Stockholders' (Deficit) Equity | 12 Months Ended |
Dec. 31, 2013 |
Stockholders' (Deficit) Equity [Abstract] | ' |
STOCKHOLDERS' (DEFICIT) EQUITY | ' |
NOTE 6 – STOCKHOLDERS’ (DEFICIT) EQUITY |
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Preferred stock |
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The Company authorized 20,000,000 preferred shares. Preferred shares may be designated by the Company’s board of directors. There were no shares designated as of December 31, 2013. |
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Equity incentive plan |
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On September 23, 2010, the Company’s board of directors adopted, and the Company’s stockholders approved the FAL Exploration Corp. Equity Incentive Plan (the “Plan”), which covers 5,000,000 shares of common stock. The purpose of the Plan is to advance the interests of the Company by enhancing the ability of the Company to (i) attract and retain employees and other persons or entities who are in a position to make significant contributions to the success of the Company and its subsidiaries; (ii) reward such persons for such contributions; and (iii) encourage such persons or entities to take into account the long-term interest of the Company through ownership of shares of the Company’s common stock, par value $.001 per share. The Plan is intended to accomplish these objectives by enabling the Company to grant awards in the form of incentive and nonqualified stock options, stock appreciation rights, restricted stock, deferred stock, or other stock based awards. The Plan will be administered by the Board of Directors of the Company or, upon its delegation, by the Compensation Committee of the Board of Directors. The Plan became effective on September 23, 2010 and will terminate on September 23, 2020. |
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Subject to adjustment as provided in the Plan, the aggregate number of shares of common stock reserved for issuance pursuant to awards granted under the Plan shall be five million (5,000,000) shares; provided, however , that within sixty (60) days of the end of each fiscal year following the adoption of the Plan, the Board, in its discretion, may increase the aggregate number of shares of Common Stock available for issuance under the Plan by an amount not greater than the difference between (i) the number of shares of Common Stock available for issuance under the Plan on the last day of the immediately preceding fiscal year, and (ii) the number of shares of Common Stock equal to 15% of the shares of Common Stock outstanding on the last day of the immediately preceding fiscal year. As of December 31, 2013, no instruments have been granted under the Plan. |
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Common stock |
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On July 22, 2013, the Company received approval from FINRA to effectuate a reverse split of 1000 to 1 in which each shareholder was issued 1 share of common stock in exchange for 1000 shares of their currently issued common stock, which became effective as of July 22, 2013. The Reverse Split had been previously approved and authorized by the board of directors and majority holders of the Company. All share and per share values for all periods presented in the accompanying financial statements are retroactively restated for the effect of the Reverse Split. |
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On February 9, 2012, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain accredited investors (the “Investors”) relating to the sale and issuance by the Company to the Investors of an aggregate of 5,714 units, each unit consisting of (i) one share of common stock, par value $0.001 per share (“Common Stock”), of the Company, and (ii) a five-year warrant to purchase one share of Common Stock at an exercise price of $250 per share (each, a “Warrant,” and collectively, the “Warrants”). Each unit was sold at a price of $175. Pursuant to the Securities Purchase Agreement, on February 14, 2012 (the closing date), the Company issued 5,714 shares of common stock and issued 5,714 Warrants for net proceeds to the Company of $830,650 from the sale of the units, after deducting the placement agent’s fees and expenses of $90,000, legal fees of $75,000 and other offering expenses of $4,350. The Company conducted the Offering pursuant to a registration statement on Form S-1 which was declared effective by the Securities and Exchange Commission on February 9, 2012. |
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Pursuant to existing anti-dilution price protection rights for a certain investor who purchased the Company’s common shares in an April 2010 offering, the Company issued 346 shares of its common stock in April 2012. |
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On February 27, 2012, ,the Company issued 163 shares of its common stock to the Company’s Chief Financial Officer for services rendered and for accounts payable of $12,000 that was outstanding at December 31, 2011. The Company valued these common shares at the fair value of $110 per share based on the quoted trading price of the common stock on the grant date which is the measurement date. In connection with issuance of these common shares, the Company recorded stock-based compensation of $6,000 and reduced accounts payable by $12,000 for the year ended December 31, 2012. |
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On April 10, 2012, the Company entered into a one-year consulting agreement for business development services. In connection with the agreement, the Company issued 1,000 shares of its common stock. The Company valued these common shares at the fair value of $108 per common share or $108,000 based on the quoted trading price of the common stock on the grant date which is the measurement date and was being amortized over the one year service period. Additionally, the Company issued 500 warrants for the purchase of 500 shares of the Company’s common stock at an exercise price equal to $250 per share exercisable for a two year period. The Company calculated the $35,581 fair value of the 500 warrants granted using the Black-Scholes option pricing model and using actual historical volatility of 168.7%, risk free interest rate of 0.28% and was being amortized over the one year service period. During the third quarter of 2012, the contract was verbally terminated and any remaining prepaid amounts were written off. Accordingly, in connection with this agreement, for the year ended December 31, 2012, the Company recorded professional fees of $143,581. |
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On June 11, 2012, the Company issued 75 shares of its common stock to the Company’s chief financial officer for services rendered. The Company valued these common shares at the fair value of $80 per common share based on the quoted trading price of the common stock on the grant date which is the measurement date. In connection with issuance of these common shares, the Company recorded stock-based compensation of $6,000 for the year ended December 31, 2012. |
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On August 24, 2012, the Company entered into a four month consulting agreement for business development services This agreement was for a fixed term of four months (the “Initial Term”) commencing on August 24, 2012 and continued through December 23, 2012, and, provided that, if the Company is funded or purchased (or has entered into a memorandum of understanding, letter of intent or similar document) (a “Transaction”) by another company during the Initial Term whereby the consultant’s services made a direct contribution to such Transaction, the Initial Term shall automatically be renewed for an additional eight (8) months (the “Additional Term” and together with the Initial Term, the “Consulting Period”). If the Company enters into a Transaction during the Initial Term without any direct contribution by the Consultant’s Services, this Agreement will not be automatically renewed for an Additional Term. As consideration for consultant’s performance of the services, the Company shall pay Consultant 2,000 shares of the Company’s common stock in equal monthly installments during the Initial Term of 500 shares per month. If this agreement is extended for the Additional Term, then the Company shall issue an additional 4,000 shares of the Company’s common stock to the consultant. The 500 shares of Company’s common stock for each month of Service during the Initial Term shall be issued to and earned by the Consultant on or before the fifth (5th) calendar day of each month. The first payment date shall be on or before September 5, 2012 and each month thereafter, with the last payment date of the Initial Term shall be on December 5, 2012. In the event that this Agreement is extended to include the Additional Term, the 4,000 shares of the Company’s common stock shall be awarded to the consultant in a lump sum either (a) by January 5, 2013 or (b) within 5 business days of the date on which the Company is funded or purchased by another Company, whichever is feasible. In connection with the agreement, the Company issued 500 shares of its common stock on September 5, 2012. The Company valued these common shares at the fair value of $15 per common share or $7,500 based on the quoted trading price of the common stock on the grant date of August 24, 2012, which is the measurement date. For the year ended December 31, 2012, the Company recorded professional fees of $7,500. Each subsequent monthly issuance of share pursuant to this consulting agreement shall be valued at the fair value of such common share based on the quoted trading price of the common stock on the grant date, which will be the measurement date. |
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On September 1, 2012, the Company issued 429 shares of its common stock to the Company’s chief financial officer for services rendered. The Company valued these common shares at the fair value of $14 per common share based on the quoted trading price of the common stock on the grant date which is the measurement date. In connection with issuance of these common shares, the Company recorded stock-based compensation of $6,000 for the year ended December 31, 2012. |
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In connection with the consulting agreement dated August 24, 2012 (see above), the Company was obligated to issue 500 shares of common stock for each month on October 5, 2012, November 5, 2012 and December 5, 2012. The Company valued these 1,500 common shares at fair value ranging from $20 to $32 per common share or $36,500 based on the quoted trading price of the common stock on the grant dates of October 5, 2012, November 5, 2012 and December 5, 2012, which are the measurement dates. The $36,000 has been expensed as of December 31, 2012. |
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On October 24, 2012, the Company issued 200 shares of its common stock to a consultant for services rendered. The Company valued these common shares at the fair value of $30 per common share based on the quoted trading price of the common stock on the grant date which is the measurement date. In connection with issuance of these common shares, the Company recorded stock-based compensation of $6,000 for the year ended December 31, 2012. |
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In connection with a licensing agreement (See Note 7), on October 17, 2011, the Company issued 70 shares of its common stock. The Company valued these common shares at the fair value of $315 per common share or $22,050 based on the quoted trading price of the common stock on the grant date which is the measurement date. In connection with the issuance of these common shares, the Company recorded licensing fees included in loss from discontinued operations of $0 and $18,987 for the years ended December 31, 2013 and 2012 respectively. |
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In March 2013, the Company issued 90 shares of its common stock to a consultant for payment of public relations services rendered. The Company valued these common shares at the fair value of $16.70 per common share (see Note 7) based on the quoted trading price of the common stock on the grant date which is the measurement date and recorded stock-based compensation of $1,500 during the year ended December 31, 2013. |
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In April 2013, the Company issued 200 shares of its common stock to two consultants for services rendered in April 2013 and May 2013. The Company valued these common shares at the fair value of $12 per common share based on the quoted trading price of the common stock on the grant date which is the measurement date. In connection with issuance of these common shares, the Company recorded stock-based consulting of $2,400. |
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On September 6, 2013, the Company entered into subscription agreements with 15 subscribers to issue a total of 10,910,000 shares of common stock for $10,910 at a price per share of $0.001. |
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On September 6, 2013, the Company issued 20,000,000 shares of its common stock to the Company’s chief executive officer to settle accrued salary. The Company valued these common shares at the fair value of $0.001 per common share based on the sale of common stock in a private placement at $0.001 per common share. In connection with issuance of these common shares, the Company reduced accrued salary by $20,000 for the year ended December 31, 2013. |
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On September 26, 2013, the Company entered into stock purchase agreements with 2 investors for the purchase of 200,000 shares of common stock for $50,000 at a price per share of $0.25. |
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Effective October 7, 2013 the Company entered into a Membership Interest Purchase Agreement with FAL Minerals LLC. Pursuant to the Agreement the Company agreed to purchase from FAL Minerals newly issued membership interests of FAL Minerals representing 20% of the issued and outstanding membership interests of FAL Minerals. The purchase price for the interests is $100,000 payable in common stock at a per share price of $0.25 or a total issuance of 400,000 shares. On October 9, 2013 the Company and the other members of FAL Minerals agreed to assign a 2% interest on a pro-rata basis to a third party for legal fees owed by FAL Minerals. Accordingly, the Company’s interest in FAL Minerals decreased to 19.6%. On October 7, 2013, the Company issued 400,000 shares of common stock to FAL Minerals in connection with the Agreement (see Note 1). After the Company performed an impairment analyses and review, the Company determined and recognized an impairment loss in connection with its investment in FAL Minerals of $100,000 for the year ended December 31, 2013. |
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Common stock warrants |
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Pursuant to a licensing agreement (See Note 7), on October 17, 2011, the Company issued Licensor or assignees warrants exercisable for the purchase of 1,100 shares of the Company’s common stock at an exercise price equal to $310 per share on a for-cash or cashless exercise basis. The Warrants will be exercisable by Licensor until the later of (iii) one hundred fifty (150) days following the end of the Term (and any extensions thereto) or (iv) eighteen (18) months following the Effective Date. If at any time after the six (6) month anniversary of the date hereof, there is no effective Registration Statement registering, or no current prospectus available for, the resale of the Warrant shares by the holder, then this Warrant may be exercised, in whole or in part, at such time by means of a cashless exercise. The Company accounted for the equity instruments issued pursuant to the License Agreement in accordance with ASC 505-50, “Equity Based Payments to Non-Employees”. |
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The Company calculated the fair value of the 1,100 warrants granted using the Black-Scholes option pricing model and recorded the fair value of $147,884 as a deferred license costs included in prepaid expenses which will be amortized over the initial estimated license term of 20 months. In applying the Black-Scholes method, the Company calculated volatility based upon the volatility of several similar companies with historical market prices for their common stock (since the Company’s common stock had a limited trading history at that time), utilized discount rates obtained from the Federal Reserve Statistical Release for treasury instruments of the same duration, and an expected term based on the estimated contractual term of the warrants of 23 months. Since the expiration date of the warrants has not been determined, the fair market value of warrants granted pursuant to the License Agreement is subject to adjustment by the Company if the estimates of the initial expiration date changes. For the years ended December 31, 2013 and 2012, the Company recorded licensing fees included in loss from discontinued operations of $0 and $127,345, respectively. |
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On February 9, 2012, the Company entered into an exclusive, worldwide licensing agreement (the “MPS License Agreement”) with Mike Sorrentino and MPS Entertainment LLC (“MPS”) and Starz Management & PR (“Starz”) (See Note 7). Pursuant to the MPS Licensing Agreement, the Company issued warrants exercisable for the purchase of 1,000 shares of the Company’s common stock at an exercise price equal to $230 per share (the “MPS Warrants”) and the Company has issued Starz warrants exercisable for the purchase of 100 shares of the Company’s common stock at an exercise price equal to $230 per share (the “Starz Warrants”). The MPS Warrants will be exercisable by MPS until the later of (i) one hundred fifty (150) days following the end of the Term (and any extensions thereto) or (ii) eighteen (18) months following the Effective Date. The MPS Warrants can be exercised as follows: 500 warrants on the Effective date, and 167 on the release of the second game, 167 upon release of the third game and 167 upon release of the fourth game. The Starz Warrants shall vest upon the release of each game at 25 warrants per game. These Warrants may be exercised, in whole or in part, at such time by means of a cashless exercise. The Company accounted for the equity instruments issued pursuant to the License Agreement in accordance with ASC 505-50, “Equity Based Payments to Non-Employees”. |
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The Company calculated the fair value of the 1,000 MPS Warrants granted using the Black-Scholes option pricing model and recorded the fair value of $167,090 as a deferred license costs included in prepaid expenses which will be amortized over the license term of 18 months. The Company calculated the fair value of the 100 Starz Warrants granted using the Black-Scholes option pricing model and initially recorded the fair value of $16,709 as a deferred license costs included in prepaid expenses which will be amortized over the vesting period. In applying the Black-Scholes method, the Company calculated volatility using actual historical volatility, utilized discount rates obtained from the Federal Reserve Statistical Release for treasury instruments of the same duration, and an expected term based on the estimated contractual term of the warrants of 18 months. The value of the MPS Warrant and Starz Warrant on the grant date was based upon the following Black-Scholes assumptions; exercise prices of $230, actual historical volatility of 176.74%, expected term of 18 months and discount rate of 0.27%. In connection with these Warrants, for the year ended December 31, 2012, the Company’s amortization of these licensing fees included in loss from discontinued operations amounted to $183,799. |
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At the valuation dates, the fair values of the above warrants were estimated using the Black-Scholes option pricing model with the following assumptions: |
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| | 2012 | | | | | | | | | | | | | |
Dividend rate | | | 0 | % | | | | | | | | | | | | |
Term (in years) | | 1.50 to 5 years | | | | | | | | | | | | | |
Volatility | | 169% to 177% | | | | | | | | | | | | | |
Risk-free interest rate | | | 0.27% - 0.28 | % | | | | | | | | | | | | |
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On January 16, 2013, the Company entered into an Advisory Board Agreement (the “Agreement”). Pursuant to the Agreement, the Company issued warrants exercisable for the purchase of 100 shares of the Company’s common stock at an exercise price equal to $50 per share. The warrants will be exercisable until January 2016. The Company accounted for the equity instruments issued pursuant to the Agreement in accordance with ASC 505-50, “Equity Based Payments to Non-Employees”. |
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The Company calculated the fair value of the 100 warrants granted using the Black-Scholes option pricing model and recorded the fair value of $783. In applying the Black-Scholes method, the Company calculated volatility using actual historical volatility, utilized discount rates obtained from the Federal Reserve Statistical Release for treasury instruments of the same duration, and an expected term based on the estimated contractual term of the warrants of 3 years. The value of the warrant on the grant date was based upon the following Black-Scholes assumptions; exercise prices of $50, actual historical volatility of 123%, expected term of 3 years and discount rate of 0.39%. In connection with these warrants, the Company recorded stock-based consulting expense of $783 during the year ended December 31, 2013. |
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Warrant activities for the year ended December 31, 2013 are summarized as follows: |
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| | Number of | | | Weighted | | | Weighted | | | | |
Warrants | Average | Average | Aggregate |
| Exercise Price | Remaining | Intrinsic Value |
| | Contractual | |
| | Life (Years) | |
Balance at December 31, 2012 | | | 8,914 | | | $ | 260 | | | | | | | |
Issued | | | 100 | | | | 50 | | | | | | | |
Exercised/forfeited | | | (2,200 | ) | | | 270 | | | | | | | |
Balance at December 31, 2013 | | | 6,814 | | | $ | 249.6 | | | | 2.9 | | | $ | - | |
Warrants exercisable at December 31, 2013 | | | 6,814 | | | $ | 249.6 | | | | 2.9 | | | $ | - | |
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Non-Plan Stock Options |
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On March 1, 2012, the Company entered into a financial service agreement with a third party for a seven month term. In connection with the financial service agreement, the Company issued an aggregare of 500 stock options to purchase 500 shares of the Company’s common stock at an exercise price of $140 per common share. The stock options expire on March 1, 2017. The Company calculated the $66,749 fair value of the 500 stock options granted using the Black-Scholes option pricing model and using actual historical volatility of $177.3% For the year ended December 31, 2012, the Company recorded professional fees of $66,749. |
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In connection with services to be rendered related to the purchase of a game for a period of 12 months, on March 21, 2012, the Company issued options exercisable for the purchase of 25 shares of the Company’s common stock at an exercise price equal to $120 per share exercisable for a two year period. Additionally, the Company shall pay to Sellerr 10% of the aggregate net revenue from sales and advertising of the game, if any, for the lifetime of the game. The Company calculated the $2,342 fair value of the 25 stock options granted using the Black-Scholes option pricing model and using actual historical volatility of 173.4 which will be amortized over the one year service period. For the year end December 2012, the Company expensed to professional fees $2,342. |
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Stock option activities for the year ended December 31, 2013 are summarized as follows: |
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| | Number of | | | Weighted | | | Weighted | | | | |
Options | Average | Average | Aggregate |
| Exercise Price | Remaining | Intrinsic Value |
| | Contractual | |
| | Life (Years) | |
Balance at December 31, 2012 | | | 525 | | | $ | 140 | | | | | | | |
Granted | | | - | | | | - | | | | | | | |
Exercised/forfeited | | | - | | | | - | | | | | | | |
Balance at December 31, 2013 | | | 525 | | | $ | 140 | | | | 3.03 | | | $ | - | |
Options exercisable at December 31, 2013 | | | 525 | | | $ | 140 | | | | 3.03 | | | $ | - | |
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The weighted-average grant-date fair value of options granted to employees/consultants during the year ended December 31, 2013 was none. As of December 31, 2013, there were total unrecognized compensation costs related to non-vested share-based compensation arrangements of $0. |