Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | 9-May-14 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'EWaste Systems, Inc. | ' |
Entity Central Index Key | '0001488309 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
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 | ' | 394,893,241 |
Document Fiscal Period Focus | 'Q1 | ' |
Document Fiscal Year Focus | '2014 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
CURRENT ASSETS: | ' | ' |
Cash and cash equivalents | $216,617 | $145,778 |
Restricted cash held in escrow | 140,000 | 140,000 |
Accounts receivable, net | 252,076 | 63,217 |
Related parties receivable | ' | 1,052 |
Inventory | 5,752 | 5,752 |
Deferred financing costs | 39,993 | ' |
Other current assets | 191 | 3,833 |
Total Current Assets | 654,629 | 359,632 |
Property and equipment, net | 280,559 | 181,720 |
Security deposits | 108,462 | 3,270 |
Intangible assets | 302,417 | 324,011 |
Investments | 285,573 | 285,573 |
TOTAL ASSETS | 1,631,640 | 1,154,206 |
CURRENT LIABILITIES: | ' | ' |
Accounts payable and accrued expenses | 753,991 | 479,884 |
Accrued expenses, related party | 1,432,847 | 1,320,918 |
Due to related parties | 4,948 | ' |
Due to others | 8,985 | ' |
Short-term notes payable | 185,027 | 194,460 |
Short-term related party convertible notes payable, net | 12,000 | 12,000 |
Short-term convertible notes payable, net | 1,834,837 | 1,139,897 |
Derivative liability on short-term convertible notes payable | 1,682,387 | 465,880 |
Total Current Liabilities | 5,915,022 | 3,613,039 |
Deferred rent | 2,023 | ' |
Long term portion of loans payable | 65,269 | 85,908 |
Long term portion of convertible notes payable, net | 251,406 | 251,406 |
TOTAL LIABILITIES | 6,233,720 | 3,950,353 |
STOCKHOLDERS' DEFICIT | ' | ' |
Preferred stock, Series A, $0.001 par value, 10,000,000 shares authorized; 5,891 and 1,903 shares issued and outstanding, respectively | 6 | 2 |
Preferred stock, Series B, $0.001 par value, 10,000,000 shares authorized; 195,000 and 195,000 shares issued and outstanding, respectively | 195 | 195 |
Common stock, $0.001 par value, 8,000,000 shares authorized; 344,727,085 and 262,734,973 shares issued and outstanding, respectively | 344,727 | 262,735 |
Additional paid-in capital | 11,783,604 | 7,154,225 |
Accumulated deficit | -16,730,612 | -10,213,304 |
TOTAL STOCKHOLDERS' DEFICIT | -4,602,080 | -2,796,147 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $1,631,640 | $1,154,206 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Stockholders' Equity (Deficiency) | ' | ' |
Preferred stock Series A, par value | $0.00 | $0.00 |
Preferred stock Series A, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock Series A, shares issued | 5,891 | 1,903 |
Preferred stock Series A, shares outstanding | 5,891 | 1,903 |
Preferred stock Series B, par value | $0.00 | $0.00 |
Preferred stock Series B, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock Series B, shares issued | 195,000 | 195,000 |
Preferred stock Series B, shares outstanding | 195,000 | 195,000 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 8,000,000 | 8,000,000 |
Common stock, shares issued | 344,727,085 | 262,734,973 |
Common stock, shares outstanding | 344,727,085 | 262,734,973 |
UNAUDITED_CONDENSED_CONSOLIDAT
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
NET REVENUES: | ' | ' |
Product sales revenue | $219,853 | ($4,001) |
Service revenue | 289,203 | ' |
TOTAL REVENUES | 509,056 | -229,001 |
Cost of sales | 312,508 | -3,801 |
GROSS PROFIT | 196,548 | -252,200 |
OPERATING EXPENSES | ' | ' |
Officer and director compensation | 91,035 | ' |
Professional fees | 3,397,436 | ' |
Financing costs | 163,697 | ' |
Stock based compensation | 938,509 | ' |
General and administrative expenses | 626,124 | -2,186 |
TOTAL OPERATING EXPENSES | 5,216,801 | -2,186 |
LOSS FROM OPERATIONS | -5,020,253 | -223,014 |
OTHER (EXPENSE) INCOME: | ' | ' |
Interest expense, net | -196,066 | 3,452 |
Change in derivative liability | -1,216,507 | ' |
Currency exchange gain | ' | ' |
TOTAL OTHER (EXPENSE) INCOME | -1,412,573 | 3,452 |
Loss from Operations before Income Taxes | -6,432,826 | -219,562 |
Provision for Income Taxes | ' | ' |
NET LOSS FROM CONTINUING OPERATIONS | -6,432,826 | -219,562 |
Loss from Discontinued Operations, net of Income Taxes | -84,482 | -5,254 |
NET LOSS | -6,517,308 | -224,816 |
NET LOSS PER COMMON SHARE: | ' | ' |
Basic and Diluted Loss per Share from Continuing Operations | ($0.02) | ($0.01) |
Basic and Diluted Loss per Share from Discontinued Operations | ' | ' |
NET LOSS PER SHARE - BASIC AND DILUTED | ($0.02) | ($0.01) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: | ' | ' |
Basic and diluted | 302,733,982 | ' |
As Restated | ' | ' |
NET REVENUES: | ' | ' |
Product sales revenue | ' | ' |
TOTAL REVENUES | ' | ' |
Cost of sales | ' | ' |
GROSS PROFIT | ' | ' |
OPERATING EXPENSES | ' | ' |
Officer and director compensation | ' | 131,622 |
Professional fees | ' | 449,167 |
Financing costs | ' | ' |
Stock based compensation | ' | ' |
General and administrative expenses | ' | 19,075 |
TOTAL OPERATING EXPENSES | ' | 599,864 |
LOSS FROM OPERATIONS | ' | -599,864 |
OTHER (EXPENSE) INCOME: | ' | ' |
Interest expense, net | ' | -114,711 |
Change in derivative liability | ' | 3,525 |
Currency exchange gain | ' | 5,149 |
TOTAL OTHER (EXPENSE) INCOME | ' | -106,037 |
Loss from Operations before Income Taxes | ' | -705,901 |
Provision for Income Taxes | ' | ' |
NET LOSS FROM CONTINUING OPERATIONS | ' | -705,901 |
Loss from Discontinued Operations, net of Income Taxes | ' | -5,254 |
NET LOSS | ' | ($711,155) |
NET LOSS PER COMMON SHARE: | ' | ' |
Basic and Diluted Loss per Share from Continuing Operations | ' | ($0.01) |
Basic and Diluted Loss per Share from Discontinued Operations | ' | ' |
NET LOSS PER SHARE - BASIC AND DILUTED | ' | ($0.01) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: | ' | ' |
Basic and diluted | ' | 123,153,590 |
UNAUDITED_CONDENSED_CONSOLIDAT1
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net loss from continuing operations | ($6,432,826) | ($219,562) |
Adjustment to reconcile net loss to net cash used in operating activities: | ' | ' |
Amortization of deferred financing costs | 4,007 | ' |
Depreciation expense | 12,193 | 0 |
Amortization of intangible assets | 21,594 | ' |
Origination interest charge | 6,000 | ' |
Convertible notes payable executed for services | 18,045 | ' |
Amortization of debt discount | 118,285 | ' |
Change in derivative liability | 1,216,507 | ' |
Common stock issued for services | 630,984 | ' |
Stock based compensation | 938,509 | ' |
Loss on conversion of debt | 3,912 | ' |
Preferred stock issued for services | 2,817,100 | ' |
Currency translation effect | ' | ' |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable, net | -188,859 | -4,009 |
Related parties receivable | 1,052 | ' |
Other current assets | 3,642 | ' |
Accounts payable and accrued expenses | 360,150 | -19,548 |
Accrued expenses, related parties | 119,890 | ' |
Deferred rent | 2,023 | ' |
NET CASH USED IN CONTINUING OPERATING ACTIVITIES | -347,791 | -10,101 |
NET CASH USED IN DISCONTINUED OPERATING ACTIVITIES | -84,482 | -5,254 |
NET CASH USED IN OPERATING ACTIVITIES | -432,273 | -15,355 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Purchase of equipment | -111,032 | ' |
Payments towards security deposits | -105,192 | ' |
NET CASH USED IN CONTINUING INVESTING ACTIVITIES | -216,224 | ' |
NET CASH USED IN INVESTING ACTIVITIES | -216,224 | ' |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Proceeds from convertible notes payable | 609,975 | ' |
Proceeds from notes payable | ' | ' |
Principal payments towards convertible notes payable | -27,500 | ' |
Principal payments towards notes payable | -30,072 | ' |
Advances from related parties | 4,948 | ' |
Advances from others | 8,985 | ' |
Issuance of common stock for cash | 153,000 | ' |
NET CASH PROVIDED BY CONTINUING FINANCING ACTIVITIES | 719,336 | ' |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 719,336 | ' |
Effects of exchange rates on cash | ' | -62 |
Net increase in cash and cash equivalents | 70,839 | -15,417 |
Cash and cash equivalents, beginning of period | 145,778 | ' |
Cash and cash equivalents, end of period | 216,617 | -15,417 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ' | ' |
Cash paid for interest | 14,847 | ' |
Cash paid for taxes | ' | ' |
NON-CASH ACTIVITIES: | ' | ' |
Deferred financing costs associated with convertible notes payable issuances | 44,000 | ' |
Conversions of convertible notes payable and accrued interest into shares of common stock | 81,644 | ' |
Issuance of common stock as payment towards accrued expenses | 27,838 | ' |
Conversion of preferred Series A stock into common stock | 14,877 | ' |
Issuance of preferred Series A stock for payment of accrued expenses, related parties | 7,961 | ' |
Issuance of preferred Series A stock for payment of accounts payable and accrued expenses | 50,428 | ' |
Accrued interest added to principal in connection with assignments of convertible notes payable between third parties | 3,913 | ' |
Debt discounts on convertible notes payable | ' | ' |
Preferred stock issued for marketable securities | ' | ' |
Preferred stock issued for acquisition of subsidiary | ' | ' |
Common stock issued for intangible assets | ' | ' |
As Restated | ' | ' |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net loss from continuing operations | ' | -705,901 |
Adjustment to reconcile net loss to net cash used in operating activities: | ' | ' |
Amortization of deferred financing costs | ' | ' |
Amortization of intangible assets | ' | ' |
Origination interest charge | ' | 76,195 |
Convertible notes payable executed for services | ' | 17,417 |
Amortization of debt discount | ' | 25,918 |
Change in derivative liability | ' | -3,525 |
Common stock issued for services | ' | 293,634 |
Stock based compensation | ' | ' |
Loss on conversion of debt | ' | ' |
Preferred stock issued for services | ' | ' |
Currency translation effect | ' | -5,149 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable, net | ' | ' |
Related parties receivable | ' | ' |
Other current assets | ' | ' |
Accounts payable and accrued expenses | ' | 147,278 |
Accrued expenses, related parties | ' | 123,176 |
Deferred rent | ' | ' |
NET CASH USED IN CONTINUING OPERATING ACTIVITIES | ' | -30,957 |
NET CASH USED IN DISCONTINUED OPERATING ACTIVITIES | ' | -5,254 |
NET CASH USED IN OPERATING ACTIVITIES | ' | -36,211 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Payments towards security deposits | ' | ' |
NET CASH USED IN CONTINUING INVESTING ACTIVITIES | ' | ' |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Proceeds from convertible notes payable | ' | ' |
Proceeds from notes payable | ' | 25,000 |
Principal payments towards convertible notes payable | ' | ' |
Principal payments towards notes payable | ' | ' |
Advances from related parties | ' | ' |
Advances from others | ' | ' |
Issuance of common stock for cash | ' | ' |
NET CASH PROVIDED BY CONTINUING FINANCING ACTIVITIES | ' | 25,000 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | ' | 25,000 |
Effects of exchange rates on cash | ' | 22,242 |
Net increase in cash and cash equivalents | ' | 11,031 |
Cash and cash equivalents, beginning of period | ' | 139 |
Cash and cash equivalents, end of period | ' | 11,170 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ' | ' |
Cash paid for interest | ' | ' |
Cash paid for taxes | ' | ' |
NON-CASH ACTIVITIES: | ' | ' |
Deferred financing costs associated with convertible notes payable issuances | ' | ' |
Conversions of convertible notes payable and accrued interest into shares of common stock | ' | 252,123 |
Issuance of common stock as payment towards accrued expenses | ' | ' |
Conversion of preferred Series A stock into common stock | ' | ' |
Issuance of preferred Series A stock for payment of accrued expenses, related parties | ' | ' |
Issuance of preferred Series A stock for payment of accounts payable and accrued expenses | ' | ' |
Accrued interest added to principal in connection with assignments of convertible notes payable between third parties | ' | ' |
Debt discounts on convertible notes payable | ' | 247,545 |
Preferred stock issued for marketable securities | ' | 730,000 |
Preferred stock issued for acquisition of subsidiary | ' | 27,256 |
Common stock issued for intangible assets | ' | $77,185 |
BACKGROUND_INFORMATION
BACKGROUND INFORMATION | 3 Months Ended |
Mar. 31, 2014 | |
Notes to Financial Statements | ' |
BACKGROUND INFORMATION | ' |
Organization and Business | |
We were incorporated on December 19, 2008 in the State of Nevada. Our wholly owned subsidiary, E-Waste Systems (UK) Ltd. was founded in January 2011 for the purpose of implementing our business strategy and has had limited operations. We acquired all of the issued and outstanding capital stock of EWSO on October 14, 2011. On September 20, 2012, certain of the assets and business of EWSO were physically transferred to Two Fat Greek, LLC. | |
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 $250,184. 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. | |
E-Waste Systems Cincinnati Inc. (EWS-C) | |
E-Waste Systems Cincinnati Inc. (EWS-C) was formed as a wholly owned subsidiary on November 16, 2013 to acquire certain debt from Fifth Third Bank secured by the assets of WWS Associates d/b/a 2TRG. The transaction for the purchase of the debt was concluded in December of 2013. Subsequent to the acquisition of the debt, the obligors surrendered the collateral to the Company and EWS-C began operations with operations in Ohio and New York. |
GOING_CONCERN
GOING CONCERN | 3 Months Ended |
Mar. 31, 2014 | |
Notes to Financial Statements | ' |
GOING CONCERN | ' |
The Company’s condensed 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 incurred net losses of $6,517,308 and $711,155 during the three months ended March 31, 2014 and 2013, respectively. Cash on hand will not be sufficient to cover debt repayments scheduled as of March 31, 2014 and operating expenses and capital expenditure requirements for at least twelve months from the condensed consolidated balance sheet date. As of March 31, 2014 and December 31, 2013, the Company had working capital deficits of $5,260,393 and $3,253,407, respectively. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is 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. |
RESTATEMENT
RESTATEMENT | 3 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Notes to Financial Statements | ' | ||||||||||||
RESTATEMENT | ' | ||||||||||||
On March 26, 2013, EWSI entered into a set of agreements with XuFu (Shanghai) Co, Ltd, (“XuFu”) a company incorporated in the People’s Republic of China (“PRC”) and formerly known as Yazhuo. The interests in XuFu were initially consolidated on the Company’s interim financial statements as a Variable Interest Entity (“VIE”) as of March 31, 2013, June 30, 2013 and September 30, 2013. Upon further analysis, prior to filing its 10-K for the year ended December 31, 2013, the Company concluded that consolidation was not proper. Accordingly, the Company has not consolidated Xufu in the quarterly statements for the three months ended March 31, 2014 and 2013. | |||||||||||||
The following represents the changes to the restated consolidated financial statements as of and for the three months ended March 31, 2014: | |||||||||||||
Consolidated Balance Sheets | |||||||||||||
Restated | Amended | ||||||||||||
31-Mar-13 | 31-Mar-13 | Differences | |||||||||||
ASSETS | |||||||||||||
Current Assets | |||||||||||||
Cash | $ | 9,690 | $ | 25,107 | $ | (15,417 | ) | ||||||
Accounts receivable | - | 4,009 | (4,009 | ) | |||||||||
License fee receivable | - | 75,000 | (75,000 | ) | |||||||||
Marketable securities, available-for-sale | 730,000 | 880,000 | (150,000 | ) | |||||||||
Total Current Assets | 739,690 | 984,116 | (244,426 | ) | |||||||||
Total Assets | $ | 739,690 | $ | 984,116 | $ | (244,426 | ) | ||||||
LIABILITIES AND STOCKHOLDERS' DEFICIENCY | |||||||||||||
Current Liabilities | |||||||||||||
Accounts payable and accrued expenses | $ | 288,328 | $ | 307,876 | $ | (19,548 | ) | ||||||
Accounts payable - related party | 1,240,380 | 1,240,380 | - | ||||||||||
Short-term notes payable | 175,000 | 175,000 | - | ||||||||||
Short-term related party convertible notes payable, net | 12,000 | 12,000 | - | ||||||||||
Short-term convertible notes payable, net | 13,158 | 13,158 | - | ||||||||||
Derivative liability on short-term convertible notes payable | 54,239 | 54,239 | - | ||||||||||
Total Current Liabilities | 1,783,105 | 1,802,653 | (19,548 | ) | |||||||||
Long-Term Liabilities | |||||||||||||
Long-term convertible notes payable, net | 138,187 | 138,187 | - | ||||||||||
Derivative liability on long-term convertible notes | 62,111 | 62,111 | - | ||||||||||
Total Long-Term Liabilities | 200,298 | 200,298 | - | ||||||||||
Total Liabilities | 1,983,403 | 2,002,951 | (19,548 | ) | |||||||||
Stockholders' Deficiency | |||||||||||||
Preferred stock, $0.001 par value; 10,000,000 shares authorized, 800 and 0 shares issued and outstanding, respectively | 1 | 1 | - | ||||||||||
Common stock, $0.001 par value; 490,000,000 shares authorized, 146,823,587 and 106,504,926 shares issued and outstanding, respectively | 146,825 | 146,825 | - | ||||||||||
Additional paid-in capital | 2,357,119 | 2,357,119 | - | ||||||||||
Accumulated other comprehensive income | - | 62 | (62 | ) | |||||||||
Accumulated deficit | (3,747,658 | ) | (3,522,842 | ) | (224,816 | ) | |||||||
Total Stockholders' Deficiency | (1,243,713 | ) | (1,018,835 | ) | (224,878 | ) | |||||||
Total Liabilities and Stockholders' Deficiency | $ | 739,690 | $ | 984,116 | $ | (244,426 | ) | ||||||
Consolidated Statements of Operations | |||||||||||||
(Unaudited) | |||||||||||||
Restated | Amended | ||||||||||||
31-Mar-13 | 31-Mar-13 | Differences | |||||||||||
Product sales revenue | $ | - | $ | 4,001 | $ | (4,001 | ) | ||||||
Revenues from license fees | - | 225,000 | (225,000 | ) | |||||||||
Total Revenues | - | 229,001 | (229,001 | ) | |||||||||
Cost of goods sold | - | 3,801 | (3,801 | ) | |||||||||
Gross Margin | - | 225,200 | (252,200 | ) | |||||||||
Operating Expenses | |||||||||||||
Officer and director compensation | 131,622 | 131,622 | - | ||||||||||
Professional fees | 449,167 | 449,167 | - | ||||||||||
General and administrative | 19,075 | 21,261 | (2,186 | ) | |||||||||
Total Operating Expenses | 599,864 | 602,050 | (2,186 | ) | |||||||||
Loss from Operations | (599,864 | ) | (376,850 | ) | (223,014 | ) | |||||||
Other Income/(Expenses) | |||||||||||||
Interest expense | (114,711 | ) | (118,163 | ) | 3,452 | ||||||||
Gain on derivative liability | 3,525 | 3,525 | - | ||||||||||
Currency exchange gain | 5,149 | 5,149 | - | ||||||||||
Total Other Income/(Expenses) | (106,037 | ) | (109,489 | ) | 3,452 | ||||||||
Loss from Operations before Income Taxes | (705,901 | ) | (486,339 | ) | (219,562 | ) | |||||||
Provision for Income Taxes | - | - | - | ||||||||||
Net Loss from Continuing Operations | (705,901 | ) | (486,339 | ) | (219,562 | ) | |||||||
Loss from Discontinued Operations, net of Income Taxes | (5,254 | ) | - | (5,254 | ) | ||||||||
Net Loss | $ | (711,155 | ) | $ | (486,339 | ) | $ | (224,816 | ) | ||||
Other Comprehensive Income | |||||||||||||
Foreign currency translation adjustments | - | - | - | ||||||||||
Total Other Comprehensive Income | $ | (711,155 | ) | $ | (486,339 | ) | $ | (224,816 | ) | ||||
Basic and Diluted Loss per Share from Continuing Operations | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.01 | ) | ||||
Basic and Diluted loss per Share from Discontinued Operations | $ | - | $ | - | $ | - | |||||||
Net loss per share - Basic and Diluted | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.01 | ) | ||||
Weighted average number of shares outstanding during the period - Basic and Diluted | 123,153,590 | 123,153,590 | - | ||||||||||
Consolidated Statements of Cash Flows | |||||||||||||
(Unaudited) | |||||||||||||
Restated | Amended | ||||||||||||
31-Mar-13 | 31-Mar-13 | Differences | |||||||||||
Cash Flows From Operating Activities: | |||||||||||||
Net Loss | $ | (705,901 | ) | $ | (486,339 | ) | $ | (219,562 | ) | ||||
Adjustments to reconcile net loss to net cash used in operations | |||||||||||||
Currency translation gain | (5,149 | ) | (5,149 | ) | - | ||||||||
Amortization of debt discounts | 25,918 | 25,918 | - | ||||||||||
Origination interest on derivative liability | 76,195 | 76,195 | - | ||||||||||
Change in derivative liability | (3,525 | ) | (3,525 | ) | - | ||||||||
Debt issued for services | 17,417 | 17,417 | - | ||||||||||
Common stock issued for services | 293,634 | 293,634 | - | ||||||||||
Changes in operating assets and liabilities: | |||||||||||||
(Increase)/Decrease in accounts and other receivables | - | (4,009 | ) | 4,009 | |||||||||
(Increase)/Decrease in license fees receivable | - | (225,000 | ) | (225,000 | ) | ||||||||
Increase/(Decrease) in accounts payable and accrued expenses | 147,278 | 166,826 | (19,548 | ) | |||||||||
Increase/(Decrease) in accrued expenses - related party | 123,176 | 123,176 | - | ||||||||||
Net Cash Used In Continuing Operating Activities | (30,957 | ) | (20,856 | ) | (10,101 | ) | |||||||
Net Cash Provided by Discontinued Operating Activities | (5,254 | ) | - | (5,254 | ) | ||||||||
Net Cash Used in Operating Activities | (36,211 | ) | (20,856 | ) | (15,355 | ) | |||||||
Cash Flows From Financing Activities: | |||||||||||||
Proceeds from notes payable | 25,000 | 25,000 | - | ||||||||||
Net Cash Provided by Continuing Financing Activities | 25,000 | 25,000 | - | ||||||||||
Net Cash Provided by Discontinued Financing Activities | - | - | - | ||||||||||
Net Cash Provided by Financing Activities | 25,000 | 25,000 | - | ||||||||||
Effects of exchange rates on cash | 22,242 | 22,304 | (62 | ) | |||||||||
Net Increase / (Decrease) in Cash | 11,031 | 26,448 | (15,417 | ) | |||||||||
Cash at Beginning of Period | 139 | 139 | - | ||||||||||
Cash at End of Period | $ | 11,170 | $ | 26,587 | $ | (15,417 | ) | ||||||
Supplemental disclosure of cash flow information: | |||||||||||||
Cash paid for interest | $ | - | $ | - | $ | - | |||||||
Cash paid for taxes | $ | - | $ | - | $ | - | |||||||
Supplemental disclosure of non-cash investing and financing activities: | |||||||||||||
Debt discounts on convertible notes payable | $ | 247,545 | $ | 247,545 | $ | - | |||||||
Preferred stock issued for marketable securities | $ | 730,000 | $ | 730,000 | $ | - | |||||||
Preferred stock issued for acquisition of subsidiary | $ | 27,256 | $ | 27,256 | $ | - | |||||||
Common stock issued for intangible assets | $ | 77,185 | $ | 77,185 | $ | - | |||||||
Common stock issued for conversion of debt | $ | 252,123 | $ | 252,123 | $ | - |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended | |||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||
Notes to Financial Statements | ' | |||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |||||||||||||||||
Basis of Presentation | ||||||||||||||||||
The Financial Statements and related disclosures have been prepared pursuant to the rules and regulations of the SEC. The Financial Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States | ||||||||||||||||||
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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. | ||||||||||||||||||
In the opinion of management, all adjustments necessary to present fairly the financial position, results of operations, and cash flows at March 31, 2014, and for all periods presented herein, have been made. | ||||||||||||||||||
Beneficial Conversion Feature | ||||||||||||||||||
Costs incurred with parties who are providing financing, which include the intrinsic value of beneficial conversion features associated with the underlying debt, are reflected as a debt discount. These discounts are generally amortized over the life of the related debt. In certain circumstances, the intrinsic value of the beneficial conversion feature may be greater than the proceeds associated to the convertible instrument. In such situations, the amount of the discount assigned to the beneficial conversion feature is limited to the amount of the proceeds allocated to the convertible instrument. | ||||||||||||||||||
The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional standards for “Accounting for Derivative Instruments and Hedging Activities”. | ||||||||||||||||||
Professional standards generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument”. | ||||||||||||||||||
The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with professional standards when “Accounting for Convertible Securities with Beneficial Conversion Features,” as those professional standards pertain to “Certain Convertible Instruments.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. | ||||||||||||||||||
The Company evaluated the conversion option embedded in the Series A Preferred Stock and determined, in accordance with the provisions of these statements, that such conversion option does not meet the criteria requiring bifurcation of these instruments. The characteristics of the common stock that is issuable upon a holder’s exercise of the conversion option embedded in the convertible preferred stock are deemed to be clearly and closely related to the characteristics of the preferred shares. Additionally, the Company’s conversion options, if free standing, would not be considered derivatives subject to the accounting guidelines prescribed in accordance with professional standards. | ||||||||||||||||||
ASC 815-40 provides that, among other things, generally, if an event is not within the entity’s control could require net cash settlement, then the contract shall be classified as an asset or a liability. | ||||||||||||||||||
Cash and Cash Equivalents | ||||||||||||||||||
For the purpose of the financial statements cash equivalents include all highly liquid investments with maturity of three months or less. Cash and cash equivalents were $216,617 and $145,778 at March 31, 2014 and December 31, 2013, respectively. See Note 6 – Restricted Cash Held in Escrow | ||||||||||||||||||
Cash Flows Reporting | ||||||||||||||||||
The Company follows ASC 230, Statement of Cash Flows, for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by ASC 230, Statement of Cash Flows, to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period. | ||||||||||||||||||
Commitments and Contingencies | ||||||||||||||||||
The Company follows ASC 440, Commitments and ASC 450, Loss Contingencies, to report accounting for commitments and contingencies. | ||||||||||||||||||
Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. There were no commitments or contingencies at March 31, 2014 and 2013. | ||||||||||||||||||
Earnings per Share | ||||||||||||||||||
The Company computes basic and diluted earnings per share amounts in accordance with ASC Topic 260, Earnings per Share. Basic earnings per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. | ||||||||||||||||||
For the three months ended March 31, 2014 and 2013, the effect of common stock equivalents has been excluded from the calculation of diluted earnings per share as their effect would be anti-dilutive. | ||||||||||||||||||
The Company does not have any potentially dilutive instruments as of March 31, 2014 and, thus, anti-dilution issues are not applicable. | ||||||||||||||||||
At March 31, 2014, there were no stock options. | ||||||||||||||||||
Fair Value of Financial Instruments | ||||||||||||||||||
The Company follows paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments and paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below: | ||||||||||||||||||
Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. | |||||||||||||||||
Level 2 | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. | |||||||||||||||||
Level 3 | Pricing inputs that are generally unobservable inputs and not corroborated by market data. | |||||||||||||||||
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. | ||||||||||||||||||
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. | ||||||||||||||||||
The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts payable, accrued expenses and loans payable approximate their fair values because of the short maturity of these instruments. Loans payable are recorded at their issue value. | ||||||||||||||||||
Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated. | ||||||||||||||||||
It is not, however, practical to determine the fair value of advances from stockholders, if any, due to their related party nature. | ||||||||||||||||||
The following table presents assets and liabilities that are measured and recognized at fair value as of March 31, 2014 and December 31, 2013, on a recurring basis: | ||||||||||||||||||
Assets and liabilities measured at fair value on a recurring basis at March 31, 2014 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Carrying | ||||||||||||||||||
Value | ||||||||||||||||||
Derivative liabilities | $ | - | $ | - | $ | (1,682,387 | ) | $ | (1,682,387 | ) | ||||||||
Assets and liabilities measured at fair value on a recurring basis at December 31, 2013 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Carrying | ||||||||||||||||||
Value | ||||||||||||||||||
Derivative liabilities | $ | - | $ | - | $ | (465,880 | ) | $ | (465,880 | ) | ||||||||
Property and Equipment | ||||||||||||||||||
Property and equipment are stated at cost. Depreciation was calculated using the straight-line method over the estimated useful lives of the related assets, ranging from three to seven years. Expenditures for additions and improvements were capitalized, while repairs and maintenance costs were expensed as incurred. The cost and related accumulated depreciation of property and equipment sold or otherwise disposed of were removed from the accounts and any gain or loss was recorded in the year of disposal. Depreciation expense for the three months ended March 31, 2014 and 2013 was $12,193 and $0, respectively. | ||||||||||||||||||
Related Parties | ||||||||||||||||||
The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. Related party transactions for the three month periods ending March 31, 2013 and 2014 are reflected in Note 9. | ||||||||||||||||||
Stock Based Compensation | ||||||||||||||||||
ASC 718, Compensation – Stock Compensation, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). | ||||||||||||||||||
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, Equity – based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date. | ||||||||||||||||||
Under our stock compensation plan (the “Stock Plan”) which is registered under Form S8, or through newly issued restricted common stock, we pay qualified contractors and advisors common shares in lieu of compensation for services provided including business development, management, technology development, consulting, legal services and accounting services | ||||||||||||||||||
Share-based expense for the three months ended March 31, 2014 and 2013 was $938,509 and $0, respectively. | ||||||||||||||||||
Reclassifications | ||||||||||||||||||
Certain balances in previously issued financial statements have been reclassified to be consistent with current period presentation. | ||||||||||||||||||
Principles of Consolidation | ||||||||||||||||||
The accompanying condensed consolidated financial statements for the three months ended March 31, 2014, include the accounts of the Company and its wholly-owned subsidiary E-Waste Systems Cincinnati, Inc. (“EWS-C”), and Surf Investments, Ltd. (“Surf”). All significant intercompany balances and transactions have been eliminated in consolidation. | ||||||||||||||||||
Concentration of Credit Risk | ||||||||||||||||||
SURF | ||||||||||||||||||
For the three months ended March 31, 2014, Customer A accounted for 27.9% of the Surf’s net revenue. Customer B accounted for approximately 22.8% of Surf’s net revenue and 18.9% of Surf’s total accounts receivable for the three months ended March 31, 2014. Customer C accounted for approximately 19.9% of the Company’s net revenue and 31% of Surf’s total accounts receivable for the three months ended March 31, 2014. Customer D accounted for 11.8% of Surf’s total accounts receivable for the three months ended March 31, 2014. | ||||||||||||||||||
EWS-C | ||||||||||||||||||
For the three months ended March 31, 2014, Customer A accounted for 61.9% of EWS-C’s net revenue and 84.2% of EWS-C’s accounts receivables. Customer B accounted for approximately 19.6% of EWS-C’s net revenue and 10.6% of EWS-C’s accounts receivables for the three months ended March 31, 2014. Customer C accounted for approximately 16% of EWS-C’s net revenue. Customer D 12.4% of EWS-C’s accounts receivable for the three months ended March 31, 2014. | ||||||||||||||||||
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. 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 months ended March 31, 2014 and 2013, allowance for doubtful accounts was $2,700 and $0, 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 Sales of Brand Licenses | ||||||||||||||||||
During the year, 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. The Company will recognize the licensing revenue when collected or when collectability is probable. | ||||||||||||||||||
Segment Reporting | ||||||||||||||||||
The Company generates revenues from the following sources: (1) licensing of technology and management services in electronic waste disposal, development of ePlants and similar processes for electronic waste disposal systems in return for license, consulting and management fees; (2) operation of strategic business development projects and market development projects through the eVolve divisions for which the Company obtains sales revenues and incurs day to day operational expenses including the cost of leases incurred through the activities, and (3) repair refurbishing and recycling of electronics for which the Company receives revenues from disposal contracts, and fees for disposal plus revenues from the sale of reclaimed components or reclaimed materials such a gold, platinum and other precious metals obtained through recycling processes and incurs costs associated recycling activities. | ||||||||||||||||||
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 consolidated 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. The Company did not record an impairment expense for the three months ended March 31, 2014. | ||||||||||||||||||
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 consolidated 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. Intangible assets consist of customer lists and certification. Amortization of intangible assets for three months ended March 31, 2014 was $21,594. The Company did not record an impairment expense as of March 31, 2014. | ||||||||||||||||||
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 consolidated 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. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are as follows: | ||||||||||||||||||
Automobiles and Equipment | 5 years | |||||||||||||||||
Computer Software | 3 years | |||||||||||||||||
Leasehold Improvements | 3 years | |||||||||||||||||
Goodwill | ||||||||||||||||||
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations. ASC 350-30-35-4 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests when circumstances indicate that the recoverability of the carrying amount of goodwill may be in doubt. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. Significant judgments required to estimate the fair value of reporting units include estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment for each reporting unit. | ||||||||||||||||||
Foreign Currency | ||||||||||||||||||
Monetary assets and liabilities of the Company's foreign operations are translated into U.S. dollars at period-end exchange rates. Non-monetary assets and liabilities are translated at historical 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 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’ deficit. | ||||||||||||||||||
Stock-Based Compensation | ||||||||||||||||||
Under our stock compensation plan (the “Stock Plan”) which is registered under Form S8, or through newly issued restricted common stock, we pay qualified 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 | ||||||||||||||||||
Deferred income tax assets as of March 31, 2014, of $688,816 resulting from net operating losses and future amortization deductions, have been fully offset by valuation allowances. The valuation allowances have been established equal to the full amounts of the deferred tax assets, as the Company is not assured that it is more likely than not that these benefits will be realized. | ||||||||||||||||||
Reconciliation between the statutory United States corporate income tax rate (35%) and the effective income tax rates based on continuing operations is as follows: | ||||||||||||||||||
As of March 31, | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||
Income tax benefit at Federal statutory rate of 44% | $ | (2,288,393 | ) | $ | (500,368 | ) | ||||||||||||
State Income tax benefit, net of Federal effect | (634,031 | ) | (138,634 | ) | ||||||||||||||
Permanent and other differences | - | - | ||||||||||||||||
Change in valuation allowance | 2,922,424 | 639,002 | ||||||||||||||||
Total | $ | - | $ | - | ||||||||||||||
Components of deferred tax assets were approximately as follows: | ||||||||||||||||||
As at March 31, | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||
Net operating loss | $ | 10,213,000 | $ | 3,037,000 | ||||||||||||||
Asset impairment | ||||||||||||||||||
Valuation allowance | (10,213,000 | ) | (3,037,000 | ) | ||||||||||||||
Total | $ | - | $ | - | ||||||||||||||
At March 31, 2014, the Company has available net operating losses of approximately $18,000,000 which may be carried forward to apply against future taxable income. These losses will expire in 2031. Deferred tax assets related to these losses have not been recorded due to uncertainty regarding their utilization. | ||||||||||||||||||
The provisions of ASC 740 require companies to recognize in their condensed consolidated financial statements the impact of a tax position if that position is more likely than not to be sustained upon audit, based upon the technical merits of the position. ASC 740 prescribes a recognition threshold and measurement attribute for the condensed consolidated financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. | ||||||||||||||||||
Management does not believe that the Company has any material uncertain tax positions requiring recognition or measurement in accordance with the provisions of ASC 740. Accordingly, the adoption of these provisions of ASC 740 did not have a material effect on the Company’s condensed consolidated financial statements. The Company’s policy is to record interest and penalties on uncertain tax positions, if any, as income tax expense. | ||||||||||||||||||
The Company has not filed its applicable Federal and State tax returns for the year ended December 31, 2012 and may be subject to penalties for noncompliance. The Company has filed an extension for the 2013 filings. | ||||||||||||||||||
Recently Issued Accounting Pronouncements | ||||||||||||||||||
Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. | ||||||||||||||||||
We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration. |
DISCONTINUED_OPERATIONS
DISCONTINUED OPERATIONS | 3 Months Ended |
Mar. 31, 2014 | |
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. Accordingly, all activity related to the disposal of the assets of our Ohio business has been classified as discontinued operations. |
RESTRICTED_CASH_HELD_IN_ESCROW
RESTRICTED CASH HELD IN ESCROW | 3 Months Ended |
Mar. 31, 2014 | |
Notes to Financial Statements | ' |
RESTRICTED CASH HELD IN ESCROW | ' |
On November 30, 2013 the Company entered into a Credit Agreement with TCA Global Credit Master Fund (“TCA”) for a loan of up to $5,000,000 with an initial draw of $1,000,000. At the initial funding of the first $1,000,000 on the TCA revolving credit facility, TCA held in reserve/escrow $140,000 pending completion of several post-closing matters. Those funds have not yet been released. | |
As of March 31, 2014, the Company had a balance of $140,000 in escrow. |
DEFERRED_FINANCING_COSTS
DEFERRED FINANCING COSTS | 3 Months Ended |
Mar. 31, 2014 | |
Notes to Financial Statements | ' |
DEFERRED FINANCING COSTS | ' |
During the period ended March 31, 2014, the Company incurred financing costs in connection with the issuance of various convertible promissory notes totaling $44,000. The costs are being amortized over the term of their respective convertible promissory notes on the straight-line method, which approximates the interest rate method. As of March 31, 2014, the Company amortized $4,007 of financing costs resulting in a balance of $39,993. |
PROPERTY_AND_EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Notes to Financial Statements | ' | ||||||||
PROPERTY AND EQUIPMENT | ' | ||||||||
Property and equipment consisted of the following as of March 31, 2014 and December 31, 2013: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Equipment | $ | 187,384 | $ | 165,518 | |||||
Automobiles | 20,926 | 20,926 | |||||||
Computer Software | 8,558 | - | |||||||
Leasehold Improvements | 80,608 | - | |||||||
Less: accumulated depreciation | (16,917 | ) | -4,724 | ||||||
Property and Equipment, Net | $ | 280,559 | $ | 181,720 | |||||
Depreciation expense for the three months ended March 31, 2014 and 2013 was $12,193 and $0, respectively. | |||||||||
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2014 | |
Notes to Financial Statements | ' |
RELATED PARTY TRANSACTIONS | ' |
Transactions Involving Non-Officers and Directors | |
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% 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 $355 and $252 of interest expense on the related party convertible note payable leaving a balance in accrued interest of $3,492 and $1,697 as of March 31, 2014 and 2013, respectively. The note has been extended and has a maturity date of November 22, 2014. | |
On May 1, 2013, the Company issued 1,500,000 shares of common stock to an employee for past obligations due. | |
At March 31, 2014, the Company had payables to related parties totaling $4,948. | |
Transactions Involving Officers and Directors | |
During the three months ended March 31, 2014, the Company accrued $91,035 in officer compensation, leaving an ending balance of $1,358,308 in accrued officer and director compensation at March 31, 2014. |
NOTES_AND_LOANS_PAYABLE
NOTES AND LOANS PAYABLE | 3 Months Ended |
Mar. 31, 2014 | |
Notes to Financial Statements | ' |
NOTES AND LOANS 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% 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 balance in accrued interest is $3,492 and $2.052 as of March 31, 2014 and 2013, respectively. The note has been extended and has a maturity date of October 28, 2014. | |
Subsequent to this, on April 28, 2014, the Company paid the note holder the amount of $6,000 in cash toward the principal amount due on this note as of the date of the payment. | |
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%, are unsecured and are due on demand. During the year ended December 31, 2013, the Company recognized $7,714 of interest expense on these notes payable leaving balances in accrued interest of $403, respectively as of December 31, 2013. | |
Effective April 3, 2013, the Company entered into a settlement agreement with a 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 $13,653 was made in the form of 2,185,879 shares of Rule 144 unrestricted common stock. | |
It was further agreed that the principal amount of the combined notes would be paid on a monthly basis in the amounts of $5,833 for the $35,000 Note, and $6,667 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 year ending December 31, 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 an issuance of 1,543,210 shares at a price per share of $0.0081. The aggregate payment for both notes for the month of June 2013 resulted in an issuance of 1,344,086 shares at a price per share of $0.0093. The aggregate payment for both notes for the month of July 2013 resulted in an issuance of 828,912 shares at a price per share of $0.0151. | |
Effective November 1, 2013 the Company issued an aggregate of 1,253,117 shares of the Company’s unrestricted common stock as payment in full of the existing debt to this note holder as follows: the Company issued 644,330 shares at a price of $0.0194 for the month of August; in addition, the Company issued 256,674 at a price of $0.0487 for the month of September and we also issued 352,113 at a price of $0.0355 for the month of October, 2013. Upon receipt of all the shares listed in this paragraph, the note holder acknowledged that the principal amount of the note had been paid in full and requested that the interest payment in the form of stock also to be issued at this time. | |
Effective February 24, 2012, the Company borrowed $100,000 from an unrelated third party in the form of a Line of Credit. 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% 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 time, and interest will continue to accrue on the note beginning with June 1, 2013 through the time the note is completely retired. During the period ended December 31, 2013 the Company recognized $14,000 of interest expense and made no payments on this promissory note leaving a balance of $8,167 accrued interest as of December 31, 2013. During the period ended March 31, 2014 the Company recognized $3,500 of interest expense and made no payments on this promissory note leaving a balance of $8,167 in accrued interest as of March 31, 2014. | |
Effective August 27, 2012, the Company executed a convertible 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, $95,000 through the year ended December 31, 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 year ended December 31, 2013. | |
Effective February 28, 2013, the note holder elected to convert $7,350 of the principal balance 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 of the principal 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 $9,931 of the principal balance 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 $3,265 to interest expense. | |
Effective May 6, 2013, the note holder elected to convert $8,341 of the principal balance 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 $4,062 to interest expense. | |
Effective June 13, 2013, the note holder elected to convert $8,217 of the principal balance 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 $168 to interest expense. | |
Effective August 27, 2013, the note holder elected to convert $27,778 of the principal balance 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 $18,418 to interest expense. | |
Effective January 21, 2014, the note holder elected to convert $27,778 of the principal balance resulting in the issuance of 3,055,556 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 $12,406 to interest expense. | |
Effective February 25, 2013, the note holder elected to convert $27,778 of the principal balance resulting in the issuance of 3,055,556 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 $17,199 to interest expense. | |
Effective March 26, 2013, the note holder elected to convert $22,222 of the principal balance resulting in the issuance of 2,444,444 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 $16,377 to interest expense. This loan is now considered to be paid in full and all debt discount has been amortized in full. | |
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 $402,675 and debt discounts of $105,556 on the payment dates of the note for the year ended December 31, 2013. As of March 31, 2014, the Company had recognized amortization on debt discounts on these notes of $45,982, leaving unamortized debt discounts of $0. See Note 11 for treatment of derivative liability associated with convertible notes payable. | |
On February 6, 2014, the Company executed a convertible promissory note in the principal sum of $500,000. The consideration to be paid to the Lender shall be equal to the consideration actually paid by the Lender plus prorated interest and any other fees such that the Company shall be required to pay. The Company will incur a one-time interest charge of 6% on the principal amount of each loan. The note holder made a payment to the Company of $100,000 of the total consideration during the period ending March 31, 2014, along with a one-time interest charge that is added to the principal in the amount of $6,000. The maturity date is two years from the date of each payment to the Company, and is the date upon which the principal sum, as well as any unpaid interest and other fees, shall be due and payable. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $199,376 on the payment date of the note for the period ended March 31, 2014. See Note 11 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 these 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 notes and is included within interest expense. As of March 31, 2014 and 2013, the Company had recognized amortization on the debt discounts on these note of $4,123 and $-0- of the total outstanding debt discounts leaving an unamortized debt discounts of $3,697 and $25,313, respectively. | |
Effective September 9, 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 $1,114 to interest expense. | |
Effective March 12, 2014, a settlement was reached with the note holder of the $29,000 convertible note whereby his note and all accrued interest was purchased by an unrelated third party. This note has been retired in its entirety. | |
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. | |
Effective March 12, 2014, a settlement was reached with the note holder whereby his note and all accrued interest was purchased by an unrelated third party. This note has been retired in its entirety, and the remaining debt discount of $28,387 was amortized in full. | |
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 March 31, 2014, the Company had recognized amortization on the debt discounts on this note of $13,653 of the total outstanding debt discounts leaving an unamortized debt discounts $100,468. | |
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. | |
Effective March 12, 2014, a settlement was reached with the note holder whereby his note and all accrued interest was purchased by an unrelated third party. This note has been retired in its entirety, and the remaining debt discount of $11,240 was amortized in full. | |
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 $15,371. 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 December 31, 2013, the Company has amortized $6,177 of the total outstanding debt discounts leaving an unamortized debt discount of $11,240. | |
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 December 31, 2013, the Company had recognized amortization on debt discounts on these notes of $32,500 leaving unamortized debt discounts of $0. See Note 11 for treatment of derivative liability associated with convertible notes payable. On October 28, 2013, this note was paid in full by the Company. | |
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 $12,258 and debt discount of $32,500 on the payment dates of the note. As of December 31, 2013, the Company had recognized amortization on debt discounts on these notes of $32,500 leaving unamortized debt discounts of $0 See Note 11 for treatment of derivative liability associated with convertible notes payable. On December 31, 2013, this note was paid in full by the Company. | |
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 $55,751 and debt discount of $27,500 on the payment dates of the note for the period ended September 30, 2013. As of December 31, 2013, the Company had recognized amortization on debt discounts on these notes of $12,600 leaving unamortized debt discounts of $14,900. See Note 11 for treatment of derivative liability associated with convertible notes payable. On March 10, 2014, this note was paid in full by the Company, and the remaining debt discount of $14,900 was amortized in full, and the remaining derivative liability was reversed in full. | |
On June 25, 2013, the Company assumed loans payable with the acquisition of Surf in the amount of $222,928. These loans are non-interest bearing and due upon demand. Of the total amount of these loans, on the condensed consolidated balance sheet, $82,500 is classified in accrued expenses, related party, and $140,428 is classified in accounts payable and accrued expenses. | |
In connection with its acquisition of EWS-C, the Company assumed five financing agreements that comprise all the equipment listed in EWS-C. The total value of these notes is $180,368. The original terms of these notes consist of a term of 60 months, with interest rates ranging from 4.60% to 9.24%, due dates of May 1, 2015, May 27, 2015, September 30, 2015, June 14, 2016, and October 1, 2016, and total payments ranging from $282 to $3,414. Of the total balance of these notes, $85,027 is deemed to be the short term portion and is included in short-term notes payable on the condensed consolidated balance sheet. | |
Effective October 1, 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%. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $25,339 on the payment dates of the note for the period ended March 31, 2014. See Note 11 for treatment of derivative liability associated with convertible notes payable. | |
Subsequent to this, on April 18, 2014, the note holder elected to convert $20,000 of this note into 2,531,646 at a price per share of $0.00790, leaving an unconverted amount due of $12,500. | |
Effective December 9, 2013, the Company executed a convertible note payable with a face value of $63,000. This note is unsecured, bears interest at 8% per annum and is due September 9, 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%. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $75,362 on the payment date of the note for the period ended December 31, 2013. See Note 11 for treatment of derivative liability associated with convertible notes payable. | |
Effective February 10, 2014, the Company executed a convertible note payable with a face value of $18,000, whereby the full $18,000 went towards payment for professional fees. This note is unsecured, bears interest at 8% per annum and is due September 9, 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%. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $22,230 on the payment date of the note for the period ended March 31, 2014. See Note 11 for treatment of derivative liability associated with convertible notes payable. | |
On November 30, 2013, the Company entered into a Credit Agreement with TCA Global Credit Master Fund for a loan of up to $5.0 Million with an initial draw of $1.0 Million. At the initial funding of the first $1.0 Million on the TCA revolving credit facility, TCA held in reserve/escrow $160,000 pending completion of several post-closing matters. Those funds have not yet been released. The debt is secured by assets of the Company and its subsidiaries Surf and e-Waste Systems Cincinnati, Inc. and e-Waste Systems Ohio, Inc. Interest accrues at the rate of 16.5% per annum, calculated on the actual number of days elapsed over a 360-day year. Provisions for a Reserve of 15% there is a mandatory repayment of not less than 15% of the gross revenues. At the present time, this loan is in default. The Company determined the note qualified for derivative liability treatment under ASC 815. | |
On January 30, 2014, the Company entered into a Convertible Promissory Note with an unrelated third party in the amount of $100,000 which carries an interest rate of 12% per annum, whereby $10,000 of the proceeds were recorded as deferred financing costs. This note will mature on January 30, 2015. The issuer of the Note can convert unpaid portions of this Note any time after July 30, 2014. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $200,870 on the payment date of the note for the period ended March 31, 2014. See Note 11 for treatment of derivative liability associated with convertible notes payable. | |
On March 12, 2014, the Company entered into a Convertible Promissory Note with an unrelated third party in the amount of $44,425 which carries an interest rate of 12% per annum. This note will mature on February 28, 2015. The issuer of the Note can convert unpaid portions of this Note any time after September 12, 2014. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $99,524 on the payment date of the note for the period ended March 31, 2014. See Note 11 for treatment of derivative liability associated with convertible notes payable. | |
On March 12, 2014, the Company entered into a Convertible Promissory Note with an unrelated third party in the amount of $18,483 which carries an interest rate of 12% per annum. This note will mature on February 28, 2015. The issuer of the Note can convert unpaid portions of this Note any time after September 12, 2014. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $41,407 on the payment date of the note for the period ended March 31, 2014. See Note 11 for treatment of derivative liability associated with convertible notes payable. | |
On March 12, 2014, the Company entered into a Convertible Promissory Note with an unrelated third party in the amount of $29,000 which carries an interest rate of 12% per annum. This note will mature on February 28, 2015. The issuer of the Note can convert unpaid portions of this Note any time after September 12, 2014. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $64,969 on the payment date of the note for the period ended March 31, 2014. See Note 11 for treatment of derivative liability associated with convertible notes payable. | |
On March 25, 2014, the Company entered into a Convertible Promissory Note with an unrelated third party in the amount of $50,000 which carries an interest rate of 12% per annum, whereby $5,000 of the proceeds were recorded as deferred financing costs. This note will mature on March 25, 2015. The issuer of the Note can convert unpaid portions of this Note any time after September 25, 2014. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $69,748 on the payment date of the note for the period ended March 31, 2014. See Note 11 for treatment of derivative liability associated with convertible notes payable. | |
On March 7, 2014, the Company entered into a Convertible Promissory Note with an unrelated third party in the amount of $60,000 with an interest rate of 8% per annum. This note will mature on February 28, 2015. The note holder can convert any unpaid balance only after the note has reached its maturity date. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $66,442 on the payment date of the note for the period ended March 31, 2014. See Note 11 for treatment of derivative liability associated with convertible notes payable. | |
On March 7, 2014, the Company entered into a Convertible Promissory note in the amount of $100,000 that carries an interest rate of 8% per annum, whereby $10,000 of the proceeds were recorded as deferred financing costs. This note will mature on September 7, 2014 and note holder can convert to the Company’s common stock any time after the maturity date. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $101,215 on the payment date of the note for the period ended March 31, 2014. See Note 11 for treatment of derivative liability associated with convertible notes payable. | |
On March 7, 2014, the Company entered into a Convertible Promissory Note with an unrelated third party in the amount of $50,000 with an interest rate of 8% per annum, whereby $7,500 of the proceeds were recorded as deferred financing costs. This note will mature on February 28, 2015. The note holder can convert any unpaid balance after 180 days from the original date of the note. This Note also contains a Back End note for $50,000 wherein note holder can convert to the Company’s common stock after 180 days and after full cash payment has been made for the convertible shares thereunder. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $50,295 on the payment date of the note for the period ended March 31, 2014. See Note 11 for treatment of derivative liability associated with convertible notes payable. | |
On March 20, 2014, the Company entered into a Convertible Promissory Note with an additional unrelated third party in the amount of $60,000 with an interest rate of 8% per annum. This note will mature on November 12, 2014. The note holder can convert any unpaid balance only after the note has reached its maturity date. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $59,406 on the payment date of the note for the period ended March 31, 2014. See Note 11 for treatment of derivative liability associated with convertible notes payable. | |
On March 20, 2014, the Company entered into a Convertible Promissory Note with an unrelated third party in the amount of $84,000 with an interest rate of 8% per annum, whereby $4,000 of the proceeds were recorded as deferred financing costs. This note will mature on March 20, 2015. The note holder can convert any unpaid balance after 180 days from the original date of the note. On March 20, 2014, we also entered into a Back End Convertible Note with this Note Holder for $84,000. This note has an interest rate of 8% per annum and will mature on March 20, 2015. On March 20, 2014 the Company also entered into a Collateralized Secured Promissory Back End Note with the same note holder in the amount of $84,000 with a Maturity date of November 20, 2104. The Back End Note and the Collateralized Secured Promissory Note can be offset against one another if the third party does not fund the Back End Note. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $121,705 on the payment date of the note for the period ended March 31, 2014. See Note 11 for treatment of derivative liability associated with convertible notes payable. | |
On March 21, 2014, the Company entered into a Convertible Promissory Note with an unrelated third party in the amount of $50,000 with an interest rate of 8% per annum, whereby $7,500 of the proceeds were recorded as deferred financing costs. This note will mature on March 21, 2015. The note holder can convert any unpaid balance after 180 days from the original date of the note. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $74,016 on the payment date of the note for the period ended March 31, 2014. See Note 11 for treatment of derivative liability associated with convertible notes payable. |
DERIVATIVE_LIABILITY
DERIVATIVE LIABILITY | 3 Months Ended |
Mar. 31, 2014 | |
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, 2013, the Company revalued the conversion features using the following assumptions: dividend yield of zero, years to maturity of between 0.29 and 0.70 years, a risk free rate of 0.13%, and annualized volatility of 232.29% and determined that, during the year ended December 31, 2013, the Company’s derivative liability increased by $404,335 to $465,880. The Company recognized a corresponding loss on derivative liability in conjunction with this revaluation. | |
At March 31, 2014, the Company revalued the conversion features using the following assumptions: dividend yield of zero, years to maturity of between 0.18 and 1.85 years, a risk free rate of 0.13%, and annualized volatility of 199.03% and determined that, during the year ended March 31, 2014, the Company’s derivative liability increased by $1,216,507 to $1,682,387. The Company recognized a corresponding loss on derivative liability in conjunction with this revaluation. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2014 | |
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 expected to have a material impact. | |
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 has not issued those shares. | |
Effective February 6, 2014, EWSI’s wholly owned subsidiary e-Waste Systems Cincinnati, Inc. entered into a lease with DTC Northwest OH LLC, a Delaware limited liability company for its newly operational Cincinnati, Ohio facility. The building is approximately 126,500 square foot of warehouse building located at 12075 Northwest Blvd., Springdale, OH 45246. The monthly rent for this facility for Month 1 through 12 of the first year will be $11,916. The monthly rent for the facility for Month 1 through 12 of the second year will be $12,274. The monthly rent for the facility for month 1 through 12 of the third year will be $12,642. | |
Lease and Operating Agreements | |
The Company has entered into three operating agreements to operate businesses on behalf of property and business 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. |
STOCKHOLDERS_DEFICIT
STOCKHOLDERS' DEFICIT | 3 Months Ended | |
Mar. 31, 2014 | ||
Notes to Financial Statements | ' | |
STOCKHOLDERS' DEFICIT | ' | |
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. As of March 31, 2014, and December 31, 2013, there were 5,891 and 1,903 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 March 31, 2014 and March 31, 2013 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 $1,000 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 $1,100 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 March 31, 2014, and December 31, 2013, there were 195,000 and 195,000 shares of Series B Convertible Preferred Stock issued and outstanding, respectively. | ||
The Series B Preferred Shares have the following provisions: | ||
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 A Activity for the three months ended March 31, 2014 | ||
For the three months ended March 31, 2014, the Company issued a total of 4,975 shares of Series A Preferred Stock for various services rendered per agreements entered into with the shareholders valued at $2,817,100. | ||
For the three months ended March 31, 2014, the Company issued a total of 95 shares of Series A Preferred Stock as payment of debt to a related party valued at $58,389. | ||
For the three months ended March 31, 2014, 1,082 shares of Series A Preferred Stock was converted into 14,877,500 shares of common stock in accordance with the provisions of the Series A Preferred Stock. | ||
Common Stock | ||
On March 28, 2014, the Company’s board of directors and majority shareholder approved an amendment to the Articles of Incorporation according to the Bylaws of the Company and the State of Nevada revised statutes for the purpose of increasing the authorized common stock from 490,000,000 shares to 800,000,000 shares. The Company’s authorized shares of preferred stock were not affected in this corporate action. As of March 31, 2014 and 2013, there were 334,892,542 and 137,791,286 shares of common stock issued and outstanding, respectively. | ||
Common Stock Activity for the three months ended March 31, 2014 | ||
During the three months ended March 31, 2014, the Company issued 24,958,315 shares of common stock at prices ranging from $0.0096 to $0.0425 per share for services valued at $630,984. 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 three months ended March 31, 2014, the Company issued 9,267,513 shares of common stock at $0.01 to $0.0391 per share for settlement of all accounts payable, accrued expense, accrued interest, and debt transactions valued at $113,393. 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 three months ended March 31, 2014, the Company issued 23,888,784 shares of common stock at $0.027 to $0.0447 per share as stock based compensation valued at $936,509. The value of shares issued for stock based compensation was based on the trading price of the Company’s common stock on the date of issuance. | ||
During the three months ended March 31, 2014, the Company issued 9,000,000 shares of common stock at $0.0132 to $0.0207 per share for cash valued at $153,000. The value of shares issued for cash was based on the agreements in place with the shareholders. | ||
During the three months ended March 31, 2014, the Company issued 14,877,500 shares of common stock to Series A Preferred Stock shareholders for their 1,082 shares of Series A Preferred Stock in accordance with the provisions set forth for the Series A Preferred Stock. |
COST_METHOD_INVESTMENT
COST METHOD INVESTMENT | 3 Months Ended |
Mar. 31, 2014 | |
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 and 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. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2014 | |
Notes to Financial Statements | ' |
SUBSEQUENT EVENTS | ' |
On April 2, 2014, the Company entered into a Convertible Promissory Note with an unrelated third party in the amount of $665,000 with an interest rate of 10% per annum, whereby $60,000 is original issue discount, and $5,000 is previously paid legal fees. The effective date of the note per the agreements is March 31, 2014, but will be recorded on April 2, 2014 as the proceeds of the note were issued on April 2, 2014 and all corresponding documents were signed on April 2, 2014 as well. This note will mature on May 31, 2015. The note holder can convert any unpaid balance after 180 days from the original date of the note. In connection with this Convertible Promissory Note, the Company also entered into four Secured Buyer Notes with this Note Holder for $100,000 each. This Secured Buyer Notes have an interest rate of 8% per annum and will mature on March 31, 2015. Also in connection with this Convertible Promissory Note, on March 31, 2014, the Company issued a warrant to purchase shares of the Company’s common stock equal to $332,500 divided by the fair market value of the Company’s common stock on the date of issuance with an exercise price of $0.055 per share. The warrants expire on March 31, 2020. | |
On April 4, 2014, the Company entered into a Convertible Promissory Note with an unrelated third party in the amount of $55,000 with an interest rate of 8% per annum. This note will mature on April 4, 2015. The note holder can convert any unpaid balance after 180 days from the original date of the note. | |
On April 16, 2014, the Company entered into a Convertible Promissory Note with an unrelated third party in the amount of $55,000 with an interest rate of 8% per annum. This note will mature on April 3, 2015. The note holder can convert any unpaid balance after 180 days from the original date of the note. | |
On May 13, 2014, the Company entered into a Convertible Promissory Note with an unrelated third party in the amount of $250,000. The consideration to be paid to the Lender shall be equal to the consideration actually paid by the Lender plus prorated interest and any other fees such that the Company shall be required to pay. The Company will incur a one-time interest charge of 10% on the principal amount of each loan. The note holder made a payment to the Company of $50,000 of the total consideration on the date of the closing of the note, along with a one-time interest charge that is added to the principal in the amount of $5,000.This note will mature one year from the date of each payment of consideration. The note holder can convert any unpaid balance after 180 days from the original date of the note. | |
Subsequent to March 31, 2014, the Company issued 50,201,367 shares of common stock for various services rendered and conversions of debt. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended | |||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||
Notes to Financial Statements | ' | |||||||||||||||||
Basis of Presentation | ' | |||||||||||||||||
The Financial Statements and related disclosures have been prepared pursuant to the rules and regulations of the SEC. The Financial Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States | ||||||||||||||||||
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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. | ||||||||||||||||||
In the opinion of management, all adjustments necessary to present fairly the financial position, results of operations, and cash flows at March 31, 2014, and for all periods presented herein, have been made. | ||||||||||||||||||
Beneficial Conversion Feature | ' | |||||||||||||||||
Costs incurred with parties who are providing financing, which include the intrinsic value of beneficial conversion features associated with the underlying debt, are reflected as a debt discount. These discounts are generally amortized over the life of the related debt. In certain circumstances, the intrinsic value of the beneficial conversion feature may be greater than the proceeds associated to the convertible instrument. In such situations, the amount of the discount assigned to the beneficial conversion feature is limited to the amount of the proceeds allocated to the convertible instrument. | ||||||||||||||||||
The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional standards for “Accounting for Derivative Instruments and Hedging Activities”. | ||||||||||||||||||
Professional standards generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument”. | ||||||||||||||||||
The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with professional standards when “Accounting for Convertible Securities with Beneficial Conversion Features,” as those professional standards pertain to “Certain Convertible Instruments.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. | ||||||||||||||||||
The Company evaluated the conversion option embedded in the Series A Preferred Stock and determined, in accordance with the provisions of these statements, that such conversion option does not meet the criteria requiring bifurcation of these instruments. The characteristics of the common stock that is issuable upon a holder’s exercise of the conversion option embedded in the convertible preferred stock are deemed to be clearly and closely related to the characteristics of the preferred shares. Additionally, the Company’s conversion options, if free standing, would not be considered derivatives subject to the accounting guidelines prescribed in accordance with professional standards. | ||||||||||||||||||
ASC 815-40 provides that, among other things, generally, if an event is not within the entity’s control could require net cash settlement, then the contract shall be classified as an asset or a liability. | ||||||||||||||||||
Cash and Cash Equivalents | ' | |||||||||||||||||
For the purpose of the financial statements cash equivalents include all highly liquid investments with maturity of three months or less. Cash and cash equivalents were $216,617 and $145,778 at March 31, 2014 and December 31, 2013, respectively. See Note 6 – Restricted Cash Held in Escrow. | ||||||||||||||||||
Cash Flows Reporting | ' | |||||||||||||||||
The Company follows ASC 230, Statement of Cash Flows, for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by ASC 230, Statement of Cash Flows, to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period. | ||||||||||||||||||
Commitments and Contingencies | ' | |||||||||||||||||
The Company follows ASC 440, Commitments and ASC 450, Loss Contingencies, to report accounting for commitments and contingencies. | ||||||||||||||||||
Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. There were no commitments or contingencies at March 31, 2014 and 2013. | ||||||||||||||||||
Earnings per Share | ' | |||||||||||||||||
The Company computes basic and diluted earnings per share amounts in accordance with ASC Topic 260, Earnings per Share. Basic earnings per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. | ||||||||||||||||||
For the three months ended March 31, 2014 and 2013, the effect of common stock equivalents has been excluded from the calculation of diluted earnings per share as their effect would be anti-dilutive. | ||||||||||||||||||
The Company does not have any potentially dilutive instruments as of March 31, 2014 and, thus, anti-dilution issues are not applicable. | ||||||||||||||||||
At March 31, 2014, there were no stock options. | ||||||||||||||||||
Fair Value of Financial Instruments | ' | |||||||||||||||||
The Company follows paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments and paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below: | ||||||||||||||||||
Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. | |||||||||||||||||
Level 2 | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. | |||||||||||||||||
Level 3 | Pricing inputs that are generally unobservable inputs and not corroborated by market data. | |||||||||||||||||
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. | ||||||||||||||||||
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. | ||||||||||||||||||
The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts payable, accrued expenses and loans payable approximate their fair values because of the short maturity of these instruments. Loans payable are recorded at their issue value. | ||||||||||||||||||
Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated. | ||||||||||||||||||
It is not, however, practical to determine the fair value of advances from stockholders, if any, due to their related party nature. | ||||||||||||||||||
The following table presents assets and liabilities that are measured and recognized at fair value as of March 31, 2014 and December 31, 2013, on a recurring basis: | ||||||||||||||||||
Assets and liabilities measured at fair value on a recurring basis at March 31, 2014 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Carrying | ||||||||||||||||||
Value | ||||||||||||||||||
Derivative liabilities | $ | - | $ | - | $ | (1,682,387 | ) | $ | (1,682,387 | ) | ||||||||
Assets and liabilities measured at fair value on a recurring basis at December 31, 2013 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Carrying | ||||||||||||||||||
Value | ||||||||||||||||||
Derivative liabilities | $ | - | $ | - | $ | (465,880 | ) | $ | (465,880 | ) | ||||||||
Property and Equipment | ' | |||||||||||||||||
Property and equipment are stated at cost. Depreciation was calculated using the straight-line method over the estimated useful lives of the related assets, ranging from three to seven years. Expenditures for additions and improvements were capitalized, while repairs and maintenance costs were expensed as incurred. The cost and related accumulated depreciation of property and equipment sold or otherwise disposed of were removed from the accounts and any gain or loss was recorded in the year of disposal. Depreciation expense for the three months ended March 31, 2014 and 2013 was $12,193 and $0, respectively. | ||||||||||||||||||
Related Parties | ' | |||||||||||||||||
The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. Related party transactions for the three month periods ending March 31, 2013 and 2014 are reflected in Note 9. | ||||||||||||||||||
Stock-Based Compensation | ' | |||||||||||||||||
ASC 718, Compensation – Stock Compensation, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). | ||||||||||||||||||
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, Equity – based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date. | ||||||||||||||||||
Under our stock compensation plan (the “Stock Plan”) which is registered under Form S8, or through newly issued restricted common stock, we pay qualified contractors and advisors common shares in lieu of compensation for services provided including business development, management, technology development, consulting, legal services and accounting services | ||||||||||||||||||
Share-based expense for the three months ended March 31, 2014 and 2013 was $938,509 and $0, respectively. | ||||||||||||||||||
Reclassifications | ' | |||||||||||||||||
Certain balances in previously issued financial statements have been reclassified to be consistent with current period presentation. | ||||||||||||||||||
Principles of Consolidation | ' | |||||||||||||||||
The accompanying condensed consolidated financial statements for the three months ended March 31, 2014, include the accounts of the Company and its wholly-owned subsidiary E-Waste Systems Cincinnati, Inc. (“EWS-C”), and Surf Investments, Ltd. (“Surf”). All significant intercompany balances and transactions have been eliminated in consolidation. | ||||||||||||||||||
Concentration of Credit Risk | ' | |||||||||||||||||
SURF | ||||||||||||||||||
For the three months ended March 31, 2014, Customer A accounted for 27.9% of the Surf’s net revenue. Customer B accounted for approximately 22.8% of Surf’s net revenue and 18.9% of Surf’s total accounts receivable for the three months ended March 31, 2014. Customer C accounted for approximately 19.9% of the Company’s net revenue and 31% of Surf’s total accounts receivable for the three months ended March 31, 2014. Customer D accounted for 11.8% of Surf’s total accounts receivable for the three months ended March 31, 2014. | ||||||||||||||||||
EWS-C | ||||||||||||||||||
For the three months ended March 31, 2014, Customer A accounted for 61.9% of EWS-C’s net revenue and 84.2% of EWS-C’s accounts receivables. Customer B accounted for approximately 19.6% of EWS-C’s net revenue and 10.6% of EWS-C’s accounts receivables for the three months ended March 31, 2014. Customer C accounted for approximately 16% of EWS-C’s net revenue. Customer D 12.4% of EWS-C’s accounts receivable for the three months ended March 31, 2014. | ||||||||||||||||||
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. 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 months ended March 31, 2014 and 2013, allowance for doubtful accounts was $2,700 and $0, 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 Sales of Brand Licenses | ||||||||||||||||||
During the year, 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. The Company will recognize the licensing revenue when collected or when collectability is probable. | ||||||||||||||||||
Segment Reporting | ' | |||||||||||||||||
The Company generates revenues from the following sources: (1) licensing of technology and management services in electronic waste disposal, development of ePlants and similar processes for electronic waste disposal systems in return for license, consulting and management fees; (2) operation of strategic business development projects and market development projects through the eVolve divisions for which the Company obtains sales revenues and incurs day to day operational expenses including the cost of leases incurred through the activities, and (3) repair refurbishing and recycling of electronics for which the Company receives revenues from disposal contracts, and fees for disposal plus revenues from the sale of reclaimed components or reclaimed materials such a gold, platinum and other precious metals obtained through recycling processes and incurs costs associated recycling activities. | ||||||||||||||||||
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 condensed consolidated 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. The Company did not record an impairment expense for the three months ended March 31, 2014. | ||||||||||||||||||
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 condensed consolidated 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. Intangible assets consist of customer lists and certification. Amortization of intangible assets for three months ended March 31, 2014 was $21,594. The Company did not record an impairment expense as of March 31, 2014. | ||||||||||||||||||
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 condensed consolidated 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. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are as follows: | ||||||||||||||||||
Automobiles and Equipment | 5 years | |||||||||||||||||
Computer Software | 3 years | |||||||||||||||||
Leasehold Improvements | 3 years | |||||||||||||||||
Goodwill | ' | |||||||||||||||||
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations. ASC 350-30-35-4 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests when circumstances indicate that the recoverability of the carrying amount of goodwill may be in doubt. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. Significant judgments required to estimate the fair value of reporting units include estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment for each reporting unit. | ||||||||||||||||||
Foreign Currency | ' | |||||||||||||||||
Monetary assets and liabilities of the Company's foreign operations are translated into U.S. dollars at period-end exchange rates. Non-monetary assets and liabilities are translated at historical 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 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’ deficit. | ||||||||||||||||||
Income Taxes | ' | |||||||||||||||||
Deferred income tax assets as of March 31, 2014, of $688,816 resulting from net operating losses and future amortization deductions, have been fully offset by valuation allowances. The valuation allowances have been established equal to the full amounts of the deferred tax assets, as the Company is not assured that it is more likely than not that these benefits will be realized. | ||||||||||||||||||
Reconciliation between the statutory United States corporate income tax rate (35%) and the effective income tax rates based on continuing operations is as follows: | ||||||||||||||||||
As of March 31 | 2014 | 2013 | ||||||||||||||||
Income tax benefit at Federal statutory rate of 44% | $ | (2,288,393 | ) | $ | (500,368 | ) | ||||||||||||
State Income tax benefit, net of Federal effect | (634,031 | ) | (138,634 | ) | ||||||||||||||
Permanent and other differences | - | - | ||||||||||||||||
Change in valuation allowance | 2,922,424 | 639,002 | ||||||||||||||||
Total | $ | - | $ | - | ||||||||||||||
Components of deferred tax assets were approximately as follows: | ||||||||||||||||||
As at March 31, | 2014 | 2013 | ||||||||||||||||
Net operating loss | $ | 10,213,000 | $ | 3,037,000 | ||||||||||||||
Asset impairment | ||||||||||||||||||
Valuation allowance | (10,213,000 | ) | (3,037,000 | ) | ||||||||||||||
Total | $ | - | $ | - | ||||||||||||||
At March 31, 2014, the Company has available net operating losses of approximately $18,000,000 which may be carried forward to apply against future taxable income. These losses will expire in 2031. Deferred tax assets related to these losses have not been recorded due to uncertainty regarding their utilization. | ||||||||||||||||||
The provisions of ASC 740 require companies to recognize in their condensed consolidated financial statements the impact of a tax position if that position is more likely than not to be sustained upon audit, based upon the technical merits of the position. ASC 740 prescribes a recognition threshold and measurement attribute for the condensed consolidated financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. | ||||||||||||||||||
Management does not believe that the Company has any material uncertain tax positions requiring recognition or measurement in accordance with the provisions of ASC 740. Accordingly, the adoption of these provisions of ASC 740 did not have a material effect on the Company’s condensed consolidated financial statements. The Company’s policy is to record interest and penalties on uncertain tax positions, if any, as income tax expense. | ||||||||||||||||||
The Company has not filed its applicable Federal and State tax returns for the year ended December 31, 2012 and may be subject to penalties for noncompliance. The Company has filed an extension for the 2013 filings. | ||||||||||||||||||
Recent Accounting Pronouncements | ' | |||||||||||||||||
Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. | ||||||||||||||||||
We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration. |
RESTATEMENT_Tables
RESTATEMENT (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Restatement Tables | ' | ||||||||||||
Restatement of condensed consolidated financial statements | ' | ||||||||||||
The following represents the changes to the restated consolidated financial statements as of and for the three months ended March 31, 2014: | |||||||||||||
Consolidated Balance Sheets | |||||||||||||
Restated | Amended | ||||||||||||
31-Mar-13 | 31-Mar-13 | Differences | |||||||||||
ASSETS | |||||||||||||
Current Assets | |||||||||||||
Cash | $ | 9,690 | $ | 25,107 | $ | (15,417 | ) | ||||||
Accounts receivable | - | 4,009 | (4,009 | ) | |||||||||
License fee receivable | - | 75,000 | (75,000 | ) | |||||||||
Marketable securities, available-for-sale | 730,000 | 880,000 | (150,000 | ) | |||||||||
Total Current Assets | 739,690 | 984,116 | (244,426 | ) | |||||||||
Total Assets | $ | 739,690 | $ | 984,116 | $ | (244,426 | ) | ||||||
LIABILITIES AND STOCKHOLDERS' DEFICIENCY | |||||||||||||
Current Liabilities | |||||||||||||
Accounts payable and accrued expenses | $ | 288,328 | $ | 307,876 | $ | (19,548 | ) | ||||||
Accounts payable - related party | 1,240,380 | 1,240,380 | - | ||||||||||
Short-term notes payable | 175,000 | 175,000 | - | ||||||||||
Short-term related party convertible notes payable, net | 12,000 | 12,000 | - | ||||||||||
Short-term convertible notes payable, net | 13,158 | 13,158 | - | ||||||||||
Derivative liability on short-term convertible notes payable | 54,239 | 54,239 | - | ||||||||||
Total Current Liabilities | 1,783,105 | 1,802,653 | (19,548 | ) | |||||||||
Long-Term Liabilities | |||||||||||||
Long-term convertible notes payable, net | 138,187 | 138,187 | - | ||||||||||
Derivative liability on long-term convertible notes | 62,111 | 62,111 | - | ||||||||||
Total Long-Term Liabilities | 200,298 | 200,298 | - | ||||||||||
Total Liabilities | 1,983,403 | 2,002,951 | (19,548 | ) | |||||||||
Stockholders' Deficiency | |||||||||||||
Preferred stock, $0.001 par value; 10,000,000 shares authorized, 800 and 0 shares issued and outstanding, respectively | 1 | 1 | - | ||||||||||
Common stock, $0.001 par value; 490,000,000 shares authorized, 146,823,587 and 106,504,926 shares issued and outstanding, respectively | 146,825 | 146,825 | - | ||||||||||
Additional paid-in capital | 2,357,119 | 2,357,119 | - | ||||||||||
Accumulated other comprehensive income | - | 62 | (62 | ) | |||||||||
Accumulated deficit | (3,747,658 | ) | (3,522,842 | ) | (224,816 | ) | |||||||
Total Stockholders' Deficiency | (1,243,713 | ) | (1,018,835 | ) | (224,878 | ) | |||||||
Total Liabilities and Stockholders' Deficiency | $ | 739,690 | $ | 984,116 | $ | (244,426 | ) | ||||||
Consolidated Statements of Operations | |||||||||||||
(Unaudited) | |||||||||||||
Restated | Amended | ||||||||||||
31-Mar-13 | 31-Mar-13 | Differences | |||||||||||
Product sales revenue | $ | - | $ | 4,001 | $ | (4,001 | ) | ||||||
Revenues from license fees | - | 225,000 | (225,000 | ) | |||||||||
Total Revenues | - | 229,001 | (229,001 | ) | |||||||||
Cost of goods sold | - | 3,801 | (3,801 | ) | |||||||||
Gross Margin | - | 225,200 | (252,200 | ) | |||||||||
Operating Expenses | |||||||||||||
Officer and director compensation | 131,622 | 131,622 | - | ||||||||||
Professional fees | 449,167 | 449,167 | - | ||||||||||
General and administrative | 19,075 | 21,261 | (2,186 | ) | |||||||||
Total Operating Expenses | 599,864 | 602,050 | (2,186 | ) | |||||||||
Loss from Operations | (599,864 | ) | (376,850 | ) | (223,014 | ) | |||||||
Other Income/(Expenses) | |||||||||||||
Interest expense | (114,711 | ) | (118,163 | ) | 3,452 | ||||||||
Gain on derivative liability | 3,525 | 3,525 | - | ||||||||||
Currency exchange gain | 5,149 | 5,149 | - | ||||||||||
Total Other Income/(Expenses) | (106,037 | ) | (109,489 | ) | 3,452 | ||||||||
Loss from Operations before Income Taxes | (705,901 | ) | (486,339 | ) | (219,562 | ) | |||||||
Provision for Income Taxes | - | - | - | ||||||||||
Net Loss from Continuing Operations | (705,901 | ) | (486,339 | ) | (219,562 | ) | |||||||
Loss from Discontinued Operations, net of Income Taxes | (5,254 | ) | - | (5,254 | ) | ||||||||
Net Loss | $ | (711,155 | ) | $ | (486,339 | ) | $ | (224,816 | ) | ||||
Other Comprehensive Income | |||||||||||||
Foreign currency translation adjustments | - | - | - | ||||||||||
Total Other Comprehensive Income | $ | (711,155 | ) | $ | (486,339 | ) | $ | (224,816 | ) | ||||
Basic and Diluted Loss per Share from Continuing Operations | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.01 | ) | ||||
Basic and Diluted loss per Share from Discontinued Operations | $ | - | $ | - | $ | - | |||||||
Net loss per share - Basic and Diluted | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.01 | ) | ||||
Weighted average number of shares outstanding during the period - Basic and Diluted | 123,153,590 | 123,153,590 | - | ||||||||||
Consolidated Statements of Cash Flows | |||||||||||||
(Unaudited) | |||||||||||||
Restated | Amended | ||||||||||||
31-Mar-13 | 31-Mar-13 | Differences | |||||||||||
Cash Flows From Operating Activities: | |||||||||||||
Net Loss | $ | (705,901 | ) | $ | (486,339 | ) | $ | (219,562 | ) | ||||
Adjustments to reconcile net loss to net cash used in operations | |||||||||||||
Currency translation gain | (5,149 | ) | (5,149 | ) | - | ||||||||
Amortization of debt discounts | 25,918 | 25,918 | - | ||||||||||
Origination interest on derivative liability | 76,195 | 76,195 | - | ||||||||||
Change in derivative liability | (3,525 | ) | (3,525 | ) | - | ||||||||
Debt issued for services | 17,417 | 17,417 | - | ||||||||||
Common stock issued for services | 293,634 | 293,634 | - | ||||||||||
Changes in operating assets and liabilities: | |||||||||||||
(Increase)/Decrease in accounts and other receivables | - | (4,009 | ) | 4,009 | |||||||||
(Increase)/Decrease in license fees receivable | - | (225,000 | ) | (225,000 | ) | ||||||||
Increase/(Decrease) in accounts payable and accrued expenses | 147,278 | 166,826 | (19,548 | ) | |||||||||
Increase/(Decrease) in accrued expenses - related party | 123,176 | 123,176 | - | ||||||||||
Net Cash Used In Continuing Operating Activities | (30,957 | ) | (20,856 | ) | (10,101 | ) | |||||||
Net Cash Provided by Discontinued Operating Activities | (5,254 | ) | - | (5,254 | ) | ||||||||
Net Cash Used in Operating Activities | (36,211 | ) | (20,856 | ) | (15,355 | ) | |||||||
Cash Flows From Financing Activities: | |||||||||||||
Proceeds from notes payable | 25,000 | 25,000 | - | ||||||||||
Net Cash Provided by Continuing Financing Activities | 25,000 | 25,000 | - | ||||||||||
Net Cash Provided by Discontinued Financing Activities | - | - | - | ||||||||||
Net Cash Provided by Financing Activities | 25,000 | 25,000 | - | ||||||||||
Effects of exchange rates on cash | 22,242 | 22,304 | (62 | ) | |||||||||
Net Increase / (Decrease) in Cash | 11,031 | 26,448 | (15,417 | ) | |||||||||
Cash at Beginning of Period | 139 | 139 | - | ||||||||||
Cash at End of Period | $ | 11,170 | $ | 26,587 | $ | (15,417 | ) | ||||||
Supplemental disclosure of cash flow information: | |||||||||||||
Cash paid for interest | $ | - | $ | - | $ | - | |||||||
Cash paid for taxes | $ | - | $ | - | $ | - | |||||||
Supplemental disclosure of non-cash investing and financing activities: | |||||||||||||
Debt discounts on convertible notes payable | $ | 247,545 | $ | 247,545 | $ | - | |||||||
Preferred stock issued for marketable securities | $ | 730,000 | $ | 730,000 | $ | - | |||||||
Preferred stock issued for acquisition of subsidiary | $ | 27,256 | $ | 27,256 | $ | - | |||||||
Common stock issued for intangible assets | $ | 77,185 | $ | 77,185 | $ | - | |||||||
Common stock issued for conversion of debt | $ | 252,123 | $ | 252,123 | $ | - | |||||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended | |||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||
Summary Of Significant Accounting Policies Tables | ' | |||||||||||||||||
Schedule of Assets and Liabilities Measured at Fair Value | ' | |||||||||||||||||
The following table presents assets and liabilities that are measured and recognized at fair value as of March 31, 2014 and December 31, 2013, on a recurring basis: | ||||||||||||||||||
Assets and liabilities measured at fair value on a recurring basis at March 31, 2014 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Carrying | ||||||||||||||||||
Value | ||||||||||||||||||
Derivative liabilities | $ | - | $ | - | $ | (1,682,387 | ) | $ | (1,682,387 | ) | ||||||||
Assets and liabilities measured at fair value on a recurring basis at December 31, 2013 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Carrying | ||||||||||||||||||
Value | ||||||||||||||||||
Derivative liabilities | $ | - | $ | - | $ | (465,880 | ) | $ | (465,880 | ) | ||||||||
Schedule of Depreciable Lives for Property and Equipment | ' | |||||||||||||||||
Automobiles and Equipment | 5 years | |||||||||||||||||
Computer Software | 3 years | |||||||||||||||||
Leasehold Improvements | 3 years | |||||||||||||||||
Effective income tax rates based on continuing operations | ' | |||||||||||||||||
Reconciliation between the statutory United States corporate income tax rate (35%) and the effective income tax rates based on continuing operations is as follows: | ||||||||||||||||||
As of March 31 | 2014 | 2013 | ||||||||||||||||
Income tax benefit at Federal statutory rate of 44% | $ | (2,288,393 | ) | $ | (500,368 | ) | ||||||||||||
State Income tax benefit, net of Federal effect | (634,031 | ) | (138,634 | ) | ||||||||||||||
Permanent and other differences | - | - | ||||||||||||||||
Change in valuation allowance | 2,922,424 | 639,002 | ||||||||||||||||
Total | $ | - | $ | - | ||||||||||||||
Deferred tax assets | ' | |||||||||||||||||
Components of deferred tax assets were approximately as follows: | ||||||||||||||||||
As at March 31, | 2014 | 2013 | ||||||||||||||||
Net operating loss | $ | 10,213,000 | $ | 3,037,000 | ||||||||||||||
Asset impairment | ||||||||||||||||||
Valuation allowance | (10,213,000 | ) | (3,037,000 | ) | ||||||||||||||
Total | $ | - | $ | - |
PROPERTY_AND_EQUIPMENT_Tables
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Property And Equipment Tables | ' | ||||||||
Schedule of Property and Equipment | ' | ||||||||
Property and equipment consisted of the following as of March 31, 2014 and December 31, 2013: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Equipment | $ | 187,384 | $ | 165,518 | |||||
Automobiles | 20,926 | 20,926 | |||||||
Computer Software | 8,558 | - | |||||||
Leasehold Improvements | 80,608 | - | |||||||
Less: accumulated depreciation | (16,917 | ) | -4,724 | ||||||
Property and Equipment, Net | $ | 280,559 | $ | 181,720 |
GOING_CONCERN_Details_Narrativ
GOING CONCERN (Details Narrative) (USD $) | 3 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Going Concern Details Narrative | ' | ' | ' |
Incurred net losses | $6,517,308 | ($711,155) | ' |
Working capital deficits | $5,260,393 | ' | $3,253,407 |
RESTATEMENT_Details
RESTATEMENT (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 |
CURRENT ASSETS: | ' | ' | ' |
Cash | $216,617 | $145,778 | ($15,417) |
Accounts receivable, net | 252,076 | 63,217 | -4,009 |
License fee receivable | ' | ' | 75,000 |
Marketable securities, available-for-sale | ' | ' | 150,000 |
Total Current Assets | 654,629 | 359,632 | -244,426 |
TOTAL ASSETS | 1,631,640 | 1,154,206 | -244,426 |
CURRENT LIABILITIES: | ' | ' | ' |
Accounts payable and accrued expenses | 753,991 | 479,884 | -19,548 |
Accounts payable - related party | ' | ' | ' |
Short-term notes payable | 185,027 | 194,460 | ' |
Short-term related party convertible notes payable, net | 12,000 | 12,000 | ' |
Short-term convertible notes payable, net | 1,834,837 | 1,139,897 | ' |
Derivative liability on short-term convertible notes payable | 1,682,387 | 465,880 | ' |
Total Current Liabilities | 5,915,022 | 3,613,039 | -19,548 |
Long-Term Liabilities | ' | ' | ' |
Long term portion of loans payable | 65,269 | 85,908 | ' |
Derivative liability on long-term convertible notes | ' | ' | ' |
Total Long-Term Liabilities | ' | ' | ' |
TOTAL LIABILITIES | 6,233,720 | 3,950,353 | -19,548 |
STOCKHOLDERS' DEFICIT | ' | ' | ' |
Preferred stock, Series B, $0.001 par value, 10,000,000 shares authorized; 195,000 and 195,000 shares issued and outstanding, respectively | 195 | 195 | ' |
Common stock, $0.001 par value, 8,000,000 shares authorized; 344,727,085 and 262,734,973 shares issued and outstanding, respectively | 344,727 | 262,735 | ' |
Additional paid-in capital | 11,783,604 | 7,154,225 | ' |
Accumulated other comprehensive income | ' | ' | -62 |
Accumulated deficit | -16,730,612 | -10,213,304 | -224,816 |
TOTAL STOCKHOLDERS' DEFICIT | -4,602,080 | -2,796,147 | -224,878 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | 1,631,640 | 1,154,206 | -244,426 |
As Restated | ' | ' | ' |
CURRENT ASSETS: | ' | ' | ' |
Cash | ' | ' | 9,690 |
Accounts receivable, net | ' | ' | ' |
License fee receivable | ' | ' | ' |
Marketable securities, available-for-sale | ' | ' | 730,000 |
Total Current Assets | ' | ' | 739,690 |
TOTAL ASSETS | ' | ' | 739,690 |
CURRENT LIABILITIES: | ' | ' | ' |
Accounts payable and accrued expenses | ' | ' | 288,328 |
Accounts payable - related party | ' | ' | 1,240,380 |
Short-term notes payable | ' | ' | 175,000 |
Short-term related party convertible notes payable, net | ' | ' | 12,000 |
Short-term convertible notes payable, net | ' | ' | 13,158 |
Derivative liability on short-term convertible notes payable | ' | ' | 54,239 |
Total Current Liabilities | ' | ' | 1,783,105 |
Long-Term Liabilities | ' | ' | ' |
Long term portion of loans payable | ' | ' | 138,187 |
Derivative liability on long-term convertible notes | ' | ' | 62,111 |
Total Long-Term Liabilities | ' | ' | 200,298 |
TOTAL LIABILITIES | ' | ' | 1,983,403 |
STOCKHOLDERS' DEFICIT | ' | ' | ' |
Preferred stock, Series B, $0.001 par value, 10,000,000 shares authorized; 195,000 and 195,000 shares issued and outstanding, respectively | ' | ' | 1 |
Common stock, $0.001 par value, 8,000,000 shares authorized; 344,727,085 and 262,734,973 shares issued and outstanding, respectively | ' | ' | 146,825 |
Additional paid-in capital | ' | ' | 2,357,119 |
Accumulated other comprehensive income | ' | ' | ' |
Accumulated deficit | ' | ' | -3,747,658 |
TOTAL STOCKHOLDERS' DEFICIT | ' | ' | -1,243,713 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | ' | ' | 739,690 |
Amended [Member] | ' | ' | ' |
CURRENT ASSETS: | ' | ' | ' |
Cash | ' | ' | 25,107 |
Accounts receivable, net | ' | ' | 4,009 |
License fee receivable | ' | ' | 75,000 |
Marketable securities, available-for-sale | ' | ' | 880,000 |
Total Current Assets | ' | ' | 984,116 |
TOTAL ASSETS | ' | ' | 984,116 |
CURRENT LIABILITIES: | ' | ' | ' |
Accounts payable and accrued expenses | ' | ' | 307,876 |
Accounts payable - related party | ' | ' | 1,240,380 |
Short-term notes payable | ' | ' | 175,000 |
Short-term related party convertible notes payable, net | ' | ' | 12,000 |
Short-term convertible notes payable, net | ' | ' | 13,158 |
Derivative liability on short-term convertible notes payable | ' | ' | 54,239 |
Total Current Liabilities | ' | ' | 1,802,653 |
Long-Term Liabilities | ' | ' | ' |
Long term portion of loans payable | ' | ' | 138,187 |
Derivative liability on long-term convertible notes | ' | ' | 62,111 |
Total Long-Term Liabilities | ' | ' | 200,298 |
TOTAL LIABILITIES | ' | ' | 2,002,951 |
STOCKHOLDERS' DEFICIT | ' | ' | ' |
Preferred stock, Series B, $0.001 par value, 10,000,000 shares authorized; 195,000 and 195,000 shares issued and outstanding, respectively | ' | ' | 1 |
Common stock, $0.001 par value, 8,000,000 shares authorized; 344,727,085 and 262,734,973 shares issued and outstanding, respectively | ' | ' | 146,825 |
Additional paid-in capital | ' | ' | 2,357,119 |
Accumulated other comprehensive income | ' | ' | 62 |
Accumulated deficit | ' | ' | -3,522,842 |
TOTAL STOCKHOLDERS' DEFICIT | ' | ' | -1,018,835 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | ' | ' | $984,116 |
RESTATEMENT_Details_1
RESTATEMENT (Details 1) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Product sales revenue | $219,853 | ($4,001) |
Revenue from license fees | ' | 225,000 |
Total Revenues | 509,056 | -229,001 |
Cost of goods sold | 312,508 | -3,801 |
Gross Margin | 196,548 | -252,200 |
OPERATING EXPENSES | ' | ' |
Officer and director compensation | 91,035 | ' |
Professional fees | 3,397,436 | ' |
General and administrative expenses | 626,124 | -2,186 |
Total Operating Expenses | 5,216,801 | -2,186 |
Loss from Operations | -5,020,253 | -223,014 |
Other Income/(Expenses) | ' | ' |
Interest expense | -196,066 | 3,452 |
Gain on derivative liability | -1,216,507 | ' |
Currency exchange gain | ' | ' |
Total Other Income/(Expenses) | -1,412,573 | 3,452 |
Loss from Operations before Income Taxes | -6,432,826 | -219,562 |
Provision for Income Taxes | ' | ' |
Net Loss from Continuing Operations | -6,432,826 | -219,562 |
Loss from Discontinued Operations, net of Income Taxes | -84,482 | -5,254 |
Net Loss | -6,517,308 | -224,816 |
Other Comprehensive Income | ' | ' |
Total Other Comprehensive Income | ' | -224,816 |
Basic and Diluted Loss per Share from Continuing Operations | ($0.02) | ($0.01) |
Basic and Diluted Loss per Share from Discontinued Operations | ' | ' |
Net loss per share - Basic and Diluted | ($0.02) | ($0.01) |
Weighted average number of shares outstanding during the period - Basic and Diluted | 302,733,982 | ' |
As Restated | ' | ' |
Product sales revenue | ' | ' |
Total Revenues | ' | ' |
Cost of goods sold | ' | ' |
Gross Margin | ' | ' |
OPERATING EXPENSES | ' | ' |
Officer and director compensation | ' | 131,622 |
Professional fees | ' | 449,167 |
General and administrative expenses | ' | 19,075 |
Total Operating Expenses | ' | 599,864 |
Loss from Operations | ' | -599,864 |
Other Income/(Expenses) | ' | ' |
Interest expense | ' | -114,711 |
Gain on derivative liability | ' | 3,525 |
Currency exchange gain | ' | 5,149 |
Total Other Income/(Expenses) | ' | -106,037 |
Loss from Operations before Income Taxes | ' | -705,901 |
Provision for Income Taxes | ' | ' |
Net Loss from Continuing Operations | ' | -705,901 |
Loss from Discontinued Operations, net of Income Taxes | ' | -5,254 |
Net Loss | ' | -711,155 |
Other Comprehensive Income | ' | ' |
Foreign currency translation adjustments | ' | ' |
Total Other Comprehensive Income | ' | -711,155 |
Basic and Diluted Loss per Share from Continuing Operations | ' | ($0.01) |
Basic and Diluted Loss per Share from Discontinued Operations | ' | ' |
Net loss per share - Basic and Diluted | ' | ($0.01) |
Weighted average number of shares outstanding during the period - Basic and Diluted | ' | 123,153,590 |
Amended [Member] | ' | ' |
Product sales revenue | ' | 4,001 |
Revenue from license fees | ' | 225,000 |
Total Revenues | ' | 229,001 |
Cost of goods sold | ' | 3,801 |
Gross Margin | ' | 225,200 |
OPERATING EXPENSES | ' | ' |
Officer and director compensation | ' | 131,622 |
Professional fees | ' | 449,167 |
General and administrative expenses | ' | 21,261 |
Total Operating Expenses | ' | 602,050 |
Loss from Operations | ' | -376,850 |
Other Income/(Expenses) | ' | ' |
Interest expense | ' | -118,163 |
Gain on derivative liability | ' | 3,525 |
Currency exchange gain | ' | 5,149 |
Total Other Income/(Expenses) | ' | -109,489 |
Loss from Operations before Income Taxes | ' | -486,339 |
Net Loss from Continuing Operations | ' | -486,339 |
Loss from Discontinued Operations, net of Income Taxes | ' | ' |
Net Loss | ' | -486,339 |
Other Comprehensive Income | ' | ' |
Foreign currency translation adjustments | ' | ' |
Total Other Comprehensive Income | ' | ($486,339) |
Basic and Diluted Loss per Share from Continuing Operations | ' | $0 |
Basic and Diluted Loss per Share from Discontinued Operations | ' | ' |
Net loss per share - Basic and Diluted | ' | $0 |
Weighted average number of shares outstanding during the period - Basic and Diluted | ' | 123,153,590 |
RESTATEMENT_Details_2
RESTATEMENT (Details 2) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Cash Flows From Operating Activities: | ' | ' |
Net loss | ($6,432,826) | ($219,562) |
Adjustments to reconcile net loss to net cash used in operations | ' | ' |
Currency translation gain | ' | ' |
Amortization of debt discount | 118,285 | ' |
Origination interest on derivative liability | 6,000 | ' |
Change in derivative liability | 1,216,507 | ' |
Debt issued for services | ' | ' |
Common stock issued for services | 630,984 | ' |
Changes in operating assets and liabilities: | ' | ' |
Increase)/Decrease in accounts and other receivables | 188,859 | 4,009 |
(Increase)/Decrease in license fees receivable | ' | -225,000 |
Increase/(Decrease) in accounts payable and accrued expenses | 360,150 | -19,548 |
Increase/(Decrease) in accrued expenses - related party | 119,890 | ' |
Net Cash Used In Continuing Operating Activities | -347,791 | -10,101 |
Net Cash Provided by Discontinued Operating Activities | -84,482 | -5,254 |
Net Cash Used in Operating Activities | -432,273 | -15,355 |
Cash Flows From Financing Activities: | ' | ' |
Proceeds from notes payable | ' | ' |
Net Cash Provided by Continuing Financing Activities | 719,336 | ' |
Net Cash Provided by Financing Activities | 719,336 | ' |
Effects of exchange rates on cash | ' | -62 |
Net Increase / (Decrease) in Cash | 70,839 | -15,417 |
Cash and cash equivalents, beginning of period | 145,778 | ' |
Cash and cash equivalents, end of period | 216,617 | -15,417 |
Supplemental disclosure of cash flow information: | ' | ' |
Cash paid for interest | 14,847 | ' |
Cash paid for taxes | ' | ' |
Supplemental disclosure of non-cash investing and financing activities: | ' | ' |
Debt discounts on convertible notes payable | ' | ' |
Preferred stock issued for marketable securities | ' | ' |
Preferred stock issued for acquisition of subsidiary | ' | ' |
Common stock issued for intangible assets | ' | ' |
Common stock issued for conversion of debt | ' | ' |
As Restated | ' | ' |
Cash Flows From Operating Activities: | ' | ' |
Net loss | ' | -705,901 |
Adjustments to reconcile net loss to net cash used in operations | ' | ' |
Currency translation gain | ' | 5,149 |
Amortization of debt discount | ' | 25,918 |
Origination interest on derivative liability | ' | 76,195 |
Change in derivative liability | ' | -3,525 |
Debt issued for services | ' | 17,417 |
Common stock issued for services | ' | 293,634 |
Changes in operating assets and liabilities: | ' | ' |
Increase)/Decrease in accounts and other receivables | ' | ' |
Increase/(Decrease) in accounts payable and accrued expenses | ' | 147,278 |
Increase/(Decrease) in accrued expenses - related party | ' | 123,176 |
Net Cash Used In Continuing Operating Activities | ' | -30,957 |
Net Cash Provided by Discontinued Operating Activities | ' | -5,254 |
Net Cash Used in Operating Activities | ' | -36,211 |
Cash Flows From Financing Activities: | ' | ' |
Proceeds from notes payable | ' | 25,000 |
Net Cash Provided by Continuing Financing Activities | ' | 25,000 |
Net Cash Provided by Discontinued Financing Activities | ' | ' |
Net Cash Provided by Financing Activities | ' | 25,000 |
Effects of exchange rates on cash | ' | 22,242 |
Net Increase / (Decrease) in Cash | ' | 11,031 |
Cash and cash equivalents, beginning of period | ' | 139 |
Cash and cash equivalents, end of period | ' | 11,170 |
Supplemental disclosure of cash flow information: | ' | ' |
Cash paid for interest | ' | ' |
Cash paid for taxes | ' | ' |
Supplemental disclosure of non-cash investing and financing activities: | ' | ' |
Debt discounts on convertible notes payable | ' | 247,545 |
Preferred stock issued for marketable securities | ' | 730,000 |
Preferred stock issued for acquisition of subsidiary | ' | 27,256 |
Common stock issued for intangible assets | ' | 77,185 |
Common stock issued for conversion of debt | ' | 252,123 |
Amended [Member] | ' | ' |
Cash Flows From Operating Activities: | ' | ' |
Net loss | ' | -486,339 |
Adjustments to reconcile net loss to net cash used in operations | ' | ' |
Currency translation gain | ' | -5,149 |
Amortization of debt discount | ' | 25,918 |
Origination interest on derivative liability | ' | 76,195 |
Change in derivative liability | ' | -3,525 |
Debt issued for services | ' | 17,417 |
Common stock issued for services | ' | 293,634 |
Changes in operating assets and liabilities: | ' | ' |
Increase)/Decrease in accounts and other receivables | ' | -4,009 |
(Increase)/Decrease in license fees receivable | ' | -225,000 |
Increase/(Decrease) in accounts payable and accrued expenses | ' | 166,826 |
Increase/(Decrease) in accrued expenses - related party | ' | 123,176 |
Net Cash Used In Continuing Operating Activities | ' | -20,856 |
Net Cash Provided by Discontinued Operating Activities | ' | ' |
Net Cash Used in Operating Activities | ' | -20,856 |
Cash Flows From Financing Activities: | ' | ' |
Proceeds from notes payable | ' | 25,000 |
Net Cash Provided by Continuing Financing Activities | ' | 25,000 |
Net Cash Provided by Financing Activities | ' | 25,000 |
Effects of exchange rates on cash | ' | 22,304 |
Net Increase / (Decrease) in Cash | ' | 26,448 |
Cash and cash equivalents, beginning of period | ' | 139 |
Cash and cash equivalents, end of period | ' | 26,587 |
Supplemental disclosure of cash flow information: | ' | ' |
Cash paid for interest | ' | ' |
Cash paid for taxes | ' | ' |
Supplemental disclosure of non-cash investing and financing activities: | ' | ' |
Debt discounts on convertible notes payable | ' | 247,545 |
Preferred stock issued for marketable securities | ' | 730,000 |
Preferred stock issued for acquisition of subsidiary | ' | 27,256 |
Common stock issued for intangible assets | ' | 77,185 |
Common stock issued for conversion of debt | ' | $252,123 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Derivative liabilities | ($1,682,387) | ($465,880) |
Level 1 [Member] | ' | ' |
Derivative liabilities | ' | ' |
Level 2 [Member] | ' | ' |
Derivative liabilities | ' | ' |
Level 3 [Member] | ' | ' |
Derivative liabilities | ($1,682,387) | ($465,880) |
SUMMARY_OF_SIGNIFICANT_ACCOUNT4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) | 3 Months Ended |
Mar. 31, 2014 | |
Automobiles and Equipment [Member] | ' |
Estimated useful lives of the assets | '5 years |
Computer Software [Member] | ' |
Estimated useful lives of the assets | '3 years |
Leasehold Improvements [Member] | ' |
Estimated useful lives of the assets | '3 years |
SUMMARY_OF_SIGNIFICANT_ACCOUNT5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Dec. 31, 2013 | |
Summary Of Significant Accounting Policies Details 2 | ' | ' |
Income tax benefit at Federal statutory rate of 44% | ($2,288,393) | ($500,368) |
State Income tax benefit, net of Federal effect | -634,031 | -138,634 |
Permanent and other differences | ' | ' |
Change in valuation allowance | 2,922,424 | 639,002 |
Total | ' | ' |
SUMMARY_OF_SIGNIFICANT_ACCOUNT6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Summary Of Significant Accounting Policies Details 3 | ' | ' |
Net operating loss | $10,213,000 | $3,037,000 |
Asset impairment | ' | ' |
Valuation allowance | -10,213,000 | -3,037,000 |
Total | ' | ' |
SUMMARY_OF_SIGNIFICANT_ACCOUNT7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 3 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | ||||||
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | |
Sales Revenue, Net [Member] | Sales Revenue, Net [Member] | Sales Revenue, Net [Member] | Sales Revenue, Net [Member] | Accounts Receivable [Member] | Accounts Receivable [Member] | Accounts Receivable [Member] | ||||
Customer Concentration Risk [Member] | Customer Concentration Risk [Member] | Customer Concentration Risk [Member] | Customer Concentration Risk [Member] | Customer Concentration Risk [Member] | Customer Concentration Risk [Member] | Customer Concentration Risk [Member] | ||||
Customer A [Member] | Customer B [Member] | Customer C [Member] | Customer C [Member] | Customer D [Member] | ||||||
Cash and cash equivalents | $216,617 | ($15,417) | $145,778 | ' | ' | ' | ' | ' | ' | ' |
Depreciation | 12,193 | 0 | ' | ' | ' | ' | ' | ' | ' | ' |
Share-based expense | 938,509 | 0 | ' | ' | ' | ' | ' | ' | ' | ' |
Concentration of Credit Risk, SURF | ' | ' | ' | 27.90% | 22.80% | 19.90% | ' | 18.90% | 11.80% | 31.00% |
Concentration of Credit Risk, EWS-C | ' | ' | ' | ' | 19.60% | 61.90% | 16.00% | 84.20% | 12.40% | 10.60% |
Amortization of intangible assets | 21,594 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deferred income tax assets | 688,816 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net operating losses | 18,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net operating losses expiry period | '2031 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Allowance for doubtful accounts | $2,700 | $0 | ' | ' | ' | ' | ' | ' | ' | ' |
RESTRICTED_CASH_HELD_IN_ESCROW1
RESTRICTED CASH HELD IN ESCROW (Details Narrative) (USD $) | Mar. 31, 2014 |
Restricted Cash Held In Escrow Details Narrative | ' |
Escrow | $140,000 |
DEFERRED_FINANCING_COSTS_Detai
DEFERRED FINANCING COSTS (Details Narrative) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2013 | |
Deferred Financing Costs Details Narrative | ' | ' |
Convertible promissory notes | $44,000 | ' |
Amortization of deferred financing costs | 4,007 | ' |
Deferred financing costs | $39,993 | ' |
PROPERTY_AND_EQUIPMENT_Details
PROPERTY AND EQUIPMENT (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Less: accumulated depreciation | ($16,917) | ($4,724) |
Property and Equipment, Net | 280,559 | 181,720 |
Equipment [Member] | ' | ' |
Property and Equipment, Gross | 187,384 | 165,518 |
Automobiles [Member] | ' | ' |
Property and Equipment, Gross | 20,926 | 20,926 |
Computer Software [Member] | ' | ' |
Property and Equipment, Gross | 8,558 | ' |
Leasehold Improvements [Member] | ' | ' |
Property and Equipment, Gross | $80,608 | ' |
PROPERTY_AND_EQUIPMENT_Details1
PROPERTY AND EQUIPMENT (Details Narrative) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Property And Equipment Details Narrative | ' | ' |
Depreciation expense | $12,193 | $0 |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS (Details Narrative) (USD $) | 3 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Related Party Transactions Details Narrative | ' | ' | ' |
Interest expense on related party convertible note payable | $355 | $252 | ' |
Accrued interest on related party convertible notes payable | 3,492 | ' | 1,697 |
Payable to related party | 4,948 | ' | ' |
Accrued officers compensation | 91,035 | ' | ' |
Accrued officer and director compensation | $1,358,308 | ' | ' |
NOTES_AND_LOANS_PAYABLE_Detail
NOTES AND LOANS PAYABLE (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Dec. 31, 2013 | |
Convertible Note Payable October 28, 2011 [Member] | ' | ' |
Accrued interest | $3,492 | $2,052 |
Convertible Promissory Note March 21, 2014 [Member] | ' | ' |
Derivative liabilities | 74,016 | ' |
Convertible Promissory Note March 20, 2014 One [Member] | ' | ' |
Derivative liabilities | 121,705 | ' |
Convertible Promissory Note March 20, 2014 [Member] | ' | ' |
Derivative liabilities | 59,406 | ' |
Convertible Promissory Note March 7, 2014 Three [Member] | ' | ' |
Derivative liabilities | 50,295 | ' |
Convertible Promissory Note March 7, 2014 One [Member] | ' | ' |
Derivative liabilities | 101,215 | ' |
Convertible Promissory Note March 7, 2014 [Member] | ' | ' |
Derivative liabilities | 66,442 | ' |
Convertible Promissory Note March 25, 2014 [Member] | ' | ' |
Derivative liabilities | 69,748 | ' |
Convertible Promissory Note March 12, 2014 Two [Member] | ' | ' |
Derivative liabilities | 64,969 | ' |
Convertible Promissory Note March 12, 2014 One [Member] | ' | ' |
Derivative liabilities | 41,407 | ' |
Convertible Promissory Note March 12, 2014 [Member] | ' | ' |
Derivative liabilities | 99,524 | ' |
Convertible Promissory Note January 30, 2014 [Member] | ' | ' |
Derivative liabilities | 200,870 | ' |
Convertible Promissory Note February 10, 2014 [Member] | ' | ' |
Derivative liabilities | 22,230 | ' |
Convertible Promissory Note December 9, 2013 [Member] | ' | ' |
Derivative liabilities | ' | 75,362 |
Convertible Promissory Note October 1, 2013 [Member] | ' | ' |
Derivative liabilities | 25,339 | ' |
Convertible Promissory Note August 27, 2013 [Member] | ' | ' |
Debt discounts | ' | 14,900 |
Amortization of debt discounts of notes | ' | 12,600 |
Convertible Promissory Note Payable July 15, 2013 [Member] | ' | ' |
Debt discounts | ' | 0 |
Amortization of debt discounts of notes | ' | 32,500 |
Convertible Promissory Note Payable June 3, 2013 [Member] | ' | ' |
Debt discounts | ' | 0 |
Amortization of debt discounts of notes | ' | 32,500 |
Convertible Promissory Note March 12, 2014 [Member] | ' | ' |
Debt discounts | ' | 11,240 |
Amortization of debt discounts of notes | ' | 6,177 |
Convertible Note Payable February 8, 2013 [Member] | ' | ' |
Debt discounts | 100,468 | ' |
Amortization of debt discounts of notes | 13,653 | ' |
Convertible Note Payable December 31, 2012 [Member] | ' | ' |
Debt discounts | 3,697 | 25,313 |
Amortization of debt discounts of notes | 4,123 | 0 |
Convertible Promissory Note February 6, 2014 [Member] | ' | ' |
Payment made by noteholder | 100,000 | ' |
Derivative liabilities | 199,376 | ' |
Convertible promissory note 3 [Member] | ' | ' |
Derivative liabilities | ' | 402,675 |
Debt discounts | ' | 105,556 |
Amortization of debt discounts of notes | 45,982 | ' |
Promissory Note [Member] | Unrelated Third Party [Member] | ' | ' |
Accrued interest | ' | 403 |
Interest expense | ' | 7,714 |
Line of Credit [Member] | Unrelated Third Party [Member] | ' | ' |
Accrued interest | 8,167 | 8,167 |
Interest expense | 3,500 | 14,000 |
Convertible Promissory Note August 27, 2012 [Member] | ' | ' |
Payment made by noteholder | ' | 95,000 |
Consideration received on date of execution | ' | $10,556 |
DERIVATIVE_LIABILITY_Details_N
DERIVATIVE LIABILITY (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Dec. 31, 2013 | |
Derivative Liability Details Narrative | ' | ' |
Dividend Yield | 0.00% | 0.00% |
Risk Free Rate | 0.13% | 0.13% |
Volatility | 199.03% | 232.29% |
Years to Maturity Minimum | '2 months 5 days | '3 months 15 days |
Years to Maturity Maximum | '1 year 10 months 6 days | '8 months 12 days |
Derivative liability before increment | $1,216,507 | $404,335 |
Derivative liability after increment | $1,682,387 | $465,880 |
STOCKHOLDERS_DEFICIT_Details_N
STOCKHOLDERS' DEFICIT (Details Narrative) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2013 | |
Common stock, shares issued | 344,727,085 | 262,734,973 |
Common stock, shares outstanding | 344,727,085 | 262,734,973 |
Series A [Member] | ' | ' |
Convertible preferred stock shares issued | 5,891 | 1,903 |
Convertible preferred stock shares outstanding | 5,891 | 1,903 |
Series A Preferred Stock issued for services, Shares | 4,975 | ' |
Series A Preferred Stock issued for services, Value | $2,817,100 | ' |
Series A Preferred Stock issued to related party for debt, Shares | 95 | ' |
Series A Preferred Stock issued to related party for debt, Value | 58,389 | ' |
Series A Preferred Stock converted into common stock, Shares | 1,082 | ' |
Common stock issued on conversion of Series A preferred stock, Shares | 14,877,500 | ' |
Common stock issued to Series A preferred stock stockholders, Shares | 14,877,500 | ' |
Series A preferred stock conversion into common stock, Shares | 1,082 | ' |
Series B [Member] | ' | ' |
Convertible preferred stock shares issued | 195,000 | 195,000 |
Convertible preferred stock shares outstanding | 195,000 | 195,000 |
Cash [Member] | ' | ' |
Stock issued, shares | 9,000,000 | ' |
Stock Issued Price Minimum Range | $0.01 | ' |
Stock Issued Price Max Range | $0.02 | ' |
Stock issued, Value | 153,000 | ' |
Stock Based Compensation [Member] | ' | ' |
Stock issued, shares | 23,888,784 | ' |
Stock Issued Price Minimum Range | $0.03 | ' |
Stock Issued Price Max Range | $0.04 | ' |
Stock issued, Value | 936,509 | ' |
Settlement of Debt [Member] | ' | ' |
Stock issued, shares | 9,267,513 | ' |
Stock Issued Price Minimum Range | $0.01 | ' |
Stock Issued Price Max Range | $0.04 | ' |
Stock issued, Value | 113,393 | ' |
Services [Member] | ' | ' |
Stock issued, shares | 24,958,315 | ' |
Stock Issued Price Minimum Range | $0.01 | ' |
Stock Issued Price Max Range | $0.04 | ' |
Stock issued, Value | $630,984 | ' |