Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 26, 2014 | Mar. 30, 2015 | Jun. 27, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | LABOR SMART, INC. | ||
Entity Central Index Key | 1522469 | ||
Document Type | 10-K | ||
Document Period End Date | 26-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -14 | ||
Is Entity a Well-known Seasoned Issuer? | Yes | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $2,126,675 | ||
Entity Common Stock, Shares Outstanding | 3,088,060,356 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 |
Balance_Sheets
Balance Sheets (USD $) | Dec. 26, 2014 | Dec. 31, 2013 |
Current assets | ||
Cash | $68,972 | $178,539 |
Accounts receivable, net | 3,068,798 | 1,941,437 |
Marketable securities, available for sale | 99,954 | 4,972 |
Prepaid expense | 322,855 | 45,497 |
Other assets | 453,341 | 11,591 |
Total current assets | 4,013,920 | 2,182,036 |
Deferred financing costs | 57,748 | |
Deposits | 80,283 | 20,014 |
Property and equipment, net | 98,790 | 7,894 |
Customer relationships, net | 385,436 | 228,028 |
Workers' compensation insurance collateral | 536,771 | |
Total long-term assets | 1,101,280 | 313,684 |
Total assets | 5,115,200 | 2,495,720 |
Current liabilities | ||
Accounts payable and accrued liabilities | 190,517 | 135,524 |
Loan payable to factor | 1,638,771 | 865,321 |
Payroll taxes payable | 1,303,337 | 1,487,907 |
Notes payable, related party | 14,725 | 44,806 |
Contingent liability | 122,129 | |
Convertible notes payable, net of unamortized discount of $1,487,875 and $578,848, respectively | 3,894,678 | 1,057,679 |
Convertible note payable, derivative liability | 603,639 | 20,701 |
Total current liabilities | 7,767,796 | 3,611,938 |
Contingent liability | 43,733 | 79,221 |
Total liabilities | 7,811,529 | 3,691,159 |
Stockholders' deficit | ||
Preferred stock, ($.0001 par value, 5,000,000 shares authorized; none issued and outstanding) Series A Preferred stock, ($.0001 par value, 51 shares authorized; 51 and none issued and outstanding as of December 26, 2014 and December 31, 2013, respectively. | ||
Common stock; $0.00001 par value; 20,000,000,000 shares authorized, 180,455,103 and 20,982,740 issued and outstanding as of December 26, 2014 and December 31, 2013, respectively. | 1,805 | 210 |
Additional paid-in capital | 5,550,383 | 1,998,815 |
Accumulated deficit | -8,313,284 | -3,193,778 |
Accumulated other comprehensive income(loss) | 64,767 | -686 |
Total stockholder's deficit | -2,696,329 | -1,195,439 |
Total liabilities and stockholders' deficit | 5,115,200 | 2,495,720 |
Series A Preferred Stock [Member] | ||
Stockholders' deficit | ||
Preferred stock, ($.0001 par value, 5,000,000 shares authorized; none issued and outstanding) Series A Preferred stock, ($.0001 par value, 51 shares authorized; 51 and none issued and outstanding as of December 26, 2014 and December 31, 2013, respectively. |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Dec. 26, 2014 | Dec. 31, 2013 |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 180,455,103 | 20,982,740 |
Common stock, shares outstanding | 180,455,103 | 20,982,740 |
Series A Preferred Stock [Member] | ||
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 51 | 51 |
Preferred stock, shares issued | 51 | 51 |
Preferred stock, shares outstanding |
Statements_of_Operations
Statements of Operations (USD $) | 12 Months Ended | |
Dec. 26, 2014 | Dec. 31, 2013 | |
Income Statement [Abstract] | ||
Revenues | $23,978,136 | $16,651,885 |
Cost of sales | 17,950,160 | 13,953,122 |
Gross profit | 6,027,976 | 2,698,763 |
Operating expenses | ||
Payroll expenses | 2,478,439 | 1,620,859 |
Bad debt expense | 244,420 | 215,255 |
Loss on sale of receivables | 90,826 | |
General and administrative expense | 3,774,689 | 2,509,307 |
Total operating expenses | 6,497,548 | 4,436,247 |
Operating loss | -469,572 | -1,737,484 |
Other income (expenses) | ||
Interest and finance expense | -4,826,309 | -1,035,031 |
Interest income | 73 | |
Gain on change in fair value in derivative liability | 197,187 | 45,222 |
Gain (loss) on sale of securities | -20,812 | 4,240 |
Total other income (expenses) | -4,649,934 | -985,496 |
Net loss | -5,119,506 | -2,722,980 |
Other comprehensive income (loss): | ||
Unrealized gain (loss) on marketable securities | 65,453 | -6,938 |
Other comprehensive income (loss) | 65,453 | -6,938 |
Comprehensive loss | ($5,054,053) | ($2,729,918) |
Basic loss per common share | ($0.15) | ($0.14) |
Basic weighted average common shares outstanding | 34,841,494 | 19,337,142 |
Shareholders_Equity
Shareholders Equity (USD $) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total |
Beginning Balance at Dec. 31, 2012 | $168 | $365,427 | ($470,798) | $6,252 | ($98,951) | |
Beginning Balance, Shares at Dec. 31, 2012 | 16,757,000 | |||||
Shares issued for services | 18 | 444,377 | 444,395 | |||
Shares issued for services, Shares | 1,833,500 | |||||
Shares issued for cash | 2 | 99,998 | 100,000 | |||
Shares issued for cash, Shares | 200,000 | |||||
Conversion of convertible notes | 22 | 678,008 | 678,030 | |||
Conversion of convertible notes, Shares | 2,152,240 | |||||
Commitment fees | 10,800 | 10,800 | ||||
Commitment fees, Shares | 40,000 | |||||
Warrants issued for finance costs | 57,359 | 57,359 | ||||
Options issued for employee compensation | 342,846 | 342,846 | ||||
Net change in unrealized gain on marketable securities | -6,938 | -6,938 | ||||
Net loss | -2,722,980 | -2,722,980 | ||||
Ending Balance at Dec. 31, 2013 | 210 | 1,998,815 | -3,193,778 | -686 | -1,195,439 | |
Ending Balance, Shares at Dec. 31, 2013 | 20,982,740 | |||||
Preferred shares issued to CEO | ||||||
Preferred shares issued to CEO, Shares | 51 | |||||
Shares issued for services | 11 | 55,908 | 55,919 | |||
Shares issued for services, Shares | 1,090,000 | |||||
Conversion of convertible notes | 1,584 | 3,447,219 | 3,448,803 | |||
Conversion of convertible notes, Shares | 158,382,363 | |||||
Options issued for employee compensation | 48,441 | 48,441 | ||||
Net change in unrealized gain on marketable securities | 65,453 | 65,453 | ||||
Net loss | -5,119,506 | -5,119,506 | ||||
Ending Balance at Dec. 26, 2014 | $1,805 | $5,550,383 | ($8,313,284) | $64,767 | ($2,696,329) | |
Ending Balance, Shares at Dec. 26, 2014 | 51 | 180,455,103 |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 12 Months Ended | |
Dec. 26, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities: | ||
Net loss | ($5,119,506) | ($2,722,980) |
Stock-based compensation | 104,360 | 801,915 |
Interest and financing costs | 4,139,495 | 698,585 |
Depreciation and amortization | 167,662 | 70,020 |
Bad debt expense | 244,420 | 215,255 |
(Gain) loss on sale of securities | 20,812 | -4,240 |
(Gain) on change in fair value of derivative liability | -197,187 | -45,222 |
Changes in operating assets and liabilities: | ||
Decrease in off-balance sheet receivable factoring | -291,708 | |
Increase in accounts receivables | -1,371,781 | -1,153,774 |
Increase in prepaid expense and deposits | -277,358 | -25,458 |
Increase in other assets | -1,038,790 | 15,306 |
Increase in accounts payable and accrued liabilities | 54,993 | 8,819 |
Increase in payroll taxes payable | -184,570 | 908,507 |
Net cash used by operating activities | -3,457,450 | -1,524,975 |
Cash flows from investing activities: | ||
Assets acquired in asset purchase agreement | -120,797 | -150,000 |
Purchase of fixed assets | -111,975 | -1,188 |
Proceeds from sale of marketable securities | 96,203 | 1,853,884 |
Purchase of marketable securities | -146,544 | -1,833,129 |
Net cash used by investing activities | -283,113 | -130,433 |
Cash flows from financing activities: | ||
Proceeds from common stock | 100,000 | |
Proceeds from convertible notes payable | 4,131,823 | 1,630,200 |
Payment on convertible notes payable | -1,137,621 | -607,500 |
Proceeds from notes payable- related party | -30,081 | -173,962 |
Payment on notes payable - related party | 773,450 | 865,321 |
Payments on contingent liability | -106,575 | -89,840 |
Payment on financed insurance | -15,160 | |
Net cash provided by financing activities | 3,630,996 | 1,709,059 |
Net change in cash | -109,567 | 53,651 |
Cash, beginning of period | 178,539 | 124,888 |
Cash, end of period | 68,972 | 178,539 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 719,121 | 227,854 |
Taxes paid | ||
Warrants issued as part of deferred finance costs | 57,359 | |
Finance costs included in convertible note value | 104,550 | |
Commitment fees | 10,800 | |
Shares issued for convertible notes | 1,575,532 | 678,030 |
Contingent liability associated with asset purchase | 183,194 | 158,490 |
Convertible note payable derivative liability | 733,565 | |
Warrant derivative liability | $46,560 |
NATURE_OF_OPERATIONS
NATURE OF OPERATIONS | 12 Months Ended |
Dec. 26, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS | NOTE 1 – NATURE OF OPERATIONS |
Nature of Business | |
Labor Smart, Inc. (the “Company”) was incorporated in the State of Nevada on May 31, 2011. Labor Smart, Inc. provides temporary blue-collar staffing services. It supplies general laborers on demand to the light industries, including manufacturing, logistics, and warehousing, skilled trades’ people, and general laborers to commercial construction industries. | |
GOING_CONCERN
GOING CONCERN | 12 Months Ended |
Dec. 26, 2014 | |
Going Concern | |
GOING CONCERN | NOTE 2 – GOING CONCERN |
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company requires capital for its contemplated operational and marketing activities. The Company’s ability to raise additional capital through the future issuances of common stock is unknown. At December 26, 2014, the Company has an accumulated deficit of 8,313,284 and negative working capital of 8,313,284. Also, the Company had a net loss of $5,119,506 for the year ended December 26, 2014. Additionally, the operating activities of the Company used $3,457,450 net cash during the same one year period. The obtainment of additional financing and increasingly profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||||||||
Dec. 26, 2014 | |||||||||||||
Accounting Policies [Abstract] | |||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||
Basis of Presentation | |||||||||||||
These financial statements are presented in United States dollars and have been prepared in accordance with generally accepted accounting principles in the United States of America. | |||||||||||||
On May 20, 2014, the Board of Directors of the Company determined it is in the best interests of the Company to change its fiscal year end from December 31 to a 52-53 week fiscal year ending on the Friday closest to December 31. The change is intended to align the Company’s fiscal periods more closely with the seasonality of its business and improve comparability with industry peers. This change is effective with the end of the registrant’s fiscal second quarter ended June 26, 2014. The change to a 52-53 week fiscal year will be retroactively applied as if it was adopted as of January 1, 2014. The registrant’s current fiscal year ended on December 26, 2014 and comprises 360 days. | |||||||||||||
Fair Value of Financial Instruments | |||||||||||||
As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC (“ASC 820-10”), fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. | |||||||||||||
The three levels of the fair value hierarchy are described below: | |||||||||||||
Level 1 | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; | ||||||||||||
Level 2 | Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; | ||||||||||||
Level 3 | Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). | ||||||||||||
Pursuant to ASC 825, the fair value of cash and marketable securities is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of cash, accounts receivables, marketable securities, accounts payable and accrued liabilities, and notes payable approximate their current fair values because of their nature and respective relatively short maturity dates or durations. | |||||||||||||
Assets measured at fair value on a recurring basis were presented on the Company’s balance sheets as of December 26, 2014 and December 31, 2013 as follows: | |||||||||||||
Fair Value Measurements as of December 26, 2014 Using: | |||||||||||||
Total Carrying Value as of | Quoted Market Prices in Active Markets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||
12/26/14 | (Level 1) | (Level 2) | (Level 3) | ||||||||||
Assets: | |||||||||||||
Equity securities | $ | 52,610 | $ | 52,610 | $ | 0 | $ | 0 | |||||
Warrant | 47,344 | 0 | 0 | 47,344 | |||||||||
Total | $ | 99,954 | $ | 52,610 | $ | 0 | $ | 47,344 | |||||
Liabilities: | |||||||||||||
Convertible note payable derivative liability | $ | 601,345 | $ | 0 | $ | 0 | $ | 601,345 | |||||
Warrant derivative liability | 2,294 | 0 | 0 | 2,294 | |||||||||
Contingent consideration payable | 165,862 | 0 | 0 | 165,862 | |||||||||
Total | $ | 769,501 | $ | 0 | $ | 0 | $ | 769,501 | |||||
Fair Value Measurements as of December 31, 2013 Using: | |||||||||||||
Total Carrying Value as of | Quoted Market Prices in Active Markets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||
12/31/13 | (Level 1) | (Level 2) | (Level 3) | ||||||||||
Assets: | |||||||||||||
$ | 4,972 | $ | 4,972 | $ | 0 | $ | 0 | ||||||
Equity securities | |||||||||||||
Total | $ | 4,972 | $ | 4,972 | $ | 0 | $ | 0 | |||||
Liabilities: | |||||||||||||
Convertible note payable derivative liability | $ | 20,701 | $ | 0 | $ | 0 | $ | 20,701 | |||||
Contingent consideration payable | 79,221 | 0 | 0 | 79,221 | |||||||||
Total | $ | 99,922 | $ | 0 | $ | 0 | $ | 79,221 | |||||
Change in convertible note payable derivative liability during the year ended December 26, 2014 were as follows: | |||||||||||||
Opening balance at December 31, 2013 | $ 20,701 | ||||||||||||
Initial valuation of derivatives | 733,565 | ||||||||||||
Initial loss on derivatives | 32,906 | ||||||||||||
Gain on change in fair value of derivative | |||||||||||||
liability | -185,827 | ||||||||||||
Closing balance at December 26, 2014 | $ 601,345 | ||||||||||||
Change in warrant derivative liability during the year ended December 26, 2014 were as follows: | |||||||||||||
Opening balance at December 31, 2013 | $ 0 | ||||||||||||
Initial valuation of derivatives | 46,560 | ||||||||||||
Gain on change in fair value of derivative | |||||||||||||
liability | -44,266 | ||||||||||||
Closing balance at December 26, 2014 | $ 2,294 | ||||||||||||
Equity securities comprise publicly traded shares of common stock. The warrant gives the Company, the right but not the obligation, to purchase 100,000 shares of Argon Beauty Corp. (OTCBB:ABXX). The warrant is valued at the end of each accounting period using the Black Scholes option valuation model using the following inputs at December 26, 2014: stock price $0.50, exercise price $0.50, expected life 2.73 years, volatility 233%, dividends 0% and discount rate 1.08%. | |||||||||||||
Cash and Cash Equivalents | |||||||||||||
Cash and cash equivalents consist of cash and short-term investments with original maturities of less than 90 days. Cash equivalents are placed with high credit quality financial institutions and are primarily in money market funds. The carrying value of those investments approximates fair value. The Company maintains its cash in bank deposit accounts which may exceed federally insured limits. As of December 26, 2014, the Company’s accounts are insured for $250,000 by FDIC for US bank deposits. | |||||||||||||
Income Taxes | |||||||||||||
The Company follows the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment. Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with FASB ASC 740-10, “Income Taxes,” which requires the use of the asset/liability method of accounting for income taxes. | |||||||||||||
The Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not. | |||||||||||||
Revenue Recognition | |||||||||||||
The Company recognizes revenues and the related costs when persuasive evidence of an arrangement exists, delivery and acceptance has occurred or service has been rendered, the price is fixed or determinable, and collection of the resulting receivable is reasonably assured. Amounts invoiced or collected in advance of product delivery or providing services are recorded as deferred revenue. The Company accrues for customer credits, bad debts, and other allowances based on its historical experience. Staffing revenue is recognized as the services are performed. Revenue also includes billable travel and other reimbursable costs and is recorded net of sales tax. | |||||||||||||
Deferred Financing Costs | |||||||||||||
Deferred financing costs consist of costs incurred to obtain debt financing, including legal fees, origination fees and administration fees. Costs associated with the Convertible Promissory Note are deferred and amortized in our statements of operations using the straight-line method, which approximates the effective interest method, over the terms of the respective financing instrument. | |||||||||||||
Use of Estimates | |||||||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information that is currently available to the Company, and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates. | |||||||||||||
Factoring Agreements and Accounts Receivable | |||||||||||||
The Company had a month-to-month financing agreement with Riviera Finance LLC (“Riviera”) which was terminated on July 24, 2013. On July 31, 2013 the Company entered into a Purchase and Sale Agreement with Transfac Capital, Inc. (“Transfac”). The agreement with Riviera includes a non-recourse factoring arrangement that provided notification factoring on substantially all of the Company’s sales. Riviera, based on credit approved orders, assumed the accounts receivable risk of the Company’s customers in the event of insolvency or non-payment. All other receivable risks for customer deductions that reduce the customer receivable balances were retained by the Company, including, but not limited to, allowable customer markdowns, disputes, and discounts. The Company assumes the risk on accounts receivable not factored to Riviera, which is shown as accounts receivable on the balance sheets, net of factored accounts receivable. Advances to the Company from Transfac are with recourse and are secured by assets of the Company and are treated as a secured financing arrangement. As of December 26, 2014 and December 31, 2013, factored accounts receivable total $1,638,771 and $865,321, respectively. | |||||||||||||
Allowance for Doubtful Accounts | |||||||||||||
The Company allows for an estimated amount of receivables that may not be collected. The Company estimates its allowance for doubtful accounts based on historical experience and customer relationships. As of December 26, 2014 and December 31, 2013, the Company has recorded an allowance of $110,605 and $156,297, respectively. | |||||||||||||
Property and Equipment | |||||||||||||
Property and equipment are stated at the lower of cost or fair value. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets, as follows: | |||||||||||||
Description | Estimated Life | ||||||||||||
Office equipment and furniture | 3 years | ||||||||||||
The estimated useful lives are based on the nature of the assets as well as current operating strategy and legal considerations such as contractual life. Future events, such as property expansions, property developments, new competition, or new regulations, could result in a change in the manner in which the Company uses certain assets requiring a change in the estimated useful lives of such assets. | |||||||||||||
26-Dec-14 | 31-Dec-13 | ||||||||||||
Office equipment and furniture | $ 131,295 | $ 11,842 | |||||||||||
Less: accumulated depreciation | -32,505 | -3,948 | |||||||||||
$ 98,790 | $ 7,894 | ||||||||||||
Depreciation expense for the years ended December 26, 2014 and December 31, 2013 is $21,079 and $3,948, respectively. | |||||||||||||
Customer Relationships | |||||||||||||
Customer relationships comprise customer lists acquired from Qwik Staffing Solutions, Inc. on April 29, 2013 with an estimated fair value of $294,100, from Shirley’s Employment Service, Inc. on April 9, 2014 with an estimated fair value of $162,461 and from Kwik Jobs on September 26, 2014 with an estimated fair value of $141,529. Customer lists are amortized on a straight-line basis over three years. | |||||||||||||
26-Dec-14 | 31-Dec-13 | ||||||||||||
Customer lists | $ 598,090 | $ 294,100 | |||||||||||
Less: accumulated amortization | -212,654 | -66,072 | |||||||||||
$ 385,436 | $ 228,028 | ||||||||||||
Amortization expense for the years ended December 26, 2014 and December 31, 2013 is $146,583 and $66,072, respectively. | |||||||||||||
Earnings (loss) per share | |||||||||||||
Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued. Potentially dilutive common shares outstanding stock options assumed to be exercised or vested and paid out of shares of common stock and warrants assumed to be exercised. Outstanding stock options and warrants are disclosed in Note 12 Shareholders’ Equity. | |||||||||||||
Convertible Notes Payable | |||||||||||||
i) | Beneficial Conversion Feature | ||||||||||||
The conversion features are first analyzed for bifurcation under ASC 815, then if the conversion features of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 “Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method. | |||||||||||||
ii) | Debt Discount | ||||||||||||
The Company determines if the convertible debenture should be accounted for as liability or equity under ASC 480, Liabilities — Distinguishing Liabilities from Equity. ASC 480, applies to certain contracts involving a company's own equity, and requires that issuers classify the following freestanding financial instruments as liabilities. Mandatorily redeemable financial instruments, obligations that require or may require repurchase of the issuer's equity shares by transferring assets (e.g., written put options and forward purchase contracts), and certain obligations where at inception the monetary value of the obligation is based solely or predominantly on: | |||||||||||||
– A fixed monetary amount known at inception, for example, a payable settleable with a variable number of the issuer's equity shares with an issuance date fair value equal to a fixed dollar amount, | |||||||||||||
– Variations in something other than the fair value of the issuer's equity shares, for example, a financial instrument indexed to the S&P 500 and settleable with a variable number of the issuer's equity shares, or | |||||||||||||
– Variations inversely related to changes in the fair value of the issuer's equity shares, for example, a written put that could be net share settled. | |||||||||||||
If the entity determined the instrument meets the guidance under ASC 480 the instrument is accounted for as a liability with a respective debt discount. The Company records debt discounts in connection with raising funds through the issuance of convertible debt (see Note 10). These costs are amortized to non-cash interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed. | |||||||||||||
iii) | Derivative Financial Instruments | ||||||||||||
Derivative financial instruments, as defined in ASC 815, “Accounting for Derivative Financial Instruments and Hedging Activities”, consist of financial instruments or other contracts that contain a notional amount and one or more underlying (e.g. interest rate, security price or other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured at fair value and recorded as liabilities or, in rare instances, assets. | |||||||||||||
The Company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has issued financial instruments including senior convertible promissory notes payable and freestanding stock purchase warrants with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts, or (iii) may be net-cash settled by the counterparty. As required by ASC 815, in certain instances, these instruments are required to be carried as derivative liabilities, at fair value, in our financial statements. | |||||||||||||
Stock-based compensation | |||||||||||||
The Company records stock based compensation in accordance with the guidance in ASC Topic 505 and 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award. | |||||||||||||
The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50. | |||||||||||||
Recent Accounting Pronouncements | |||||||||||||
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“FASB ASU 2014-09”). This standard update clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. generally accepted accounting principles (GAAP) and International Financial Reporting Standards. The standard update intends to provide a more robust framework for addressing revenue issues; improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; and provide more useful information to users of financial statements through improved disclosure requirements. Upon adoption of this standard update, the Company expects that the allocation and timing of revenue recognition will be impacted. The provisions of FASB ASU 2014-09 are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and are to be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. Early application is not permitted. The Company is currently evaluating the impact that this standard update will have on its consolidated financial statements. | |||||||||||||
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern. The new standard requires management of public and private companies to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern and, if so, disclose that fact. Management will also be required to evaluate and disclose whether its plans alleviate that doubt. The standard requires management to evaluate, for each reporting period, whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. The new standard is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted. The Company does not expect the adoption of the ASU to have a significant impact on our consolidated financial statements | |||||||||||||
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial statements. |
PREPAID
PREPAID | 12 Months Ended |
Dec. 26, 2014 | |
Notes to Financial Statements | |
PREPAID | NOTE 4 – PREPAID |
As of December 26, 2014 and December 31, 2013, the Company had prepaid expenses of $322,855 and $45,497, respectively. Prepaid expenses at December 26, 2014 comprises primarily of prepaid lease payments, insurance and services. |
CUSTOMER_RELATIONSHIP_NET
CUSTOMER RELATIONSHIP, NET | 12 Months Ended | |
Dec. 26, 2014 | ||
Notes to Financial Statements | ||
CUSTOMER RELATIONSHIP, NET | NOTE 5 – CUSTOMER RELATIONSHIPS, NET | |
On April 9, 2014, the Company entered into an Asset Purchase Agreement (“Agreement”) with Shirley’s Employment Service, Inc. (“Shirley’s”). Under the terms of the Agreement, Shirley’s sold its customer list. In consideration for the customer list, the Company agreed to pay $300,000 in cash minus the open accounts receivable of Shirley’s. At closing, it was estimated by the Company that $170,797 will be paid for the customer list after deducting accounts receivable. The first $70,797 was paid one day prior to the delivery and transfer of the customer list. The remaining $100,000 is due in monthly installments by paying an amount equal to 5.0% of the monthly accounts receivable collected at the Tulsa, Oklahoma location. In the event these aggregate monthly payments total less than $100,000, after 18 months, Shirley’s will issue the Company a credit memo for the difference. | ||
The total purchase price for Shirley’s was approximately $162,461. The purchase price consisted of approximately (i) $70,797 in cash, (ii) Estimated fair value of consideration payable on collection 5.0% of the monthly accounts receivable collected by operating the Tulsa, Oklahoma location over the next 18 months of $91,664. The Company expected to pay total consideration of $100,000 in equal installments over 18 months. The fair value of the consideration was estimated by discounting the monthly installments by 12% per annum. | ||
The determination of the estimated fair value of the acquired assets and liabilities assumed required management to make significant estimates and assumptions. We determined the fair value by applying established valuation techniques, based on information that management believed to be relevant to this determination. The following table summarizes the purchase price allocation of the fair value of the assets acquired and liabilities assumed at the date of purchase: | ||
Customer relationships | $ 162,461 | |
Net assets acquired | $ 162,461 | |
Cash | $ 70,797 | |
Contingent consideration | 91,664 | |
Consideration paid | $ 162,461 | |
On September 26, 2014, the Company entered into an Asset Purchase Agreement (“Agreement”) with Kwik Jobs, Inc. (“Kwik’s”). Under the terms of the Agreement, Kwik’s sold the customer list of Kwik’s. The first $50,000 was paid on closing. The remaining estimated $100,000 is due in monthly installments by paying an amount equal 5.0% of the monthly accounts receivable collected at the Birmingham Alabama and Decatur Georgia locations. | ||
The fair value of the total purchase price for Kwik’s was approximately $141,529. The purchase price consisted of (i) $50,000 in cash, (ii) Estimated fair value of consideration payable on collection 5.0% of the monthly accounts receivable collected at the Birmingham, Alabama and Decatur, Georgia locations over the next 18 months of $91,529. The Company estimates that it will pay total consideration of $100,000 in equal installments over 18 months. The fair value of the consideration was estimated by discounting the monthly installments by 12% per annum. | ||
The determination of the estimated fair value of the acquired assets and liabilities assumed required management to make significant estimates and assumptions. We determined the fair value by applying established valuation techniques, based on information that management believed to be relevant to this determination. The following table summarizes the purchase price allocation of the fair value of the assets acquired and liabilities assumed at the date of purchase: | ||
Customer relationships | $ 141,529 | |
Net assets acquired | $ 141,529 | |
Cash | $ 50,000 | |
Contingent consideration | 91,529 | |
Consideration paid | $ 141,529 | |
On April 29, 2013 the Company entered into an Asset Purchase Agreement (“Agreement”) with Qwik Staffing Solutions, Inc. (“Qwik”). Under the terms of the Agreement, Qwik sold the customer list of Qwik, excluding cash and accounts receivable. In consideration for the customer list, the Company agreed to pay $320,000 in cash. The first $150,000 is due one day prior to the delivery and transfer of the Assets. The remaining $170,000 is due in monthly installments by paying an amount equal to 6.5% of the monthly accounts receivable collected by operating the Orlando, Jacksonville and Tampa, Florida locations. In the event these aggregate monthly payments total less than $170,000, after 14 months, Qwik will issue the Company a credit memo for the difference. | ||
The total purchase price for Qwik was approximately $308,490. The purchase price consisted of approximately (i) $150,000 in cash, (ii) Estimated fair value of consideration payable on collection 6.5% of the monthly accounts receivable collected by operating the Orlando, Jacksonville and Tampa, Florida locations over the next fourteen months of $158,490. The Company expected to pay total consideration of $170,000 in equal installments over 14 months. The fair value of the consideration was estimated by discounting the monthly installments by 12% per annum. | ||
Equipment | $ 10,654 | |
Prepaid supplies | 3,736 | |
Customer relationships | 294,100 | |
Net assets acquired | $ 308,490 | |
Cash | $ 150,000 | |
Contingent consideration | 158,490 | |
Consideration paid | $ 308,490 | |
As of December 26, 2014 and December 31, 2013, the customer list was valued at $228,028 and $0, respectively. Amortization expense was $66,072 and $0 for the years ended December 26, 2014 and December 31, 2013, respectively. |
FACTORING_AGREEMENT
FACTORING AGREEMENT | 12 Months Ended | ||||||||
Dec. 26, 2014 | |||||||||
Notes to Financial Statements | |||||||||
FACTORING AGREEMENT | NOTE 6 – FACTORING AGREEMENT | ||||||||
On July 24, 2013, the Company terminated a month-to-month financing agreement with Riviera Finance LLC (“Riviera”) that included a non-recourse factoring arrangement that provided notification factoring on substantially all of the Company’s sales. Receivables were factored at a rate of eighty-five percent (85%) of the invoice face value on accepted accounts up to $500,000. A reserve of eight percent (8%) of the invoice face value was held by Riviera in case of customer disputes. | |||||||||
Fees charged by Riviera were two (2) percent of the unpaid invoice face value for the first twenty-five (25) days after the factored date and 0.8% of the invoice face value for every ten (10) days thereafter up to a total of seven (7) percent, including the initial two (2) percent. Administrative charges based on various rates were charged on the gross face amount of all accounts with minimum fees as defined in the agreement. The following table details the amounts of the factoring agreement with Riviera as of December 26, 2014 and December 31, 2013. | |||||||||
Receivables Factored | Reserve | Fees | Administrative Charges | ||||||
Deposit | |||||||||
26-Dec-14 | $ | 0 | $ 0 | $ 0 | $ 0 | ||||
31-Dec-13 | $ | 0 | $ 0 | $ 90,826 | $ 0 | ||||
The reserve deposits were included in other current assets within the balance sheets and receivables factored are netted against accounts receivable. Fees or charges billed by Riviera Finance as of December 26, 2014 and December 31, 2013 were $0 and $90,826, respectively. | |||||||||
On July 31, 2013 the Company entered into a Purchase and Sale Agreement with Transfac Capital, Inc. (“Transfac”). Under the terms of the Purchase and Sale Agreement, Transfac shall have the right, but not the obligation, to purchase up to Two Million Dollars ($2,000,000) worth of accounts receivable (the “Maximum Advances”) of the Company. For each account receivable purchased, Transfac shall advance eighty-five percent (85%) of the face value of the account and the balance after receipt of full payment on the account. As consideration, the Company shall pay Transfac two percent (2%) of the average monthly balance of the outstanding accounts purchased, with a minimum of one half of one percent (0.5%) of the Maximum Advances per month, as long as the Purchase and Sale Agreement remains in effect. | |||||||||
The factoring line of credit with Transfac has been treated as a secured financing arrangement. As of December 26, 2014 and December 31, 2013 under the agreement with Transfac, the Company had factored receivables in the amounts of $1,699,900 and $1,281,122, recorded reserve deposits of $448,968 and $693 included in other current assets, and recorded a liability of $1,638,771 and $865,321, respectively. Discounts and interest provided during factoring of the accounts receivable have been expensed on the statements of operations as interest expense. For the years ended December 26, 2014 and December 31, 2013, interest expense related to the factoring arrangement was $401,278 and $103,165, respectively. |
RELATED_PARTY
RELATED PARTY | 12 Months Ended |
Dec. 26, 2014 | |
Notes to Financial Statements | |
RELATED PARTY | NOTE 7 – RELATED PARTY |
On April 25, 2013, the Company entered into a loan agreement with the CEO of the Company in the amount of $175,768. This loan is payable on demand, unsecured, and bears 0% interest per annum. This loan consolidates all previous loans issued. As of December 26, 2014, $161,043 of this note has been repaid and $14,725 (December 31, 2013 - $44,806) of this note remains outstanding. |
CONVERTIBLE_PROMISSORY_NOTES
CONVERTIBLE PROMISSORY NOTES | 12 Months Ended | ||
Dec. 26, 2014 | |||
Notes to Financial Statements | |||
CONVERTIBLE PROMISSORY NOTES | NOTE 8 – CONVERTIBLE PROMISSORY NOTES | ||
Unless otherwise stated in Note 9, these convertible promissory notes have been accounted for in accordance with ASC 480 Distinguishing Liabilities from Equity. | |||
On September 20, 2012, the Company entered into a Convertible Promissory Note with Evolution Capital, LLC, (the ‘Holder’) in the original principal amount of $130,000 bearing a 12% annual interest rate and maturing June 20, 2013. This convertible note together with any unpaid accrued interest is convertible into shares of common stock at the holder’s option at a variable conversion price calculated as 50% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. On March 28, 2013, Evolution Capital, LLC elected to convert $130,000 of principal amount for 604,651 shares of common stock of the Company valued at $268,088 ($0.44 per share) in accordance with the terms of the Note. After conversion the Convertible Promissory Note was paid in full. | |||
On January 17, 2013, the Company entered into a Convertible Promissory Note with Asher Enterprises, Inc. (“Holder”) in the original principal amount of $103,500 bearing an 8% annual interest rate and maturing October 21, 2013. This convertible promissory note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 51% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the convertible promissory note if repaid within 60 days of date of issue at 130% of the original principal amount plus interest, between 60 days and 120 days at 140% of the original principal amount plus interest and between 120 days and 180 days at 150% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. The Company received cash proceeds of $100,000, which was net of original issue discount of $105,478. On April 16, 2013, the Company elected to prepay the Convertible Promissory Note dated January 17, 2013 with Asher Enterprises, Inc. for $146,647 in cash. The payment included prepayment of $103,500 in original principal, a prepayment penalty and outstanding accrued interest of $43,147. | |||
On February 25, 2013, the Company entered into a Convertible Promissory Note with Evolution Capital Fund I, L.P. (“Holder”) in the original principal amount of $106,000 bearing a 12% annual interest rate and maturing November 25, 2013. This convertible note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated as 52% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the convertible promissory note if repaid within 120 days of date of issue at 140% of the original principal amount plus interest, between 121 days and 150 days at 145% of the original principal amount plus interest and between 151 days and 180 days at 150% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. The Company received cash proceeds of $101,000, which was net of original issue discount of $106,628. On September 28, 2013, the Holder converted 221,108 shares of common stock of the Company with a fair market value of $61,910 for $27,529 and $2,471 in principal and interest, respectively. On October 29, 2013, the Holder converted 227,342 shares of common stock of the Company with a fair market value of $65,929 for $23,859 and $2,141 in principal and interest, respectively. On November 26, 2013, the Holder converted 418,060 shares of common stock of the Company with a fair market value of $96,154 for $45,882 and $4,118 in principal and interest, respectively. On November 26, 2013, the Holder waived $9,514 of interest and the Convertible Promissory Note was paid in full. | |||
On March 4, 2013, the Company issued a Convertible Promissory Note (“Note”) to Vista Capital Investments, LLC (“Holder”), in the original principal amount of $275,000 bearing a 12% annual interest rate and maturing one year for $250,000 of consideration paid in cash and a $25,000 original issue discount. The Company may repay the Note any time and if repaid within 90 days of date of issue with an interest rate is 0%. This Note together with any unpaid accrued interest is convertible into shares of common stock at the Holder’s option at a variable conversion price calculated as lessor of (a) $0.62 or (b) 60% of the lowest trade occurring during the 25 consecutive trading days immediately preceding the conversion date. | |||
i) | On March 6, 2013, the Company received cash proceeds of $25,000 on the first tranche of the Note, which was net of original issue discount of $20,533. During the year ended December 31, 2013, the Holder converted 217,374 shares of common stock of the Company with a fair value of $61,667 for $25,000 and $5,800 in principal and interest, respectively. On November 21, 2013, the first tranche of the Note was paid in full. | ||
ii) | On October 30, 2013, the Company received cash proceeds of $25,000 on the second tranche of the Note, which was net of original issue discount of $18,667. During the year ended December 26, 2014, the Holder converted 239,246 shares of common stock of the Company with a fair value of $57,856 for $27,500 and $3,300 in principal and interest, respectively. On March 3, 2013, the second tranche of the Note was paid in full. | ||
iii) | On January 14, 2014, the Company received cash proceeds of $25,000 on the third tranche of the Note. During the year ended December 26, 2014, the Holder converted 1,431,373 shares of common stock of the Company with a fair value of $51,654 for $20,540 of principal and interest. At December 26, 2014, the Note is recorded at a fully accreted value of $16,311 less unamortized debt discount of $188. | ||
iv) | On March 19, 2014, the Company received cash proceeds of $25,000 on the fourth tranche of the Note. During the year ended December 26, 2014, the Holder converted 3,800,000 shares of common stock of the Company with a fair value of $33,410 for $17,364 in principal and interest, respectively. At December 26, 2014, the Note is recorded at a fully accreted value of $20,734 less unamortized debt discount of $1,530. | ||
v) | On May 27, 2014, the Company received cash proceeds of $25,000 on the fifth tranche of the Note. At December 26, 2014, the Note is recorded at a fully accreted value of $49,118 less unamortized debt discount of $7,818. | ||
vi) | On July 24, 2014, the Company received cash proceeds of $25,000 on the sixth tranche of the Note. At December 26, 2014, the Note is recorded at a fully accreted value of $48,244 less unamortized debt discount of $10,881. | ||
On March 6, 2013, the Company issued a Convertible Promissory Note (“Note”) to JMJ Financial (“Holder”), in the original principal amount of $275,000 bearing a 12% annual interest rate and maturing in one year for $250,000 of consideration paid in cash and a $25,000 original issue discount. The Company may repay the Note any time and if repaid within 90 days of date of issue with an interest rate is 0%. This Note together with any unpaid accrued interest is convertible into shares of common stock at the Holder’s option at a variable conversion price calculated as lessor of (a) $0.62 or (b) 60% of the lowest trade occurring during the 25 consecutive trading days immediately preceding the conversion date. | |||
i) | On March 6, 2013, the Company received cash of $46,000 in the first tranche, which was net of original issue discount of $41,067. During the year ended December 31, 2013, the Holder converted 433,705 shares of common stock of the Company with a fair value of $115,758 for $55,000 and $6,600 in principal and interest, respectively. On November 12, 2013, the first tranche was paid in full. | ||
ii) | On June 27, 2013, the Company received the second tranche of $50,000 in cash, which was net of original issue discount of $43,750. During the year ended December 26, 2014, the Holder converted 603,943 shares of common stock of the Company with a fair value of $142,804 for $56,250 and $6,750 in principal and interest, respectively. On March 3, 2014, the second tranche of the Note was paid in full. | ||
iii) | On September 27, 2013, the Company received the third tranche of $50,000 in cash, which was net of original issue discount of $42,000. During the year ended December 26, 2014, the Holder converted 552,632 shares of common stock of the Company with a fair value of $243,158 for $56,250 and $6,750 in principal and interest, respectively. On March 26, 2014, the third tranche of the Note was paid in full. | ||
iv) | On December 9, 2013, the Company received the fourth tranche of $40,000 in cash, which was net of original issue discount of $36,497. During the year ended December 26, 2014, the Holder converted 432,629 shares of common stock of the Company with a fair value of $96,576 for $45,000 and $5,400 in principal and interest, respectively. On July 22, 2014, the fourth tranche of the Note was paid in full. | ||
On April 10, 2013, the Company issued a Convertible Promissory Note to Iconic Holding, LLC (“Holder”), in the original principal amount of $115,500 bearing a 5% annual interest rate and maturing April 10, 2014 for $101,200 of consideration paid in cash, $8,800 in issuer expenses and a $5,500 original issue discount. This unsecured convertible promissory note is convertible into shares of common stock at the Holder’s option at a variable conversion price calculated at 65% of the lowest trading price of any day during the 10 consecutive trading days prior to the dated on which the Holder elects to convert all or part of the Note. The Company may repay the convertible promissory note within 60 days of date of issue at 110% of the original principal amount plus interest, between 60 days and 120 days at 120% of the original principal amount plus interest and between 120 days and 180 days at 130% of the original principal amount plus interest and 30,000 shares of common stock of the Company with a fair market value of $8,550. Thereafter, the Note may only be repaid with the consent of the Holder. The Company received cash proceeds of $101,200, which was net of unamortized discount of $62,192. On October 7, 2013, Company elected to prepay the Convertible Promissory Note for $149,500 in cash. The payment includes prepayment of $115,500 in original principal a prepayment penalty and outstanding accrued interest of $34,000. | |||
On April 29, 2013, the Company entered into a Convertible Promissory Note with Asher Enterprises, Inc. (“Holder”) in the original principal amount of $128,500 bearing an 8% annual interest rate and maturing January 31, 2014. This convertible promissory note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the convertible promissory note if repaid within 30 days of date of issue at 112% of the original principal amount plus interest, between 31 days and 60 days at 119% of the original principal amount plus interest, between 61 days and 90 days at 125% of the original principal amount plus interest, between 91 days and 120 days at 130% of the original principal amount plus interest and between 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. The Company received cash proceeds of $125,000, which was net of original issue discount of $93,052. On October 24, 2013, Company elected to prepay the Convertible Promissory Note for $176,291 in cash. The payment includes prepayment of $128,500 in original principal a prepayment penalty and outstanding accrued interest of $47,791. | |||
On May 17, 2013, the Company entered into a Convertible Promissory Note with Redwood Fund II, LLC (“Holder”) in the original principal amount of $101,000 bearing a 10% annual interest rate and maturing November 17, 2013. This convertible note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated as 58% of the lowest trading price, determined on the then current trading market for the Company’s common stock, for 20 trading days prior to conversion. The Company received cash proceeds of $101,000, which was net of original issue discount of $76,825. At December 31, 2013, $60,547 of discount has been amortized. On November 19, 2013, Company elected to prepay the Convertible Promissory Note for $138,875 in cash. The payment includes prepayment of $101,000 in original principal a prepayment penalty and outstanding accrued interest of $37,875. | |||
On May 20, 2013, the Company entered into a Convertible Promissory Note with Asher Enterprises, Inc. (“Holder”) in the original principal amount of $53,000 bearing an 8% annual interest rate and maturing February 20, 2014. This convertible promissory note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the convertible promissory note if repaid within 30 days of date of issue at 112% of the original principal amount plus interest, between 31 days and 60 days at 119% of the original principal amount plus interest, between 61 days and 90 days at 125% of the original principal amount plus interest, between 91 days and 120 days at 130% of the original principal amount plus interest and between 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. The Company received cash proceeds of $50,000, which was net of original issue discount of $40,701. On November 20, 2013, Company elected to prepay the Convertible Promissory Note for $73,641 in cash. The payment includes prepayment of $53,000 in original principal a prepayment penalty and outstanding accrued interest of $20,641. | |||
On June 4, 2013, the Company entered into a Convertible Promissory Note with Evolution Capital Fund I, L.P. (“Holder”) in the original principal amount of $106,000 bearing a 12% annual interest rate and maturing March 4, 2014. This convertible note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated as 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the convertible promissory note if repaid within 120 days of date of issue at 140% of the original principal amount plus interest, between 121 days and 150 days at 145% of the original principal amount plus interest and between 151 days and 180 days at 150% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. The Company received cash proceeds of $101,000, which was net of original issue discount of $81,648. On December 31, 2013, Company elected to prepay the Convertible Promissory Note for $148,400 in cash. The payment includes prepayment of $106,000 in original principal a prepayment penalty and outstanding accrued interest of $42,400. | |||
On July 11, 2013, the Company entered into a Convertible Promissory Note (“Note”) with Asher Enterprises, Inc. (“Holder”) in the original principal amount of $63,000 bearing an 8% annual interest rate and maturing April 15, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 30 days of date of issue at 112% of the original principal amount plus interest, between 31 days and 60 days at 119% of the original principal amount plus interest, between 61 days and 90 days at 125% of the original principal amount plus interest, between 91 days and 120 days at 130% of the original principal amount plus interest and between 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. The Company received cash proceeds of $60,000, which was net of original issue discount of $48,400. On January 9, 2014, the Company elected to pay the Note in full for $87,466 in cash allocated to $63,000 and $24,466 in principal and interest, respectively. | |||
On September 16, 2013, the Company entered into a Convertible Promissory Note (“Note”) with Willow Creek Capital Group, LLC (“Holder”) in the original principal amount of $130,000 bearing a 12% annual interest rate and maturing July 16, 2014. At the option of the Holder: | |||
i) | The Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date, or | ||
ii) | All principal, costs, charges and interest amounts outstanding may be exchanged for shares of the Company’s common stock at the Conversion Price of $0.34 per share. The Conversion Price is subject to an anti-dilution adjustment in the event the Company at any time, while the Notes are outstanding, issues equity securities including common stock or any security convertible or exchangeable for shares of common stock for no consideration or for consideration less than $0.34 a share. | ||
The Company may repay the Note at 135% of the original principal amount plus interest. The Company received cash proceeds of $125,000, which was net of original issue discount of $103,516 and convertible note payable derivative liability of $65,723. During the year ended December 26, 2014, the Company elected to pay $79,099 in cash and the Holder converted 509,965 shares of common stock of the Company with a fair value of $113,922 for $53,353 in principal and interest. On July 16, 2014, the Note was paid in full. | |||
On October 31, 2013, the Company issued a Convertible Promissory Note (“Note”) to Iconic Holding, LLC (“Holder”), in the original principal amount of $110,250 bearing a 0% annual interest rate and maturing October 31, 2014 for $105,000 of consideration paid in cash and a $5,250 original issue discount. This unsecured Note is convertible into shares of common stock at the Holder’s option at a variable conversion price calculated at 60% of the lowest trading price of any day during the 10 consecutive trading days prior to the dated on which the Holder elects to convert all or part of the Note. The Company may repay the Note within 60 days of date of issue at 125% of the original principal amount plus interest, between 60 days and 120 days at 130% of the original principal amount plus interest plus 30,000 shares of common stock of the Company and between 120 days and 180 days at 135% of the original principal amount plus interest plus 60,000 shares of common stock of the Company. Thereafter, the Note may only be repaid with the consent of the Holder. The Company received cash proceeds of $105,000, which was net of unamortized discount of $73,500. At December 31, 2013, $12,284 of discount has been amortized. During the year ended December 26, 2014, the Holder converted 811,462 shares of common stock of the Company with a fair value of $208,845 for $110,250 of principal and interest. On June 5, 2014, the Note was paid in full. | |||
On November 4, 2013, the Company entered into a Convertible Promissory Note (“Note”) with Asher Enterprises, Inc. (“Holder”) in the original principal amount of $128,500 bearing an 8% annual interest rate and maturing November 4, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 30 days of date of issue at 112% of the original principal amount plus interest, between 31 days and 60 days at 119% of the original principal amount plus interest, between 61 days and 90 days at 125% of the original principal amount plus interest, between 91 days and 120 days at 130% of the original principal amount plus interest and between 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. The Company received cash proceeds of $125,000, which was net of original issue discount of $100,496. On May 21, 2014, the Company elected to pay the Note in full for $178,545 in cash allocated to $128,500 and $50,045 in principal and interest, respectively. | |||
On December 9, 2013, the Company entered into a Convertible Promissory Note (“Note”) with Group 10 Holdings, LLC (“Holder”) in the original principal amount of $106,000 bearing a 12% annual interest rate and maturing December 9, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 55% of the lowest trading price of any day during the 10 consecutive trading days prior to the dated on which the Holder elects to convert all or part of the Note. The Company may repay the Note if repaid within 30 days of date of issue at 125% of the original principal amount plus interest and between 31 days and 179 days at 135% of the original principal amount plus interest. Thereafter, the Company subject to the approval of the Holder, may repay the Note at 135% of the original principal amount plus interest. The Company received cash proceeds of $101,000 which was net of original issue discount of $97,135. During the year ended December 26, 2014, the Holder converted 993,428 shares of common stock of the Company with a fair value of $214,959 for $105,000 of principal and interest. On September 17, 2014, the Note was paid in full. | |||
On December 12, 2013 the Company entered into a Convertible Promissory Note (“Note”) with Tonaquint Inc. (“Holder”) in the original principal amount of $115,000 bearing a 10% annual interest rate and maturing November 12, 2014. The Note is due is six equal monthly installments plus interest (“Installment Amount”) commencing six months after the issue date. At the option of the Holder, the Installment Amount is convertible into shares of common stock of the Company at a variable conversion price calculated at 60% of the market price which means the average of the lowest two trading prices during the twenty trading day period ending on the latest complete trading day prior to the conversion date. The Company may elect to prepay in cash all or any portion of the outstanding balance of the Note if the Company pays the holder 125% of the outstanding balance. The Company received cash proceeds of $100,000, which was net of original issue discount of $83,703. During the year ended December 26, 2014, the Company elected to pay $57,452 in cash and the Holder converted 713,167 shares of common stock of the Company with a fair market value of $138,205 for $77,528 in principal and interest. At July 17, 2014, the Note was paid in full. | |||
On December 13, 2013 the Company entered into a Convertible Promissory Note (“Note”) with Tailwind Partners, LLC (“Holder”) in the original principal amount of $106,000 bearing a 12% annual interest rate and maturing November 12, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 120 days of date of issue at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest and between 151 days and 180 days at 130% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. The Company received cash proceeds of $101,000, which was net of original issue discount of $83,673. During the year ended December 26, 2014, the Holder converted 761,005 shares of common stock of the Company with a fair value of $169,979 for $106,000 of principal and interest. On June 24, 2014, the Note was paid in full. | |||
On January 1, 2014, the Company entered into an Original Issue Discount Secured Promissory Note dated December 27, 2014 with Beaufort Ventures PLC (“Holder”) for a purchase price of $101,000 and a face amount of $136,350 and maturing June 27, 2014. After the maturity date, the Notes accrues interest at 22% per annum and the Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the lowest trading price of the prior 15 trading days, determined on the then current trading market of the Company’s common stock, for 10 trading days prior to conversion. The Company may repay the Note at any time for a net payment of $136,350. On June 27, 2014, the Company paid the Note in full for $136,350 in cash. | |||
On January 2, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Metolius Capital, LLC (“Holder”) in the original principal amount of $106,000 bearing a 12% annual interest rate and maturing October 4, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 120 days of date of issue at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest and between 151 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. During the year ended December 26, 2014, the Holder converted 1,075,051 shares of common stock of the Company with a fair value of $225,761 for $106,000 of principal and interest. On July 25, 2014, the Note was paid in full. | |||
On January 8, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Asher Enterprises, Inc. (“Holder”) in the original principal amount of $63,000 bearing an 8% annual interest rate and maturing September 8, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 30 days of date of issue at 112% of the original principal amount plus interest, between 31 days and 60 days at 119% of the original principal amount plus interest and between 61 days and 90 days at 125% of the original principal amount plus interest and between 91 days and 120 days at 130% of the original principal amount plus interest and between 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. On July 11, 2014, the Company elected to pay the Note in full for $87,535 in cash allocated to $63,000 and $24,535 in principal and interest, respectively. On July 11, 2014, the Note was paid in full. | |||
On January 14, 2014, the Company entered into a Convertible Debenture with Daniel James Management, Inc. (“Holder”) in the original principal amount of $101,000 bearing a 12% annual interest rate and maturing January 14, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the lowest closing bid price during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay any portion of the principal amount at 135% of such amount along with any accrued interest of this Debenture at any time upon seven days written notice to the Holder. On July 11, 2014, the Company elected to pay the Note in full for $144,780 in cash allocated to $101,000 and $43,780 in principal and interest, respectively. On July 11, 2014, the Note was paid in full. | |||
On January 22, 2014, the Company entered into a Convertible Promissory Note (“Note”) with WHC Capital, LLC (“Holder”) in the original principal amount of $101,000 bearing a 12% annual interest rate and maturing January 22, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the lowest bid price during the fifteen trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay outstanding principal and interest due at 135% of such amount within 180 days of the execution of the Note. On July 25, 2014, the Company elected to pay the Note in full for $144,443 in cash allocated to $101,000 and $43,443 in principal and interest, respectively. | |||
On January 31, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Tonaquint Inc. (“Holder”) in the original principal amount of $115,000 less an original issuer’s discount of $10,000 and transaction costs of $5,000 bearing a 0% annual interest rate and maturing December 31, 2014. The Note is due in six equal monthly installments plus interest (“Installment Amount”) commencing nine months after the issue date. At the option of the Holder, the Installment Amount is convertible into shares of common stock of the Company at a variable conversion price calculated at 60% of the market price which means the average of the lowest two trading prices during the twenty trading day period ending on the latest complete trading day prior to the conversion date. The Company may elect to prepay in cash all or any portion of the outstanding balance of the Note if the Company pays the holder 125% of the outstanding balance. In October 2014, the Company paid principal and interest of $88,577 in cash. At December 26, 2014, the Note is recorded at a fully accreted value of $44,039 less unamortized debt discount of $0. | |||
On February 13, 2014, the Company entered into an Original Issue Discount Secured Promissory Note (“Note”) with Beaufort Ventures PLC (“Holder”) for a purchase price of $101,000 and a face amount of $136,350 and maturing August 13, 2014. After the maturity date, the Notes accrues interest at 22% per annum and the Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the lowest trading price of the prior 15 trading days, determined on the then current trading market of the Company’s common stock, for 10 trading days prior to conversion. The Company may repay the prepay this note, if repaid within 90 days of date of issue, for a net payment of $136,350 plus 70,000 shares of common stock of the Company. On July 7, 2014, the Company paid the Note is full for $136,350 in cash. | |||
On March 5, 2014, the Company entered into a Convertible Promissory Note (“Note”) with LG Capital Funding, LLC (“Holder”) in the original principal amount of $101,000 bearing a 10% annual interest rate and maturing March 5, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the lowest bid price during the twelve trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 90 days of date of issue at 125% of the original principal amount plus interest, between 91 days and 150 days at 130% of the original principal amount plus interest and between 151 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. During the year ended December 26, 2014, the Holder converted 12,355,951 shares of common stock of the Company with a fair value of $275,164 for $113,866 of principal and interest. On December 22, 2014, the Note was paid in full. | |||
On March 10, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Adar Bays, LLC (“Holder”) in the original principal amount of $101,000 bearing a 10% annual interest rate and maturing March 10, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 90 days of date of issue at 125% of the original principal amount plus interest, between 91 days and 150 days at 130% of the original principal amount plus interest and between 151 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. During the year ended December 26, 2014, the Holder converted 4,519,019 shares of common stock of the Company with a fair value of $194,724 for $101,000 of principal and interest. On November 3, 2014, the Note was paid in full. | |||
On March 12, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Asher Enterprises, Inc. (“Holder”) in the original principal amount of $103,500 bearing an 8% annual interest rate and maturing December 17, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 30 days of date of issue at 112% of the original principal amount plus interest, between 31 days and 60 days at 119% of the original principal amount plus interest and between 61 days and 90 days at 125% of the original principal amount plus interest and between 91 days and 120 days at 130% of the original principal amount plus interest and between 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. During the year ended December 26, 2014, the Holder converted 3,071,221 shares of common stock of the Company with a fair value of $185,620 for $103,500 of principal and interest. On October 13, 2014, the Note was paid in full. | |||
On March 24, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Carebourn Capital, L.P. (“Holder”) in the original principal amount of $112,500 bearing an 8% annual interest rate and maturing November 24, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest, and between 151 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. During the year ended December 26, 2014, the Company elected to pay $75,289 in cash and the Holder converted 1,043,153 shares of common stock of the Company with a fair value of $115,166 for $60,000 in principal and interest. At September 29, 2014, the Note was paid in full. | |||
On March 27, 2014, the Company entered into a 10% Original Issue Discount Convertible Promissory Note (“Note”) with Gemini Master Fund, Ltd. (“Holder”) in the original principal amount of $220,000 bearing a 10% annual interest rate and maturing January 1, 2015. At the option of the Holder: | |||
i) | The Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at a variable conversion price calculated at 65% of the market price which means the average of the lowest volume weighted average price during the twenty trading day period ending prior to the conversion date, or | ||
ii) | All principal, costs, charges and interest amounts outstanding may be exchanged for shares of the Company’s common stock at the Conversion Price of $0.25 per share. The Conversion Price is subject to an anti-dilution adjustment. | ||
The Company may repay the Note at 130% of the original principal amount plus interest. During the year ended December 26, 2014, the Holder converted 2,386,034 shares of common stock of the Company with a fair value of $143,162 for $30,000 of principal and interest. At December 26, 2014, the Note is recorded at a fully accreted value of $317,423 less unamortized debt discount of $814. | |||
On April 2, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Coventry Enterprises, LLC (“Holder”) in the original principal amount of $101,000 less transaction costs of $13,000 bearing a 10% annual interest rate and maturing April 5, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the lowest bid price during the twelve trading days prior to the conversion date including the day upon which a Notice of Conversion is received by the Company. The Company may repay the Note if repaid within 180 days of date of issue at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. During the year ended December 26, 2014, the Holder converted 27,737,439 shares of common stock of the Company with a fair value of $306,184 for $98,856 of principal and interest. At December 26, 2014, the Note is recorded at a fully accreted value of $15,205 less unamortized debt discount of $413. | |||
On April 14, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Group 10 Holdings, LLC (“Holder”) in the original principal amount of $113,000 less original issue discount of $12,000 bearing a 12% annual interest rate and maturing April 17, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 55% of the lowest trading price of any day during the 20 consecutive trading days prior to the date on which the Holder elects to convert all or part of the Note. The Company may repay the Note if repaid within 30 days of date of issue at 125% of the original principal amount plus interest and between 31 days and 179 days at 135% of the original principal amount plus interest and thereafter, the Company may repay the Note at 145% of the original principal amount plus interest. During the year ended December 26, 2014, the Holder converted 26,340,100 shares of common stock of the Company with a fair value of $170,445 for $71,944 of principal and interest. At December 26, 2014, the Note is recorded at a fully accreted value of $90,790 less unamortized debt discount of $10,429. | |||
On April 16, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Tonaquint Inc. (“Holder”) in the original principal amount of $115,000 less an original issuer’s discount of $10,000 and transaction costs of $13,000 bearing a 10% annual interest rate and maturing March 16, 2015. The Note is due in six equal monthly installments plus interest (“Installment Amount”) commencing nine months after the issue date. At the option of the Holder, the Installment Amount is convertible into shares of common stock of the Company at a variable conversion price calculated at 60% of the market price which means the average of the lowest two trading prices during the twenty trading day period ending on the latest complete trading day prior to the conversion date. The Company may elect to prepay in cash all or any portion of the outstanding balance of the Note if the Company pays the holder 125% of the outstanding balance. During the year ended December 26, 2014, the Holder converted 18,429,925 shares of common stock of the Company with a fair value of $94,398 for $69,530 of principal and interest. At December 26, 2014, the Note is recorded at a fully accreted value of $88,577 less unamortized debt discount of $18,605. | |||
On April 21, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Tailwind Partners 3, LLC (“Holder”) in the original principal amount of $106,000 less transaction costs of $5,000 bearing a 12% annual interest rate and maturing January 21, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 120 days of date of issue at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest and between 151 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. During the year ended December 26, 2014, the Holder converted 459,281 shares of common stock of the Company with a fair value of $103,600 for $71,000 of principal and interest. During the year ended December 26, 2014, the Holder converted 8,620,690 shares of common stock of the Company with a fair value of $142,698 for $49,000 of principal and interest. At December 26, 2014, the Note is recorded at a fully accreted value of $136,503 less unamortized debt discount of $4,156. | |||
On May 14, 2014, the Company entered into a Convertible Promissory Note (“Note”) with KBM Worldwide, Inc. (“Holder”) in the original principal amount of $103,500 less transaction costs $3,500 bearing an 8% annual interest rate and maturing February 16, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 60 days of date of issue at 119% of the original principal amount plus interest, between 61 days and 90 days at 125% of the original principal amount plus interest, between 91 days and 120 days at 130% of the original principal amount plus interest and 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. During the year ended December 26, 2014, the Holder converted 33,354,930 shares of common stock of the Company with a fair value of $98,434 for $60,345 of principal and interest. At December 26, 2014, the Note is recorded at a fully accreted value of $83,014 less unamortized debt discount of $5,595. | |||
On May 27, 2014, the Company issued a Convertible Promissory Note (“Note”) to JMJ Financial (“Holder”), in the original principal amount of $330,000 bearing a 12% annual interest rate and maturing in one year for $300,000 of consideration paid in cash and a $30,000 original issue discount. The Company may repay the Note any time and if repaid within 90 days of date of issue with an interest rate is 0%. This Note together with any unpaid accrued interest is convertible into shares of common stock at the Holder’s option at a variable conversion price calculated as lessor of (a) $0.30 or (b) 60% of the lowest trade occurring during the 25 consecutive trading days immediately preceding the conversion date. On May 27, 2014, the Company received cash of $100,000 in the first tranche, which was net of original issue discount of $10,000. On August 19, 2014, the Company received cash of $50,000 in the second tranche, which was net of original issue discount of $5,000 bearing a 8% annual interest and maturing in one year. During the year ended December 26, 2014, the Holder converted 8,600,000 shares of common stock of the Company with a fair value of $25,880 for $14,256 of principal and interest. At December 26, 2014, the first tranche of the Note is recorded at a fully accreted value of $155,292 less unamortized debt discount of $34,471. At December 26, 2014, the second tranche of the Note is recorded at a fully accreted value of $87,135 less unamortized debt discount of $27,215. | |||
On June 6, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Firehole River Capital, LLC (“Holder”) in the original principal amount of $106,000 less transaction costs of $5,000 bearing a 12% annual interest rate and maturing March 6, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 120 days of date of issue at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest and between 151 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. At December 26, 2014, the Note is recorded at a fully accreted value of $195,256 less unamortized debt discount of $19,354. | |||
On June 9, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Group 10 Holdings, LLC (“Holder”) in the original principal amount of $113,000 less an original issue discount of $12,000 bearing a 12% annual interest rate and maturing June 9, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 55% of the lowest trading price of any day during the 20 consecutive trading days prior to the date on which the Holder elects to convert all or part of the Note. The Company may repay the Note if repaid within 30 days of date of issue at 125% of the original principal amount plus interest and between 31 days and 179 days at 135% of the original principal amount plus interest and thereafter, the Company may repay the Note at 145% of the original principal amount plus interest. At December 26, 2014, the Note is recorded at a fully accreted value of $219,302 less unamortized debt discount of $42,917. | |||
On July 2, 2014, the Company entered into a Convertible Promissory Note (“Note”) with KBM Worldwide, Inc. (“Holder”) in the original principal amount of $78,500 less transaction costs $3,500 bearing an 8% annual interest rate and maturing April 7, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 30 days of date of issue at 112% of the original principal amount plus interest, between 31 days and 60 days at 119% of the original principal amount plus interest, between 61 days and 90 days at 125% of the original principal amount plus interest, between 91 days and 120 days at 130% of the original principal amount plus interest and 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. At December 26, 2014, the Note is recorded at a fully accreted value of $4,673 less unamortized debt discount of $0. | |||
On July 3, 2014, the Company received cash proceed of a Convertible Promissory Note (“Note”) dated June 26, 2014 with JSJ Investment Inc. (“Holder”) in the original principal amount of $101,000 bearing a 10% annual interest rate and maturing December 27, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. Upon the maturity date, this note has a cash redemption value of 135%. This provision only may be exercise if the consent of the Note holder is obtained. At December 26, 2014, the Note is recorded at a fully accreted value of $182,582 less unamortized debt discount of $0. | |||
On July 8, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Tailwind Partners, LLC (“Holder”) in the original principal amount of $106,000 less transaction costs of $5,000 bearing a 12% annual interest rate and maturing April 8, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 120 days of date of issue at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest and between 151 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. At December 26, 2014, the Note is recorded at a fully accreted value of $193,334 less unamortized debt discount of $29,073. | |||
On July 11, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Tonaquint Inc. (“Holder”) in the original principal amount of $225,000 less an original issuer’s discount of $20,000 and transaction costs of $16,000 bearing a 10% annual interest rate and maturing June 11, 2015. The Note is due in six equal monthly installments plus interest (“Installment Amount”) commencing nine months after the issue date. At the option of the Holder, the Installment Amount is convertible into shares of common stock of the Company at a variable conversion price calculated at 60% of the market price which means the average of the lowest two trading prices during the twenty trading day period ending on the latest complete trading day prior to the conversion date. The Company may elect to prepay in cash all or any portion of the outstanding balance of the Note if the Company pays the holder 125% of the outstanding balance. At December 26, 2014, the Note is recorded at a fully accreted value of $393,021 less unamortized debt discount of $123,793. | |||
On July 11, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Macallan Partners, LLC (“Holder”) in the original principal amount of $115,000 less an original issue discount of $14,000 and transaction costs of $8,080 bearing a 0% annual interest rate and maturing January 7, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the lowest trading price of any day during the 15 consecutive trading days prior to the date on which the Holder elects to convert all or part of the Note. The Company may repay the Note if repaid within 60 days of date of issue at 125% of the original principal amount plus interest, and between 61 days and 120 days at 130% of the original principal amount plus interest and between 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. At December 26, 2014, the Note is recorded at a fully accreted value of $198,276 less unamortized debt discount of $31,888. | |||
On July 15, 2014, the Company issued a Convertible Promissory Note (“Note”) to Iconic Holding, LLC (“Holder”), in the original principal amount of $110,250 less an original issue discount of $5,250 and transaction costs of $8,340 bearing a 0% annual interest rate and maturing July 15, 2015. This unsecured Note is convertible into shares of common stock at the Holder’s option at a variable conversion price calculated at 60% of the lowest trading price of any day during the 10 consecutive trading days prior to the dated on which the Holder elects to convert all or part of the Note. The Company may repay the Note within 60 days of date of issue at 125% of the original principal amount plus interest, between 60 days and 120 days at 130% of the original principal amount plus interest plus 30,000 shares of common stock of the Company and between 120 days and 180 days at 135% of the original principal amount plus interest plus 60,000 shares of common stock of the Company. Thereafter, the Note may only be repaid with the consent of the Holder. At December 26, 2014, the Note is recorded at a fully accreted value of $183,750 less unamortized debt discount of $41,796. | |||
On July 22, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Firehole River Capital, LLC (“Holder”) in the original principal amount of $106,000 less transaction costs of $8,080 bearing a 12% annual interest rate and maturing April 22, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 120 days of date of issue at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest and between 151 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. At December 26, 2014, the Note is recorded at a fully accreted value of $192,492 less unamortized debt discount of $44,500. | |||
On July 23, 2014, the Company entered into a Convertible Promissory Note (“Note”) with WHC Capital, LLC (“Holder”) in the original principal amount of $101,000 less transaction costs of $5,000 bearing a 12% annual interest rate and maturing July 23, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the fifteen trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 120 days of date of issue at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest and between 151 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. At December 26, 2014, the Note is recorded at a fully accreted value of $183,355 less unamortized debt discount of $42,520. | |||
On August 6, 2014, the Company entered into a Convertible Promissory Note (“Note”) with LG Capital Funding, LLC (“Holder”) in the original principal amount of $106,000 less transaction costs of $5,000 bearing a 10% annual interest rate and maturing August 6, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the lowest bid price during the twelve trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 90 days of date of issue at 125% of the original principal amount plus interest, between 91 days and 150 days at 130% of the original principal amount plus interest and between 151 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. At December 26, 2014, the Note is recorded at a fully accreted value of $190,820 less unamortized debt discount of $44,627. | |||
On August 8, 2014, the Company entered into a Convertible Debenture (“Note”) with Daniel James Management, Inc. (“Holder”) in the original principal amount of $101,000 bearing a 12% annual interest rate and maturing August 8, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the lowest closing bid price during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay any portion of the principal amount at 135% of such amount along with any accrued interest of this Debenture at any time upon seven days written notice to the Holder. At December 26, 2014, the Note is recorded at a fully accreted value of $182,439 less unamortized debt discount of $46,680. | |||
On August 18, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Redwood Fund III, LLC (“Holder”) in the original principal amount of $262,500 less original issue discount of $12,500 and transaction costs of $22,000 bearing a 11% annual interest rate and maturing August 18, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated as 60% of the lowest trading price, determined on the then current trading market for the Company’s common stock, for 20 trading days prior to conversion. The Company may repay any portion of the principal amount at 130% of such amount along with any accrued interest of this Debenture at any time upon five days written notice to the Holder. At December 26, 2014, the Note is recorded at a fully accreted value of $455,547 less unamortized debt discount of $199,861. | |||
On August 18, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Redwood Management, LLC (“Holder”) in the original principal amount of $105,000 less original issue discount $5,000 bearing a 11% annual interest rate and maturing August 18, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated as 60% of the lowest trading price, determined on the then current trading market for the Company’s common stock, for 20 trading days prior to conversion. The Company may repay any portion of the principal amount at 130% of such amount along with any accrued interest of this Debenture at any time upon five days written notice to the Holder. At December 26, 2014, the Note is recorded at a fully accreted value of $182,219 less unamortized debt discount of $76,764. | |||
On September 19, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Eastmore Capital, LLC (“Holder”) in the original principal amount of $110,000 less transaction costs of $5,000 bearing a 12% annual interest rate and maturing September 18, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 60% of the market price which means the average of the lowest trading price during the fifteen trading day period ending on the latest complete trading day prior to the conversion date. For six months, the Company may repay any portion of the principal amount at 130% of such amount along with any accrued interest of this Debenture at any time upon five days written notice to the Holder. Thereafter, the Company does not have the right of prepayment. At December 26, 2014, the Note is recorded at a fully accreted value of $189,542 less unamortized debt discount of $55,681. | |||
On September 19, 2014, the Company entered into a Convertible Promissory Note (“Note”) with RDW Capital, LLC (“Holder”) in the original principal amount of $131,250 less original issue discount of $6,250 bearing a 11% annual interest rate and maturing September 19, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated as 60% of the lowest trading price, determined on the then current trading market for the Company’s common stock, for 20 trading days prior to conversion. The Company may repay any portion of the principal amount at 130% of such amount along with any accrued interest of this Debenture at any time upon five days written notice to the Holder. At December 26, 2014, the Note is recorded at a fully accreted value of $225,635 less unamortized debt discount of $102,059. | |||
On September 24, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Carebourn Capital, L.P. (“Holder”) in the original principal amount of $125,289 less transaction costs $6,300 bearing an 12% annual interest rate and maturing June 24, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 60% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest and 121 days and 150 days at 130% and between 151 days and 180 days at 135% of the original principal amount plus interest of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. At December 26, 2014, the Note is recorded at a fully accreted value of $215,542 less unamortized debt discount of $56,696. | |||
On October 1, 2014, the Company entered into a Convertible Promissory Note (“Note”) with KBM Worldwide, Inc. (“Holder”) in the original principal amount of $95,000 less transaction costs $10,000 bearing an 8% annual interest rate and maturing July 6, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 30 days of date of issue at 112% of the original principal amount plus interest, between 31 days and 60 days at 119% of the original principal amount plus interest, between 61 days and 90 days at 125% of the original principal amount plus interest, between 91 days and 120 days at 130% of the original principal amount plus interest and 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. At December 26, 2014, the Note is recorded at a fully accreted value of $167,105 less unamortized debt discount of $98,311. | |||
On October 31, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Tailwind Partners, LLC (“Holder”) in the original principal amount of $106,000 less transaction costs of $5,000 bearing a 12% annual interest rate and maturing July 31, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 120 days of date of issue at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest and between 151 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. At December 26, 2014, the Note is recorded at a fully accreted value of $186,475 less unamortized debt discount of $146,173. | |||
On November 12, 2014, the Company entered into a Convertible Promissory Note (“Note”) with LG Capital Funding, LLC (“Holder”) in the original principal amount of $106,000 less transaction costs of $5,000 bearing a 10% annual interest rate and maturing November 12, 2015. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the lowest bid price during the twelve trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 90 days of date of issue at 125% of the original principal amount plus interest, between 91 days and 150 days at 130% of the original principal amount plus interest and between 151 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. At December 26, 2014, the Note is recorded at a fully accreted value of $185,246 less unamortized debt discount of $162,962. | |||
At December 26, 2014 and December 31, 2013, convertible notes payable include accrued interest of $103,555 and $0, respectively, for Notes that principal has been fully paid. |
CONVERTIBLE_NOTE_PAYABLE_DERIV
CONVERTIBLE NOTE PAYABLE DERIVATIVE LIABILITY | 12 Months Ended | |
Dec. 26, 2014 | ||
Notes to Financial Statements | ||
CONVERTIBLE NOTE PAYABLE DERIVATIVE LIABILITY | NOTE 9 – CONVERTIBLE NOTE PAYABLE DERIVATIVE LIABILITY | |
The Convertible Promissory Notes (see Note 8) with Willow Creek Capital Group, LLC with an issue date September 16, 2013, Gemini Master Fund Ltd. with an issue date of March 27, 2014, JMJ Financial Tranche 1 with an issue date of May 27, 2014, Tonaquint, Inc. with an issue date of April 16, 2014, Tonaquint, Inc. with an issue date of July 11, 2014, Redwood Fund III, Ltd. with an issue date of August 18, 2014, Redwood Management LLC with an issue date of August 18, 2014, JMJ Financial Tranche 2 with an issue date of August 19, 2014 and RDW Capital, LLC with an issue date of September 19, 2014 have an initial conversion price that is subject to anti-dilution adjustments that allow for the reduction in the Conversion Price in the event the Company subsequently issues equity securities including common stock or any security convertible or exchangeable for shares of common stock for no consideration or for consideration less than original conversion price. | ||
The Company’s convertible promissory note derivative liabilities due to anti-dilution adjustments has been measured at fair value at December 26, 2014 and December 31, 2013 using a binomial model. Since the Conversion Price contains an anti-dilution adjustment, the probability that the Conversion Price of the Notes would decrease as the share price decreased was incorporated into the valuation calculation. | ||
The inputs into the binomial models are as follows: | ||
Conversion price | $0.25 - $0.50 | |
Risk free rate | 0.03% - 0.11% | |
Expected volatility | 196% - 282% | |
Dividend yield | 0% | |
Expected life | 0.03 years – 0.73 years | |
Additionally, the Convertible Promissory Notes with KBM Worldwide, Inc. with an issue date of October 1, 2014, Tailwind Partner 3, LLC with an issue date of October 31, 2014 and LG Capital Funding, LLC with an issued date of November 12, 2014 were all accounted for under ASC 815. The variable conversion price is not considered predominately based on a fixed monetary amount settleable with a variable number of shares due to the volatility and trading volume of the Company’s common stock. The Company’s convertible promissory note derivative liabilities has been measured at fair value at December 26, 2014 and December 31, 2013 using the Black-Scholes model. | ||
The inputs into the Black-Scholes models are as follows: | ||
Conversion price | $0.0008 - $0.0141 | |
Risk free rate | 0.05% | |
Expected volatility | 130% - 211% | |
Dividend yield | 0% | |
Expected life | 0.53 years – 1.00 years |
WARRANT_DERIVATIVE_LIABILITY
WARRANT DERIVATIVE LIABILITY | 12 Months Ended | |
Dec. 26, 2014 | ||
Notes to Financial Statements | ||
WARRANT DERIVATIVE LIABILITY | NOTE 10 – WARRANT DERIVATIVE LIABILITY | |
On July 11, 2014, in conjunction with the issuance of the Convertible Promissory Note issued to Tonaquint, Inc. on July 11, 2014 (see Note 8), the Company issued a warrant to purchase 271,084 shares of common stock with an exercise price of $0.45 per share and a life of five years. | ||
The warrant is subject to anti-dilution adjustments that allow for the reduction in the conversion price in the event the Company subsequently issues equity securities including common stock or any security convertible or exchangeable for shares of common stock for no consideration or for consideration less than $0.45 a share. The Company accounted for the conversion option in accordance with ASC Topic 815. Accordingly, the Conversion Option is not considered to be solely indexed to the Company’s own stock and, as such, is recorded as a liability. | ||
The warrant derivative liability has been measured at fair value at July 11, 2014 and December 26, 2014 using a binomial model. Since the Conversion Price contains an anti-dilution adjustment, the probability that the exercise price of the Notes would decrease as the share price decreased was incorporated into the valuation calculation. | ||
The inputs into the binomial model are as follows: | ||
Risk free rate | 1.75% | |
Expected volatility | 170% | |
Dividend yield | 0% | |
Expected life | 4.5 years |
CONTINGENT_LIABILITY
CONTINGENT LIABILITY | 12 Months Ended | |
Dec. 26, 2014 | ||
Notes to Financial Statements | ||
CONTINGENT LIABILITY | NOTE 11 – CONTINGENT LIABILITY | |
The Company incurred a contingent liability related to the Asset Acquisition Agreement with Qwik Staffing Solutions, Inc. on April 29, 2013. The obligation is due in monthly installments by paying an amount equal to 6.5% of the monthly accounts receivable collected by operating the Orlando, Jacksonville and Tampa, Florida locations. The total payments are not to exceed $170,000. The fair value of the obligation is determined by estimating discounted monthly installments at an interest rate of 12% per annum. The obligation to Qwik was paid in full during May 2014. | ||
The Company incurred a contingent liability related to the Asset Acquisition Agreement with Shirley’s Employment Service, Inc. on April 13, 2014. The obligation is due in monthly installments by paying an amount equal to 5.0% of the monthly accounts receivable collected by operating the Tulsa, Oklahoma location. The total payments are not to exceed $100,000. The fair value of the obligation is determined by estimating discounted monthly installments at an interest rate of 12% per annum. | ||
The Company incurred a contingent liability related to the Asset Acquisition Agreement with Kwik Jobs, Inc. on September 26, 2014. The obligation is due in monthly installments by paying an amount equal to 5.0% of the monthly accounts receivable collected by operating the Birmingham, Alabama and Decatur, Georgia locations. The total payments are not expected to exceed $100,000. The fair value of the obligation is determined by estimating discounted monthly installments at an interest rate of 12% per annum. | ||
Opening balance at December 31, 2013 | $ 79,221 | |
Purchase of Shirley’s customer list – April 13, 2014 | ||
91,664 | ||
Purchase of Kwik customer list – September 26, 2014 | ||
141,529 | ||
Payments | -156,575 | |
Interest | 10,023 | |
Closing balance at December 26, 2014 | $ 165,862 |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended | ||||||||||||||
Dec. 26, 2014 | |||||||||||||||
Equity [Abstract] | |||||||||||||||
STOCKHOLDERS' EQUITY | NOTE 12 – STOCKHOLDERS’ EQUITY | ||||||||||||||
On October 6, 2014 the Company filed a Certificate of Designation with the Nevada Secretary of State to amend its Articles of Incorporation to create and designate the rights and preferences of a new series of preferred stock designated the Series A Preferred Stock. The number of shares authorized as Series A Preferred Stock shall be fifty one (51) shares. Each share of Series A Preferred Stock shall be convertible into one (1) share of common stock of the Company at the election of the holder and shall have voting rights equal to: (x) 0.019607 multiplied by the total issued and outstanding shares of Common Stock eligible to vote at the time of the respective vote (the “Numerator”), divided by (y) 0.49, minus (z) the Numerator. | |||||||||||||||
On October 22, 2014, the Board of Directors adopted and approved and the majority shareholder, Ryan Schadel, ratified a Company proposed amendment to the Articles of Incorporation to increase the number of authorized shares of the Company’s common stock from 150,000,000 to 1,000,000,000. The amendment is effective November 25, 2014. | |||||||||||||||
Effective February 16, 2015, the Company filed a Certificate of Amendment to the Articles of Incorporation to increase the number of authorized shares of the Company’s common stock from 1,000,000,000 to 20,000,000,000 and to decrease the par value common stock from $0.001 per share to $0.00001 per share. The increase in authorized shares and change in par value have been accounted for retroactively in these financial statements. | |||||||||||||||
Preferred Stock – The Company has 5,000,000 shares of “blank check” preferred stock authorized. As of December 26, 2014 and December 31, 2013, the Company had no preferred shares issued and outstanding, respectively. | |||||||||||||||
On October 20, 2014, the Company issued fifty-one (51) shares of Series A Preferred Stock to Ryan Schadel for his service as the Chief Executive Officer and director of the Company. | |||||||||||||||
Common Stock - The Company has 20,000,000,000 shares of $0.00001 par value common stock authorized. As of December 26, 2014 and December 31, 2013, the Company had 180,485,103 and 20,982,740 shares issued and outstanding, respectively. | |||||||||||||||
On January 28, 2013, the Company entered into a Consultant Agreement for a term of six months for general corporate and due diligence services. As compensation, the Company agreed to issue to the consultant 300,000 shares of unrestricted common stock valued at $72,000 ($0.24 per share) in conjunction with the Form S-8 Registration Statement as filed on July 13, 2012. | |||||||||||||||
On January 28, 2013, the Company entered into a Consultant Agreement for a term of six months for general corporate and due diligence services. As compensation, the Company agreed to issue to the consultant 700,000 shares of unrestricted common stock valued at $168,000 ($0.24 per share) in conjunction with the Form S-8 Registration Statement as filed on July 13, 2012. | |||||||||||||||
On January 28, 2013, the Company entered into a Consultant Agreement for a term of six months. As compensation, the Company agreed to issue to the consultant 500,000 shares of common stock valued at $120,000 ($0.24 per share) of the Company. | |||||||||||||||
On January 28, 2013, the Company entered into a Consultant Agreement for services. As compensation, the Company agreed to issue to the consultant 300,000 shares of unrestricted common stock valued at $72,000 ($0.24 per share) in conjunction with the Form S-8 Registration Statement as filed on July 13, 2012. | |||||||||||||||
In February 21, 2013, the Company issued 50,000 stock options to a director of the Company with an exercise price of $0.56 per share, expiring on February 21, 2018 in conjunction with the Form S-8 Registration Statement as filed on July 13, 2012. The options were measured at their fair value on February 21, 2013 using the following Black-Scholes Model Assumptions: risk free interest (0.86%); expected volatility (166%); expected life (5 years); no dividends. These options were immediately vested and exercisable, valued at $26,244 and expensed in our accompanying statement of operations. | |||||||||||||||
On February 25, 2013, the Company issued warrants to purchase 202,000 shares of common stock of the Company with an exercise price of $0.40 per share and no specific term. These warrants were issued in conjunction to the Convertible Promissory Note the Company entered into on February 25, 2013. The warrants were measured at their fair value on February 25, 2013 using the following Black-Scholes Model Assumptions: risk free interest (1.93%); expected volatility (166%); expected life (10 years); no dividends. These warrants were valued at their relative fair value of $57,359, recorded as a discount to convertible note payable and are deferred and amortized in our accompanying statement of operations using the straight-line method, which approximates the effective interest method, over the term of the associated Convertible Promissory Note. | |||||||||||||||
In March 14, 2013, the Company issued 50,000 stock options to a director of the Company with an exercise price of $0.62 per share, expiring on March 14, 2018 in conjunction with the Form S-8 Registration Statement as filed on July 13, 2012. The options were measured at their fair value on March 14, 2013 using the following Black-Scholes Model Assumptions: risk free interest (0.88%); expected volatility (166%); expected life (5 years); no dividends. These options were immediately vested and exercisable, valued at $29,057 and expensed in our accompanying statement of operations. | |||||||||||||||
On March 20, 2013, the Company agreed to issue 100,000 shares of its common stock for cash. The shares were issued at $0.50 per share for an aggregate of $50,000. | |||||||||||||||
On April 5, 2013, the Company agreed to issue 100,000 shares of its common stock for cash. The shares were issued at $0.50 per share for an aggregate of $50,000. | |||||||||||||||
In April 19, 2013, the Company issued 30,000 stock options for employee compensation with an exercise price of $0.41 per share, expiring on April 19, 2018 in conjunction with the Form S-8 Registration Statement as filed on July 13, 2012. The options were measured at their fair value on April 19, 2013 using the following Black-Scholes Model Assumptions: risk free interest (0.72%); expected volatility (167%); expected life (5 years); no dividends. These options were immediately vested and exercisable, valued at $11,559 and expensed in our accompanying statement of operations. | |||||||||||||||
On May 24, 2013, the Company issued 33,500 of shares of common stock to employees for services rendered by them for an aggregate fair value of $12,395 ($0.37 per share) based on the quoted market price of the shares at time of issuance in conjunction with the Form S-8 Registration Statement as filed on July 13, 2012. | |||||||||||||||
In October 28, 2013, the Company issued 1,500,000 stock options for employee compensation with an exercise price of $0.30 per share, expiring on April 28, 2015 in conjunction with the Form S-8 Registration Statement as filed on July 13, 2012. The options were measured at their fair value on October 28, 2013 using the following Black-Scholes Model Assumptions: risk free interest (0.215%); expected volatility (148%); expected life (1.5 years); no dividends. These options were immediately vested and exercisable, valued at $226,882 and expensed in our accompanying statement of operations. | |||||||||||||||
On October 8, 2013, the Company issued 30,000 shares of its common stock with an aggregate fair value of $8,550 ($0.285 per share) based on the quoted market price of the shares at time of issue to Iconic Holding, LLC for finance costs upon the election of the Company to prepay the Convertible Promissory Note dated April 10, 2013. | |||||||||||||||
On October 9, 2013, the Company agreed to issue options to purchase 2,405,037 shares of common stock to nineteen (19) employees of the Company with an exercise price of $0.05 per share of common stock and a contractual life of ten years in conjunction with the Form S-8 Registration Statement as filed on July 13, 2012. The stock options as vest follows: 25% on October 9, 2016, 35% on October 9, 2017 and the remaining 40% on October 9, 2018. The options were measured at their fair value on October 9, 2013 using the following Black-Scholes Model Assumptions: risk free interest (1.73%); expected volatility (147%); expected life (ten years); no dividends. Share-based compensation related to these common stock option grants for the years ended December 26, 2014 and December 31, 2013 amounted to $29,783 and $0, respectively, and is reported as stock-based compensation in the statement of operations and additional paid-in capital in the statement of stockholders’ equity. | |||||||||||||||
In October 28, 2013, the Company issued 50,000 stock options for employee compensation with an exercise price of $0.295 per share, expiring on September 24, 2018 in conjunction with the Form S-8 Registration Statement as filed on July 13, 2012. The options were measured at their fair value on October 28, 2013 using the following Black-Scholes Model Assumptions: risk free interest (0.72%); expected volatility (164%); expected life (5 years); no dividends. These options were immediately vested and exercisable, valued at $13,792 and expensed in our accompanying statement of operations. | |||||||||||||||
On December 12, 2013, the Company issued to Group 10 Holdings, LLC in conjunction with the Convertible Promissory Note issued to Group 10 Holdings, LLC on December 9, 2013 40,000 shares of common stock with an aggregate fair value of $10,800 ($0.27 per share) based on the quoted market price of the for a commitment fee. The commitment fee is included in deferred finance costs and amortized on a straight line, which approximates the effective interest method, over the life the Convertible Promissory Note. | |||||||||||||||
In December 24, 2013, the Company issued 25,000 stock options for employee compensation with an exercise price of $0.25 per share, expiring on December 24, 2018 in conjunction with the Form S-8 Registration Statement as filed on July 13, 2012. The options were measured at their fair value on December 24, 2013 using the following Black-Scholes Model Assumptions: risk free interest (1.73%); expected volatility (147%); expected life (5 years); no dividends. These options were immediately vested and exercisable, valued at $5,529 and expensed in our accompanying statement of operations. | |||||||||||||||
During the year ended December 31, 2013, the holders of Convertible Promissory Notes (see Note 8) converted 2,152,240 shares of common stock of the Company with a fair value of $678,030 to settle $328,400 of principal and interest. | |||||||||||||||
On February 11, 2014, the Company issued 100,000 shares of common stock for professional services valued at $21,000 ($0.02 per share). | |||||||||||||||
On July 11, 2014, the Company issued 100,000 shares common stock in satisfaction of stock payable for $23,000 in stock-based compensation for professional fees. | |||||||||||||||
On November 1, 2014, the Company issued 500,000 shares of common stock for investor relations valued at $11,100 ($0.0222 per share) based on the quoted market price of the shares at time of issuance. | |||||||||||||||
On May 24, 2013, the Company issued 390,000 of shares of common stock to employees for services rendered by them for an aggregate fair value of $429 ($0.0.0021 per share) based on the quoted market price of the shares at time of issuance. | |||||||||||||||
During the year ended December 26, 2014, the holders of Convertible Promissory Notes (see Note 8) converted 158,382,363 shares of common stock of the Company with a fair value of $3,448,803 to settle $1,575,531 of principal and interest. | |||||||||||||||
The following is a summary of the common stock options granted, forfeited or expired and exercised: | |||||||||||||||
Number of Options | Weighted Average Exercise | ||||||||||||||
Price Per Share | |||||||||||||||
Outstanding - January 1, 2014 | 3,883,455 | $ | 0.18 | ||||||||||||
Granted | 50,000 | $ | 0.06 | ||||||||||||
Forfeited or expired | (1,057,478 | ) | $ | 0.05 | |||||||||||
Exercised | — | — | |||||||||||||
Outstanding– December 26, 2014 | 2,875,977 | $ | 0.19 | ||||||||||||
Exercisable – December 26, 2014 | 1,885,000 | $ | 0.33 | ||||||||||||
The following table summarizes information on stock options exercisable as of December 26, 2014: | |||||||||||||||
Number Outstanding at December 26, 2014 | Average Remaining Life (Years) | Aggregate Intrinsic Value | |||||||||||||
Exercise Price | |||||||||||||||
$ | 0.021 | 25,000 | 4.86 | — | |||||||||||
$ | 0.105 | 25,000 | 4.77 | — | |||||||||||
$ | 0.25 | 25,000 | 4 | — | |||||||||||
$ | 0.295 | 50,000 | 3.75 | — | |||||||||||
$ | 0.3 | 1,500,000 | 0.34 | — | |||||||||||
$ | 0.41 | 30,000 | 3.32 | — | |||||||||||
$ | 0.5 | 130,000 | 4 | — | |||||||||||
$ | 0.56 | 50,000 | 3.16 | — | |||||||||||
$ | 0.62 | 50,000 | 3.22 | — | |||||||||||
The following table summarizes information on stock options outstanding as of December 26, 2014: | |||||||||||||||
Number Outstanding at December 26, 2014 | Average Remaining Life (Years) | Aggregate Intrinsic Value | |||||||||||||
Exercise Price | |||||||||||||||
$ | 0.21 | 25,000 | 4.86 | — | |||||||||||
$ | 0.05 | 990,977 | 8.79 | — | |||||||||||
$ | 0.105 | 25,000 | 4.77 | — | |||||||||||
$ | 0.25 | 25,000 | 4 | — | |||||||||||
$ | 0.295 | 50,000 | 3.75 | — | |||||||||||
$ | 0.3 | 1,500,000 | 0.34 | — | |||||||||||
$ | 0.41 | 30,000 | 3.32 | — | |||||||||||
$ | 0.5 | 130,000 | 4 | — | |||||||||||
$ | 0.56 | 50,000 | 3.16 | — | |||||||||||
$ | 0.62 | 50,000 | 3.22 | — | |||||||||||
The following is a summary of warrants activity during December 26, 2014: | |||||||||||||||
Number of Shares | Weighted Average Exercise Price | ||||||||||||||
Balance, January 1, 2014 | 502,000 | $ | 0.4 | ||||||||||||
Warrants granted and assumed | 1,339,286 | $ | 0.04 | ||||||||||||
Warrants canceled | |||||||||||||||
Warrants expired | — | — | |||||||||||||
Balance, December 26, 2014 | 1,841,286 | $ | 0.14 | ||||||||||||
-1 | The number of warrants is equal to $56,250 divided by the market price. Market price is defined as greater of (i) the closing price of common stock on the issue date and (ii) the VWAP of the common stock for the trading day that is 2 trading days prior to the exercise price. At December 26, 2014, the number of warrants granted and assumed is calculated to be 1,339,286. The initial exercise price of the warrants is $0.45 per common share subject to adjustment for dilutive issuances. As December 26, 2014, the exercise price was $0.04 per share. | ||||||||||||||
All warrants outstanding as of December 26, 2014 are exercisable. |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||
Dec. 26, 2014 | |||||||||||
Income Tax Disclosure [Abstract] | |||||||||||
INCOME TAXES | NOTE 13 – INCOME TAXES | ||||||||||
As of December 26, 2014, the Company had net operating loss carry forwards of $2,880,251 that may be available to reduce future years’ taxable income through 2032 and 2034. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carryforwards. | |||||||||||
Components of net deferred tax assets, including a valuation allowance, are as follows at December 26, 2014 and December 31, 2013: | |||||||||||
2014 | 2013 | ||||||||||
Net loss before taxes | $ | (5,119,506 | ) | $ | (2,722,980 | ) | |||||
Permanent adjustments: | |||||||||||
Stock based compensation | 104,360 | 801,915 | |||||||||
Meals and Entertainment | 55,661 | 12,926 | |||||||||
Amortized debt discount | 4,146,475 | 682,603 | |||||||||
Non-deductible expenses | 123,022 | ||||||||||
Temporary adjustments: | |||||||||||
Bad debt expense | — | 113,538 | |||||||||
NOL loss carryforward | (689,988 | ) | (1,111,998 | ) | |||||||
Tax rate | 35 | % | 35 | % | |||||||
Recovery) Provision for income taxes | (241,496 | ) | (389,000 | ) | |||||||
Less: Valuation allowance | 241,496 | 389,000 | |||||||||
Net deferred tax asset | $ | — | $ | — | |||||||
The valuation allowance for deferred tax assets as of December 26, 2014 was $1,008,088. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. As a result, management determined it was more likely than not the deferred tax assets would not be realized as of December 26, 2014 and December 31, 2013. | |||||||||||
Reconciliation between the statutory rate and the effective tax rate is as follows at December 26, 2014 and December 31, 2013: | |||||||||||
2013 | 2013 | ||||||||||
Federal statutory tax rate | -35.00% | -35.00% | |||||||||
Valuation allowance | 35.00% | 35.00% | |||||||||
- % | - % | ||||||||||
Below is a chart showing the estimated corporate federal net operating loss (NOL) and the year in which it will expire. | |||||||||||
Year | Amount | Expiration | |||||||||
2014 | $ | 689,988 | 2034 | ||||||||
2013 | $ | 1,903,087 | 2033 | ||||||||
2012 | $ | 287,176 | 2032 | ||||||||
The tax years 2014, 2013, 2012 and 2011 remain open to examination by the major taxing jurisdictions in which the Company operates. The Company expects no material changes to unrecognized tax positions within the next twelve months. |
COMMITMENTS
COMMITMENTS | 12 Months Ended | ||
Dec. 26, 2014 | |||
Notes to Financial Statements | |||
COMMITMENTS | NOTE 14 – COMMITMENTS | ||
The Company leases office premises under 31 operating leases with terms from month to month to five years. Rental expenses was $443,802 and $236,734 for the years ended December 26, 2014 and December 31, 2013, respectively. | |||
The following table is a schedule of future minimum lease commitments for the Company: | |||
Period ending December 31, | 2015 | $ 483,201 | |
2016 | 382,161 | ||
2017 | 260,679 | ||
2018 | 185,301 | ||
2019 | 105,565 | ||
$ 1,416,907 |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 26, 2014 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 15 – SUBSEQUENT EVENTS |
From December 27, 2014 to March 30, 2015, the holders of Convertible Promissory Notes (see Note 8) converted 2,907,605,253 shares of common stock of the Company with a fair value of $920,071 to settle $463,833 of principal and interest. | |
On January 13, 2015, the Company entered into a Second Amendment to Purchase and Sale Agreement (the “Amendment”) with Transfac. The Amendment amended the original Purchase and Sale Agreement entered into July 31, 2013, as amended on February 27, 2014 (the “Agreement”). Under the terms of the Amendment, the definition of “Advance Rate” was amended to read: “Advance Rate” means 90% or such other percent as may be determined from time to time by Transfac in its sole discretion. The previous “Advance Rate” was 85%. The definition of “Account Due Date” was amended to read: “Account Due Date” 90 days from the date of the invoice evidencing the Account. The previous “Account Due Date” was 80 days. The definition of “Maximum Advances” was amended to read: “Maximum Advances” means the maximum aggregate amount of Outstanding Advances, which amount shall not exceed $4,000,000, or such other amount as may be determined from time to time by Transfac in its sole discretion. The previous “Maximum Advances” were $2,000,000. The definition of “Contract Term” was amended to read: “Contract Term” means an initial period of 24 months commencing on the date of this signed Second Amendment to Purchase and Sale Agreement and renewal periods of 1 year thereafter. The previous “Contract Term” was 18 months. Finally, the following definition was added: “Origination Fee” means 0.25%of the Maximum Advances which was due and payable on the date of this signed Second Amendment to Purchase and Sale Agreement. All other provisions of the Agreement remain in full force and effect. | |
On January 27, 2015, the Company entered into a Partial Note Prepayment Agreement with Firehole River Capital, LLC (“Lender”) for the Convertible Promissory Note with a face value of $106,000 dated June 6, 2014. The Lender agreed to allow the Company to pay off $20,000 of principal by paying $25,000 in cash. | |
On January 27, 2015, the Company entered into a Partial Note Prepayment Agreement with Tailwind Partners, LLC (“Lender”) for the Convertible Promissory Note with a face value of $106,000 dated July 8, 2014. The Lender agreed to allow the Company to pay off $53,000 of principal by paying $64,000 in cash. | |
On January 27, 2015, the Company entered into a Partial Note Prepayment Agreement with Firehole River Capital, LLC (“Lender”) for the Convertible Promissory Note with a face value of $106,000 dated July 22, 2014. The Lender agreed to allow the Company to pay off $53,000 of principal by paying $64,000 in cash. | |
Effective February 16, 2015, the Company filed a Certificate of Amendment to the Articles of Incorporation to increase the number of authorized shares of the Company’s common stock from 1,000,000,000 to 20,000,000,000 and to decrease the par value common stock from $0.001 per share to $0.00001 per share.. The increase in authorized shares and change in par value have been accounted for retroactively in these financial statements. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||||||||||||
Dec. 26, 2014 | |||||||||||||
Accounting Policies [Abstract] | |||||||||||||
Basis of Presentation | Basis of Presentation | ||||||||||||
These financial statements are presented in United States dollars and have been prepared in accordance with generally accepted accounting principles in the United States of America. | |||||||||||||
On May 20, 2014, the Board of Directors of the Company determined it is in the best interests of the Company to change its fiscal year end from December 31 to a 52-53 week fiscal year ending on the Friday closest to December 31. The change is intended to align the Company’s fiscal periods more closely with the seasonality of its business and improve comparability with industry peers. This change is effective with the end of the registrant’s fiscal second quarter ended June 26, 2014. The change to a 52-53 week fiscal year will be retroactively applied as if it was adopted as of January 1, 2014. The registrant’s current fiscal year ended on December 26, 2014 and comprises 360 days. | |||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments | ||||||||||||
As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC (“ASC 820-10”), fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. | |||||||||||||
The three levels of the fair value hierarchy are described below: | |||||||||||||
Level 1 | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; | ||||||||||||
Level 2 | Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; | ||||||||||||
Level 3 | Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). | ||||||||||||
Pursuant to ASC 825, the fair value of cash and marketable securities is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of cash, accounts receivables, marketable securities, accounts payable and accrued liabilities, and notes payable approximate their current fair values because of their nature and respective relatively short maturity dates or durations. | |||||||||||||
Assets measured at fair value on a recurring basis were presented on the Company’s balance sheets as of December 26, 2014 and December 31, 2013 as follows: | |||||||||||||
Fair Value Measurements as of December 26, 2014 Using: | |||||||||||||
Total Carrying Value as of | Quoted Market Prices in Active Markets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||
12/26/14 | (Level 1) | (Level 2) | (Level 3) | ||||||||||
Assets: | |||||||||||||
Equity securities | $ | 52,610 | $ | 52,610 | $ | 0 | $ | 0 | |||||
Warrant | 47,344 | 0 | 0 | 47,344 | |||||||||
Total | $ | 99,954 | $ | 52,610 | $ | 0 | $ | 47,344 | |||||
Liabilities: | |||||||||||||
Convertible note payable derivative liability | $ | 601,345 | $ | 0 | $ | 0 | $ | 601,345 | |||||
Warrant derivative liability | 2,294 | 0 | 0 | 2,294 | |||||||||
Contingent consideration payable | 165,862 | 0 | 0 | 165,862 | |||||||||
Total | $ | 769,501 | $ | 0 | $ | 0 | $ | 769,501 | |||||
Fair Value Measurements as of December 31, 2013 Using: | |||||||||||||
Total Carrying Value as of | Quoted Market Prices in Active Markets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||
12/31/13 | (Level 1) | (Level 2) | (Level 3) | ||||||||||
Assets: | |||||||||||||
$ | 4,972 | $ | 4,972 | $ | 0 | $ | 0 | ||||||
Equity securities | |||||||||||||
Total | $ | 4,972 | $ | 4,972 | $ | 0 | $ | 0 | |||||
Liabilities: | |||||||||||||
Convertible note payable derivative liability | $ | 20,701 | $ | 0 | $ | 0 | $ | 20,701 | |||||
Contingent consideration payable | 79,221 | 0 | 0 | 79,221 | |||||||||
Total | $ | 99,922 | $ | 0 | $ | 0 | $ | 79,221 | |||||
Change in convertible note payable derivative liability during the year ended December 26, 2014 were as follows: | |||||||||||||
Opening balance at December 31, 2013 | $ 20,701 | ||||||||||||
Initial valuation of derivatives | 733,565 | ||||||||||||
Initial loss on derivatives | 32,906 | ||||||||||||
Gain on change in fair value of derivative | |||||||||||||
liability | -185,827 | ||||||||||||
Closing balance at December 26, 2014 | $ 601,345 | ||||||||||||
Change in warrant derivative liability during the year ended December 26, 2014 were as follows: | |||||||||||||
Opening balance at December 31, 2013 | $ 0 | ||||||||||||
Initial valuation of derivatives | 46,560 | ||||||||||||
Gain on change in fair value of derivative | |||||||||||||
liability | -44,266 | ||||||||||||
Closing balance at December 26, 2014 | $ 2,294 | ||||||||||||
Equity securities comprise publicly traded shares of common stock. The warrant gives the Company, the right but not the obligation, to purchase 100,000 shares of Argon Beauty Corp. (OTCBB:ABXX). The warrant is valued at the end of each accounting period using the Black Scholes option valuation model using the following inputs at December 26, 2014: stock price $0.50, exercise price $0.50, expected life 2.73 years, volatility 233%, dividends 0% and discount rate 1.08%. | |||||||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents | ||||||||||||
Cash and cash equivalents consist of cash and short-term investments with original maturities of less than 90 days. Cash equivalents are placed with high credit quality financial institutions and are primarily in money market funds. The carrying value of those investments approximates fair value. The Company maintains its cash in bank deposit accounts which may exceed federally insured limits. As of December 26, 2014, the Company’s accounts are insured for $250,000 by FDIC for US bank deposits. | |||||||||||||
Income Taxes | Income Taxes | ||||||||||||
The Company follows the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment. Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with FASB ASC 740-10, “Income Taxes,” which requires the use of the asset/liability method of accounting for income taxes. | |||||||||||||
The Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not. | |||||||||||||
Revenue Recognition | Revenue Recognition | ||||||||||||
The Company recognizes revenues and the related costs when persuasive evidence of an arrangement exists, delivery and acceptance has occurred or service has been rendered, the price is fixed or determinable, and collection of the resulting receivable is reasonably assured. Amounts invoiced or collected in advance of product delivery or providing services are recorded as deferred revenue. The Company accrues for customer credits, bad debts, and other allowances based on its historical experience. Staffing revenue is recognized as the services are performed. Revenue also includes billable travel and other reimbursable costs and is recorded net of sales tax. | |||||||||||||
Deferred Financing Costs | Deferred Financing Costs | ||||||||||||
Deferred financing costs consist of costs incurred to obtain debt financing, including legal fees, origination fees and administration fees. Costs associated with the Convertible Promissory Note are deferred and amortized in our statements of operations using the straight-line method, which approximates the effective interest method, over the terms of the respective financing instrument. | |||||||||||||
Use of Estimates | Use of Estimates | ||||||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information that is currently available to the Company, and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates. | |||||||||||||
Factoring Agreements and Accounts Receivable | Factoring Agreements and Accounts Receivable | ||||||||||||
The Company had a month-to-month financing agreement with Riviera Finance LLC (“Riviera”) which was terminated on July 24, 2013. On July 31, 2013 the Company entered into a Purchase and Sale Agreement with Transfac Capital, Inc. (“Transfac”). The agreement with Riviera includes a non-recourse factoring arrangement that provided notification factoring on substantially all of the Company’s sales. Riviera, based on credit approved orders, assumed the accounts receivable risk of the Company’s customers in the event of insolvency or non-payment. All other receivable risks for customer deductions that reduce the customer receivable balances were retained by the Company, including, but not limited to, allowable customer markdowns, disputes, and discounts. The Company assumes the risk on accounts receivable not factored to Riviera, which is shown as accounts receivable on the balance sheets, net of factored accounts receivable. Advances to the Company from Transfac are with recourse and are secured by assets of the Company and are treated as a secured financing arrangement. As of December 26, 2014 and December 31, 2013, factored accounts receivable total $1,638,771 and $865,321, respectively. | |||||||||||||
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts | ||||||||||||
The Company allows for an estimated amount of receivables that may not be collected. The Company estimates its allowance for doubtful accounts based on historical experience and customer relationships. As of December 26, 2014 and December 31, 2013, the Company has recorded an allowance of $110,605 and $156,297, respectively. | |||||||||||||
Property and Equipment | Property and Equipment | ||||||||||||
Property and equipment are stated at the lower of cost or fair value. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets, as follows: | |||||||||||||
Description | Estimated Life | ||||||||||||
Office equipment and furniture | 3 years | ||||||||||||
The estimated useful lives are based on the nature of the assets as well as current operating strategy and legal considerations such as contractual life. Future events, such as property expansions, property developments, new competition, or new regulations, could result in a change in the manner in which the Company uses certain assets requiring a change in the estimated useful lives of such assets. | |||||||||||||
26-Dec-14 | 31-Dec-13 | ||||||||||||
Office equipment and furniture | $ 131,295 | $ 11,842 | |||||||||||
Less: accumulated depreciation | -32,505 | -3,948 | |||||||||||
$ 98,790 | $ 7,894 | ||||||||||||
Depreciation expense for the years ended December 26, 2014 and December 31, 2013 is $21,079 and $3,948, respectively. | |||||||||||||
Customer Relationships | Customer Relationships | ||||||||||||
Customer relationships comprise customer lists acquired from Qwik Staffing Solutions, Inc. on April 29, 2013 with an estimated fair value of $294,100, from Shirley’s Employment Service, Inc. on April 9, 2014 with an estimated fair value of $162,461 and from Kwik Jobs on September 26, 2014 with an estimated fair value of $141,529. Customer lists are amortized on a straight-line basis over three years. | |||||||||||||
26-Dec-14 | 31-Dec-13 | ||||||||||||
Customer lists | $ 598,090 | $ 294,100 | |||||||||||
Less: accumulated amortization | -212,654 | -66,072 | |||||||||||
$ 385,436 | $ 228,028 | ||||||||||||
Amortization expense for the years ended December 26, 2014 and December 31, 2013 is $146,583 and $66,072, respectively. | |||||||||||||
Earnings (loss) per share | Earnings (loss) per share | ||||||||||||
Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued. Potentially dilutive common shares outstanding stock options assumed to be exercised or vested and paid out of shares of common stock and warrants assumed to be exercised. Outstanding stock options and warrants are disclosed in Note 12 Shareholders’ Equity. | |||||||||||||
Convertible Notes Payable | Convertible Notes Payable | ||||||||||||
i) | Beneficial Conversion Feature | ||||||||||||
The conversion features are first analyzed for bifurcation under ASC 815, then if the conversion features of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 “Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method. | |||||||||||||
ii) | Debt Discount | ||||||||||||
The Company determines if the convertible debenture should be accounted for as liability or equity under ASC 480, Liabilities — Distinguishing Liabilities from Equity. ASC 480, applies to certain contracts involving a company's own equity, and requires that issuers classify the following freestanding financial instruments as liabilities. Mandatorily redeemable financial instruments, obligations that require or may require repurchase of the issuer's equity shares by transferring assets (e.g., written put options and forward purchase contracts), and certain obligations where at inception the monetary value of the obligation is based solely or predominantly on: | |||||||||||||
– A fixed monetary amount known at inception, for example, a payable settleable with a variable number of the issuer's equity shares with an issuance date fair value equal to a fixed dollar amount, | |||||||||||||
– Variations in something other than the fair value of the issuer's equity shares, for example, a financial instrument indexed to the S&P 500 and settleable with a variable number of the issuer's equity shares, or | |||||||||||||
– Variations inversely related to changes in the fair value of the issuer's equity shares, for example, a written put that could be net share settled. | |||||||||||||
If the entity determined the instrument meets the guidance under ASC 480 the instrument is accounted for as a liability with a respective debt discount. The Company records debt discounts in connection with raising funds through the issuance of convertible debt (see Note 10). These costs are amortized to non-cash interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed. | |||||||||||||
iii) | Derivative Financial Instruments | ||||||||||||
Derivative financial instruments, as defined in ASC 815, “Accounting for Derivative Financial Instruments and Hedging Activities”, consist of financial instruments or other contracts that contain a notional amount and one or more underlying (e.g. interest rate, security price or other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured at fair value and recorded as liabilities or, in rare instances, assets. | |||||||||||||
The Company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has issued financial instruments including senior convertible promissory notes payable and freestanding stock purchase warrants with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts, or (iii) may be net-cash settled by the counterparty. As required by ASC 815, in certain instances, these instruments are required to be carried as derivative liabilities, at fair value, in our financial statements. | |||||||||||||
Stock-based compensation | Stock-based compensation | ||||||||||||
The Company records stock based compensation in accordance with the guidance in ASC Topic 505 and 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award. | |||||||||||||
The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50. | |||||||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements | ||||||||||||
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“FASB ASU 2014-09”). This standard update clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. generally accepted accounting principles (GAAP) and International Financial Reporting Standards. The standard update intends to provide a more robust framework for addressing revenue issues; improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; and provide more useful information to users of financial statements through improved disclosure requirements. Upon adoption of this standard update, the Company expects that the allocation and timing of revenue recognition will be impacted. The provisions of FASB ASU 2014-09 are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and are to be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. Early application is not permitted. The Company is currently evaluating the impact that this standard update will have on its consolidated financial statements. | |||||||||||||
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern. The new standard requires management of public and private companies to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern and, if so, disclose that fact. Management will also be required to evaluate and disclose whether its plans alleviate that doubt. The standard requires management to evaluate, for each reporting period, whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. The new standard is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted. The Company does not expect the adoption of the ASU to have a significant impact on our consolidated financial statements | |||||||||||||
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial statements. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||||||
Dec. 26, 2014 | |||||||||||||
Summary Of Significant Accounting Policies Tables | |||||||||||||
Assets measured at fair value on a recurring basis | Fair Value Measurements as of December 26, 2014 Using: | ||||||||||||
Total Carrying Value as of | Quoted Market Prices in Active Markets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||
12/26/14 | (Level 1) | (Level 2) | (Level 3) | ||||||||||
Assets: | |||||||||||||
Equity securities | $ | 52,610 | $ | 52,610 | $ | 0 | $ | 0 | |||||
Warrant | 47,344 | 0 | 0 | 47,344 | |||||||||
Total | $ | 99,954 | $ | 52,610 | $ | 0 | $ | 47,344 | |||||
Liabilities: | |||||||||||||
Convertible note payable derivative liability | $ | 601,345 | $ | 0 | $ | 0 | $ | 601,345 | |||||
Warrant derivative liability | 2,294 | 0 | 0 | 2,294 | |||||||||
Contingent consideration payable | 165,862 | 0 | 0 | 165,862 | |||||||||
Total | $ | 769,501 | $ | 0 | $ | 0 | $ | 769,501 | |||||
Fair Value Measurements as of December 31, 2013 Using: | |||||||||||||
Total Carrying Value as of | Quoted Market Prices in Active Markets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||
12/31/13 | (Level 1) | (Level 2) | (Level 3) | ||||||||||
Assets: | |||||||||||||
$ | 4,972 | $ | 4,972 | $ | 0 | $ | 0 | ||||||
Equity securities | |||||||||||||
Total | $ | 4,972 | $ | 4,972 | $ | 0 | $ | 0 | |||||
Liabilities: | |||||||||||||
Convertible note payable derivative liability | $ | 20,701 | $ | 0 | $ | 0 | $ | 20,701 | |||||
Contingent consideration payable | 79,221 | 0 | 0 | 79,221 | |||||||||
Total | $ | 99,922 | $ | 0 | $ | 0 | $ | 79,221 | |||||
Sechedule of convertible note payable derivative liability and warrant derivative liability | Change in convertible note payable derivative liability during the year ended December 26, 2014 were as follows: | ||||||||||||
Opening balance at December 31, 2013 | $ 20,701 | ||||||||||||
Initial valuation of derivatives | 733,565 | ||||||||||||
Initial loss on derivatives | 32,906 | ||||||||||||
Gain on change in fair value of derivative | |||||||||||||
liability | -185,827 | ||||||||||||
Closing balance at December 26, 2014 | $ 601,345 | ||||||||||||
Change in warrant derivative liability during the year ended December 26, 2014 were as follows: | |||||||||||||
Opening balance at December 31, 2013 | $ 0 | ||||||||||||
Initial valuation of derivatives | 46,560 | ||||||||||||
Gain on change in fair value of derivative | |||||||||||||
liability | -44,266 | ||||||||||||
Closing balance at December 26, 2014 | $ 2,294 | ||||||||||||
Schedule of Property and Equipment | Description | Estimated Life | |||||||||||
Office equipment and furniture | 3 years | ||||||||||||
26-Dec-14 | 31-Dec-13 | ||||||||||||
Office equipment and furniture | $ 131,295 | $ 11,842 | |||||||||||
Less: accumulated depreciation | -32,505 | -3,948 | |||||||||||
$ 98,790 | $ 7,894 | ||||||||||||
Schedule of Customer Relationship | 26-Dec-14 | 31-Dec-13 | |||||||||||
Customer lists | $ 598,090 | $ 294,100 | |||||||||||
Less: accumulated amortization | -212,654 | -66,072 | |||||||||||
$ 385,436 | $ 228,028 |
CUSTOMER_RELATIONSHIP_NET_Tabl
CUSTOMER RELATIONSHIP, NET (Tables) | 12 Months Ended | |
Dec. 26, 2014 | ||
Notes to Financial Statements | ||
Fair value | Customer relationships | $ 162,461 |
Net assets acquired | $ 162,461 | |
Cash | $ 70,797 | |
Contingent consideration | 91,664 | |
Consideration paid | $ 162,461 | |
Customer relationships | $ 141,529 | |
Net assets acquired | $ 141,529 | |
Cash | $ 50,000 | |
Contingent consideration | 91,529 | |
Consideration paid | $ 141,529 | |
Equipment | $ 10,654 | |
Prepaid supplies | 3,736 | |
Customer relationships | 294,100 | |
Net assets acquired | $ 308,490 | |
Cash | $ 150,000 | |
Contingent consideration | 158,490 | |
Consideration paid | $ 308,490 |
FACTORING_AGREEMENT_Tables
FACTORING AGREEMENT (Tables) | 12 Months Ended | ||||||||
Dec. 26, 2014 | |||||||||
Notes to Financial Statements | |||||||||
Table of amounts factoring agreement | Receivables Factored | Reserve | Fees | Administrative Charges | |||||
Deposit | |||||||||
26-Dec-14 | $ | 0 | $ 0 | $ 0 | $ 0 | ||||
31-Dec-13 | $ | 0 | $ 0 | $ 90,826 | $ 0 |
CONVERTIBLE_NOTE_PAYABLE_DERIV1
CONVERTIBLE NOTE PAYABLE DERIVATIVE LIABILITY (Tables) | 12 Months Ended | |
Dec. 26, 2014 | ||
Notes to Financial Statements | ||
Binomial model | The inputs into the binomial models are as follows: | |
Conversion price | $0.25 - $0.50 | |
Risk free rate | 0.03% - 0.11% | |
Expected volatility | 196% - 282% | |
Dividend yield | 0% | |
Expected life | 0.03 years – 0.73 years | |
The inputs into the Black-Scholes models are as follows: | ||
Conversion price | $0.0008 - $0.0141 | |
Risk free rate | 0.05% | |
Expected volatility | 130% - 211% | |
Dividend yield | 0% | |
Expected life | 0.53 years – 1.00 years |
WARRANT_DERIVATIVE_LIABILITY_T
WARRANT DERIVATIVE LIABILITY (Tables) | 12 Months Ended | |
Dec. 26, 2014 | ||
Notes to Financial Statements | ||
Schedule of Warranty Derivative Liability | Risk free rate | 1.75% |
Expected volatility | 170% | |
Dividend yield | 0% | |
Expected life | 4.5 years |
CONTINGENT_LIABILITY_Tables
CONTINGENT LIABILITY (Tables) | 12 Months Ended | |
Dec. 26, 2014 | ||
Notes to Financial Statements | ||
Table of fair value | Opening balance at December 31, 2013 | $ 79,221 |
Purchase of Shirley’s customer list – April 13, 2014 | ||
91,664 | ||
Purchase of Kwik customer list – September 26, 2014 | ||
141,529 | ||
Payments | -156,575 | |
Interest | 10,023 | |
Closing balance at December 26, 2014 | $ 165,862 |
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended | ||||||||||||||
Dec. 26, 2014 | |||||||||||||||
Equity [Abstract] | |||||||||||||||
Common stock options granted, forfeited or expired and exercised | The following is a summary of the common stock options granted, forfeited or expired and exercised: | ||||||||||||||
Number of Options | Weighted Average Exercise | ||||||||||||||
Price Per Share | |||||||||||||||
Outstanding - January 1, 2014 | 3,883,455 | $ | 0.18 | ||||||||||||
Granted | 50,000 | $ | 0.06 | ||||||||||||
Forfeited or expired | (1,057,478 | ) | $ | 0.05 | |||||||||||
Exercised | — | — | |||||||||||||
Outstanding– December 26, 2014 | 2,875,977 | $ | 0.19 | ||||||||||||
Exercisable – December 26, 2014 | 1,885,000 | $ | 0.33 | ||||||||||||
Table summarizes information on stock | The following table summarizes information on stock options exercisable as of December 26, 2014: | ||||||||||||||
Number Outstanding at December 26, 2014 | Average Remaining Life (Years) | Aggregate Intrinsic Value | |||||||||||||
Exercise Price | |||||||||||||||
$ | 0.021 | 25,000 | 4.86 | — | |||||||||||
$ | 0.105 | 25,000 | 4.77 | — | |||||||||||
$ | 0.25 | 25,000 | 4 | — | |||||||||||
$ | 0.295 | 50,000 | 3.75 | — | |||||||||||
$ | 0.3 | 1,500,000 | 0.34 | — | |||||||||||
$ | 0.41 | 30,000 | 3.32 | — | |||||||||||
$ | 0.5 | 130,000 | 4 | — | |||||||||||
$ | 0.56 | 50,000 | 3.16 | — | |||||||||||
$ | 0.62 | 50,000 | 3.22 | — | |||||||||||
Table summarizes information on stock options outstanding | The following table summarizes information on stock options outstanding as of December 26, 2014: | ||||||||||||||
Number Outstanding at December 26, 2014 | Average Remaining Life (Years) | Aggregate Intrinsic Value | |||||||||||||
Exercise Price | |||||||||||||||
$ | 0.21 | 25,000 | 4.86 | — | |||||||||||
$ | 0.05 | 990,977 | 8.79 | — | |||||||||||
$ | 0.105 | 25,000 | 4.77 | — | |||||||||||
$ | 0.25 | 25,000 | 4 | — | |||||||||||
$ | 0.295 | 50,000 | 3.75 | — | |||||||||||
$ | 0.3 | 1,500,000 | 0.34 | — | |||||||||||
$ | 0.41 | 30,000 | 3.32 | — | |||||||||||
$ | 0.5 | 130,000 | 4 | — | |||||||||||
$ | 0.56 | 50,000 | 3.16 | — | |||||||||||
$ | 0.62 | 50,000 | 3.22 | — | |||||||||||
Warrants activity | The following is a summary of warrants activity during December 26, 2014: | ||||||||||||||
Number of Shares | Weighted Average Exercise Price | ||||||||||||||
Balance, January 1, 2014 | 502,000 | $ | 0.4 | ||||||||||||
Warrants granted and assumed | 1,339,286 | $ | 0.04 | ||||||||||||
Warrants canceled | |||||||||||||||
Warrants expired | — | — | |||||||||||||
Balance, December 26, 2014 | 1,841,286 | $ | 0.14 |
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||||
Dec. 26, 2014 | |||||||||||
Income Tax Disclosure [Abstract] | |||||||||||
Deferred tax assets | Components of net deferred tax assets, including a valuation allowance, are as follows at December 26, 2014 and December 31, 2013: | ||||||||||
2014 | 2013 | ||||||||||
Net loss before taxes | $ | (5,119,506 | ) | $ | (2,722,980 | ) | |||||
Permanent adjustments: | |||||||||||
Stock based compensation | 104,360 | 801,915 | |||||||||
Meals and Entertainment | 55,661 | 12,926 | |||||||||
Amortized debt discount | 4,146,475 | 682,603 | |||||||||
Non-deductible expenses | 123,022 | ||||||||||
Temporary adjustments: | |||||||||||
Bad debt expense | — | 113,538 | |||||||||
NOL loss carryforward | (689,988 | ) | (1,111,998 | ) | |||||||
Tax rate | 35 | % | 35 | % | |||||||
Recovery) Provision for income taxes | (241,496 | ) | (389,000 | ) | |||||||
Less: Valuation allowance | 241,496 | 389,000 | |||||||||
Net deferred tax asset | $ | — | $ | — | |||||||
Reconciliation between the statutory rate and the effective tax rate | 2013 | 2013 | |||||||||
Federal statutory tax rate | -35.00% | -35.00% | |||||||||
Valuation allowance | 35.00% | 35.00% | |||||||||
- % | - % | ||||||||||
Estimated corporate federal net operating loss | Below is a chart showing the estimated corporate federal net operating loss (NOL) and the year in which it will expire. | ||||||||||
Year | Amount | Expiration | |||||||||
2014 | $ | 689,988 | 2034 | ||||||||
2013 | $ | 1,903,087 | 2033 | ||||||||
2012 | $ | 287,176 | 2032 |
COMMITMENTS_Tables
COMMITMENTS (Tables) | 12 Months Ended | ||
Dec. 26, 2014 | |||
Notes to Financial Statements | |||
Table is a schedule of future minimum lease | Period ending December 31, | 2015 | $ 483,201 |
2016 | 382,161 | ||
2017 | 260,679 | ||
2018 | 185,301 | ||
2019 | 105,565 | ||
$ 1,416,907 |
GOING_CONCERN_Details_Narrativ
GOING CONCERN (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 26, 2014 | Dec. 31, 2013 | |
Notes to Financial Statements | ||
Accumulated deficit | ($8,313,284) | ($3,193,778) |
Net loss | -5,119,506 | -2,722,980 |
Working capital deficit | $3,753,876 |
PREPAID_Details_Narrative
PREPAID (Details Narrative) (USD $) | Dec. 26, 2014 | Dec. 31, 2013 |
Notes to Financial Statements | ||
Prepaid expense | $322,855 | $45,497 |
CUSTOMER_RELATIONSHIP_NET_Deta
CUSTOMER RELATIONSHIP, NET (Details Narrative) (USD $) | Apr. 29, 2013 |
Notes to Financial Statements | |
Asset, pay cash | $300,000 |
Delivery and transfer Asset | 170,797 |
Monthly installments | $100,000 |
Paying amount | 0.05 |
FACTORING_AGREEMENT_Details_Na
FACTORING AGREEMENT (Details Narrative) (USD $) | Dec. 26, 2014 | Jul. 31, 2014 | Jul. 24, 2014 |
Notes to Financial Statements | |||
Accepted account | $500,000 | ||
Riviera Finance | 90,826 | ||
Account receivable | 2,000,000 | ||
Transfac shall advance | 0.85 | ||
Shall pay Transfac | 0.02 | ||
Receivable amount | 1,281,122 | ||
Receivable liability | $865,321 |
RELATED_PARTY_Details_Narrativ
RELATED PARTY (Details Narrative) (USD $) | Dec. 26, 2014 | Apr. 25, 2014 | Dec. 31, 2013 |
Notes to Financial Statements | |||
Bears interest | 0 | ||
Note repaid | $161,043 | ||
Amount of CEO | 175,768 | ||
Remains outstanding | $14,725 | $44,806 |
CONVERTIBLE_PROMISSORY_NOTES_D
CONVERTIBLE PROMISSORY NOTES (Details Narrative) (USD $) | Nov. 26, 2014 | Nov. 21, 2014 | Nov. 12, 2014 | Oct. 31, 2014 | Oct. 29, 2014 | Oct. 24, 2014 | Oct. 21, 2014 | Oct. 09, 2014 | Oct. 08, 2014 | Oct. 07, 2014 | Oct. 01, 2014 | Sep. 28, 2014 | Sep. 24, 2014 | Sep. 20, 2014 | Sep. 19, 2014 | Sep. 09, 2014 | Sep. 05, 2014 | Aug. 19, 2014 | Aug. 18, 2014 | Aug. 08, 2014 | Aug. 06, 2014 | Jul. 23, 2014 | Jul. 22, 2014 | Jul. 15, 2014 | Jul. 12, 2014 | Jul. 11, 2014 | Jul. 08, 2014 | Jul. 03, 2014 | Jul. 02, 2014 | Jun. 09, 2014 | Jun. 06, 2014 | 27-May-14 | 14-May-14 | Apr. 21, 2014 | Apr. 16, 2014 | Apr. 14, 2014 | Apr. 05, 2014 | Apr. 02, 2014 | Mar. 28, 2014 | Mar. 27, 2014 | Mar. 24, 2014 | Mar. 20, 2014 | Mar. 12, 2014 | Mar. 10, 2014 | Mar. 05, 2014 | Feb. 13, 2014 | Jan. 31, 2014 | Jan. 22, 2014 | Jan. 14, 2014 | Jan. 08, 2014 | Jan. 02, 2014 | Dec. 13, 2013 | Dec. 12, 2013 | Dec. 09, 2013 | Nov. 04, 2013 | Oct. 31, 2013 | Oct. 01, 2013 | Sep. 16, 2013 | Jul. 11, 2013 | Jun. 04, 2013 | 20-May-13 | 17-May-13 | Apr. 29, 2013 | Apr. 10, 2013 | Mar. 06, 2013 | Mar. 04, 2013 | Feb. 25, 2013 | Jan. 17, 2013 | Sep. 20, 2012 |
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Original principal amount | $106,000 | $106,000 | $95,000 | $125,289 | $131,250 | $110,000 | $105,000 | $262,500 | $101,000 | $106,000 | $101,000 | $106,000 | $110,250 | $115,000 | $225,000 | $106,000 | $101,000 | $78,500 | $113,000 | $106,000 | $330,000 | $103,500 | $106,000 | $115,000 | $113,000 | $101,000 | $220,000 | $112,500 | $103,500 | $101,000 | $101,000 | $101,000 | $115,000 | $101,000 | $101,000 | $63,000 | $106,000 | $106,000 | $115,000 | $106,000 | $128,500 | $110,250 | $130,000 | $63,000 | $106,000 | $53,000 | $101,000 | $128,500 | $115,500 | $275,000 | $275,000 | $106,000 | $103,500 | $130,000 | |||||||||||||||
Annual interest (in percentage) | 10.00% | 12.00% | 8.00% | 12.00% | 11.00% | 12.00% | 11.00% | 11.00% | 12.00% | 10.00% | 12.00% | 12.00% | 0.00% | 0.00% | 10.00% | 12.00% | 10.00% | 8.00% | 12.00% | 12.00% | 12.00% | 8.00% | 12.00% | 10.00% | 12.00% | 10.00% | 10.00% | 8.00% | 8.00% | 10.00% | 10.00% | 22.00% | 12.00% | 12.00% | 8.00% | 12.00% | 12.00% | 10.00% | 12.00% | 8.00% | 0.00% | 12.00% | 8.00% | 12.00% | 8.00% | 10.00% | 8.00% | 5.00% | 12.00% | 12.00% | 12.00% | 8.00% | 12.00% | ||||||||||||||||
Principal amount | 130,000 | 130,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares of common stock | 418,060 | 57,374 | 118,705 | 227,342 | 60,000 | 100,000 | 2,405,037 | 50,000 | 75,000 | 221,108 | 80,000 | 60,000 | 50,000 | 100,000 | 604,651 | 100,000 | 40,000 | 30,000 | 57,000 | 30,000 | 100,000 | 50,000 | 202,000 | 604,651 | |||||||||||||||||||||||||||||||||||||||||||||
Company value | 268,088 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Received cash proceed | 101,000 | 100,000 | 101,000 | 125,000 | 105,000 | 125,000 | 60,000 | 101,000 | 50,000 | 101,000 | 125,000 | 101,200 | 25,000 | 25,000 | 101,000 | 100,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | 83,673 | 83,703 | 97,135 | 100,496 | 5,250 | 103,516 | 48,400 | 81,648 | 40,701 | 76,825 | 93,052 | 62,192 | 20,533 | 25,000 | 106,628 | 105,478 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Asher Enterprises cash | 146,647 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
original principal | 106,000 | 53,000 | 101,000 | 128,500 | 115,500 | 103,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest amount | 101,000 | 101,000 | 63,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepayment penalty and outstanding accrued interest | 43,443 | 43,780 | 24,535 | 42,400 | 20,641 | 37,875 | 47,791 | 34,000 | 43,147 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consideration paid in cash | 103,500 | 101,000 | 113,866 | 136,350 | 144,443 | 144,780 | 87,535 | 105,000 | 101,200 | 250,000 | 250,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuer expenses | 8,800 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discount amortized | $60,547 |
CONVERTIBLE_NOTE_PAYABLE_DERIV2
CONVERTIBLE NOTE PAYABLE DERIVATIVE LIABILITY (Details) (USD $) | 12 Months Ended |
Dec. 26, 2014 | |
Derivative Liabilities [Member] | |
Dividend yield | 0.00% |
Derivative Liabilities [Member] | Minimum [Member] | |
Conversion Price | 0.25 |
Risk free rate | 0.03% |
Expected volatility | 196.00% |
Expected life | 10 days |
Derivative Liabilities [Member] | Maximum [Member] | |
Conversion Price | 0.5 |
Risk free rate | 0.11% |
Expected volatility | 282.00% |
Expected life | 8 months 22 days |
Convertible Promissory Notes [Member] | |
Risk free rate | 5.00% |
Dividend yield | 0.00% |
Convertible Promissory Notes [Member] | Minimum [Member] | |
Conversion Price | 0.0141 |
Expected volatility | 130.00% |
Expected life | 6 months 10 days |
Convertible Promissory Notes [Member] | Maximum [Member] | |
Conversion Price | 0.0008 |
Expected volatility | 211.00% |
Expected life | 1 year |
WARRANT_DERIVATIVE_LIABILITY_D
WARRANT DERIVATIVE LIABILITY (Details Narrative) (USD $) | Dec. 26, 2014 | Dec. 31, 2013 | Jul. 11, 2013 |
Notes to Financial Statements | |||
Common Stock Warrants Issued | 180,455,103 | 20,982,740 | 271,084 |
Excerise Price | $0.00 | $0.00 | $0.45 |
WARRANT_DERIVATIVE_LIABILITY_D1
WARRANT DERIVATIVE LIABILITY (Details) (Warrant Derivative Liability [Member]) | 12 Months Ended |
Dec. 26, 2014 | |
Warrant Derivative Liability [Member] | |
Risk free rate | 1.75% |
Expected volatility | 170.00% |
Dividend yield | 0.00% |
Expected life | 4 years 6 months |
CONTINGENT_LIABILITY_Details_N
CONTINGENT LIABILITY (Details Narrative) | Apr. 29, 2013 |
Notes to Financial Statements | |
Total payment | 170,000 |
Interest rate | 12.00% |
STOCKHOLDERS_EQUITY_Details_Na
STOCKHOLDERS' EQUITY (Details Narrative) (USD $) | Dec. 26, 2014 | Dec. 24, 2014 | Nov. 26, 2014 | Nov. 21, 2014 | Nov. 12, 2014 | Oct. 29, 2014 | Oct. 28, 2014 | Oct. 27, 2014 | Oct. 24, 2014 | Oct. 21, 2014 | Oct. 09, 2014 | Oct. 08, 2014 | Oct. 07, 2014 | Sep. 28, 2014 | Sep. 19, 2014 | Sep. 09, 2014 | Sep. 05, 2014 | 24-May-14 | Apr. 19, 2014 | Apr. 05, 2014 | Mar. 28, 2014 | Mar. 20, 2014 | Mar. 14, 2014 | Feb. 21, 2014 | Dec. 31, 2013 | Dec. 12, 2013 | Oct. 31, 2013 | Oct. 17, 2013 | Oct. 01, 2013 | Aug. 31, 2013 | Jul. 13, 2013 | Jul. 12, 2013 | Jul. 11, 2013 | Apr. 10, 2013 | Mar. 06, 2013 | Mar. 04, 2013 | Feb. 25, 2013 | Sep. 20, 2012 |
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||
Common stock shares authorized | 75,000,000 | 75,000,000 | ||||||||||||||||||||||||||||||||||||
Common stock par value | $0.00 | $0.00 | $0.45 | |||||||||||||||||||||||||||||||||||
Common stock shares issued | 180,455,103 | 20,982,740 | 271,084 | |||||||||||||||||||||||||||||||||||
Common stock shares outstanding | 180,455,103 | 20,982,740 | ||||||||||||||||||||||||||||||||||||
Company issued shares | 30,000 | 100,000 | 25,000 | |||||||||||||||||||||||||||||||||||
Fair market value | $0.41 | $0.50 | $0.44 | $0.50 | $0.62 | $0.56 | $0.50 | $0.20 | $0.50 | $0.40 | $0.40 | |||||||||||||||||||||||||||
Total shares | 100,000 | |||||||||||||||||||||||||||||||||||||
Expensed as stock based compensation | $17,020 | |||||||||||||||||||||||||||||||||||||
Fair value | $0.50 | $0.20 | ||||||||||||||||||||||||||||||||||||
Services and shares | 500,000 | |||||||||||||||||||||||||||||||||||||
Shares of common stock | 418,060 | 57,374 | 118,705 | 227,342 | 60,000 | 100,000 | 2,405,037 | 50,000 | 75,000 | 221,108 | 80,000 | 60,000 | 50,000 | 100,000 | 604,651 | 100,000 | 40,000 | 30,000 | 57,000 | 30,000 | 100,000 | 50,000 | 202,000 | 604,651 | ||||||||||||||
Warrants value | 133,521 | |||||||||||||||||||||||||||||||||||||
Shares of unrestricted common stock | 300,000 | |||||||||||||||||||||||||||||||||||||
Common stock valued | 72,000 | |||||||||||||||||||||||||||||||||||||
Company issued | 25,000 | 1,500,000 | 50,000 | 30,000 | 33,500 | 30,000 | 50,000 | 50,000 | ||||||||||||||||||||||||||||||
Principal amount | 130,000 | 130,000 | ||||||||||||||||||||||||||||||||||||
Aggregate fair value | 96,154 | 14,917 | 29,083 | 65,929 | 15,000 | 25,000 | 8,550 | 19,875 | 61,910 | 20,800 | 21,000 | 17,500 | 12,395 | 50,000 | 50,000 | 10,800 | ||||||||||||||||||||||
Principal and interest | 50,000 | 7,532 | 15,584 | 26,000 | 7,848 | 13,128 | 7,500 | 11,250 | 30,000 | 12,134 | 9,504 | 7,920 | ||||||||||||||||||||||||||
Debt discount | 46,154 | 7,385 | 13,499 | 39,929 | 7,152 | 11,872 | 6,750 | 8,625 | 31,910 | 8,666 | 11,496 | 9,580 | ||||||||||||||||||||||||||
Vested and exercisable, value | 5,529 | 226,882 | 13,792 | 11,559 | 29,057 | 26,244 | 14,454 | 57,359 | ||||||||||||||||||||||||||||||
Warrants were valued | $17,020 | $133,521 |
INCOME_TAXES_Details_Narrative
INCOME TAXES (Details Narrative) (USD $) | Dec. 26, 2014 |
Income Tax Disclosure [Abstract] | |
Net operating loss | $2,880,251 |
Deferred tax assets | $1,008,088 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 12 Months Ended | |
Dec. 26, 2014 | Dec. 31, 2013 | |
Income Taxes Details | ||
Net loss | ($5,119,506) | ($2,722,980) |
Permanent adjustments: | ||
Stock based compensation | 104,360 | 801,915 |
Meals and Entertainment | 55,661 | 12,926 |
Amortized debt discount | 4,146,475 | 682,603 |
Non-deductible expenses | 123,022 | |
Temporary adjustments: | ||
Bad debt expense | 113,538 | |
NOL loss carryforward | -689,988 | -1,111,998 |
Tax rate | 35.00% | 35.00% |
Recovery) Provision for income taxes | -241,496 | -389,000 |
Less: Valuation allowance | 241,496 | 389,000 |
Net deferred tax asset |
INCOME_TAXES_Details_2
INCOME TAXES (Details 2) | 12 Months Ended | |
Dec. 26, 2014 | Dec. 31, 2013 | |
Income Taxes Details 2 | ||
Federal statutory tax rate | -35.00% | -35.00% |
Valuation allowance | 35.00% | 35.00% |
Total |
COMMITMENTS_Details_Narrative
COMMITMENTS (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 26, 2014 | Dec. 31, 2013 | |
Notes to Financial Statements | ||
Rental Expenses | $443,802 | $236,734 |
COMMITMENTS_Details
COMMITMENTS (Details) (USD $) | Dec. 26, 2014 |
Commitments Details | |
2015 | $483,201 |
2016 | 382,161 |
2017 | 260,679 |
2018 | 185,301 |
2019 | 105,565 |
Total | $1,416,907 |