposal of discontinued operations | ' | ' | ' | ' |
Net Loss | -1,824,327 | ' | -2,458,653 | ' |
Other Comprehensive Income | ' | ' | ' | ' |
Foreign currency translation adjustments | 191 | ' | 705 | ' |
Total Other Comprehensive Income | ($1,824,136) | ' | ($2,457,948) | ' |
Basic and Diluted Loss per Share from Continuing Operations | ($0.01) | ' | ($0.01) | ' |
Basic and Diluted loss per Share from Discontinued Operations | ' | ' | ' | ' |
Net loss per share - Basic and Diluted | ($0.01) | ' | ($0.01) | ' |
Weighted average number of shares outstanding during the period - Basic and Diluted | 218,801,511 | ' | 170,554,213 | ' |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | |
Sep. 30, 2012 | Sep. 30, 2013 | |
Restated [Member] | ||
Cash Flows From Operating Activities: | ' | ' |
Net Loss | ($822,621) | ($2,458,653) |
Adjustments to reconcile net loss to net cash used in operations | ' | ' |
Amortization expense | ' | 21,593 |
Provision for allowance on A/R | ' | -28,177 |
Currency translation (gain) loss | ' | -5,149 |
Loss on settlement of contingent considerations | 66,671 | ' |
Amortization of debt discounts | 16,223 | 128,578 |
Origination interest on derivative liability | ' | 553,176 |
Change in derivative liability | -9,964 | -438,990 |
Debt issued for services | ' | 17,417 |
Common stock issued for services | 93,930 | 2,143,125 |
Changes in operating assets and liabilities: | ' | ' |
(Increase)/Decrease in accounts and other receivables | ' | -2,559,198 |
(Increase)/Decrease in other current assets | ' | 1,028 |
(Increase)/Decrease in inventory | ' | -531,320 |
(Increase)/Decrease in license fees receivable | ' | -525,000 |
Increase/(Decrease) in accounts payable and accrued expenses | -55,579 | 1,955,440 |
Increase/(Decrease) in accrued expenses - related party | 561,737 | 281,487 |
Increase/(Decrease) in checks in excess of bank | ' | 1,247,242 |
Net Cash Used In Continuing Operating Activities | -149,603 | -197,401 |
Net Cash Used In Discontinued Operating Activities | -102,390 | ' |
Net Cash Used in Operating Activities | -251,993 | -197,401 |
Cash Flows From Investing Activities: | ' | ' |
Cash acquired with purchase of subsidiary | ' | 42,549 |
Net Cash Used In Investing Activities | ' | 42,549 |
Cash Flows From Financing Activities: | ' | ' |
Proceeds from notes payable | 200,000 | 187,500 |
Expenses paid on behalf of Company | 43,500 | 11,977 |
Proceeds from contributed capital | 2,000 | ' |
Net Cash Provided by Continuing Financing Activities | 245,500 | 199,477 |
Net Cash Provided by Discontinued Financing Activities | ' | ' |
Net Cash Provided by Financing Activities | 245,500 | 199,477 |
Effects of exchange rates on cash | ' | 224 |
Net Increase / (Decrease) in Cash | -6,493 | 44,849 |
Cash at Beginning of Period | 6,493 | 139 |
Cash at End of Period | ' | 44,988 |
Supplemental disclosure of cash flow information: | ' | ' |
Cash paid for interest | 3,710 | ' |
Cash paid for taxes | ' | ' |
Supplemental disclosure of non-cash investing and financing activities: | ' | ' |
Debt discounts on convertible notes payable | ' | 151,026 |
Preferred stock issued for marketable securities | ' | 1,445,000 |
Preferred stock issued for acquisition of subsidiary | ' | 27,256 |
Preferred stock issued for cost method investment | ' | 27,273 |
Common stock issued for cost method investment | ' | 258,300 |
Common stock issued for intangible asset | ' | 97,014 |
Preferred stock issued for conversion of debt | ' | 71,538 |
Common stock issued for conversion of debt | 140,664 | 342,865 |
Common stock issued for conversion of preferred stock for settlement of deferred consideration | $378,409 | ' |
BASIS_OF_PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
BASIS OF PRESENTATION | ' |
The consolidated financial statements present the results of operations, financial position, and cash flows of E-Waste Systems, Inc. (“EWSI,” and together with its subsidiaries “we,” “us,” or the “Company”). In order to make this report easier to read, we refer throughout to (i) our Consolidated Financial Statements as our “Financial Statements,” (ii) our Consolidated Statements of Operations as our “Income Statements,” (iii) our Consolidated Balance Sheets as our “Balance Sheets,” In addition, references throughout to numbered "Footnotes" refer to the numbered Notes in these Notes to Condensed Consolidated Financial Statements, unless otherwise noted. | |
These condensed consolidated Financial Statements have not been audited. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments consisting of normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended September 30, 2013 are not necessarily indicative of the results that can be expected for the full year. Although we believe our disclosures are adequate to make the information presented not misleading, you should read the financial statements in this report in conjunction with the consolidated financial statements and notes to those financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, (“2012 Form 10-K”). Certain terms not otherwise defined in this Form 10-Q have the meanings specified in our 2012 Form 10-K. |
GOING_CONCERN
GOING CONCERN | 9 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
GOING CONCERN | ' |
The Company’s consolidated financial statements have been prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. | |
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and to seek equity and / or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. | |
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | |
Sep. 30, 2013 | ||
Notes to Financial Statements | ' | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |
Reclassifications | ||
Certain balances in previously issued financial statements have been reclassified to be consistent with current period presentation. | ||
Recent Accounting Pronouncements | ||
The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements. | ||
Use of Estimates | ||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. | ||
Principles of Consolidation | ||
The accompanying consolidated financial statements for the period ended September 30, 2013 include the accounts of the Company and its wholly-owned subsidiary, E-Waste Systems of Ohio, Inc. All significant intercompany balances and transactions have been eliminated in consolidation. | ||
The consolidated financial statements also include the accounts of Shanghai YaZhuo Jiudian Guanli ("YaZhou"), a consolidated variable interest entity. On March 26, 2013, EWSI entered into a set of agreements with YaZhou, a company incorporated in the People’s Republic of China (“PRC”), wherein EWSI will provide management services in relation to the current and proposed operations of YaZhou’s business in the PRC. The management services include general business operation, human resources, business development, and such other advice and assistance as may be agreed upon by the parties. In consideration, YaZhou will pay a management services fee, payable each quarter, equivalent to all of YaZhou’s net income for such quarter. All intercompany balances and transactions have been eliminated. | ||
Accounts Receivable | ||
Trade accounts receivables are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivables are included in net cash provided by operating activities in the consolidated cash flow statements. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management considers a number of factors, including historical losses, current receivables aging reports, the counter party’s current ability to pay its obligation to the Company, and existing industry and People’s Republic of China (“PRC”) economic data. The Company reviews its allowances every month. Past due invoices over 90 days that exceed a specific amount are reviewed individually for collectability. During the three and nine month periods ended September 30, 2013 and 2012, $65,000 and $0 of receivables were charged off against the allowance, respectively. During the three and nine month periods ended September 30, 2013 and 2012, $36,823 and $0 was added to the allowance as an estimate of bad debts on current accounts receivable, respectively. The Company does not have any off-balance sheet exposure related to its customers. | ||
Inventory | ||
Inventory is valued at the lower of cost (on a first-in, first-out (FIFO) basis) or market. The Company purchases its inventory direct from the manufacturer and includes these costs in its Cost of Sales as well as its packaging supplies, shipping, freight and duties costs. The Company evaluates inventory for items that have become obsolete. An allowance for obsolescence is established for items that are deemed not able to be sold. Currently, there are no obsolete inventory items. | ||
Revenue Recognition | ||
The Company applies the provisions of ASC 605, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements. ASC 605 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. In general, the Company recognizes revenue related to goods and services provided when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured. | ||
Revenue from Operating Leases | ||
The Company recognizes revenue for its operating leases in the following three categories: | ||
● | Concrete forms are produced to customer specifications. Deposits paid prior to the completion of the product are deferred until the product is delivered. Once the product is delivered, the Company recognizes product sales. | |
● | Services for product acquisition are recognized when commissions are received as determined by contract. | |
● | We recognize base management fees as revenue when we earn them under the contracts. | |
Revenue from Sales of Brand Licenses | ||
During the nine month period, the Company sold brand licenses to customers which allow the promotion of business under the E-Waste Systems brand names in selected jurisdictions. The license agreements call for an initial payment plus a percentage of revenues generated under the brand during term of the license agreement. The initial fees are booked to revenues of the Company in the period first sold. License fees earned from subsequent revenues of the licensee company are only booked later after periodic reviews. | ||
Marketable Securities | ||
The Company reports its investments in marketable securities under the provisions of ASC 320, Investments in Debt and Equity Securities. All the Company’s marketable securities are classified as “available for sale” securities, as the market value of the securities are readily determinable and the Company’s intention upon obtaining the securities was neither to sell them in the short term nor to hold them to maturity. Pursuant to ASC 320, securities which are classified as “available for sale” are recorded on the Company’s balance sheet at fair market value, with the resulting unrealized holding gains and losses excluded from earnings and reported as other comprehensive income until realized. | ||
The Company evaluates securities for other-than-temporary impairment at least on a yearly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to the length of time and amount of the loss relative to cost, the nature and financial condition of the issuer and the ability and intent of the Company to hold the investment for a time sufficient to allow any anticipated recovery in fair value. Pursuant to ASC 320-5, other than temporary impairment losses are recorded as impairment expense in the statement of operations during the period in which the impairment is determined. | ||
Intangible Assets | ||
Intangible assets are recorded at the costs associated with the asset. These assets are then amortized using the straight-line method over the remaining useful economic life of each asset type. At each balance sheet date, the unamortized capitalized cost of the each intangible asset will be compared to the net realizable value of that asset. If the unamortized capitalized cost exceeds the net realizable value, then the difference will be written down to the net realizable value. | ||
Cost Method Investments | ||
Cost method investments are recorded at the costs associated with the investments in accordance with ASC 325-20. The costs are valued at the most readily available source of value with the various aspects of the transaction. The investments are presented at the cost. No returns are recorded on the investments unless dividends are received. | ||
Capitalized Software Development Costs | ||
The Company applies the provisions of ASC 985-20, which provides guidance on the recognition, presentation and disclosure of software development costs in financial statements. The costs associated with developing the software is capitalized and will be amortized using the straight-line method over the economic life of the software. At each balance sheet date, the unamortized capitalized cost of the software product will be compared to the net realizable value of that product. If the unamortized capitalized cost exceeds the net realizable value, then the difference will be written down to the net realizable value. | ||
Long-Lived Assets | ||
Long-lived assets include equipment and intangible assets other than those with indefinite lives. We assess the carrying value of our long-lived asset groups when indicators of impairment exist and recognize an impairment loss when the carrying amount of a long-lived asset is not recoverable from the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Indicators of impairment include significant underperformance relative to historical or projected future operating results, significant changes in our use of the assets or in our business strategy, loss of or changes in customer relationships and significant negative industry or economic trends. When indications of impairment arise for a particular asset or group of assets, we assess the future recoverability of the carrying value of the asset (or asset group) based on an undiscounted cash flow analysis. If carrying value exceeds projected, net, undiscounted cash flows, an additional analysis is performed to determine the fair value of the asset (or asset group), typically a discounted cash flow analysis, and an impairment charge is recorded for the excess of carrying value over fair value. | ||
Property and equipment are recorded at historical cost less accumulated depreciation, unless impaired. Depreciation is charged to operations over the estimated useful lives of the assets using the straight-line. Upon retirement or sale, the historical cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized. Expenditures for repairs and maintenance are charged to expense as incurred. | ||
Basic and Diluted Loss Per Common Share | ||
Basic loss per common share is computed by dividing the loss available to common stockholders by the weighted average number of common shares outstanding during the period of computation. Diluted loss per share gives effect to all potential dilutive common shares outstanding during the period of compensation. The computation of diluted loss per share does not assume conversion, exercise or contingent exercise of securities that would have an antidilutive effect on earnings. As of September 30, 2013, the Company had 79,723,167 potentially dilutive securities that would affect the loss per share if they were to be dilutive. | ||
Foreign Currency | ||
Assets and liabilities of the Company's foreign operations are translated into U.S. dollars at period-end exchange rates. Net exchange gains or losses resulting from such translation are excluded from net loss but are included in comprehensive income and accumulated in a separate component of stockholders' equity. Income and expenses are translated at weighted average exchange rates for the period. Foreign currency transactions denominated in a currency other than the US Dollar, which is the Company’s functional currency, are included in determining net income for the period. | ||
Accumulated Other Comprehensive Income (Loss) | ||
Comprehensive loss includes net loss as currently reported under U.S. GAAP and other comprehensive loss. Other comprehensive loss considers the effects of additional economic events, such as foreign currency translation adjustments, that are not required to be recorded in determining net loss, but rather are reported as a separate component of stockholders’ equity (deficit). | ||
Stock-Based Compensation | ||
The Company measures and recognizes stock-based compensation expense using a fair value-based method for all share-based awards made to employees and nonemployee directors, including grants of stock options and other stock-based awards. The application of this standard requires significant judgment and the use of estimates, particularly with regard to Black-Scholes assumptions such as stock price volatility and expected option lives to value equity-based compensation. We recognize stock compensation expense using a straight line method over the vesting period of the individual grants. | ||
Under our stock compensation plan (the “Stock Plan”) which is registered under Form S8, or through newly issued restricted common stock, we pay qualified employees, contractors and advisors common shares in lieu of compensation for services provided including business development, management, technology development, consulting, legal services and accounting services | ||
Income Taxes | ||
The Company utilizes the balance sheet method of accounting for income taxes. Accordingly, The Company is required to estimate its income taxes in each of the jurisdictions in which it operates as part of the process of preparing its consolidated financial statements. This process involves estimating the Company’s actual current tax exposure, including assessing the risks associated with tax audits, together with assessing temporary differences resulting from the different treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities. Due to the evolving nature and complexity of tax rules, it is possible that the Company’s estimates of its tax liability could change in the future, which may result in additional tax liabilities and adversely affect the results of operations, financial condition and cash flows. |
MARKETABLE_SECURITIES
MARKETABLE SECURITIES | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||
MARKETABLE SECURITIES | ' | ||||||||||||||||
During the nine months ended September 30, 2013 the Company received marketable securities in exchange for shares of preferred stock of the Company. The Company’s marketable securities are classified as “available for sale” because it is managements’ intent neither to sell them in the short-term nor to hold them until maturity. All of the Company’s available for sale securities are equity securities. Accordingly, the Company originally records the shares at the market value of the shares on the contracted sale date. The shares are evaluated quarterly using the specific identification method. Any unrealized holding gains or losses are reported as Other Comprehensive Income (Loss) and as a separate component of stockholder’s equity. Realized gains and losses and other-than-temporary impairments are included in earnings. | |||||||||||||||||
Marketable Securities-Available for Sale is as follows: | |||||||||||||||||
Balance, December 31, 2012 | $ | - | |||||||||||||||
Marketable securities received in exchange for preferred stock | 1,595,000 | ||||||||||||||||
Unrealized gains or losses | |||||||||||||||||
Other-than-temporary impairment | - | ||||||||||||||||
Balance, September 30, 2013 | $ | 1,595,000 | |||||||||||||||
Amortized | Gross | Gross | Net | ||||||||||||||
Cost | Unrealized | Unrealized | Market | ||||||||||||||
Basis | Gains | Loss | Value | ||||||||||||||
Available-for-sale Securities | $ | 1,595,000 | $ | - | $ | - | $ | 1,595,000 | |||||||||
INTANGIBLE_ASSETS
INTANGIBLE ASSETS | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Notes to Financial Statements | ' | |||||||||||||
INTANGIBLE ASSETS | ' | |||||||||||||
Intangible assets consist of the unamortized portion of software development costs, certification costs and customer lists. The software development costs asset is still in the developmental stage. No amortization has been recorded on this product. Certification costs and customer lists will be amortized over the remaining economic useful lives. The following table presents the detail of intangible assets for September 30, 2013: | ||||||||||||||
Gross | Accumulated | Net | Weighted | |||||||||||
Carrying | Amortization | Carrying | Average | |||||||||||
Amount | Amount | Remaining | ||||||||||||
Life | ||||||||||||||
30-Sep-13 | ||||||||||||||
Software Development Costs | $ | 97,014 | $ | (8,084 | ) | $ | 88,930 | 3 Years | ||||||
Certification Costs | 200,000 | (10,000 | ) | 190,000 | 3 Years | |||||||||
Customer Lists | 70,184 | (3,509 | ) | 66,675 | 3 Years | |||||||||
Total | $ | 367,198 | $ | (21,593 | ) | $ | 345,605 | |||||||
Amortization expense was $21,593 and $0 for the nine months ended September 30, 2013 and 2012. |
INVENTORIES
INVENTORIES | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
INVENTORIES | ' | ||||||||
Inventories by major categories are summarized as follows: | |||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Finished goods | $ | 536,984 | $ | - | |||||
Less: allowances for slow moving items | - | - | |||||||
Total | $ | 536,984 | $ | - |
DISCONTINUED_OPERATIONS
DISCONTINUED OPERATIONS | 9 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
DISCONTINUED OPERATIONS | ' |
Disposition of E-Waste Systems of Ohio, Inc. (formerly Tech Disposal, Inc.) | |
On September 20, 2012 the Company’s wholly owned subsidiary, E-Waste Systems (Ohio), Inc. completed the physical transfer of its business and its assets to a company controlled by a minority shareholder in the Company (“the purchaser”). In connection with this transfer the purchaser has agreed to assume payments on the lease on the premises at 1033 Brentnell Avenue, Columbus, Ohio, formerly held by the Company. The value of any consideration receivable arising from the sale, including any gain on disposal, has been fully impaired as its collection is uncertain. |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
RELATED PARTY TRANSACTIONS | ' |
Transactions Involving Officers and Directors | |
During the nine month period ended September 30, 2013, the Company issued 10,000,000 shares of common stock to the Company’s Chief Executive Officer and Director at $0.0088 per share for accrued officer compensation of $125,000. The Company also issued 1,800,000 shares of S-8 registered shares at $.004355 per share valued at $7,839 and 2,500,000 shares of S-8 registered shares at $.003315 per share valued at $8,288 for accrued officer compensation to the Company’s Chief Executive Officer and Director. The Company also issued 195,000 shares of preferred stock series B at $1.00 per share valued at $195,000 for accrued officer compensation to the Company’s Chief Executive Officer and Director. The Company issued 3,685,341 shares of common stock to the Company’s former interim Chief Financial Officer at $0.013 per share for compensation expense of $40,154. The Company also recorded $261,532 of additional officer compensation along with a gain on currency translation loss for an officer contract denominated in British Pounds (“GBP”), leaving an ending balance of $1,187,999 in accrued officer and director compensation at September 30, 2013. |
NOTES_PAYABLE
NOTES PAYABLE | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
NOTES PAYABLE | ' | ||||||||
Effective October 28, 2011 the Company received $12,000 in cash from a related party in exchange for a convertible note payable. The note accrues interest at 12 percent and is due twelve months from the date of origination or October 28, 2012. The principal balance of the note along with accrued interest is convertible at any time, at the option of the note holder, into the Company's common stock on or before the maturity date at a price of $0.25 per share. The Company recognized $1,077 and $252 of interest expense on the related party convertible note payable leaving a balance in accrued interest of $2,774 and $1,697 as of September 30, 2013 and December 31, 2012, respectively. The note has been extended for an additional year and all default terms have been recognized in the presentation of the note payable. | |||||||||
Effective February 3, 2012 and February 21, 2012 the Company borrowed $40,000 and $35,000, respectively, from an unrelated third party entity in the form of two promissory notes. The notes bear interest at 14 percent, are unsecured and are due on demand. During the quarter ended September 30, 2013, the Company recognized $7,853 of interest expense on these notes payable leaving balances in accrued interest of $2,738 and $403, respectively as of September 30, 2013 and December 31, 2012. | |||||||||
Effective April 3, 2013 the Company entered into a settlement agreement with the Note Holder whereby the Company would pay interest to the Note Holder from inception of the two notes through and including May 31, 2013. Payment of the interest due of $13,657 was made in the form of 1,029,479 shares of Rule 144 Unrestricted common stock. | |||||||||
Further to this, it was agreed that the principal amount of the combined Notes would be paid on a monthly basis in the amounts of $5,833.33 for the $35,000 Note and $6,666.67 for the $40,000 Note. Interest will continue to accrue at the agreed upon 14% per annum on each note until the principal balance has been retired. During the nine months ending September 30, 2013, the Company made three of the required aggregate monthly payments to the Note Holder in the form of the Company’s Unrestricted Common Stock. The aggregate payment for both Notes for the month of May 2013 resulted in a share issuance of 1,543,210 at a price per share of $0.0081. The aggregate payment for both Notes for the month of June 2013 resulted in a share issuance of 1,344,086 at a price per share of $0.0093. The aggregate payment for both Notes for the month of July 2013 resulted in a share issuance of 828,912 at a price per share of $0.001508. | |||||||||
As of September 30, 2013, the principal amount of the combined notes is now $37,500. The interest accruing for each month beginning on June 1, 2013 and continuing until the principal amount of both Notes has been retired will be paid in the month following the retirement of the principal amounts of both Notes. Subsequent to September 30, 2013, the Company received notification from the lender that they desired to convert the remaining balance and the accrued interest. The Company has made the aggregate payments on the loan for the months of August, 2013 resulting in 644,330 shares issued at a price of $.0194 per share; September, 2013 resulting in 256,674 shares issued at a price of $.0487 per share and October, 2013 resulting in 352,113 shares issued at a price of $.0355. In addition, the interest that had accrued from June 1, 2013 through and including November 4, 2013 was paid in full by issuing 91,270 shares of stock at a price per share of $.0355. Pursuant to the issuance of these shares these Notes have been paid in full and no longer appear on the books of EWSI. | |||||||||
Effective February 24, 2012, the Company borrowed $100,000 from an unrelated third party in the form of a promissory note. The funds were to support the working capital requirements of E-Waste Systems (Ohio) and specifically, the procurement of electronic waste for refurbishment or recycling. The promissory note accrues interest at 14 percent and is due on March 24, 2013. On April 22, 2013 the Company issued 1,029,479 shares of the Company’s common stock in payment of all interest from inception of the note through May 31, 2013. The note holder has agreed to accept no payment on the principal amount of the note for the present and interest will continue to accrue on the note beginning with June 1, 2013 through the time the note is completely retired. During the nine months ended September 30, 2013 the Company recognized $8,132 of interest expenses and made no payments on this promissory note leaving a balance in accrued interest of $4,680 as of September 30, 2013 | |||||||||
Effective August 27, 2012, the Company executed a promissory note in the principal sum of $150,000. The consideration to be provided by the note holder is no more than $135,000. A $13,500 (10%) original issue discount (“OID”) applies to the principal sum. The note holder made payments to the Company of $25,000 and $15,000 of the total consideration during the year ended December 31, 2012 and $95,000 through the period ended September 30, 2013. The principal sum due to the note holder is to be prorated based on the consideration actually paid together with the 10% original issue discount that will also be prorated based on the amount of consideration actually paid as well as any other interest or fees. The maturity date is one year from the date of each payment of consideration and is the date upon which the principal sum, as well as any unpaid interest and other fees, shall be due and payable. The OID in respect of the consideration received on the date of execution equaled $4,445 for the year ended December 31, 2012, and $10,556 for the nine months ended September 30, 2013. | |||||||||
Effective February 28, 2013, the note holder elected to convert $7,350 and of the principal balance at $0.0049 per share into 1,500,000 shares of the Company’s common stock. In connection with the conversion, the Company recognized a pro rata portion of the unamortized debt discount of $3,625 to interest expense. | |||||||||
Effective March 20, 2013, the note holder elected to convert an additional $11,466 and of the principal balance at $0.0064 per share into 1,800,000 shares of the Company’s common stock. In connection with the conversion, the Company recognized a pro rata portion of the unamortized debt discount of $5,026 to interest expense. | |||||||||
Effective April 16, 2013, the note holder elected to convert $8,962 of the principal balance at a price per share of $0.004355 resulting in the issuance of 2,695,650 shares of the Company’s common stock. In connection with the conversion, the Company recognized a pro rata portion of the unamortized debt discount of $3,658 to interest expense. | |||||||||
Effective May 6, 2013, the note holder elected to convert $8,450 of the principal balance at a price per share of $0.003380 resulting in the issuance of 2,500,000 shares of the Company’s common stock. In connection with the conversion, the Company recognized a pro rata portion of the unamortized debt discount of $4,384 to interest expense. | |||||||||
Effective June 13, 2013, the note holder elected to convert $8,217 of the principal balance at a price per share of $0.003315 resulting in the issuance of 2,981,397 shares of the Company’s common stock. In connection with the conversion, the Company recognized a pro rata portion of the unamortized debt discount of $4,639 to interest expense. | |||||||||
Effective September 3, 2013, the note holder elected to convert $27,778 of the principal balance at a price per share of $0.0065 resulting in the issuance of 4,700,856 shares of the Company’s common stock. In connection with the conversion, the Company recognized a pro rata portion of the unamortized debt discount of $11,415 to interest expense. | |||||||||
The note contains a conversion feature wherein the note may be converted to shares of the Company’s common stock at a conversion price of the lesser of $0.01 or 70% of the lowest trade price in the 25 trading days prior to the conversion date. Unless otherwise agreed in writing by both parties, at no time will the holder of the note convert any amount outstanding into common stock that would result in it owning more than 4.99% of the total common stock outstanding. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $58,646 and debt discounts of $44,445 on the payment dates of the note for the year ended December 31, 2012, and $404,254 and $105,556 for the period ended September 30, 2013. As of September 30, 2013 and December 31, 2012, the Company had recognized amortization on debt discounts on these notes of $30,854 and $37,814 leaving unamortized debt discounts of $65,586 and $31,111, respectively. See Note 10 for treatment of derivative liability associated with convertible notes payable. | |||||||||
Effective December 31, 2012, the Company negotiated the forgiveness of accounts payable of $50,000 owed to a Company consultant in exchange for the execution of a convertible note payable with a face value of $162,500. On the same date and under the same terms, the Company executed two other convertible notes payable with face values of $11,000 and $29,000 in exchange for services provided to the Company. The notes are unsecured, bear interest at 6% per annum and are due on December 31, 2015. The notes are also convertible, at the option of the holder, into shares of the Company’s common stock at a share price of the lower of $0.0064 or the average of the three lowest volume weighted-average prices per share during the 30 calendar day period immediately prior to the date of conversion. | |||||||||
The intrinsic value of the beneficial conversion features and the debt discounts associated with the equity issued in connection with the convertible debts were recorded based on the relative fair value of the equity in relation to the debt in accordance with ASC 470. The total initial beneficial conversion feature recorded was $25,313. The discount will be amortized and recorded to the statement of operations over the stated term of the note and is included within as interest expense. As of September 30, 2013 and December 31, 2012, the Company had recognized amortization on the debt discounts on this note of $8,622 and $-0- of the total outstanding debt discounts leaving an unamortized debt discounts $9,832and $25,313, respectively. | |||||||||
Effective March 18, 2013, the note holder elected to convert $64,000 of the principal balance at $0.0064 per share into 10,000,000 shares of the Company’s common stock. In connection with the conversion, the Company recognized a pro rata portion of the unamortized debt discount of $7,438 to interest expense. | |||||||||
Effective August 24, 2013, the note holder elected to convert $11,000 of the principal balance and accrued interest of $435 at $0.0064 per share into 1,786,641 shares of the Company’s common stock. In connection with the conversion, the Company recognized a pro rata portion of the unamortized debt discount of $1,109 to interest expense. | |||||||||
On January 18, 2013, the Company executed a convertible note payable with a face value of $41,557 in exchange for services provided to the Company. This note is unsecured, bears interest at 6% per annum and is due January 18, 2016. The note is convertible, at the option of the holder, into shares of the Company’s common stock at a share price of the lower of $0.0064 or the average of the three lowest volume weighted-average prices per share during the 30 calendar day period immediately prior to the date of conversion. The intrinsic value of the beneficial conversion features and the debt discounts associated with the equity issued in connection with the convertible debt was recorded based on the relative fair value of the equity in relation to the debt in accordance with ASC 470. The total initial beneficial conversion feature recorded was $41,557. The discount will be amortized and recorded to the statement of operations over the stated term of the note and is included within as interest expense. As of September 30, 2013, the Company had recognized amortization on the debt discounts on this note of $9,679 of the total outstanding debt discounts leaving an unamortized debt discounts $31,879. | |||||||||
Effective February 8, 2013, the Company executed a convertible note payable with a face value of $162,500 in exchange for services provided to the Company in the amount of $115,400 and forgiveness of accounts payable of $47,060. The intrinsic value of the beneficial conversion features and the debt discounts associated with the equity issued in connection with the convertible debts were recorded based on the relative fair value of the equity in relation to the debt in accordance with ASC 470. The total initial beneficial conversion feature recorded was $162,500. The discount will be amortized and recorded to the statement of operations over the stated term of the note and is included within as interest expense. As of September 30, 2013, the Company had recognized amortization on the debt discounts on this note of $34,726 of the total outstanding debt discounts leaving an unamortized debt discounts $127,774. | |||||||||
This note is unsecured, bears interest at 6% per annum and is due February 8, 2016. The note is convertible, at the option of the holder, into shares of the Company’s common stock at a share price of the lower of $0.0064 or the average of the three lowest volume weighted-average prices per share during the 30 calendar day period immediately prior to the date of conversion. | |||||||||
Effective March 5, 2013, the Company executed a convertible note payable with a face value of $17,417 in exchange for services provided to the Company. This note is unsecured, bears interest at 6% per annum and is due March 5, 2016. The note is convertible, at the option of the holder, into shares of the Company’s common stock at a share price of the lower of $0.0064 or the average of the three lowest volume weighted-average prices per share during the 30 calendar day period immediately prior to the date of conversion. | |||||||||
The intrinsic value of the beneficial conversion features and the debt discounts associated with equity issued in connection with the convertible debts has been recorded based on the relative fair value of the equity in relation to the debt in accordance with ASC 470. The total initial beneficial conversion feature recorded was$15,784. The discount will be amortized and recorded to the statement of operations over the stated term of the note and is included within as interest expense. As of September 30, 2013, the Company has amortized $3,010 of the total outstanding debt discounts leaving an unamortized debt discount of $12,565. | |||||||||
Effective June 3, 2013, the Company executed a convertible note payable with a face value of $32,500. This note is unsecured, bears interest at 8% per annum and is due June 2, 2014. The note is convertible, at the option of the holder, into shares of the Company’s common stock at a share price of the average of the three lowest volume weighted-average prices per share during the 10 calendar day period immediately prior to the date of conversion times 55 percent. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $60,352 and debt discount of $32,500 on the payment dates of the note for the period ended September 30, 2013. As of September 30, 2013, the Company had recognized amortization on debt discounts on these notes of $10,538 leaving unamortized debt discounts of $21,962. See Note 10 for treatment of derivative liability associated with convertible notes payable. | |||||||||
Effective July 15, 2013, the Company executed a convertible note payable with a face value of $32,500. This note is unsecured, bears interest at 8% per annum and is due April 17, 2014. The note is convertible, at the option of the holder, into shares of the Company’s common stock at a share price of the average of the three lowest volume weighted-average prices per share during the 10 calendar day period immediately prior to the date of conversion times 55 percent. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $90,207 and debt discount of $32,500 on the payment dates of the note for the period ended September 30, 2013. As of September 30, 2013, the Company had recognized amortization on debt discounts on these notes of $9,067 leaving unamortized debt discounts of $23,433. See Note 10 for treatment of derivative liability associated with convertible notes payable. | |||||||||
Effective August 27, 2013, the Company executed a convertible note payable with a face value of $27,500. This note is unsecured, bears interest at 8% per annum and is due May 29, 2014. The note is convertible, at the option of the holder, into shares of the Company’s common stock at a share price of the average of the three lowest volume weighted-average prices per share during the 10 calendar day period immediately prior to the date of conversion times 55 percent. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $116,312 and debt discount of $27,500 on the payment dates of the note for the period ended September 30, 2013. As of September 30, 2013, the Company had recognized amortization on debt discounts on these notes of $3,400 leaving unamortized debt discounts of $24,100. See Note 10 for treatment of derivative liability associated with convertible notes payable. | |||||||||
On June 25, 2013, the Company assumed loans payable with the acquisition of Surf Investments, Ltd. in the amount of $222,928. These loans are non-interest bearing and due upon demand. | |||||||||
The components of notes payable are summarized in the table below: | |||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Convertible note payable to a related party, bearing interest at 12%, unsecured, due on October 28, 2012 (note is in default) | $ | 12,000 | $ | 12,000 | |||||
Notes payable to an unrelated party, bearing interest at 14%, unsecured, due on demand | 37,500 | 75,000 | |||||||
Note payable to an unrelated party, bearing interest at 14%, unsecured, due on March 24, 2013 (note is in default) | 100,000 | 100,000 | |||||||
Notes payable to unrelated parties, bearing no interest, unsecured, and due on demand | 222,928 | - | |||||||
Convertible note payable to an unrelated party, bearing interest at 10%, unsecured, due on June 12, 2014 | 27,778 | - | |||||||
Convertible note payable to an unrelated party, bearing interest at 10%, unsecured, due on August 14, 2014 | 27,778 | - | |||||||
Convertible note payable to an unrelated party, bearing interest at 10%, unsecured, due on September 26, 2014 | 22,222 | - | |||||||
Convertible note payable to an unrelated party, bearing interest at 10%, unsecured, due on August 27, 2013 and due on October 10, 2013. | - | 44,445 | |||||||
Convertible note payable to an unrelated party, bearing interest at 8%, unsecured, due on June 2, 2014 | 32,500 | - | |||||||
Convertible note payable to an unrelated party, bearing interest at 8%, unsecured, due on April 17, 2014 | 32,500 | - | |||||||
Convertible note payable to an unrelated party, bearing interest at 8%, unsecured, due on May 29, 2014 | 27,500 | - | |||||||
Discounts on short-term convertible notes payable | (135,081 | ) | (31,111 | ) | |||||
Total short-term debt | $ | 407,625 | $ | 200,334 | |||||
Derivative liability on short-term convertible notes | $ | 245,008 | $ | 61,545 | |||||
Convertible note payable to an unrelated party, bearing interest at 6%, unsecured, due on December 31, 2015 | $ | - | $ | 11,000 | |||||
Convertible note payable to an unrelated party, bearing interest at 6%, unsecured, due on December 31, 2015 | 29,000 | 29,000 | |||||||
Convertible note payable to an unrelated party, bearing interest at 6%, unsecured, due on December 31, 2015 | 98,500 | 162,500 | |||||||
Convertible note payable to an unrelated party, bearing interest at 6%, unsecured, due on January 18, 2016 | 41,557 | - | |||||||
Convertible note payable to an unrelated party, bearing interest at 6%, unsecured, due on February 8, 2016 | 162,500 | - | |||||||
Convertible note payable to an unrelated party, bearing interest at 6%, unsecured, due on March 5, 2016 | 17,417 | - | |||||||
Unamortized debt discounts on issuances of convertible debt | (182,049 | ) | (25,313 | ) | |||||
Total long-term debt | $ | 166,925 | $ | 177,187 | |||||
DERIVATIVE_LIABILITY
DERIVATIVE LIABILITY | 9 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
DERIVATIVE LIABILITY | ' |
Effective July 31, 2009, the Company adopted ASC 815 which defines determining whether an instrument (or embedded feature) is solely indexed to an entity’s own stock. The conversion terms of the convertible notes executed on June 3, 2013, June 11, 2013, July 15, 2013, August 14, 2013, August 27, 2013 and September 26, 2013 (total unpaid face value of $170,278) are subject to “reset” provisions in the event the Company subsequently issues common stock, stock warrants, stock options or convertible debt with a stock price, exercise price or conversion price lower than conversion price of these notes. If these provisions are triggered, the conversion price of the note will be reduced. As a result, the Company has determined that the conversion features imbedded in the notes are not considered to be solely indexed to the Company’s own stock and are therefore not afforded equity treatment. In accordance with ASC 815, the Company has bi-furcated the conversion feature of the note and recorded a derivative liability. | |
ASC 815 requires Company management to assess the fair market value of certain derivatives at each reporting period and recognize any change in the fair market value as another income or expense item. The Company’s only asset or liability measured at fair value on a recurring basis is its derivative liability associated with convertible notes payable. | |
At origination, the Company valued the conversion features using the following assumptions: dividend yield of zero, years to maturity of 0.75 to 1.00 year, average risk free rates over between 0.11 and 0.18 percent, and annualized volatility of between 5 and 230 percent to record derivative liabilities of $752,749. At December 31, 2012, the Company revalued the conversion features using the following assumptions: dividend yield of zero, years to maturity of between 0.65 and 0.78 years, risk free rate of 0.16 percent, and annualized volatility of between 234 and 251 percent and determined that, during the year ended December 31, 2012, the Company’s derivative liability decreased by $2,899 to $61,545. The Company recognized a corresponding loss on derivative liability in conjunction with this revaluation. | |
At September 30, 2013, the Company revalued the conversion features using the following assumptions: dividend yield of zero, years to maturity of between 0.55 and 0.99 years, risk free rates of between 0.10 percent and 0.63 percent, and annualized volatility of between 22 and 217 percent and determined that, during the nine months ended September 30, 2013, the Company’s derivative liability decreased by $446,488 to $245,008. The Company recognized a corresponding gain on derivative liability in conjunction with this revaluation. | |
The Company recognized a pro rata portion of the derivative liability of $71,665 to additional paid-in capital as a result of six conversions of the notes payable on February 28, 2013, March 20, 2013, April 18, 2013, May 6, 2013, June 14, 2013 and September 3, 2013. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
COMMITMENTS AND CONTINGENCIES | ' |
Legal Proceedings | |
As of the date of this filing, the Company is not aware of any current or pending legal actions. | |
Occupancy Leases | |
The Company leased office and warehouse space in Columbus, Ohio under an operating lease. The lease provided for a lease payment of $4,200 per month from December 1, 2012 through November 30, 2013, and a lease payment of $4,400 per month from December 1, 2013 through November 30, 2014, and lease payments thereafter on a month-to-month basis at a rate of $4,568 per month. On September 20, 2012, this lease was assigned to the purchaser as part of the transfer of the Company’s assets and business on September 20, 2012. As such, the Company has no ongoing minimum lease payments associated with the lease. | |
Effective February 12, 2013, the Company entered into a Lease Agreement with Evotech Capital Ltd in a commercial building in Shanghai, China. The term of the lease runs from February 12, 2013 through February 12, 2015. The terms of the lease calls for the Company to issue Evotech Capital 250,000 shares of common stock within 180 days of the beginning of the lease term. This represents the only payment required during the term of the lease. The Company plans to issue these shares during the fourth quarter of 2013. | |
Effective November 30, 2012 the Company was accepted as a sponsored company with the Los Angeles Cleantech Incubator and maintains an office there. No lease payments are due until the Company raises at least $1.5 million in investment. | |
Operating Leases | |
The Company has entered three operating agreements to operate businesses in behalf of property owners. The agreements require facility and equipment payments and personnel payments along with other possible payments in the course of operating these businesses. These agreements are on a quarter-to-quarter basis and can be terminated upon agreement of both parties. | |
Contingent Consideration | |
In connection with the acquisition of E-Waste Systems of Ohio, Inc. (formerly Tech Disposal, Inc.), this was disclosed in our annual filing with the SEC on Form 10-K, filed April 16, 2013 and incorporated by reference herein. |
PREFERRED_STOCK
PREFERRED STOCK | 9 Months Ended | |
Sep. 30, 2013 | ||
Notes to Financial Statements | ' | |
PREFERRED STOCK | ' | |
The Company is authorized to issue 10,000,000 shares of Preferred Stock, of which there are 200,000 shares set aside as Series A Convertible Preferred Stock with a par value of $0.001 with a par value of $0.001. As of September 30, 2013, and December 31, 2012, there were 1,903 and 0 shares of Series A Convertible Preferred Stock issued and outstanding, respectively. | ||
The Series A Preferred Shares have the following provisions: | ||
Dividends | ||
Series A convertible preferred stockholders’ are entitled to receive dividends when declared. As of June 30, 2013 and December 31, 2012 no dividends have been declared or paid. | ||
Liquidation Preferences | ||
In the event of liquidation, following the sale or disposition of all or substantially all of the Company’s assets, the holders of the Series A Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Company to the holders of the common stock by reason of their ownership thereof, an amount equal to $100 per share. | ||
Voting Rights | ||
Each holder of shares of the Series A Preferred Stock is entitled to the number of votes equal to the number of shares of common stock into which the preferred shares are convertible. | ||
Conversion | ||
Each share of Series A Preferred Stock is convertible, at the option of the holder, into the number of shares of common stock which is equal to $110 divided by the greater of (i) $0.001 or (ii) 90 percent of the volume weighted average closing price for the Company’s common stock during the ten trading days immediately prior to conversion. | ||
Redemption | ||
The Series A Preferred Stock shares are redeemable for cash, at the option of the Company any time after the date of issuance, plus all accrued but unpaid dividends, on the following basis: | ||
(i) | 110 percent of the purchase price of each share of Series A Preferred Stock if redeemed any time before the first twelve months of the date of issuance; and | |
(ii) | 105 percent of the purchase price of each share of Series A Preferred Stock on or after the first twelve months of the date of issuance. | |
The Company is authorized to issue 10,000,000 shares of Preferred Stock, of which there are 500,000 shares set aside as Series B Convertible Preferred Stock with a par value of $0.001. As of September 30, 2013, and December 31, 2012, there were 195,000 and 0 shares of Series B Convertible Preferred Stock issued and outstanding, respectively. | ||
The Series B Preferred Shares have the following provisions: | ||
Dividends | ||
Dividends: Initially, there will be no dividends due or payable on the Series B Preferred Stock. Any future terms with respect to dividends shall be determined by the Board consistent with the Corporation’s Certificate of Incorporation. Any and all such future terms concerning dividends shall be reflected in an amendment to this Certificate, which the Board shall promptly file or cause to be filed. | ||
Liquidation Preferences | ||
If, upon the occurrence of a Liquidation Event, the assets and funds available for distribution among the Holders of the Series B Preferred Stock and Holders of Pari Passu Securities shall be insufficient to permit the payment to such holders of the preferential amounts payable thereon, then the entire assets and funds of the Corporation legally available for distribution to the Series B Preferred Stock and the Pari Passu Securities shall be distributed ratably among such shares in proportion to the ratio that the Liquidation Preference payable on each such share bears to the aggregate Liquidation Preference payable on all such shares. | ||
Voting Rights | ||
Each holder of shares of the Series B Preferred Stock is entitled to 1,000 votes per share held. | ||
Conversion | ||
The Conversion Price for each share of Series B Preferred Stock in effect on any Conversion Date shall be the greater of $0.20 or (i) Eighty-Five percent (85%) of the average closing bid price of the Common Stock over the Twenty (20) trading days immediately preceding the date of conversion, (ii) but no less than Par Value of the Common Stock. For purposes of determining the closing bid price on any day, reference shall be to the closing bid price for a share of Common Stock on such date on the NASD OTC Bulletin Board, as reported on Bloomberg, L.P. (or similar organization or agency succeeding to its functions of reporting prices). | ||
Redemption | ||
The Series B Preferred Stock shares are only redeemable for cash by mutual agreement. | ||
Preferred Stock Activity for the Period Ended September 30, 2013 | ||
Effective February 6, 2013, as part of a master license agreement signed with an unrelated third party, the Company issued 650 shares of Series and in exchange received marketable securities valued at $880,000. The fair value of the preferred stock transferred was based on the trading price on the date of transfer of the marketable securities into which the shares received may be converted based on the conversion terms of the preferred stock. During the period ended September 30, 2013, no unrealized gains or losses were recorded with respect to the preferred shares. | ||
During the quarter ended June 30, 2013, the Company issues 223 in Series A Preferred Stock valued at $27,256 and assumed liabilities of $222,928 in the acquisition of a subsidiary. | ||
During the quarter ended June 30, 2013, the Company entered into a subscription agreement with an unrelated third party to issue 800 shares of Series A Preferred Shares. The transaction has been recorded at a value or $88,000, which was based on the trading price on date of transfer of the marketable securities into which the share received may be converted based on the conversion terms of the preferred stock and is currently recorded as a subscription receivable on the Company’s balance sheet. During the three months ended September 30, 2013, the Company received marketable securities valued at $715,000 in satisfaction of the subscription receivable. The fair value of the preferred stock transferred was based on the trading price on the date of transfer of the marketable securities into which the shares received may be converted based on the conversion terms of the preferred stock. During the period ended September 30, 2013, no unrealized gains or losses were recorded with respect to the preferred shares. | ||
On August 21, 2013, the Company issued 20,000 in Series B Preferred Stock valued at $20,000 for accrued officer compensation to the Company’s Chief Executive Officer and Director. | ||
On September 3, 2013, the Company issued 230 in Series A Preferred Stock valued at $27,273 in the acquisition of a subsidiary. | ||
On September 6, 2013, the Company issued 175,000 in Series B Preferred Stock valued at $175,000 for accrued officer compensation to the Company’s Chief Executive Officer and Director. |
COMMON_STOCK
COMMON STOCK | 9 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
COMMON STOCK | ' |
The Company’s board of directors and majority shareholder approved an amendment to the articles of incorporation for the purpose of increasing the authorized common stock from 190,000,000 shares to 490,000,000 shares. The Company’s authorized shares of preferred stock were not affected in this corporate action. As of September 30, 2013 and December 31, 2012, there were 242,781,629 and 106,504,926 shares of common stock issued and outstanding, respectively. | |
Common Stock Activity for the Nine Months Ended September 30, 2013 | |
During the nine months ended September 30, 2013, the Company issued 75,956,990 shares of common stock at prices ranging from $0.006 to $0.0899 per share for services valued at $1,543,492. The value of the shares issued for services was based on the trading price of the Company’s common stock on the date of issuance. | |
During the nine months ended September 30, 2013, the Company issued 7,623,693 shares of common stock at prices ranging from $.006 to $0.0178 per share for capitalized software development costs valued at $97,014. The value of the shares issued for services was based on the trading price of the Company’s common stock on the date of issuance. | |
During the nine months ended September 30, 2013, the Company issued 49,196,020 shares of common stock at $0.003315 to $0.01508 per share for settlement of debt valued at $424,059. The value of shares issued for settlement of debt was based on the trading price of the Company’s common stock on the date of issuance or the face value of the debt extinguished. | |
During the nine months ended September 30, 2013, the Company recorded $222,805 to additional paid-in capital for debt discounts recorded on convertible notes payable. | |
During the nine months ended September 30, 2013, the Company recorded $15,340 to additional paid-in capital in connection with an agreement signed with a consolidated subsidiary which has been determined to be a variable interest entity. | |
On September 3, 2013, the Company issued 3,500,000 shares of common stock at $0.0738 per share valued at $258,300 in the acquisition of a minority interest in a subsidiary. | |
During the nine months ended September 30, 2013, the Company recorded $5,400 to additional paid-in capital for expenses paid in behalf of the Company by a related party. |
OPERATING_LEASES
OPERATING LEASES | 9 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
OPERATING LEASES | ' |
We operate properties and businesses which operate under leasehold contracts. These are operated as business units within this division of the Company. As of this report, we have entered into three such contracts in China, one in the USA and one in Mexico. Revenues are reported gross and our costs, including the leasehold payments are consolidated into our condensed consolidated statements of operations. We do not acquire the assets, but instead lease them, and we pay the property owners certain fixed and variable cost in the process. This strategy delivers to us revenue streams and access to customers without the significant capital cost which might otherwise be required. The agreements are on a quarter by quarter basis. | |
Jiangsu ChengXiang Plastic Co., LTD (JCP) | |
As previously reported in the first quarter, EWSI entered into an agreement with JCP which is incorporated in the People’s Republic of China (“PRC”) wherein EWSI leased the business and properties and is operating the business on those properties. Under this agreement the Company operates a plastics recycling business for the construction industry. The Company recognizes the revenue, directly related costs of revenues and all associated costs; pays for the leased premises with certain fixed and variable payments and also reimburses JCP for the use of personnel leased by the Company | |
Shanghai Yibao Shangwu Xinxi Zixun Youxian Gongsi (eBao) | |
Effective April 1, 2013 EWSI entered into an agreement with eBao which is incorporated in the People’s Republic of China (“PRC”) wherein EWSI leased the business and properties and is operating the business on those properties. Under this agreement the Company operates a consulting and specialized services business for the hospitality industry. The Company recognizes the revenue, directly related costs of revenues and all associated costs; pays for the leased premises with certain fixed and variable payments and also reimburses eBao for the use of personnel leased by the Company | |
Shanghai City View Hotel Management and Shanghai Kunyuan Jiudan Guanli (City) | |
Effective April 1, 2013 EWSI entered into a joint agreement with City, which consists of two ‘sister’ companies incorporated in the People’s Republic of China (“PRC”) which has identical shareholders, wherein EWSI leased and the operating the business from those properties. The Company recognizes the revenue, directly related costs of revenues and all associated costs; pays for the leased premises with certain fixed and variable payments and also reimburses City for the use of personnel leased by the Company. Effective June 30, 2013, this operating agreement terminated. | |
XTS(XTS) | |
Effective July 1, 2013 YaZhuo entered into a lease and operating agreement with XTS to lease its assets and to operate its business in China. | |
GoEZ Deals, Inc.(GED) | |
Effective July 1, 2013. In addition to initial investment in stock as described herein. EWSI entered into a lease and operating agreement with GoEZ Deals Inc. a California corporation with operations located in New York city (GED) as further described herein providing for lease of GED properties and operation of its businesses as business units within this division of the Company. Revenues are reported gross and our costs, including the leasehold payments are consolidated into our condensed consolidated statements of operations. We did not acquire the assets, but instead lease them, and we pay the property owners certain fixed and variable cost in the process. This strategy delivers to us revenue streams and access to customers without the significant capital cost which might otherwise be required. |
VARIABLE_INTEREST_ENTITY
VARIABLE INTEREST ENTITY | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Notes to Financial Statements | ' | ||||
VARIABLE INTEREST ENTITY | ' | ||||
Consolidation of Shanghai YaZhuo Jiudan Guanli (Xufu) | |||||
On March 26, 2013, EWSI entered into a set of agreements with Xufu, a company incorporated in the People’s Republic of China (“PRC”), wherein EWSI will provide management services in relation to the current and proposed operations of Xufu’s business in the PRC. The management services include general business operation, human resources, business development, and such other advice and assistance as may be agreed upon by the parties. In consideration, Xufu will pay a management services fee, payable each quarter, equivalent to all of Xufu’s net income for such quarter. | |||||
In order to ensure that Xufu will perform its obligations under the management services agreement, and in order to provide an additional mechanism for EWSI to enforce its rights to collect its fees pursuant to the agreement, the Xufu shareholders agreed to pledge all of their equity interests in Xufu as security for the performance of the obligations of Xufu under the agreement, including payment of management fees due EWSI. | |||||
Xufu shareholders also agreed to irrevocably grant and entrust EWSI with all of their voting rights as shareholders of Xufu including but not limited to the rights to sell or transfer all or any of the shareholders’ equity interest of Xufu, appoint and elect board members and directors, and the signing of legal documents. Xufu shareholders also granted an exclusive option to EWSI to purchase at any time all or a portion of the shareholders’ equity interest in Xufu. | |||||
The Company follows ASC 810-10, "Consolidation of Variable Interest Entities" to account for its relationships with variable interest entities (“VIE”). At the execution of the contractual agreements between EWSI and Xufu, the Company determined that it was the primary beneficiary of Xufu and that the assets, liabilities and operations of Xufu should be consolidated into its financial statements. This assessment was made based on the following factors: | |||||
● | EWSI, through the terms of the management agreement, has the power to direct the activities of Xufu that most significantly impact the entity’s economic performance such as entering into equity and debt arrangements, entering into transactions related to the purchase fixed assets, entering into any transactions related to lending money or paying dividends, entering into transactions with related parties, or engaging in any other type of business without the written consent of EWSI. | ||||
● | EWSI has the right to receive expected residual returns of Xufu in the form of the management service fees equivalent to all of the net income of Xufu. | ||||
Included in the accompanying consolidated financial statements are the following assets and liabilities of Xufu as of September 30, 2013: | |||||
30-Sep-13 | |||||
Cash | $ | - | |||
Accounts receivable | 2,638,390 | ||||
Inventories | 228,493 | ||||
Total assets | $ | 2,866,683 | |||
Accounts payable | $ | 1,660,464 | |||
Accrued liabilities | (16 | ) | |||
Checks in excess of bank | 1,075,159 | ||||
Total liabilities | $ | 2,735,607 | |||
Included in the accompanying consolidated financial statements are the following income and expenses of Xufu from the date of the execution of the management agreement on March 26, 2013 through September 30, 2013: | |||||
From the Date of | |||||
Consolidation on | |||||
26-Mar-13 | |||||
through | |||||
September 30, | |||||
2013 | |||||
Revenues | $ | 2,572,124 | |||
Cost of goods sold | 1,862,954 | ||||
Gross margin | 709,170 | ||||
General and administrative expenses | 335,571 | ||||
Consulting services | 181,059 | ||||
Income tax expense | 35 | ||||
Interest expense | 77,474 | ||||
Net loss | $ | 115,030 |
ACQUISITION_OF_SUBSIDIARY
ACQUISITION OF SUBSIDIARY | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Notes to Financial Statements | ' | ||||
ACQUISITION OF SUBSIDIARY | ' | ||||
Surf Investments, Ltd. (Surf) | |||||
On June 25, 2013, the Company entered into a binding agreement to acquire 100% of the shares of Surf Investments, Ltd, ({"Surf") a California company in the mobile computing and e-waste recycling business. The Company acquired Surf because of it e-waste certifications in the state of California and the access to customers that will benefit the Company in expanding its sales and services. Consideration paid was the assumption of liabilities of $222,928 and the issuance of 223 shares of Series A Preferred Stock valued at $27,256 for a total consideration of $250,148. Results of operations are from the date of acquisition through the end of the period. Fair values of assets and liabilities acquired are estimates of management and the Company is currently in the process of obtaining a third-party valuation on such assets and liabilities. | |||||
The following table shows the assets and liabilities acquired, consideration paid and net assets acquired: | |||||
Assets | |||||
Cash | $ | 42,549 | |||
Accounts receivable, net | 31,028 | ||||
Inventories | 3,342 | ||||
Other current assets | 872 | ||||
Security deposits | 1,942 | ||||
Total Assets | $ | 79,733 | |||
Certifications | $ | 200,000 | |||
Customer list | 71,184 | ||||
Total | $ | 350,917 | |||
Liabilities | |||||
Accounts payable | $ | 100,733 | |||
Total Liabilities | $ | 100,733 | |||
Net Assets Acquired | $ | 250,184 |
COST_METHOD_INVESTMENT
COST METHOD INVESTMENT | 9 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
COST METHOD INVESTMENT | ' |
GoEz Deals, Inc. (GED) | |
On August 9, 2013, the Company entered into a binding agreement to acquire 7% of the shares of GoEz Deals, Inc., ("GED") a California company in the mobile computing and e-waste recycling business. The Company acquired GED because of it e-waste certifications in the state of California and the access to customers that will benefit the Company in expanding its sales and services. Consideration paid was the issuance of 230 shares of Series A Preferred Stock valued at $27,273, the issuance of 3,500,000 shares of common stock at $0.0738 per share valued at $258,300 for a total consideration of $285,573. The investment is recorded at the cost of the investment. Additional agreements for lease of properties and assets and operation of the business were entered into effective July, 1, 2013. |
FAIR_VALUE_OF_FINANCIAL_INSTRU
FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ' | ||||||||||||||||
The Company adopted certain provisions of ASC Topic 820. ASC 820 defines fair value, provides a consistent framework for measuring fair value under generally accepted accounting principles and expands fair value financial statement disclosure requirements. ASC 820’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. ASC 820 classifies these inputs into the following hierarchy: | |||||||||||||||||
Level 1 inputs: Quoted prices for identical instruments in active markets. | |||||||||||||||||
Level 2 inputs: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. | |||||||||||||||||
Level 3 inputs: Instruments with primarily unobservable value drivers. | |||||||||||||||||
The following table presents assets and liabilities that are measured and recognized at fair value as of September 30, 2013 and December 31, 2012, on a recurring basis: | |||||||||||||||||
Assets and liabilities measured at fair value on a recurring basis at September 30, 2013 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Carrying | |||||||||||||||||
Value | |||||||||||||||||
Marketable securities | $ | 1,595,000 | $ | - | $ | - | $ | 1,595,000 | |||||||||
Stock warrant derivative liabilities | - | - | (245,008 | ) | (245,008 | ) | |||||||||||
$ | 1,595,000 | $ | - | $ | (245,008 | ) | $ | 1,349,992 | |||||||||
Assets and liabilities measured at fair value on a recurring basis at December 31, 2012 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Carrying | |||||||||||||||||
Value | |||||||||||||||||
Marketable securities | $ | - | $ | - | $ | - | $ | - | |||||||||
Stock warrant derivative liabilities | - | - | (61,545 | ) | (61,545 | ) | |||||||||||
$ | - | $ | - | $ | (61,545 | ) | $ | (61,545 | ) |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
SUBSEQUENT EVENTS | ' |
The Company has made the aggregate payments on the two loans entered into in February, 2012 in the amount of $75,000. for the months of August, 2013 resulting in 644,330 shares issued at a price of $.0194 per share; September, 2013 resulting in 256,674 shares issued at a price of $.0487 per share and October, 2013 resulting in 352,113 shares issued at a price of $.0355. In addition, the interest that had accrued from June 1, 2013 through and including November 4, 2013 was paid in full by issuing 91,270 shares of stock at a price per share of $.0355. Pursuant to the issuance of these shares these Notes have been paid in full and no longer appear on the books of EWSI. | |
In October 2013, the Company executed a convertible note payable with a face value of $32,500. This note is unsecured, bears interest at 8% per annum and is due October 2014. The note is convertible, at the option of the holder, into shares of the Company’s common stock at a share price of the average of the three lowest volume weighted-average prices per share during the 10 calendar day period immediately prior to the date of conversion times 55 percent. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company is currently reviewing the accounting for this transaction. | |
Subsequent to September 30, 2013, the Company issued 397,164 shares of common stock to various contractors for services. The prices and values of these shares of common stock are currently being reviewed by the Company. |
RESTATEMENT
RESTATEMENT | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Notes to Financial Statements | ' | ||||||||||||
RESTATEMENT | ' | ||||||||||||
The condensed consolidated financial statements have been restated for the nine month period ending September 30, 2013. The Company identified misstatements in the balances from the consolidation of leased operations. All corrections have been made in these restated financial statements. | |||||||||||||
As Filed | Adjustment | As Restated | |||||||||||
Balance Sheet | |||||||||||||
Trade accounts receivable | 1,484,368 | 1,160,845 | 2,645,213 | ||||||||||
Inventory | 339,956 | 197,028 | 536,984 | ||||||||||
Accounts payable and accrued expenses | 1,786,695 | 367,166 | 2,153,861 | ||||||||||
Checks in excess of bank | 197,811 | 1,060,357 | 1,258,168 | ||||||||||
Accumulated other comprehensive loss (income) | 26,587 | (25,882 | ) | 705 | |||||||||
Accumulated deficit | (5,451,388 | ) | (43,768 | ) | (5,495,156 | ) | |||||||
Statement of Operations | |||||||||||||
Nine Months | |||||||||||||
Professional fees | 2,548,156 | (5,551 | ) | 2,542,605 | |||||||||
General and administrative | 698,599 | 49,319 | 747,918 | ||||||||||
Total operating expenses | 3,803,095 | 43,768 | 3,846,863 | ||||||||||
Loss from operations | (2,042,964 | ) | (43,768 | ) | (2,086,732 | ) | |||||||
Net loss | (2,414,885 | ) | (43,768 | ) | (2,458,653 | ) | |||||||
Foreign currency translation adjustment | 26,587 | (25,882 | ) | 705 | |||||||||
Total other comprehensive income | (2,388,298 | ) | (69,650 | ) | (2,457,948 | ) | |||||||
Three Months | |||||||||||||
Professional fees | 1,963,730 | (5,551 | ) | 1,958,179 | |||||||||
General and administrative | 616,514 | 49,319 | 665,833 | ||||||||||
Total operating expenses | 2,897,953 | 43,768 | 2,941,721 | ||||||||||
Loss from operations | (1,567,369 | ) | (43,768 | ) | (1,611,137 | ) | |||||||
Net loss | (1,780,559 | ) | (43,768 | ) | (1,824,327 | ) | |||||||
Foreign currency translation adjustment | 26,073 | (25,882 | ) | 191 | |||||||||
Total other comprehensive income | (1,754,486 | ) | (69,650 | ) | (1,824,136 | ) | |||||||
Statement of Cash Flows | |||||||||||||
Net loss | (2,414,885 | ) | (43,768 | ) | (2,458,653 | ) | |||||||
(Increase)/decrease in account receivables | (1,410,150 | ) | (1,149,048 | ) | (2,559,198 | ) | |||||||
(Increase)/decrease in inventory | (336,295 | ) | (195,025 | ) | (531,320 | ) | |||||||
Increase/(decrease) in accounts payable and accrued expenses | 1,617,179 | 338,261 | 1,955,440 | ||||||||||
Increase/(decrease) in checks in excess of bank | 197,661 | 1,049,581 | 1,247,242 | ||||||||||
Net cash used in continuing operating activities | (197,402 | ) | 1 | (197,401 | ) | ||||||||
Net cash used in operating activities | (197,402 | ) | 1 | (197,401 | ) | ||||||||
Effects of exchange rate on cash | 225 | (1 | ) | 224 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | |
Sep. 30, 2013 | ||
Summary Of Significant Accounting Policies Policies | ' | |
Reclassifications | ' | |
Certain balances in previously issued financial statements have been reclassified to be consistent with current period presentation. | ||
Recent Accounting Pronouncements | ' | |
The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements. | ||
Use of Estimates | ' | |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. | ||
Principles of Consolidation | ' | |
The accompanying consolidated financial statements for the period ended September 30, 2013 include the accounts of the Company and its wholly-owned subsidiary, E-Waste Systems of Ohio, Inc. All significant intercompany balances and transactions have been eliminated in consolidation. | ||
The consolidated financial statements also include the accounts of Shanghai YaZhuo Jiudian Guanli ("YaZhou"), a consolidated variable interest entity. On March 26, 2013, EWSI entered into a set of agreements with YaZhou, a company incorporated in the People’s Republic of China (“PRC”), wherein EWSI will provide management services in relation to the current and proposed operations of YaZhou’s business in the PRC. The management services include general business operation, human resources, business development, and such other advice and assistance as may be agreed upon by the parties. In consideration, YaZhou will pay a management services fee, payable each quarter, equivalent to all of YaZhou’s net income for such quarter. All intercompany balances and transactions have been eliminated. | ||
Accounts Receivable | ' | |
Trade accounts receivables are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivables are included in net cash provided by operating activities in the consolidated cash flow statements. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management considers a number of factors, including historical losses, current receivables aging reports, the counter party’s current ability to pay its obligation to the Company, and existing industry and People’s Republic of China (“PRC”) economic data. The Company reviews its allowances every month. Past due invoices over 90 days that exceed a specific amount are reviewed individually for collectability. During the three and nine month periods ended September 30, 2013 and 2012, $65,000 and $0 of receivables were charged off against the allowance, respectively. During the three and nine month periods ended September 30, 2013 and 2012, $36,823 and $0 was added to the allowance as an estimate of bad debts on current accounts receivable, respectively. The Company does not have any off-balance sheet exposure related to its customers. | ||
Inventory | ' | |
Inventory is valued at the lower of cost (on a first-in, first-out (FIFO) basis) or market. The Company purchases its inventory direct from the manufacturer and includes these costs in its Cost of Sales as well as its packaging supplies, shipping, freight and duties costs. The Company evaluates inventory for items that have become obsolete. An allowance for obsolescence is established for items that are deemed not able to be sold. Currently, there are no obsolete inventory items. | ||
Revenue Recognition | ' | |
The Company applies the provisions of ASC 605, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements. ASC 605 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. In general, the Company recognizes revenue related to goods and services provided when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured. | ||
Revenue from Operating Leases | ' | |
The Company recognizes revenue for its operating leases in the following three categories: | ||
● | Concrete forms are produced to customer specifications. Deposits paid prior to the completion of the product are deferred until the product is delivered. Once the product is delivered, the Company recognizes product sales. | |
● | Services for product acquisition are recognized when commissions are received as determined by contract. | |
● | We recognize base management fees as revenue when we earn them under the contracts. | |
Revenue from Sales of Brand Licenses | ' | |
During the nine month period, the Company sold brand licenses to customers which allow the promotion of business under the E-Waste Systems brand names in selected jurisdictions. The license agreements call for an initial payment plus a percentage of revenues generated under the brand during term of the license agreement. The initial fees are booked to revenues of the Company in the period first sold. License fees earned from subsequent revenues of the licensee company are only booked later after periodic reviews. | ||
Marketable Securities | ' | |
The Company reports its investments in marketable securities under the provisions of ASC 320, Investments in Debt and Equity Securities. All the Company’s marketable securities are classified as “available for sale” securities, as the market value of the securities are readily determinable and the Company’s intention upon obtaining the securities was neither to sell them in the short term nor to hold them to maturity. Pursuant to ASC 320, securities which are classified as “available for sale” are recorded on the Company’s balance sheet at fair market value, with the resulting unrealized holding gains and losses excluded from earnings and reported as other comprehensive income until realized. | ||
The Company evaluates securities for other-than-temporary impairment at least on a yearly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to the length of time and amount of the loss relative to cost, the nature and financial condition of the issuer and the ability and intent of the Company to hold the investment for a time sufficient to allow any anticipated recovery in fair value. Pursuant to ASC 320-5, other than temporary impairment losses are recorded as impairment expense in the statement of operations during the period in which the impairment is determined. | ||
Intangible Assets | ' | |
Intangible assets are recorded at the costs associated with the asset. These assets are then amortized using the straight-line method over the remaining useful economic life of each asset type. At each balance sheet date, the unamortized capitalized cost of the each intangible asset will be compared to the net realizable value of that asset. If the unamortized capitalized cost exceeds the net realizable value, then the difference will be written down to the net realizable value. | ||
Cost Method Investments | ' | |
Cost method investments are recorded at the costs associated with the investments in accordance with ASC 325-20. The costs are valued at the most readily available source of value with the various aspects of the transaction. The investments are presented at the cost. No returns are recorded on the investments unless dividends are received. | ||
Capitalized Software Development Costs | ' | |
The Company applies the provisions of ASC 985-20, which provides guidance on the recognition, presentation and disclosure of software development costs in financial statements. The costs associated with developing the software is capitalized and will be amortized using the straight-line method over the economic life of the software. At each balance sheet date, the unamortized capitalized cost of the software product will be compared to the net realizable value of that product. If the unamortized capitalized cost exceeds the net realizable value, then the difference will be written down to the net realizable value. | ||
Long-Lived Assets | ' | |
Long-lived assets include equipment and intangible assets other than those with indefinite lives. We assess the carrying value of our long-lived asset groups when indicators of impairment exist and recognize an impairment loss when the carrying amount of a long-lived asset is not recoverable from the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Indicators of impairment include significant underperformance relative to historical or projected future operating results, significant changes in our use of the assets or in our business strategy, loss of or changes in customer relationships and significant negative industry or economic trends. When indications of impairment arise for a particular asset or group of assets, we assess the future recoverability of the carrying value of the asset (or asset group) based on an undiscounted cash flow analysis. If carrying value exceeds projected, net, undiscounted cash flows, an additional analysis is performed to determine the fair value of the asset (or asset group), typically a discounted cash flow analysis, and an impairment charge is recorded for the excess of carrying value over fair value. | ||
Property and equipment are recorded at historical cost less accumulated depreciation, unless impaired. Depreciation is charged to operations over the estimated useful lives of the assets using the straight-line. Upon retirement or sale, the historical cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized. Expenditures for repairs and maintenance are charged to expense as incurred. | ||
Basic and Diluted Loss Per Common Share | ' | |
Basic loss per common share is computed by dividing the loss available to common stockholders by the weighted average number of common shares outstanding during the period of computation. Diluted loss per share gives effect to all potential dilutive common shares outstanding during the period of compensation. The computation of diluted loss per share does not assume conversion, exercise or contingent exercise of securities that would have an antidilutive effect on earnings. As of September 30, 2013, the Company had 79,723,167 potentially dilutive securities that would affect the loss per share if they were to be dilutive. | ||
Foreign Currency | ' | |
Assets and liabilities of the Company's foreign operations are translated into U.S. dollars at period-end exchange rates. Net exchange gains or losses resulting from such translation are excluded from net loss but are included in comprehensive income and accumulated in a separate component of stockholders' equity. Income and expenses are translated at weighted average exchange rates for the period. Foreign currency transactions denominated in a currency other than the US Dollar, which is the Company’s functional currency, are included in determining net income for the period. | ||
Accumulated Other Comprehensive Income (Loss) | ' | |
Comprehensive loss includes net loss as currently reported under U.S. GAAP and other comprehensive loss. Other comprehensive loss considers the effects of additional economic events, such as foreign currency translation adjustments, that are not required to be recorded in determining net loss, but rather are reported as a separate component of stockholders’ equity (deficit). | ||
Stock-Based Compensation | ' | |
The Company measures and recognizes stock-based compensation expense using a fair value-based method for all share-based awards made to employees and nonemployee directors, including grants of stock options and other stock-based awards. The application of this standard requires significant judgment and the use of estimates, particularly with regard to Black-Scholes assumptions such as stock price volatility and expected option lives to value equity-based compensation. We recognize stock compensation expense using a straight line method over the vesting period of the individual grants. | ||
Under our stock compensation plan (the “Stock Plan”) which is registered under Form S8, or through newly issued restricted common stock, we pay qualified employees, contractors and advisors common shares in lieu of compensation for services provided including business development, management, technology development, consulting, legal services and accounting services. | ||
Income Taxes | ' | |
The Company utilizes the balance sheet method of accounting for income taxes. Accordingly, The Company is required to estimate its income taxes in each of the jurisdictions in which it operates as part of the process of preparing its consolidated financial statements. This process involves estimating the Company’s actual current tax exposure, including assessing the risks associated with tax audits, together with assessing temporary differences resulting from the different treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities. Due to the evolving nature and complexity of tax rules, it is possible that the Company’s estimates of its tax liability could change in the future, which may result in additional tax liabilities and adversely affect the results of operations, financial condition and cash flows. |
MARKETABLE_SECURITIES_Tables
MARKETABLE SECURITIES (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Marketable Securities Tables | ' | ||||||||||||||||
Schedule of Available for Sale Maketable Securities | ' | ||||||||||||||||
Balance, December 31, 2012 | $ | - | |||||||||||||||
Marketable securities received in exchange for preferred stock | 1,595,000 | ||||||||||||||||
Unrealized gains or losses | |||||||||||||||||
Other-than-temporary impairment | - | ||||||||||||||||
Balance, September 30, 2013 | $ | 1,595,000 | |||||||||||||||
Available for Sale Securities Reconciliation | ' | ||||||||||||||||
Amortized | Gross | Gross | Net | ||||||||||||||
Cost | Unrealized | Unrealized | Market | ||||||||||||||
Basis | Gains | Loss | Value | ||||||||||||||
Available-for-sale Securities | $ | 1,595,000 | $ | - | $ | - | $ | 1,595,000 |
INTANGIBLE_ASSETS_Tables
INTANGIBLE ASSETS (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Intangible Assets Tables | ' | |||||||||||||
Schedule of Intangible Assets | ' | |||||||||||||
Gross | Accumulated | Net | Weighted | |||||||||||
Carrying | Amortization | Carrying | Average | |||||||||||
Amount | Amount | Remaining | ||||||||||||
Life | ||||||||||||||
30-Sep-13 | ||||||||||||||
Software Development Costs | $ | 97,014 | $ | (8,084 | ) | $ | 88,930 | 3 Years | ||||||
Certification Costs | 200,000 | (10,000 | ) | 190,000 | 3 Years | |||||||||
Customer Lists | 70,184 | (3,509 | ) | 66,675 | 3 Years | |||||||||
Total | $ | 367,198 | $ | (21,593 | ) | $ | 345,605 |
INVENTORIES_Tables
INVENTORIES (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Inventories Tables | ' | ||||||||
Schedule of Inventory | ' | ||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Finished goods | $ | 536,984 | $ | - | |||||
Less: allowances for slow moving items | - | - | |||||||
Total | $ | 536,984 | $ | - |
NOTES_PAYABLE_Tables
NOTES PAYABLE (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Notes Payable Tables | ' | ||||||||
Schedule of components of notes payable | ' | ||||||||
The components of notes payable are summarized in the table below: | |||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Convertible note payable to a related party, bearing interest at 12%, unsecured, due on October 28, 2012 (note is in default) | $ | 12,000 | $ | 12,000 | |||||
Notes payable to an unrelated party, bearing interest at 14%, unsecured, due on demand | 37,500 | 75,000 | |||||||
Note payable to an unrelated party, bearing interest at 14%, unsecured, due on March 24, 2013 (note is in default) | 100,000 | 100,000 | |||||||
Notes payable to unrelated parties, bearing no interest, unsecured, and due on demand | 222,928 | - | |||||||
Convertible note payable to an unrelated party, bearing interest at 10%, unsecured, due on June 12, 2014 | 27,778 | - | |||||||
Convertible note payable to an unrelated party, bearing interest at 10%, unsecured, due on August 14, 2014 | 27,778 | - | |||||||
Convertible note payable to an unrelated party, bearing interest at 10%, unsecured, due on September 26, 2014 | 22,222 | - | |||||||
Convertible note payable to an unrelated party, bearing interest at 10%, unsecured, due on August 27, 2013 and due on October 10, 2013. | - | 44,445 | |||||||
Convertible note payable to an unrelated party, bearing interest at 8%, unsecured, due on June 2, 2014 | 32,500 | - | |||||||
Convertible note payable to an unrelated party, bearing interest at 8%, unsecured, due on April 17, 2014 | 32,500 | - | |||||||
Convertible note payable to an unrelated party, bearing interest at 8%, unsecured, due on May 29, 2014 | 27,500 | - | |||||||
Discounts on short-term convertible notes payable | (135,081 | ) | (31,111 | ) | |||||
Total short-term debt | $ | 407,625 | $ | 200,334 | |||||
Derivative liability on short-term convertible notes | $ | 245,008 | $ | 61,545 | |||||
Convertible note payable to an unrelated party, bearing interest at 6%, unsecured, due on December 31, 2015 | $ | - | $ | 11,000 | |||||
Convertible note payable to an unrelated party, bearing interest at 6%, unsecured, due on December 31, 2015 | 29,000 | 29,000 | |||||||
Convertible note payable to an unrelated party, bearing interest at 6%, unsecured, due on December 31, 2015 | 98,500 | 162,500 | |||||||
Convertible note payable to an unrelated party, bearing interest at 6%, unsecured, due on January 18, 2016 | 41,557 | - | |||||||
Convertible note payable to an unrelated party, bearing interest at 6%, unsecured, due on February 8, 2016 | 162,500 | - | |||||||
Convertible note payable to an unrelated party, bearing interest at 6%, unsecured, due on March 5, 2016 | 17,417 | - | |||||||
Unamortized debt discounts on issuances of convertible debt | (182,049 | ) | (25,313 | ) | |||||
Total long-term debt | $ | 166,925 | $ | 177,187 |
VARIABLE_INTEREST_ENTITY_Table
VARIABLE INTEREST ENTITY (Tables) | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Variable Interest Entity Tables | ' | ||||
Schedule of Variable Interest Assets and Liabilities | ' | ||||
30-Sep-13 | |||||
Cash | $ | - | |||
Accounts receivable | 2,638,390 | ||||
Inventories | 228,493 | ||||
Total assets | $ | 2,866,683 | |||
Accounts payable | $ | 1,660,464 | |||
Accrued liabilities | (16 | ) | |||
Checks in excess of bank | 1,075,159 | ||||
Total liabilities | $ | 2,735,607 | |||
Schedule of Variable Interest Income and Expenses | ' | ||||
From the Date of | |||||
Consolidation on | |||||
26-Mar-13 | |||||
through | |||||
September 30, | |||||
2013 | |||||
Revenues | $ | 2,572,124 | |||
Cost of goods sold | 1,862,954 | ||||
Gross margin | 709,170 | ||||
General and administrative expenses | 335,571 | ||||
Consulting services | 181,059 | ||||
Income tax expense | 35 | ||||
Interest expense | 77,474 | ||||
Net loss | $ | 115,030 |
ACQUISITION_OF_SUBSIDIARY_Tabl
ACQUISITION OF SUBSIDIARY (Tables) | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Acquisition Of Subsidiary Tables | ' | ||||
Schedule of acquired assets and liabilities | ' | ||||
Assets | |||||
Cash | $ | 42,549 | |||
Accounts receivable, net | 31,028 | ||||
Inventories | 3,342 | ||||
Other current assets | 872 | ||||
Security deposits | 1,942 | ||||
Total Assets | $ | 79,733 | |||
Certifications | $ | 200,000 | |||
Customer list | 71,184 | ||||
Total | $ | 350,917 | |||
Liabilities | |||||
Accounts payable | $ | 100,733 | |||
Total Liabilities | $ | 100,733 | |||
Net Assets Acquired | $ | 250,184 |
FAIR_VALUE_OF_FINANCIAL_INSTRU1
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Fair Value Of Financial Instruments Tables | ' | ||||||||||||||||
Schedule of Assets and Liabilities Measured at Fair Value | ' | ||||||||||||||||
Assets and liabilities measured at fair value on a recurring basis at September 30, 2013 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Carrying | |||||||||||||||||
Value | |||||||||||||||||
Marketable securities | $ | 1,595,000 | $ | - | $ | - | $ | 1,595,000 | |||||||||
Stock warrant derivative liabilities | - | - | (245,008 | ) | (245,008 | ) | |||||||||||
$ | 1,595,000 | $ | - | $ | (245,008 | ) | $ | 1,349,992 | |||||||||
Assets and liabilities measured at fair value on a recurring basis at December 31, 2012 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Carrying | |||||||||||||||||
Value | |||||||||||||||||
Marketable securities | $ | - | $ | - | $ | - | $ | - | |||||||||
Stock warrant derivative liabilities | - | - | (61,545 | ) | (61,545 | ) | |||||||||||
$ | - | $ | - | $ | (61,545 | ) | $ | (61,545 | ) |
RESTATEMENT_Tables
RESTATEMENT (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Restatement Tables | ' | ||||||||||||
Restatement of condensed consolidated financial statements | ' | ||||||||||||
As Filed | Adjustment | As Restated | |||||||||||
Balance Sheet | |||||||||||||
Trade accounts receivable | 1,484,368 | 1,160,845 | 2,645,213 | ||||||||||
Inventory | 339,956 | 197,028 | 536,984 | ||||||||||
Accounts payable and accrued expenses | 1,786,695 | 367,166 | 2,153,861 | ||||||||||
Checks in excess of bank | 197,811 | 1,060,357 | 1,258,168 | ||||||||||
Accumulated other comprehensive loss (income) | 26,587 | (25,882 | ) | 705 | |||||||||
Accumulated deficit | (5,451,388 | ) | (43,768 | ) | (5,495,156 | ) | |||||||
Statement of Operations | |||||||||||||
Nine Months | |||||||||||||
Professional fees | 2,548,156 | (5,551 | ) | 2,542,605 | |||||||||
General and administrative | 698,599 | 49,319 | 747,918 | ||||||||||
Total operating expenses | 3,803,095 | 43,768 | 3,846,863 | ||||||||||
Loss from operations | (2,042,964 | ) | (43,768 | ) | (2,086,732 | ) | |||||||
Net loss | (2,414,885 | ) | (43,768 | ) | (2,458,653 | ) | |||||||
Foreign currency translation adjustment | 26,587 | (25,882 | ) | 705 | |||||||||
Total other comprehensive income | (2,388,298 | ) | (69,650 | ) | (2,457,948 | ) | |||||||
Three Months | |||||||||||||
Professional fees | 1,963,730 | (5,551 | ) | 1,958,179 | |||||||||
General and administrative | 616,514 | 49,319 | 665,833 | ||||||||||
Total operating expenses | 2,897,953 | 43,768 | 2,941,721 | ||||||||||
Loss from operations | (1,567,369 | ) | (43,768 | ) | (1,611,137 | ) | |||||||
Net loss | (1,780,559 | ) | (43,768 | ) | (1,824,327 | ) | |||||||
Foreign currency translation adjustment | 26,073 | (25,882 | ) | 191 | |||||||||
Total other comprehensive income | (1,754,486 | ) | (69,650 | ) | (1,824,136 | ) | |||||||
Statement of Cash Flows | |||||||||||||
Net loss | (2,414,885 | ) | (43,768 | ) | (2,458,653 | ) | |||||||
(Increase)/decrease in account receivables | (1,410,150 | ) | (1,149,048 | ) | (2,559,198 | ) | |||||||
(Increase)/decrease in inventory | (336,295 | ) | (195,025 | ) | (531,320 | ) | |||||||
Increase/(decrease) in accounts payable and accrued expenses | 1,617,179 | 338,261 | 1,955,440 | ||||||||||
Increase/(decrease) in checks in excess of bank | 197,661 | 1,049,581 | 1,247,242 | ||||||||||
Net cash used in continuing operating activities | (197,402 | ) | 1 | (197,401 | ) | ||||||||
Net cash used in operating activities | (197,402 | ) | 1 | (197,401 | ) | ||||||||
Effects of exchange rate on cash | 225 | (1 | ) | 224 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Summary Of Significant Accounting Policies Details Narrative | ' | ' | ' | ' |
Charge Offs from Allowance for Doubtful Accounts | $65,000 | $0 | $65,000 | $0 |
Allowance of bad debts on current accounts receivable | $36,823 | $0 | $36,823 | $0 |
Potentially Dilutive Securities | '79,723,167 | ' | ' | ' |
MARKETABLE_SECURITIES_Details
MARKETABLE SECURITIES (Details) (USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Marketable Securities Details | ' |
Balance, December 31, 2012 | ' |
Marketable securities received in exchange for preferred stock | 1,595,000 |
Unrealized gains or losses | ' |
Other-than-temporary impairment | ' |
Balance, September 30, 2013 | $1,595,000 |
MARKETABLE_SECURITIES_Details_
MARKETABLE SECURITIES (Details 1) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2012 | |
Marketable Securities Details 1 | ' | ' |
Amortized Cost Basis | $1,595,000 | ' |
Gross Unrealized Gains | ' | ' |
Gross Unrealized Loss | ' | ' |
Net Market Value | $1,595,000 | ' |
INTANGIBLE_ASSETS_Details
INTANGIBLE ASSETS (Details) (USD $) | Sep. 30, 2013 |
Gross Carrying Amount | $367,198 |
Accumulated Amortization | -21,593 |
Net Carrying Amount | 345,605 |
Software Development Costs [Member] | ' |
Gross Carrying Amount | 97,014 |
Accumulated Amortization | -8,084 |
Net Carrying Amount | 88,930 |
Weighted- Average Remaining Life | '3 years |
Certification Costs [Member] | ' |
Gross Carrying Amount | 200,000 |
Accumulated Amortization | -10,000 |
Net Carrying Amount | 190,000 |
Weighted- Average Remaining Life | '3 years |
Customer Lists [Member] | ' |
Gross Carrying Amount | 70,184 |
Accumulated Amortization | -3,509 |
Net Carrying Amount | $66,675 |
Weighted- Average Remaining Life | '3 years |
INTANGIBLE_ASSETS_Details_Narr
INTANGIBLE ASSETS (Details Narrative) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Intangible Assets Details Narrative | ' | ' |
Amortization Expense | $21,593 | $0 |
INVENTORIES_Details
INVENTORIES (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Inventories Details | ' | ' |
Finished goods | $536,984 | ' |
Less: allowances for slow moving items | ' | ' |
Total | $536,984 | ' |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Shares Issued During Period | ' | ' | 256,674 | ' |
Officers Compensation | $317,709 | $241,582 | $556,340 | $608,024 |
Preferred Stock Series B [Member] | ' | ' | ' | ' |
Shares Issued During Period | ' | ' | 195,000 | ' |
Price per Share | $1 | ' | $1 | ' |
CEO [Member] | ' | ' | ' | ' |
Shares Issued During Period | ' | ' | 10,000,000 | ' |
Price per Share | $0.01 | ' | $0.01 | ' |
Officers Compensation | ' | ' | 125,000 | ' |
CEO [Member] | Preferred Stock Series B [Member] | ' | ' | ' | ' |
Officers Compensation | ' | ' | 195,000 | ' |
CEO S-8 Registered [Member] | ' | ' | ' | ' |
Shares Issued During Period | ' | ' | 1,800,000 | ' |
Price per Share | $0.00 | ' | $0.00 | ' |
Officers Compensation | ' | ' | 7,839 | ' |
Officers [Member] | ' | ' | ' | ' |
Shares Issued During Period | ' | ' | 2,500,000 | ' |
Price per Share | $0.00 | ' | $0.00 | ' |
Officers Compensation | ' | ' | 8,288 | ' |
Accrued Officer Compensation | 1,187,999 | ' | 1,187,999 | ' |
Officers [Member] | Preferred Stock Series B [Member] | ' | ' | ' | ' |
Officers Compensation | ' | ' | 71,538 | ' |
CFO [Member] | ' | ' | ' | ' |
Shares Issued During Period | ' | ' | 3,685,341 | ' |
Price per Share | $0.01 | ' | $0.01 | ' |
Officers Compensation | ' | ' | $40,154 | ' |
NOTES_PAYABLE_Details
NOTES PAYABLE (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Notes Payable Details | ' | ' |
Convertible note payable to a related party, bearing interest at 12%, unsecured, due on October 28, 2012 (note is in default) | $12,000 | $12,000 |
Notes payable to an unrelated party, bearing interest at 14%, unsecured, due on demand | 37,500 | 75,000 |
Note payable to an unrelated party, bearing interest at 14%, unsecured, due on March 24, 2013 (note is in default) | 100,000 | 100,000 |
Notes payable to unrelated parties, bearing no interest, unsecured, and due on demand | 222,928 | ' |
Convertible note payable to an unrelated party, bearing interest at 10%, unsecured, due on June 12, 2014 | 27,778 | ' |
Convertible note payable to an unrelated party, bearing interest at 10%, unsecured, due on August 14, 2014 | 27,778 | ' |
Convertible note payable to an unrelated party, bearing interest at 10%, unsecured, due on September 26, 2014 | 22,222 | ' |
Convertible note payable to an unrelated party, bearing interest at 10%, unsecured, due on August 27, 2013 and due on October 10, 2013. | ' | 44,445 |
Convertible note payable to an unrelated party, bearing interest at 8%, unsecured, due on June 2, 2014 | 32,500 | ' |
Convertible note payable to an unrelated party, bearing interest at 8%, unsecured, due on April 17, 2014 | 32,500 | ' |
Convertible note payable to an unrelated party, bearing interest at 8%, unsecured, due on May 29, 2014 | 27,500 | ' |
Discounts on short-term convertible notes payable | -135,081 | -31,111 |
Total short-term debt | 407,625 | 200,334 |
Derivative liability on short-term convertible notes | 245,008 | 61,545 |
Convertible note payable to an unrelated party, bearing interest at 6%, unsecured, due on December 31, 2015 | ' | 11,000 |
Convertible note payable to an unrelated party, bearing interest at 6%, unsecured, due on December 31, 2015 | 29,000 | 29,000 |
Convertible note payable to an unrelated party, bearing interest at 6%, unsecured, due on December 31, 2015 | 98,500 | 162,500 |
Convertible note payable to an unrelated party, bearing interest at 6%, unsecured, due on January 18, 2016 | 41,557 | ' |
Convertible note payable to an unrelated party, bearing interest at 6%, unsecured, due on February 8, 2016 | 162,500 | ' |
Convertible note payable to an unrelated party, bearing interest at 6%, unsecured, due on March 5, 2016 | 17,417 | ' |
Unamortized debt discounts on issuances of convertible debt | -182,049 | -25,313 |
Total long-term debt | $166,925 | $177,187 |
NOTES_PAYABLE_Details_Narrativ
NOTES PAYABLE (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | 0 Months Ended | 0 Months Ended | 1 Months Ended | 3 Months Ended | 3 Months Ended | 12 Months Ended | 4 Months Ended | 9 Months Ended | 4 Months Ended | ||||||||||||||||||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2012 | Sep. 30, 2013 | Jun. 03, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Feb. 08, 2013 | Sep. 30, 2013 | Jan. 18, 2013 | Sep. 30, 2013 | Mar. 05, 2013 | Jul. 15, 2013 | Sep. 30, 2013 | Aug. 27, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | |
Consultant [Member] | Consultant [Member] | Convertible Debt [Member] | Convertible Debt [Member] | Convertible Debt [Member] | Convertible Debt [Member] | Convertible Debt [Member] | Convertible Debt [Member] | Convertible Debt [Member] | Convertible Debt [Member] | Convertible Debt [Member] | Convertible Debt [Member] | Convertible Debt [Member] | Convertible Debt [Member] | Unrelated Third Party [Member] | Unrelated Third Party [Member] | Unrelated Third Party [Member] | Working Capital Loan [Member] | Related Party [Member] | Related Party [Member] | Promissory Note [Member] | Promissory Note [Member] | Promissory Note [Member] | Promissory Note [Member] | Promissory Note [Member] | Promissory Note [Member] | Surf Investments [Member] | |||||||
Jun3 [Member] | Jun3 [Member] | Feb8 [Member] | Feb8 [Member] | Jan18 [Member] | Jan18 [Member] | Mar5 [Member] | Mar5 [Member] | July15 [Member] | July15 [Member] | August27 [Member] | August27 [Member] | Feb3 [Member] | Feb21 [Member] | Payment2 [Member] | Payment1 [Member] | Derivative Liability [Member] | Derivative Liability [Member] | ||||||||||||||||
Proceeds from Notes Payable | ' | ' | $187,500 | $200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument Interest Rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8.00% | ' | 6.00% | ' | ' | ' | 6.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6.00% | ' | ' | ' | ' | ' | ' | ' |
Interest Expense | 599,712 | 19,231 | 816,060 | 27,298 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,853 | ' | ' | 8,132 | 1,077 | 252 | ' | ' | ' | ' | ' | ' | ' |
Notes Payable | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,738 | 403 | ' | 2,774 | 1,697 | ' | ' | ' | ' | ' | ' | ' |
Interest Payable | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,680 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest Paid | ' | ' | ' | 3,710 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Original Issue Discount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,445 | ' | ' | ' | ' | ' | ' |
Payments of Note Payable | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 95,000 | 15,000 | 25,000 | ' | ' | ' |
Price Per Share | ' | ' | ' | ' | ' | ' | $0.01 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum Price Per Share | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.01 | ' | ' | ' | ' | ' |
Percent of Trade Price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $70 | ' | ' | ' | ' | ' |
Prior Trading Days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '25 | ' | ' | ' | ' | ' |
Max Ownership Outstanding Stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $4.99 | ' | ' | ' | ' | ' |
Derivative Liabilities | 245,008 | ' | 245,008 | ' | 61,545 | 752,749 | ' | ' | ' | 60,352 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 58,646 | 108,236 | ' | ' | 65,586 | 31,111 | ' |
Debt Discounts | ' | ' | ' | ' | ' | ' | 25,313 | 9,832 | ' | 21,962 | 127,774 | 34,726 | 31,879 | 9,679 | 12,565 | 3,010 | ' | 23,433 | ' | 24,100 | ' | ' | ' | ' | ' | ' | 44,445 | 105,556 | ' | ' | 30,854 | 37,814 | ' |
Amortization of Debt Discounts | ' | ' | 128,578 | 16,223 | ' | ' | 0 | 8,622 | 10,538 | ' | ' | ' | ' | ' | ' | ' | 9,067 | ' | 3,400 | ' | ' | ' | ' | ' | ' | ' | 4,445 | 10,556 | ' | ' | ' | ' | ' |
Accounts Payable Forgiveness | ' | ' | ' | ' | ' | ' | 37,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Conversion of Debt | ' | ' | ' | ' | ' | ' | 162,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Issued for Service | ' | ' | ' | ' | ' | ' | 11,000 | ' | ' | ' | ' | 162,500 | ' | 41,557 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Beneficial Conversion Feature | ' | ' | ' | ' | ' | ' | 25,313 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Value of Services Provided | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 115,400 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Assumed on Acquisition | $222,928 | ' | $222,928 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $222,928 |
DERIVATIVE_LIABILITY_Details_N
DERIVATIVE LIABILITY (Details Narrative) (USD $) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | |
Derivative Liability Details Narrative | ' | ' | ' | ' |
Unpaid Face Value | $170,278 | ' | ' | ' |
Dividend Yield | 0.00% | ' | 0.00% | 0.00% |
Risk Free Rate Minumum | 0.10% | ' | 0.16% | 0.11% |
Risk Free Rate Maximum | 0.63% | ' | ' | 0.18% |
Volatility Minimum | 22.00% | ' | 234.00% | 5.00% |
Volatility Maximum | 217.00% | ' | 251.00% | 230.00% |
Derivative Liability | 245,008 | ' | 61,545 | 752,749 |
Years to Maturity Minimum | '7 months 28 days | '9 months | '7 months 24 days | ' |
Years to Maturity Maximum | '11 months 12 days | '1 year | '9 months 11 days | ' |
Pro rata portion of derivative liability | $71,665 | ' | ' | ' |
PREFERRED_STOCK_Details_Narrat
PREFERRED STOCK (Details Narrative) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Preferred Stock Shares Authorized | 500,000 | 500,000 |
Preferred Stock Par Value | $0.00 | $0.00 |
Preferred Stock Shares Issued | 195,000 | 0 |
Preferred stock, shares outstanding | 195,000 | 0 |
Preferred Stock Redemption Price | ' | $100 |
Preferred Stock Conversion Price per Share | ' | 110 |
Face Value Preferred Stock | ' | $100 |
Increase in subscriptions receivable | $715,000 | ' |
Series B [Member] | ' | ' |
Preferred Stock Shares Authorized | 500,000 | ' |
Preferred Stock Par Value | $0.00 | ' |
Preferred Stock Shares Issued | 195,000 | 0 |
Preferred stock, shares outstanding | 195,000 | 0 |
Series A [Member] | ' | ' |
Preferred Stock Shares Authorized | 200,000 | ' |
Preferred Stock Par Value | $0.00 | ' |
Preferred Stock Shares Issued | 1,903 | 0 |
Preferred stock, shares outstanding | 1,903 | 0 |
COMMON_STOCK_Details_Narrative
COMMON STOCK (Details Narrative) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2012 | |
Common Stock Authorized | 490,000,000 | 490,000,000 |
Common stock, shares issued | 242,781,629 | 106,504,926 |
Common stock, shares outstanding | 242,781,629 | 106,504,926 |
Increase in Additional Paid in Capital for Debt Discounts | $222,805 | ' |
Increase in Additional Paid in Capital Variable Interest Entity | 15,340 | ' |
Additional paid-in capital for expenses paid | 5,400 | ' |
Services [Member] | ' | ' |
Shares Issued During Period | 75,956,990 | ' |
Stock Issued Price Minimum Range | $0.01 | ' |
Stock Issued Price Max Range | $0.09 | ' |
Value of Share | 1,543,492 | ' |
Software Development Costs [Member] | ' | ' |
Shares Issued During Period | 7,623,693 | ' |
Stock Issued Price Minimum Range | $0.01 | ' |
Stock Issued Price Max Range | $0.02 | ' |
Value of Share | 97,014 | ' |
Settlement of Debt [Member] | ' | ' |
Shares Issued During Period | 49,196,020 | ' |
Stock Issued Price Minimum Range | $0.00 | ' |
Stock Issued Price Max Range | $0.02 | ' |
Value of Share | $424,059 | ' |
VARIABLE_INTEREST_ENTITY_Detai
VARIABLE INTEREST ENTITY (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Dec. 31, 2011 |
Cash | ' | $139 | ' | $6,493 |
Accounts receivable | ' | ' | ' | ' |
Inventories | 536,984 | ' | ' | ' |
Total Assets | ' | 139 | ' | ' |
Accounts payable | ' | 339,684 | ' | ' |
Checks in excess of bank | ' | ' | ' | ' |
Total Liabilities | ' | 2,026,105 | ' | ' |
Xufu [Member] | ' | ' | ' | ' |
Cash | ' | ' | ' | ' |
Accounts receivable | 2,638,390 | ' | ' | ' |
Inventories | 228,493 | ' | ' | ' |
Total Assets | 2,866,683 | ' | ' | ' |
Accounts payable | 1,660,464 | ' | ' | ' |
Accrued liabilities | -16 | ' | ' | ' |
Checks in excess of bank | 1,075,159 | ' | ' | ' |
Total Liabilities | $2,735,607 | ' | ' | ' |
VARIABLE_INTEREST_ENTITY_Detai1
VARIABLE INTEREST ENTITY (Details 1) (USD $) | 3 Months Ended | 9 Months Ended | 6 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | |
Xufu [Member] | |||||
Revenues | ' | ' | ' | ' | $2,572,124 |
Cost of goods sold | ' | ' | ' | ' | 1,862,954 |
Gross Margin | ' | ' | ' | ' | 709,170 |
General and administrative expenses | ' | 1,965 | ' | 39,190 | 335,571 |
Consulting services | ' | ' | ' | ' | 181,059 |
Income tax expense | ' | ' | ' | ' | 35 |
Interest expense | 599,712 | 19,231 | 816,060 | 27,298 | 77,474 |
Net loss | ' | ' | ' | ($822,621) | $115,030 |
ACQUISITION_OF_SUBSIDIARY_Deta
ACQUISITION OF SUBSIDIARY (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Dec. 31, 2011 |
Assets | ' | ' | ' | ' |
Cash | ' | $139 | ' | $6,493 |
Accounts receivable | ' | ' | ' | ' |
Inventories | 536,984 | ' | ' | ' |
Other current assets | ' | ' | ' | ' |
Total Assets | ' | 139 | ' | ' |
Total | 367,198 | ' | ' | ' |
Liabilities | ' | ' | ' | ' |
Accounts payable | ' | 339,684 | ' | ' |
Total Liabilities | ' | 2,026,105 | ' | ' |
Surf Investments [Member] | ' | ' | ' | ' |
Assets | ' | ' | ' | ' |
Cash | 42,549 | ' | ' | ' |
Accounts receivable | 31,028 | ' | ' | ' |
Inventories | 3,342 | ' | ' | ' |
Other current assets | 872 | ' | ' | ' |
Security deposits | 1,942 | ' | ' | ' |
Total Assets | 79,733 | ' | ' | ' |
Certifications | 200,000 | ' | ' | ' |
Customer list | 71,184 | ' | ' | ' |
Total | 350,917 | ' | ' | ' |
Liabilities | ' | ' | ' | ' |
Accounts payable | 100,733 | ' | ' | ' |
Total Liabilities | 100,733 | ' | ' | ' |
Net Assets Acquired | $250,184 | ' | ' | ' |
FAIR_VALUE_OF_FINANCIAL_INSTRU2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Marketable securities | $1,595,000 | ' |
Stock warrant derivative liabilities | -245,008 | -61,545 |
Total | 1,349,992 | -61,545 |
Level 1 [Member] | ' | ' |
Marketable securities | 1,595,000 | ' |
Stock warrant derivative liabilities | ' | ' |
Total | 1,595,000 | ' |
Level 2 [Member] | ' | ' |
Marketable securities | ' | ' |
Stock warrant derivative liabilities | ' | ' |
Total | ' | ' |
Level 3 [Member] | ' | ' |
Marketable securities | ' | ' |
Stock warrant derivative liabilities | -245,008 | -61,545 |
Total | ($245,008) | ($61,545) |
RESTATEMENT_Details
RESTATEMENT (Details) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | |
As Filed [Member] | As Filed [Member] | Adjustment [Member] | Adjustment [Member] | Restated [Member] | Restated [Member] | |||||
Balance Sheet | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Trade accounts receivable | ' | ' | ' | ' | $1,484,368 | $1,484,368 | $1,160,845 | $1,160,845 | $2,645,213 | $2,645,213 |
Inventory | ' | ' | 536,984 | ' | 339,956 | 339,956 | 197,028 | 197,028 | 536,984 | 536,984 |
Accounts payable and accrued expenses | ' | ' | ' | 339,684 | 1,786,695 | 1,786,695 | 367,166 | 367,166 | 2,153,861 | 2,153,861 |
Checks in excess of bank | ' | ' | ' | ' | 197,811 | 197,811 | 1,060,357 | 1,060,357 | 1,258,168 | 1,258,168 |
Accumulated other comprehensive loss (income) | ' | ' | ' | ' | 26,587 | 26,587 | -25,882 | -25,882 | 705 | 705 |
Accumulated deficit | ' | ' | ' | -3,036,503 | -5,451,388 | -5,451,388 | -43,768 | -43,768 | -5,495,156 | -5,495,156 |
Statement of Operations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Professional fees | 12,436 | 91,402 | ' | ' | 1,963,730 | 2,548,156 | -5,551 | -5,551 | 1,958,179 | 2,542,605 |
General and administrative | 1,965 | 39,190 | ' | ' | 616,514 | 698,599 | 49,319 | 49,319 | 665,833 | 747,918 |
Total operating expenses | 255,983 | 738,616 | ' | ' | 2,897,953 | 3,803,095 | 43,768 | 43,768 | 2,941,721 | 3,846,863 |
Loss from operations | -255,983 | -738,616 | ' | ' | -1,567,369 | -2,042,964 | -43,768 | -43,768 | -1,611,137 | -2,086,732 |
Net loss | -349,889 | -958,298 | ' | ' | -1,780,559 | -2,414,885 | -43,768 | -43,768 | -1,824,327 | -2,458,653 |
Foreign currency translation adjustment | ' | ' | ' | ' | 26,073 | 26,587 | -25,882 | -25,882 | 191 | 705 |
Total other comprehensive income | -349,889 | -958,298 | ' | ' | -1,754,486 | -2,388,298 | -69,650 | -69,650 | -1,824,136 | -2,457,948 |
Statement of Cash Flows | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net loss | ' | -822,621 | ' | ' | ' | -2,414,885 | ' | -43,768 | ' | -2,458,653 |
(Increase)/decrease in account receivables | ' | ' | ' | ' | ' | -1,410,150 | ' | -1,149,048 | ' | -2,559,198 |
(Increase)/decrease in inventory | ' | ' | ' | ' | ' | -336,295 | ' | -195,025 | ' | -531,320 |
Increase/(decrease) in accounts payable and accrued expenses | ' | -55,579 | ' | ' | ' | 1,617,179 | ' | 338,261 | ' | 1,955,440 |
Increase/(decrease) in checks in excess of bank | ' | ' | ' | ' | ' | 197,661 | ' | 1,049,581 | ' | 1,247,242 |
Net cash used in continuing operating activities | ' | -149,603 | ' | ' | ' | -197,402 | ' | 1 | ' | -197,401 |
Net cash used in operating activities | ' | -251,993 | ' | ' | ' | -197,402 | ' | 1 | ' | -197,401 |
Effects of exchange rate on cash | ' | ' | ' | ' | ' | $225 | ' | ($1) | ' | $224 |